Republicans have moved quickly to reject US President Barack Obama's call for new public spending on research, infrastructure and education.
After Mr Obama's State of the Union address, leading Republicans reiterated their proposal for massive budget cuts.
On Wednesday, Mr Obama travelled to a renewable energy plant in Wisconsin to drive home his message.
With American businesses facing tough international competition, "we've got to step up our game," he said.
Speaking at the Orion Energy Systems plant in Manitowoc, Wisconsin, Mr Obama delivered a forward-looking economic message, calling for enhanced American competitiveness in a global era.
Echoing the words of a local football hero, Mr Obama told the audience: "There is no room for second place. There is only one place in my game, and that's first place."
Wisconsin is considered a political bellwether state that will be important to Mr Obama's re-election hopes in 2012.
He won Wisconsin by 14 points in the 2008 presidential election, only to see the state swing Republican in the 2010 mid-terms.
'Catastrophic' debt
In their State of the Union responses, Republicans cited their gains in the November election as evidence Americans had rejected Mr Obama's approach.
In the official Republican Party response, Representative Paul Ryan of Wisconsin, chairman of the House budget committee, emphasised "the crushing burden of debt" he said the US faced.
"We hold to a couple of simple convictions: endless borrowing is not a strategy; spending cuts have to come first," he said.
"The debt will soon eclipse our entire economy and grow to catastrophic levels in the years ahead."
The debate over spending and deficit reduction comes as new figures show the US government budget shortfall reached $1.5 trillion (£946.5bn) this year, a new record.
The figure shows the US government must borrow 40 cents for each dollar it spends, analysts say.
But polling suggested Americans were receptive to Mr Obama's proposals.
A CBS News poll taken immediately after the president's address on Tuesday night suggested 91% of those who watched it approved, and only 9% disapproved.
Last year, 83% of Americans approved of Mr Obama's address, the poll's authors said.
'Win the future'
In his speech to a joint session of Congress, Mr Obama outlined his plan for America to "win the future": significant spending - which he dubbed "investment" - on education, infrastructure, high-speed rail, broadband internet, clean energy and scientific research.
On Tuesday night Mr Obama also called for a five-year freeze in domestic spending at current levels - except on security and some social programmes.
He acknowledged that would require "painful cuts", and endorsed a plan by the US secretary of defence to slash "tens of billions of dollars" from the military budget.
In a change from tradition, many rival Democrats and Republicans sat together in the House chamber on Capitol Hill to hear the president's speech, instead of separately across the centre aisle.
The gesture was intended to show unity, amid the heated debate since a mass shooting in Arizona earlier this month in which Congresswoman Gabrielle Giffords was seriously injured.
Mr Obama began his speech by paying tribute to Ms Giffords, saying the shooting had reminded the US public that they "share common hopes and a common creed".
He continued with a challenge to the Congress - including Republicans who won control of the House of Representatives in November - to work together in the coming two years.
"That's what the people who sent us here expect of us," he said. "With their votes, they've determined that governing will now be a shared responsibility between parties.
"New laws will only pass with support from Democrats and Republicans. We will move forward together, or not at all - for the challenges we face are bigger than party, and bigger than politics."
'Force budget down'
While Republicans welcomed his call for bipartisan co-operation - as well as proposals to lower corporate taxes and simplify the tax code - they said Mr Obama's proposals failed adequately to address the yawning budget deficit and called for immediate, dramatic spending cuts.
Leading Republicans called for far deeper cuts in the budget than Mr Obama outlined.
"Freezing government spending for five years at the increased levels of the last two years is really not enough," Senate Republican Leader Mitch McConnell of Kentucky said.
Senator Jim DeMint, a leader of the anti-government tea party movement and one of the most conservative senators, declared voters had already rejected Mr Obama's approach to increased government spending.
"When the president says 'investment' he means bigger federal government and higher taxes," he said.
"Americans sent a clear message in the 2010 elections. They no longer wish to 'invest' in President Obama's big-spending plans."
