Financial turmoil may not just boost government's role in markets. It could undermine a push in recent years by conservatives, including John McCain, to inject more market forces into government-run and heavily regulated programs.

On the presidential campaign trail, Democrat Barack Obama is seizing on the recent turbulence to lambast proposals by Sen. McCain on Social Security and health care, two areas on which the Republican presidential nominee has embraced market-oriented solutions.

These proposals -- particularly private accounts carved out of Social Security -- were controversial to begin with, and the new crisis only heightens the concerns. The accounts are designed to generate greater returns than the government gets holding onto the money. But if workers invest their Social Security taxes in the stock market, what happens if the market is down when it comes time to retire?

Those are potent questions for voters, and the unfolding financial crisis could kill any chance this proposal had of becoming law when Congress eventually works out a solution to the retirement program's financial problems.

It is a "particularly perilous" time to favor any sort of privatization, said Neil Newhouse, a Republican pollster. Even if the policy is good, he said, it is a hazardous moment to advocate it.

Overall, the economic turmoil is working to swing the race toward Sen. Obama, said Matthew Dowd, a former strategist for President George W. Bush. He said the Social Security argument makes Sen. McCain's problems more acute.

"It makes him feel like a traditional Republican: 'Let the market handle it,'" he said. And for Democrats, "it has the added benefit of tying him to Bush."
Mr. Bush campaigned for private accounts in 2000 and pushed hard for them in 2005, only to see the proposal die in a Republican-led Congress.

"Social Security has never been more important," an announcer says in a new Obama ad. "But John McCain's voted three times in favor of privatizing Social Security." It says the plan would amount to "risking Social Security on the stock market."

Sen. Obama is also attacking Sen. McCain on health care, pointing to a piece he wrote in a health-care magazine called Contingencies. In it, he calls for opening health care to "more vigorous nationwide competition, as we have done over the last decade in banking."

"They said they wanted to let the market run free but instead they let it run wild," Sen. Obama told a crowd of 20,000 supporters in Charlotte, N.C., on Sunday. "Now this 'great deregulator' wants to turn his attention to health care."

Sen. McCain wants to allow people to buy health insurance across state lines, which would let them skirt state regulations that offer consumer protections but also drive up the cost of coverage.

Douglas Holtz-Eakin, Sen. McCain's chief economic adviser, said the banking regulations referenced in that magazine article were common-sense provisions approved in 1995 that allowed people to bank across state lines. Obama adviser Jason Furman said Sen. McCain appeared to be referencing 2004 rules that pre-empted state banking regulations and that, he argues, helped bring on the current financial meltdown.

The article was vague, so it is unclear what banking changes Sen. McCain was referring to. Either way, the controversy stirs questions over whether free-market solutions are beneficial.

When it comes to Social Security, Sen. McCain is a longtime supporter of private accounts, in which younger workers could divert a portion of their payroll taxes into personal accounts that would be invested in the market, ideally creating a nest egg that would be at least as big as what they would have received from the government -- especially as the program runs out of money.
But that idea can seem scary after a week when a large portion of the financial sector appeared at risk of collapse.

"If my opponent had his way, the millions of Floridians who rely on it would've had their Social Security tied up in the stock market this week," Sen. Obama told supporters in Daytona Beach, Fla., on Saturday. He warned that "millions would've watched as the market tumbled and their nest egg disappeared before their eyes."

None of the proposals to create private retirement accounts would affect current seniors, despite Sen. Obama's implication. "This is a desperate attempt to gain political advantage using scare tactics and deceit," said Tucker Bounds, a McCain spokesman.

Sen. McCain hasn't campaigned on private accounts, but he hasn't walked away from them either. On Sunday, he said his views haven't changed. "I still believe that young Americans ought to ... be able to, in a voluntary fashion ... put some of their money into accounts with their name on it," he said in an interview with CNBC.

Mr. Holtz-Eakin said Sunday that Sen. Obama's decision to stoke fears about market risk suggests that he thinks the financial problems the nation sees today are likely to persist.

"If they want to run on a position that says we're going to have financial markets this bad for eight years under Barack Obama, let them," Mr. Holtz-Eakin said. "We will never remove all investment risk and we shouldn't pretend otherwise, but we better remove what people are seeing now."