Mr. Speaker, Vice President Cheney, Members of Congress, members of the Supreme
Court and Diplomatic Corps, distinguished guests and fellow citizens:

Today our Nation lost a beloved, graceful, courageous woman who called America
to its founding ideals and carried on a noble dream. Tonight we are comforted by
the hope of a glad reunion with the husband who was taken from her so long ago,
and we are grateful for the good life of Coretta Scott King.

Every time I am invited to this rostrum, I am humbled by the privilege, and
mindful of the history we have seen together. We have gathered under this
Capitol dome in moments of national mourning and national achievement. We have
served America through one of the most consequential periods of our history, and
it has been my honor to serve with you.

In a system of two parties, two chambers, and two elected branches, there will
always be differences and debate. But even tough debates can be conducted in a
civil tone, and our differences cannot be allowed to harden into anger. To
confront the great issues before us, we must act in a spirit of good will and
respect for one another, and I will do my part. Tonight the state of our Union
is strong, and together we will make it stronger.

In this decisive year, you and I will make choices that determine both the
future and the character of our country. We will choose to act confidently in
pursuing the enemies of freedom, or retreat from our duties in the hope of an
easier life. We will choose to build our prosperity by leading the world
economy, or shut ourselves off from trade and opportunity. In a complex and
challenging time, the road of isolationism and protectionism may seem broad and
inviting, yet it ends in danger and decline. The only way to protect our people,
the only way to secure the peace, the only way to control our destiny is by our
leadership, so the United States of America will continue to lead.

Abroad, our Nation is committed to a historic, long-term goal. We seek the end
of tyranny in our world. Some dismiss that goal as misguided idealism. In
reality, the future security of America depends on it. On September 11, 2001, we
found that problems originating in a failed and oppressive state 7,000 miles
away could bring murder and destruction to our country. Dictatorships shelter
terrorists, feed resentment and radicalism, and seek weapons of mass
destruction. Democracies replace resentment with hope, respect the rights of
their citizens and their neighbors, and join the fight against terror. Every
step toward freedom in the world makes our country safer, and so we will act
boldly in freedom's cause.

Far from being a hopeless dream, the advance of freedom is the great story of
our time. In 1945, there were about two dozen lonely democracies in the world.
Today, there are 122. And we are writing a new chapter in the story of
self-government, with women lining up to vote in Afghanistan, and millions of
Iraqis marking their liberty with purple ink, and men and women from Lebanon to
Egypt debating the rights of individuals and the necessity of freedom. At the
start of 2006, more than half the people of our world live in democratic
nations. And we do not forget the other half, in places like Syria, Burma,
Zimbabwe, North Korea, and Iran, because the demands of justice, and the peace
of this world, require their freedom as well.

No one can deny the success of freedom, but some men rage and fight against it.
And one of the main sources of reaction and opposition is radical Islam, the
perversion by a few of a noble faith into an ideology of terror and death.
Terrorists like bin Laden are serious about mass murder, and all of us must take
their declared intentions seriously. They seek to impose a heartless system of
totalitarian control throughout the Middle East and arm themselves with weapons
of mass murder. Their aim is to seize power in Iraq and use it as a safe haven
to launch attacks against America and the world. Lacking the military strength
to challenge us directly, the terrorists have chosen the weapon of fear. When
they murder children at a school in Beslan, or blow up commuters in London, or
behead a bound captive, the terrorists hope these horrors will break our will,
allowing the violent to inherit the Earth. But they have miscalculated: we love
our freedom, and we will fight to keep it.

In a time of testing, we cannot find security by abandoning our commitments and
retreating within our borders. If we were to leave these vicious attackers
alone, they would not leave us alone. They would simply move the battlefield to
our own shores. There is no peace in retreat. And there is no honor in retreat.
By allowing radical Islam to work its will, by leaving an assaulted world to
fend for itself, we would signal to all that we no longer believe in our own
ideals, or even in our own courage. But our enemies and our friends can be
certain: the United States will not retreat from the world, and we will never
surrender to evil.

