Sep 19, 2008 11:20 am US/Pacific
McCain, Obama At Odds Over Fed's Economic Bailout
GREEN BAY, Wis. (AP) ―
Democratic presidential nominee Barack Obama said Friday he backs giving "broad authority" to the Treasury Department to deal with the burgeoning credit crisis, but said he's not spelling out details of his own plans to avoid roiling the markets.
Obama said at a Florida news conference that given the gravity of the situation, he will refrain for now from presenting a more detailed blueprint. He said any recovery plan should be guided by not rewarding reckless business leaders.
"What we have to do is make sure taxpayer money is not being used to bail out bad decisions," he said. He refused to put a pricetag on a bailout he could support, but said it would not bar him from pushing for middle-class tax cuts that have been central to his campaign.
"I think now more than ever we have to have the broad-based middle-class tax cuts," Obama said.
Obama huddled with key economic advisers to talk about a burgeoning credit crisis that is rapidly moving to the front of this competitive election season, seeking a balance between offering stability and blaming the crisis on what he said were failed economic policies that John McCain would continue.
"We have an immediate emergency situation in the capital markets and it is important to provide the Treasury and the Fed broad authority to make sure the credit markets work, that bills are paid, that payrolls are made, that there's liquidity in the system," Obama said. "We have an institutional problem that has to do with a regulatory system that's inadequate to the new global marketplace."
He spoke to a generally friendly crowd of nearly 8,000 people who roared approval. His speech was interrupted at one point by a group of protesters who chanted and waved signs in the upper deck of the basketball arena. They were shouted down by the crowd chanting "Yes we can" and were escorted from the room.
Republican John McCain said Friday the Federal Reserve needs to stop bailing out failed financial institutions.
The Republican presidential hopeful said the Fed should get back to "its core business of responsibly managing our money supply and inflation" and he laid out several recommendations for stabilizing markets in the financial crisis that has rocked Wall Street and commanded the dialogue in the presidential campaign.
The Fed engineered an $85 billion takeover of insurance giant AIG this week after seizing control of housing giants Freddie Mac and Fannie Mae. McCain said that to help return the U.S. to fiscal solvency, the powerful central bank should instead focus on shoring up the dollar and keeping inflation low.
"A strong dollar will reduce energy and food prices," McCain said to applause from the Green Bay Chamber of Commerce. "It will stimulate sustainable economic growth and get this economy moving again."
The Arizona senator again criticized Democratic rival Barack Obama for ties to Freddie Mac and Fannie Mae and for advocating tax increases McCain said would "turn a recession into a depression."
Obama has said he would raise taxes on people making over $250,000 a year and would cut taxes on the middle class. McCain restated his claim that Obama had voted to raise taxes on people who make just $42,000 a year — a claim that has been widely debunked by nonpartisan fact check organizations.
McCain noted the Illinois senator had taken large campaign contributions from both Fannie Mae and Freddie Mac and that the one-time head of Obama's vice presidential search team, Jim Johnson, had received a multimillion-dollar severance deal after stepping down as Fannie Mae CEO.
"Maybe just this once he could spare us the lectures, and admit to his own poor judgment in contributing to these problems," McCain said of Obama.
McCain's campaign released a new television ad Friday hitting Obama for his connection to Johnson.
The Arizona senator is correct when he says Obama is the No. 2 recipient of campaign money from employees of Fannie Mae and Freddie Mac. Obama has collected $126,349 from those sources, according to a compilation by the Center for Responsive Politics, second only to Senate Banking Committee Chairman Sen. Christopher Dodd, D-Conn., who has received $165,400. The ranking covers the period since 1989.
McCain renewed his call for tighter regulation of financial markets, even though he has generally championed deregulation throughout his career in the Senate and as chairman of the influential Commerce Committee.
He also called Securities and Exchange Commission Chris Cox a "good man" but reiterated his view that Cox should step down or be fired, saying there needed to be greater accountability in Washington.
McCain said as president he would create a Mortgage and Financial Institutions Trust to help homeowners avoid foreclosure. He said he would propose and sign into law changes to prevent financial firms from concealing "bad practices."
Throughout the week, McCain and Obama have tangled over which candidate is better to steer the U.S. out of its financial crisis. One investment giant, Lehman Brothers, collapsed this week and another, Merrill Lynch, was purchased by rival Bank of America for less than half its value.
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
