Obama proposes hike in minimum wage

State of the Union address.

Photograph: Getty Images.

In his State of the Union address, the US President Barack Obama proposed an increase in the minimum wage from $7.25 an hour to $9, linked to the cost of living, as it would bring back some stimulus to the economy lost with the recent end of the payroll tax holiday.

Obama said: “It is our generation’s task, then, to reignite the true engine of America’s economic growth – a rising, thriving middle class. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong.”

Obama said that the US and the EU should begin discussions for a bilateral transatlantic trade deal.

Obama called for Republicans in Congress to unwind the automatic $1.2tn in spending cuts, half from the defence budget, effective 1 March 2013.

“These sudden, harsh, arbitrary cuts would jeopardise our military readiness, devastate priorities like education, energy and medical research, slow our recovery, and cost us hundreds of thousands of jobs,” the President said.

As well as reforming Medicare, Obama’s remarks included initiatives to promote manufacturing, workers’ skills and preschools.

Jonathan Cowan, president of think-tank Third Way, told the Financial Times: “While he noted that both parties must compromise, the President did not truly challenge his own party and liberal advocates on entitlement fixes and serious deficit reduction.”

Obama also warned to take unilateral action to cut greenhouse emissions unless Congress acted on climate change.

“If Congress won’t act soon to protect future generations, I will direct my cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy,” Obama said.

The audience included family members and relatives of gun violence victims.

Citing gun attack incidents in the country, Obama said victims and their families deserved a vote on each of the measures before Congress makes any legislation.