As officials in Washington raced to put together a bailout plan for the nation's teetering financial system, John McCain hammered Barack Obama as part of the problem while Obama said any rescue should include a new stimulus package for working families.
Gyrating stock markets and the discussions in Washington overshadowed the two presidential candidates again Friday. But the winner probably will find that his administration will be deeply affected by what happens over the next few weeks.
Efforts to stabilize the financial system not only could increase the federal budget deficit but will add another large problem on top of the wars in Iraq and Afghanistan and make it harder for Obama and McCain to make their mark with a big domestic initiative.
Obama met with his economic advisers and then strongly endorsed the work of Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.
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He said he supported giving the Treasury Department and the Federal Reserve the broad authority they need to shore up the system.
But he also renewed his call for Congress to enact a second stimulus package, saying that the current focus on Wall Street should not obscure the pain that working Americans have been feeling all year.
Obama said an injection of money into the economy should be part of immediate steps by the Bush administration and Congress.
“In the same bipartisan spirit that is being shown with regard to the crisis on Wall Street, I ask Sen. McCain, President Bush, Republicans and Democrats to join me in supporting an emergency economic plan for working families,” he said.
McCain, campaigning in Wisconsin and Minnesota, did not react specifically to the emerging plan in Washington. Instead, he expanded on his idea for a Treasury entity that would identify and rescue ailing financial institutions before they failed.
But while he, too, said both parties must work together to solve the crisis, he mostly spent the day going after Obama, saying the senator from Illinois had been “gaming” the system rather than trying to reform it.
McCain has aired two ads that link Obama to former Freddie Mac and Fannie Mae chief executives Jim Johnson and Franklin Raines. McCain told a large, loud audience in Blaine, Minn., that Johnson – the one-time head of Obama's vice presidential search team – had walked away from the mortgage giants with $21 million “of your money” in severance pay, while Raines received $25 million.
“Let's tell them to give it back,” McCain said, and the crowd obliged, chanting “Give it back. Give it back.”
While Fannie and Freddie have held favored status with the federal government, which has contributed to their profits, the severance packages were paid by company shareholders, not taxpayers.
McCain said earlier that there were many places to find blame for the crisis, but at the rally he identified the mortgage giants as “the culprits as to how this began,” and said Obama “actually profited from this system of abuse and scandal.”
“We've heard a lot of words from Sen. Obama over the course of this campaign,” McCain said. “But maybe just this once he could spare us the lectures, and admit to his own poor judgment in contributing to these problems. The crisis on Wall Street started in the Washington culture of lobbying and influence peddling, and he was right square in the middle of it.”
He added: “That's not country first. That's Obama first.”
Earlier in Green Bay, Wis., before a hastily assembled meeting of the local chamber of commerce, McCain said his proposed mortgage and financial institutions trust would be an “early intervention program to help financial institutions avoid bankruptcy, expensive bailouts and damage to their customers.”
He said that unlike the Resolution Trust Corp. that Congress created to deal with the savings-and-loan crisis in the 1980s, his proposed agency would identify institutions before they failed, taking a “proactive position instead of reacting in a crisis mode to one situation after another.”
Beyond that, he set out a list of principles he believes are important to solving the crisis, such as protecting consumers and promoting greater transparency in financial institutions.
McCain said the Federal Reserve “needs to get out of the business of bailouts” and back to its “core business of responsibly managing our money supply and inflation.”
In Florida, Obama called the current financial crisis a threat to “the stability and security of our entire global economy.” He said that, despite earlier, unprecedented steps by the federal government to stem the problem, “even bolder and more decisive action” is required.
Obama said the immediate moves by Washington should not reward firms or executives who helped bring about the current crisis. “We don't want bailouts of folks who've been taking bad decisions,” he said.
Obama outlined a plan earlier in the year that would pump more than $100 billion into the economy. He would send $25 billion to the states to prevent cuts in health, education or housing aid. Another $25 billion would be put into infrastructure projects, mostly for highways and schools. His plan also calls for checks of $500 per individual, or $1,000 per household, to offset higher gasoline and other energy costs. Obama would pay for those checks with a windfall profits tax on the oil industry.
Obama said the potential cost of the financial rescue would not prevent him from pushing for a middle-class tax cut if he becomes president, arguing that broad-based tax cuts are part of a long-term solution to the economy's ills.
He deflected a questioner who wondered whether, by deferring his own financial rescue plan until Washington has acted, he was standing on the sidelines at a time of economic crisis.
“You don't do it in a day,” he said. “We'd better do it in an intelligent, systematic, thoughtful fashion. I'm much less interested at this point in scoring political points than I am in making sure that we have a structure in place that is sound and is actually going to work.”