With his declaration “Let’s be clear: deficit reduction alone is not an economic plan,” President Obama opened his fourth State of the Union address by taking a stand in the great debate between austerity and growth. And he did so with a clarity that has the potential to define his second term. “A growing economy that creates good middle-class jobs—that must be the North Star that guides our efforts,” the president announced. “Every day, we should ask ourselves three questions as a nation: How do we attract more jobs to our shores? How do we equip our people with the skills they need to get those jobs? And how do we make sure that hard work leads to a decent living?”

Obama acknowledged the budget-cutting demands of Representative Paul Ryan and his conservative compatriots; and he displayed more deference than was wise to the wrongheaded proposals of the Simpson-Bowles deficit reduction commission. But he did not go to the Capitol to embrace the austerity lie; he argued instead that “we can’t just cut our way to prosperity” and called for investment in job creation, education and healthcare. Obama may not have achieved a full FDR, but he aspired to it. At a point when he must chart a clear course through the sequester storm and the debt-ceiling quagmire, that’s essential.

Obama was exactly right to highlight a fundamental injustice of our era, in which “corporate profits have skyrocketed to all-time highs—but for more than a decade, wages and incomes have barely budged,” just as he was right to announce that “it is our generation’s task, then, to reignite the true engine of America’s economic growth—a rising, thriving middle class.” In his official GOP response, Senator Marco Rubio hewed to bankrupt conservative orthodoxy in scolding “the president’s plan to grow our government.”

Especially welcome was Obama’s call for an increase in the minimum wage (although it was disappointing that the $9 he called for was less than the $9.50 he advocated four years ago) and, more important, for indexing that would “tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on.”

Here was a president proposing significant new investments in education, especially for America’s youngest and most vulnerable children. Here was a president renewing the call for federal support of green jobs initiatives and denouncing climate-change denialism. And here was a president recognizing that “there are communities in this country where no matter how hard you work, it is virtually impossible to get ahead.” Obama’s proposal to “put people back to work rebuilding vacant homes in run-down neighborhoods…. [to] work with local leaders to target resources at public safety and education and housing…. [to] give new tax credits to businesses that hire and invest” was spot on. Unfortunately, it was coupled with talk of promoting new “NAFTA on steroids” trade deals like the Trans-Pacific Partnership. Obama understands the need for more jobs and better pay, but he has yet to pull all the pieces together. And he still has not cured himself of the penchant for compromise that was evident in the most unsettling section of the speech, a discussion of “entitlement reform” in which Obama suggested he was “prepared to enact reforms that will achieve the same amount of healthcare savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission.”

The president moved in the right direction, however, with his proposal to “reduce taxpayer subsidies to prescription drug companies” and to use the Affordable Care Act “to slow the growth of healthcare costs.” As long as that’s where Obama’s focus remains, he’s on solid ground. But it would be reassuring if he would echo the wise commitment of Senator Elizabeth Warren to “a balanced approach to our budget, 
one that allows us to invest in our future and does not make cuts to the Social Security, Medicare and Medicaid benefits that so many rely on.”

Obama lost some fights in his first term because of Republican obstruction, but he lost others by giving up too much ground at the start of the struggle. With this year’s robust inaugural and State of the Union addresses, he has suggested a more clear-eyed and aggressively progressive stance. He’s willing to fight for LGBT rights, for pay equity, for gun safety, for immigration reform, and for a foreign policy based on diplomacy rather than wars of whim (although with his global drone war, Obama has extended and expanded the destructive “war on terror,” as noted by David Cole and Katha Pollitt in this issue).

But the final measure of Obama’s tenure will almost certainly be an economic one. If, as his State of the Union address suggested, this president is at last recognizing the need for an economic plan that rejects austerity and embraces growth, then he will not be alone. He will find that the great mass of Americans are ready to support him as he battles those who would obstruct economic renewal.

John Nichols writes that key members of the Congressional Progressive Caucus have formulated a specific growth agenda that has a goal of expanding job creation initiatives and strengthening families and communities.