Candidates Put Economy Centerstage; Outline Competing Economic Visions

With one of the largest investment firms in the country in bankruptcy and an insurance giant needing a massive government bailout to hang on, presidential candidates John McCain and Barack Obama have turned their attention to the economy, hoping to win still undecided voters with their plans to cure the nation's economic woes.

The financial crisis of the past few days is the latest in the long list of problems costing Americans their jobs, their homes and their savings.

On the "Straight Talk" Express in Tampa, Fla., McCain struck a populist tone, railing against greed and corruption on Wall Street.

"Our economy is broken," the Arizona Republican told the crowd. "We've seen self-interest, greed, irresponsibility and corruption undermine the hard work of the American people."

Sens. McCain and ObamaPlay

McCain announced plans for a commission to explore what he said was corruption in Washington and in corporations that has led to the current turmoil on Wall Street and put people's savings at risk.

"Americans are hurting right now, and there's going to be a ripple effect of this financial crisis because of the greed and corruption and excess, and Wall Street treated the American economy like a casino," he said. "And I know how to fix it, and I know how to get things done."

Tuesday's comments were in a different tone than the day before, where McCain acknowledged the grave state of the nation's economy, but underscored that the "fundamentals" of the U.S. economy were still sound.

The Obama campaign mocked that statement as proof McCain doesn't recognize the gravity of the economic crisis. By contrast, Sen. Barack Obama called this "the most serious financial crisis in generations."

"What we need now is leadership that gets us out," Obama said at a campaign stop today in Colorado. "I'll provide it. John McCain won't."

But beyond sniping at each other, what are the campaigns actually proposing?

In light of the sale of Merrill Lynch, bankruptcy of Lehman Brothers and the possible death throes of insurance giant American International Group, saved only by a last-minute $85 billion bailout by the federal government tonight, both McCain and Obama are now promising tougher regulations for Wall Street.

Obama identified 6 specific reforms five months ago at a speech at Cooper Union, including giving the SEC and other regulatory bodies greater enforcement powers. McCain, who prior to the current crisis cast himself as a champion of "less government, fewer regulations," tends now to speak in broad generalities without hashing out the details of what specific reforms he intends to make.

"I don't think either candidate has put together a cogent or persuasive package," to deal with the current crisis, said C. Fred Bergsten, director of the Peterson Institute for International Economics .

Economists say, 'the Devil is in the details.' Cracking down on Wall Street could have a strong impact on those on Main Street, making it harder for average Americans to qualify for a mortgage.

"Everybody's for tighter regulation," said Tom Gallagher, senior managing director and economist at International Strategy and Investment. "The fact is it's going to be harder to get credit than it was."

On the bread and butter issues, McCain and Obama have sharp differences.

McCain says he believes cutting taxes across the board would promote economic growth. He'd make permanent the Bush tax cuts for the wealthiest Americans, cut corporate taxes, drop Internet taxes, end the Alternative Minimum Tax, and double the personal exemption for dependents from $3,500 to $7,000.

Obama would raise taxes on the wealthy -- individuals who make more than $200,000 a year or couples who earn more than $250,000 a year -- but cut taxes for most households. Middle-class families would receive a $1,000 tax credit under his plan; seniors on fixed incomes would not be taxed.

The McCain campaign insists he would not raise taxes on a single American.

On health care, McCain offers Americans $5,000 credit to make private health insurance more affordable. Obama says people who can't afford private insurance should have access to an affordable government plan.

On the mortgage crisis, McCain would encourage lenders to refinance mortgages that have become too expensive for responsible homebuyers. Obama would rely on a government fund to help people avoid foreclosure, and give a mortgage interest tax credit to low and middle income earners who don't itemize.

In battleground states, like Ohio, and across the country, McCain and Obama have been trying to tell voters that they feel their pain and are willing to take action.

But, beyond sympathy, there are deeper issues that neither has addressed -- including what some economists call "the cardinal macroeconomic problem of the economy -- the budget deficit."

Both candidates frame the economy as a leadership issue: McCain, "the maverick" versus Obama, "the agent of change." But successfully managing the economy is much more complicated.