McCain offers economic plans, Obama picks up steam

BLUE BELL, Pennsylvania Tue Oct 14, 2008 7:39pm EDT

1 of 13. Republican presidential nominee Senator John McCain greets supporters during a rally in Virginia Beach, Virginia October 13, 2008.

Credit: Reuters/Carlos Barria

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BLUE BELL, Pennsylvania (Reuters) - Trying to revive his faltering campaign, Republican presidential nominee John McCain offered proposals on Tuesday to help investors rebound from the stock market crash as he warmed up for his final debate with Democrat Barack Obama.

"What we need to see now is swift and bold action to lead this country in a new direction," McCain told cheering supporters in the battleground state of Pennsylvania.

McCain has sought to regain his footing on economic issues for the past three weeks after drawing criticism for saying the U.S. economy's fundamentals were strong despite brewing signs of crisis on Wall Street that ultimately gave way to the biggest stock market drop since the Great Depression.

During that time Obama has prospered, moving from a tie with McCain in national polls to a lead. In bad news for the McCain campaign, a Quinnipiac University/Wall Street Journal/Washingtonpost.com poll on Tuesday gave Obama sizable leads in four battleground states.

The Illinois senator, who has hammered economic issues in his own campaign speeches, was up 52 percent to 43 percent for McCain in Colorado, 54-38 in Michigan, 51-40 in Minnesota and 54-37 in Wisconsin.

One day before they face off in their third and final debate, a CBS News/New York Times national opinion poll showed Obama leading McCain by 14 percentage points -- 53 percent to 39 percent. The latest Reuters/C-SPAN/Zogby four-day tracking poll showed Obama with a 6-point advantage over McCain.

With three weeks to go until election day on November 4, the stakes were high for the debate, to take place at 9 p.m. EDT on Wednesday in Hempstead, New York.

Obama shook hands with workers at a factory in Ohio and then holed up at a secluded resort on Lake Erie to prepare for the face-off. McCain rehearsed for the debate in a closed-door session at a stage complex in Manhattan's theater district.

McCain is offering a more positive message on the campaign trail a week after he went negative on Obama, criticizing the Democrat for his ties to 1960s radical William Ayers.

Ayers may well come up at the third debate, however, McCain told the Mark Reardon Show of St. Louis radio station KMOX.

"I was astonished to hear him (Obama) say that he was surprised that I didn't have the guts to do that ... I think he's probably assured that it's going to come up this time," McCain said.

ECONOMIC PLAN

In the Philadelphia suburb of Blue Bell, McCain outlined an estimated $52.5 billion in new proposals called the Pension and Security Plan. Many of them are aimed at helping older Americans who have seen their retirement accounts devastated in the recent stock market gyrations.

He proposed that seniors pay a maximum tax rate of 10 percent on money they withdraw from IRAs and 401(k) retirement savings plans in 2009 and 2010, instead of paying the current higher tax rate. It would cost $36 billion.

This is in addition to a plan he announced last week to give investors temporary relief from a rule forcing them to begin withdrawing from their 401(k) and IRA plans once they reach the age of 70-1/2.

McCain also proposed relief for Americans who were counting on investment income to send their children to college or pay the mortgage.

Internal Revenue Service rules say Americans can only deduct $3,000 in stock losses in any given year. McCain would expand that deduction to $15,000 a year for the tax years 2008 and 2009.

Saying he wanted to "revive the market by attracting new investment," McCain proposed a two-year cut in the capital gains tax on stock profits, from 15 percent now on stocks held a year or longer to 7.5 percent -- a $10 billion proposal.

In a proposal aimed at helping Americans who have been laid off from their jobs, McCain said would suspend the tax on unemployment insurance benefits in 2008 and 2009.

McCain repeated his support for a $300 billion plan for the government to buy troubled loans from homeowners and restructure them into more affordable mortgages.

The Obama campaign dismissed McCain's plan. "John McCain's latest gambit is a day late and 101 million middle-class families short. McCain's plan would spend $300 billion to bail out the same irresponsible Wall Street banks that got us into this mess without doing anything to help jump-start job growth for America's middle class," said Obama spokesman Bill Burton.

McCain, accused by the Obama campaign of helping deregulate the financial industry, called for more oversight of Wall Street to avoid a repeat of a lax environment that fostered the housing crisis at the root of the meltdown.

On the eve of the debate, McCain and running mate Sarah Palin headlined a Republican fundraiser in New York. The event, where attendees paid at least $2,300 a plate, was expected to rake in more than $8 million, mostly due to Palin's celebrity status among Republican donors, a campaign aide said.

(Additional reporting by Arshad Mohammed; writing by Steve Holland; editing by David Wiessler and Cynthia Osterman)

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