McCain, Obama Debate Focuses On Economy

Presidential hopefuls Barack Obama and John McCain debated Tuesday night at Belmont University in Nashville, Tenn. The two clashed over the economic crisis, taxes, health care, energy and foreign policy.

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STEVE INSKEEP, host:

It's Morning Edition from NPR News. I'm Steve Inskeep.

ARI SHAPIRO, host:

And I'm Ari Shapiro, sitting in for Renee Montagne. Senator John McCain's campaign spoke this week of turning the page from the economy to other issues. There was no chance of that at last night's presidential debate. The candidates met on the same day that the Dow Jones Industrials lost another 500 points.

INSKEEP: Even as Barack Obama and John McCain took questions from voters, Asian markets were beginning another plunge. The drops came in response to more fears about the credit markets and talk of recession, and news like that provided the starting point of the discussion moderated by NBC's Tom Brokaw. Here's NPR national political correspondent Mara Liasson.

MARA LIASSON: It was clear from the very first question from Allan Shaffer what voters in the audience wanted to hear - specific solutions to help their families get through the economic crisis.

Mr. ALLAN SHAFFER (Audience Member): With the economy on the downturn and retired and older citizens and workers losing their incomes, what's the fastest, most positive solution to bail these people out of the economic ruin?

LIASSON: Barack Obama blamed the Bush administration and John McCain for pushing deregulation, and he said the first step was the rescue package for Wall Street that Congress passed last week.

Senator BARACK OBAMA (Democrat, Illinois, Presidential Candidate): The middle-class need a rescue package. And that means tax cuts for the middle-class. It means help for homeowners so that they can stay in their homes. It means that we are helping state and local governments set up road projects and bridge projects that keep people in their jobs. And then long-term, we've got to fix our health care system, we've got to fix our energy system that is putting such an enormous burden on families. You need somebody working for you and you've got to have somebody in Washington who is thinking about the middle class and not just those who can afford to hire lobbyists.

LIASSON: Senator McCain had a brand new policy proposal that he unveiled on the spot, saying the problem had become so severe that something had to be done to stabilize home values.

Senator JOHN MCCAIN (Republican, Arizona, Presidential Candidate): You know that home values of retirees continues to decline and people are no longer able to afford their mortgage payments. As President of the United States, Allan, I would order the Secretary of the Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes - at the diminished value of those homes and let people make those - be able to make those payments and stay in their homes. Is it expensive? Yes.

LIASSON: Both Obama and McCain had promised to take off the gloves, but the back and forth last night was not nearly as harsh as the candidates' rhetoric on the campaign trail or in their ads. It's hard to be aggressive and personal when you're standing right next to your opponent answering questions from voters. Still, they managed to clash repeatedly over taxes even when the questions were about something else.

Senator MCCAIN: You know, nailing down Senator Obama's various tax proposals is like nailing Jell-O to the wall. There has been five or six of them and if you wait long enough, there will probably be another one. But he wants to raise taxes. My friends, the last president to raise taxes during tough economic times was Herbert Hoover.

LIASSON: And McCain accused Obama of wanting to raise taxes on small businesses.

Senator MCCAIN: Small businesses across America will have to cut jobs and will have their taxes increase and won't be able to hire because of Senator Obama's tax policies. You know, he said some time ago, he said, he would forgo his tax increases if the economy was bad. I've got some news, Senator Obama, the news is bad. So let's not raise anybody's taxes, my friends.

Senator OBAMA: Senator McCain, I think the 'Straight Talk Express' lost a wheel on that one.

LIASSON: Obama shot back that McCain wanted to give a hundred billion dollars in tax cuts to CEOs on Wall Street.

Senator OBAMA: I want to provide a tax cut for 95 percent of Americans. 95 percent. If you make less than a quarter million dollars a year, you will not see a single dime of your taxes go up. If you make $200,000 a year or less, your taxes will go down. Now, Senator McCain talks about small businesses. Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.

LIASSON: McCain's poll numbers have been dropping ever since the economic crisis began. The Democrats' traditional advantage on the economy has given Obama a boost, nationally and in key battleground states. So, McCain came to this debate with the heavier burden. His goal was to raise doubts about Obama's ability to lead. He found an opportunity when Phil Elliot asked a question about foreign policy.

Mr. PHIL ELLIOT (Audience Member): Senator McCain, how will all the recent economic stress affect our nation's ability to act as a peacemaker in the world?

Senator MCCAIN: That question has - can only be answered with someone with the knowledge and experience and the judgment, the judgment to know when our national security is not only at risk, but where the United States of America can make a difference in preventing genocide, in preventing the spread of terrorism, in doing the things that the United States has done, not always well, but we've done because we're a nation of good.

