In his first press conference since May, President Obama assailed Republicans for opposing his economic agenda and spoke out passionately about Pastor Terry Jones' threat to burn Korans and Muslims' right to build an Islamic Center two blocks from Ground Zero.
The president also announced that he is appointing University of Chicago economist Austan Goolsbee to be chair of his Council of Economic Advisers.
He took aim at the previous administration and the "partisan minority" that he says are blocking his economic proposals.
"Policies of the previous decades have left our economy weaker and our middle class struggling," the president said.
Obama acknowledged that progress has been "painfully slow" and that a lot more work needs to be done.
"Since I am the president and Democrats have control of the House and the Senate, it's understandable that people are saying, you know, what have you done?" Obama said. "We've still got a long ways to go."
But when asked about Democrats' prospects in the mid-term election, he painted the choice for voters as one between reverting to policies of the Bush administration and one that will solve economic issues in the long term. The president said he is willing to sign a bill this month that would give the middle class tax relief.
"Republicans [are] holding middle class tax relief hostage because they're insisting we've got to give tax relief to millionaires and billionaires, which would cost, over the course of 10 years, $700 billion and economists say is probably the worst way to stimulate the economy," he said. "That's an example of what this election is all about."
Republicans were quick to fire back -- Senate Minority Leader Mitch McConnell, R-Ky., said in a statement he was "disappointed" by the president's remarks.
"The president spent a lot of time blaming others and talking about more government spending. But Americans want to know that Washington is going to stop the reckless spending and debt, the burdensome red-tape and job-killing taxes," McConnell said in a statement.
The Republican leader, however, did praise Obama's tough stance against al Qaeda, saying he agrees "wholeheartedly with the president that we need to do everything we can to fight al Qaeda, while being clear who the enemy is."
Obama on Florida Pastor: Koran Burning Would Cause 'Profound Damage'
Asked by ABC News if he elevated the pastor who launched the Koran burning day, Obama defended his administration's decision to speak up, saying he was concerned people across the country would take similar steps to get attention.
"The idea that we would burn the sacred text of someone else's religion is contrary to what this country stands for. It's contrary to what this country was founded on," he said, adding that such rhetoric is the "best imaginable tool for recruiting al Qaeda," and endangers U.S. troops.
Jones' threat led to an uproar in the Islamic world. Defense Secretary Robert Gates called the Florida pastor this week to convey how dangerous his decision would be to U.S. troops serving abroad. On Thursday, Jones announced he is cancelling plans to burn the Koran.
Obama today spoke passionately for the freedom of Muslims build an Islamic center near Ground Zero. Since the president weighed in early last month, Republicans have seized upon the issue.
"This country stands for the proposition that all men and women are created equal, that they have certain inalienable rights," the president said at the end of his press conference. "And what it means is that if you could build a church on a site, you could build a synagogue on a site, if you could build a Hindu temple on a site, then you should be able to build a mosque on the site."
Reminding Americans of Muslims who are serving in the U.S. armed forces, Obama cautioned people to beware of the real enemy and to not "turn on each other."
"We are not at war against Islam. We're at war against terrorist organizations that have distorted Islam or falsely used the banner of Islam to engage in their destructive acts. We've got to be clear about that," Obama said. "From a national security interest, we have to be clear about who the enemy is here."
Obama Holds News Conference
Obama praised Goolsbee as a "brilliant economist" who has "a deep appreciation of how the economy affects everyday people."
The former chair, Christina Romer, departed last week, returning to teach at the University of California at Berkeley.
Goolsbee, 41, has already been confirmed by the Senate to serve as one of the three economists on the CEA; Obama has the prerogative to appoint the chair.
After a brief holiday and hosting Israeli and Palestinian leaders for peace talks, the president has turned back toward the economy -- the chief issue in the upcoming mid-term elections. Earlier this week, Obama announced new incentives for businesses and assailed Republicans for impeding his efforts and for wanting to revert to "the same philosophy that led to this mess in the first place."
With Democrats embroiled in tight races around the country, and polls showing Republicans regaining their majority this November, the administration is aiming to paint the choice for voters as one between reverting to policies of the Bush administration and one that will solve economic issues in the long term.
Republicans are calling for Obama to extend the Bush administration tax cuts that expire at the end of the year.
Earlier this week, House Minority Leader John Boehner, R-Ohio, proposed a two-point plan, calling for a bill that would cut non-security spending to 2008 levels and enact a freeze on tax rates.
But the White House argues those cuts only benefit the wealthy.
"There was just the same philosophy we already tried for the last decade; the same philosophy that led to this mess in the first place. Cut more taxes for millionaires and cut more rules for corporations," the president said earlier this week at a speech in Cleveland, Ohio.