WASHINGTON — After months of focusing on Afghanistan and health care, President Obama turned his attention on Thursday to the high level of joblessness, but offered no promise that he could do much to bring unemployment down quickly even as he comes under pressure from his own party to do more.

At a White House forum, scheduled for the day before the government releases unemployment and job loss figures for November, Mr. Obama sought new ideas from business executives, labor leaders, economists and others. Confronted with concern that his own ambitious agenda and the uncertain climate it has created among employers have slowed hiring, the president defended his policies.

Mr. Obama said he would entertain “every demonstrably good idea” for creating jobs, but he cautioned that “our resources are limited.”

The president said he would announce some new ideas of his own next week. One of those, he indicated when he participated in a discussion group on clean energy, would be a program of weatherization incentives for homeowners and small businesses modeled on the popular “cash for clunkers” program.

On Capitol Hill, Ben S. Bernanke, the chairman of the Federal Reserve, told senators at a sometimes testy hearing on his confirmation for a second term, “Jobs are the issue right now.”

“It really is the biggest challenge, the most difficult problem that we face right now,” Mr. Bernanke added, citing in particular the inability of many credit-worthy small businesses to get bank loans.

In the House, where lawmakers are particularly sensitive to the employment issue since they all face re-election next year, Democratic leaders on Thursday were finishing work on a jobs bill for debate this month. It would extend expiring federal unemployment benefits for people who have been out of jobs for long periods, and provide up $70 billion for roads and infrastructure projects and for aid to small business. House Democrats plan to pay for the plan by drawing from the $700 billion fund set up last year to bail out financial institutions.

The House also passed legislation on Thursday that would freeze the federal tax on large estates at its current level. Under current law, the tax would have disappeared entirely next year, only to reappear at much higher levels in 2011. The vote highlighted the raft of fiscal issues facing the administration and Congress and the tension between addressing budget deficits and taking potentially expensive actions to help the economy.

Mr. Obama’s jobs event captured the political and policy vise now squeezing the president and his party at the end of his first year. It came on the eve of a government report that is expected to show unemployment remaining in double digits, and two days after Mr. Obama emphasized as he ordered 30,000 additional troops to Afghanistan that he did not want the financial burdens of the war to overwhelm his domestic agenda.

Both the domestic and the military demands on the administration are raising costs unanticipated when Mr. Obama took office, even as pressures build to arrest annual budget deficits now exceeding $1 trillion. Those demands are also eroding the broad support that swept Mr. Obama into office, especially among independent voters, and igniting a guns-versus-butter budget debate in his own party not seen since the Vietnam era.

While liberals are calling for ambitious job-creating measures along the lines of the New Deal and Republicans want to scale back government spending programs, Mr. Obama talked at the White House on Thursday of limited programs that he suggested could provide substantial bang for the buck when it comes to job creation. Among them was the weatherization program.

Called “cash for caulkers,” it would enlist contractors and home-improvement companies like Home Depot — whose chief executive was on the panel — to advertise the benefits, much as car dealers did for the clunkers trade-ins this year.

Yet that relatively modest proposal underscores the limits of the government’s ability to affect a jobless recovery with the highest unemployment rate in 26 years — and Mr. Obama acknowledged as much. Just as he said in Tuesday’s Afghanistan speech that the nation could not afford an open-ended commitment there, especially when the economy is so weak and deficits so high, Mr. Obama emphasized at the jobs forum that the government had already done a lot with his $787 billion economic stimulus package and the $700 billion financial bailout that he inherited.

“I want to be clear: While I believe the government has a critical role in creating the conditions for economic growth, ultimately true economic recovery is only going to come from the private sector,” he told his audience, which included executives and some critics from American Airlines, Boeing, Nucor, Google, Walt Disney and FedEx.

Mr. Obama told the chief executives that he wanted to know: “What’s holding back business investment and how we can increase confidence and spur hiring? And if there are things that we’re doing here in Washington that are inhibiting you, then we want to know about it.”

He got a blunt answer from Fred P. Lampropoulos, founder and chief of Merit Medical Systems Inc., a medical device manufacturer in the Salt Lake City area. Mr. Lampropoulos said some in his discussion group agreed that businesses were uncertain about investment because “there’s such an aggressive legislative agenda that businesspeople don’t really know what they ought to do.” That uncertainty, he added, “is really what’s holding back the jobs.”

The president acknowledged, “This is a legitimate concern,” one that he and his advisers had discussed before he took office.

But Mr. Obama said he had decided that “if we keep on putting off tough decisions about health care, about energy, about education, we’ll never get to the point where there’s a lot of appetite for that.”

The argument that Democrats’ ambitions are unnerving business is one that Republicans have been making lately, and it was prominent Thursday when House Republican leaders held a competing round table on jobs with conservative economists.

“The American people are asking, ‘Where are the jobs?’ but all they are getting from Washington Democrats is more spending, more debt and more policies that hurt small businesses,” said Representative John A. Boehner of Ohio, the House minority leader.

But W. James McNerney Jr., the head of the Boeing Company, said in an interview after the president’s forum, “If you ask me what creates the uncertainty I’m dealing with, it’s more the state of the economy.”

The administration’s domestic agenda is a problem only to the extent that it “is crowding out their attention” to the economy, Mr. McNerney said, adding, “I think the purpose of today was to convince us that there’s at least a half-pivot in the other direction.”

WASHINGTON — The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true.

But that happy situation, aided by ultralow interest rates, may not last much longer.

Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.

The potential for rapidly escalating interest payouts is just one of the wrenching challenges facing the United States after decades of living beyond its means.

