Which Candidate Has the Best Economic Plan?

With 48 days left before election day, rival presidential candidates Barack Obama and John McCain are trying to convince voters that they have the best plan to fix what is being called the worst economic crisis the nation has faced since the Great Depression.

Obama and McCain released fresh television ads today looking straight into the camera, appealing to Americans to trust them to fix the staggering economy as Wall Street reeled this week with stock prices plummeting, investment banks collapsing, and the Federal Reserve rescuing an insurance giant from bankruptcy.

"This isn't just a string of bad luck," Obama says in his latest two-minute ad. "The truth is that while you've been living up to your responsibilities, Washington has not."

"Enough is enough," McCain declared in his 30-second ad. "New rules for fairness and honesty, I won't tolerate a system that puts you and your family at risk. Your savings, your jobs -- I'll keep them safe."

While both candidates have made the economy the centerpiece of their campaigns in recent days, neither has been able to capture the issue -- which voter say is their No. 1 concern -- like Bill Clinton did in 1992 with the slogan, "It's the economy, stupid."

And while McCain and Obama offer starkly different plans to fix the economy rooted in their basic philosophies about the role of government in the nation's economy, the details of those plans have been lost in a swirl of slogans and political accusations.

Obama's Economic Blueprint

Obama's plan focuses on revamping the nation's regulatory oversight system, immediate relief for homeowners hit by the housing crisis, and a middle-class tax cut to stimulate the economy.

Obama, who was raised for a time by a single mother and whose first job was as an advocate for a public housing project in Chicago, proposes a greater government role in driving an economy that creates good jobs for working families.

"He believes that the test of a successful economy is how that economy works for people and what it does for workers," Obama's senior economics adviser Jason Furman told ABC News recently. "Does it give them job security, does it give them good wages, does it give them good benefits?"

Advisers said Obama's roots as a community organizer in Chicago are reflected in his economic agenda, which proposes to scrap President George Bush's tax cuts for families making more than $250,000. Obama would use that tax revenue money to give low- and middle-class families a $1,000 tax cut that would effectively give 95 percent of working families a tax cut.

Obama also advocates spending $21 billion per year on alternative energy and infrastructure projects, and supporting a second stimulus package worth $50 billion in an attempt to spur job growth.

Obama's plan to combat the subprime mortgage crisis that has led many homeowners into foreclosure proposes a $10 billion fund to help lenders rework existing subprime loans into 30-year, fixed loans and crack down on mortgage fraud and predatory lenders.

Obama has suggested he would renegotiate the North American Free Trade Agreement to add environmental and labor protections. McCain traveled to Canada during the campaign to reaffirm his commitment to NAFTA.

McCain's Economic Plan: Small Government

McCain's economic plan has been less specific, though rooted in his philosophy that government shouldn't play a big role in the economy.

"Sen. McCain's basic approach is to have a reliance on the capacities of American workers and firms and small businesses to make sure the government remains relatively small," McCain's senior domestic and economic policy adviser Douglas Holtz-Eakin told ABC News recently.

Holtz-Eakin said McCain's economic plan is focused on reining in congressional spending, or earmarks, forging trade agreements, reforming job training programs for blue-collar workers and advocating the expansion of the No Child Left Behind Act to allow parents to "take their money with them" to shop around for schools.

"Sen. McCain's economic plans are rooted in his belief that the role of government and on economic issues is to unleash the ingenuity, creativity and hard work of the American people and make it easier to create jobs," McCain senior adviser Taylor Griffin told ABC News.com last month.

Republican advisers said McCain believes national security is inextricably linked with economic security. They said he believes the key to economic growth is low taxes, incentives to keep companies in the country, free trade and getting rid of earmarks in federal spending.

Despite initially voting against Bush's tax cuts, McCain is now proposing to make them permanent and give additional tax cuts to corporations and eliminate the alternative minimum tax.

