LEHRER: Gentlemen where do you stand on the financial recovery plan?
First response to you Senator Obama. You have two minutes.
OBAMA: Well , thank you very much Jim and thanks to the commission and the University of Mississippi, Ole Miss for hosting us tonight. I can’t think of a more important time for us to talk about the future of the country.
You know, we are at a defining moment in our history. Our nation is involved in two wars, and we are going through the worst financial crisis since the Great Depression.
And although we’ve heard a lot about Wall Street , those of you on Main Street I think have been struggling for a while and you recognize that this could have an impact on all sectors of the economy.
And you’re wondering , how’s it going to affect me? How’s it going to affect my job? How’s it going to affect my house? How’s it going to affect my retirement savings or my ability to send my children to college?
So we have to move swiftly and we have to move wisely. And I’ve put forward a series of proposals that make sure that we protect taxpayers as we engage in this important rescue effort.
# 1 we’ve got to make sure that we’ve got oversight over this whole process $700 billion potentially is a lot of money.
# 2 we’ve got to make sure that taxpayers when they are putting their money at risk have the possibility of getting that money back and gains , if the market and when the market returns.
# 3 we’ve got to make sure that none of that money is going to pad CEO bank accounts or to promote golden parachutes.
And # 4 we’ve got to make sure that we’re helping homeowners because the root problem here has to do with the foreclosures that are taking place all across the country.
Now , we also have to recognize that this is a final verdict on eight years of failed economic policies promoted by George Bush , supported by Senator McCain , a theory that basically says that we can shred regulations and consumer protections and give more and more to the most , and somehow prosperity will trickle down.
It Hasn’t Worked. And I think that the fundamentals of the economy have to be measured by whether or not the middle class is getting a fair shake. That’s why I’m running for president , and that’s what I hope we’re going to be talking about tonight.
LEHRER: Senator McCain, two minutes.
MCCAIN: Well thank you Jim. And thanks to everybody.
And I do have a SAD note tonight. And Jim, I’ve been not feeling too great about a lot of things lately. So have a lot of Americans who are facing challenges … trying to work out a solution to this fiscal crisis that we’re in.
And have no doubt about the magnitude of this crisis. And we’re not talking about failure of institutions on Wall Street. We’re talking about failures on Main Street, and people who will lose their jobs, and their credits, and their homes , if we don’t fix the greatest fiscal crisis , certainly in our time , and I’ve been around a little while.
And we’ve got a lot of work to do. And we’ve got to create jobs. And one of the areas of course is to eliminate our dependence on foreign oil.
LEHRER: All right let’s go back to my question. How do you all stand on the recovery plan? And talk to each other about it. We’ve got five minutes. We can negotiate a deal right here. Are you in favor of this plan?
OBAMA: We haven’t seen the language yet , I am optimistic about the capacity of us to come together with a plan.
LEHRER: Are you going to vote for the plan , Senator McCain?
MCCAIN: I — I hope so. And I –
LEHRER: As a United States senator…
MCCAIN: Sure. I also warned about Fannie Mae and Freddie Mac and warned about corporate greed and excess, and CEO pay, and all that. A lot of us saw this train wreck coming.
We’ve got to start also holding people accountable, and we’ve got to reward people who succeed.
But somehow in Washington today and I’m afraid on Wall Street greed is rewarded , excess is rewarded , and corruption or certainly failure to carry out our responsibility is rewarded.
OBAMA: Well I think Senator McCain’s absolutely right that we need more responsibility , but we need it not just when there’s a crisis. It’s so important as we solve this short term problem that we look at some of the underlying issues that have led to wages and incomes for ordinary Americans to go down , a health care system that is broken , energy policies that are not working , because you know , 10 days ago , John said that the fundamentals of the economy are sound.
LEHRER: Say it directly to him.
OBAMA: Well John , 10 days ago you said that the fundamentals of the economy are sound , and I just fundamentally disagree.
MCCAIN: Are you afraid I couldn’t hear him?
LEHRER: I’m just determined to get you all to talk to each other. I’m going to try.
LEHRER: So, Senator McCain, do you agree with what Senator Obama just said? And if you don’t , tell him what you disagree with.
MCCAIN: No , I — look , we’ve got to fix the system. We’ve got fundamental problems in the system. And Main Street is paying a penalty for the excesses and greed in Washington DC and on Wall Street. So there’s no doubt that we have a long way to go.
