"At stake right now is not who wins the next election -- after all, we just had an election. At stake is whether new jobs and industries take root in this country, or somewhere else. It's whether the hard work and industry of our people is rewarded," he said. "It's whether we sustain the leadership that has made America not just a place on a map, but a light to the world."
The president struck an optimistic tone on the economy.
"We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again," he said.
As expected, Obama's address was not a laundry list of new policy proposals. In fact it was largely a narrative about the way forward, fitting the theme of "Winning the Future."
"From the earliest days of our founding, America has been the story of ordinary people who dare to dream," he said. "That's how we win the future."
The president outlined five key areas where he said the United States needs to move forward and Washington needs to make significant and immediate strides: innovation, education, infrastructure, tackling the national debt and government reform.
Obama said innovation is the first step toward keeping America's place as the world leader in creating the jobs and industries of the future.
"We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook," he said. "In America, innovation doesn't just change our lives. It's how we make a living."
Obama called for "our generation's Sputnik moment" when it comes to education and innovation.
"Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik, we had no idea how we'd beat them to the moon. The science wasn't there yet. NASA didn't even exist," Obama said. "But after investing in better research and education, we didn't just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs."
Obama called for a ban on earmarks and proposed a five-year freeze on non-security related discretionary spending, saving approximately $400 billion over five years.
The president has long been critical of members of Congress inserting their pet projects into legislation, but Congress has defied him on this and billions of dollars have continued to flow to their districts.
"Because the American people deserve to know that special interests aren't larding up legislation with pet projects, both parties in Congress should know this: if a bill comes to my desk with earmarks inside, I will veto it," he pledged.
Senate Majority Leader Harry Reid indicated today that he will not change his stance on pork barrel spending now that the president is going to propose an earmark ban.
"I think this is an issue that any president would like to have, that takes power away from the legislative branch of government and I don't think that's helpful. I think it's a lot of pretty talk and it's only giving the president more power. He's got enough power already," Reid told reporters on Capitol Hill.
Tonight Obama said the spending freeze will require "painful cuts" and noted that some sitting in front of him have proposed deeper cuts.
"I'm willing to eliminate whatever we can honestly afford to do without," he said. "But let's make sure that we're not doing it on the backs of our most vulnerable citizens."