Politics & Government

McCain, Obama snipe at each other over the economy

WASHINGTON — John McCain tried Monday to relaunch his campaign with a pledge to use broad-based tax cuts to revive the ailing economy — and a string of barbs contrasting his views with Barack Obama's.

"The choice in this election is stark and simple," McCain, the presumptive Republican nominee, told a town hall meeting in Denver. "Senator Obama will raise your taxes. I won't. I will cut them where I can."

Obama, the presumptive Democratic nominee, countered Monday by challenging McCain and promising that he won't raise taxes on anyone who makes less than $250,000 a year.

"If Senator McCain wants a debate about taxes in this campaign," Obama told supporters in Charlotte, N.C., "that's a debate I'm happy to have." Obama spoke to his backers through a telephone hookup after his Charlotte-bound plane was grounded in St. Louis because of maintenance trouble.

Neither candidate's address Monday contained new proposals. McCain's chief purpose was not only to shift his campaign's focus squarely to the economy but also to reignite his White House bid after weeks of organizational trouble and muddled messages.

Carly Fiorina, a senior McCain adviser, described the new phase as "a little bit like a start-up company becoming a multimillion-dollar corporation."

But David Carney, a Republican consultant and President George H.W. Bush's White House political director, saw McCain's shift in starker terms: "The biggest problem was they talked about two or three different things every week."

That could be tough to fix for McCain, whose maverick tendencies have fueled his political success. He also faces the problem of running as a Republican in a year when the party's approval ratings are dismal.

McCain tried to put some distance between himself and his party Monday, criticizing Congress and the Bush administration for having "failed to meet their responsibilities to manage the government."

McCain has been a senator since 1987, however, and Obama charged that "he's launching a new economic tour today with politics that are very much the same as those we have seen from the Bush administration."

Many of McCain's ideas are similar to or even identical to the President Bush's, notably his support for continuing key elements of the 2001 and 2003 tax cuts, which are scheduled for repeal during the next administration. Asked to list three ways that Bush and McCain differed on the economy, Fiorina struggled and listed only one, better job training for displaced workers.

Obama would restore higher Clinton-era income tax rates on people who earn more than $250,000. The top rates before 2001 were 36 and 39.5 percent; now, the top rates are 33 and 35 percent.

One to 2 percent of all wage earners make more than $250,000. Obama says he wouldn't raise taxes on anyone else.

"If you're a family making less than $250,000," Obama said Monday, "my plan will not raise your taxes: not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes."

McCain, who didn't discuss how his tax plan could avoid making the federal budget deficit worse, countered that repealing the Bush cuts as Obama proposes would have a ripple effect and would be more widely felt. One reason is that the tax on dividends and capital gains, now 15 percent, is slated to go up in 2011.

Because of that, "if you have an investment in your child's education or own a mutual fund or a stock in a retirement plan, he is going to raise your taxes," McCain insisted.

The Arizona senator, who also wants to lower the corporate tax rate, would retain current dividend and capital-gains tax rates, saying, "When you raise taxes in a bad economy, you eliminate jobs. I'm not going to let that happen."

Obama suggested that keeping such rates low is a boon only to big business and wealthy taxpayers.

"The difference is, he trusts that prosperity will trickle down from corporations and the wealthiest few to everyone else," the Illinois senator said.

McCain in his address emphasized small business incentives, charging that Obama would raise the tax rate on the 23 million small-business owners in America who file as individual rate payers.

However, Obama has said he'd raise taxes only on family income above $250,000. When pressed on what percentage of the 23 million have taxable individual income above that sum, Fiorina couldn't say. Trade associations for small business owners said those numbers were hard to discern.

"There are a lot of small companies out there that aren't anywhere close to netting $250,000," said Karl Ottosen, a spokesman for the U.S. Federation of Small Businesses. "I know many of our members would love to be making the $250,000 but aren't anywhere close to it."

(William Douglas contributed to this story)