Trading accusations on the economy

Gearing up for their first presidential debate, Republican John McCain and Democrat Barack Obama traded fresh jabs Sunday but offered no new policy prescriptions to lead the nation out of its economic morass.

In his only public appearance of the day, McCain devoted just three sentences to the unfolding Wall Street debacle. He pivoted off the fiasco to slam Obama’s positions on Iraq and portray him as a weak leader overall.

McCain is expected to employ this tactic as part of his strategy when the candidates face off Friday to discuss foreign policy in Oxford, Miss., in the first of three scheduled presidential debates.

Speaking in Charlotte, N.C., Obama focused almost entirely on the financial crisis and repeatedly charged that McCain had embraced a failed economic philosophy for his 26 years in Congress. “And yet Sen. McCain, who candidly admitted not long ago that he doesn’t know as much about economics as he should, wants to keep going down the same disastrous path,” Obama said.

Both candidates have grown far more assertive in recent days in accusing the other of misguided economic policies -- and both have moved more cautiously in suggesting remedies to the fast-moving crisis.

Speaking to a National Guard Assn. annual conference in Baltimore, McCain said that he planned “comprehensive reform of the broken institutions” on Wall Street and vowed to help “keep people in their homes and safeguard the life savings of all Americans.” He provided no details of his plan, however.

On Sunday night, after McCain flew to Scranton, Pa., aide Brooke Buchanan sought to regain the initiative. Reading a prepared statement, she told reporters that McCain would call today for creation of a bipartisan board to help oversee the proposed federal bailout of troubled financial firms. Although McCain has generally backed the administration’s approach to the crisis, he also will break with Treasury Secretary Henry M. Paulson Jr.

“I have great respect for Secretary Paulson, but I am greatly concerned that the plan gives a single individual the unprecedented power to spend 1 trillion -- trillion -- dollars on the basis of not much more than ‘trust me,’ ” the statement read. It added that Paulson “may not be in the Treasury job” after a new administration takes office next January.

The Bush administration has asked Congress for authority to spend up to $700 billion, not $1 trillion, to relieve crippled financial institutions of their mortgage-backed assets.

McCain has recast his economic message repeatedly over the last week. After initially declaring that the fundamentals of the economy were strong, he belatedly conceded that a crisis had begun. He also stopped touting his long-standing opposition to regulation of the financial industry, and began calling for increased government oversight of banking and credit markets.

In his Baltimore speech, however, McCain said that Obama had “declined to put forth a plan of his own. At a time of crisis, when leadership is needed, Sen. Obama has not provided it. We saw the same lack of leadership on Iraq.”

In an e-mail, Hari Sevugan, an Obama spokesman, called McCain’s charge “an especially absurd claim, given that Sen. McCain’s so-called plan consists of zero details and 10 sentences that reflect the outlines of a proposal first offered” by Obama’s campaign a week ago.

Obama first proposed a series of economic reforms last year, including a call to strengthen regulatory oversight and enforcement on Wall Street. In recent days, he has supported giving the Treasury Department and the Federal Reserve the authority to provide the liquidity to shore up the ailing financial system.

Like other Democrats, Obama backs a proposed economic stimulus package to let homeowners restructure their mortgages to avoid foreclosure, along with a plan that would prevent Wall Street executives from benefiting from high-risk investments on bundles of real estate loans that went bad.

In his remarks Sunday, Obama urged Congress and the White House to protect taxpayers as they negotiate a proposed bailout for the financial industry. He reiterated his call for negotiators in Washington to seek a bipartisan agreement to resolve the crisis and avert a broader catastrophe.

Republicans have “run this economy into the ground,” Obama said, and called for new rules “to make sure it doesn’t happen again.”

Reprising an argument he has made for months, McCain used his Baltimore speech to criticize Obama for opposing the deployment of additional U.S. combat forces to Iraq in mid-2007. McCain, who championed the so-called surge, insists that the increase in troop strength was key to creating greater stability in Iraq, and that Obama has never acknowledged that success.

“Even in retrospect, he would choose the path of retreat and failure for America over the path of success and victory,” McCain charged. “Behind all of these claims and positions lies Obama’s ambition to be president.”

Obama opposed the U.S.-led invasion of Iraq from the start, and argues that he has exhibited the clear-headed judgment in foreign affairs needed to keep America safe. Both the White House and the Iraqi government now essentially agree with Obama’s calls to withdraw most U.S. troops over the next 18 months.

McCain strongly supported the invasion but broke with the Bush administration over the bungled occupation and military tactics that followed. He argues that the surge helped avert potential disaster.

--

bob.drogin@latimes.com

michael.finnegan@

latimes.com

Drogin reported from Baltimore and Finnegan from Charlotte, N.C.