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MELISSA BLOCK, host:

We're going to talk now with key economic policy advisers to both presidential campaigns to ask about the candidates' visions for the economy and what needs fixing. And we begin with Doug Holtz-Eakin, adviser to the John McCain campaign.

Welcome to the program.

Mr. DOUGLAS HOLTZ-EAKIN (McCain Adviser): Nice to be here, thank you.

BLOCK: I want to ask you first whether you - John McCain believes that the country is in a recession.

Mr. HOLTZ-EAKIN: Well, the indicators are really a matter for the experts to fight about. Senator McCain deeply believes that the economy's hurting, that American families are feeling the pressure from it, and that we need to do a better job of getting the economy on track.

BLOCK: If you look at the survey of consumers that was released today, 60 percent of consumers say their financial situation has worsened in the past year. That's the highest level since the survey began 62 years ago. But John McCain's economic ideas are to a large extent an extension of current administration policy from the Bush administration. Why should Americans expect any improvement in a McCain administration?

Mr. HOLTZ-EAKIN: Well, the one place where Senator McCain would continue existing policy is to make sure we don't tax our small businesses too heavily; right now we need jobs. Small businesses suffer when candidates propose to raise tax rates, unfortunately.

But he's got some important new steps to take in controlling health care costs, making sure that people have some security in having their benefits move from job to job, job to home, and he's committed to making sure that factories stay in the United States. We've got a corporate tax rate that's the second highest in the world. If we can get that down into line with our competitors, every American worker will benefit by not seeing their job go away and their benefits disappear.

BLOCK: I want to talk to you about tax cuts. John McCain, back in 2001 and again in 2003, opposed the Bush administration tax cuts. He said you couldn't cut taxes so much and still fund the wars in Iraq and Afghanistan and he said the tax breaks were tilted toward the rich. Of course we're still at war in both of the countries. The tax breaks still tilt toward the rich. Why does John McCain now support the same tax breaks that he used to oppose?

Mr. HOLTZ-EAKIN: He's never changes view on taxes. He run for president in 2000 with a large tax cut; we're raising almost 20 cents of every national dollar in taxes at that time. He felt a tax cut was appropriate. He felt his tax cut should be accompanied by two things that were not present - number one, a genuine control over spending, which he did not see in 2001 and especially by 2003, and the ability to make sure that the defense was adequately funded and so security was protected. He had a comprehensive plan in 2000 that did those things. When he saw the proposals in 2001 and 2003, they were absent and he voted no.

Going forward, there's no value to raising taxes and harming the economy, especially now, a point that Senator Obama has made repeatedly. And so he would make the tax policies stay sensible and control the spending. He has the track record to do that, a long history of finding ways and reaching across the aisle. That would put in place the policies that would cause the economy to grow.

BLOCK: You use to be the director of the Congressional Budget Office, so you're used to crunching numbers and seeing how things either add up or don't. When you look up these numbers, you also know that Baby Boomers are going to be retiring in great numbers. There's going to be huge strains on Social Security and Medicare. There's a lot that you just don't control.

Mr. HOLTZ-EAKIN: Senator McCain's policies will put the budget on track to balance by 2013, but it will stay balanced only as well and as quickly as the Democrats reach across the aisle and join with Senator McCain in bipartisan reform of Social Security, Medicare and Medicaid. Those programs are the pressing fiscal issue. The real issues in Washington are on the spending side, and this town - and Senator McCain has fought this battle for 20 years - must change the way it does business and not spend the taxpayers' money on things that aren't national priorities.

BLOCK: Well, Douglas Holtz-Eakin, thanks for being with us.

Mr. HOLTZ-EAKIN: My pleasure.

BLOCK: That's Douglas Holtz-Eakin, senior policy adviser to the John McCain campaign here in Washington. And now to his counterpart with the Barack Obama campaign, Austan Goolsbee; he's an economics professor at the University of Chicago.

Welcome to the program.

Professor AUSTAN GOOLSBEE (University of Chicago): Thank you for having me.

BLOCK: And I want to start with you where I also started with Mr. Holtz-Eakin, asking does Barack Obama think this country is in a recession?

Prof. GOOLSBEE: Again, whether you call it a recession or not a recession, it's clear we've had a very substantial slow down. People are really struggling and especially ordinary Americans are struggling.

BLOCK: How would you describe Barack Obama's overall economic view? Would it be fair to consider him a populist on economic issues, for example?

Prof. GOOLSBEE: I would say the overriding principle that drives almost all of Barack Obama's economic program is the ongoing squeeze on ordinary Americans that we've been experiencing, certainly in the last eight years, and put in stark relief with the rather clearly failed philosophy that to whatever economic problem we have let's just go cut very high income people's taxes. That hasn't worked for the last eight years and there's no reason to expect that to work now, even though John McCain's going to double down on that strategy. Obama's primary view is that this slowdown is not in any way a random business cycle event that just happened to us. It is the very culmination of this squeeze on ordinary Americans that's been going for eight years.

BLOCK: But if you look at the bottom line, the Tax Policy Center crunched the numbers and says Barack Obama's plan would add $3.3 trillion to the national debt over 10 years, simply that spending is not being cut enough under his plan.

Prof. GOOLSBEE: Well, you got to be extremely careful when you look at numbers like that: A) the Tax Policy Center makes perfectly clear that the McCain plan is vastly less fiscally responsible than the Obama plan.

BLOCK: I think they said that plan would add about $4.5 trillion to the national debt.

Prof. GOOLSBEE: Okay, and then second, Barack Obama has always said he doesn't want to make our current problems worse. It's clear you couldn't put the country on a path to balance the budget in the immediate term without doing serious significant additional damage to the already slowing economy. But Barack Obama said he will obligate himself to pay for anything he proposes.

BLOCK: The promise is to pay for those programs. But again, a number of people who have looked at this plan said you're promising too much and you're not asking people to sacrifice enough to make these two numbers even out.

Prof. GOOLSBEE: Well, the Wall Street Journal, the Tax Policy Center - when people have looked in detail at Obama's budget, they have shown that it is paid for. I find it a little puzzling that people are saying what we ought to do is ask middle income, ordinary Americans to sacrifice. They're the ones who are getting squeezed. The sacrifice has been made by them for eight years. The people that have been receiving trillions of dollars of tax cuts and would receive multiple trillions of dollars of tax cuts under the McCain plan are people whose incomes have been growing very rapidly already. Cutting high - the problem spacing our economy are not rooted in high income people not having enough money. And that seems to be the philosophical basis of the McCain plan, that the benefits are just going to trickle down. When in fact, as Senator Obama says, what has happened the last eight years is that the pain has trickled up.

BLOCK: Austan Goolsbee, thanks very much.

Prof. GOOLSBEE: Nice talking to you.

BLOCK: That's Austan Goolsbee, economic policy adviser for Barack Obama's presidential campaign. We also heard from his counterpart with the John McCain campaign, Douglas Holtz-Eakin.

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