McCain, Obama address voters' economic fears

TOLEDO, Ohio — Sens. Barack Obama and John McCain battled long-distance over the economy Monday as Obama offered new proposals to aid middle-class voters, including a moratorium on mortgage foreclosures, while McCain presented himself as a fighter with a plan to restore the nation's finances to good health.

In advance of Wednesday's final presidential debate, McCain suggested that the nation's problems are too complex for Obama's relative inexperience, while Obama portrayed his opponent as more concerned with politics than with shoring up the work force with new jobs.

Obama proposed allowing penalty-free withdrawals of up to $10,000 from retirement IRAs and 401(k)s through 2009, as well as giving $3,000 tax credits to businesses that create new jobs over the next two years. He also proposed a 90-day moratorium on foreclosures for people trying to pay their mortgages and a way to lend money to struggling state and local governments.

"We need to give people the breathing room they need to get back on their feet," Obama told a crowd of more than 3,000 people at the SeaGate Convention Centre in downtown Toledo.

The package of new proposals was the most detailed and ambitious offered by Obama since the financial crisis became acute last month.

McCain, on the other hand, criticized Obama for planning to raise taxes, comparing him to Herbert Hoover, who was president when the stock market crashed in 1929, ushering in the Great Depression. McCain also reiterated his plans to buy up bad mortgages and refinance them so home values don't plummet, allow retirees to keep their money in retirement accounts longer to rebuild their savings and cut taxes to spur competition and new jobs.

"If I'm elected president, I won't spend nearly a trillion dollars more of your money, on top of the $700 billion we just gave the Treasury secretary, as Senator Obama proposes," McCain said. "Because he can't do that without raising your taxes or digging us further into debt. I'm going to make government live on a budget just like you do."

A McCain campaign official said the Republican candidate is expected to unveil some new policy prescriptions for the economy today in suburban Philadelphia.

Recent polls show Obama is widening his lead in key battleground states such as Pennsylvania and Ohio, while McCain has been forced to play defense in the traditionally Republican states of Virginia and North Carolina. An ABC News/Washington Post poll puts Obama ahead nationally, 53-43, with 90 percent of all voters saying the country is on the wrong track.

In Virginia Beach, McCain insisted Obama is getting ahead of himself.

"We have 22 days to go. We're 6 points down. The national media has written us off. Sen. Obama is measuring the drapes, and planning with Speaker [Nancy] Pelosi and Senator [Harry] Reid to raise taxes, increase spending, take away your right to vote by secret ballot in labor elections, and concede defeat in Iraq," McCain said. "But they forgot to let you decide. My friends, we've got them just where we want them."

Obama offered a tart retort: "Senator McCain may be worried about losing an election, but I'm worried about you losing your job and you losing your life savings."

Toledo, a struggling manufacturing city, is representative of both the economic crisis and the political battle for industrial-belt swing states that could determine the winner of the election. Obama is spending three days in northwestern Ohio, just south of the auto-making capital, Detroit, mostly sequestered with advisers to prepare for Wednesday's debate at Hofstra University in Hempstead, N.Y.

Obama's advisers emphasized many of the new steps he called for could be taken quickly by the Democrat-controlled Congress in a lame-duck session this year, instead of waiting until after the new president is sworn into office late in January. Several steps could be taken by the Treasury and Federal Reserve using their powers under current law, the advisers said.

Obama advisers put the cost of Obama's full economic-stimulus plan at $175 billion, including $60 billion for the steps announced Monday.

Of the earlier $115 billion, $50 billion would be used to help states and to speed construction of roads and other infrastructure projects that create jobs. About $65 billion of it would be the cost of a second round of rebates to taxpayers this year.

Obama had initially proposed to offset the rebates' expense with a new windfall-profits tax on oil companies, but the campaign indicated Monday he would scrap that plan assuming oil prices do not rise above about $80 a barrel. The shift was just one sign of how the economic crisis has shoved concerns about budget deficits to the sidelines.

Despite criticism from the McCain camp that increasing taxes would further endanger the economy, Obama has "no plans to change" his long-standing proposal to repeal the Bush tax cuts next year for households with an annual income of more than $250,000, said Jason Furman, Obama's economic adviser. Under Obama's plan, most individuals and families would get a tax cut, and in terms of total dollars, he would cut taxes on lower- and middle-income people more than he would raise them on upper income people.

McCain advisers on Monday reiterated their argument that the higher taxes, together with Obama's plan for expanded health care, would hit small businesses with costs they could ill afford. Many small businesses pay taxes as individuals. But the Obama campaign and independent fact-checking groups argue that relatively few would be affected by the tax increase on upper income levels.

The recent surge of government spending to bail out financial institutions and other corporations is likely to drive projections for the federal deficit this year and beyond far above the $438 billion shortfall recorded for the fiscal year that ended Sept. 30.

Yet the McCain campaign on Monday insisted that McCain would balance the budget by 2013, which would be the end of his first term. Nonpartisan analysts consider that unlikely if not impossible. Obama is promising to reduce annual deficits from the current level.