On foreign policy, Obama offered stern warnings to aspiring nuclear powers Iran and North Korea, which conducted a nuclear test overnight in violation of international agreements. "Provocations of the sort we saw last night will only isolate them further," Obama said.
He also announced he will make a trip to the Middle East next month that will include a stop in Israel -- his first as president. "We will stand steadfast with Israel in pursuit of security and lasting peace," Obama said of the message he plans to bring to the region.
Giving nod to emerging threats to peace, the president announced a long-anticipated executive order aimed at combating cyberterrorism from foreign governments and independent groups.
The order directs federal agencies to share information about electronic threats with U.S. infrastructure companies and requires the National Institute of Standards and Technology to develop a framework of cybersecurity practices to reduce risks to critical infrastructure. "We cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy," he said.
Obama's speech -- his fifth annual address before a joint session of Congress -- comes at a critical juncture for the U.S. economy, with unemployment hovering near 8 percent and new government economic forecasts showing sluggish growth through the next year.
Partisan wrangling over federal deficits and debt has raised the possibility that deep, across-the-board spending cuts will take effect March 1 and that the federal government could shut down at the end of next month without a budget deal. Both could further dampen economic growth and imperil the nation's credit rating, experts say.
Obama signaled a persistent desire to try for a big deal on the deficit, calling for compromise on spending cuts and tax increases, highlighting the human impact of the deeper cuts if they're allowed to go through. "Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit," he said. "The politics will be hard for both sides... but the alternative will cost us jobs, hurt our economy and visit hardship on millions of hardworking Americans."
But Republicans remain staunchly opposed to any new revenue, insisting it's up to Obama to tackle the drivers of the national debt.
"He doesn't have the courage to take on the liberal side of his own party," House Speaker Boehner said at a breakfast briefing with television correspondents and anchors. "He just doesn't have the courage to lead when it comes to our long-term spending problem."
Sen. Marco Rubio of Florida, delivering the official Republican response to Obama, argued that the president's agenda would undermine the middle class rather than help it, by increasing taxes and adding to the debt.
"Mr. President, I don't oppose your plans because I want to protect the rich. I oppose your plans because I want to protect my neighbors," Rubio said, invoking his own working-class roots.
There were signs of bipartisanship at the annual Washington ritual on Capitol Hill. The "date night" approach of recent years, with many members crossing the aisle to sit with a colleague of the opposing party, has given way to two coalitions of Republicans and Democrats seeking compromise.
More than 40 members pledged to wear orange lapel pins branded with "problem solvers," showing a commitment to "substantive cooperation" in the new Congress, according to the group coordinating the effort. Dozens of other members planned to wear green and silver ribbons -- the colors of Sandy Hook Elementary School -- to show solidarity with victims of gun violence and support for new gun control measures. The effort was led by Democratic Rep. Jim Langevin of Rhode Island.
Obama will waste little time building a public campaign for his agenda. Immediately following the address, he hosts a live conference call with supporters of his new outside advocacy group, Organizing for Action.
The president hits the road Wednesday morning to highlight key proposals from the speech. He will visit an auto parts manufacturer in North Carolina to promote new incentives for hiring; an Atlanta community center to talk about job skills training; and a Chicago-area school to discuss gun violence and education.
ABC News' Ann Compton, Mary Bruce and Luis Martinez contributed to this report.