A "breakthrough year", declares Obama as he urges Congress to raise minimum wage

January 29, 2014 | 19:21
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US President Barack Obama urged Congress on Tuesday to raise the federal minimum wage, challenging legislators to help reverse deepening income disparity across the country.

US President Barack Obama delivers the State of the Union address at the US Capitol in Washington, DC. ( AFP/Larry Downing)

WASHINGTON: US President Barack Obama declared that the United States has turned a corner after struggling to escape the economic downturn and is poised for recovery, in his State of the Union address.

"After five years of grit and determined effort, the United States is better-positioned for the 21st century than any other nation on Earth."

The speech broadcast live during US prime time television viewing was largely focused on domestic issues such as healthcare and jobs.

The US leader calling on Congress on Tuesday to raise the federal minimum wage, challenged legislators to help reverse deepening income disparity across the country.

"Say yes. Give America a raise. Give them a raise!" Obama told Congress in his State of the Union speech.

Obama vowed to use his executive powers to lift up workers, improve education and clean the environment if his foes in Congress balk at more sweeping action.

"America does not stand still -- and neither will I," Obama said, talking, past the lawmakers gathered to listen in the House of Representatives directly to millions of television viewers.

"Inequality has deepened. Upward mobility has stalled and too many still aren't working at all."

Obama mined a political seam that has proven rich in the past, billing himself as the champion of middle class families fighting to overcome the worst recession since the Great Depression.

He opened on a note of optimism, saying that thanks to "five years of grit" by the American people, the US economy was finally poised for a "breakthrough."

"The United States is better positioned for the 21st century than any other nation on earth," Obama declared, touting the lowest unemployment rate in five years and a rebounding housing market.

Yet he argued the "defining project of our generation is to restore" the promise of equality of opportunity for all Americans.

He promised to wield his power to raise the minimum wage for federal workers on new contracts from $7.25 to $10.10 per hour, and to create a new retirement savings "starter" scheme to help millions of Americans.

"This will help families. It will give businesses customers with more money to spend," he said.

Obama called on corporate CEOs to pledge not to discriminate against long-term unemployed job seekers, and to introduce new energy efficient fuel standards for trucks while working with cities and states to promote cleaner power.

"Profitable corporations like Costco see higher wages as the smart way to boost productivity and reduce turnover. We should too."

The push for higher wages comes as the slow recovery from the 2008 to 2009 economic crisis sees wealthy Americans earning more than ever but real wages for others still below where they were.

With their eye toward Congressional elections in November this year, Democrats are pressing the issue of income inequality in hopes of gaining the upper hand over rival Republicans.

Obama stressed that most people accept that some will earn more than others.

But he added: "Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty."

Obama announced he would soon issue an executive order requiring government contractors to pay their workers at least $10.10 an hour, skirting the need for Congressional approval.

That would potentially boost the incomes of hundreds of thousands of workers cleaning government buildings or working low-skilled jobs on military bases.

"Because if you cook our troops' meals or wash their dishes, you shouldn't have to live in poverty," he said.

Obama stressed that most people accept that some will earn more than others.

But he added: "Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty."

The push for higher wages comes amid a recovery from the 2008-2009 economic crisis that sees wealthy Americans making more than ever, but most of the country's real wages still below where they were prior to the crisis.

Obama proposed other new measures to help poorer citizens including a new "starter" retirement savings plan that will have the government's backing and broader tax credits for low-income families.

In addition, he called on Congress to reinstate unemployment support payments for some 1.6 million jobless Americans that were cut off at the beginning of the year as part of a budget deal.

The move to bring higher wages to workers on government contract jobs garnered measured support from liberal groups hoping it is a first step to a broader increase in the minimum.

The Economic Policy Institute has estimated that one in five contract workers are "working for poverty wages".

"Requiring federal contractors to pay employees at least $10.10 per hour is a good first step... toward ensuring that taxpayer funds are not used to create a larger workforce that is unable to escape poverty and support a decent standard of living," said the EPI's Vice President Ross Eisenbrey.

Tsedeye Gebreselassie, a staff attorney at the National Employment Law Project, called the move "in general a really positive step."

"Workers will almost always be net better-off due to increased wages," she told AFP, although she added that $10.10 an hour "is still not a livable wage."

Businesses though were divided.

Cris Young , President of the American Small Business Chamber of Commere, whose 500,000 members are mostly involved in government contracting, said the step would benefit them.

"As small businesses, we often have to pay our employees better than a living wage," she said, while larger contractors get away with low pay.

"If everyone is paying $10.10, then the playing field is more level."

But the US Chamber of Commerce said raising the minimum wage in general just increases costs for American companies and forces them to cut back on job creation.

"A very large increase in the minimum wage destroys a very large number of jobs; a large increase destroys a large number of jobs," said the Chamber's deputy chief economist, J D Foster.

"A higher minimum wage for workers on federal contracts just gets passed on to the federal government -- the taxpayers -- in higher costs."

But Obama's vows of action are likely to reach far fewer Americans than could be accomplished through legislation.

For example, while he has the power to wage the minimum wage for federal workers, a reluctant Congress would be required to extend the measure across the entire economy.

He called on lawmakers to do just that but they appear unlikely to heed his call.

Such is the stranglehold clamped by Republicans on Congress, much of Obama's second term agenda is stillborn.

Few easy victories

Obama's subtext was reviving a presidency that seems to be racing towards early lame duck status after a disastrous 2013.

He also needs to shield allied lawmakers from being pulled down by his relative unpopularity -- he has a 43-per cent approval rating -- and Democrats are in peril of losing the Senate in mid-term elections.

The president's reputation was sullied by the disastrous rollout of his signature health care law, a government shutdown drama and perceived missteps abroad last year.

He admitted the Obamacare website needed fixing, but fiercely defended the principle of expanding coverage to almost all Americans, which Republicans have voted over 40 times to repeal.

The grand designs of the once-inspirational president's first year in office are but a memory.

But there are signs that Obama's rhetoric on economic disparity is paying off as Republicans also tackled the issue in their response to Obama's address.

Republicans sceptical

In the official Republican response, congresswoman Cathy McMorris Rodgers promised Americans an agenda that "empowers you, not the government."

"It helps working families rise above the limits of poverty and protects our most vulnerable."

The speaker of the Republican-lead House of Representatives, John Boehner, said Obama's address showed the president is running on empty.

"After five years, President Obama is clearly out of ideas. With few bipartisan proposals, Americans heard a president more interested in advancing ideology than in solving the problems regular folks are talking about," Boehner said in a statement.

With power ebbing at home, second-term presidents often look for opportunity abroad.

But with America facing challenges from Syria to the South China Sea, there are few easy victories on offer for Obama.

He defended an interim nuclear deal with Iran, which has many sceptics in Congress, as the best way to resolve a top security challenge "without the risks of war."

Obama also reiterated his vow to veto a new sanctions bill that he fears could cause Iran to walk away from the negotiating table.

While Al-Qaeda's core leadership was "on a path to defeat," the extremist threat was evolving through Yemen, Somalia, Iraq and Mali, Obama said.

In the emotional high point of the speech, Obama praised a US soldier who was blown up in Afghanistan but is fighting back from massive brain injuries.

"Like the America he serves, Sergeant First Class Cory Remsburg never gives up and he does not quit," he said, drawing a prolonged ovation for Remsburg, who was seated beside First Lady Michelle Obama.

The president argued that US diplomacy backed by force had resulted in the handover of Syria's chemical weapons, and was supporting difficult talks on an Israeli-Palestinian peace.



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