Campaign focus back on economy after debate

ST. LOUIS (Reuters) - The White House race turned back to the ailing economy on Friday with Democrat Barack Obama and Republican John McCain praising a Wall Street bailout passed in Congress but voicing caution about the details.

After the House of Representatives gave final approval to the $700 billion bailout of U.S. financial institutions, Obama urged the Bush administration and Treasury Secretary Henry Paulson to use their authority wisely.

"The number one thing is that the administration uses this authority wisely, makes sure that Secretary Paulson and others are structuring the purchase of these assets in a way that protects taxpayers," Obama told reporters while campaigning in Pennsylvania.

McCain, speaking in Colorado before the bill was approved, said it was "not a cure, it's a tourniquet. It will stop the bleeding but now we've got to reform the way we do business in Washington."

McCain, Obama and Obama's vice presidential running mate, Joe Biden, all U.S. senators, voted for the measure on Wednesday when it was approved by the Senate. McCain will be anxious to see the bailout fade from the headlines as Obama has gained ground in polls during the economic crisis.

The vote in Congress occurred one day after Biden and McCain's running mate, Alaska Gov. Sarah Palin, sparred on the economy and Iraq during a lively but polite vice presidential debate.

Polls taken after the debate judged Biden the winner but Palin's steady performance was stronger than many voters expected and calmed the nerves of Republicans worried about whether she was up to the job.

"How about Sarah Palin last night?" McCain said in Pueblo, Colorado. "I almost felt a little sorry last night for my old friend Joe Biden. She did a magnificent job."

Both McCain and Obama pledged to bring economic relief for the middle class after the U.S. government reported employers slashed 159,000 jobs in September -- the ninth straight month of job losses.

But they took shots at each other's economic approach and each claimed to be best prepared to lead the United States out of its economic crisis.

'CAN'T AFFORD MCCAIN'

"This country can't afford Senator McCain's plan to give America four more years of the same policies that have devastated our middle class and our economy for the last eight," Obama said in a statement, repeating his frequent link of McCain to unpopular President George W. Bush.

McCain also repeated his frequent criticism of Obama's plan to raise taxes on Americans who make more than $250,000 a year. Obama will give a tax cut to those making less.

"Unlike Senator Obama, I do not believe we will create one single American job by increasing taxes, going on a massive spending binge and closing off markets," McCain said in a statement.

Biden was back in Delaware on Friday, where he bid farewell to his son Joseph "Beau" Biden III, 39, and members of his Delaware National Guard unit who are reporting to Texas before heading to Iraq.

"We take comfort in the knowledge ... that you are the best prepared group of citizen soldiers our country and this state has ever sent into harm's way," the Delaware senator said, making no reference to his debate with Palin.

In the only vice presidential debate ahead of the November 4 U.S. election, Biden had accused McCain of being out of touch on the economic crisis and dismissed his claim to be a "maverick" on crucial issues facing Americans.

Palin said Obama was too partisan to work across party lines to accomplish change and was waving a "white flag of surrender" in Iraq.

With all eyes on Palin in her national debut in an unscripted format, the 44-year-old governor turned in a steady and aggressive performance in which she repeatedly attacked Obama and pledged she and McCain would work for the middle class.

She frequently displayed the folksy style that has become a favorite target of late-night comics. "Aw, say it ain't so, Joe," she told Biden at one point, adding a "doggone it" for good measure.

Biden, 65, a veteran foreign policy expert, had one emotional moment, choking up when recalling having to raise his two young sons alone after their mother died in a car crash.

The debate came as new polls show Obama has solidified his national lead and gained an edge in crucial battleground states as the Wall Street crisis focuses the attention of voters on the economy.

McCain and Obama reclaim the campaign spotlight on Tuesday when they meet in their second presidential debate in Nashville, Tennessee.

(Additional reporting by Jeff Mason, Mark Egan and Thomas Ferraro; Editing by Bill Trott)