WASHINGTON — Democrat Barack Obama on Monday proposed $60 billion worth of new ideas to stimulate the ailing economy, including a tax credit to prod companies to hire more workers and a new way for consumers to cash out up to 15 percent of their IRAs or 401(k)s with no early-withdrawal penalties.
Republican John McCain, who's behind in polls, reiterated several of his recent proposals to combat the economic crisis, but rolled out nothing new in speeches in Virginia and North Carolina. He plans a more detailed speech Tuesday with some "specific new measures," said his senior policy adviser, Doug Holtz-Eakin.
The economy is by far the most important issue to voters, polls have found, but some experts said that Obama's new proposals weren't comprehensive enough.
Obama's new ideas, combined with his earlier economic-stimulus proposals from the summer, would cost about $175 billion over two years, according to his economic policy director, Jason Furman.
The additional spending probably would drive up the federal budget deficit, estimated at a record $438 billion in fiscal 2008 and likely to be at least that much next year, according to the Congressional Budget Office.
Still, because of the economic downturn, "this president is going to need a large stimulus package," argued Alice Rivlin, a Democrat and former Federal Reserve Board vice chairman.
Campaigning in Ohio, Obama also proposed giving companies a $3,000 tax credit per new worker for net U.S. jobs created through 2010. He called for a three-month moratorium on home foreclosures. He also asked the Federal Reserve to provide short-term emergency loans to struggling states or local governments that can't tap the bond market during the financial crisis.
He said that allowing early withdrawals of up to 15 percent — capped at $10,000 — from retirement savings programs through 2009 without tax penalties "will help families get through this crisis without being forced to make painful choices like selling their homes or not sending their children to college."
Current law imposes a 10 percent tax penalty on withdrawals from 401(k) plans before age 59 and a half, and makes the money that's withdrawn subject to income tax. The tax penalty is waived for those who can demonstrate hardships or for first-time homebuyers, said William Roberts, a spokesman for the American Institute of Certified Public Accountants. Obama's proposal would let anyone withdraw up to $10,000 without penalty.
The Illinois senator also reiterated his recent calls for an emergency lending fund, fee waivers for small businesses and an extension of unemployment benefits.
McCain's forces were sharply critical.
Holtz-Eakin charged that Obama's $3,000 tax credits for new American workers would "hardly undo the damage" from the employer health-care mandates or some business tax increases that Obama wants.
McCain supporter Rob Portman, a former congressman and budget director for the Bush administration, said that Obama's $10,000 allowance for early withdrawals "seems like it would be the wrong thing to encourage," since it would let people take money out of their retirement accounts at a time when the assets in them are lower because of the crisis.
McCain reiterated his own ideas, pitching his $300 billion plan for the government to buy bad mortgages in exchange for lower-rate government-backed loans, and to take bad debt off banks' books. Obama has criticized that approach as a giveaway to the lending industry.
McCain also has proposed waiving rules that force senior citizens to withdraw from their IRAs or 401(k)s beginning at age 70 and a half regardless of the market. Obama supports that idea.
In addition, the Arizona senator has called for freezing government spending on "all but the most important programs." Defense spending, veterans' care, Social Security and perhaps others he's yet to specify would be exempt from his freeze.
Some analysts' were underwhelmed by Obama's new ideas.
Their chief benefit would be largely psychological, said Stan Collender, a veteran Washington economic analyst. The ability to tap 401(k)s or freezing foreclosures, for instance, "would take one source of stomach-tightening away from people," he said. "It could make people feel a little bit better."
William Shughart, a professor of economics at the University of Mississippi, saw the proposals as minor efforts when "you need a global plan" to help the economy. "People are looking for an overarching plan, not stopgap measures."
McCain spoke of the economic crisis in national-security terms. He used the words "fight" or "fighting" at least 18 times, and said that "the hour is late. Our troubles are getting worse. Our enemies watch. . . . We have to fight."
"I've been fighting for this country since I was 17 years old, and I have the scars to prove it," he added. "What America needs in this hour is a fighter, someone who puts all his cards on the table and trusts the judgment of the American people."
He accused Obama of "measuring the drapes" at the White House with 22 days to go before the election Nov. 4, and said that although he's slipped behind Obama in national polls, "We've got them just where we want them."
(Kevin G. Hall contributed to this article.)
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