The gym, which has a 1,520 capacity, was packed. Obama said his parents believed you could make it if you worked hard and played by the rules.
"My grandparents served during World War II -- he as a soldier in Patton's Army, she as a worker on a bomber assembly line. Together, they shared the optimism of a nation that triumphed over a Depression and fascism. They believed in an America where hard work paid off, responsibility was rewarded, and anyone could make it if they tried -- no matter who you were, where you came from or how you started out," Obama said.
Today, Obama, said, America still has the world's most productive workforce and innovative companies, but for most, "the basic bargain that made this country great has eroded."
A few years after World War II, a child born into poverty had a slightly better than 50-50 chance of becoming middle class as an adult. By 1980, that chance fell to around 40 percent. Now it's estimated that a child born today will have only a one in three chance of making it to the middle class, he said.
In the last few decades, the average income of the top 1 percent has gone up by more than 250 percent to $1.2 million per year, Obama said. For the top one-hundredth of 1 percent, the average income is now $27 million per year. While CEO incomes have continued to multiply, incomes of most Americans have fallen about 6 percent, he said.
"Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success. Those at the very top grew wealthier from their incomes and investments than ever before. But everyone else struggled with costs that were growing and paychecks that weren't -- and too many families found themselves racking up more and more debt just to keep up," Obama said.
Then the financial collapse of 2008 happened. Mortgages were sold to people who couldn't afford them, or sometimes even understand them, he said. "Banks and investors were allowed to keep packaging the risk and selling it off. Huge bets -- and huge bonuses -- made with other people's money on the line. Regulators ... were supposed to warn us about the dangers of all this, but looked the other way or didn't have the authority to look at all," Obama said.
Since that time, debate has been ongoing nationwide about how to restore prosperity, and it has sparked protests from everything from the Tea Party to the occupy movement. "But this isn't just another political debate," Obama said. "This is the defining issue of our time. This is a make-or-break moment for the middle class and all those who are fighting to get into the middle class. At stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home and secure their retirement."
In 2001 and 2003, Congress passed tax cuts for the wealthy, which Obama said resulted in the slowest job growth in half a century. Deficits have made it "much harder" to pay "for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class, things like education and infrastructure; science and technology; Medicare and Social Security," he said.
What's needed is education and putting the country's financial house in order by, in the short term, extending the payroll tax cut due to expire at the end of this month. If the cut is not renewed, 160 million Americans will see their taxes go up an average of $1,000, he said.
"In this economy, a higher education is the surest route to the middle class," Obama said. "The unemployment rate for Americans with a college degree or more is about half the national average. Their income is twice as high as those who don't have a high school diploma. We shouldn't be laying off good teachers right now -- we should be hiring them. We shouldn't be expecting less of our schools, we should be demanding more. We shouldn't be making it harder to afford college, we should be a country where everyone has the chance to go."
"In today's innovation economy, we also need a world-class commitment to science, research and the next generation of high-tech manufacturing. Our factories and their workers shouldn't be idle. We should be giving people the chance to get new skills and training at community colleges, so they can learn to make wind turbines and semiconductors and high-powered batteries," he added.