Obama vows to fight on after tough year

WASHINGTON

President Barack Obama pushed job creation to the top of his agenda on Wednesday and vowed not to abandon his struggling healthcare overhaul after a political setback that raised doubts about his leadership.

"Jobs must be our number one focus in 2010," he said in his annual State of the Union address as US unemployment remained at a painful 10 percent and the weak economy dominated the debate before coming congressional elections in November.

Obama admitted he had made mistakes and that his first year in office had been a difficult one, but promised not to give up in his efforts to change the way that Washington works and push through his ambitious legislative agenda.

"I don't quit," he told the US Congress. "Let's seize this moment -- to start anew, to carry the dream forward, and to strengthen our union once more."

He pledged to slap tough new regulations on Wall Street but said he was "not interested in punishing banks", comments which helped boost US stock futures by appearing to retreat slightly from some of his recent fiery rhetoric.

Obama said he would work to dig the country out a "massive fiscal hole" and was willing to use his presidential veto power to enforce budgetary discipline.

He also pledged to double exports in five years to help create jobs, comments which weighed on the dollar and prompted some in the market to think the government may seek a weaker greenback.

Others said there was little substance to his promise to boost jobs and exports.

"The devil is in the detail," said Andrew Neale, portfolio manager at Fogel Neale Wealth Management in New York. "Making a speech and getting things done are two very different things."

Still smarting from a drop in his popularity and the loss by his Democratic Party of a pivotal US Senate seat in Massachusetts, Obama did not gloss over his political difficulties and acknowledged some mistakes.

But his tone at times was feisty and defiant.

Even as he signalled a recasting of his agenda by making the economy the most pressing priority, Obama did not concede the defeat of his sweeping agenda, including revamping healthcare system and forging a bipartisan consensus on climate change.

The loss in Massachusetts was seen by some political analysts as a referendum on his agenda, reflecting voter anxiety about the healthcare effort but also frustration with punishing double-digit unemployment.

"People are out of work. They are hurting. They need our help. And I want a jobs bill on my desk without delay," he said.