updated 6/14/2008 2:50:46 PM ET 2008-06-14T18:50:46

Democratic candidate Barack Obama told voters Saturday he would push an aggressive economic agenda as president to help the middle-class as the paycheck struggles of Americans took center stage in the presidential campaign amid fresh reports of surging inflation and sagging wages.

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Obama's head-to-head battle with Republican rival John McCain began in earnest earlier this week, following Hillary Rodham Clinton's departure from the Democratic race, and has focused squarely on fiscal issues — trumping the unpopular Iraq war as the pressing issue on voters' minds and putting McCain at a distinct disadvantage.

The public splits between McCain and Obama as to who could handle Iraq best, but Obama is viewed as the one best to handle the economy.

Obama promised to cut taxes for the middle class, raise taxes on the wealthy, pour money into "green energy," and require employers to set up retirement savings plans for their workers as he campaigned Saturday in Pennsylvania, a key battleground in the November election.

Obama also planned to visit the flooded Midwest later Saturday, stopping in Quincy, Illinois, in his home state to help fill sandbags.

Positioning for Clinton's votes
Democrats have carried Pennsylvania in the last four presidential elections, although narrowly at times. Obama lost badly in the primary here to Hillary Rodham Clinton, and he is struggling to attract white working-class voters who heavily favored her.

McCain, meanwhile, was planning to make his own pitch to disgruntled Clinton supporters who might be open to supporting him. The Arizona senator planned to hold an online town hall forum Saturday afternoon to take questions from Democratic and independent voters, emphasizing his long record of bipartisanship.

Should McCain manage to win Pennsylvania and its 21 electoral votes, Obama would have to compensate in other areas, such as in western states like Colorado and Nevada, where Republicans have done well in recent campaigns.

Speaking to about 200 people in Wayne, a Philadelphia suburb, Obama said he would take a much more hands-on approach than would McCain. He again criticized McCain's proposal for a temporary halt in the federal gasoline tax. It would "actually do real harm," Obama said, by reducing revenue for road and bridge construction even as oil companies make record profits.

Helping folks save
Obama made no new proposals but emphasized earlier ones in light of rising gas prices, inflation and job losses. They include a $1,000 tax cut for most working families; a new Social Security tax on incomes above $250,000; a "windfall profits" tax on oil companies; a $4,000 annual college tuition credit for those who commit to national or community service programs; and an end to income taxes for elderly people making less than $50,000 a year.

Obama said he could pay for his programs by eliminating the Bush administration's tax cuts for the wealthy, winding down the Iraq war and spending more on alternative energy programs that eventually will save money.

He said employers should be required to set up retirement saving plans for workers even if they contribute no money to them. Workers would automatically be enrolled unless they choose to opt out, he said. That way, he said, "most people will save more."

He also vowed to spend $150 billion over 10 years to establish a "green energy sector." It would require greater fuel efficiency in cars and devote more money to solar, wind, and biodiesel energy.

McCain spokesman Tucker Bounds said Saturday that Obama was railing against "the very energy policy that he voted for." Obama told the Wayne audience that he voted for an energy bill "that was far from perfect" because "it contained the largest investment in renewable sources of energy in our nation's history."

McCain is seeking to frame an economic policy that defends extending President George W. Bush's tax cuts but embraces quick measures that the president opposes. Obama, benefiting from public disapproval of Bush's economic policies, has continued to link McCain to Bush.

The Labor Department reported Friday that consumer prices rose by 0.6 percent last month — the biggest one-month increase in inflation since last November — pushed up by surging gasoline costs. After adjusting for inflation, weekly earnings for nonsupervisory workers were down 1.2 percent in May, compared to a year ago, the department said in a separate report.

With the unemployment rate in May jumping to 5.5 percent, McCain said Friday he would support extending jobless assistance and said he was willing to discuss other short-term measures to boost the economy. "I think we should explore a number of options," he told reporters following a town hall meeting in Pemberton, New Jersey.

McCain argued for continuing Bush's tax cuts, most of which are set to expire in 2010. Failure to extend them, he said, would result in tax increases.

Obama has proposed tax cuts for low- and middle-income taxpayers, but would restore pre-Bush tax rates to the wealthiest Americans.

An independent, liberal-leaning think tank, the Tax Policy Center, issued an analysis of the candidates' tax plans that concluded that McCain's would primarily benefit very high income taxpayers, while Obama's would increase taxes for the wealthiest.

McCain said that in extending Bush's reductions, he would spur economic activity that would actually raise government revenue.

The Tax Policy Center concluded that Obama's would offer much larger tax breaks to low- and middle-income taxpayers than McCain would.

Meanwhile, shock rippled through the American political world Friday as one of its most prominent journalists, NBC television's Tim Russert , died suddenly of a heart attack Friday at age 58. Russert had covered the election intently and was the network's Washington bureau chief. Obama said he was "grief-stricken" and McCain praised him as "a man of honesty and integrity."

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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