America rejects the false comfort of isolationism. We are the Nation that saved
liberty in Europe, and liberated death camps, and helped raise up democracies,
and faced down an evil empire. Once again, we accept the call of history to
deliver the oppressed, and move this world toward peace.

We remain on the offensive against terror networks. We have killed or captured
many of their leaders. And for the others, their day will come. We remain on the
offensive in Afghanistan, where a fine president and national assembly are
fighting terror while building the institutions of a new democracy.

And we are on the offensive in Iraq, with a clear plan for victory. First, we
are helping Iraqis build an inclusive government, so that old resentments will
be eased and the insurgency will be marginalized. Second, we are continuing
reconstruction efforts and helping the Iraqi government to fight corruption and
build a modern economy, so all Iraqis can experience the benefits of freedom.
Third, we are striking terrorist targets while we train Iraqi forces that are
increasingly capable of defeating the enemy. Iraqis are showing their courage
every day, and we are proud to be their allies in the cause of freedom.

Our work in Iraq is difficult because our enemy is brutal. But that brutality
has not stopped the dramatic progress of a new democracy. In less than 3 years,
that nation has gone from dictatorship, to liberation, to sovereignty, to a
constitution, to national elections. At the same time, our coalition has been
relentless in shutting off terrorist infiltration, clearing out insurgent
strongholds, and turning over territory to Iraqi security forces. I am confident
in our plan for victory. I am confident in the will of the Iraqi people. I am
confident in the skill and spirit of our military. Fellow citizens, we are in
this fight to win, and we are winning.

The road of victory is the road that will take our troops home. As we make
progress on the ground, and Iraqi forces increasingly take the lead, we should
be able to further decrease our troop levels; but those decisions will be made
by our military commanders, not by politicians in Washington, D.C.

Our coalition has learned from our experience in Iraq. We have adjusted our
military tactics and changed our approach to reconstruction. Along the way, we
have benefited from responsible criticism and counsel offered by Members of
Congress of both parties. In the coming year, I will continue to reach out and
seek your good advice.

Yet there is a difference between responsible criticism that aims for success
and defeatism that refuses to acknowledge anything but failure. Hindsight alone
is not wisdom. And second-guessing is not a strategy.

With so much in the balance, those of us in public office have a duty to speak
with candor. A sudden withdrawal of our forces from Iraq would abandon our Iraqi
allies to death and prison, put men like bin Laden and Zarqawi in charge of a
strategic country, and show that a pledge from America means little. Members of
Congress: however we feel about the decisions and debates of the past, our
Nation has only one option: we must keep our word, defeat our enemies, and stand
behind the American military in its vital mission.

Our men and women in uniform are making sacrifices and showing a sense of duty
stronger than all fear. They know what it is like to fight house to house in a
maze of streets, to wear heavy gear in the desert heat, to see a comrade killed
by a roadside bomb. And those who know the costs also know the stakes. Marine
Staff Sergeant Dan Clay was killed last month fighting in Fallujah. He left
behind a letter to his family, but his words could just as well be addressed to
every American. Here is what Dan wrote: "I know what honor is. It has been an
honor to protect and serve all of you. I faced death with the secure knowledge
that you would not have to. Never falter. Don't hesitate to honor and support
those of us who have the honor of protecting that which is worth protecting."

Staff Sergeant Dan Clay's wife, Lisa, and his mom and dad, Sara Jo and Bud, are
with us this evening. Welcome. Our Nation is grateful to the fallen, who live in
the memory of our country. We are grateful to all who volunteer to wear our
Nation's uniform; and as we honor our brave troops, let us never forget the
sacrifices of America's military families.

Our offensive against terror involves more than military action. Ultimately, the
only way to defeat the terrorists is to defeat their dark vision of hatred and
fear by offering the hopeful alternative of political freedom and peaceful
change. So the United States of America supports democratic reform across the
broader Middle East. Elections are vital, but they are only the beginning.
Raising up a democracy requires the rule of law, protection of minorities, and
strong, accountable institutions that last longer than a single vote. The great
people of Egypt have voted in a multiparty presidential election, and now their
government should open paths of peaceful opposition that will reduce the appeal
of radicalism. The Palestinian people have voted in elections, and now the
leaders of Hamas must recognize Israel, disarm, reject terrorism, and work for
lasting peace. Saudi Arabia has taken the first steps of reform. Now it can
offer its people a better future by pressing forward with those efforts.