But I have a fundamental belief in the goodness and strength of the American worker , we’ve got to get through these times but I have a fundamental belief in the United States of America. And I still believe , under the right leadership , our best days are ahead of us.
…. MCCAIN: Well , the first thing we have to do is get spending under control in Washington , It’s completely out of control. We have now presided over the largest increase in the size of government since the Great Society.
The worst symptom on this disease is earmarking - It’s a gateway to out of control spending and corruption. And we have former members of Congress now residing in federal prison because of the evils of this earmarking and pork barrel spending.
LEHRER: Senator Obama , two minutes.
OBAMA: Well , Senator McCain is absolutely right that the earmarks process has been abused.
But let’s be clear: Earmarks account for $18 billion in last year’s budget. Senator McCain is proposing and this is a fundamental difference between us – $300 billion in tax cuts to some of the wealthiest corporations and individuals in the country, $300 billion.
Now, $18 billion is important; $300 billion is really important. And in his tax plan you would have CEOs of Fortune 500 companies getting an average of $700,000 in reduced taxes , while leaving 100 million Americans out.
So my attitude is, we’ve got to grow the economy from the bottom up. What I’ve called for is a tax cut for 95 percent of working families, 95 percent.
And that means that the ordinary American out there who’s collecting a paycheck every day, they’ve got a little extra money , and over time , that I think is going to be a better recipe for economic growth than the policies of President Bush that John McCain wants to follow… tax policies that are directed primarily at those who are doing well, and you are neglecting people who are really struggling right now – I think that is a continuation of the last eight years , and we can’t afford another four.
My definition , here’s what I can tell the American people - 95 percent of you will get a tax cut. And if you make less than $250,000 - less than a quarter million dollars a year , then you will not see one dime’s worth of tax increase.
LEHRER: All right. All right
We have to have energy independence , so I’ve put forward a plan to make sure that, in 10 years’ time, we have freed ourselves from dependence on Middle Eastern oil by increasing production at home, but most importantly by starting to invest in alternative energy, solar, wind, biodiesel, making sure that we’re developing the fuel-efficient cars of the future right here in the United States, in Ohio and Michigan, instead of Japan and South Korea.
We have to fix our health care system, which is putting an enormous burden on families. The third thing we have to do is we’ve got to make sure that we’re competing in education – make sure that college is affordable for every young person in America.
And I also think that we’re going to have to rebuild our infrastructure – making sure that we have a new electricity grid to get the alternative energy to population centers that are using them.
MCCAIN: Look , we no matter what we’ve got to cut spending. We have , we’ve let government get completely out of control . We need very badly to understand that defense spending is very important and vital, particularly in the new challenges we face in the world.
LEHRER: What I’m trying to get at is this – one of you is going to be the president of the United States come January – in the middle of a huge financial crisis that is yet to be resolved – And what I’m trying to get at is , how this is going to affect you not in very specific small ways but in major ways and the approach to take as to the presidency.
MCCAIN: How about a spending freeze on everything but defense, veteran affairs and entitlement programs.
LEHRER: Spending freeze? Let me figure out a way to ask the same question in a slightly different way here. Are you willing to acknowledge both of you that this financial crisis is going to affect the way you rule the country as president of the United States beyond the kinds of things that you have already – I mean , is it a major move? Is it going to have a major affect?
OBAMA: I just want to make this point, Jim. John, it’s been your president who you said you agreed with 90 percent of the time who presided over this increase in spending. This orgy of spending and enormous deficits you voted for almost all of his budgets. So to stand here and after eight years and say that you’re going to lead on controlling spending and you know balancing our tax cuts so that they help middle class families when over the last eight years that hasn’t happened I think just is , you know , kind of hard to swallow.
LEHRER: Two minutes, how you see the lessons of Iraq, Senator Obama?
OBAMA: Well, this is an area where Senator McCain and I have a fundamental difference because I think the first question is whether we should have gone into the war in the first place.
Now six years ago , I stood up and opposed this war at a time when it was politically risky to do so because I said that not only did we not know how much it was going to cost , what our exit strategy might be , how it would affect our relationships around the world , and whether our intelligence was sound , but also because we hadn’t finished the job in Afghanistan.
We hadn’t caught bin Laden. We hadn’t put al Qaeda to rest , and as a consequence , I thought that it was going to be a distraction. Now Senator McCain and President Bush had a very different judgment.
