NEW YORK (Reuters) - Democratic presidential candidate Barack Obama proposed greater government regulation of the U.S. financial system and a new $30 billion economic stimulus plan on Thursday in response to the housing crisis.
Both Obama and his Democratic rival, New York Sen. Hillary Clinton, accused Republican candidate John McCain of supporting little to ease the current credit and housing problems, which drew a quick response from the McCain camp.
The focus on the economy mirrors its pressing importance for Americans. A Pew Research Center poll said people are as negative as they were during the recession of the early 1990s, with just 11 percent rating the economy as excellent or good.
Obama said under Republican and Democratic administrations — a slap at Clinton’s husband, 1990s Democratic President Bill Clinton — an era of financial deregulation created conditions that pushed the U.S. economy to the brink of a new recession.
“It is time for the federal government to revamp the regulatory framework dealing with our financial markets,” the Illinois senator said in a wide-ranging speech on the economy.
In a month when the U.S. Federal Reserve helped shore up the ailing financial system and financed the takeover of Bear Stearns, a major Wall Street investment firm, Obama said the new rules should include liquidity and capital requirements for financial institutions.
“If you can borrow from the government, you should be subject to government oversight and supervision,” he said.
The Bush administration’s two-year, $168 billion stimulus package aimed at propping up the economy is about to take effect, with $152 billion to be doled out this year.
Obama proposed a further $30 billion that would provide relief to areas hardest hit by the housing crisis and an extension of unemployment insurance for those out of work.
“If we can extend a hand to banks on Wall Street when they get into trouble, we can extend a hand to Americans who are struggling through no fault of their own,” he said to applause.
Obama told CNBC he could support raising the capital gains tax on stock profits from the current 15 percent up to 20 percent or 25 percent to pay for government spending elsewhere.
“I think that we can have a capital gains rate that is higher than 15 percent,” he said.
Obama, who would be the first black U.S. president, and Clinton are in a heated battle for the Democratic nomination to face McCain, an Arizona senator, in the November presidential election.
In an effort to unite Republicans behind his candidacy, McCain campaigned in Utah with former Massachusetts Gov. Mitt Romney, who pulled out of the Republican presidential race in February.
“He is a man who is proven and tested, an individual who is without question the right person to be the next president of the United States,” said Romney, who has roots in Utah.
Clinton, who would be the first woman president, called last week for a $30 billion emergency fund to help ease the housing crisis. An estimated 4 million American homeowners are in danger of losing their houses.
“If Sen. Obama has to copy policy ideas when he’s a candidate on the campaign trail, how is he going to solve people’s problems if he’s president?” said Clinton campaign policy director Neera Tanden.
“When it comes to fixing the economy, we need leadership, not ‘followership.’”
Clinton turned her fire on McCain in an economic address in Raleigh, North Carolina, saying he had supported “virtually nothing” to ease the current crisis.
While describing McCain as “a friend of mine,” Clinton said: “He’d rather ignore the credit crisis and mortgage crisis — or blame middle-class families — instead of offering solutions on their behalf.”
McCain, who gave an economic address on Tuesday, said he was “committed to considering any and all proposals” to help homeowners but that he opposed a “multibillion-dollar bailout for big banks and speculators.”
Former Hewlett-Packard chief executive officer Carly Fiorina, an economic adviser to McCain, accused Obama and Clinton of “politics of the worst sort.”
“Both of them are rather vague on specifics but they do borrow from the principles John McCain has already laid out,” Fiorina said.
Obama was introduced by New York Mayor Michael Bloomberg, whose plans to have a role at the event prompted speculation he would endorse Obama. But he did not.
(Additional reporting by Jeff Mason, Deborah Charles, John Whitesides and Tim Gaynor; Writing by Steve Holland; Editing by John O’Callaghan)
To read more about the U.S. political campaign, visit Reuters "Tales from the Trail: 2008" online at blogs.reuters.com/trail08/