SCENARIOS-Possible themes in Obama's State of Union speech
WASHINGTON Jan 21 (Reuters) - President Barack Obama faces a new political reality when he gives his State of the Union address on Tuesday: greater Republican power in Congress that will hamper his ability to make sweeping policy proposals.
So the president, a Democrat, will make an even greater attempt to highlight areas of common ground with the opposition party on areas that are priorities for both sides such as boosting the economy and reducing the deficit.
Here are a few potential areas he may touch upon.
Democrats and Republicans have both pledged to cut the country's massive budget deficit.
A bipartisan commission's report on the topic in December won unexpectedly broad bipartisan support, but Obama did not come out and endorse any of the specific recommendations, and leaders from both parties found many proposals unworkable.
The plan calls for overhauling the tax code and eliminating tax breaks to broaden the tax base and help lower overall income tax rates. It also proposes cutting the deficit by nearly $4 trillion over the next decade.
Obama may not flesh out his specific vision for the deficit on Tuesday, but he is likely to give clues on where he wants to go and where he thinks the two parties could agree. Tax reform is bound to be a part of that equation as are calls for cuts in spending -- a tricky balance for all sides to maneuver.
THE DEBT LIMIT
The White House is already at odds with Republicans over the U.S. debt limit, and the issue will be hard for Obama to avoid on Tuesday.
Republicans say they will only agree to lifting the $14.3 trillion limit on federal borrowing in return for spending concessions from Obama. The debt limit was last increased in February last year and the Treasury expects to bump up against that existing threshold in the first or second quarter of 2011, unless it is lifted.
Administration officials say the impact on the U.S. economy of not lifting the limit -- and defaulting on U.S. obligations -- would be catastrophic.
Obama could echo that language in his prime-time television address. Markets will also be watching for any sign that he is willing to compromise with Republicans on spending as part of any deal to increase the debt limit.
JOBS AND THE ECONOMY
With the unemployment rate at 9.4 percent, and Obama's 2012 re-election campaign looming, the most important issue for him and the American public is creating jobs.
But the president's toolbox for doing so is limited. New economic stimulus measures would not get Republican support, and increasing public spending for such a package would contradict his efforts to reduce the deficit anyway.
Given those limitations, the president may highlight or repackage some of his existing economic proposals in this year's address such as efforts to double U.S. exports and increase U.S. competitiveness.
He will likely draw attention to the controversial deal to extend Bush-era tax cuts that he reached with Republicans in December, though calling that an example of bipartisanship may rankle members of his own party, many of whom objected to the way he negotiated the pact.
Even without sweeping new proposals, Obama will try to convince the U.S. public he means it this time when he says "jobs jobs jobs" are his main priority.
FOREIGN POLICY, WARS AND ENERGY
The majority of Obama's address will probably focus on domestic policy and the economy, but a few international issues will undoubtedly crop up. Obama will look forward to at least one foreign policy success -- the expected complete withdrawal of U.S. troops from Iraq this year.
On Afghanistan, he is unlikely to waver from his administration's pledge to start a drawdown of troops from Afghanistan this year, too.
Having just hosted Chinese President Hu Jintao for a state visit, Obama may make reference to the U.S. relationship with its biggest creditor and the world's second largest economy. He may also use that topic as an opportunity to prod lawmakers forward on clean energy -- an issue on which China is leading.
Though all eyes will be on the president -- the State of the Union night is his to set the agenda -- lawmakers will also be watched for their reaction and their willingness to work together. Some have promised to cross lines and sit with members of the opposite party to demonstrate bipartisanship.
That may happen, but the theatrics of the evening will still be in full display. Even Republicans sitting with Democrats can stay seated when their colleagues rise in one of the night's many standing ovations if they disagree with what the president says. (Compiled by Jeff Mason; Editing by Xavier Briand)
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