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A Primer for the Dismal Debate

There?? little doubt that the economy will be the main event at tonight?? final presidential debate. That was true at last week?? face-off, too ?the stock-market had plunged, Congress had just passed a financial rescue bill, and both Barack Obama and John McCain took pains to commiserate with the American Public.

But they didn’t say a lot about what they’d do to address the current crisis. Expect them to this time.

On Monday, Obama put forward a $60-billion four-point plan to encourage job creation, waive penalties for dipping into an IRA or 401(k), postpone some foreclosures and lend to strapped states and cities. McCain responded the next day with a five-point, $52.5 billion plan to cut capital-gains taxes, deduct more investment losses from income, ease taxes on unemployment benefits and up to $50,000 of retirement-account withdrawals, and guarantee all savings accounts. (A few days earlier, McCain had also proposed suspending rules requiring retirees to make minimum withdrawals from retirement accounts.)

Whether the debate gets feisty or remains staid, no doubt you’ll hear a lot about these proposals. Obama has already observed that the market rout has left few Americans with capital gains to tax; McCain has already branded as irresponsible Obama’s plan to waive early-withdrawal penalties for people with less than $200,000 in retirement accounts. Health care, too, is sure to take center stage.

We won’t predict the results, but we can offer some insights into what Americans are thinking, thanks to a 57-page report from the Pew Research Center for the People & the Press.

Here are the highlights that caught our eye, from a national survey of 1,485 adults called Oct. 9-12 (with a 3% margin of error at a 95% confidence level for the full sample):

The pain is widespread: Americans are trimming vacation plans and skipping meals out; more than a third said they would delay major purchases and buying a new car; a quarter have changed retirement plans. Nearly two thirds say jobs are hard to find, up from half in November; the feeling is strongest among those making less than $50,000, Democrats and independents.

Still, Americans are an optimistic bunch: 46% think the economy will be better a year from now, and 59% think their personal finances will improve as well. Both measures are actually up from July. Nearly two thirds say the country "can always find ways to solve our problems," while just 29% think the country can't solve many important problems; by contrast, in 1994, there was a narrow 7-point gap between those views.

There's plenty of blame to go around: Borrowers and banks take almost equal blame for the financial crisis, with about three in four Americans saying they contributed to the mess; inadequate government regulation was a factor to just 46%.

Despite misgivings, government has its role: Half of Americans think government needs to regulate business to protect the public, vs. a little over a third who say business regulation tends to hurt more than it helps; there has been little change there since late 2004. A little over half think the federal government can fix the economy; that has slipped from slightly over two thirds in July. Still, only a third thinks government does a better job than it's credited for; 57% say it's "almost always" wasteful and inefficient.

Skepticism about big business is widespread: Nearly four people in five think commercial power is too concentrated in a few companies -- including two thirds of Republicans; 59% of Americans think corporate profits are too big.

It all contributes to Obama's solidifying lead: Obama's better able to handle the crisis in the eyes of 47%; McCain gets support from a third. That's likely because people feel Obama has better explained what he would do: 48% say he's done a good job; 29% say McCain has. No wonder Pew clocks the Illinois senator's support at 50% among registered voters and 49% among likely voters; McCain gets 40% and 42%.

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