McCain rejects comments from economic adviser

BELLEVILLE, Michigan (Reuters) - Republican presidential candidate John McCain on Thursday sharply rejected a top economic adviser's description of the United States as "a nation of whiners" who are in a mental recession.

Democratic White House rival Barack Obama pounced on the remarks and said they proved McCain was out of touch on the economy, a critical issue in November's presidential election.

McCain moved quickly to limit the political damage caused by the comments of adviser Phil Gramm, a former Texas senator who questioned the extent of the U.S. economic downturn in an interview with the Washington Times.

"Phil Gramm does not speak for me. I speak for me. So, I strongly disagree," McCain said. "America's in great difficulty and we are experiencing enormous economic challenges."

The Arizona senator responded sharply when asked if Gramm would have a key role in a potential McCain administration.

"I think Senator Gramm would be in serious consideration for ambassador to Belarus, although I'm not sure the citizens of Minsk would welcome that," he said.

In the Times interview, Gramm said "you've heard of mental depression, this is a mental recession." He said there was still economic growth and the United States was not in an economic recession.

"We have sort of become a nation of whiners," Gramm said.

Obama quickly pounced on the remarks by Gramm.

"I want all of you to know that America already has one Dr. Phil, they don't need another one when it comes to the economy," Obama said at a campaign event in Fairfax, Virginia. The reference was to a U.S. television talk-show therapist.

"It's not just a figment of the imagination, it's not all in your head," Obama said. "I think it's time we had a president who doesn't deny our problems -- or blame the American people for them."

The flap resurrected questions about McCain's economic approach, a subject of repeated criticism from Democrats who have linked McCain to President George W. Bush's policies and who frequently remind voters McCain once admitted he was no economic expert.

NOT SPEAKING FOR MCCAIN

But in Michigan, a battleground state in November's election that has been hit hard by the loss of industrial jobs, McCain emphasized Gramm was not speaking for the campaign.

"I don't agree with Senator Gramm. I believe that the person here in Michigan that just lost his job isn't suffering from a mental recession," he said. "I believe the mother here in Michigan and around America who is trying to get enough money to educate their children isn't whining."

McCain had his best month of fundraising since he entered the presidential race. Campaign manager Rick Davis said McCain raised $22 million for his White House bid in June and had nearly $27 million in the bank at the end of the month.

That is a slight increase from May, when McCain raised $21 million and reported nearly $36 million in the bank. Davis said the Republican National Committee had nearly $68 million in the bank, giving them a formidable war chest for the race.

"We start in a very robust situation financially," Davis told reporters.

He said the stepped-up pace of fundraising had allowed McCain to outspend Obama on television advertising in key battleground states in June.

McCain said last month he would take $84 million in public funds in the general election, which means he will be limited to spending that amount in the two months between the Republican convention and the November 4 election.

Obama, an Illinois senator, said last month he will reject public financing, reversing an earlier promise and positioning himself to try to outspend McCain in the general election race.

Obama has not announced his fundraising for June yet. Figures are due to be reported to the Federal Election Commission by July 20.

(Additional reporting by Claudia Parsons, writing by John Whitesides; Editing by David Wiessler)

(For more about the U.S. political campaign, visit Reuters "Tales from the Trail: 2008" online at blogs.reuters.com/trail08/)