Original subtitles

Good evening from Belmont University in Nashville, Tennessee. I'm Tom Brokaw of NBC News and

welcome to the second presidential debate sponsored by the Commission on Presidential

Debates. Tonight's debate is the only one with a town hall format. The Gallup organization

chose 80 uncommitted voters from the Nashville area to be here with us tonight. And earlier

today each of them gave me a copy of their question for the candidates. From all of these

questions and from tens of thousands submitted online, I have selected a long list of excellent

questions on domestic and foreign policy. Neither the Commission nor the candidates

have seen the questions and although we won't be able to get to all of them tonight, we

should have a wide ranging discussion one month before the election. Each candidate

will have two minutes to respond to a common question and there will be a one minute follow

up. The audience here in the hall has agreed to be polite and attentive, no cheering or

outbursts. Those of you at home of course are not so constrained. The only exception

in the hall is right now as it is my privilege to introduce the candidates, Senator Barack

Obama of Illinois and Senator John McCain of Arizona. Gentlemen.

We want to get underway immediately if we can. Since you left, I'm going to ask you

a question. You and I last met at Ole Miss 12 days ago. The world has changed a great

deal and not for the better. We still don't know where the bottom is at this time. As

you might expect, many of the questions that we have from here in the hall tonight and

from online have to do with the American economy and in fact with global economic conditions.

I understand that you flipped a coin and Senator Obama, you'll begin tonight. And we're going

to have our first question from over here in Section A from Alan Schaefer. Alan?

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?

THE PRESIDENT. Well, Alan, thank you very much for the question. I want to first obviously

thank Belmont University. Tom, thank you. And to all of you who are participating tonight

and those of you who sent email questions in, I think everybody knows now we are in

the worst financial crisis since the Great Depression. And a lot of you, I think, are

worried about your jobs, your pensions, your retirement accounts, your ability to send

your child or your grandchild to college. And I believe this is a final verdict on the

failed economic policies of the last eight years, strongly promoted by President Bush

and supported by Senator McCain, that essentially said that we should strip away regulations,

consumer protections, let the market run wild, and prosperity would rain down on all of us.

It hasn't worked out that way. And so now we've got to take some decisive action. Now,

step one was a rescue package that was passed last week. We've got to make sure that works

properly. And that means strong oversight, making sure that investors, taxpayers are

getting their money back and treated as investors. It means that we are cracking down on CEOs

and making sure that they're not getting bonuses or golden parachutes as a consequence of this

package. And, in fact, we just found out that AIG, a company that got a bailout, just a

week after they got help went on a $400,000 junket. And I tell you what, the Treasury

should demand that money back and those executives should be fired. But that's only step one.

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's thinking

about the middle class and not just those who can afford to hire lobbyists.

Mr. Earnest Senator McCain?

Senator McCain Well, thank you, Tom. Thank you, Belmont University. And, Senator Obama,

it's good to be with you at a town hall meeting. And, Alan, thank you for your question. You

go to the heart of America's worries tonight. Americans are angry, they're upset, and they're

a little fearful. It's our job to fix the problem. I have a plan to fix this problem.

And it's got to do with energy independence. We've got to stop sending $700 billion a year

to countries that don't like us very much. We have to keep Americans' taxes low, all

Americans' taxes low. Let's not raise taxes on anybody today. We obviously have to stop

the spending spree that's going on in Washington. Do you know that we've laid a $10 trillion

debt on these young Americans who are here with us tonight? $500 billion of it we owe

to China. We've got to have a package of reforms, and it's got to lead to reform, prosperity,

and peace in the world. And I think that this problem has become so severe, as you know,

that we're going to have to do something about home values. 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, Alan, 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. But we all know,

my friends, until we stabilize home values in America, we're never going to start turning

around and creating jobs and fixing our economy. And we've got to give some trust and confidence

back to America. I know how to do that, my friends. And it's my proposal. It's not Senator

Obama's proposal. It's not President Bush's proposal. But I know how to get America working

again, restore our economy, and take care of working Americans. Thank you.

SEN. MITCH MCCONNELL

Senator, we have one minute for a discussion here. Obviously, the powers of the Treasury

Secretary have been greatly expanded. The most powerful officer in the Cabinet now,

Hank Paulson, says he won't stay on. Who do you have in mind to appoint to that very

important post? Senator McCain?

