The deteriorating economy took center stage in the presidential election Thursday as Democrat Barack Obama called for tighter regulation of financial markets and rival Hillary Rodham Clinton proposed more retraining for displaced workers, creating a sharp contrast 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 Thursday for an overhaul of the nation’s regulatory system, immediate relief for homeowners caught in the sub-prime 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 emphasized Thursday that he thought any federal aid should be limited to “deserving American families” who were “in danger of not realizing the American dream.”
“What is not necessary is a multibillion-dollar bailout for big banks and speculators, as Sens. 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. On Thursday, as the candidates campaigned in three different states, the federal government confirmed that the economy all but stalled out in the final quarter of last year, with the gross domestic product posting a scant 0.6% increase.
For a new system
Obama, speaking to a Wall Street audience at the Cooper Union for the Advancement of Science and Art in New York, cited 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 sub-prime 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 sub-prime mortgages don’t originate from banks,” he said.
Accompanied by New York Mayor Michael R. Bloomberg, he also called for a crackdown on “trading activity that crosses the line to market manipulation.”
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 Sen. 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.”
Tying McCain to Bush
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 McCain’s comment that he didn’t understand the economy as well as he should.
The Arizona senator did not step away from those comments Thursday, but told reporters during a brief news conference in the Salt Lake City airport that any 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.”
In North Carolina, Clinton kicked off what her campaign bills as a three-state, six-day “Solutions for America” tour to highlight her proposals to deal with the economy.
As she has across the country on the campaign trail, the New York senator cited the economic challenges Americans face: rising gas prices, steep college tuition and the increasingly unaffordable cost of healthcare -- the mention of which generated the most applause.
Clinton also attacked the Bush administration, saying it had failed to do enough to ease the plight of displaced workers. “We’ve been stalled, I would say, for at least seven years,” she told a crowd at Wake Tech Community College in Raleigh. “And you pay the price.”
She also criticized the president for giving tax breaks to oil companies, and said he was ignoring the mortgage crisis and allowing the nation’s infrastructure to deteriorate.
Clinton did not mention Obama, but campaign aides mocked him for announcing a $30-billion plan after she had announced one. They said the country needs “leadership, not followership.”
A key focus of Clinton’s economic message Thursday was her proposal to spend an additional $12.5 billion on retraining over five years to help workers who have lost their jobs or who seek higher-paying ones.
“No American should be left on the side of the road,” she said, singling out efforts by North Carolina leaders to boost job training at places like community colleges.
Clinton followed up with a detailed set of proposals for dramatically more government involvement in providing economic aid. “It is time for a president who is ready on Day One to be commander in chief of our economy,” she said.
Reynolds reported from Washington and Levey from North Carolina. Times staff writers Maeve Reston in Salt Lake City and Johanna Neuman in Washington contributed to this report. Mark Silva of the Chicago Tribune also contributed.