Obama broadens economic assault on rival's proposals

Spokesman for McCain alleges lies, distortions

Senator Barack Obama of Illinois arrived for a campaign event in Green Bay, Wis., yesterday. ''You can trust me to bring about the reform we need in the future,'' Obama said. (Chris Carlson/Associated Press)

With leaders of both parties pinning the Wall Street collapse on lax Washington oversight, Senator Barack Obama has broadened his economic assault on rival John McCain by attacking McCain's proposals to open up health insurance and Social Security to more market competition.

Using speeches over the weekend and a hard-hitting TV ad released yesterday, Obama is warning voters that McCain, even as the shortcomings of government regulation have been laid bare, would put their healthcare and retirement security at risk by loosening scrutiny in those areas, too.

"We've seen what Bush-McCain policies have done to our economy; now John McCain wants to do the same to our healthcare," the narrator of Obama's new ad says over brooding music, referring to an article McCain wrote for a health journal this month arguing for "opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking."

McCain spokesman Tucker Bounds responded by saying that Obama has "once again lied and distorted," and that the position McCain articulated in the article was that Americans should "have better access to more affordable healthcare across state lines." Of Obama's attack on Social Security, Bounds said, "John McCain is 100 percent committed to preserving Social Security benefits for seniors, and Barack Obama knows it - this is a desperate attempt to gain political advantage using scare tactics and deceit."

Indeed, nonpartisan fact-checkers accuse Obama of distorting some facts to score political points, but Obama's campaign, in now also targeting healthcare and Social Security, is seizing what it considers an opportunity to keep McCain on the defensive as the magnitude of the financial meltdown grows with each day.

Both candidates reacted warily to the emergency proposal by the Bush administration to grant Treasury Secretary Henry Paulson broad authority to spend as much as $700 billion to buy distressed mortgages and assume responsibility for bad debt on banks' books, bringing to roughly $1 trillion the amount of taxpayer money the US government has committed to the crisis over the past several weeks.

McCain and Obama expressed reservations about giving Paulson so much leeway, asserting that a lack of oversight is what contributed to the current collapse.

"This arrangement makes me deeply uncomfortable," McCain told supporters in Scranton, Pa. "When we're talking about a trillion dollars in taxpayer money, 'trust me' just isn't good enough."

McCain called for an oversight board to "impose accountability and establish concrete criteria for who gets help and who doesn't." He floated as potential board members New York mayor Michael Bloomberg, billionaire investor Warren Buffett, and former Massachusetts governor Mitt Romney.

In a speech in Green Bay, Wis., Obama reiterated a series of principles he believes must be reflected in the final plan, saying, "We cannot give a blank check to Washington with no oversight and no accountability when no oversight and no accountability is exactly what got us into this mess in the first place."

Still, both candidates may face a thorny political dilemma in the coming days as they decide how to vote on the final package. The GOP White House and Democrat-led Congress are wrangling over what should be included in the bailout plan and how quickly it should be signed into law.

Obama, who found his campaign footing again over the past week as the financial crisis unfolded, has sought to open a new front by pouncing on McCain's support for allowing workers to invest a portion of their Social Security benefits in the stock market. If it were currently in place, Obama suggested, a looser, market-based Social Security system would be disastrous for seniors.

"If my opponent had his way, the millions of Floridians who rely on it would've had their Social Security tied up in the stock market this week," Obama said Saturday in Daytona Beach, Fla.

But fact-checkers from The Washington Post and the website factcheck.org deemed the attack misleading, noting the plan McCain supported - proposed by President Bush in 2005 - would have applied to those born after 1950, and thus affected future retirees, not many current ones.

Obama yesterday also sought to answer critics who question, given the precarious state of the economy, whether he can carry through with heavy domestic spending if elected, including offering universal access to healthcare and expanding early education. Among the cost-cutting proposals he outlined: trimming $40 billion a year by cutting spending on government contractors by 10 percent; slashing $15 billion in annual "overpayments" to insurance companies for Medicare services; and bringing most American troops home from Iraq.

"If people tell you we can't afford it, you just remind them we are spending $10 billion a month in Iraq when they've got a $79 billion surplus," Obama told voters in Wisconsin. "The only way we can do all this without leaving our children with an even larger mountain of debt is if Washington starts taking responsibility for every dime that it spends."

McCain, for his part, is sticking by proposals for a corporate tax cut and extending President Bush's income tax cuts. The two candidates continued to clash over who had been more responsive to the current financial crisis.

"I've been on top of this thing, and that's why you can trust me to bring about the reform we need in the future," Obama said in Green Bay.

McCain, after initially saying last week that the economy was fundamentally sound, said yesterday that the financial system faced the "most serious crisis since World War II." He asserted Obama had not offered specific solutions, though both candidates have held off doing so as they absorb the aftershocks and await Washington's proposed fix.

A new CNN/Opinion Research Corp. poll released yesterday found that 6 in 10 voters believe the government should step in to fix the crisis, with twice as many voters blaming Republicans (47 percent) as blaming Democrats (24 percent).

Scott Helman can be reached at shelman@globe.com.