SEN. JOHN MCCAIN

Not you, Tom.

SEN. MITCH MCCONNELL

With good reason.

SEN. JOHN MCCAIN

You know, that's a tough question. And there's a lot of qualified Americans. But I think

the first criteria, Tom, would have to be somebody who immediately Americans identify

with, immediately say, we can trust that individual. Supporter of Senator Obama's is Warren Buffett.

He's already weighed in and helped stabilize some of the difficulties in the markets and

with companies and corporations, institutions today. I like Meg Whitman. She knows what

it's like to be out there in the marketplace. She knows how to create jobs. Meg Whitman

was the CEO of a company that started with 12 people and is now 1.3 million people in

America make their living off eBay. Maybe somebody here has done a little business with

him. But the point is, it's going to have to be somebody who inspires trust and confidence.

Because the problem in America today, to a large extent, Tom, is that we don't have trust

and confidence in our institutions because of the corruption on Wall Street and the greed

and excess and the cronyism in Washington, D.C.

SEN. MITCH MCCONNELL

All right. Senator McCain, Senator Obama, who do you have in mind for Treasury Secretary?

THE PRESIDENT Well, Warren would be a pretty good choice,

Warren Buffett, and I'm pleased to have his support. But there are other folks out there.

The key is making sure that the next Treasury Secretary understands that it's not enough

just to help those at the top. Prosperity is not just going to trickle down. We've got

to help the middle class. And we've – Senator McCain and I have some fundamental disagreements

on the economy, starting with Senator McCain's statement earlier that he thought the fundamentals

of the economy were sound. Part of the problem here is that, for many of you, wages and incomes

have flatlined. For many of you, it is getting harder and harder to save, harder and harder

to retire. And that's why, for example, on tax policy, what I want to do is provide a

middle-class tax cut to 95 percent of working Americans, those who are working two jobs,

people who are not spending enough time with their kids because they are struggling to

make ends meet. Senator McCain is right that we've got to stabilize housing prices. But

underlying that is loss of jobs and loss of income. That's something that the next Treasury

Secretary is going to have to work on.

MR. ROMNEY. Senator Obama, thank you very much. May I

remind both of you, if I can, that we're operating under rules that you signed off on, and when

we have a discussion, it really is to be confined within about a minute or so. We're going to

go now, Senator McCain, to the next question for you from the hall here. And it comes from

Oliver Clark, who is over here in Section F. Oliver?

MR. CLARK. Well, Senators, through this economic crisis, most of the people I know have had

a difficult time. And through this bailout package, I was wondering what it is that's

going to actually help those people out.

SEN. JOHN BARRASSO. Well, thank you, Oliver. And that's an excellent question because,

as you just described it, bailout, when I believe that it's rescue, because of the greed

and excess in Washington and Wall Street, Main Street was paying a very heavy price.

And we know that. I left my campaign and suspended it to go back to Washington to make sure that

there were additional protections for the taxpayer, the form of good oversight and the

form of taxpayers being the first to be paid back when our economy recovers. And it will

recover and a number of other measures.

But, you know, one of the real catalysts, really the match that lit this fire, was Fannie

Mae and Freddie Mac. I'll bet you you may never even have heard of them before this

crisis. But, you know, they're the ones that, with the encouragement of Senator Obama and

his cronies and his friends in Washington, that went out and made all these risky loans,

gave them to people that couldn't never afford to pay back. And, you know, there were some

of us that stood up two years ago and said, we've got to enact legislation to fix this.

We've got to stop this greed and excess. Meanwhile, the Democrats in the Senate and some members

of Congress defended what Fannie and Freddie were doing. They resisted any change. Meanwhile,

they were getting all kinds of money in campaign contributions.

Senator Obama was the second highest recipient of Fannie Mae and Freddie Mac money in history.

In history. So this rescue package means that we will stabilize markets. We will buy, we

will shore up these institutions. But it's not enough. That's why we're going to have

to go out into the housing market and we're going to have to buy up these bad loans. And

we're going to have to stabilize house, home values. And that way Americans can, like Alan,

can realize the American dream and stay in their home. But Fannie and Freddie were the

catalyst, the match that started this forest fire. There were some of us, there were some

of us that stood up against it. There was others who took a hike.