The surge in borrowing over the last year or two is widely judged to have been a necessary response to the financial crisis and the deep recession, and there is still a raging debate over how aggressively to bring down deficits over the next few years. But there is little doubt that the United States’ long-term budget crisis is becoming too big to postpone.

Americans now have to climb out of two deep holes: as debt-loaded consumers, whose personal wealth sank along with housing and stock prices; and as taxpayers, whose government debt has almost doubled in the last two years alone, just as costs tied to benefits for retiring baby boomers are set to explode.

The competing demands could deepen political battles over the size and role of the government, the trade-offs between taxes and spending, the choices between helping older generations versus younger ones, and the bottom-line questions about who should ultimately shoulder the burden.

“The government is on teaser rates,” said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates lower deficits. “We’re taking out a huge mortgage right now, but we won’t feel the pain until later.”

So far, the demand for Treasury securities from investors and other governments around the world has remained strong enough to hold down the interest rates that the United States must offer to sell them. Indeed, the government paid less interest on its debt this year than in 2008, even though it added almost $2 trillion in debt.

The government’s average interest rate on new borrowing last year fell below 1 percent. For short-term i.o.u.’s like one-month Treasury bills, its average rate was only sixteen-hundredths of a percent.

“All of the auction results have been solid,” said Matthew Rutherford, the Treasury’s deputy assistant secretary in charge of finance operations. “Investor demand has been very broad, and it’s been increasing in the last couple of years.”

The problem, many analysts say, is that record government deficits have arrived just as the long-feared explosion begins in spending on benefits under Medicare and Social Security. The nation’s oldest baby boomers are approaching 65, setting off what experts have warned for years will be a fiscal nightmare for the government.

“What a good country or a good squirrel should be doing is stashing away nuts for the winter,” said William H. Gross, managing director of the Pimco Group, the giant bond-management firm. “The United States is not only not saving nuts, it’s eating the ones left over from the last winter.”

The current low rates on the country’s debt were caused by temporary factors that are already beginning to fade. One factor was the economic crisis itself, which caused panicked investors around the world to plow their money into the comparative safety of Treasury bills and notes. Even though the United States was the epicenter of the global crisis, investors viewed Treasury securities as the least dangerous place to park their money.

On top of that, the Fed used almost every tool in its arsenal to push interest rates down even further. It cut the overnight federal funds rate, the rate at which banks lend reserves to one another, to almost zero. And to reduce longer-term rates, it bought more than $1.5 trillion worth of Treasury bonds and government-guaranteed securities linked to mortgages.

Those conditions are already beginning to change. Global investors are shifting money into riskier investments like stocks and corporate bonds, and they have been pouring money into fast-growing countries like Brazil and China.

The Fed, meanwhile, is already halting its efforts at tamping down long-term interest rates. Fed officials ended their $300 billion program to buy up Treasury bonds last month, and they have announced plans to stop buying mortgage-backed securities by the end of next March.

Eventually, though probably not until at least mid-2010, the Fed will also start raising its benchmark interest rate back to more historically normal levels.

The United States will not be the only government competing to refinance huge debt. Japan, Germany, Britain and other industrialized countries have even higher government debt loads, measured as a share of their gross domestic product, and they too borrowed heavily to combat the financial crisis and economic downturn. As the global economy recovers and businesses raise capital to finance their growth, all that new government debt is likely to put more upward pressure on interest rates.

Even a small increase in interest rates has a big impact. An increase of one percentage point in the Treasury’s average cost of borrowing would cost American taxpayers an extra $80 billion this year — about equal to the combined budgets of the Department of Energy and the Department of Education.

But that could seem like a relatively modest pinch. Alan Levenson, chief economist at T. Rowe Price, estimated that the Treasury’s tab for debt service this year would have been $221 billion higher if it had faced the same interest rates as it did last year.

The White House estimates that the government will have to borrow about $3.5 trillion more over the next three years. On top of that, the Treasury has to refinance, or roll over, a huge amount of short-term debt that was issued during the financial crisis. Treasury officials estimate that about 36 percent of the government’s marketable debt — about $1.6 trillion — is coming due in the months ahead.

To lock in low interest rates in the years ahead, Treasury officials are trying to replace one-month and three-month bills with 10-year and 30-year Treasury securities. That strategy will save taxpayers money in the long run. But it pushes up costs drastically in the short run, because interest rates are higher for long-term debt.

Adding to the pressure, the Fed is set to begin reversing some of the policies it has been using to prop up the economy. Wall Street firms advising the Treasury recently estimated that the Fed’s purchases of Treasury bonds and mortgage-backed securities pushed down long-term interest rates by about one-half of a percentage point. Removing that support could in itself add $40 billion to the government’s annual tab for debt service.

This month, the Treasury Department’s private-sector advisory committee on debt management warned of the risks ahead.

“Inflation, higher interest rate and rollover risk should be the primary concerns,” declared the Treasury Borrowing Advisory Committee, a group of market experts that provide guidance to the government, on Nov. 4.

“Clever debt management strategy,” the group said, “can’t completely substitute for prudent fiscal policy.”

Does the U.S. Constitution stand for anything in an era of government excess? Can that founding document, which is supposed to restrain the power and reach of a centralized federal government, slow down the juggernaut of czars, health insurance overhaul and anything else this administration and Congress wish to do that is not in the Constitution?

The Framers created a limited government, thus ensuring individuals would have the opportunity to become all that their talents and persistence would allow. The Left has put aside the original Constitution in favor of a “living document” that they believe allows them to do whatever they want and demand more tax dollars with which to do it.

