Douglas Alexander's Democratic Convention diary

On stage, Obama spoke truth from power - the essential task of a political leader.

How to win friends....

I arrive on Wednesday afternoon by direct flight from Gatwick to Douglas International Airport (honestly, that's its name!) in Charlotte, NC, just as Air Force One lands at the nearby Air National Guard Base.

In the sweltering line for a taxi - it's 86 degrees - I hear that all flights out of Charlotte have been delayed to allow the President's plane to land ... I guess that's all part of the plan for building broader support in this vital swing state!

The Come Back Kid returns.

One man who is famous for making friends in the Democratic Party - or anywhere - is Bill Clinton. Back in 2000, I sat with Ed Miliband high in the Staples Centre in Los Angeles as Clinton transfixed the crowd at what was supposed to be Al Gore's Convention. He hasn't lost his touch and his speech on Wednesday night once again had the delegates in raptures.

Its central theme - "We're all in this together" - was not unfamiliar to British ears, so the next morning I sought out the man with whom I first associated with those words - Frank Luntz. Frank is now a commentator for both CBS and Fox News, but you might also remember him from the focus groups he ran for Newsnight. Back in the spring of 2008, he gave a presentation to Republican Congressional Candidates that recommended the use of the line "We're all in this together".

Over breakfast in a downtown grill, he tells me he arrived at the phrase after much testing when his research showed hard pressed voters didn't welcome a politician talking about they felt they were already making enough sacrifices, thank you very much. Luntz is genuinely effusive in his praise of Clinton's performance the night before: "It's the most effective political deconstruction I have ever seen. And it will matter," he tells me."It's given every Democrat their talking points for the next 8 weeks." He goes on, "It wasn't really an endorsement of Barack Obama, but an incredible indictment of Mitt Romney. Bill Clinton's a one man war room."

E Pluribus Unum

It's to one of the veterans of the original War Room in Little Rock that I turn next. Simon Rosenberg is an old friend who runs the Washington based centre-left think-tank The New Democratic Network. He's also a leading expert on the demographic shifts transforming American politics.

The contrast between the all-white crowd in Tampa last week and the hugely diverse delegations here in Charlotte tells a powerful story. In a bar crowded with delegates, donors, lobbyists, and journalists, Simon shouts his explanation for this, "Barack Obama whose slogan is 'Forward' is the first President of the new emerging demographics of the twenty first century. He's a symbol of transition from a country dominated by white Europeans to a country that'll be majority non-white within 30 years."

And this matters deeply to US politics. As Simon goes on to explain, in the 1960s, America was 90% white and 10% black. Today, it is 65% white and 35% people of colour, and it's on track to be majority non-white by 2040. "Not only did America's economy become globalised in recent decades, but so did its people," shouts my ever hoarser friend. Little wonder the growing diversity of the Democratic Party is on such glorious display on the Convention stage - and the Convention floor.

Following in Family Footsteps

Talking about the 1960s reminds me that while it's my first visit to North Carolina, it turns out I'm following in family footsteps. Back in Easter 1960, my mum and dad, then fresh out of Glasgow University and studying for a year in New York, also made the journey south to attend a special conference. There they queued to hear a young Baptist - and were spat at by white passersby for their trouble. The conference was a gathering of the Southern Christian Leadership, bringing civil rights protesters together, and the young Baptist preacher was Martin Luther King.

Little could my parents have imagined that, fifty years later, their son would return to North Carolina to hear another young African American .... who also just happens to be the 44th President of the United States.

My Kingdom for a Pass

By Thursday afternoon, all minds are turning to the finale of the Convention, the President's acceptance of the party's nomination. All has not gone smoothly for the campaign officials planning the event. The speech was due to be made at the Bank of America Stadium - which is outdoor and has a capacity of over 70,000 - but on Wednesday the venue is suddenly changed to the Time Warner Cable Centre, where the rest of the Convention has been taking place. The explanation that's given is the risk of rain, but nobody seems very sure why the decision has changed when apparently the forecast hasn't.

Anyway, 70,000 just doesn't go in to 20,000, so it suddenly seems like everyone is cajoling, begging and pleading for a pass to get in for the big speech. Donna Brazille proves my saviour and I get there early. David Miliband is delayed at a dinner, and so has to queue during one of the temporary lock downs, which the Daily Mail gleefully show in a photo apparently taken on someone's mobile. Quite why anyone would care is beyond me.

In the hall, John Kerry tears into the Republicans on foreign policy. The biggest cheers he get from delegates - given the difficulty Democrats have had since Tampa in answering Ronald Reagan's old question - is when he asks "Is Osama Bin Laden better off than he was 4 years ago?"

Earlier in the day, I'd grabbed a cup of coffee with Madeleine Albright - Clinton's Secretary of State - and still well connected and wise in the arena of foreign policy. What she tells me convinces me that the new Secretary of State, if Obama wins (a contest widely thought, here in Charlotte, to be between John Kerry and UN Ambassador Susan Rice), will not have an empty inbox on day one.

Speaking to America

Obama takes to the stage timed precisely around the networks' coverage. There are 20,000 of us packed into the hall, but his real audience are the TV viewers scattered across battleground states like Iowa, Colorado, Ohio and Virginia. It is undecided voters in these states that will ultimately decide the outcome of a race that's been tight ever since Romney secured the Republican nomination in April

During the day, I'd chatted with Philip Kent, the chairman and chief executive of Turner Broadcasting, who own CNN. He's the man who brought Piers Morgan to the states and he tells me that the Convention should boost ratings for the network. For as well as the dial metering and the instant polling the other number the campaign staff will be studying anxiously will be the TV viewing figures.

Those figures weren't good for Romney and the Republicans last week in Tampa as his speech was watched by only 30.3million over eleven TV networks.....down from the 40milion over seven TV networks that watched John McCain deliver his acceptance speech four years ago.

A Speech....

In retrospect, it's clear that there was a powerful logic and a clear plan behind the main speeches here in Charlotte. Michelle's task was to defend Obama's character. Clinton's task was to defend Obama's record. And Obama's task was to set out his plan for America's future.

And that's exactly what he did. On stage, he wasn't just Commander-in-Chief; he was Educator-In-Chief, as he set out his vision for America's future success. It was a different and more sober speech than his acceptance address four years ago in a vast Denver Stadium - when his soaring rhetoric matched the mood of hope that would carry him all the way to the White House.

The main theme of the President's powerful speech was an effort to turn the focus of his re-election bid on the rebuilding of the economy. At a time of massive challenge for western economies and societies, he spoke truth from power - the essential task of a political leader.

By any measure, it has proved a strong Convention for the Democrats here in North Carolina. The speeches were strong and their messages clear. Today, as the delegates started their long trek home, they are, in the phrase Obama made famous four years ago, "Fired Up. Ready to Go!"

And a Taxi Ride...

When I look back on this week in Charlotte, however, I'll remember more than just the speeches and the schmaltz. I'll also remember Ephron, the taxi driver who gave me a ride back to my motel late one night after the speeches had finished. His family came originally from Ethiopia. He's 36 and has two kids almost the same age as mine. He works all week driving the cab, but he last saw a doctor three years ago. That's because he doesn't have any health insurance. And with quiet determination he told me "That's why I'm voting for Barack Obama".

Douglas Alexander is the shadow foreign secretary.

Barack Obama with Bill Clinton at the Democratic National Convention in North Carolina. Photograph: Getty Images.

Douglas Alexander is the shadow foreign secretary and Labour MP for Paisley and Renfrewshire South.

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.