Obama, McCain clash over economy

McCain tries hard to regain his footing with new calls for reform and attacks on Obama's stands on health and taxes

With public anxiety mounting over financial markets and the economy, Sens. Barack Obama and John McCain engaged in a muted debate Tuesday night over who was to blame and whose plan would successfully address the problems.

In the second presidential debate, at Belmont University in Nashville, Tenn., Obama faulted the Bush administration, and by extension McCain, for a deregulatory environment that he said had led to the economic meltdown. And McCain, pledging to aid struggling homeowners, offered a proposal to direct the federal government to save families from foreclosure by buying mortgages they could no longer afford.

"As president of the United States," McCain said in response to an audience member's question, "I would order the secretary of the Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes, at the diminished value of those homes and let people make those, be able to make those payments and stay in their homes.

"Is it expensive?" he asked. "Yes."

Obama, who has been gaining strength in recent polls, actively engaged McCain, and repeatedly focused on the bread-and-butter struggles of Americans, vowing to help them with a "rescue package" for the middle class, not only for banks and insurance companies on Wall Street. The first part of the package, he said, would be tax cuts for all American households making less than $250,000 a year.

"It means help for homeowners so that they can stay in their homes," Obama said. "It means that we are helping state and local governments set up road projects and bridge projects that keep people in their jobs. And then, long-term, we've got to fix our health care system, we've got to fix our energy system that is putting such an enormous burden on families."

The plunging markets in the United States and overseas and a freeze in commercial and consumer credit added urgency to Tuesday night's debate, with questioners at the town-hall-style forum pressing the candidates to say how they would address the financial crisis.

But the candidates often seized on the questions to attack each other's records. While Obama and McCain were outwardly civil, each watched warily, sometimes with a thin smile, sometimes with a look of exasperation, as the other spoke directly to the audience.

McCain criticized Obama's record in the Senate, saying he had voted for billions of dollars in unneeded spending, including $3 million for a "projector for a planetarium in Chicago."

Obama said McCain's campaign manager, Rick Davis, had accepted money for consulting for Fannie Mae and Freddie Mac, the government-sponsored mortgage giants taken over by the federal government last month to protect them from collapse.

Gloomy pictures

Neither Obama nor McCain offered an optimistic view of the American economy. Obama said the nation was reaping the bitter fruit of eight years of the Bush administration's fiscal mismanagement and drive to deregulate markets, moves he said were supported by McCain.

McCain called American workers "innocent bystanders" in the economic storm and said one of his priorities would be to rid Washington of cronyism, greed and corruption.

Obama spoke of the importance of spending $15 billion a year over 10 years to gain energy independence, noting the local price of gasoline. "You're paying $3.80 here in Nashville," he said. But he also called for making health care more accessible, saying that the "broken health care system is bad, not only for families, but it's making our businesses less competitive."