Can they be stopped? Some constitutional scholars think the Tenth Amendment offers the best opportunity. The Tenth Amendment states: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

In 1939, the Supreme Court began to dilute constitutional language so that it became open to broader interpretation. Rob Natelson, professor of Constitutional Law and Legal History at the University of Montana, has written that even before Franklin Roosevelt’s court-packing scheme, it was changing the way the Constitution was interpreted, especially “how the commerce and taxing powers were turned upside-down, the necessary and proper clauses and incidental powers, the false claim that the Supreme Court is conservative, how bad precedent leads to more bad court rulings, state elections as critical for constitutional activists, and more.”

While during the past seven decades the court has tolerated the federal welfare state, Natelson says it has never, except in wartime, “authorized an expansion of the federal scope quite as large as what is being proposed now. And in recent years, both the Court and individual justices – even ‘liberal’ justices – have said repeatedly that there are boundaries beyond which Congress may not go.” … “Chief Justice John Marshall once wrote that if Congress were to use its legitimate powers as a ‘pretext’ for assuming an unauthorized power, ‘it would become the painful duty’ of the Court ‘to say that such an act was not the law of the land.’ ”

It would be nice to know now what those boundaries are and whether Congress is exceeding its powers as it prepares to alter one-sixth of our economy and change how we access health insurance and health care.

Natelson makes a fascinating argument in his essay, “Is ObamaCare Constitutional?” (www.tenthamend mentcenter.com/2009/08/18/is-obama care-constitutional), using the court’s Roe v. Wade ruling in 1973. In Roe, he writes, the court struck down state abortion laws that “intruded into the doctor-patient relationship. But the intrusion invalidated in Roe was insignificant compared to the massive intervention contemplated by schemes such as HB3200. ‘Global budgeting’ and ‘single-payer’ plans go even further, and seem clearly to violate the Supreme Court’s Substantive Due Process rules.”

Constitutional attorney John Whitehead, president of the Rutherford Institute, tells me, “Although the states surrendered many of their powers to the new federal government, they retained a residuary and inviolable sovereignty that is reflected throughout the Constitution’s text. The Framers rejected the concept of a central government that would act upon and through the states, and instead designed a system in which the state and federal governments would exercise concurrent authority over the people. The court’s jurisprudence makes clear that the federal government may not compel the states to enact or administer a federal regulatory program.”

Lawyers are busy writing language only they can understand that seeks to circumvent the intentions of the Founders. But it will be difficult to circumvent the last four words of the Tenth Amendment, which state unambiguously where ultimate power lies: “… or to the people.”

Americans who believe their government should not be a giant ATM, dispensing money and benefits to people who have not earned them, and who want their country returned to its founding principles, must now exercise that power before it is taken from them. The Tenth Amendment is one place to begin. The streets are another. It worked for the Left.

Cal Thomas is a columnist for Tribune Media Services.

CHICAGO – Nearly half of all U.S. children and 90 percent of black youngsters will be on food stamps at some point during childhood, and fallout from the current recession could push those numbers even higher, researchers say.

The estimate comes from an analysis of 30 years of national data, and it bolsters other recent evidence on the pervasiveness of youngsters at economic risk. It suggests that almost everyone knows a family who has received food stamps, or will in the future, said lead author Mark Rank, a sociologist at Washington University in St. Louis.

“Your neighbor may be using some of these programs, but it’s not the kind of thing people want to talk about,” Rank said.

The analysis was released Monday in the November issue of Archives of Pediatrics and Adolescent Medicine. The authors say it’s a medical issue pediatricians need to be aware of because children on food stamps are at risk for malnutrition and other ills linked with poverty.

“This is a real danger sign that we as a society need to do a lot more to protect children,” Rank said.

Food stamps are a Department of Agriculture program for low-income individuals and families, covering most foods although not prepared hot foods or alcohol. For a family of four to be eligible, their annual take-home pay can’t exceed about $22,000.

According to a USDA report released last month, 28.4 million Americans received food stamps in an average month in 2008, and about half were younger than age 18. The average monthly benefit per household totaled $222.

Rank and Cornell University sociologist Thomas Hirschl studied data from a nationally representative survey of 4,800 American households interviewed annually from 1968 through 1997 by the University of Michigan. About 18,000 adults and children were involved.

Overall, about 49 percent of all children were on food stamps at some point by the age of 20, the analysis found. That includes 90 percent of black children and 37 percent of whites. The analysis didn’t include other ethnic groups.

The time span included typical economic ups and downs, including the early 1980s recession. That means similar portions of children now and in the future will live in families receiving food stamps, although ongoing economic turmoil may increase the numbers, Rank said.

An editorial in the medical journal agreed.

“The current recession is likely to generate for children in the United States the greatest level of material deprivation that we will see in our professional lifetimes,” Stanford pediatrician Dr. Paul Wise wrote.

Wise said the Archives study estimate is believable.

“I find it terribly sad, but not surprising,” Wise said.

James Weill, president of Food Research and Action Center, a Washington-based advocacy group, said the analysis underscores that “there are just very large numbers of people who rely on this program for a month, six months, a year.”

“What I hope comes out of this study is an understanding that food stamp beneficiaries aren’t them – they’re us,” Weill said.

The analysis is in line with other recent research suggesting that more than 40 percent of U.S. children will live in poverty or near-poverty by age 17; and that half will live at some point in a single-parent family. Also, other researchers have estimated that slightly more than half of adults will use food stamps at some point by age 65.

