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Obama and McCain push economic plans as stocks plunge

BLOOMBERG NEWS

October 11, 2008

Barack Obama proposed a $5-billion program to help small businesses, and John McCain called for suspending some rules on retirement account withdrawals as the faltering economy remained center stage for both campaigns Friday.

Obama said business owners should be able to tap emergency government funds through the Small Business Administration as they struggle to meet payrolls because of the credit crisis.

"If we're going to rebuild this economy from the bottom up, then it has to start with our small businesses on Main Street," the Democratic presidential candidate told supporters in Chillicothe, Ohio.

McCain, campaigning in La Crosse, Wis., called for a suspension of rules mandating disbursements from Individual Retirement Accounts and 401(k) accounts at age 70 1/2.

"To spare investors from being forced to sell their stocks at just the time when the market is hurting the most, those rules should be suspended," he said.

The two candidates issued their latest prescriptions for the economy as stocks globally plummeted again Friday.

The swing state of Ohio, with 20 electoral votes, is one of the main battlegrounds for Illinois Senator Obama and McCain, an Arizona senator. It also is one of the states hardest hit by the slowing economy with an unemployment rate of 7.4 percent.

McCain is trying to pry loose Wisconsin's 10 electoral votes, even though the state has gone for the Democratic candidate in the past five presidential elections.

McCain also modified some details on how he would fund his $300-billion proposal to have the government buy up distressed home mortgage loans. In an interview Thursday evening on ABC News, he said some of the cost may come from "new money, if necessary." Friday he said "the funds aren't new but the priorities will be."

Campaign aides confirmed the money would be drawn only from the $700-billion financial rescue package passed by Congress last week.

Obama has called the plan costly to taxpayers and said it would reward speculators and banks. At a midday rally in Columbus, Ohio, Obama said he and McCain have different priorities. "Taxpayers should not have all the downside without any of the upside," he said.

Even as he warned the credit crisis could quickly extend to businesses throughout the country, resulting in layoffs and shuttered shops, Obama said Americans shouldn't panic. He quoted former President Franklin D. Roosevelt, who took office amid the Great Depression, saying at his first inauguration, "the only thing we have to fear is fear itself."

Obama told a crowd in Chillicothe history would judge the actions of Americans at this time and asked them to rise up as people have done in "times of trial and turmoil" throughout U.S. history.

"I want you to believe in the future we can build together," he said. "Together we can't fail. Not now. Not when we have a crisis to solve and an economy to save."

Obama told reporters afterward the Federal Reserve and Treasury have the necessary tools to deal with the crisis. Both now need to take actions that will calm markets, he said. "The problem is that there's been a lack of coordination, a lack of marketing of what's being done, clarity, so that the market understands these clear signals," he said.