Democracies in the Middle East will not look like our own, because they will
reflect the traditions of their own citizens. Yet liberty is the future of every
nation in the Middle East, because liberty is the right and hope of all
humanity.

The same is true of Iran, a nation now held hostage by a small clerical elite
that is isolating and repressing its people. The regime in that country sponsors
terrorists in the Palestinian territories and in Lebanon, and that must come to
an end. The Iranian government is defying the world with its nuclear ambitions,
and the nations of the world must not permit the Iranian regime to gain nuclear
weapons. America will continue to rally the world to confront these threats. And
tonight, let me speak directly to the citizens of Iran: America respects you,
and we respect your country. We respect your right to choose your own future and
win your own freedom. And our Nation hopes one day to be the closest of friends
with a free and democratic Iran.

To overcome dangers in our world, we must also take the offensive by encouraging
economic progress, fighting disease, and spreading hope in hopeless lands.
Isolationism would not only tie our hands in fighting enemies; it would keep us
from helping our friends in desperate need. We show compassion abroad because
Americans believe in the God-given dignity and worth of a villager with
HIV/AIDS, or an infant with malaria, or a refugee fleeing genocide, or a young
girl sold into slavery. We also show compassion abroad because regions
overwhelmed by poverty, corruption, and despair are sources of terrorism,
organized crime, human trafficking, and the drug trade.

In recent years, you and I have taken unprecedented action to fight AIDS and
malaria, expand the education of girls, and reward developing nations that are
moving forward with economic and political reform. For people everywhere, the
United States is a partner for a better life. Shortchanging these efforts would
increase the suffering and chaos of our world, undercut our long-term security,
and dull the conscience of our country. I urge Members of Congress to serve the
interests of America by showing the compassion of America.

Our country must also remain on the offensive against terrorism here at home.
The enemy has not lost the desire or capability to attack us. Fortunately, this
Nation has superb professionals in law enforcement, intelligence, the military,
and homeland security. These men and women are dedicating their lives to
protecting us all, and they deserve our support and our thanks. They also
deserve the same tools they already use to fight drug trafficking and organized
crime, so I ask you to reauthorize the PATRIOT Act.

It is said that prior to the attacks of September 11, our government failed to
connect the dots of the conspiracy. We now know that two of the hijackers in the
United States placed telephone calls to al Qaeda operatives overseas. But we did
not know about their plans until it was too late. So to prevent another attack,
based on authority given to me by the Constitution and by statute, I have
authorized a terrorist surveillance program to aggressively pursue the
international communications of suspected al Qaeda operatives and affiliates to
and from America. Previous Presidents have used the same constitutional
authority I have, and Federal courts have approved the use of that authority.
Appropriate Members of Congress have been kept informed. This terrorist
surveillance program has helped prevent terrorist attacks. It remains essential
to the security of America. If there are people inside our country who are
talking with al Qaeda, we want to know about it, because we will not sit back
and wait to be hit again.

In all these areas, from the disruption of terror networks, to victory in Iraq,
to the spread of freedom and hope in troubled regions, we need the support of
our friends and allies. To draw that support, we must always be clear in our
principles and willing to act. The only alternative to American leadership is a
dramatically more dangerous and anxious world. Yet we also choose to lead
because it is a privilege to serve the values that gave us birth. American
leaders, from Roosevelt to Truman to Kennedy to Reagan, rejected isolation and
retreat because they knew that America is always more secure when freedom is on
the march. Our own generation is in a long war against a determined enemy, a war
that will be fought by Presidents of both parties, who will need steady
bipartisan support from the Congress. And tonight I ask for yours. Together, let
us protect our country, support the men and women who defend us, and lead this
world toward freedom.

Here at home, America also has a great opportunity: we will build the prosperity
of our country by strengthening our economic leadership in the world.