Senator Obama.

Well, Oliver, first let me tell you what's in the rescue package for you. Right now,

the credit markets are frozen up. And what that means as a practical matter is that small

businesses and some large businesses just can't get loans. If they can't get a loan,

that means that they can't make payroll. If they can't make payroll, then they may end

up having to shut their doors and lay people off. And if you imagine just one company trying

to deal with that, now imagine a million companies all across the country. So it could end up

having an adverse effect on everybody. And that's why we had to take action. But we shouldn't

have been there in the first place.

Now, I've got to correct a little bit of Senator McCain's history, not surprisingly. Let's

first of all understand that the biggest problem in this whole process was the deregulation

of the financial system. Senator McCain as recently as March bragged about the fact that

he is a deregulator. On the other hand, two years ago, I said that we've got a subprime

lending crisis that has to be dealt with. I wrote to Secretary Paulson. I wrote to Federal

Reserve Chairman Bernanke and told them this is something we have to deal with and nobody

did anything about it. A year ago, I went to Wall Street and said we've got to re-regulate,

and nothing happened. And Senator McCain during that period said that we should keep on deregulating

because that's how the free enterprise system works. Now, with respect to Fannie Mae, what

Senator McCain didn't mention is the fact that this bill that he talked about wasn't

his own bill. He jumped on it a year after it had been introduced and it never got passed.

And I never promoted Fannie Mae. In fact, Senator McCain's campaign chairman's firm

was a lobbyist on behalf of Fannie Mae, not me. So – but look, you're not interested

in hearing politicians' pointy fingers. What you're interested in is trying to figure

out how is this going to impact you. This is not the end of the process. This is the

beginning of the process. And that's why it's going to be so important for us to work with

homeowners to make sure that they can stay in their homes. The Secretary already has

the power to do that in the rescue package, but it hasn't been exercised yet. And the

next President has to make sure that the next Treasury Secretary is thinking about how to

strengthen you as a homebuyer, you as a homeowner, and not simply think about bailing out banks

on Wall Street.

Senator Obama, time for discussion. I'm going to begin with you. Are you saying to Mr. Clark

and to the other members of the American television audience that the American economy is going

to get much worse before it gets better and they ought to be prepared for that?

No. I am confident about the American economy. But we are going to have to have some leadership

from Washington that not only sets out much better regulations for the financial system

– the problem is we still have an archaic 20th century regulatory system for 21st century

financial markets – we're going to have to coordinate with other countries to make

sure that whatever actions we take work. But most importantly, we're going to have to help

ordinary families be able to stay in their homes, make sure that they can pay their bills,

deal with critical issues like health care and energy, and we're going to have to change

the culture in Washington so that lobbyists and special interests aren't driving the process

and your voices aren't being drowned out.

Senator McCain, in all candor, do you think the economy is going to get worse before it

gets better?

I think it depends on what we do. I think if we act effectively, if we stabilize the

housing market, which I believe we can if we go out and buy up these bad loans so that

people can have a new mortgage at the new value of their home. I think if we get rid

of the cronyism and special interest influence in Washington so we can act more effectively.

My friend, I'd like you to see the letter that a group of senators and I wrote warning

exactly of this crisis. Senator Obama's name was not on that letter. The point is, the

point is that we can fix our economy. Americans, workers are the best in the world. They are

the fundamental aspect of America's economy. They're the most innovative, they're the best

at best, we're the best exporters, we're the best importers, they're most effective, they

are the best workers in the world. And we've got to give them a chance. We've got to give

them a chance to do their best again. And they are the innocent bystanders here in what

is the biggest financial crisis and challenge of our time. We can do it.

Thank you, Senator McCain. We're going to continue over in Section F, as it turns out.

Senator Obama, this is a question from you, from Theresa Finch. Theresa?

How can we trust either of you with our money when both parties got us into this global

economic crisis?

Well, look, I understand your frustration and your cynicism, because while you've been

carrying out your responsibilities, most of the people here, you've got a family budget.