"The underlining themes that are woven throughout his approach is not to punish productive behavior, keep tax rates low, create incentives for companies to stay in this country, lower the corporate tax rate and ... comprehensive spending reform," McCain economic adviser Nancy Pfotenhauer told ABCNews.com in August.

McCain has acknowledged in the past that he knows more about foreign policy and national security than economics. Democrats have blasted McCain for quipping that economics is not his strong suit, turning it into a television ad against McCain.

"He has this wonderful self-deprecating sense of humor and out of his mouth comes things sometimes like 'yeah, I'm not that good on the economy' in an effort to make a small joke," Holtz-Eakin said, noting McCain has been the chair of the Senate commerce committee and ran the largest squadron in the Navy.

McCain Recasts Himself as Champion of Regulation

In recent days, McCain has attempted to recast his long-held positions on government regulation, as giants in the nation's banking and insurance industries teeter on the edge of collapse.

McCain struggled to explain his reaction today as news broke that the Federal Reserve had reversed itself and agreed to an $85 billion bailout of insurance giant The American International Group (AIG).

In keeping with his philosophy that the government shouldn't bail out failing private businesses, McCain adamantly said Tuesday that the government shouldn't save AIG as it teetered on the edge of collapse.

"They're on their own, We cannot have the taxpayers bail out AIG or anybody else," McCain said on Tuesday.

But after Treasury Secretary Henry Paulson announced the government would intervene to save AIG, McCain suggested he agreed with protecting Americans who have insurance policies and accounts at AIG.

In an e-mailed statement to reporters, McCain said that any actions "should be to protect the millions of Americans who hold insurance policies, retirement plans and other accounts." But in the next sentence McCain insisted, "we must not bailout the management and speculators who created this mess."

For over a decade in the Senate, McCain embraced legislation to broadly deregulate the banking and insurance industries. But as the Bush administration scrambled to prevent the collapse of AIG, he has attempted to recast himself as a champion of Wall Street reform.

Obama agreed Wednesday that the government "must ensure that the plan protects the families that count on insurance," but like McCain said the government "must not bail out the shareholders or management of AIG."

Obama said the fact the Federal Reserve had to intervene to save AIG at all is a "verdict on the failed economic philosophy of the last eight years" and blamed the Bush administration and McCain's unwillingness to regulate industry.

"This crisis serves as a stark reminder of the failures of crony capitalism and an economic philosophy that sees any regulation at all as unwise and unnecessary," read an Obama statement sent to reporters Wednesday.

"Despite his eleventh hour conversion to the language of reform, Senator McCain has subscribed to this philosophy for 26 years in Washington and the events of this week have rendered it a colossal failure...I will bring the change we need to restore confidence in our financial markets and strength to our economy," Obama said.

Americans Can't Decide Who to Trust on Economy

Neither candidate has thus far been able to gain the upper hand with voters in who is best to handle the economic crisis.

The two are rated very closely in overall trust to handle the economy – 47 percent pick Obama, 42 percent McCain, a scant 5-point Obama edge, according to the latest ABC News/Washington Post poll . That's contracted from an 11-point Obama advantage before the conventions and a 17-point Obama lead on the economy in mid-July – a trend in McCain's favor.

However Obama leads McCain with the support of the 74 percent of Americans who say the Democratic presidential candidate understands the economic difficulties people are having, compared with 53 percent who think McCain gets it, according to the latest ABC/Post poll.

Economists Find Obama, McCain Economic Proposals Lacking

McCain and Obama are bracing to inherit an economy in turmoil next January, with an estimated record deficit of $482 billion -- the largest the nation has ever faced.

Both candidates have been criticized for not having a plan to deal with the $9.3 trillion-plus national debt and some economists have found both of the candidates' economic proposals lacking.

"Neither candidate has come up with anything that comes close to matching the size of the problems we're facing," said Peter Morici, a business professor at University of Maryland.

"The big issues are the trade deficit, energy policy, and cleaning up the banks," Morici said, arguing neither candidate has offered a good plan to fix those issues.

"Nothing that's meaningful, nothing that makes any sense, nothing that solves those problems," he said.