Oct. 14, 2008 -- Sen. John McCain unveiled his plan today for dealing with the financial crisis as he competes with Sen. Barack Obama -- and President Bush -- for voters' faith that he can best handle the economic threat.
McCain released his economic recovery blueprint a day after his presidential rival Obama spelled out his proposals. McCain delivered his plan on the day that President Bush announced the federal government's historic move to invest $250 billion directly into banks to prop up the credit market, the federal government's largest bank intervention since the Depression, a move likely to steal much of the spotlight from McCain.
Nevertheless, the dueling economic plans spelled out by McCain and Obama will lay the groundwork for the candidates' final presidential debate at Hofstra University on Long Island, N.Y., Wednesday night.
The Wednesday debate is growing in importance for McCain as he tries to reverse sliding poll numbers that have fellow Republicans openly worried.
McCain got more bad news today in a series of surveys from four battleground states that the economic crisis has helped Obama solidify hefty leads. The polls by Quinnipiac University found that voters in those states had more confidence in Obama to understand and handle the economy than in McCain.
According to the Quinnipiac polls, Obama is beating McCain 52-43 in Colorado, 54-38 in Michigan, 51-40 in Minnesota and 54-37 in Wisconsin.
The No. 1 issue in the election by far is the economy. Both men have battled over who is best suited to handle the fiscal crisis, and both issued their most comprehensive economic plans yet in the past two days.
Speaking in Blue Bell, Pa., McCain promised to improve the economics of the nation and attacked Obama's plans.
"When I leave office I can promise you that this nation will not be on the same path it is today," McCain said. "I will not play along with the same Washington games and gimmicks that got us into this terrible mess in the first place."
McCain charged that despite "frequent changes to my opponent's tax plans in recent months -- he seems to revise them with each new poll --" that the bottom line remained the same. "He will raise your taxes."
There are several strategies on which Obama and McCain agree.
Both would waive rules that force older Americans to withdraw from their 401(k)s in a bear market. It was an idea first suggested by McCain, a fact that Obama acknowledged when he made his own announcement Monday.
McCain proposes also lowering to 10 percent the tax rate on older Americans forced to tap into their retirement accounts.
Both men would offer help to those who recently lost their jobs by eliminating federal taxes on unemployment compensation payments.
In addition, McCain and Obama would ease rules on capital gains taxes. While Obama would eliminate all capital gains taxes on investments in small businesses and startup companies, McCain would reduce capital gains taxes from 15 percent to 7.5 percent for 2009 and 2010.
McCain would also increase the amount of capital losses that could be deducted from taxes from $3,000 to $15,000.
A centerpiece of McCain's economic rescue is his plan to buy up bad mortgages and replace them with new, fix rated mortgages. That suggestion came under withering criticism when it was first broached last week because critics said it would bail out the companies most culpable for selling subprime mortgages to families who couldn't afford them.
Rudy Giuliani Shrugs Off McCain Polls
The McCain plan has been tweaked since then, however, to allow the government to buy mortgages directly from homeowners as well as companies.
The McCain camp said there are 3.1 million homeowners who are behind in their mortgage payments, and 11. 8 milllion whose mortgages are "underwater," meaning that the value of their homes has fallen below the value of their mortgages.
To be eligible under the revised McCain plan, a homeowner would have to prove that he or she was creditworthy at the time of the original mortgage.
McCain estimated the cost of his plan to be about $300 billion and would come out of the $700 billion already authorized in the congressional bailout bill. When McCain first considered the proposal last week, he was uncertain whether it would be in addition to the $700 billion bailout fund.
The Obama camp immediately pounced on McCain's proposals, saying they provided more help to banks than to families.
"John McCain's latest gambit is a day late and 101 million middle-class families short," Obama's campaign said in a statement. "McCain's plan would spend $300 billion to bailout the same irresponsible Wall Street banks that got us into this mess without doing anything to help jump-start job growth for America's middle class."
Several top Republicans have publicly fretted over McCain's ability to pull off a victory next month, but former New York City Mayor Rudy Giuliani tried to shrug off the Washington Post/ABC News poll showing McCain trailing Obama by 10 points with three weeks left to the campaign.
"Ronald Reagan was pretty far behind at this point, three weeks before the election," Giuliani told "Good Morning America" today. Reagan was eight points behind Jimmy Carter before pulling an upset win.
"Look, John McCain is someone who's been through difficulties before. I've watched him down and out in the Republican primary," Giuliani said. "He came back. He beat me, he beat everybody else. I believe he's going to do the same thing."