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Obama confronts US economic 'emergency'

Staff Reporter

White House contender Barack Obama said on Monday the faltering United States economy was now in the grip of an "emergency".

White House contender Barack Obama said on Monday the faltering United States economy was now in the grip of an “emergency” as he pivoted back to the domestic agenda after a triumphant foreign tour.

In a meeting with a high-powered panel of economic advisers, the Democrat returned to the most pressing anxiety of US voters after bidding to cement his commander-in-chief credentials with his overseas trip.

But as voters reel from job losses, home seizures and rocketing fuel prices, the rival campaign of Republican John McCain said Obama’s economic plan would serve only to plunge the US into a 1930s-style depression.

After a federal stimulus plan and a newly passed Bill to rescue the stricken housing market, Obama told the advisory meeting: “I believe more action is going to be necessary.

“The economic emergency is growing more severe,” he said, pointing to job cuts, falling wages and a deepening credit crunch.

“And this is an emergency that you feel not only just from reading the Wall Street Journal, but from travelling across Ohio and Michigan into New Mexico and Nevada, where you meet people day after day who are one foreclosure notice or one illness or one pink slip away from economic disaster.”

Obama’s economic panel included former treasury secretary Robert Rubin, former Federal Reserve chairperson Paul Volcker, billionaire investor Warren Buffett and Google chairperson Eric Schmidt.

Boosting Obama’s appeal for a break with partisan politics, two ex-members of President George Bush’s administration—treasury secretary Paul O’Neill and securities and exchange commissioner William Donaldson—also attended.

Laura Tyson, who was the chief economic adviser to president Bill Clinton, said there were as many policy differences among some of the Democratic participants as with the Republican appointees.

She stressed to reporters: “There is no silver bullet. There are trade-offs in everything. Some people were focusing more on the long-term issues ... some of them were focusing on what we might do in the next six months.”

Obama promoted his proposals for middle-class tax cuts while levying higher taxes on the rich, new federal stimulus spending and additional measures to prop up the property market.

He argued longer-term measures were needed to rein in excesses on Wall Street and to fix the budget deficit, which government officials said on Monday was set to balloon to a record $482-billion in the next fiscal year.

With fewer than 100 days now before the November 4 election, McCain aides vied to steal Obama’s thunder and dent a bounce in the polls enjoyed by the Democrat since his trip to Afghanistan, Iraq, the Middle East and Europe.

In the latest daily poll from Gallup released on Monday, Obama led McCain by 48% to 40%. That was down a point from Sunday, but Gallup said the Democrat was still basking in the afterglow of his rock-star reception overseas.

Carly Fiorina, a key lieutenant to McCain and former boss of computing giant Hewlett-Packard, said a recession triggered by the 1929 Wall Street crash became a depression through the imposition of higher taxes and trade barriers.

“The reality is when an economy is slowing, if you raise taxes and you curtail free trade through isolationist policies, bad economic times become worse,” she told reporters.

“We know this from history ... and that is precisely the proposal that Barack Obama is making,” Fiorina said.

“And that is why I say as a businesswoman, I hope Barack Obama continues to consult with experts because I think his understanding of the economy leaves a great deal to be desired.”

The Obama campaign accuses McCain of fuzzy arithmetic on his own vows to cut taxes across the board, balance the budget and sustain a hefty US military presence in Iraq.

And it has ridiculed the Arizona senator’s admission last December that he knows more about national security than about the economy.

McCain suffered a setback just over a week ago with the resignation of his own top economic adviser, Phil Gramm, after the former Texas senator had called the United States a “nation of whiners” over the economy.—AFP

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