Despite Wall Street panic, McCain says fundamentals of economy are strong

Despite bank collapses and stock market turmoil, John McCain said yesterday morning that the fundamentals of the economy are strong, prompting a quick and hard-hitting response from Barack Obama.

In the past 48 hours, the economy moved back as the number 1 issue in the presidential campaign, and John McCain walked into a political minefield Monday that opened up an opportunity for Barack Obama to pounce.

The Dow Jones Industrial Average plunged more than 500 points on Monday and 170 points in the opening minutes Tuesday. The fall comes after the news that Merrill Lynch agreed to sell itself to Bank of America for $50 billion and Lehman Brothers announced it will file for bankruptcy, and just a week after the government announced a takeover of mortgage lenders Fannie Mae and Freddie Mac.

Speaking on the campaign trail Monday, Sen. McCain acknowledged the "tremendous turmoil in our financial markets in Wall Street" but insisted that "the fundamentals of our economy are strong."

That prompted a quick response from Sen. Obama. "Senator McCain, what economy are you talking about?" the Democratic presidential candidate said.

"What's more fundamental than knowing your life's savings is secure? What's more fundamental than knowing you'll have a roof over your head at the end of the day?" Obama asked.

McCain later tried to correct his statement by claiming he was referring to the people of America as the fundamentals of the economy and suggesting that his "opponents" may not believe in the American worker but he does.

MSNBC host Rachel Maddow ridiculed McCain's argument on her new show Monday night. "If you're against the economy going down the toilet, then you're against the American worker," asked Maddow.

In an effort at damage control, McCain appeared live on all six morning TV programs to talk about the financial crisis. He blasted the "greed" and "excess" on Wall Street and attacked, what he called the "inside-the-Beltway old-boy network." The Arizona senator also called for a new commission to investigate, according to Time Magazine's Mark Halperin.

The Obama campaign put out Sen. Joe Biden to respond to McCain, and the Delaware senator blamed the Bush Administration and GOP policies for the economic collapse. He also criticized McCain for distorting Obama's record on taxes. McCain has been accusing Obama of wanting to raise taxes on average Americans, but Obama's tax plan would actually cut taxes for most Americans.

Obama also approved a new television ad that challenged McCain directly on his statement that the fundamentals of the economy are strong. The ad asked how John McCain could fix the economy if he doesn't know there's anything wrong.