If less money is coming in, you end up making cuts. Maybe you don't go out to dinner as

much. Maybe you put off buying a new car. That's not what happens in Washington. And

you're right, there's a lot of blame to go around. But I think it's important just to

remember a little bit of history. When George Bush came into office, we had surpluses. And

now we have a half-a-trillion-dollar deficit annually. When George Bush came into office,

our debt, national debt, was around $5 trillion. It's now over $10 trillion. We've almost doubled

it.

And so while it's true that nobody is completely innocent here, we have had over the last eight

years the biggest increases in deficit spending and national debt in our history. And Senator

McCain voted for four out of five of those George Bush budgets.

So here's what I would do. I'm going to spend some money on the key issues that we've got

to work on. You may have seen your health care premiums go up. We've got to reform health

care to help you and your budget. We are going to have to deal with energy, because we can't

keep on borrowing from the Chinese and sending money to Saudi Arabia. We are mortgaging our

children's future. We've got to have a different energy plan. We've got to invest in college

affordability. So we're going to have to make some investments, but we've also got to make

spending cuts.

And what I've proposed you'll hear Senator McCain say, well, he's proposing a whole bunch

of new spending. But actually I am cutting more than I'm spending so that it will be

a net spending cut. The key is whether or not we've got priorities that are working

for you as opposed to those who have been dictating policy in Washington lately, and

that's mostly lobbyists and special interests. We've got to put an end to that.

Senator McCain.

Well, Teresa, thank you. And I can see why you feel that cynicism and mistrust, because

the system in Washington is broken. And I have been a consistent reformer. I have advocated

and taken on the special interests, whether they be the big money people by reaching across

the aisle and working with Senator Feingold on campaign finance reform, whether it being

a variety of other issues, working with Senator Lieberman on trying to address climate change.

I have a clear record of bipartisanship. The situation today cries out for bipartisanship.

Senator Obama has never taken on his leaders of his party on a single issue. And we need

to reform. And so let's look at our records as well as our rhetoric. That's really part

of your mistrust here. And now I suggest that maybe you go to some of these organizations

that are the watchdogs of what we do, like the Citizens Against Government Waste or the

National Taxpayers Union or these other organizations that watch us all the time. I don't expect

you to watch every vote.

And you know what you'll find? This is the most liberal big spending record in the United

States Senate. I have fought against excessive spending and outrageous. I have fought to

reduce the earmarks and eliminate them. Do you know that Senator Obama has voted for

or is proposing $860 billion of new spending now? New spending? Do you know that he voted

for every for every increase in spending that I saw come across the floor of the United

States Senate while we were working to eliminate these pork barrel earmarks? He voted for

nearly a billion dollars in pork barrel earmark projects, including, by the way, $3 million

for an overhead projector at a planetarium in Chicago, Illinois. My friends, do we need

to spend that kind of money? I think you have to look at my record and you have to look

at his. Then you have to look at our proposals for our economy. Not $860 billion in new spending,

but for the kinds of reforms that keep people in their jobs, get middle-income Americans

working again and getting our economy moving again. You're going to be examining our proposals

tonight and in the future. And energy independence is a way to do that, is one of them. And drilling

offshore and nuclear power are two vital elements of that. And I've been supporting those. And

I know how to fix this economy and eliminate our dependence on foreign oil and stop sending

$700 billion a year over seats.

Well, we've run out of time. We have this one-minute discussion period going on here.

There are new economic realities out there that everyone in this hall and across this

country understands that there are going to have to be some choices made. Health policies,

energy policies, and entitlement reform, what are going to be your priorities in what order?

Which of those will be your highest priority your first year in office and which will follow

in sequence? Senator McCain.

The three priorities were health.

The three, health, health care, energy, and entitlement reform, Social Security and Medicare.

In what order would you put them in terms of priorities?

I think you can work on all three at once, Tom. I think it's very important that we reform

our entitlement programs. My friends, we are not going to be able to provide the same benefit

for present-day workers that we are going, that present-day retirees have today. We're

going to have to sit down across the table, Republican and Democrat, as he did in 1983

between Ronald Reagan and Tip O'Neill. I know how to do that. I have a clear record of reaching

across the aisle, whether it be Joe Lieberman or Russ Feingold or Ted Kennedy or others.

