US President Barack Obama is applauded as he delivers his State of the Union addres. Jonathan Ernst / Reuters
US President Barack Obama is applauded as he delivers his State of the Union addres. Jonathan Ernst / Reuters

Obama challenges Congress on inequality in State of the Union address



WASHINGTON // President Barack Obama vowed to reverse a tide of economic inequality threatening the American dream Tuesday, seeking to outflank Republicans and revive a second term blighted by self-inflicted wounds and partisan warfare.

In his annual State of the Union address, Mr Obama promised to wield his executive powers in a “year of action” 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 in the House of Representatives directly to millions of television viewers.

“Inequality has deepened. Upwards mobility has stalled and too many still aren’t working at all.

“Our job is to reverse these trends,” Obama said, pounding out his points with a punchy, optimistic delivery, apparently keen to suggest that despite five gruelling years he still has energy and purpose for his task.

While focusing squarely on a domestic audience, Mr Obama strayed into foreign policy only briefly during the one hour, 16-minute speech, as his cabinet and military brass looked on.

He vowed to support democracy in Ukraine, warned Al Qaeda’s threat had evolved and yet again urged Congress to let him close the war on terror camp at Guantanamo Bay, Cuba.

But mostly 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 an upbeat note, 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,” Mr 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 use executive action 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.

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

But Mr Obama’s vows of action is likely to reach far fewer Americans than could be helped through legislation.

While he has the power to raise 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 “say Yes, give America a raise” but they appear unlikely to heed his call.

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

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-percent approval rating — and Democrats are in peril of losing the Senate in midterm elections.

The president’s reputation was sullied by the disastrous roll-out 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.

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.”

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.

* Agence France-Presse

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What is Reform?

Reform is a right-wing, populist party led by Nigel Farage, a former MEP who won a seat in the House of Commons last year at his eighth attempt and a prominent figure in the campaign for the UK to leave the European Union.

It was founded in 2018 and originally called the Brexit Party.

Many of its members previously belonged to UKIP or the mainstream Conservatives.

After Brexit took place, the party focused on the reformation of British democracy.

Former Tory deputy chairman Lee Anderson became its first MP after defecting in March 2024.

The party gained support from Elon Musk, and had hoped the tech billionaire would make a £100m donation. However, Mr Musk changed his mind and called for Mr Farage to step down as leader in a row involving the US tycoon's support for far-right figurehead Tommy Robinson who is in prison for contempt of court.

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At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

 

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

 

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

 

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30 

 

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

 

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

 

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances

Skewed figures

In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458. 

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JAPANESE GRAND PRIX INFO

Schedule (All times UAE)
First practice: Friday, 5-6.30am
Second practice: Friday, 9-10.30am
Third practice: Saturday, 7-8am
Qualifying: Saturday, 10-11am
Race: Sunday, 9am-midday 

Race venue: Suzuka International Racing Course
Circuit Length: 5.807km
Number of Laps: 53
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”