Speech Transcript:

 Thank you all. 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 so long ago, and we are grateful for the good life of Coretta
Scott King.

Every time I'm invited to this rostrum, I'm humbled by the privilege,
and mindful of the history we've 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 goodwill 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 an 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 the 11th, 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, and 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 -- 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're 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
and 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
a National Assembly are fighting terror while building the
institutions of a new democracy. We're on the offensive in Iraq, with
a clear plan for victory. First, we're helping Iraqis build an
inclusive government, so that old resentments will be eased and the
insurgency will be marginalized.

Second, we're 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. And, third, we're
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 three years, the 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've adjusted
our military tactics and changed our approach to reconstruction. Along
the way, we have benefitted 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, would 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 this 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's 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're 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, and protection of minorities, and strong,
accountable institutions that last longer than a single vote.

The great people of Egypt have voted in a multi-party 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.

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, and 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, and organized crime, and 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. Short-changing 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, 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 the 11th, 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. The 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 two-and-a-half 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, and this creates uncertainty,
which makes it easier to feed people's fears. So we're 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 five 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 four 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've reduced the growth of
non-security 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. (Laughter.) This milestone is more than a personal
crisis -- (laughter) -- 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
-- (applause) -- yet the rising cost of entitlements is a problem that
is not going away. And 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 and 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
out-produce or out-compete 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 provide health care for the poor
and the elderly, and we are meeting that responsibility. For all
Americans -- 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 -- 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. And 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'll also fund additional
research in cutting-edge methods of producing ethanol, not just from
corn, but from wood chips and stalks, or switch grass. Our goal is to
make this new kind of ethanol practical and competitive within six
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're going to keep
that edge. Tonight I announce an 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 -- (applause) -- to encourage bolder private-sector
initiatives 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 to make sure those courses are rigorous enough to compete with
other nations. We've 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 and 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're concerned about unethical conduct by public
officials, and discouraged by activist courts that try to redefine
marriage. 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 -- 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 -- 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're back on
their feet. So far the federal government has committed $85 billion
to the people of the Gulf Coast and New Orleans. We're removing
debris and repairing highways and rebuilding stronger levees. We're
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've been called to leadership in a period of
consequence. We've entered a great ideological conflict we did
nothing to invite. We see great changes in science and commerce that
will influence all our lives. 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.