Obama calls for smarter, not bigger, government

President Barack Obama said in his State of the Union address Tuesday night that it's not bigger government that America needs, but smarter government that sets priorities and invests in growth.

Obama focused on the economy in his speech and called on the nation to "reignite the true engine of America’s economic growth."

"Thanks to the grit and determination of the American people, there is much progress to report," Obama said. "Together, we have cleared away the rubble of crisis, and we can say with renewed confidence that the state of our union is stronger."

He challenged members of Congress to work through their differences for the good of the country.

"The American people don’t expect government to solve every problem. They don’t expect those of us in this chamber to agree on every issue. But they do expect us to put the nation's interests before party," he said.

The president said the proposals he offered on Tuesday to bolster the economy would not add "a single dime" to the budget deficit. "It's not a bigger government we need, but a smarter government," he said.

Obama told Congress he was willing to "ask more from the wealthiest seniors" to bring down the costs of Medicare, an apparent reference to expanding means testing that requires wealthier beneficiaries to pay more.

He also called for "bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit" -- one that he said could include closing "tax loopholes and deductions for the well-off and well-connected," making the tax code simpler for small business owners and diminishing incentives for businesses to move jobs overseas, among other proposals.

Obama said that he'd work with states "to make high-quality preschool available to every child" in the United States. "Let's do what works and make sure none of our children start the race of life already behind," he said.

Saying "colleges must do their part to keep costs down," Obama said that he wanted Congress to revise federal law to make affordability and value part of the criteria determining whether schools get certain types of federal aid.