By Carrie Johnson
Washington Post Staff Writer
Tuesday, October 20, 2009

Attorney General Eric H. Holder Jr. directed federal prosecutors Monday to back away from pursuing cases against medical marijuana patients, signaling a broad policy shift that drug reform advocates interpret as the first step toward legalization of the drug.

The government’s top lawyer said that in 14 states with some provisions for medical marijuana use, federal prosecutors should focus only on cases involving higher-level drug traffickers, money launderers or people who use the state laws as a cover.

The Justice Department’s action came days after the Senate’s second-highest-ranking Democrat introduced a bill that would eradicate a two-decade-old sentencing disparity for people caught with cocaine in rock form instead of powder form. Taken together, experts say, the moves represent an approach favored by President Obama and Vice President Biden to put new emphasis on violent crime and the sale of illicit drugs to children. Legislation that would cover a third administration commitment, to support federal funding of needle exchanges, is moving through the House.

The announcement set off waves of support from advocacy groups that have long sought to relax the enforcement of marijuana laws. But some local police and Republican lawmakers criticized the change, saying it could exacerbate the flow of drug money to Mexican cartels, whose violence has spilled over the Southwestern border.

In a statement, Holder asserted that drug traffickers and people who use firearms will continue to be direct targets of federal prosecutors, but that, on his watch, “it will not be a priority to use federal resources to prosecute patients with serious illnesses or their caregivers who are complying with state laws on medical marijuana.”

The turnaround could pave the way for Rhode Island, New Mexico and Michigan to put together marijuana-distribution systems for residents of those states, according to Graham Boyd, director of the Drug Law Reform Project at the American Civil Liberties Union. Advocates say marijuana use can help alleviate pain and stimulate appetite in patients suffering from cancer, HIV-AIDS and other ailments. But the American Medical Association since 2001 has held firm to a policy opposing marijuana for medical purposes.

Under the Controlled Substances Act, which is more than three decades old, marijuana remains within the category of drugs most tightly restricted by the government. Donna Lambert, who is awaiting criminal trial in San Diego County Superior Court for allegedly providing medical marijuana to another patient, injected a note of skepticism into Holder’s announcement. In an interview, Lambert noted that senior administration officials had made public comments this year in line with the Justice Department policy, only to have law enforcement agents, including the Drug Enforcement Administration, take part in raids soon afterward.

Ethan Nadelmann, executive director of the Drug Policy Alliance, said he and other advocates will watch closely whether federal agents refuse to participate in raids or send other signals to district attorneys in the states that allow some medical use of marijuana.

Americans for Safe Access, which supports medical marijuana programs nationwide, estimated that during the Bush administration federal authorities conducted 200 raids in California alone. A 2005 U.S. Supreme Court case made clear that the federal government has the discretion to enforce federal drug laws even in states that had approved some relaxation of marijuana statutes for sick patients.

White House press secretary Robert Gibbs, at a daily briefing in Washington, declined to address “what states should do” in response to the Justice Department guidance. But Gibbs said that the president since January had outlined his medical marijuana policy and that the Justice Department memo, signed by Deputy Attorney General David W. Ogden, helped to fill in the details.

The administration stopped far short Monday of endorsing wholesale marijuana legalization, frustrating some activists. At the libertarian Cato Institute, official Tim Lynch described the war on drugs as a “grand failure.” He exhorted the White House to take “much bolder steps to stop the criminalization of drug use more generally.”

In the three-page memo, Ogden made clear that the department is not creating a new legal defense for people who may have violated the Controlled Substances Act. Instead, the memo is intended to guide prosecutors on where to train their scarce investigative resources.

The International Association of Chiefs of Police “strongly believes that the federal government must continue to play a central role in the investigation and prosecution of . . . traffickers, dispensary operators, and growers,” said Meredith Mays, a spokeswoman for the group.

Rep. Lamar Smith (Tex.), the top Republican on the House Judiciary Committee, said the Justice Department guidelines “fly in the face of Supreme Court precedent and undermine federal laws that prohibit the distribution and use of marijuana.”

He added: “We cannot hope to eradicate the drug trade if we do not first address the cash cow for most drug-trafficking organizations — marijuana.”

The cocaine bill is still pending in the Senate, although advocates say its prospects are stronger now than over the past decade. The sponsor, Sen. Richard J. Durbin (D-Ill.), said in an interview last week that he was working to enlist GOP co-sponsors to ease the bill’s passage.

Senator John McCain used the final debate of the presidential election on Wednesday night to raise persistent and pointed questions about Senator Barack Obama’s character, judgment and policy prescriptions in a session that was by far the most spirited and combative of their encounters this fall.

At times showing anger and at others a methodical determination to make all his points, Mr. McCain pressed his Democratic rival on taxes, spending, the tone of the campaign and his association with the former Weather Underground leader William Ayers, using nearly every argument at his disposal in an effort to alter the course of a contest that has increasingly gone Mr. Obama’s way.

But Mr. Obama maintained a placid and at times bemused demeanor — if at times appearing to work at it — as he parried the attacks and pressed his consistent line that Mr. McCain would represent a continuation of President Bush’s unpopular policies, especially on the economy.

That set the backdrop for one of the sharpest exchanges of the evening, when, in response to Mr. Obama’s statement that Mr. McCain had repeatedly supported Mr. Bush’s economic policies, Mr. McCain fairly leaped out of his chair to say: “Senator Obama, I am not President Bush. If you wanted to run against President Bush, you should have run four years ago.”

Acknowledging Mr. McCain had his differences with Mr. Bush, Mr. Obama replied, “The fact of the matter is that if I occasionally mistake your policies for George Bush’s policies, it’s because on the core economic issues that matter to the American people — on tax policy, on energy policy, on spending priorities — you have been a vigorous supporter of President Bush.”

