McCain can’t find economic footing

With the economy in turmoil and the country’s second-largest insurer faltering, John McCain was unequivocal Tuesday: “We cannot have the taxpayers bail out AIG or anybody else.”

By Wednesday, he had changed his mind.

The rapid about-face followed another quick retreat by the Republican presidential nominee earlier this week when he insisted that “the fundamentals of our economy are strong” even as one brokerage house filed for bankruptcy, another nearly went under and the Dow Jones industrial average dropped 504 points.

McCain’s reversals underscored the difficulty he has had in finding the right response to the deteriorating economy, the issue voters say is most important. The reversals also highlight the contradiction between McCain’s oft-repeated campaign message -- that the federal government should largely stay out of the economy -- and his new promises to help voters whose jobs, houses and retirement accounts are disappearing.

In a matter of days, McCain shifted from invoking small-government icon Ronald Reagan to quoting Franklin D. Roosevelt, the architect of the modern regulatory state.

And he and his running mate, Alaska Gov. Sarah Palin, dropped their promise, as Palin put it, to “get government out of the way of private-sector progress,” and are now pledging “stringent oversight” to deal with “a toxic waste there on Wall Street.”

The wildly swinging rhetoric from the McCain campaign has delighted Barack Obama, who just last week was struggling to respond to the enthusiasm whipped up by Palin’s unexpected arrival on the national stage.

Campaigning in Nevada on Wednesday, the Democratic nominee mocked McCain’s attempts to cast himself as a reformer. “This is somebody who’s been in Congress for 26 years, who put seven of the most powerful Washington lobbyists in charge of his campaign,” Obama said.

McCain’s zigzags on the deepening economic crisis may also be stirring doubts with some voters. Several recent polls suggest that his post-convention lead is slipping away.

The latest New York Times/CBS poll, taken Friday through Tuesday, found that Obama had the support of 48% of registered voters to 43% for McCain, a statistical tie. Voters overwhelmingly indicated the economy was their top issue and that they had more confidence in Obama than in McCain to make the right decisions.

And a CNN/Time/Opinion Research poll, taken Sunday through Tuesday, showed the race deadlocked in some battleground states, including Florida and Ohio.

This is not the first time in the presidential campaign that McCain has appeared to be caught off guard by an economic crisis.

Six months ago, as signs emerged of a slowdown in the housing market, McCain chided Hillary Rodham Clinton, then still competing for the Democratic nomination, for offering a plan to help homeowners facing foreclosure, noting critically that it looked “very expensive.”

After McCain was criticized for appearing unsympathetic, he came back several weeks later with a plan he said would help “well-meaning, deserving homeowners” facing foreclosure.

In May, though, McCain was back to attacking government intervention. In a speech to the National Restaurant Assn. in Chicago, he mocked Obama’s and Clinton’s plans for “more federal regulation, more government control of the economy,” according to a text of his remarks.

And in July, when a report showed that the nation had shed 62,000 jobs the month before, McCain issued a statement warning: “We cannot . . . increase regulation.”

Just three weeks ago, McCain -- who once said he was “proud to be a foot soldier” in the “Reagan revolution” -- was accepting the Republican presidential nomination with tough rhetoric about bureaucrats and bloated government.

Palin, too, invoked Reagan’s famous quip that “government is the problem” as she touted her own record of limiting the role of government as mayor of Wasilla, Alaska.

“I reminded people that government is not always the answer,” Palin said at a rally in Lee’s Summit, Mo., last week. “In fact, too often government is often the problem.”

Yet while campaigning in Michigan on Wednesday, McCain twice quoted Roosevelt, calling the president who triumphed over Republicans to create a vast system of regulatory agencies and government programs “one of our great presidents.” (McCain was reminding autoworkers at a General Motors plant in Lake Orion that Roosevelt had urged optimism even in the depths of the Great Depression.)

Instead of attacking government, McCain and Palin now routinely call for robust federal action. “We’ve got to get a more coordinated and a much more stringent oversight regime,” Palin said Wednesday in an interview on Fox News Channel’s “Hannity & Colmes.” “Government can play a very, very appropriate role in the oversight.”

Obama, who has consistently criticized the Bush administration’s economic management, avoided taking a position on the American International Group rescue plan, saying Wednesday, “We do not know all the details.” The Illinois senator added that the plan should not “bail out the shareholders or management of AIG.”

But he and his running mate, Joe Biden, have been working to exploit McCain’s changing positions to cast doubt on his ability to tackle the economy.

Biden, who began a two-day swing through Ohio on Wednesday, blasted the Arizona senator before a raucous crowd in Muamee, Ohio.

“All of a sudden it’s: ‘My goodness, there’s greed on Wall Street. My goodness, we need common-sense regulation,’ ” Biden said, citing examples of workers who lost their jobs while the chief executives of failed companies walked away with golden parachutes. “Please, please, please spare me about how Republicans are good managers of our money.”

As Obama has intensified his attacks, the McCain campaign has appeared unprepared to respond the fast-changing economic landscape.

As recently as Tuesday, the campaign’s senior policy advisor flatly rejected any detailed plan to deal with the mounting crisis. “The senator is not running to be Treasury secretary. He’s not running to be head of the SEC. He is running to be the leader of the United States. He can and has the judgment to put people in place with the technical expertise,” Douglas Holtz-Eakin told reporters.

“The moment when we write down a specific piece is the moment we send legislation from a McCain administration to Congress,” Holtz-Eakin added.

On Wednesday, Holtz-Eakin said McCain would create a bipartisan fact-finding commission to study the crisis. He also said that McCain would push legislation to strengthen financial regulators and protect consumers from mortgage fraud.

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noam.levey@latimes.com

maeve.reston@latimes.com

Levey reported from Michigan, Reston from Los Angeles. Times staff writers Michael Finnegan in Nevada and Faye Fiore in Ohio contributed to this report.