White House hopefuls clash over how to repair the country's ailing economy, but both dodged questions on a US$700bn Wall Street bailout.
US Debate: Economy takes centre stage
White House hopefuls Barack Obama and John McCain clashed in a debate yesterday over how to repair the country's ailing economy, but both dodged questions over whether they will back a US$700bn Wall Street bailout. Mr Obama, reprising his recent attacks on Republicans' zeal for deregulation, said the crisis was the "final verdict on eight years of failed economic policies promoted by George Bush, supported by Senator McCain.
The Democrat noted that early last week, Mr McCain had said the US economy was fundamentally "strong." I just fundamentally disagree," he said, as he pressed for relief for "Main Street" mortgage holders and tax cuts to restore middle-class prosperity. Both the Democrat and his Republican rival said they were supporting round-the-clock efforts in Congress to seal a $700bn economic rescue package.
Mr McCain, insisting that he had issued warnings in the Senate about the impending crisis, said "a lot of us saw this train wreck coming." But the Arizona senator said: "I'm feeling a little better tonight" as leaders in Congress grappled to finalise a deal after Republicans injected new demands to keep the burden off taxpayers and on private investors. "This isn't the beginning of the end of this crisis. This is the end of the beginning if we come out with a package that will keep these institutions stable and we've got a lot of work to do," Mr McCain said.
Mr Obama reiterated that in light of the onerous fiscal burden imposed by Bush's bailout, there were "a range of things that are probably going to have to be delayed" in his economic agenda. "Our economy is slowing down and it's hard to anticipate right now what the budget looks like next year, but there's no doubt that we're not going to be able to do everything that I think needs to be done," he said.
Mr Obama stressed that some agenda priorities would stay regardless, including his promised push for energy independence and universal health care, but that "some components" might have to be shed. Asked what he might have to trim from his policy agenda, Mr McCain said: "No matter what, we've got to cut spending. We've let government get completely out of control." The Republican restated his vow to eliminate ethanol subsidies, which profit large agri-businesses and are hugely popular in battleground farming states such as Iowa.
Mr McCain said that the United States has the second highest business tax in the world, and emphasised that he would strip out government spending. Mr Obama agreed that the business tax was high. "Here's the problem," he said. "There are so many loopholes that have been written into the tax code often times with support of Senator McCain that we actually see the businesses pay effectively one of the lowest tax rates in the world, and what that means then is that there are people out there who are working every day who are not getting a tax cut and you want to give them more."
Mr McCain portrayed himself as "the person who's tried to keep spending under control" in the Senate, and someone who has pushed for a simplified tax code. Mr Obama shot back that under Mr McCain's economic plan, "oil companies would get additional four billion dollars" in tax breaks. "Look, we all would love to lower taxes on everybody. But here's the problem: If we're giving them to oil companies, then that means that there are those who are not getting them," Mr Obama said.
Mr Obama began his presentation by saying that the United States was involved in two wars and "the worst financial crisis since the Great Depression". On Capitol Hill, lawmakers continued negotiating over finance system bailout deal over the weekend, past the legislature's scheduled pre-election break time that was to have begun yesterday. The Senate's Democratic majority leader, Harry Reid, vowed Congress would stay in session until the deal was done.
The gravity of the crisis was underscored by the collapse on Thursday of Washington Mutual in the biggest-ever US bank failure, and troubles at Belgian-Dutch financial group Fortis. WaMu, heavily exposed to bad mortgage investments at the heart of the financial crisis, was closed by the Federal Deposit Insurance Corporation. In a deal orchestrated by the FDIC, JPMorgan Chase bought WaMu's deposits, assets and some liabilities for US$1.9bn dollars.
Despite repeated pledges from lawmakers and President Bush that a deal was in the offing, there were still signs of discord among rebel Republicans, backing an alternative package to the plan proposed by Treasury Secretary Henry Paulson. * AFP