Our economy is healthy and vigorous and growing faster than other major
industrialized nations. In the last 2\1/2\ years, America has created 4.6
million new jobs, more than Japan and the European Union combined. Even in the
face of higher energy prices and natural disasters, the American people have
turned in an economic performance that is the envy of the world.

The American economy is preeminent, but we cannot afford to be complacent. In a
dynamic world economy, we are seeing new competitors like China and India. This
creates uncertainty, which makes it easier to feed people's fears. And so we are
seeing some old temptations return. Protectionists want to escape competition,
pretending that we can keep our high standard of living while walling off our
economy. Others say that the government needs to take a larger role in directing
the economy, centralizing more power in Washington and increasing taxes. We hear
claims that immigrants are somehow bad for the economy, even though this economy
could not function without them. All these are forms of economic retreat, and
they lead in the same direction, toward a stagnant and second-rate economy.

Tonight I will set out a better path, an agenda for a Nation that competes with
confidence, an agenda that will raise standards of living and generate new jobs.
Americans should not fear our economic future, because we intend to shape it.

Keeping America competitive begins with keeping our economy growing, and our
economy grows when Americans have more of their own money to spend, save, and
invest. In the last 5 years, the tax relief you passed has left $880 billion in
the hands of American workers, investors, small businesses, and families; and
they have used it to help produce more than 4 years of uninterrupted economic
growth. Yet the tax relief is set to expire in the next few years. If we do
nothing, American families will face a massive tax increase they do not expect
and will not welcome.

Because America needs more than a temporary expansion, we need more than
temporary tax relief. I urge the Congress to act responsibly and make the tax
cuts permanent.

Keeping America competitive requires us to be good stewards of tax dollars.
Every year of my Presidency, we have reduced the growth of nonsecurity
discretionary spending, and last year you passed bills that cut this spending.
This year my budget will cut it again and reduce or eliminate more than 140
programs that are performing poorly or not fulfilling essential priorities. By
passing these reforms, we will save the American taxpayer another $14 billion
next year and stay on track to cut the deficit in half by 2009. I am pleased
that Members of Congress are working on earmark reform, because the Federal
budget has too many special interest projects. And we can tackle this problem
together, if you pass the line-item veto.

We must also confront the larger challenge of mandatory spending, or
entitlements. This year, the first of about 78 million baby boomers turn 60,
including two of my dad's favorite people, me and President Clinton. This
milestone is more than a personal crisis; it is a national challenge. The
retirement of the baby boom generation will put unprecedented strains on the
Federal Government. By 2030, spending for Social Security, Medicare, and
Medicaid alone will be almost 60 percent of the entire Federal budget. And that
will present future Congresses with impossible choices, staggering tax
increases, immense deficits, or deep cuts in every category of spending.

Congress did not act last year on my proposal to save Social Security; yet the
rising cost of entitlements is a problem that is not going away. And with every
year we fail to act, the situation gets worse. So tonight, I ask you to join me
in creating a commission to examine the full impact of baby boom retirements on
Social Security, Medicare, and Medicaid. This commission should include Members
of Congress of both parties, and offer bipartisan solutions. We need to put
aside partisan politics, work together, and get this problem solved.

Keeping America competitive requires us to open more markets for all that
Americans make and grow. One out of every five factory jobs in America is
related to global trade, and we want people everywhere to buy American. With
open markets and a level playing field, no one can outproduce or outcompete the
American worker.

Keeping America competitive requires an immigration system that upholds our
laws, reflects our values, and serves the interests of our economy. Our Nation
needs orderly and secure borders. To meet this goal, we must have stronger
immigration enforcement and border protection. And we must have a rational,
humane guest worker program that rejects amnesty, allows temporary jobs for
people who seek them legally, and reduces smuggling and crime at the border.

Keeping America competitive requires affordable health care. Our government has
a responsibility to help provide health care for the poor and the elderly, and
we are meeting that responsibility. For all Americans, we must confront the
rising cost of care, strengthen the doctor-patient relationship, and help people
afford the insurance coverage they need. We will make wider use of electronic
records and other health information technology to help control costs and reduce
dangerous medical errors. We will strengthen health savings accounts by making
sure individuals and small business employees can buy insurance with the same
advantages that people working for big businesses now get. We will do more to
make this coverage portable, so workers can switch jobs without having to worry
about losing their health insurance. And because lawsuits are driving many good
doctors out of practice, leaving women in nearly 1,500 American counties without
a single OB-GYN, I ask the Congress to pass medical liability reform this year.