The debate touched on a wide variety of issues, including abortion, judicial appointments, trade and climate change as well as the economy, with the candidates often making clear the deep differences between them.

But it also put on display the two very different temperaments of the candidates with less than three weeks until Election Day. The lasting image of the night could be the split screen of Mr. Obama, doing his best to maintain his unflappable demeanor under a sometimes withering attack, and Mr. McCain looking coiled, occasionally breathing deeply, apparently in an expression of impatience.

Sitting side by side with only the host, Bob Schieffer of CBS News, between them on the stage at Hofstra University, Mr. McCain made clear from the start that he was going to follow the prescriptions of many of his supporters — among them his running mate, Gov. Sarah Palin of Alaska — and try to put Mr. Obama on the defensive and shake him from his steady debate style.

Seizing on an encounter in Ohio this week with a voter — Joe Wurzelbacher, a plumber — who told Mr. Obama that he feared that his tax policies would punish him as a small-business owner, Mr. McCain pressed his attack on Mr. Obama as a tax-and-spend liberal. Mr. Obama’s plan would raise taxes on filers earning more than $250,000 a year, a category that includes some small businesses, but would cut taxes on households earning less than $200,000 a year.

Seeking to suggest that Mr. Obama would hurt the economy and many entrepreneurs, Mr. McCain said, “The whole premise behind Senator Obama’s plans are class warfare — let’s spread the wealth around,” repeating a phrase Mr. Obama had used to Mr. Wurzelbacher in explaining the rationale for his upper-income tax increase.

“Why would you want to do that — anyone, anyone in America — when we have such a tough time, when these small-business people like Joe the Plumber are going to create jobs unless you take that money from him and spread the wealth around,” Mr. McCain said.

The plumber came up directly or indirectly 24 times during the debate, an Everyman symbol of the divide between the candidates on how best to address the economy.

As he has done in previous encounters, Mr. Obama looked into the camera and repeated his plan: “Now, the conversation I had with Joe the Plumber, what I essentially said to him was, five years ago, when you weren’t in the position to buy your business, you needed a tax cut then. And what I want to do is to make sure that the plumber, the nurse, the firefighter, the teacher, the young entrepreneur who doesn’t yet have money, I want to give them a tax break now.”

Coming on a day that the Dow Jones average had one of its worst drops in history, Mr. Schieffer tried something other moderators had failed to do this fall: get the two candidates to enumerate which proposals they would specifically have to postpone or cut in the face of an economic environment that has changed drastically since they first drew up their plans.

Neither man went very far, though Mr. McCain perhaps offered a more detailed list. Repeating his pledge of an across-the-board spending cut, he said, “Well, one of them would be the marketing assistance program. Another one would be a number of subsidies for ethanol.”

Mr. Obama, for his part, specifically cited the “$15 billion a year on subsidies to insurance companies,” a component of the Medicare program. But, he said more generally, “we need to eliminate a whole host of programs that don’t work, and I want to go through the federal budget line by line, page by page. Programs that don’t work, we should cut.”

Still, though the winner of this election will inherit the most sweeping federal intervention in financial markets in at least three generations, the debate, while not short of policy discussions, was at least as much about the styles of the two men as they engaged one another.

In the days before the debate, Mr. Obama had appeared to have goaded Mr. McCain, saying in an interview with ABC News that he did not know why Mr. McCain had not personally made an issue of Mr. Obama’s association with Mr. Ayers, with whom he worked with on two nonprofit boards, in their last debate considering that Mr. McCain’s campaign had done so repeatedly in recent weeks.

And there was some degree of anticipation over whether Mr. McCain would do so this time. He did, though only after a bit of prompting from Mr. Schieffer, who, in a question about the tone of the campaign directed at both men, asked Mr. McCain specifically, “Your running mate said he palled around with terrorists.”

Mr. McCain initially did not address that point directly.

But as Mr. Schieffer seemed prepared to move to another topic, Mr. McCain returned to Mr. Ayers on his own. Mr. McCain seemed most agitated in that moment, saying: “I don’t care about an old, washed-up terrorist. But as Senator Clinton said in her debates with you, we need to know the full extent of that relationship. We need to know the full extent of Senator Obama’s relationship with Acorn, who is now on the verge of maybe perpetrating one of the greatest frauds in voter history in this country, maybe destroying the fabric of democracy.”

He was referring to a community activist group that focuses on housing issues and has been running voter registration efforts in many states that have drawn accusations of fraud.

Mr. Obama’s aides said during the day that he was preparing for the Ayers question.

“Bill Ayers is a professor of education in Chicago. Forty years ago, when I was 8 years old, he engaged in despicable acts with a radical domestic group. I have roundly condemned those acts,” Mr. Obama said. “Ten years ago, he served and I served on a board that was funded by one of Ronald Reagan’s former ambassadors and close friends, Mr. Annenberg.”

On Acorn, Mr. Obama said, “Apparently what they have done is they were paying people to go out and register folks. And apparently some of the people who were out there didn’t really register people, they just filled out a bunch of names. Had nothing to do with us. We were not involved.”

Speaking of his involvement with the group, he said, “The only involvement I’ve had with Acorn was I represented them alongside the U.S. Justice Department in making Illinois implement a motor voter law that helped people register at D.M.V.’s.” Mr. Obama’s campaign made some payments to an affiliate of Acorn.

