Confident Obama lays out battle plan as he launches second term By Matt Spetalnick and John Whitesides WASHINGTON (Reuters) - A confident President Barack Obama kicked off his second term on Monday with an impassioned call for a more inclusive America that rejects partisan rancor and embraces immigration reform, gay rights and the fight against climate change. Obama's ceremonial swearing-in at the U.S. Capitol was filled with traditional pomp and pageantry, but it was a scaled-back inauguration compared to the historic start of his presidency in 2009 when he swept into office on a mantle of hope and change as America's first black president. Despite expectations tempered by lingering economic weakness and a politically divided Washington, Obama delivered a preview of the priorities he intends to pursue - essentially a reaffirmation of core liberal Democratic causes - declaring Americans "are made for this moment" and must "seize it together." His hair visibly gray after four years in office, Obama called for an end to the partisanship that marked much of his first term in the White House in bitter fights over the economy with Republicans. "We cannot mistake absolutism for principle, or substitute spectacle for politics, or treat name-calling as reasoned debate," Obama said from atop the Capitol steps overlooking the National Mall. Looking out on a sea of flags, Obama addressed a crowd of hundreds of thousands of people, considerably smaller than the record 1.8 million who assembled on the mall four years ago. Speaking in more specific terms than is customary in an inaugural address, he promised "hard choices" to reduce the federal deficit without shredding the social safety net and called for a revamping of the tax code and a remaking of government. The Democrat arrived at his second inauguration on solid footing, with his poll numbers up, Republicans on the defensive and his first-term record boasting accomplishments such as a U.S. healthcare overhaul, financial regulatory reforms, the end of the war in Iraq and the killing of Osama bin Laden. But fights are looming over budgets, gun control and immigration. Obama, however, has sounded more emboldened because he never again needs to run for election. When Obama raised his right hand and was sworn in by Chief Justice John Roberts, it was his second time taking the oath in 24 hours - but this time with tens of millions of people watching on television. As he spoke, the president beamed as chants of "Obama, Obama!" rang out from the crowd. Obama had a formal swearing-in on Sunday at the White House because of a constitutional requirement that the president take the oath on January 20. It was another political milestone for Obama, the Hawaiian-born son of a black father from Kenya and a white mother from Kansas. During a triumphant parade down Pennsylvania Avenue to the White House, the president and first lady Michelle Obama thrilled wildly cheering onlookers by twice getting out of their armored limousine and walking part of the way on foot, as they had done four years ago. Secret Service agents kept close watch. In a speech of under 20 minutes, Obama, 51, sought to reassure Americans at the midpoint of his presidency and encourage them to help him take care of unfinished business. "Preserving our individual freedoms ultimately requires collective action," he said. The crowds on the National Mall were enthusiastic but the euphoria of 2009 was gone. "Four years ago it was the first black president," said local resident Greg Pearson, 42. It doesn't have the same energy. It's more subdued. It's not quite the party it was four years ago. Our expectations are pretty low (this time): let's not default on the national debt, keep the government running. Organizers had given various estimates of the number of people they expected would jam the mall for the ceremony. An inauguration official estimated the crowd might have been around 1 million. Touching on volatile issues, Obama ticked off a series of liberal policies he plans to push in his second term. Most surprising was a relatively long reference to the need to address climate change, which he was unable to do in his first four years. "We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations," the president said. On gay rights, Obama insisted: "Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law." And in a nod to the fast-growing Hispanic population that helped catapult him to re-election in November, he said there was a need to "find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity." U.S. Senate Republican leader Mitch McConnell, who declared in 2010 that his top goal was to deny Obama re-election, congratulated the president and expressed a willingness to work together, saying a second term "represents a fresh start." But some Republicans responded skeptically. "It was a very, very progressive speech, to put it in the best possible light," said Republican strategist Rich Galen. He's not running for election anymore. Obama, who won a second term by defeating Republican Mitt Romney after a bitter campaign, will now face many of the same problems that dogged his first four years: persistently high unemployment, crushing government debt and a deep partisan divide. The war in Afghanistan, which Obama is winding down, has dragged on for over a decade. He won an end-of-year fiscal battle against Republicans, whose poll numbers have continued to sag, and appears to have gotten them to back down, at least temporarily, from resisting an increase in the national debt ceiling. And Obama faces a less-dire outlook than he did when he took office in 2009 at the height of a deep U.S. recession and world economic crisis. The economy is growing again, though slowly. But he still faces a daunting array of challenges. Among them is a fierce gun-control debate inspired by a school massacre in Newtown, Connecticut, last month, a tragedy he invoked in his speech. He said America must not rest until "all our children, from the streets of Detroit to the hills of Appalachia to the quiet lanes of Newtown, know that they are cared for, and cherished, and always safe from harm." Obama's appeals for bipartisan cooperation will remind many Americans of his own failure to meet a key promise when he came to power - to act as a transformational leader who would fix a dysfunctional Washington. His speech was light on foreign policy, with no mention of the West's nuclear standoff with Iran, the civil war in Syria, dealings with an increasingly powerful China or confronting al Qaeda's continued threat as exemplified by the recent deadly hostage crisis in Algeria. But Obama said: "We will show the courage to try and resolve our differences with other nations peacefully ... We will support democracy from Asia to Africa, from the Americas to the Middle East, because our interests and our conscience compel us to act on behalf of those who long for freedom. Obama's ceremonial swearing-in fell on the same day as the national holiday honoring slain civil rights leader Martin Luther King Jr. - and the president embraced the symbolism. He took the oath with his hand on two Bibles - one from President Abraham Lincoln, who ended slavery, and the other from King. Obama watched the rest of the parade, featuring more than 100 marching bands, groups and floats, from a bulletproof VIP viewing stand in front of the White House. He flashed the Hawaiian "shaka" sign of friendship to the band from his high school alma mater, the Punahou School in Honolulu. Afterward, the Obamas planned evening excursions to the two inaugural balls - rather than the 10 that were held in 2009. Writing by Matt Spetalnick and John Whitesides; Additional reporting by Margaret Chadbourn, Anna Yukhananov, Roberta Rampton, Alina Selyukh, Mark Felsenthal, Steve Holland and Patrick Rucker; Editing by Alistair Bell and Eric Beech