McCain, Obama duel on economic fix-it plans

[July 08, 2008]  DENVER (AP) -- Barack Obama and John McCain agree on this much: The economy is staggering under the Bush administration, and Americans are hurting. But who's to blame and how best to fix it?

Well, they part ways on that, as they made clear in dueling economic speeches Monday on the issue that has taken center stage in their presidential contest.

Obama said that McCain offers a third term of President Bush's policies.

"John McCain's policies are essentially a repeat, a regurgitation of what we've been hearing from the Republican Party over the last two decades, maybe three," Obama said in St. Louis, where his plane made an unscheduled stop because of mechanical problems that forced him to cancel an appearance in Charlotte, N.C. "It's part of the reason that we're in the situation that we find ourselves in right now."

McCain has been forced into a more defensive crouch because his party has held the White House while jobs, home values, stock prices and consumer confidence have tumbled.

While calling Obama's plans expensive and unwise on Monday, he tried to distance himself from Bush where he could.

"This Congress and this administration have failed to meet their responsibilities to manage the government," McCain said in Denver. "Government has grown by 60 percent in the last eight years. That is simply inexcusable."

He promised to veto "every single bill with wasteful spending."

McCain has said the economy is not his strong suit, and on Monday he seemed eager to show a deeper understanding of the topic, even as he dismissed the views of some experts.

"Some economists don't think much of my gas tax holiday," he said of his plan to temporarily suspend the federal levy on motor fuels. "But the American people like it, and so do small business owners."

Obama calls that plan a gimmick that will not lower gasoline prices.

The Democratic senator favors tax cuts for middle-class workers and tax increases for top earners. He calls for substantial government subsidies for health care, college, retirement and alternative energies.

McCain pledges to cut taxes for all and raise them on none. Government should shrink, not grow, he told his audience in Denver.

From a political standpoint, Obama's selling job would seem easier. McCain has linked himself in many ways to the struggling administration, including his call to continue Bush's first-term tax cuts, which he initially opposed.

A recent poll by Democracy Corps, which is run by Democratic strategists, suggests that voters are very much up for grabs on economic issues.

Asked to react to descriptions of the candidates' economic plans, 50 percent said their views more closely resembled McCain's goal of cutting taxes for the middle class and for businesses, simplifying the tax code, maintaining free trade and eliminating government waste.

Forty five percent said their views more closely resembled Obama's goal of cutting taxes for 95 percent of American families, eliminating special tax breaks for big corporations, renegotiating trade treaties, creating jobs by investing in research and education and in new energy sources.

At the same time, 49 percent said their views closely tracked Obama's portrayal of McCain's economic plan as a continuation of "the failed policy of George Bush." Four out of 10 said their views were closer to McCain's claims that Obama's plan calls for up to a trillion dollars in new taxes as well as "a massive increase in federal spending, including a federal takeover of health care."

Obama renewed his call Monday for a $50 billion "second stimulus package" that would provide energy rebate checks for many families, a fund to help families avoid foreclosure and increased assistance for states hit especially hard by economic setbacks.

He said he would eliminate income taxes for retirees making less than $50,000 a year. People still working, he said in remarks he had planned to give in Charlotte, would be automatically enrolled "in a workplace pension plan that stays with you from job to job. And for working families who earn under $75,000, we will start that nest egg for you by matching 50 percent of the first $1,000 you save and depositing it directly into your account."

McCain's plans include doubling the child tax deduction from $3,500 to $7,000 "for every dependent." He also cited his plans to cut the estate tax, although Democrats note that it applies to few Americans.

McCain would provide refundable tax credits of $2,500 for individuals, and $5,000 for families, for all those who buy health insurance. Employer contributions toward health insurance would be treated as income, meaning workers would have to pay income taxes on it, but not payroll taxes.

Obama says that plan would seriously undermine the employer-based system that provides health insurance to about 158 million workers. He would require most employers to provide health care for their workers or pay into a national health care plan.

McCain said Obama's plan would hurt small businesses and hamper job creation.

Aides to McCain said he would balance the budget by the end of his first term, although Obama said the Republican has not come close to explaining plausibly how he would do so. McCain has given mixed signals in recent months over whether he would make it a priority to balance the budget within four years, a goal that most economists consider to be at odds with McCain's call for continued tax cuts.

McCain restated his support of free trade, though acknowledging it "is not a positive for everyone." He promised to retrain workers who lose their jobs to overseas plants.

Obama has said he would revisit major trade pacts such as the North America Free Trade Agreement. He said in Monday's prepared remarks that he believes in free trade, but the cause is not helped "when we pass trade agreements that hand out favors to special interests and do little to help workers who have to watch their factories close down. There is nothing protectionist about demanding that trade spreads the benefits of globalization as broadly as possible."

In Denver, McCain repeated his call to build at least 45 new nuclear plants, which he said "will create over 700,000 good jobs to construct and operate them."

Obama has said he would consider nuclear energy as part of a broader approach to energy production, which would emphasize renewable fuels.

[Associated Press; By CHARLES BABINGTON and LIZ SIDOTI]

Associated Press writer Liz Sidoti reported from St. Louis. AP writer Jim Kuhnhenn contributed from Washington.

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