Mr. Obama said sternly as Mr. McCain bristled, “And I think the fact that this has become such an important part of your campaign, Senator McCain, says more about your campaign than it says about me.”

By ADAM NAGOURNEY and JEFF ZELENY

The turmoil on Wall Street and the weakening economy are changing the contours of the presidential campaign map, giving new force to Senator Barack Obama’s ambitious strategy to make incursions into Republican territory, while leading Senator John McCain to scale back his efforts to capture Democratic states.

Mr. Obama has what both sides describe as serious efforts under way in at least nine states that voted for President Bush in 2004, including some that neither side thought would be on the table this close to Election Day. In a visible sign of the breadth of Mr. Obama’s aspirations, he is using North Carolina — a state that Mr. Bush won by 13 percentage points in 2004, and where Mr. Obama is now spending heavily on advertisements — as his base to prepare this weekend for the debate on Tuesday.

By contrast, Mr. McCain is vigorously competing in just four states where Democrats won in 2004: Pennsylvania and New Hampshire, followed by Wisconsin and Minnesota. His decision last week to pull out of Michigan reflected in part the challenge that the declining economy has created for Republicans, given that they have held the White House for the last eight years.

But Mr. McCain’s abrupt decision, which caught many members of his own party by surprise, also underlined the tactical political squeeze he finds himself in: by using his fund-raising advantage to compete in so many places, Mr. Obama has forced Mr. McCain to spend money to hold on in what had been viewed as safe Republican states, like Indiana and Missouri, while limiting Mr. McCain’s ability to play offense on Democratic turf.

Mr. Obama now has a solid lead in states that account for 189 electoral votes, and he is well positioned in states representing 71 more electoral votes, for a total of 260, according to a tally by The New York Times, based on polls and interviews with officials from both campaigns and outside analysts. It takes 270 electoral votes to win the presidency.

Mr. McCain has solid leads in states with 160 electoral votes and is well positioned in states with another 40 electoral votes, according to the Times tally, for a total of 200. Just six states representing 78 electoral votes — Colorado, Florida, Nevada, New Hampshire, Ohio and Virginia — are tossups.

Mr. Obama appears to have significantly more options to reach the 270 threshold, particularly if Mr. McCain fails to win any states that Democrats won in 2004, like Pennsylvania, where the Republican ticket has been competing especially vigorously.

That said, the margin in many of these states remains relatively tight, and the field could certainly shift again in the final weeks, as the presidential candidates engage in two more debates and as Mr. McCain steps up his attacks on Mr. Obama, as his aides said he planned to do.

Mr. McCain’s advisers said their hope was that the issue of the economy would recede somewhat from the public consciousness, now that Congress has passed a bailout plan, and open the way to try to turn the contest back into a referendum on Mr. Obama’s credentials. They argued that given everything that had happened, Mr. McCain remained in easy distance of Mr. Obama, evidence of what they said were underlying problems with his appeal.

“Senator Obama has more money than God, the most favorable political climate imaginable — a three-week Wall Street meltdown and financial crisis — and with all that, the most margin he can get is four points?” said Bill McInturff, one of Mr. McCain’s pollsters. “That does speak to the questions there are about lack of experience, his candidacy, and other things that make people say, ‘Gosh, is he really ready?’ ”

Mr. Obama in particular is moving to seize on what both sides think could be a decisive moment in this campaign, using Wall Street as a way to focus attention on related concerns, like Social Security and health care.

Campaigning on Saturday, Mr. Obama told several thousand supporters in Newport News, Va., that Mr. McCain’s health care plan was outdated and had hidden tax increases that would erode companies’ coverage for workers and leave millions of people uninsured.

He called it an “old Washington bait and switch,” adding, “He gives you a tax credit with one hand but raises your taxes with the other.”

Mr. Obama is now running advertisements aimed at elderly voters in South Florida, Las Vegas and Reno, Nev., invoking the Wall Street crisis in criticizing Mr. McCain’s support for allowing individuals to choose to invest part of their payroll taxes in stocks and bonds as an alternative to Social Security. The advertisements assert that the approach will “gamble with your life savings.” (That claim has been described by independent monitoring organizations as deceptive.)

In Florida, voters will begin receiving mailings from Mr. Obama on Monday warning about what they describe as a McCain plan to tax health care benefits “for the first time ever.” A new advertisement released on Friday, using clips from the vice-presidential debate on Thursday night, makes the same attack on Mr. McCain. In Nevada, advertisements are geared toward the mortgage crisis in a state that has one of the highest foreclosure rates in the country.

In Virginia, voters stung by fuel costs received a brochure saying, “While you’re running on empty, Exxon made $4 billion in one month,” pointing out that Mr. McCain promised tax breaks to oil companies. (The tax cuts are not specifically for oil companies but are part of a broader proposal to reduce corporate tax rates, including those for alternative energy companies.)

It is health care, advisers said, that they believe resonates more than other issues for Americans who are worried about their economic condition. It is a less-threatening way to talk about the economy — showing pictures of shuttered banks, for example, could create more worry — that aides said tested well across demographic groups, but particularly among older voters who have been slower to warm to Mr. Obama.

“One of the biggest economic anxieties that people have is the cost of health care,” said Gov. James E. Doyle of Wisconsin, a Democrat in a state where Mr. McCain is making a strong challenge to Mr. Obama. “There is a great deal of uneasiness.”

Mr. McCain’s advisers said that more than anything, it was the bad economy in Michigan, staggered by declining sales of American-made automobiles, that convinced them they had no hope of winning a state that once had been high on their list of targets. Beyond that, they said the Wall Street downturn was hurting Mr. McCain in Florida — where the mortgage crisis has been particularly acute — a state where they were once confident that they could hold off Mr. Obama.

