Wall Street dominates presidential campaign

The financial crisis on Wall Street spread to the presidential campaigns Monday as Barack Obama touted the Democrats’ ability to handle the economy and GOP rival John McCain pushed his message of reform.

Obama seized on the assumption that Democrats are more trusted to handle the economy, repeatedly calling McCain out of touch with voters' economic concerns. The Illinois senator also pounced on McCain’s assertion that the "the fundamentals of our economy are strong.”

{mosads}The Democratic presidential candidate called the current economic struggles "the most serious financial crisis since the Great Depression."

McCain responded by hitting his rival on the tax issue, a perceived Republican strength.

The Arizona senator said the country's banking system is in dire need of new regulatory policies, adding that Obama would raise taxes, causing further pain and uncertainty to an economy that took another hit on Monday.

After the Dow closed more than 500 points down on Monday, and in the wake of the news that the investment banking giant Lehman Brothers filed for bankruptcy, Merrill Lynch was purchased by Bank of America in a deal brokered by the federal government and continued uncertainty about the future of AIG, Obama sought to claim the mantle of the candidate best suited to be the steward of the economy.

He blamed much of the day's economic turmoil on the Republican policies of the Bush administration, policies he said McCain would continue.

"It’s not that I think John McCain doesn’t care what’s going on in the lives of most Americans. I just think he doesn’t know," Obama said. "He doesn’t get what’s happening between the mountain in Sedona where he lives and the corridors of Washington where he works. Why else would he say that we’ve made great progress economically under George Bush? Why else would he say that the economy isn’t something he understands as well as he should? Why else would he say, today of all days — just a few hours ago — that the fundamentals of the economy are still strong? Senator — what economy are you talking about?"

McCain and his campaign responded that Obama had distorted McCain's remarks, which he made at a campaign stop in Jacksonville, Fla. The Arizona Republican acknowledged in the same breath that while "the fundamentals of our economy are strong … these are still very, very difficult times."

Before making that statement, McCain praised the resilience of American workers and said they are not to blame for whatever economic troubles the country is facing, which led the McCain camp to charge Obama with possessing a defeatist attitude.

"Only Barack Obama would take a statement about the strength, ingenuity and resilience of American workers and American industry and turn it into a political distortion and attack," McCain spokesman Tucker Bounds said in a statement. "Barack Obama's short career as a public servant has been defined by pessimism, defeatism, and weakness in the face of the great challenges of our time. His lack of faith in American workers may explain his willingness to raise taxes during a struggling economy, but it is no way to lead our country."

McCain throughout the day tried to turn the day's news into a vehicle to push his message of reform, calling for more regulation of Wall Street and promising to "put an end to running Wall Street like a casino."

Obama and Democrats, however, were relentless in painting McCain as out of touch. While Obama said at a campaign stop in Colorado that he doesn't "fault Sen. McCain for these problems," he does "fault the economic philosophy he subscribes to."

"It’s the same philosophy we’ve had for the last eight years — one that says we should give more and more to those with the most and hope that prosperity trickles down to everyone else," Obama said.
 
The Obama camp also tried to portray McCain as being confused on the economy, pointing to his stated belief that the economy is fundamentally strong while at the same time announcing a new ad that says the economy is in crisis, another line that McCain said Monday in Orlando.

"Today of all days, John McCain's stubborn insistence that the 'fundamentals of the economy are strong' shows that he is disturbingly out of touch with what's going in the lives of ordinary Americans," Obama spokesman Bill Burton said. "Even as his own ads try to convince him that the economy is in crisis, apparently his 26 years in Washington have left him incapable of understanding that the policies he supports have created an historic economic crisis."

McCain did however say in his remarks that "the American economy is in crisis" and "we are seeing tremendous upheaval on Wall Street."

Despite the criticism launched at the White House by both candidates and their surrogates, Treasury Secretary Henry Paulson declined to take the bait or endorse any of the suggestions coming from either McCain or Obama.

Paulson, briefing reporters at the White House, said that the election season and political blame-game are not factoring into the administration's thought process as it seeks to right the country's listing economic ship.

"Let me say, we're in the middle of a presidential campaign and we're going to let the campaigns fight it out, make their cases to the American people," Paulson said. "I'm not focused on politics right now. I'm not looking back, I'm looking forward. This president is very committed to the stability of the financial system, to its importance to the economy, and that's where I'm focused."