Washington: US President Barack Obama will go on a bus-tour across three states in Midwest, which is part of his effort to spread the message of economy, his aid said.

While political analysts termed it his pre-election campaign to connect directly with the people.

"The President will discuss ways to grow the economy, strengthen the middle class and accelerate hiring in communities and towns across the nation and hear directly from Americans, including local families and small business owners," the White House said in an announcement.

Obama would be travelling to Midwest on a three-day economic bus tour, from August 15 to 17, making stops in southern Minnesota, northeastern Iowa and western Illinois.

Obama had carried through all these three states in the 2008 presidential elections.

"The President knows we must do everything we can to promote economic growth, restore confidence in our nation's future and restore the sense of optimism for future generations," the White House said.

"The President looks very much forward to getting out in the country — he's obviously spent a lot of time here in Washington and in the White House of late — and to hearing from Americans, in the Midwest... about what's going on in their local economies, what they think Washington can and should do to enhance economic growth, enhance job creation in their parts of the country," White House press secretary Jay Carney said.

"And that's what this trip will be about," he said, adding that Obama's message would be clear economy and job.

Obama's effort to connect directly with the people comes at a time when his popularity rating has hit an all-time low – 40 percent according to the Gallup poll – and the Standards and Poor's unprecedented decision to downgrade America's credit rating from AAA to AA+.

Romney blasts Obama re-election plan

Republican White House hopeful Mitt Romney's campaign blasted President Barack Obama's "disgraceful" reelection tactics, citing a report that the incumbent planned brutal, personal attacks.

Obama, whose upbeat "hope and change" slogan powered his historic 2008 victory, will portray Romney as "inauthentic, unprincipled" and "weird," according to a publication that covers US politics.

"Unless things change and Obama can run on accomplishments, he will have to kill Romney" if the Republican frontrunner turns out to be the nominee, an anonymous Democratic official told the publication, which identified its source as "aligned with the White House."

The President faces an uphill battle to a second four-year term, with the November 2012 election sure to turn on his handling of the sour US economy, still grappling with stubbornly high unemployment of 9.1 percent.

In troubled times, incumbent US Presidents often strive to portray their challenger as unfit for office, an effort to minimize the degree to which the election is a referendum on their record.

The report drew a swift, angry reply from Romney's campaign manager, Matt Rhoades, who charged Obama "will say and do desperate things to hold onto power because he knows he has failed."

"It is disgraceful that President Obama's campaign has launched his re-election with the stated goal to 'kill' his opponent with an onslaught of negative and personal attacks," Rhoades said in a statement.

US Fed to keep interest rates near zero

Painting a gloomy picture of the American economy and warning that it will remain weak for quite some time in the future, the US Federal Reserve decided to keep interest rates near zero percent for the next two years.

"To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent," the Federal Open Market Committee (FMOC) of the Federal Reserve said.

"The committee currently anticipates that economic conditions -- including low rates of resource utilisation and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013," the FMOC said in a statement.

The decision of the committee, however, was not unanimous.

While Federal Reserve Board Chairman Ben S Bernanke and his deputy William C Dudley, along with five others, voted in its favor; three others, including Indian American Narayan Kocherlakota, voted against the FMOC action.

Coming in the wake of the downgrade of the US credit rating from AAA to AA+ by Standards and Poor's, the FMOC said it now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the committee judges to be consistent with its dual mandate.

The committee said indicators suggest deterioration in overall labour market conditions in recent months and the unemployment rate has moved up.

Household spending has flattened out, investment in non-residential structures is still weak and the housing sector remains depressed, it said.

"Inflation picked up earlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the supply chain disruptions. More recently, inflation has moderated as prices of energy and some commodities have declined from their earlier peaks. Longer term inflation expectations have remained stable," it said.

Hope US downgrade seen as objective in time: Sharma

In the eye of a storm over the downgrade of America's credit rating from AAA to AA+ last week, ratings agency Standard & Poor's President Deven Sharma hoped the decision would over time be seen as objective and independent.

"I hope over time that people recognise that we are objective and independent. We call risks as we see them with a forward-looking view," Sharma, an Indian-American, told a magazine in an interview.

"It's hard to say how our decision will be taken. You have to look at it in the context of history, five or 10 years from now. If (US political dysfunction) doesn't change, history will say that we made the right risk call," he said.

"When we downgraded Japan it was the second largest economy and it was coming off so much economic strength. People wondered what the hell we were talking about. But now Japan has more than 200 percent debt to GDP and the problem there is big," Sharma said.

Sharma said that the market reaction in the last few days couldn't be attributed to S&P's decision on the US credit rating.
However, he praised the speech of US President Barack Obama.

"I was encouraged that he began by saying that we have two challenges, the rising debt level and the economic process by which we create an action plan to address the debt," he said.

Sharma refused to entertain a question on whether the credit rating revision would make Obama a one-time President.

"Listen, I'm not going to weigh in on the election. Our role is to speak to credit risk. If politicians can come up with a game plan to address debt levels, figure out a way to drive growth and lower unemployment, it will be good for everyone and for the country broadly," he said.

Wisconsin recall election tests Obama's foes

Voters in Wisconsin headed to the polls in a recall election sparked by a backlash against the Republican Party's swing to the right in a US presidential battleground state.

Tens of millions of dollars have been spent on the closely-watched polls as President Barack Obama's Democrats try to harness a mass protest movement which emerged in response to a controversial Republican plan to strip state workers of their union rights.

Control of the Wisconsin state senate hangs in the balance as six Republican state senators fight to keep their seats. One Democratic state senator has already weathered a recall attempt and two more are up for recall on August 16.

"The nation is watching. What you have here is a state making a decision on which way do you go," said John Hogan, who is managing the recall efforts of state senate Republicans.

Republicans have also poured money into the recall campaigns as they seek to defend both their seats and the conservative agenda of the Tea Party movement, which helped the GOP achieve historic gains in November's mid-term election.
Frustration with Tea Party ideals has been growing across the country.

A recent poll found that just 20 percent of Americans view the Tea Party favorably and 43 percent think they have too much influence in the Republican Party.