That's my clear record. We can work on nuclear power plants, build a whole bunch of them,

create millions of new jobs. We have to have all of the above, alternative fuels, wind,

tide, solar, natural gas, clean coal technology. All of these things we can do as Americans.

And we can take on this mission. And we can overcome it. My friends, some of this $700

billion ends up in the hands of terrorist organizations.

As far as health care is concerned, obviously everyone is struggling to make sure that they

can afford their premiums and that they can have affordable and available health care.

That's the next issue. But we can do them all at once. There's no – and we have to

do them all at once. All three you mentioned are compelling national security requirements.

I'm trying to play by the rules that you all established. One minute for discussion.

Senator Obama, if you would, give us your list of priorities. There are some real questions

about whether everything can be done at once.

We're going to have to prioritize, just like a family has to prioritize. Now, I've listed

the things that I think have to be at the top of the list. Energy we have to deal with

today, because you're paying $3.80 here in Nashville for gasoline, and it could go up.

And it's a strain on your family budget, but it's also bad for our national security, because

countries like Russia and Venezuela and, in some cases, countries like Iran are benefiting

from higher oil prices. So we've got to deal with that right away. That's why I've called

for an investment of $15 billion a year over 10 years. Our goal should be, in 10 years'

time, we are free of dependence on Middle Eastern oil. And we can do it.

Now, when JFK said we're going to the moon in 10 years, nobody was sure how to do it,

but we understood that if the American people make a decision to do something, it gets done.

So that would be priority number one. Health care is priority number two, because that

broken health care system is bad not only for families, but it's making our businesses

less competitive. And number three, we've got to deal with education so that our young

people are competitive in a global economy.

But just one point I want to make, Tom. Senator McCain mentioned looking at our records. We

do need to look at our records. Senator McCain likes to talk about earmarks a lot. And that's

important. I want to go line by line through every item in the federal budget and eliminate

programs that don't work and make sure that those that do work, work better and cheaper.

But understand this. We also have to look at where some of our tax revenues are going.

So when Senator McCain proposes a $300 billion tax cut, a continuation not only of the Bush

tax cuts but an additional $200 billion that he's going to give to big corporations, including

big oil companies, $4 billion worth, that's money out of the system. And so we've got

to prioritize both our spending side and our tax policies to make sure that they're working

for you. That's what I'm going to do as president of the United States.

All right, gentlemen, I want to just remind you one more time about time. We're going

to have a larger deficit than the federal government does if we don't get this under

control here before too long.

Senator McCain, for you, we have our first question from the Internet tonight. A child

of the Depression, 78-year-old Fiora from Chicago. Since World War II, we have never

been asked to sacrifice anything to help our country except the blood of our heroic men

and women as president. What sacrifices, sacrifices will you ask every American to make to help

restore the American dream and to get out of the economic morass that we're now in?

Well, Fiora, I'm going to ask the American people to understand that there are some programs

that we may have to eliminate. I first proposed a long time ago that we would have to examine

every agency and every bureaucracy of government. And we're going to have to eliminate those

that aren't working. I know a lot of them that aren't working. One of them is in defense

spending, because I've taken on some of the defense contractors. I saved the taxpayers

$6.8 billion in a deal for an Air Force tanker that was done in a corrupt fashion. I believe

that we have to eliminate the earmarks. And sometimes those projects, not the overhead

projector that Senator Obama asked for, but some of them that are really good projects,

will have to be eliminated as well. And they'll have to undergo the same scrutiny that all

projects should in competition with others. So we're going to have to tell the American

people that spending is going to have to be cut in America. And I recommend a spending

freeze that, except for defense, veterans affairs, and some other vital programs, we'll

just have to have across the board freeze. And some of those programs may not grow as

much as we would like for them to. But we can establish priorities with full transparency,

with full knowledge of the American people, and full consultation, not done behind closed

doors and shoving earmarks in the middle of the night into programs that we don't even

sometimes we don't even know about until months later. And by the way, I want to go

back a second. Look, we can attack health care and energy at the same time. We're not

rifle shots here. We are Americans. We can, with the participation of all Americans, work

together and solve these problems together. Frankly, I'm not going to tell that person

without health insurance that I'm sorry you'll have to wait. I'm going to tell you Americans

we'll get to work right away. And we'll get to work together. And we can get them all

done, because that's what America has been doing.

