President Barack Obama, setting a theme that he’ll pursue in the final years of his presidency, said growing income disparity in the U.S. is the “defining challenge or our time” and Washington must confront it.

Upward mobility for middle-income Americans has been stymied by economic changes and government policy, Obama said.

“The basic bargain at the heart of our economy has frayed,” he said in an address in Washington Wednesday that echoed a speech he gave two years ago in Osawatomie, Kansas, that set the stage for his 2012 reelection race. Increasing inequality “challenges the very essence of who we are as a people.”

After being bogged down for the past two months by the botched rollout of the Patient Protection and Affordable Care Act, the president offered arguments to press his stalled economic agenda and set a foundation for Democratic Party candidates in the 2014 congressional elections.

Illustrating the political agenda within the speech, Obama challenged Republicans in Congress to offer their own ideas for reducing inequality and providing opportunities for middle-income Americans. He said relying on free markets to solve the nation’s problems isn’t enough.

“You owe it to the American people to tell us what you are for, not just what you’re against,” he said.

Obama said the gap between rich and poor is an issue across the globe. He quoted Pope Francis, who in a speech last month warned that unfettered markets are increasing income disparities and that risks fomenting social unrest.

The president said the U.S. has fallen behind other advanced countries in income mobility. Turning that around and closing the income gap can be achieved by driving economic growth and productivity, he said, listing many of the policies and programs on education, infrastructure spending and targeted investments to create jobs that he’s outlined before.

The idea that a child might never be able to climb out of poverty “should offend all of us,” Obama said. “We are a better country than this.”

The trend toward income inequality, which he said dates back to the 1970s, is “a fundamental threat to the American dream,” he said. The nation must push through “myths” that mostly minorities are trapped in poverty. (Bloomberg)