Obama vows to fight on after tough year

WASHINGTON, Thursday

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

With the economy still weak and unemployment at a painful 10 per cent, “Jobs must be our number one focus in 2010,” Mr Obama told Congress in his annual State of the Union address today.

Mr Obama, who inherited a financial crisis and wars in Iraq and Afghanistan from the Bush administration, admitted he had made mistakes and that his first year in office had been a difficult one.

But he promised not to give up in his efforts to change the way that Washington works and push through his ambitious agenda for financial reforms, healthcare, energy and climate change, even though many Democrats fear losing their seats in November congressional elections.

“We don’t quit. I don’t quit,” he told Congress, split largely along Republican and Democratic lines over Obama’s policies. “Let’s seize this moment — to start anew, to carry the dream forward and to strengthen our union once more.”

He pledged tough new rules for Wall Street but said he was “not interested in punishing banks,” comments that helped boost US stock futures by appearing to retreat slightly from some of his fiery rhetoric.

Global equities rallied on Obama’s focus on job creation instead of any concrete details of banking reforms that have rattled financial markets.

Obama said he would work to dig the United States out of a “massive fiscal hole” and was willing to use his veto power to enforce budgetary discipline.

The US deficit — a record $1.4 trillion in 2009 or almost 10 percent of gross domestic product — is forecast by the Congressional Budget Office to fall slightly this year to $1.35 trillion.

Help create jobs

Obama vowed to double exports in five years to help create jobs, which weighed on the dollar and prompted some in the market to think the government may seek a weaker US currency. 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.”

Pascal Lamy, head of the World Trade Organisation, said Obama’s comments about increasing trade and doubling exports to stimulate the US economy go “in the right direction.”

Still smarting from a drop in his popularity and the loss by his Democrats of a pivotal Senate seat in Massachusetts, Obama did not gloss over his political difficulties.

But his tone at times was feisty and defiant. He recognised that creating jobs is his most pressing task but did not concede the defeat of his sweeping agenda.

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