And I wish I had been wrong for the sake of the country and they had been right, but that’s not the case. We’ve spent over $600 billion so far, soon to be $1 trillion. We have lost over 4,000 lives. We have seen 30,000 wounded, and most importantly , from a strategic national security perspective , al Qaeda is resurgent , stronger now than at any time since 2001.
We took our eye off the ball. And not to mention that we are still spending $10 billion a month , when they have a $79 billion surplus , at a time when we are in great distress here at home , and we just talked about the fact that our budget is way overstretched and we are borrowing money from overseas to try to finance just some of the basic functions of our government.
So I think the lesson to be drawn is that we should never hesitate to use military force , and I will not , as President , in order to keep the American people safe. But we have to use our military wisely. And we did not use our military wisely in Iraq. Look , I’m very proud of my vice presidential selection , Joe Biden , who is the chairman of the Senate Foreign Relations Committee.
General Petraeus has done a brilliant job. But understand , that was a tactic designed to contain the damage of the previous four years of mismanagement of this war. And so John likes – John , you like to pretend like the war started in 2007. You talk about the surge. The war started in 2003, and at the time when the war started, you said it was going to be quick and easy. You said we knew where the weapons of mass destruction were. You were wrong.
You said that we were going to be greeted as liberators. You were wrong. You said that there was no history of violence between Shiite and Sunni. And you were wrong.
Now , what I’ve said is we should end this war responsibly. We should do it in phases. But in 16 months we should be able to reduce our combat troops , put – provide some relief to military families and our troops and bolster our efforts in Afghanistan so that we can capture and kill bin Laden and crush al Qaeda.
Every intelligence agency will acknowledge that al Qaeda is the greatest threat against the United States and that Secretary of Defense Gates acknowledged the central front — that the place where we have to deal with these folks is going to be in Afghanistan and in Pakistan.
We’ve got to deal with Pakistan , because al Qaeda and the Taliban have safe havens in Pakistan , across the border in the northwest regions , and although you know under George Bush , with the support of Senator McCain , we’ve been giving them $10 billion over the last seven years , they have not done what needs to be done to get rid of those safe havens.
And until we do , Americans here at home are not going to be safe.
That’s going to change when I’m president of the United States….
Look , over the last eight years this administration , along with Senator McCain , have been solely focused on Iraq. That has been their priority. That has been where all our resources have gone. In the meantime , bin Laden is still out there. He is not captured. He is not killed. Al Qaeda is resurgent.
In the meantime , we’ve got challenges for example with China , where we are borrowing billions of dollars. They now hold a trillion dollars worth of our debt. And they are active in countries like – in regions like Latin America and Asia and Africa. They are – the conspicuousness of their presence is only matched by our absence , because we’ve been focused on Iraq.
We have weakened our capacity to project power around the world because we have viewed everything through this single lens , not to mention , look at our economy. We are now spending $10 billion or more every month.
And that means we can’t provide health care to people who need it. We can’t invest in science and technology , which will determine whether or not we are going to be competitive in the long term.
There has never been a country on Earth that saw its economy decline and yet maintained its military superiority. So this is a national security issue.
LEHRER: Two minutes, Senator Obama
OBAMA: Well , let me just make a closing point. You know , my father came from Kenya. That’s where I get my name.
And in the ’60s , he wrote letter after letter to come to college here in the United States because the notion was that there was no other country on Earth where you could make it if you tried. The ideals and the values of the United States inspired the entire world.
I don’t think any of us can say that our standing in the world now , the way children around the world look at the United States , is the same.
And part of what we need to do , what the next president has to do and this is part of our judgment , this is part of how we’re going to keep America safe is to send a message to the world that we are going to invest in issues like education , we are going to invest in issues that relate to how ordinary people are able to live out their dreams.
And that is something that I’m going to be committed to as president of the United States.
LEHRER: Few seconds. We’re almost finished.
MCCAIN: Jim , when I came home from prison, I saw our veterans being very badly treated , and it made me sad. And I embarked on an effort to resolve the POW-MIA issue , which we did in a bipartisan fashion , and then I worked on normalization of relations between our two countries so that our veterans could come all the way home.
I guarantee you , as president of the United States , I know how to heal the wounds of war , I know how to deal with our adversaries , and I know how to deal with our friends.
LEHRER: And that ends this debate tonight.