Financial crisis dominates the campaign trail
Barack Obama and John McCain offered more details Tuesday about what they would do to bail out the nation’s struggling financial institutions, with both men demanding remedies that provide greater oversight and taxpayer protections.
The presidential rivals held dueling news conferences devoted to the financial crisis on a day when congressional leaders balked at the Bush administration’s $700-billion plan to buy troubled investments that have shaken some of the most venerable financial firms on Wall Street.
Both candidates are struggling with the fallout from a financial crisis that neither had foreseen. Obama conceded that as president he might be compelled to defer pieces of his $130-billion-a-year spending plan if the economy worsened. McCain has been forced to reexamine his long-held view that free-market solutions work best, and now finds himself calling for tougher regulation.
For all their disputes, the plans put forward by the pair are nearly identical in important respects.
Both candidates said they were uncomfortable with the sweeping powers the Bush proposal would give to the secretary of the Treasury. They recommended creation of an independent board that would oversee the rescue.
Obama said “the power to spend $700 billion of taxpayers’ money cannot be left up to the discretion of one man, no matter who he is or which party he is from. I have great respect for [Treasury] Secretary [Henry M.] Paulson, but he cannot act alone.”
Each is calling for measures that would permit taxpayers to recoup some of the public money sunk into the deal. Obama wants to impose a “financial stability fee” -- charged to financial institutions -- that would be used to repay households for the massive public outlay.
Striking a populist chord, McCain and Obama both say that Wall Street executives should not be able to collect excessive payouts as a result of a government bailout.
Yet differences remain. Obama said he would like to see an economic stimulus package for families struggling to pay bills and stave off foreclosure.
McCain, meeting reporters at a Dow Corning Corp. solar panel factory in Freeland, Mich., made it clear that he would not support such a stimulus package. “I don’t think anything should be added to this legislation,” he said. “This legislation should stand on its own.”
He also criticized Democratic leaders in Congress who have indicated they may not support the controversial proposal until McCain, as nominal leader of the Republican Party, also signs on to provide bipartisan support.
“For the Democrats to say that their vote is going to be gauged on my vote frankly doesn’t do them a great deal of credit,” McCain said. “Their first and only priority should be making sure this economy recovers and we get back on our feet again.”
McCain said he would seek five “basic improvements” to the legislation as it moved forward. The legislation, he said, needs greater provisions for accountability, possibly including an independent oversight board, as well as a yet-undefined “path for taxpayers to recover the money.”
The price tag works out to $10,000 for each American family, “and that money cannot simply go into a black hole of bad debt with no means of recovering any of the funds.”
An open question is how far McCain and Obama will push to see their principles folded into the rescue plan. At a news conference here, Obama was asked if he would vote against the bill if his proposals were disregarded.
He gave an answer that left him maneuvering room: He said if that happened he would urge Paulson to “go back to the drawing board” and return with a different proposal.
“The principles I outlined are principles I believe any package needs to contain for me to support it,” he said.
With the markets reeling, Obama conceded he might need to postpone parts of his ambitious policy plans.
Over the course of the campaign, Obama has promised to spend, among other things, $6 billion a year to improve the nation’s bridges, roads and dams; $500 million a year to help religious and community groups provide summer education; $2 billion to aid displaced Iraqis; and $15 billion a year to develop cleaner energy sources.
He also wants a middle-class tax cut that would amount to about $80 billion a year.
In an interview shown Tuesday on NBC’s “Today Show,” Obama asked, rhetorically, if he “can do everything that I’ve called for in this campaign.” Answering his own question, he said he “probably” won’t be able to fulfill all his promises “right away.”
He returned to the subject later in the day. Some plans won’t be deferred, including new education spending, energy research, a healthcare overhaul and his tax cut, Obama vowed. But he said he would reevaluate his agenda.
“It would be irresponsible of me to say I’m not going to take into account what things look like should I take office,” he said. “And one of the big question marks . . . is whether we have an economic recovery or we slide deeper into a recession. That will have a big impact on what federal revenues are and what the budget looks like. So all those things are going to have to be taken into account.”
Nicholas reported from the Obama campaign in Florida and Drogin from the McCain campaign in Michigan.