Mr. Obama opted out of the federal campaign finance system, which limits spending to $84.1 million, in the belief that he would be able to raise far more than that and outspend Mr. McCain.

Mr. Obama has used his cash advantage both to expand the size of the campaign field — it seems a good bet that Mr. Obama would not be spending money in Missouri if he had an $84.1 million limit — but also to outspend Mr. McCain in battleground states. In Florida over the past two weeks, Mr. Obama has spent $5.3 million on television, compared with just under $1.1 million by Mr. McCain, said Evan Tracey, the head of CMAG, a company that monitors political advertising.

Mr. Tracey said Mr. Obama had been steadily increasing his national television advertising budget by 20 percent each week this fall.

Mr. Obama is making a sustained effort to capture from the Republican column Colorado, Florida, Indiana, Iowa, Nevada, New Mexico, North Carolina, Ohio and Virginia. He is putting effort into Missouri and Montana, and though those seem like longer shots, Mr. McCain campaigned in Missouri last week, and Republicans are buying advertising time there.

“That is a lot of defense that John McCain is going to have to play,” said David Plouffe, Mr. Obama’s campaign manager.

Of the four Democratic states where Mr. McCain is competing, his aides said he viewed Pennsylvania — the biggest of them — as offering him the best chance. Mr. Obama lost the Democratic primary there to Senator Hillary Rodham Clinton.

Robert A. Gleason Jr., the state’s Republican chairman, said that recent polls suggesting that Mr. Obama was building a lead were misleading, noting that the state was filled with the kind of blue-collar voters with whom Mr. Obama has struggled for much of the year to connect. “Obama is not catching on here,” Mr. Gleason said.

Gov. Edward G. Rendell of Pennsylvania, a Democrat, did not dispute Mr. Gleason’s suggestion that Mr. Obama was not as strong in that state as some polls suggested. “I think they know they have catch-up to do here,” Mr. Rendell said. “Senator McCain has been here 17 times since June.”

Mr. Obama’s campaign said that he had been there seven times since the end of the primary season, June 3.

Mr. Rendell said an unusually long one-minute advertisement Mr. Obama produced, which showed him talking directly into the camera about the economic crisis, was one reason polls were showing increasing strength for Mr. Obama in the state.

The McCain campaign’s announcement that it was pulling out of Michigan — the kind of news that can be dispiriting to supporters and contributors — reflects the period the campaign has entered, when it is difficult if not impossible to do the kind of feints and bluffs about where the candidate is playing. (For a while, Mr. Obama’s aides claimed he would be competing in Georgia and even spent some money there before pulling out over the summer.)

With limited time and money left, it now becomes quickly apparent when a candidate takes down his television advertisements or cancels a campaign trip, as Mr. McCain did to Michigan this week. Mr. McCain’s associates said they put the news out on the day of the vice-presidential debate in hopes of minimizing attention to it, though inevitably, it fed the perception that Mr. McCain’s campaign was going through a difficult stretch.

Yet in a sign of how closely contested the campaign remains, both Mr. McCain and Mr. Obama have sent people and money into Maine and Nebraska, two states where electoral votes are split, to try to peel off a single electoral vote, with Mr. Obama hoping to pick up one in a particular region of Nebraska, which is otherwise reliably Republican, while Mr. McCain is trying the same thing in Maine, which has gone Democratic in recent presidential elections.

That is not a fanciful battle: There are plausible outcomes that would leave the two men with a 269-269 electoral vote tie, forcing the election into the House of Representatives.

Mr. McCain sent workers from Michigan to Maine, focusing specifically on the state’s rural 2nd Congressional District. And Mr. Obama has added an office filled with organizers in Nebraska’s 2nd Congressional District, which includes Omaha, where a large voter registration drive has been under way for weeks.

“I think we’ve got a shot at that,” Mr. Obama said in an interview in the summer about the Nebraska vote. “Wouldn’t that be fun?”

WASHINGTON – A business-friendly Supreme Court will start another season Monday on familiar turf.

With a closely watched case involving cigarette advertising, Chief Justice John G. Roberts Jr. will resume the corporate focus that’s marked his three-year tenure. The cases may not sound sexy, but they can be crucial for companies and consumers alike.

“The question,” noted Robin Conrad, the executive vice president of the National Chamber Litigation Center, “comes down to who gets to regulate business.”

So far, the Supreme Court has agreed to hear some 41 cases for the 2008-09 term, which begins on the traditional first Monday morning in October. The National Chamber Litigation Center, the increasingly active litigation arm of the U.S. Chamber of Commerce, has identified at least 16 of these as business cases.

The court typically hears about 75 cases each term, and some of the most important disputes may not have matured yet. The justices will continue adding cases through early next year.

Unlike recent years, the court hasn’t yet scheduled a Guantanamo Bay or obvious national-security case, though they might yet arise. The culture war issues, including abortion, bandied about by presidential candidates are nowhere to be seen yet, although there’s one case involving dirty words on television. Other high-profile disputes, including all-but-certain legal challenges to the new $700 billion financial bailout package, remain dormant.

“It’s going to take a while (for the bailout law) to get to the Supreme Court,” former Solicitor General Paul Clement predicted.

The pending business interests, meanwhile, revolve around high-dollar, dry-sounding issues such as pre-emption.

The term’s inaugural case, for instance, called Altria Group v. Good, will determine whether federal authority freezes out consumers from challenging cigarette advertising in state courts. A similarly themed case, Wyeth v. Levine, centers on state vs. federal authority over drug labeling.

