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by Jitendra Joshi

 

 

RENO, Nevada, Sept 30, 2008 (AFP) – Both candidates battling to succeed President George W. Bush telephoned the enfeebled leader Tuesday offering new ideas to break a devastating impasse in Congress on an economic bailout package.

 

Democrat Barack Obama and Republican John McCain both called for federal deposit insurance for US families and small businesses to be raised for the first time in three decades, in a bid to get rebellious lawmakers on side.

 

But there was also an eruption of partisan sniping as blame was traded over Monday’s failure of the emergency economic bill, with the Republican Party releasing a new ad saying Obama’s policies would worsen the crisis.

 

The two contenders warring for the November 4 election called Bush for “very constructive” discussions, White House spokesman Tony Fratto said.

 

“The senators offered ideas and reaffirmed what they have said publicly — that this is a critical issue that needs to be addressed,” he said.

 

Obama’s communications director Robert Gibbs said: “They spoke about the need to push for a package that Congress can agree on.”

 

Obama told Bush of his idea to lift the deposit insurance limit, “believing that such a proposal can broaden the coalition supporting the package,” Gibbs said.

 

The waning political capital of Bush, and the reluctant backing of Obama and McCain, was not enough to stop most Republicans and a minority of Democrats voting against the 700-billion-dollar bailout in the House of Representatives.

 

Both the White House contenders suggested increasing federal deposit insurance for families and small businesses with money saved in US banks from 100,000 dollars to 250,000 dollars.

 

The limit was set 28 years ago, and raising the ceiling could play into House Republicans’ demands for less direct intervention from taxpayers and more indirect support from the government through insurance for struggling firms.

 

Obama noted that the bill’s failure in the House had triggered a bloodbath on financial markets with 1.2 trillion dollars wiped off New York share values alone.

 

“While I, like others, am outraged that the reign of irresponsibility on Wall Street and in Washington has created the current crisis, I also know that continued inaction in the face of the gathering storm in our financial markets would be catastrophic for our economy and our families,” he said.

 

“At this moment, when the jobs, retirement savings, and economic security of all Americans hang in the balance, it is imperative that all of us — Democrats and Republicans alike, come together to meet this crisis.”

 

At a round-table economic discussion in Iowa, McCain warned “the dire consequences of inaction” would reverberate far beyond Wall Street.

 

McCain said he also recommended to Bush that the Treasury use its 250-billion-dollar “exchange stability fund” to directly shore up tottering Wall Street institutions.

 

And the Treasury has about one trillion dollars that it could expend without congressional authority to buy up “some of these terrible mortgages and help stabilize the situation,” the Republican said.

 

“We’re going to have to change enough Republican and Democrats’ minds. It was 95 Democrats that voted against it,” he told Fox News, without noting that even more House Republicans — 133 — also rejected the bailout.

 

“Even though we failed yesterday, even though I went back and was able to get more Republicans on board or help get more Republicans on board, we will go back to this, and I will be engaged always where I think America needs engagement.”

 

McCain has far more political capital invested in securing a deal than Obama, both as a member of Bush’s unpopular party and after intervening personally with a high-stakes dash to Washington last week.

 

The Republican National Committee released an advertisement arguing that the Democrat’s policies would drive up taxes and spending and “make the problem worse.”

 

The Obama campaign said the ad attack made a mockery of McCain’s slogan of “country first.”

 

“For John McCain’s party to demagogue a rescue plan that he supports in order to score cheap political points is not only dishonest and dishonorable, it is the height of irresponsibility on a day when we urgently need to pass that plan to prevent an economic catastrophe,” spokesman Bill Burton said.

 

Copyright © 2008 Agence France Presse. All rights reserved.

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