Standing in the House of Representatives chamber before lawmakers, Supreme Court justices and VIP guests, Obama declared his independence from Congress by issuing a raft of executive orders - a move likely to inflame already tense relations between the Democratic president and Republicans.
Obama's actions, while relatively modest, collectively amounted to a expression of frustration at the pace of legislative action with Republicans who control the House of Representatives and are able to slow the president's agenda.
Obama's orders included a wage hike for federal contract workers and creation of a "starter savings account" to help millions of people save for retirement.
"I'm eager to work with all of you," Obama said. "But America does not stand still - and neither will I. So wherever and whenever I can take steps without legislation to expand opportunity for more American families, that's what I'm going to do."
Obama's strategy means he has scaled back ambitions for large legislative actions and wants to focus more on small-bore initiatives that can reduce income inequality and create more opportunities for middle class workers.
Obama defended his controversial healthcare law, whose troubled rollout last October rocked his presidency and sent his job approval ratings tumbling to around 40 percent.
"I don't expect to convince my Republican friends on the merits of this law," Obama said. "But I know that the American people aren't interested in refighting old battles."
On one of his biggest priorities, immigration reform, Obama urged Congress to work together on an overhaul, but he held his fire on the issue, with signs of possible progress developing in recent days among House Republicans.
"Let's get immigration reform done this year," he said.
His political objective is to create a narrative for Democrats to use as they seek to head off Republicans eager to wrest control of the Senate from Democrats in November elections and build on their majority in the House.
The party in control of the White House typically loses seats in these so-called mid-term elections, but Democrats feel they stand a chance of limiting their losses or even making some gains.
Republicans clambered for some of the same rhetorical ground as Obama in pledging to narrow the gap between rich and poor but staked out a different vision for doing so.
"It's one that champions free markets and trusts people to make their own decisions, not a government that decides for you," Representative Cathy McMorris Rodgers, chairwoman of the House Republican Caucus, said in her party's response to Obama's speech. "It helps working families rise above the limits of poverty and protects our most vulnerable."
Obama is trying to recover from a difficult fifth year in office, when immigration and gun control legislation failed to advance in Congress, his healthcare law struggled out of the starting gate, and he appeared uncertain about how to respond to Syria's civil war.
Polls reflect a dissatisfied and gloomy country. An NBC News/Wall Street Journal poll released on Tuesday showed 68 percent of Americans saying the country is either stagnant or worse off since Obama took office. People used words like "divided," "troubled" and "deteriorating" to describe the state of the country, the poll showed.
A central theme of the address, Obama's sixth such annual speech in the House chamber, is addressing income inequality, as middle-class Americans struggle to get ahead even while wealthier people prosper in the uneven economic recovery.
Obama will talk up themes from the speech in a two-day road trip starting on Wednesday that will include stops in Maryland, Pennsylvania, Wisconsin and Tennessee.- Reuters