President Barack Obama is telling congressional Republicans that he is still willing to reduce the deficit, but only with a mix of increased taxes and reduced spending, an offer he made during budget talks that collapsed at the end of last year.
Republicans say they reject raising more tax revenue.
In his State of the Union speech on Tuesday night, Obama is reiterating his proposal to reduce spending by $US900 billion and increase taxes by $US600 billion through a tax overhaul.
The combined $US1.5 trillion in deficit reduction would also reduce government payments on the debt. Obama intends to use some of those savings to pay for initiatives meant to create jobs.
The $US900 billion in cuts include reductions of $400 billion in spending on Medicare and other health care programs.
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He urged a divided congress to boost job creation and strengthen the middle class through a package of government-backed proposals.
He called for increasing the federal minimum wage, spending more to fix the nation's roads and bridges, and expanding early childhood education.
The president also pledged to cut the number of US troops in Afghanistan in half within a year. Obama said his proposals would not increase the deficit "by a single dime".
But with unemployment persistently high and consumer confidence falling, he was pressing a progressive case for Washington's role in reigniting the economy.
