The upheaval at Lehman Brothers Holdings Inc., Merrill Lynch & Co., and American International Group Inc. – and the stunning reordering of the financial market that has following – gave the candidates an opening to press their economic ideas anew.
In line with historical positions of Democrats and Republicans, Obama generally supports stronger consumer protections, better regulatory oversight and more government intervention, while McCain broadly prefers a market system of less federal involvement and red tape.
Both advocate tax cuts, though to different degrees and different ends. Obama seeks to cut into inequality between rich and poor by raising taxes on the wealthiest Americans and give breaks to the middle class and lower-income people. McCain wants to spur the economy and create jobs by keeping tax rates low for higher-income taxpayers and slashing rates for corporations.
While they focused on the topic that voters say matters most, the two campaigns also continued to assail each other Monday on character issues. The Democratic vice presidential nominee, Joe Biden, said McCain was "launching a low blow a day." McCain's campaign, in turn, accused Obama of spouting "false talk about change" and hurling insults to cover up his record.
Yet, even that increasingly personal griping took a back seat as Obama and McCain maneuvered for an edge on the economy with stocks tumbling as investors reacted to the latest Wall Street turmoil.
Obama has led for months on the question of who would best handle the economy, but some polls show that his advantage has dwindled. He had a slight advantage over McCain on the economy – 47 percent to 42 percent – in an ABC News/Washington Post poll last week, the Democrat's edge cut in half since spring. However, CNN's latest poll showed Obama with a larger edge, 52 percent to 44 percent, with no movement from early this year.
McCain focused mostly on a need for regulatory reforms and applauded the federal government's refusal to bail out the latest cash-strapped institutions. It was a posture designed to bolster his free-market stance and strike a populist chord.
He promised: "The McCain-Palin administration will replace an outdated, patchwork quilt of regulatory oversight and bring transparency and accountability to Wall Street. We will have transparency and accountability and we will reform the regulatory bodies of government." He didn't say precisely how.
At a campaign appearance in Grand Junction, Colo., Obama chastised McCain by saying: "It's not that I think John McCain doesn't care what's going on in the lives of most Americans. I just think he doesn't know. He doesn't get what's happening between the mountains in Sedona where he lives and the corridors of power where he works."
As for government regulation, he said, "For years I have called for modernizing the rules of the road."
It's been nearly a decade since Congress and President Clinton reshaped the financial landscape. That 1999 legislation removed Depression-era barriers between commercial banks and investment firms and allowed the creation of financial behemoths where years later the risks of underwriting subprime mortgages were somewhat hidden.
Former Sen. Phil Gramm until recently one of the McCain campaign's top economic advisers, was a chief writer of that law.
McCain voted for a Senate version of the bill but did not vote on the final package. Biden voted against the Senate legislation but for the final compromise that Clinton signed. Obama was not in Congress at the time.
(Agencies via China Daily September 16, 2008)