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It's still the economy, stupid! McCain adviser in Republican attack
(1 day later)
By Steve Schifferes Economics reporter, BBC News John McCain's top economic adviser has attacked Congressional Republicans, saying they have brought "shame and disgrace" on the party.
Doug Holtz-Eakin is ex-director of the Congressional Budget OfficeJohn McCain's chief economic adviser has told the BBC that the Republican presidential candidate will campaign on his principles - even if it costs him votes. In a BBC interview, Doug Holtz-Eakin accused them of busting the budget with profligate spending programmes.
The comments are part of a strategy by Senator McCain's camp to distance themselves from the Republicans and avoid blame for the economic downturn.
Mr McCain will stick to his principles even if it costs him votes, he said.
Straight-talking
The US economy is in freefall, facing the sharpest housing slump on record and rising unemployment and prices.The US economy is in freefall, facing the sharpest housing slump on record and rising unemployment and prices.
And with economic conditions continuing to deteriorate, it is likely to dominate the US presidential election in November.And with economic conditions continuing to deteriorate, it is likely to dominate the US presidential election in November.
The Democrats are widely perceived to have a huge advantage on the economic issues, and Senator Obama has already begun campaigning on the issue, accusing Senator McCain of offering no hope for millions of people who fear losing their homes, their jobs and their health care. The Democrats are widely perceived to have a huge advantage on the economy.
In an exclusive interview with BBC News, Doug Holtz-Eakin says that in the end, voters will trust Mr McCain more on the economy because of his straight talking to the public on issues like free trade and social security reform. Senator Obama has already begun campaigning on the issue, accusing Senator McCain of offering no hope for millions of people who fear losing their homes, their jobs and their health care.
And he fiercely attacks the Republican party in Congress for bringing "shame and disgrace" on ordinary Republicans by their profligate spending and corruption. Mr Holtz-Eakin said that in the end, voters would trust Mr McCain more on the economy because of his straight talking to the public on issues like free trade and social security reform.
In the battle for the middle ground of American voters, Mr McCain's camp is doing its best to distance itself both from the Republicans in Congress and from Mr Bush's economic policies.In the battle for the middle ground of American voters, Mr McCain's camp is doing its best to distance itself both from the Republicans in Congress and from Mr Bush's economic policies.
Economic issues dominateEconomic issues dominate
With the vast majority of the public believing that the US is in recession, it does not seem to be a good year to be a Republican running for office.With the vast majority of the public believing that the US is in recession, it does not seem to be a good year to be a Republican running for office.
Mr McCain's straight talking to American workers was controversialMr McCain's straight talking to American workers was controversial
In the last national opinion poll, carried out by ABC News and the Washington Post last week, only 29% approved of the way Mr Bush was handling the job as president, while 84% of voters think the country is going in the wrong direction.In the last national opinion poll, carried out by ABC News and the Washington Post last week, only 29% approved of the way Mr Bush was handling the job as president, while 84% of voters think the country is going in the wrong direction.
The economy is considered the most important issue by 33% of voters, and it has stayed the top issue since the beginning of the year.The economy is considered the most important issue by 33% of voters, and it has stayed the top issue since the beginning of the year.
And 50% of the public trust Mr Obama more to handle the economy, as opposed to just 36% who trust Mr McCain.And 50% of the public trust Mr Obama more to handle the economy, as opposed to just 36% who trust Mr McCain.
Even more back Mr Obama on health care, gas prices, and the environment.Even more back Mr Obama on health care, gas prices, and the environment.
Free trade battleFree trade battle
But Mr Holtz-Eakin believes that Senator McCain's support for free trade and globalisation could actually gain him votes, because of the disarray in the Obama camp over this issue.But Mr Holtz-Eakin believes that Senator McCain's support for free trade and globalisation could actually gain him votes, because of the disarray in the Obama camp over this issue.
Many workers fear that free trade will mean they lose their jobs He accused Mr Obama of flip-flopping on this issue, and said that it was "better to have a view and stick to it than change your view every time you show up at a new location". Indeed, the appointment of Mr Obama's new economic adviser, Jason Furman, has dismayed trade unions because they believe he backs free trade.
He accuses Mr Obama of flip-flopping on this issue, and says that it is "better to have a view and stick to it than change your view every time you show up at a new location".
Indeed, the appointment of Mr Obama's new economic adviser, Jason Furman, has dismayed trade unions because they believe he backs free trade.
However, free trade is not that popular among the American public.However, free trade is not that popular among the American public.
When Mr McCain told car workers in Michigan they would have to retrain because there were not going to be any jobs left in the car industry, he lost the primary.When Mr McCain told car workers in Michigan they would have to retrain because there were not going to be any jobs left in the car industry, he lost the primary.
Social security fearsSocial security fears
Senator McCain has also taken a controversial position on reforming the US government pension system, known as social security.Senator McCain has also taken a controversial position on reforming the US government pension system, known as social security.