LIASSON: And McCain compared his record on Lebanon, Bosnia and Iraq to Obama's.

Senator MCCAIN: Senator Obama was wrong about Iraq and the surge. He was wrong about Russia when they committed aggression against Georgia. And in his short career, he does not understand our national security challenges. We don't have time for on-the-job training, my friend.

Mr. TOM BROKAW (Anchor, "NBC Nightly News"): Senator Obama, the economic constraints on US military action around the world.

Senator OBAMA: Well, you know, Senator McCain, in the last debate and today, again, suggested that I don't understand. It's true. There are some things I don't understand. I don't understand how we ended up invading a country that had nothing to do with 9/11, while Osama Bin Laden and Al-Qaeda are setting up base camps and safe havens to train terrorists to attack us. That was Sen. McCain's judgment and it was the wrong judgment. When Senator McCain was cheerleading the president to go into Iraq, he suggested it was going to be quick and easy, we'd be greeted as liberators. That was the wrong judgment, and it's been costly to us.

LIASSON: In his closing statement, Obama relied on the classic question of a challenger. Are you better off now than you were eight years ago? And he answered it.

Senator OBAMA: Wages and incomes have gone down. People have lost their health care or are going bankrupt because they get sick. We've got young people who have got the grades and the will and the drive to go to college, but they just don't have the money. And we can't expect that if we do the same things that we've been doing over the last eight years, that somehow we are going to have a different outcome. We need fundamental change. That's what's at stake in this election. That's the reason I decided to run for president, and I'm hopeful that all of you are prepared to continue this extraordinary journey that we call America. But we're going to have to have the courage and the sacrifice, the nerve, to move in a new direction.

LIASSON: Obama has been riding a wave of anger at Washington and fear about the economy. McCain has been fighting that same tide as it grew stronger and stronger all year. Last night, he had the last word and he offered himself and his record as the answer.

Senator MCCAIN: I know what it's like in dark times. I know what it's like to have to fight to keep one's hope going through difficult times. I know what it's like to rely on others for support and courage and love in tough times. I know what it's like to have your comrades reach out to you and your neighbors and your fellow citizens and pick you up and put you back in the fight. That's what America's all about. I believe in this country. I believe in its future. I believe in its greatness. It's been my great honor to serve it for many, many years. And I'm asking the American people to give me another opportunity.

LIASSON: It's unlikely that last night's encounter will change the dynamic of the race, but there's still one debate left, next Wednesday night in Hempstead, New York at Hofstra University. The topic will be domestic and economic policy. Mara Liasson, NPR News, Nashville, Tennessee.

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McCain, Obama Clash Over Economic Crisis

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John McCain makes a point to the audience as Barack Obama listens during their second presidential debate. Paul J. Richards/AFP/Getty Images hide caption

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close-up shot

John McCain makes a point to the audience as Barack Obama listens during their second presidential debate.

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Barack Obama responds to a question during the town-hall presidential debate. The two candidates have sparred over the economy and renewable energy. Anthony Jacobs/Getty Images hide caption

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Barack Obama

Barack Obama responds to a question during the town-hall presidential debate. The two candidates have sparred over the economy and renewable energy.

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John McCain makes a point during the debate. Stan Honda/AFP/Getty Images hide caption

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John McCain

John McCain makes a point during the debate.

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Questions about the economy and the global financial crisis dominated much of the early going in the second presidential debate between Sens. John McCain and Barack Obama.

The candidates grappled with the mortgage crisis, taxes, spending, health care and entitlement programs before moving to skirmish more briefly on foreign policy and security issues.

Although the matchup followed several days of escalating negative attacks from both campaigns, it was relatively civil, with the blows focused mostly on policies.

Pocketbook Concerns

Under the debate's town-hall-style format, the presidential candidates faced questions directly from the audience at Belmont University in Nashville, Tenn., as well as queries submitted on the Internet. The very first question went straight to voters' anxieties about the financial crisis: What would the candidates do to protect retired and older citizens who are losing their incomes?

Obama opened with a swing at "the failed economic policies of the last eight years" — policies that he has tried to link to McCain. While he called the $700 billion financial rescue package passed last week a first step, Obama said his plan would extend assistance to the middle class, including tax cuts and measures to keep homeowners in their homes.

McCain said his plan would include promoting energy independence so the U.S. could "stop sending $700 billion a year to countries that don't like us" — a reference to U.S. purchases of oil from hostile countries. He also announced a new plan to assist homeowners, saying he would order the secretary of the Treasury "to immediately buy up the bad home loan mortgages in America" and renegotiate the payments based on the diminished value of the homes.

