WASHINGTON, Feb. 12 (Xinhua) -- A rising and thriving middle class is the engine of U.S. economic growth, U.S. President Barack Obama said in his State of the Union address on Tuesday.
"After years of grueling recession, our businesses have created over six million new jobs," said Obama, adding that "our housing market is healing, our stock market is rebounding, and consumers, patients and homeowners enjoy stronger protections than ever before."
The U.S. economy is adding jobs, but too many people still can't find full-time employment. Corporate profits have rocketed to all-time highs, but for more than a decade, wages and incomes have barely budged, Obama said.
U.S. real gross domestic product (GDP) declined 0.1 percent in the fourth quarter of 2012, the first time in about three years that the U.S. economy contracted. The nation's unemployment rate edged up to 7.9 percent in January from 7.8 percent in the previous month, official figures showed.
Obama used the prime-time TV address to argue that across-the-board automatic government spending cuts scheduled to kick in on March 1 will hamper economic growth and job creation.
The "sudden, harsh and arbitrary" spending cuts would jeopardize U.S. military readiness and devastate priorities like education, energy and medical research.
They would certainly slow U.S. recovery, and cost the nation hundreds of thousands of jobs, Obama stressed.
Roughly 85 billion U.S. dollars of spending cuts were set to hit various U.S. governmental departments this year starting on March 1, as agreed by Democrats and Republicans in January to resolve the so-called "fiscal cliff."
The across-the-board automatic government spending cuts, or "sequester" in U.S. government budget language, were included in the August 2011 debt-ceiling package to force lawmakers to come up with a long-term deficit reduction plan.
Deficit reduction alone is not an economic plan. The sequester is a really "bad idea," charged Obama, reiterating that "we can't just cut our way to prosperity."
Broad-based economic growth requires a balanced approach to deficit reduction, with spending cuts and revenue, and with everybody doing their fair share, he argued.
"Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit," Obama said.
The United States can save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and well-connected, he said.
The nation needs a tax code that lowers incentives to move jobs overseas, and lowers tax rates for businesses and manufacturers that create jobs in America, Obama contended.
After shedding jobs for more than 10 years, U.S. manufacturers have added about 500,000 jobs over the past three years.
"Our first priority is making America a magnet for new jobs and manufacturing," said Obama.
The world's largest economy should endeavor to upgrade its aging infrastructure to attract more jobs, Obama suggested.
He also proposed to raise U.S. federal minimum wage to 9 dollars per hour in an effort to raise the incomes of millions of working families and boost consumption.