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Candidates Spell Out Economic Plans Before Third Debate

October 14, 2008 at 6:25 PM EDT
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A day after Democratic candidate Barack Obama unveiled his new recovery proposal for the struggling economy, his GOP rival John McCain released his own plan in an effort to gain steam in the polls. Kwame Holman reports on the candidates' efforts to gain voters' trust before the election.

RAY SUAREZ: Now, the presidential candidates and their plans to revive the faltering economy. NewsHour correspondent Kwame Holman reports.

KWAME HOLMAN: Republican presidential nominee John McCain today laid out a $52.5 billion economic recovery plan.

SEN. JOHN MCCAIN (R), Arizona: What we need to see now is swift and bold action to lead this country in a new direction.

KWAME HOLMAN: At a rally in Blue Bell, Pa., McCain endorsed the Bush administration’s plan for injecting capital directly into banks, with some caveats.

SEN. JOHN MCCAIN: We will return that those companies be reformed and restructured until they are sound assets again and can be sold at no loss or perhaps even a profit to the taxpayers of America.

When that’s accomplished, in each instant, government will relinquish its interest in these private companies. We’re going to get government out of the business of bailouts and equity stakes and back in the business of responsible regulation.

KWAME HOLMAN: McCain said he would go further to shore up confidence in the banking system, that, as president, his Treasury Department would guarantee all savings for six months.

McCain's economic plan

KWAME HOLMAN: Recent polls show Democrat Barack Obama leading McCain on the question of who would do a better job handling the economy. Today, McCain put before voters several new proposals.

McCain would eliminate taxes on unemployment benefits; reduce the capital gains tax by half, to 7.5 percent for two years; and accelerate the tax write-off for those forced to sell stocks at a loss. The current deduction is $3,000 per year. McCain would increase it to $15,000.

McCain would help seniors whose investment accounts and 401(k) plans have been decimated by the recent plunge in the markets. McCain called for suspending the requirement that seniors begin withdrawing a minimum amount of their funds at age 70 and a half.

SEN. JOHN MCCAIN: Those rules should be suspended to spare senior citizens from being forced to sell their stock just as the market is hurting the most. Under the emergency measure I propose, we will also cut the tax rate for withdrawals from tax-preferred requirement accounts to 10 percent. Retirees have suffered enough and need relief.

KWAME HOLMAN: In addition to laying out his own plan, McCain attacked a key element in Obama's economic platform. Yesterday, Obama said the government should allow tax-free emergency withdrawals from 401(k) plans for up to two years.

SEN. JOHN MCCAIN: This is an invitation to capital flight and, therefore, to continued instability in the market at a moment when exactly the opposite is needed. Any family that takes part in this will not see the benefits of the market recovery that smart policy can help bring about.

Obama focuses on job growth

KWAME HOLMAN: Obama laid out his economic program Monday in Toledo, Ohio. He said it would provide $60 billion of new tax credits and stimulus measures to help middle-class Americans deal with the sluggish economy.

SEN. BARACK OBAMA (D), Illinois: We need to pass an economic rescue plan for the middle class. And we need to do it not five years from now, not next year. We need to do it right now.

KWAME HOLMAN: Obama's plan focused heavily on trying to spur job growth. He would offer businesses a $3,000 tax credit for each new employee hired; eliminate capital gains taxes for small businesses; extend unemployment benefits and suspend taxes on those benefits.

Obama also called for a $25 billion investment in infrastructure projects.

SEN. BARACK OBAMA: We'll also save one million jobs by creating a jobs and growth fund that can provide money to state and local communities so that they can move forward with projects to rebuild and repair our infrastructure. A lot of these projects and these jobs are at risk right now because of budget shortfalls, but this fund will make sure they continue.

KWAME HOLMAN: And Obama wants to help states and municipalities by creating a federal entity that would loan money to city and state governments.

Finally, he called for a 90-day moratorium on home foreclosures for people who are trying hard to make their mortgage payments.

SEN. BARACK OBAMA: We need to give people the breathing room to get back on their feet.

Endorsing the federal plan

KWAME HOLMAN: Like McCain, today Obama also endorsed the government's plan to buy equity stakes in troubled banks, but Obama, too, had concerns.

SEN. BARACK OBAMA: I am concerned that, in the way that they structure this new mechanism, that we are cracking down on excessive CEO pay. That, I think, should be part of the deal.

And I'm also concerned that taxpayers' shares that they're purchasing or they're receiving as a consequence of this injection of equity is a good deal for taxpayers.

KWAME HOLMAN: Obama also was leery of McCain's new economic proposals, particularly the plan to cut the capital gains tax.

SEN. BARACK OBAMA: I will tell you that nobody really has capital gains right now. So if the idea is to cut capital gains taxes, when I don't know anybody, even the smartest investors, who right now are going to be experiencing a lot of capital gains, that probably is not going to be particularly useful in solving the financial crisis.

KWAME HOLMAN: Obama and McCain outlined their plans ahead of tomorrow's final presidential debate in Hempstead, N.Y., moderated by Bob Schieffer of CBS. It will focus on domestic issues.