US workers depend on government-funded social security in retirementUS workers depend on government-funded social security in retirement
It is facing a potential financial crisis as the large number of "baby-boomers" start retiring around 2015, and is predicted to run out of money within a generation. It is facing a potential financial crisis as the large number of baby-boomers start retiring around 2015, and is predicted to run out of money within a generation.
Doug Holtz-Eakin refused to be drawn on the details of how Senator McCain would reform social security, but he did accept that his plan would bear some resemblance to Mr Bush's proposal to partially privatise social security by allowing people to put some of their social security taxes into special private investment accounts.Doug Holtz-Eakin refused to be drawn on the details of how Senator McCain would reform social security, but he did accept that his plan would bear some resemblance to Mr Bush's proposal to partially privatise social security by allowing people to put some of their social security taxes into special private investment accounts.
This proposal was soundly defeated when it was proposed by Mr Bush, and any such talk is bound to mobilise the millions of members of the strongest lobby group in the US, the AARP, which represents retired people.This proposal was soundly defeated when it was proposed by Mr Bush, and any such talk is bound to mobilise the millions of members of the strongest lobby group in the US, the AARP, which represents retired people.
Tax and spending cutsTax and spending cuts
Mr McCain has also done a U-turn on tax cuts, moving from criticising the first set of tax cuts introduced by Mr Bush in 2001 for not helping the poor, to endorsing further tax cuts for small businesses in the future in an attempt to preserve jobs.Mr McCain has also done a U-turn on tax cuts, moving from criticising the first set of tax cuts introduced by Mr Bush in 2001 for not helping the poor, to endorsing further tax cuts for small businesses in the future in an attempt to preserve jobs.
Mr Obama is campaigning hard on the economyMr Obama is campaigning hard on the economy
But "any tax cuts need stringent fiscal controls", says Mr Holtz-Eakin.But "any tax cuts need stringent fiscal controls", says Mr Holtz-Eakin.
And that implies pretty swingeing cuts in Federal government spending.And that implies pretty swingeing cuts in Federal government spending.
He says that a McCain administration would aim to balance the budget in his first four years in office, by reducing government spending by 1.5% to 2% of GDP. He said that a McCain administration would aim to balance the budget in his first four years in office, by reducing government spending by 1.5% to 2% of GDP.
That cut would amount to nearly $200bn - equivalent to a substantial chunk of the whole of the Federal discretionary budget, excluding social security and defence.That cut would amount to nearly $200bn - equivalent to a substantial chunk of the whole of the Federal discretionary budget, excluding social security and defence.
Gas prices at the pumpGas prices at the pump
Mr McCain does have one populist measure he has proposed however - a temporary suspension of the 18 cents per gallon federal gasoline tax, to help drivers and truckers over the summer to cope with the "increasing distressed economic conditions".Mr McCain does have one populist measure he has proposed however - a temporary suspension of the 18 cents per gallon federal gasoline tax, to help drivers and truckers over the summer to cope with the "increasing distressed economic conditions".
Drivers across the US are facing higher gasoline billsDrivers across the US are facing higher gasoline bills
And gas prices have a mythical significance in American political life, as the queues at petrol stations and high prices during the l980 election campaign are widely believed to have led to the defeat of President Jimmy Carter and the election of Ronald Reagan. And gas prices have a mythical significance in American political life, as the queues at petrol stations and high prices during the 1980 election campaign are widely believed to have led to the defeat of President Jimmy Carter and the election of Ronald Reagan.
But on the broader state for the economy, it is perhaps another famous question by Mr Reagan during the debate with Mr Carter: "are you better off now that you were four years ago" - that was more decisive. But on the broader state for the economy, it is perhaps another famous question by Mr Reagan during the debate with Mr Carter - "Are you better off now that you were four years ago?" - that was more decisive.
With the US economy in freefall, few voters will be able to answer this question in the affirmative.With the US economy in freefall, few voters will be able to answer this question in the affirmative.
The issue for Mr McCain is whether he will be tarred with the same brush as the Republican administration for the economic hardships that are likely to intensify by the time of the election in November.The issue for Mr McCain is whether he will be tarred with the same brush as the Republican administration for the economic hardships that are likely to intensify by the time of the election in November.
Mr Holtz-Eakin, however, says that the key question should be forward looking rather than backward looking: Mr Holtz-Eakin, however, said that the key question should be forward looking rather than backward looking.
"Who do you believe will make you better off in four years' time," he says. "Who do you believe will make you better off in four years' time," he said.
"The government doesn't create jobs. Only the private sector does.""The government doesn't create jobs. Only the private sector does."
Uniquely among most Western countries, America tend to mistrust its government and believe it is more likely to be part of the problem, rather than part of the solution, to the country's economic problems. Uniquely among most Western countries, America tends to mistrust its government and believe it is more likely to be part of the problem, rather than part of the solution, to the country's economic problems.
So Mr McCain's appeal to rely on the private sector to get the US out of recession may fall on fertile ground. So Mr McCain's appeal to rely on the private sector to get the US out of recession could just fall on fertile ground.