McCain visits "war on poverty" Kentucky coal town

INEZ, Kentucky (Reuters) - Republican presidential hopeful John McCain said on Wednesday Americans face a tough economic outlook with high gasoline prices likely to remain and his Democratic opponents would make matters worse.

McCain visited the tiny Kentucky coal town of Inez 44 years after President Lyndon Johnson stood on a front porch here and declared a "war on poverty" that McCain said failed because of excessive government bureaucracy.

McCain was driven through the mountains to that woodframe house Johnson visited but now it was padlocked with the front porch fenced off, a "No Trespassing" sign posted and car parked in a driveway with a blanket covering a broken window.

McCain said the home was "significant and symbolic that we have a lot to do." Inez City Commissioner Eric Mills, a McCain supporter traveling with reporters, was disappointed McCain went there since economic progress has been made in the area.

"The war on poverty is in our past," he said.

Speaking earlier to a packed crowd in the Martin County Courthouse, McCain gave an unvarnished view of the U.S. economy, saying he believed it was already in recession regardless of whether the technical definition of a recession has been reached.

"Let's start out with acceptance of the fact that action has to be taken," McCain said.

A day after Hillary Clinton won the Pennsylvania Democratic contest, assuring a longer battle against rival Barack Obama for the party's presidential nomination, McCain told reporters he was not sure whether the extended campaign was helping or hurting him, saying he had heard arguments from both sides.

"We've never seen this before so I don't think it's easy to judge," he said on his campaign bus as it wound through the coal-rich mountains of eastern Kentucky.

Facing a longer period of waiting for Democrats to decide who will face him in the November election, he went after both of them in Inez, a town of less than 500 people.

He accused Obama of seeking to increase the capital gains tax on stock profits, saying that would affect millions of Americans, not just the wealthy. He said Clinton would also raise taxes to pay for ambitious promises.

"If you raise taxes on the American people, then I think it will be very harmful to the economy. I believe that lower taxes would stimulate the economy," McCain said.

McCain has proposed billions of dollars in tax cuts, and Democrats have expressed doubts that he would be able to pay for them with the spending cuts he pledges to find.

McCain, an Arizona senator, said he believed high gasoline prices -- around $3.50 a gallon at this juncture -- are here to stay until the United States takes steps to wean itself of its dependence on foreign oil.

"The price of oil is probably not going to go down until we become energy independent," McCain said, adding the growing need for oil in India and China was driving the price up.

Asked about lost manufacturing jobs, McCain said they are probably not coming back, but that green and information technologies will provide a new source of jobs that Americans should prepare for with training and education at community colleges.

Biding his time while the Democratic fight goes on, McCain is trying this week to appeal to moderate voters by visiting places left behind by U.S. economic growth.

(Editing by David Wiessler)

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