McCain Says Bernanke Should Have Reduced Interest Rates Faster

Feb. 17 (Bloomberg) -- Republican presidential candidate John McCain said Federal Reserve Chairman Ben S. Bernanke should have been quicker to cut interest rates to try to avert a recession.

``I personally would have liked to have seen those rate cuts earlier,'' McCain said today on ABC's ``This Week with George Stephanopoulos.'' ``That doesn't mean I want him fired, it doesn't mean I've lost confidence,'' McCain said.

McCain, the Republican front-runner for the party's nomination, said that if elected, he would consider Bernanke's reappointment when his term is up in 2010.

Traders anticipate the Fed will cut rates a further half- point by March 18, after 2.25 percentage points of reductions since September. Fed officials lowered the overnight lending rate between banks by a half-point to 3 percent Jan. 30, after an emergency 75 basis-point reduction Jan. 22.

McCain, an Arizona senator, said the U.S. economy is ``very close'' to a recession.

Asked how his administration would differ from President George W. Bush's, McCain said he would do more to eliminate earmarks proposed by Congress, and he supports mandatory limits on greenhouse gas emissions through a cap-and-trade system, which Bush opposes.

$35 Billion

He said Bush allowed $35 billion in funding for pet projects, called earmarks, to be included in the budget over the last two year, money McCain said he would have cut.

McCain also pledged not to raise taxes if elected.

``No new taxes,'' McCain said. ``I could see an argument, if our economy continues to deteriorate, for lower interest rates, lower tax rates, and certainly decreasing corporate tax rates, which are the second-highest in the world.''

McCain said he also supports reducing government spending.

``Spending restraint is why our base is not energized,'' he said. ``Spending restraint is why we are having to borrow money from China.''

McCain said that as president he would seek congressional approval for any long-term accord to keep U.S. troops in Iraq. He also promised to consult with Congress before launching an attack on Iran, except in a ``dire emergency'' that would require immediate action.

``We have to have more of a partnership with the Congress. We have to have more consultation,'' McCain said.

Bush is negotiating a long-term military peacekeeping agreement with Iraq. The White House has said such status-of- forces agreements do not require congressional approval.

``It wouldn't bother me to bring it to the Congress,'' McCain said, taking aim at Democrats' efforts to set a timetable for withdrawal of troops. ``The issue takes care of itself when we succeed. I still say setting a date for withdrawal is chaos, genocide, and we'll be back, because al-Qaeda will then succeed.''

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