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Obama to pitch ideas in speech for spurring upward mobility in U.S.

U.S. President Barack Obama delivers remarks at a reception with U.S. mayors at the White House in Washington January 23, 2014. REUTERS/Yuri
U.S. President Barack Obama delivers remarks at a reception with U.S. mayors at the White House in Washington January 23, 2014. REUTERS/Yuri

By Mark Felsenthal

WASHINGTON (Reuters) - President Barack Obama will urge the U.S. Congress on Tuesday to do more to help poor and middle-class Americans move up the economic ladder.

Both Obama and congressional Republicans view that issue as a high priority, a rare point of agreement between the two sides. But the Democratic president and Republicans disagree on the remedies, setting up a debate that Obama will discuss in his State of the Union address to Congress.

In the speech, scheduled for 9 p.m. EST on Tuesday (0200 GMT on Wednesday), Obama will push an agenda for increasing economic upward mobility and propose aid to the long-term unemployed, an increase in the minimum wage and an expansion of early-childhood education.

After Obama's speech, Cathy McMorris Rodgers, the fourth-ranking Republican in the House of Representatives, will deliver a response on behalf of her party. She will likely emphasize free-market ideas for improving prosperity.

Senator Marco Rubio and House Budget Committee Chairman Paul Ryan, two Republicans who are both seen as potential 2016 presidential candidates, spoke this month on proposals for helping people climb out of economic hardship.

Rubio has suggested shifting responsibility for many federal benefit programs to the states. Ryan has floated the idea of providing a single benefit to low-income families, modeled on one in Great Britain.

The problem of economic stagnation is expected to be a theme in congressional election campaigns this year.

Analysts said social mobility was a potent political issue because the United States has long seen itself as a place where anyone with grit and determination can succeed.

In recent years, however, the wages of many low- and middle-income workers have held steady or fallen on an inflation-adjusted basis. The slow growth after the 2007-2009 recession has exacerbated this trend.

At the same time, the wealthiest and most highly educated Americans, referred to as the "1 percent," have grown more prosperous.

STUCK AT THE BOTTOM

Both Republicans and Democrats have expressed concern about studies showing that economic mobility in the United States lags that of some other industrialized economies, calling into question the nation's reputation as a land of opportunity.

More than 40 percent of American men born into the poorest one-fifth of earners remain there, a 2006 study led by Finnish economist Markus Jantti showed. In Denmark, Norway, Finland and Sweden, only about 25 percent of such men stay in that income segment.

American sons of low-income fathers are more likely to remain stuck in the bottom tenth of earners as adults than are Canadian sons, University of Ottawa economist Miles Corak said in a study published in 2010. In the United States, 22 percent of men born to low-income families stayed in that category, while the same was true of only 16 percent of Canadians.

In 2012, former U.S. Council of Economic Advisers Chairman Alan Krueger published a study that linked income inequality with low levels of upward mobility. He devised a chart he named "The Great Gatsby Curve" after the fabulously wealthy protagonist of the novel by F. Scott Fitzgerald.

It showed the United States toward the upper end of the range of both inequality and low economic mobility, along with Argentina, Chile, and Brazil. At the opposite extreme, with low inequality and high mobility, were Denmark, Norway and Finland.

A study from a group led by Harvard University economist Raj Chetty added a new wrinkle to the debate with its finding that American children's chances of moving up the economic ladder had not changed much in the past few decades. The study also made clear that children's prospects were tightly linked to their parents' socio-economic status - more so in the United States than in some other leading economies.

"It's not so much that we're losing the American dream," said Harvard economist Nathaniel Hendren, one of the study's authors. "It's did we ever have it, and do we want it?"

The focus on economic mobility builds on a pledge Obama has emphasized over the past two years: to improve the standing and security of the middle class.

The theme is newer for Republicans, who failed to capture the White House in 2012 in part because many voters perceived their party's candidate, Mitt Romney, as dismissive of the struggles of the poor and working classes.

But analysts say a promise to boost economic mobility could resonate across the ideological spectrum.

"The idea of the United States being exceptional in its ability to promote economic opportunity or the notion of the nation being suited to help people rise is very much part of our national ethos," said Erin Currier, director of economic mobility for the Pew Charitable Trusts. "Americans feel strongly that the United States should be the land of opportunity."

(Reporting by Mark Felsenthal; Editing by Caren Bohan and Lisa Von Ahn)

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