WASHINGTON — President Barack Obama on Tuesday warned the future prosperity of the United States is at risk unless it significantly boosts investment in education and scientific research, telling Americans the country is facing a "Sputnik moment" that will define whether it leads or follows on the global stage.

In his annual state of the union address, Obama bluntly told the nation it "lags behind" other countries in academic achievement and said America's "lead has slipped" in vital areas of physical and digital infrastructure.

But Obama also sought to rally Americans by comparing the challenge of competing against emerging economic giants such as China and India to the U.S. space race against the Soviet Union in the 1950s and 1960s.

"Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik, we had no idea how we would beat them to the moon. The science wasn't even there yet. NASA didn't even exist," Obama told a joint session of Congress.

"But after investing in better research and education, we didn't just surpass the Soviets . . . we unleashed a wave of innovation that created new industries and millions of new jobs. This is our generation's Sputnik moment."

Obama's call for targeted spending to boost American competitiveness came in tandem with a broader message of fiscal austerity designed to position himself in the political centre as the U.S. edges closer to the start of the next presidential campaign.

The president proposed a five-year freeze on discretionary federal spending — a belt-tightening plan that would not extend to budget-busting entitlement programs including Social Security, Medicare and Medicaid, or to national security.

The plan would lower America's $1.3-trillion annual deficit by $400 billion over the next decade, Obama said.

But the president said he would not allow budget cuts to come at the expense of additional funding requests for biomedical research and clean-energy technology — a pet issue for Obama.

The president said he will also seek more money to train math and science teachers, citing statistics showing the U.S. had slipped to ninth in the world in the proportion of young people with college degrees.

"We have to do better," he said. "The future is ours to win, but to get there we can't just stand still."

While the nationally televised address was mostly short on specifics, Obama challenged Congress and the country to embrace a series of long-term goals. They include a proposal to generate 80 per cent of the nation's electricity from clean-energy sources by 2035; to provide access to high-speed rail for 80 per cent of Americans in 25 years and to "deploy the next generation of high-speed wireless coverage" to 98 per cent of the country in five years.

"At stake is whether new jobs and industries take root in this country, or somewhere else. It's whether the hard work and industry of our people is rewarded," he said. "It's whether we sustain the leadership that has made America not just a place on a map, but a light to the world. We are poised for progress."

Obama's speech comes at time of lingering uncertainty about the nation's economic recovery and the health of the U.S. job market, with the unemployment rate stuck at 9.4 per cent.

Despite his sober assessment of America's lack of competitiveness, Obama said he was confident about the country's potential to rebound if lawmakers make the right choices.

"The world has changed. The competition for jobs is real. But this shouldn't discourage us. It should challenge us," he said.

It was Obama's second official state of the union address and his first to a Congress no longer fully controlled by Democrats.

Almost three months after his party endured a midterm election "shellacking" that put Republicans in control of the House of Representatives, Obama's address came as he is enjoying a political rebound in the polls.

A CNN/Opinion Research survey this week put Obama's approval ratings at 55 per cent.

The president's renewed popularity is being credited in large measure to his December tax-cut deal with Republicans — a compromise that angered his Democratic base but was popular among independent voters.

He received near-universal praise for the recent speech he delivered on political civility following the attempted assassination of Arizona congresswoman Gabrielle Giffords.

Obama returned to the themes of his Tucson speech on Tuesday night, in words and symbolism.

The White House's guests for the state of the union included the parents of nine-year-old Christina Taylor Green, the civic-minded girl who was killed during the Tucson rampage.

The Green family and Daniel Hernandez, the 20-year-old political intern credited with saving Giffords' life, were seated with first lady Michelle Obama for the speech.

"There's a reason the tragedy in Tucson gave us pause. Amid all the noise and passions and rancour of our public debate, Tucson reminded us that no matter who we are or where we come from, each of us is a part of something greater — something more consequential than party or political preference," Obama said.

"We are part of the American family. We believe that in a country where every race and faith and point of view can be found, we are still bound together as one people; that we share common hopes and a common creed; that the dreams of a little girl in Tucson are not so different than those of our own children, and that they all deserve the chance to be fulfilled."

While robust political debate is vital to a healthy democracy, Obama said the nation deserves leaders who are not so bound to political dogma they cannot compromise in the national interest.

"New laws will only pass with support from Democrats and Republicans," Obama said.

"We will move forward together, or not at all — for the challenges we face are bigger than party, and bigger than politics."

In a show of solidarity, members of Congress wore black-and-white ribbons to honour Giffords, who is now recovering from her wounds at a rehabilitation facility in Texas.

The Democratic lawmaker's seat in the House chamber sat empty during Obama's speech.

Members of Congress also broke from the decades-old tradition of sitting in partisan blocs for the speech. Instead, Democrat and Republican members of Congress paired up for "dates" and sat next to each other to listen to the president.

The show of bipartisan unity among lawmakers in the House chamber did little to mask the significant political differences that are likely to result in a budget battle this spring between Republicans and the White House.

GOP leaders said proposed spending freeze would make a minimal dent in the federal deficit. And in a symbolic vote ahead of Obama's speech, the Republican-controlled House voted to slash federal spending to levels prior to passage of the $787-billion stimulus bill in 2009.

The problem with Obama's proposal is that "it freezes in place an extraordinary increase in spending that's occurred over the last two years," Senator Mitch McConnell, the Republican minority leader in the Senate, told reporters.

"So it strikes most of us that the effort by the House of Representatives to get us back to 2008 spending levels would be the direction to go if we really wanted to have an impact on our annual deficit problem."

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