Keeping America competitive requires affordable energy. Here we have a serious
problem: America is addicted to oil, which is often imported from unstable parts
of the world.

The best way to break this addiction is through technology. Since 2001, we have
spent nearly $10 billion to develop cleaner, cheaper, and more reliable
alternative energy sources; and we are on the threshold of incredible advances.
So tonight, I announce the Advanced Energy Initiative, a 22 percent increase in
clean energy research at the Department of Energy, to push for breakthroughs in
two vital areas. To change how we power our homes and offices, we will invest
more in zero- emission coal-fired plants; revolutionary solar and wind
technologies; and clean, safe nuclear energy.

We must also change how we power our automobiles. We will increase our research
in better batteries for hybrid and electric cars and in pollution-free cars that
run on hydrogen. We will also fund additional research in cutting-edge methods
of producing ethanol, not just from corn but from wood chips, stalks, or switch
grass. Our goal is to make this new kind of ethanol practical and competitive
within 6 years. Breakthroughs on this and other new technologies will help us
reach another great goal: to replace more than 75 percent of our oil imports
from the Middle East by 2025. By applying the talent and technology of America,
this country can dramatically improve our environment, move beyond a
petroleum-based economy, and make our dependence on Middle Eastern oil a thing
of the past.

And to keep America competitive, one commitment is necessary above all: we must
continue to lead the world in human talent and creativity. Our greatest
advantage in the world has always been our educated, hardworking, ambitious
people; and we are going to keep that edge. Tonight I announce the American
Competitiveness Initiative, to encourage innovation throughout our economy and
to give our Nation's children a firm grounding in math and science.

First: I propose to double the Federal commitment to the most critical basic
research programs in the physical sciences over the next 10 years. This funding
will support the work of America's most creative minds as they explore promising
areas such as nanotechnology, supercomputing, and alternative energy sources.

Second: I propose to make permanent the research and development tax credit, to
encourage bolder private-sector investment in technology. With more research in
both the public and private sectors, we will improve our quality of life and
ensure that America will lead the world in opportunity and innovation for
decades to come.

Third: We need to encourage children to take more math and science and make sure
those courses are rigorous enough to compete with other nations. We have made a
good start in the early grades with the No Child Left Behind Act, which is
raising standards and lifting test scores across our country. Tonight, I propose
to train 70,000 high school teachers to lead advanced placement courses in math
and science; bring 30,000 math and science professionals to teach in classrooms;
and give early help to students who struggle with math, so they have a better
chance at good high-wage jobs. If we ensure that America's children succeed in
life, they will ensure that America succeeds in the world.

Preparing our Nation to compete in the world is a goal that all of us can share.
I urge you to support the American Competitiveness Initiative, and together we
will show the world what the American people can achieve.

America is a great force for freedom and prosperity. Yet our greatness is not
measured in power or luxuries, but by who we are and how we treat one another.
So we strive to be a compassionate, decent, hopeful society.

In recent years, America has become a more hopeful Nation. Violent crime rates
have fallen to their lowest levels since the 1970s. Welfare cases have dropped
by more than half over the past decade. Drug use among youth is down 19 percent
since 2001. There are fewer abortions in America than at any point in the last
three decades, and the number of children born to teenage mothers has been
falling for a dozen years in a row.

These gains are evidence of a quiet transformation, a revolution of conscience,
in which a rising generation is finding that a life of personal responsibility
is a life of fulfillment. Government has played a role. Wise policies such as
welfare reform, drug education, and support for abstinence and adoption have
made a difference in the character of our country. And everyone here tonight,
Democrat and Republican, has a right to be proud of this record.

Yet many Americans, especially parents, still have deep concerns about the
direction of our culture and the health of our most basic institutions. They are
concerned about unethical conduct by public officials, and discouraged by
activist courts that try to redefine marriage. And they worry about children in
our society who need direction and love, and about fellow citizens still
displaced by natural disaster, and about suffering caused by treatable diseases.

