The deteriorating economy took center stage in the presidential election yesterday as Democrat Barack Obama called for tighter regulation of financial markets and party rival Hillary Clinton proposed more retraining for displaced workers, contrasting sharply with Republican John McCain over how much the government should intervene.
The economy has been the No. 1 issue for voters for months, but the candidates have embraced the issue more slowly. This week, however, all three gave major addresses that added significant detail to their prescriptions for the ailing economy.
Obama called yesterday for an overhaul of the nation's regulatory system, immediate relief for homeowners caught in the subprime mortgage crisis and a $30 billion economic stimulus package. Clinton, who had proposed a $30 billion fund to help prevent foreclosures a week ago, offered a new proposal to spend $12.5 billion on job training programs.
McCain stressed yesterday that federal aid should be limited to "deserving American families" who are "in danger of not realizing the American dream."
"What is not necessary is a multibillion-dollar bailout for big banks and speculators, as Senators Clinton and Obama have proposed," he said in a statement released by his campaign. "There is a tendency for liberals to seek big government programs that sock it to American taxpayers while failing to solve the very real problems we face."
The economy has not been an easy topic for any of the candidates. None of them has business experience, and all three are more comfortable talking about their well-established views on the Iraq war - a topic they had once assumed would drive the election.
But they have stepped up their efforts to refine and expand their proposals to deal with an economic slowdown recently underscored by the sudden collapse of a venerable Wall Street brokerage firm. Yesterday, as the candidates campaigned in three different states, the federal government confirmed that the economy all but stalled out in the last quarter of last year, with the gross domestic product posting just a scant 0.6 percent increase.
Obama, speaking to a Wall Street audience at the Cooper Union for Advancement of Science and Art in New York, noted the Federal Reserve's extraordinary intervention to save Bear Stearns Cos. from bankruptcy to bolster his call for more help for homeowners.
"If we can extend a hand to banks on Wall Street, we can extend a hand to Americans who are struggling through no fault of their own," he said.
The Illinois senator argued for a new system of financial regulation designed to prevent the kind of abuses that led to the housing bubble and current credit crunch.
"Our free market was never meant to be a free license to take whatever you can get, however you can get it," he said. "That is why we have put in place rules of the road to make competition fair and open and honest."
Pressing for better regulation of the financial sector, Obama noted that commercial banks and thrift institutions were subject to guidelines on subprime mortgages that did not apply to mortgage brokers. "It makes no sense for the Fed to tighten mortgage guidelines for banks when two-thirds of subprime mortgages don't originate from banks," he said.
Obama criticized McCain, the expected Republican nominee, for taking a lackadaisical approach to the crisis. On Tuesday, McCain said that "it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers."
"John McCain recently announced his own plan, and it amounts to little more than watching the crisis happen," Obama said. "While this is consistent with Senator McCain's determination to run for George Bush's third term, it won't help families who are suffering, and it won't help lift our economy out of recession."
Clinton, who was campaigning in North Carolina, also criticized McCain, tying him to what she said was Bush's neglect of the economy and ridiculing a comment he made saying he didn't understand the economy as well as he should.
The Arizona senator did not step away from those comments yesterday but told reporters during a brief news conference in the Salt Lake City airport that aid should not go to speculators who intended to flip houses or to unscrupulous lenders.
"There are people who are sitting around the kitchen table, families today, that are saying: 'Are we going to have to take an extra job?' 'Are we going to have to dig into our savings?' 'Are we going to have to take extraordinary measures to remain in our homes?'" McCain said. "Those are the people that should be the object of our attention and our care."
Maura Reynolds and Noam N. Levey write for the Los Angeles Times.