Obama’s bipartisan proposal to salvage US economy

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Barack Obama on Monday welcomed three prominent Republicans, including two former officials in the George W. Bush administration, to an “economic summit” aimed at displaying his bipartisan credentials.

By Edward Luce in Washington DC

The meeting, which followed Mr Obama’s week-long tour of the Middle East and Europe, coincided with worsening economic news as the administration estimated that next year’s budget deficit would jump to almost $500bn.

It also came amid growing Republican concern about the sometimes confused economic message of John McCain, Mr Obama’s rival for the presidency.

Mr McCain’s tax and spending proposals would add an estimated $3,400bn to the US deficit over the next decade compared with an estimated $700bn deficit reduction from Mr Obama’s plans, according to the Tax Policy Center, an independent think-tank.

The Obama campaign on Monday said the widening budget deficit was a further testimony to what it said was the administration’s “unprecedented fiscal irresponsibility”.

“The deficit is an important issue because Senator John McCain is proposing to continue the same Bush policies that put our economy on this dangerous path and that will drive America even deeper into debt.”

The main purpose of Monday’s summit, which included Paul O’Neill, who was Mr Bush’s first Treasury secretary, Bill Donaldson, the former chairman of the Securities and Exchange Commission, and Paul Volcker, the former chairman of the US Federal Reserve, was to bolster Mr Obama’s presidential credentials.

“Senator Obama is trying to transcend the traditional cleavages by building a bipartisan consensus to tackle the short-term economic challenges so that we are then in a position to address the longer-term structural economic challenges,” said Lawrence Summers, the former Democratic Treasury secretary, who attended the meeting. Mr Summers added that he doubted Mr McCain would invite him to attend an equivalent event.

Gene Sperling, an adviser to the Obama campaign and former senior official in the Bill Clinton administration, said: “If you can attract senior Republican figures to an economic summit in the July before an election, then you are sending a strong message of bipartisan credibility. It is really doubtful Senator McCain could emulate this.”

The summit, which included Warren Buffett, president of Berkshire Hathaway, Jamie Dimon, the chairman of JPMorgan Chase, and Eric Schmidt, the chairman of Google, kicked off a week-long Obama focus on the economy, which looks set to deteriorate as the presidential campaign unfolds.

With fewer than 100 days left before the election, opinion polls show Mr Obama is maintaining a 6-9 percentage point lead over Mr McCain – considerably narrower than his party’s generic lead over the Republicans. Voters consistently rate the worsening economy as their chief concern.

Mr McCain’s campaign has struggled in the past few weeks to narrow the lead and might well have damaged itself with a series of increasingly personal attacks on Mr Obama while he was overseas last week.

In addition to Mr McCain’s complaints about the media’s alleged bias towards Mr Obama, the Republican candidate released an advertisement on Monday attacking his opponent for failing to visit US soldiers in hospital in Germany last week.

It followed Mr McCain’s allegation last week that Mr Obama would prefer to lose the war in Iraq than lose his campaign for the presidency. Mr McCain also appeared to have limited success in portraying Mr Obama’s trip as an indulgent hobnobbing tour of Europe’s leaders.

The Obama campaign pointed out that Mr McCain had conducted a similar tour of European chancelleries this year and that he had also criticised Mr Obama for then not having visited Iraq or Afghanistan. Unlike Mr McCain’s last two trips to the Middle East, Mr Obama’s trip was free of gaffes.

“What the last two weeks have shown is that Barack Obama is looking increasingly presidential which was, of course, the whole point of the trip and of yesterday’s economic summit,” said Bill Galston, a veteran of Democratic campaigns.

“It doesn’t matter what else a voter thinks about a candidate, if they cannot imagine you as commander-in-chief then you will not become president. Last week’s trip helps voters to imagine Obama in that role.”

The Financial Times

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