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'Washington has taken its eye off the ball'
Reversing US economic inequality should be Washington's top priority, President Barack Obama has said, as an autumn budget battle with Congress looms.
He touted the slow but steady recovery in what was billed as a major economic speech at Knox College in Illinois.
And he criticised his Republican opponents at length, challenging them to develop their own economic plan.
Republicans attacked the president's speech, saying the country needed actions not words.
On Wednesday, Mr Obama returned to Knox College, where in 2005 he gave one of his first addresses as a newly elected US senator, discussing the economic forces that had depressed the US middle class.
'Morally wrong'"Even though our businesses are creating new jobs and have broken record profits, nearly all the income gains of the past 10 years have continued to flow to the top 1%," the Democratic president said on Wednesday.
Analysis
Rajini Vaidyanathan BBC News, Washington
President Obama is back on the stump, getting out of Washington DC for a three-stop tour to talk about the economy. It is the single biggest concern for Americans, but one which has been knocked off the news agenda - by issues such as Syria, the NSA leaks scandal and the trial of George Zimmerman. The president said he wants to put the economy back at the heart of debate on Capitol Hill.
But his speech was a reminder of the bigger challenges he faces. His address to a crowd at Knox College in his home state of Illinois was peppered with criticism of Republicans for their opposition to him on spending plans. But the question is how, if at all, he can persuade politicians from all sides to defuse crucial budget battles that lie ahead?
"The average CEO has gotten a raise of nearly 40% since 2009, but the average American earns less than he or she did in 1999.
"This growing inequality isn't just morally wrong - it's bad economics."
Mr Obama put the wage stagnation and the "decades-long erosion" of middle-class security down to technological advances, globalisation, the declining power of labour unions, and the rise in tax incentives for corporations and the wealthy.
But the president said America had seen a stronger economic recovery than other nations, crediting his administration's efforts to rescue the US automobile industry, overhaul the healthcare system, and invest in renewable energy.
Mr Obama added that the US now produced more natural gas than any other country and that it would soon produce more oil than it imported.
To encourage the recovery and create jobs, Mr Obama called for greater public investment in infrastructure and education.
He said the US had to invest in infrastructure if it wanted to remain competitive in the global economy, quipping that many of America's bridges were old enough to collect public pensions.
The president said that failure to restore equality of opportunity would be a "betrayal of the American idea".
'Sitting on sidelines'Mr Obama also appealed for a raise of the national minimum wage.
"Start Quote
End Quote John Boehner Republican Speaker of the HouseIt's an Easter egg with no candy in it"
The president devoted much of his address to criticism of the Republican Party, which controls the House of Representatives, holds enough votes in the Senate to block legislation, and has opposed virtually every item on his agenda.
Referring to the Republicans, he said Washington had manufactured an "endless parade of distractions, political posturing and phony scandals", rather than address big issues.
"Washington has taken its eye off the ball," he said. "And I am here to say this needs to stop."
Ahead of Mr Obama's speech, Republicans launched their own offensive.
Senate Minority Leader Mitch McConnell accused Democrats of "just sitting on the sidelines and waiting to take their cues from the endless political road-shows the president cooks up whenever he feels like changing the topic".
And House Speaker John Boehner called the speech a "hollow shell".
"It's an Easter egg with no candy in it."
The president will next travel to the University of Central Missouri in Warrensburg. On Thursday he is to speak in Jacksonville, Florida.
The string of speeches is intended to build support for Mr Obama's agenda ahead of a budget deadline in the autumn.
The US economy is gradually recovering from the 2007-9 recession. The unemployment rate is now 7.6%, down from nearly 10% in January 2010.
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