The facts can be gruesome. Vermont resident Diana Levine lost her right arm below the elbow after the allegedly unsafe injection of a medicine. The implications may be sweeping. Nearly 30 groups – ranging from the California Medical Association to Democratic Sen. Dianne Feinstein, of California, and Democratic Rep. Debbie Wasserman Schultz, of Florida – have filed friend-of-the-court briefs, known as amici curiae, in Wyeth.

“This case may win the amici sweepstakes for this term,” joked David Vladek, a law professor at Georgetown University Law Center.

The pre-emption theme surfaces in different ways, though the core principle remains the same. As Conrad put it: Who gets to regulate?

In Altria, for instance, three Maine residents claim that the manufacturer of Marlboro Light and Cambridge Light cigarettes – the firm more commonly known as Philip Morris – deceptively advertised the cigarettes as essentially safer. The tobacco company and business allies including drug manufacturers argue that a federal cigarette-labeling law blocks smokers from taking action under state deceptive-practices laws.

Every Supreme Court term contains a surprise or two, but handicappers already are predicting some likely winners and losers. Count business among the probable winners. In the past two terms, the U.S. Chamber of Commerce has prevailed in 21 out of 31 cases in which it’s filed briefs.

“This is a court that feels comfortable with business,” said lawyer Beth Brinkmann, who’s argued numerous cases before the high court.

Individual case winners also might be predictable. Next Wednesday, for instance, the justices will hear in Winter v. Natural Resources Defense Council a challenge that some label as the Pentagon v. whales.

The Navy’s 3rd Fleet wants to use mid-frequency active sonar for training exercises off the Southern California coast. Environmentalists contend that the underwater sonar emissions disrupt whales, dolphins and other marine mammals. The legal question, one being closely watched by timber companies, builders and others, is when “emergency circumstances” can overcome a court’s injunction.

In a wartime case coming out of the often-reversed 9th U.S. Circuit Court of Appeals, where a Navy victory is simultaneously a win for business interests, the odds appear set.

“For the whales, it’s not looking so good,” Georgetown law professor Lisa Heinzerling said.

I am worried for our country — not so much because of the tumult in the financial markets but because of the federal government’s response and its implications.

It seems that each new crisis is met with a new answer from the government. After Hurricane Katrina, the federal government assumed roles traditionally handled by state and local governments. After the Sept. 11, 2001, attacks, the government federalized 25,000 workers through the Transportation Security Administration. The example of security-focused countries such as Israel, which elects to have that function handled by the private sector, did not matter. Now, our federal government is likely to commit three-quarters of a trillion dollars — more than last year’s Pentagon budget — to a bailout based on what happened in the credit markets last week.

An ever-expanding scope of federal commitment and power is not what made this country great. Expanded power in one place comes at a cost in other places. American cornerstones such as individual initiative and an entrepreneurial spirit — born in free and open societies with private property rights and the rule of law — have never fit particularly well within the context of an ever-growing federal government.

For 200 years, the “business model” in our country has rested on a simple fact: that while one may reap rewards from taking risks, one should also be prepared to face the consequences of those risks. Some of the proposed actions with regard to the credit market turn that business model on its head — absolving those who took too much risk, or bought too much house, from the weight of their own choices. If Congress passes the proposed bailout, we will be destined to have far greater problems in time, leaving those who are prudent in their finances to foot the bill for those who are not.

I am not writing to criticize Treasury Secretary Henry Paulson. I respect his business judgment greatly, and his unenviable task is to find a short-term solution to problems grown by government over the long term. Whether his proposals are right or wrong is less the issue than the question of where we are, as a society, in terms of having government in the business of protecting people from their own financial decisions.

Last week’s events were rooted in distressed mortgage securities whose optimistic values were facilitated by quasi-governmental entities Fannie Mae and Freddie Mac. The investment banking capital write-downs were turbocharged by the Sarbanes-Oxley Act, which did what too many laws do — it fixed yesterday’s problem. The amazing expansion of credit was fueled by a Federal Reserve offering an easy-money policy that led us right into a credit bubble. All this was made worse by the government enabling some people’s tendency to want more house than they can afford.

With that bubble popped, we will now go through a major financial de-leveraging. It will be painful. Yet to preserve what has made this country great, we need to be on guard against Washington offering endless cures to our ills.

Many of the “cures” that are soon to be offered will have one thing in common — telling us what others did wrong. Instead of listening to these, each of us as taxpayers must admonish those in Washington to get their own financial house in order. Washington is the master of creative and unsustainable finance, with $50 trillion in unfunded promises.

We will be told of bailouts that “won’t cost anything.” We should caution policymakers that this has never been the history of bailouts, and remind them of Milton Friedman’s suggestion that the capitalist system never works without loss. Investment titans recently featured in Vanity Fair trading $60 million beach homes should never be sheltered from this old-fashioned concept.

We will be told of “temporary” funds and programs. We should remind our leaders of Ronald Reagan’s words that the closest thing to eternal life is a government program.

We will be told “trust us” on pricing assets, and we should not — because no matter how pure one’s intentions, no one watches your money like you do. This makes transparency and open bidding incredibly important.

If we do these things right, we will weather the very rough patch ahead and be better for it as a country. If we do not, there will be more parallels between our nation and Edward Gibbon’s “The Decline and Fall of the Roman Empire” than we would like to imagine. The difference lies in each of our hands.

Mark Sanford, a Republican, is governor of South Carolina. He represented South Carolina for three terms in the U.S. House and was formerly employed by Goldman Sachs.