It's time to give America a raise – Obama
JUST hours after admitting to the hopelessness of Washington's broken politics in his State of the Union address, President Obama (right), took to the road yesterday in a bid to demonstrate his commitment to helping America's middle classes, even as the US Congress does not.
"It is time to give America a raise," he said, echoing a key theme of his speech as he addressed workers at a Costco megastore, and by extension America's struggling wage-earners, who he said have been let down by Congress's failure to pass his plans to boost jobs, education and infrastructure investment. Despite his call to raise the minimum wage being rejected by a Republican-controlled Congress last year, Mr Obama again urged Republicans to increase the $7.25 (€5.30) wage which he said was worth 20pc less than when Ronald Reagan had delivered his first State of the Union address.
"This will help families. It will give businesses customers with more money to spend," he said, "It doesn't involve any new bureaucratic programme. So join the rest of the country. Say 'yes'. Give America a raise."
However, Mr Obama conceded that the "rancorous argument over the proper size of the federal government" had left Washington paralysed, leaving him to focus instead on a raft of micro-initiatives that could make a difference. Meanwhile, the Federal Reserve has announced that it will cut its monthly bond purchases by an additional $10 billion (€7.3bn) to $65bn (€47.5bn) because of a strengthening US economy. It's doing so even though the prospect of reduced Fed stimulus and higher US interest rates has already unsettled global markets.
The Fed also reaffirmed its plan to keep short-term rates at record lows in a statement it issued last night after Ben Bernanke's final policy meeting. Bernanke is due to step down today after eight years as chairman.
Many global investors fear that reduced Fed bond buying will boost US rates and cause investors to move money out of emerging markets and into the United States for higher returns. Currency values in emerging nations have fallen. India, Turkey and South Africa have raised rates to try to protect their currencies.
Most economists expect a string of $10bn monthly reductions in bond purchases to be announced at each Fed meeting this year, concluding with a final $15bn (€11bn) cut in December.