While the presidential candidates are crossing the U.S. to sell their visions for a post-Bush America, their advisers are scrambling to help them navigate the economic turbulence.

Earlier this week, Douglas Holtz-Eakin, senior policy adviser to Arizona Sen. John McCain, spoke at length with Forbes.com and Forbes magazine about how the presumptive Republican nominee might handle the situation. A standing invitation for discussion has also been extended to the Obama campaign.

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In the last few weeks, stock indexes have dipped into bear-market territory, the Federal Reserve has warned of rising inflation and unemployment and the Bush administration has announced a de facto bailout plan for mortgage giants Fannie Mae and Freddie Mac. So far, both McCain and the expected Democratic nominee, Sen. Barack Obama, have remained conspicuously quiet on that last issue.

"It will be an issue for the next president," Holtz-Eakin says of the market worries surrounding Fannie and Freddie. What to expect from a McCain presidency? Most likely, a long discussion on what Holtz-Eakin describes as the mortgage buyers' "enormous mission drifts," and perhaps serious talk about privatizing them.

"You can privatise it. [Student loan company] Sallie Mae was privatised," he says. "There's precedent for that." 

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But Fannie and Freddie are just two blights on an otherwise dismal economic landscape. Holtz-Eakin won't say whether McCain thinks a second economic stimulus plan is needed, but he talked in detail about several other aspects of the senator's economic plan, including his tax proposal.

Among other things, McCain's tax proposal would make most of the Bush tax cuts (except the estate tax) permanent, reduce the maximum corporate income tax rate from 35% to 25% and would establish a permanent research-and-development tax credit for companies, based on the wages they've paid out for R&D work. The latter has been lampooned on the Left as doing too much for business and not enough for individual taxpayers.

Holtz-Eakin concedes that it's a pro-business proposal. "This is a tax plan that was pretty much a non-event on the personal side," he says, defending it as "a package for American companies to manufacture and Americans to sell globally."

A June analysis by the Tax Policy Center of the candidates' stances on taxes said McCain's plan would reduce tax revenues by $3.6 trillion over the next 10 years--about 10% of what's collected under current law. Obama's plan would reduce revenues by 7%, the center says. It also said McCain's plan would be beneficial primarily to high-income earners.

Holtz-Eakin, a former director of the Congressional Budget Office, admits the plan is "not exactly revenue-neutral," but he believes it will create economic growth. "The key thing is to take care of the economy," he says.

Holtz-Eakin will have an opportunity to debate Obama adviser Austan Goolsbee on tax issues Wednesday, when the Tax Policy Center holds a discussion on the budget proposals for each campaign.

We spoke with Sen. McCain's top economic adviser about a broad range of other issues, including the weak dollar, health care, social security and energy. But we'll let him fill in the gaps. The following are excerpts of our interview with Douglas Holtz-Eakin.

On Fannie Mae and Freddie Mac:

"There are really two businesses inside these entities: a sort of monoline insurer that does guarantees on mortgages and sells mortgage-backed securities � then there's a big hedge fund. And I don't see why taxpayers should be financing a hedge fund."

"Washington has periodically gotten 'tough on Fannie and Freddie' after the accounting rip-offs, but it's never stuck, and we've never seen a real long discussion of Fannie and Freddie's enormous mission drifts. These were companies created to channel capital into the housing market. The United States doesn't have a problem raising housing-market capital."

On the weak dollar:

"We have the leading candidate for president of the United States [Obama] as someone who promises to spend a lot more and cut taxes on net. He's offered up unilateral renegotiation of international agreements, he's certainly willing to label a company as 'patriotic' or not ... Would you feel good about sticking your money in the United States?"

On Obama's proposed tax plan:

"They're not going to do anything for small businesses. They've got a whole recipe of things which are bad for small businesses. They're happy to raise dividends, capital gains and top rates. There is no recognition there that people have to run businesses and hire workers and that that's important. And on the corporate side, no sympathy there."

On whether a cap-and-trade program to curb greenhouse gas emissions would provide a major revenue source for the U.S. economy:

"Not initially. Cash flow problems are real. I don't think you want to go 100% auctions out the door. You certainly don't want to turn it instantly into a big tax-and--(potentially)--spend sort of program. If you're going to do this, the lesson in the literature is [that] you want to ramp up to minimize the transition shock, ramp up to auctioning, and as you auction more, you reduce other taxes."

On small businesses and whether they should enjoy a lesser share of the tax burden:

"Jobs are the No. 1 topic out there right now. Small businesses created 233,000 jobs this year. They're the only bright spot out there. Let's not harm them at all. And on the other front, let's keep them in the U.S."

On Social Security reform:

"(Sen. McCain) has said that he would like to see Congress deal with Social Security in a bipartisan way, early in his presidency. And if they don't do it, we'll send them a bill and demand and up-or-down vote. He's watched this now for 25 years and the key lesson of that political history is the more you say 'I have to have this or that can't be in it,' the more likely you are to polarize the debate and the less likely you are to be successful."

On health insurance policies:

"They should pay dollar one for prevention, because if you have this person for a sustained period, that's the cheapest way to deliver the care. Don't let them get into the acute-care system. Keep them out, pay for prevention, pay for wellness--that'd be a much better insurance design to match the kind of health initiatives that everyone thinks (are)necessary, including us."

On Medicare:

"We're spending $2 trillion dollars and not getting care and quality outcomes that are commensurate with that. That's the real issue. The [McCain] initiatives in Medicare are designed always with an eye toward not Medicare spending per se but: Do they change the character of treatment of patients in America? Do you move away from this very siloed system? ... All the goals have to be about--it's going to take a long time but--you really have to pay doctors, hospitals, nurses, all these folks, for coordinating care."

On whether Americans are "whining" too much (as former McCain adviser, former Sen. Phil Gramm, said):

"I don't think so. People feel duress. Americans are smart. They read the news. These are not imaginary problems, and these are not things that they don't understand."