By Jake Tapper, Jessica Yellin and Tom Cohen
WASHINGTON (CNN) -- President Barack Obama challenged Congress to join him in taking on "our generation's task" to ignite the growth of a "rising, thriving middle class," using the first State of the Union speech of his second term to prod Republicans to compromise on the major challenges facing the nation.
"It is our unfinished task to restore the basic bargain that built this country -- the idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, what you look like, or who you love," Obama said Tuesday night, sounding familiar themes from his re-election campaign last year.
The president emphasized economic growth and job creation, and insisted that his proposals would not increase the nation's federal deficit.
He mentioned Youngstown in his State of the Union, saying, "Last year, we created our first manufacturing innovation institute in Youngstown, Ohio. A once-shuttered warehouse is now a state-of-the art lab where new workers are mastering the 3D printing that has the potential to revolutionize the way we make almost everything. There’s no reason this can’t happen in other towns. So tonight, I’m announcing the launch of three more of these manufacturing hubs, where businesses will partner with the Departments of Defense and Energy to turn regions left behind by globalization into global centers of high-tech jobs. And I ask this Congress to help create a network of fifteen of these hubs and guarantee that the next revolution in manufacturing is Made in America."
He also made an emotional plea for Congress to hold votes on controversial proposals for tougher gun laws after the Newtown, Conn., shootings in December that killed 20 schoolchildren.
At the same time, Obama called for legislators to work together for the good of the nation, saying Americans "expect us to put the nation's interests before party."
"They do expect us to forge reasonable compromise where we can," he said. "For they know that America moves forward only when we do so together, and that the responsibility of improving this union remains the task of us all."
It was his fourth State of the Union address and seventh speech to a joint sitting of Congress, and analysts considered it a crucial moment for setting the tone for the political dialogue after four years of partisan division and congressional dysfunction.
With the government facing deep spending cuts mandated by a previous agreement between Obama and Congress to raise the federal debt ceiling, Obama renewed his call for a comprehensive deficit-reduction plan that includes new tax revenue coupled with spending cuts.
Taking aim at the bitter partisanship of his first term, Obama said "let's set party interests aside, and work to pass a budget that replaces reckless cuts with smart savings and wise investments in our future."
"And let's do it without the brinksmanship that stresses consumers and scares off investors," he continued to applause, mainly from Democrats. "The greatest nation on Earth cannot keep conducting its business by drifting from one manufactured crisis to the next. We can't do it. Let's agree, right here, right now, to keep the people's government open, and pay our bills on time, and always uphold the full faith and credit of the United States of America."
In a jab at congressional Republicans who seek to shrink deficits and the size of government through deep spending cuts, saying "deficit reduction alone is not an economic plan."
Watch Republican response from Florida Sen. Marco Rubio below.
However, a hard-line stance by Obama on deficit reduction after forcing Republicans to concede already on tax increases could poison prospects for the comprehensive deal he says he wants, CNN Senior Political Analyst David Gergen noted.
"The window for achieving a grand bargain has been closing rapidly and could slam shut Tuesday night," Gergen wrote.
After arriving a loud cheers and prolonged applause on a night of political pomp and ceremony, Obama began the speech on a positive note, saying the nation was on sound footing to move forward.
"Together, we have cleared away the rubble of crisis, and can say with renewed confidence that the state of our union is stronger," he said.
Obama's address comes amid breaking news around the world that touched on the challenges facing his government and the nation.
A suspected North Korean nuclear test and a gun battle involving an alleged cop killer dominated headlines in the hours before the speech.
Meanwhile, the Dow Jones Industrial average closed at its highest level since 2007, exceeding the 14,000 mark, even though unemployment continued to hover near 8%.
Obama continue his push for Congress to act on politically volatile issues such as immigration reform. Other measures in the speech included a paycheck fairness act intended to make it easier for women to fight salary discrimination without losing their jobs, and new proposals to develop alternative energy hubs in the country and help people refinance their mortgages at today's lower interest rates.
Headlines of the day also influenced the speech.
Obama mentioned North Korea's latest underground nuclear test, which the State Department labeled "provocative" and "extremely regrettable."
With victims of gun violence in the audience at the Capitol, including former U.S. Rep. Gabrielle Giffords, Obama continued his push for tighter gun laws opposed by the influential National Rifle Association and legislators from both parties.
He mentioned 15-year-old Hadiya Pendleton, the Chicago girl killed by gun violence after returning home from taking part in inauguration activities in Washington, saying she was shot a mile from his home in the city.
The girl's parents were guests of first lady Michelle Obama at the address. Also attending was former rock star Ted Nugent, a vocal critic of Obama and any efforts to strengthen gun controls in America.
Obama cited the major provisions of his package of gun proposals, including background checks on all gun sales, a ban on semi-automatic weapons that mimic military weapons, and limiting ammunition magazines to 10 rounds.
Listing gun violence victims -- Hadiya's parents, Giffords, the families of the Newtown schoolchildren and others killed in mass shootings, Obama said "they deserve a vote" as the audience cheered loudly.
On foreign policy, Obama announced that this time next year, another 34,000 U.S. troops will have returned home from Afghanistan.
The move will reduce by more than half the current force level of 66,000 troops in Afghanistan. Obama and NATO previously announced that Afghan forces will take the lead in combat missions this year.
By the end of 2014, the planned official end of the combat mission, the White House is considering a range of troop levels for Afghanistan, from as many as 15,000 down to zero.
One thing Obama didn't mention Tuesday night was new regulations on carbon emissions for existing power plants a senior administration official said. Environmentalists hoped the president's pledge in his recent inaugural address for increased steps in response to climate change would include expanding tougher standards in place for new power plants to those already in existence.
However, a new measure from the president will be an executive order signed Tuesday to address the country's most basic cybersecurity needs.
The order will make it easier for private companies in control of our nation's critical infrastructure to share information about cyber attacks with the government. In return, the Department of Homeland Security will share "sanitized" classified information with companies about attacks believed to be occurring or that are about to take place.
Congress has failed so far to pass any of the dozens of cybersecurity bills aimed at meaningfully securing critical infrastructure from an online criminals.
Sen. Marco Rubio of Florida, a tea party favorite considered the new face of the Republican Party due to his Hispanic heritage and strong communications skills, will deliver the GOP response.
In excerpts released in English and Spanish, Rubio said Obama's policies called for more deficit spending and higher taxes that would hurt those the president claimed to want to help.
Obama won overwhelming support from the Latino vote in defeating GOP challenger Mitt Romney in the November election.
Rubio is leading an effort by some Republicans to shift party policy on immigration reform by accepting the concept backed by Obama and Democrats that the nation's estimated 11 million undocumented immigrants should have a path to legal status.
In addition to Rubio, Sen. Rand Paul of Kentucky will offer a second Republican response that reflects the concerns of tea party conservatives who support him.
CNN's Jim Acosta, Kevin Liptak, Rachel Streitfeld, Ashley Killough and Mark Preston contributed to this report.