But Mr. Obama declined to suggest additional ways to rein in the unsustainable growth of Medicare and Medicaid or to resolve the long-term financial problems facing Social Security. Instead, he is waiting for the new political dynamic of divided government to sort itself out before inviting Republicans to plunge into the risky business of addressing the costly entitlement programs.
The approach he laid out would extend a partial freeze of domestic spending that he proposed last year while providing new economic ?investments? in areas like research and education.
Mr. Obama also called upon House and Senate Republicans to join him in simplifying the corporate tax code by eliminating loopholes in exchange for lowering the 35 percent rate and perhaps to overhaul the individual income-tax system as well.
The annual address before a joint session of Congress allowed Mr. Obama to directly answer the new House Republican majority that has spent weeks attacking him as spending too much. But he also spoke to a national television audience, in effect beginning a public debate about national priorities at a time of large annual deficits and unmet public needs that likely will last through his term and re-election campaign.
As a ?downpayment? on reducing annual deficits, Mr. Obama called for extending to five years the three-year spending freeze that he called for in last year?s address. The frozen spending would cover a wide range of domestic programs, from farm aid to transportation, but only about one-seventh of the federal budget ? limiting the overall deficit reduction.
The freeze would exempt the biggest and fastest-growing areas of the federal budget, which besides Medicare and Social Security includes Medicaid and military spending. But the Pentagon is coming in for cuts in the annual budget Mr. Obama will send to Congress in three weeks: Administration officials say he will embrace proposals from the defense secretary, Robert M. Gates, squeezing $78 billion from military accounts over five years.
The five-year freeze in so-called discretionary domestic spending would reduce deficits by more than $400 billion in the 10 years through fiscal year 2021, the administration said. By comparison, a group representing most House Republicans last week called for cutting $2.5 trillion over that decade.
Mr. Obama acknowledged that his budget-cutting measures would not go far enough at a time when an aging population and rising health care costs are driving up projected annual deficits. Both sides, he said, ?have to stop pretending that cutting this kind of spending alone will be enough.?
But the president declined to embrace the recommendations of a bipartisan majority on the fiscal commission he first announced in last year?s State of the Union address. He said then of the commission, ?This can?t be one of those Washington gimmicks that let?s us pretend we solved a problem.?
Its report in December proposed to cut all long-term spending, including for Medicare and Social Security, and to end a raft of tax breaks in exchange for lower income tax rates, and apply some revenue savings to reduce deficits. But the naysayers on the commission included its three House Republican members, including Representative Paul D. Ryan of Wisconsin, the new chairman of the House Budget Committee, who delivered the Republican response to Mr. Obama speech Tuesday night.
Mr. Obama ?recognizes we have to do more,? said Gene Sperling, the chief White House economic adviser. ?But he also recognizes that it?s only going to happen if we create a frame and an atmosphere that allows both houses and both parties to work together.?
The president?s decision not to use the fiscal commission?s report as the starting point for bipartisan negotiation pleased many liberal groups that have been lobbying the administration against it. But it disappointed centrist anti-deficit groups.
?He really has to kick off this discussion,? said Maya MacGuineas, president of the bipartisan and centrist Committee for a Responsible Federal Budget. ?It was his commission. They reported at the end of last year. There needs to be a follow-up and it needs to come from the president.?
?If their plan is to wait until 2013, that may well be too late,? Ms. MacGuineas added. ?There is no guarantee that credit markets are going to let us off the hook for that long.?
But other budget analysts said Mr. Obama was smart not to get out front too soon, while newly empowered Congressional Republicans still are struggling to come up with the spending cuts required to fulfill their ambitious campaign promises.
?Major deficit reduction will not happen without bipartisan negotiations, and it would have been a mistake for the president to lay out a detailed deficit-reduction plan now, only to have his opponents attack it and try to blow it up,? said Robert Greenstein, founder of the liberal Center on Budget and Policy Priorities.
?The last two times that we had large, successful bipartisan negotiations on the budget ? in 1990 and 1997 ? the president did not lay out all the changes he would be willing to accept before the negotiations began,? Mr. Greenstein added. ?Why should this time be different??