The proposal goes beyond the bailout package approved by Congress last week. Obama has said in the past that the idea should be studied, and his campaign has said that McCain's proposal was not new.

Economic Blame Game

Each candidate tried to tie the other to the causes of the financial crisis, with McCain accusing Obama "and his cronies and his friends in Washington" of encouraging Fannie Mae and Freddie Mac to make "all these risky loans."

Obama countered that he had not promoted the mortgage giants, but that McCain's campaign chairman's firm had lobbied on behalf of Fannie Mae. He accused McCain of promoting deregulation of the financial industry, letting the markets "run wild" with the claim that "prosperity would rain down on all of us. It didn't happen."

A key question at Tuesday night's presidential debate addressed voters' loss of trust in the major political parties. Audience member Teresa Finch asked, "How can we trust either of you with our money when both parties got us into this global economic crisis?"

Obama responded that there was more than enough blame to go around, before pointing the finger squarely at the Bush administration's policies. Still, the Illinois Democrat said he would increase spending on some priorities, such as energy independence and college affordability, while achieving "a net spending cut."

McCain repeated his mantra that he has been a consistent reformer who has taken on special interests, calling on voters to "look at our records as well as our rhetoric." The Arizona Republican charged that Obama's plan calls for $860 billion in new spending.

On Health Care, Social Security And Medicare

Moderator Tom Brokaw sharpened one audience member's question on entitlement reform by asking whether the candidates would set a hard deadline — say, within two years — for Congress to reform Social Security and Medicare. Obama said he would seek reform within his first term as president but said entitlement reforms couldn't be addressed without addressing tax policy.

McCain responded that "it's not that hard to fix Social Security." He said the crisis could be solved with bipartisan action, but he didn't offer specifics. He said fixing Medicare would be tougher, and he called for a commission of "the smartest people in America" to come up with a plan that Congress would not be able to amend, but simply vote up or down on.

In the course of a skirmish on health care, Obama charged that his opponent's plan would lead to the destruction of employer-based health care. He said McCain's proposal to give people a refundable tax credit for coverage would be wiped out by the fact that McCain would also tax health benefits that workers receive from their employers. McCain's plan would give $2,500 in tax credits per person, or $5,000 per household.

McCain said Obama's plan would impose government mandates and would fine small-business owners who fail to insure their employees, although in fact, small businesses would be exempt under the Democrat's plan. McCain said his plan would allow Americans to spend their tax credit on the health care of their choice.

On Iraq And Humanitarian Intervention

When the topic switched to foreign policy and national security concerns, moderator Brokaw asked the candidates what their doctrine would be for the use of U.S. combat forces in the case of a humanitarian crisis where U.S. national security was not at stake.

Obama responded that issues such as genocide and ethnic cleansing should be considered to be part of U.S. national interests, and that the nation should intervene where possible. He said it would be necessary to work in concert with American allies and that as president, he would mobilize U.S. allies to take action in areas such as Darfur.

McCain took the occasion to criticize Obama's record on Iraq, saying that if the U.S. had heeded Obama's call to set a date for withdrawal, the result would have been disaster.

Regarding humanitarian interventions, McCain said he would approach such actions with caution. He noted that some past U.S. interventions had made the situation worse — in Lebanon during the Reagan era and in Somalia during the Clinton administration.

Pondering Attacks Along Pakistan's Border

An audience member asked whether the candidates would attack across borders, as in Pakistan, in order to chase U.S. enemies such as Osama bin Laden. Obama said that if Pakistan is unable or unwilling to hunt down bin Laden and "take him out," then the U.S. should go after him.

As he has in the past, McCain accused Obama of naivete for announcing an intended cross-border attack. He said he believes that the same counterinsurgency techniques that have worked in Iraq will work in Pakistan, adding, "I know how to get bin Laden. I'll get him," but he said he wasn't going to announce his intentions.

The final question of the night was one that moderator Brokaw described as "zen." An Internet participant asked, "What don't you know, and how will you learn it?" Neither candidate answered the question directly, but it offered them a chance to define themselves in terms of the presidency, and they took it, along with the chance to insert elements of their own personal stories.

Obama said, "One of the things we know about the presidency is that it's never the challenges you expect that consume most of your time." He mentioned his own rise from "modest means" and said the question was "are we going to pass on that same American dream?"

McCain said that "what I don't know is what all of us don't know, and that's what's going to happen, both here and abroad." He referred to his own history as a prisoner of war, saying, "I know what it's like to keep up hope in difficult times."

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