As we look at these challenges, we must never give in to the belief that America
is in decline or that our culture is doomed to unravel. The American people know
better than that. We have proven the pessimists wrong before, and we will do it
again.

A hopeful society depends on courts that deliver equal justice under the law.
The Supreme Court now has two superb new members on its bench, Chief Justice
John Roberts and Justice Sam Alito. I thank the Senate for confirming both of
them. I will continue to nominate men and women who understand that judges must
be servants of the law, and not legislate from the bench. Today marks the
official retirement of a very special American. For 24 years of faithful service
to our Nation, the United States is grateful to Justice Sandra Day O'Connor.

A hopeful society has institutions of science and medicine that do not cut
ethical corners and that recognize the matchless value of every life. Tonight, I
ask you to pass legislation to prohibit the most egregious abuses of medical
research: human cloning in all its forms, creating or implanting embryos for
experiments, creating human-animal hybrids, and buying, selling or patenting
human embryos. Human life is a gift from our Creator, and that gift should never
be discarded, devalued, or put up for sale.

A hopeful society expects elected officials to uphold the public trust.
Honorable people in both parties are working on reforms to strengthen the
ethical standards of Washington, and I support your efforts. Each of us has made
a pledge to be worthy of public responsibility, and that is a pledge we must
never forget, never dismiss, and never betray.

As we renew the promise of our institutions, let us also show the character of
America in our compassion and care for one another.

A hopeful society gives special attention to children who lack direction and
love. Through the Helping America's Youth Initiative, we are encouraging caring
adults to get involved in the life of a child, and this good work is being led
by our First Lady, Laura Bush. This year we will add resources to encourage
young people to stay in school, so more of America's youth can raise their
sights and achieve their dreams.

A hopeful society comes to the aid of fellow citizens in times of suffering and
emergency and stays at it until they are back on their feet. So far the Federal
Government has committed $85 billion to the people of the gulf coast and New
Orleans. We are removing debris, repairing highways, and building stronger
levees. We are providing business loans and housing assistance. Yet as we meet
these immediate needs, we must also address deeper challenges that existed
before the storm arrived. In New Orleans and in other places, many of our fellow
citizens have felt excluded from the promise of our country. The answer is not
only temporary relief, but schools that teach every child and job skills that
bring upward mobility and more opportunities to own a home and start a business.
As we recover from a disaster, let us also work for the day when all Americans
are protected by justice, equal in hope, and rich in opportunity.

A hopeful society acts boldly to fight diseases like HIV/AIDS, which can be
prevented and treated and defeated. More than a million Americans live with HIV,
and half of all AIDS cases occur among African Americans. I ask Congress to
reform and reauthorize the Ryan White Act and provide new funding to States so
we end the waiting lists for AIDS medicines in America. We will also lead a
nationwide effort, working closely with African American churches and
faith-based groups, to deliver rapid HIV tests to millions, end the stigma of
AIDS, and come closer to the day when there are no new infections in America.

Fellow citizens, we have been called to leadership in a period of consequence.
We have entered a great ideological conflict we did nothing to invite. We see
great changes in science and commerce that will influence all our lives. And
sometimes it can seem that history is turning in a wide arc, toward an unknown
shore.

Yet the destination of history is determined by human action, and every great
movement of history comes to a point of choosing. Lincoln could have accepted
peace at the cost of disunity and continued slavery. Martin Luther King could
have stopped at Birmingham or at Selma and achieved only half a victory over
segregation. The United States could have accepted the permanent division of
Europe and been complicit in the oppression of others. Today, having come far in
our own historical journey, we must decide: Will we turn back, or finish well?

Before history is written down in books, it is written in courage. Like
Americans before us, we will show that courage, and we will finish well. We will
lead freedom's advance. We will compete and excel in the global economy. We will
renew the defining moral commitments of this land. And so we move forward,
optimistic about our country, faithful to its cause, and confident of the
victories to come.

May God bless America.

[Applause, the Members rising.]