Obama targets economy, attacks McCain

Barack Obama's plan is to give Middle America a tax break. His political plan is to link John McCain to George W. Bush.

With the economy in the dumps and gas prices soaring, Barack Obama blamed President Bush.

"This was not an inevitable part of the business cycle that was beyond our power to avoid. It was the logical conclusion of a tired and misguided philosophy that has dominated Washington for far too long," says Obama.

Obama said another stimulus package is needed and he called for another $50 billion to help those who've been hit hardest, $10 billion for a foreclosure prevention fund, a mortgage tax credit for homeowners who don't itemize their tax returns, a $1,000 tax rebate for 95 percent of American households and no income tax for seniors making under $50,000 a year.

"And we will save Social Security for future generations by asking the wealthiest Americains to pay their fair share," says Obama.

That brought a stinging response from the McCain campaign, delivered by the former head of Hewlett Packard.

"Barack Obama's plan, basically, is to raise virtually every tax out there, whether it's social security tax, payroll tax, capital gains and dividend taxes. Raising taxes when economies are hurting is the wrong formula," says Carley Fiorina.

Is it ?

We asked U.C. Berkeley economist Alan Auerbach, an expert in tax policy and public finance, to give us his take on Obama's proposals.

"Well, I think to a large extent, it's typical of what many would propose when the unemployment rate goes up sharply as it recently has," says Auerbach.

Professor Auerbach says McCain is right to say that tax cuts can spur the economy, but there's a catch.

"We've had a very big increase in the inequality of the income distribution, not just during the Bush Administration, but over the last few decades, and there is some issue of social fairness over what do to about that."

And fairness is a point Obama is going to hammer.

"His policy will spend nearly $2 trillion on tax breaks for corporations including, get this, $1.2 billion for Exxon alone -- a company that just recorded the highest profits in history. Think about that!"

John McCain was thinking about money. He did not respond publicly to Obama. He was attending fundraisers in Virginia and Washington D.C.

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