Pointing fingers on the economy

Candidates push factual envelope in harsh ads tied to financial crisis

A McCain ad claims Barack Obama is getting advice from Franklin Raines, a former Fannie Mae CEO, and calls it ''shocking.''

Voters eager to learn the presidential candidates' plans to fix the nation's quaking financial system won't get much help from their latest TV ads. Instead, they'll see dueling guilt-by-association attacks focused on players only peripherally related to John McCain and Barack Obama.

McCain, who has slipped in most national polls since the Wall Street crisis hit, released ads Thursday and yesterday attempting to link Obama to a pair of former chief executives with checkered records at Fannie Mae, one of the two mortgage giants taken over by the federal government earlier this month. One executive has never been an adviser to Obama, and the other has not had a role for months.

Obama returned the favor with a tough spot tying McCain to President Bush and a pair of economic advisers who have embarrassed McCain. One adviser left the McCain campaign months ago.

The ads are designed to undermine voter confidence in the opponent's ability to deal with the economy. One McCain ad opens with an announcer saying "Obama has no background in economics." The Obama spot begins with a voice-over stating, "John McCain admits he doesn't understand the economy." None of the ads offer any positive information about the candidates who approved them or their plans for the economy.

"The campaigns are under pressure to say something and do something about the crisis when there really isn't much they can do," said Dennis Goldford, a political science professor at Drake University in Iowa. "The easiest thing is to shellack the other guy and say 'Whatever I don't know, the other guy knows less.' "

McCain has had a rough week and needs to change the focus, said Dante Scala, political science professor at the University of New Hampshire. "John McCain can't afford to let Barack Obama get too much distance on this. He has to make sure Obama is as implicated in the mess as much as McCain himself is."

One of McCain's ads focuses on Jim Johnson, Fannie Mae CEO from 1991 to 1998, and says that under his regime, "Fannie cooked the books and Johnson made millions. Then Obama asked him to pick his VP. And raise thousands for his campaign."

Johnson, who vetted vice presidential candidates for John F. Kerry in 2004 and Walter Mondale in 1984, did raise money for Obama, but spent less than a month as one of three leaders of Obama's selection effort, long before Obama picked Joe Biden. Johnson quit in June after questions were raised about favorable loan terms he received from Countrywide Financial Corp., a shaky subprime mortgage lender criticized by Obama on the campaign trail for its abuses.

The other McCain spot says it is "shocking" that Obama is getting advice from Franklin Raines. Raines headed Fannie Mae from 1998 to 2004 and agreed in April to pay nearly $25 million in a settlement with the government in an accounting scandal while there. "Barack Obama, bad advice, bad instincts. Not ready to lead," the announcer says.

Raines, who has not donated to any presidential candidate this year, denied he is an adviser to Obama. Obama's campaign said the characterization of Raines is "a flat-out lie" and that a McCain campaign official was informed by Raines on Monday that he was not advising the campaign.

The McCain ad cites an April profile of Raines in The Washington Post. Subsequent Post stories also described him as an Obama adviser without attribution.

"They have never pushed back on that, on whether he had advised them, for four months," said McCain spokesman Tucker Bounds. "No letter to the editor, no pushback, or anything, and now they're asking for a correction. That's absurd."

Obama's campaign fired back by releasing a list of 26 McCain advisers and fund-raisers who have lobbied for Fannie Mae or Freddie Mac, the other mortgage company taken over by the federal government this month. It also pointed out that McCain's campaign manager, Rick Davis, previously lobbied on behalf of the two mortgage giants.

In Florida yesterday, Obama met with what his campaign described as his "top economic advisers" to discuss the financial meltdown and then appeared in public with two former treasury secretaries, Robert Rubin and Lawrence Summers, and two former national economic advisers, Laura Tyson and Gene Sperling. McCain gave a speech in Wisconsin yesterday outlining his proposals to deal with the crisis.

Besides mentioning Bush, Obama's ad highlights Carly Fiorina, the former Hewlett Packard executive, describing her as "the fired CEO who got a $42 million golden parachute." She has been one of McCain's chief surrogates on the economy, but has been absent after saying this week that neither McCain nor his running mate, Sarah Palin, had the qualifications to run a corporation. Fiorina received $45 million in stock and severance pay when she was forced out of Hewlett Packard in 2005, but has no connection to any of the institutions or policies that have staggered Wall Street. A spokesman said last night she remains an adviser to McCain.

Obama's ad also spotlights former senator Phil Gramm of Texas, who left his role as McCain's campaign cochairman in July after saying the United States "had become a nation of whiners" causing "a mental recession." Gramm, an ardent advocate of deregulation, was also lead sponsor of the 1999 law, passed with bipartisan support and signed by President Clinton, that allowed consolidation and competition among commercial banks, investment brokerage firms, and insurance companies.

The ads about financial advisers are the latest of many attempts by both sides trying to tar the opposition because of the company they keep.

Obama's campaign has relentlessly disparaged McCain for employing veteran Washington lobbyists in many key campaign posts and has come under sharp criticism this week for a Spanish-language ad linking McCain to talk radio's Rush Limbaugh and his incendiary remarks about immigrants. Limbaugh has been highly critical of McCain on a number of issues, including comprehensive immigration reform, which McCain favored but largely abandoned in the face of conservative outrage.