MR. GIBBS. Senator McCain, thank you very much. Senator Obama.

THE PRESIDENT. You know, a lot of you remember the tragedy of 9-11 and where you were on

that day, and how all of the country was ready to come together and make enormous changes

to make us not only safer, but to make us a better country and a more unified country.

And President Bush did some smart things at the outset, but one of the opportunities that

was missed was when he spoke to the American people, he said, go out and shop. That wasn't

the kind of call to service that I think the American people were looking for. And so it's

important to understand that I think the American people are hungry for the kind of leadership

that is going to tackle these problems not just in government, but outside of government.

And let's take the example of energy, which we already spoke about. There is going to

be the need for each and every one of us to start thinking about how we use energy. I

believe in the need for increased oil production. We're going to have to explore new ways to

get more oil, and that includes offshore drilling. It includes telling the oil companies that

currently have 68 million acres that they're not using that either you use them or you

lose them. We're going to have to develop clean coal technology and safe ways to store

nuclear energy. But each and every one of us can start thinking about how can we save

energy in our homes and in our buildings. And one of the things I want to do is make

sure that we're providing incentives so that you can buy a fuel-efficient car that's made

right here in the United States of America, not in Japan or South Korea, making sure that

you are able to weatherize your home or make your business more fuel-efficient. And that's

going to require effort from each and every one of us. And the last point I just want

to make, I think the young people of America are especially interested in how they can

serve. And that's one of the reasons why I'm interested in doubling the Peace Corps, making

sure that we are creating a volunteer corps all across this country that can be involved

in their community, involved in military service, so that military families and our troops are

not the only ones bearing the burden of renewing America. That's something that all of us have

to be involved with, and that requires some leadership from Washington.

Mr. Daly. Senator Obama, as we begin very quickly our discussion period, President Bush,

you'll remember last summer, said that Wall Street got drunk. A lot of people now look

back and think the federal government got drunk and, in fact, the American consumers

got drunk. How would you as President try to break those bad habits of too much debt

and too much easy credit, specifically across the board for this country, not just at the

federal level, but as a model for the rest of the country as well?

The President Well, I think it starts with Washington. We've got to show that we've got

good habits, because if we're running up trillion-dollar debts that we're passing on to the next generation,

then a lot of people are going to think, well, you know what, there's easy money out there.

It means — and I have to, again, repeat this — it means not just looking at the

spending side, but also at the revenue side. I mean, Senator McCain has been talking tough

about earmarks, and that's good. But earmarks account for about $18 billion of our budget.

Now, when Senator McCain is proposing tax cuts that would give the average Fortune 500

CEO an additional $700,000 in tax cuts, that's not sharing a burden. And so part of the problem,

I think, for a lot of people who are listening here tonight is they don't feel as if they

are sharing the burden with other folks. I mean, it's tough to ask a teacher who's making

$30,000 or $35,000 a year to tighten her belt when people who are making much more than

her are living pretty high on the hog. And that's why I think it's important for the

President to set a tone that says all of us are going to contribute, all of us are going

to make sacrifices, and it means that, yes, we may have to cut some spending, although

I disagree with Senator McCain about an across-the-board freeze. That's an example of an unfair burden

sharing. That's using a hatchet to cut the federal budget. I want to use a scalpel so

that people who need help are getting help, and those of us like myself and Senator McCain

who don't need help aren't getting it. That's how we make sure that everybody is willing

to make a few sacrifices.

Senator McCain.

Right. You know, nailing down Senator Obama's various tax proposals is like nailing Jell-O

to the wall. There's 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, and he practiced protectionism as well, which

I'm sure we'll get to at some point.

You know, last year, up to this time, we've lost 700,000 jobs in America. The only bright

spot is that 300 — over 300,000 jobs have been created by small businesses. Senator

Obama's secret that you don't know is that his tax increases will increase taxes on 50

percent of small business revenue. 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 got some news, Senator Obama. The news is bad.

So let's not raise anybody's taxes, my friends, and make it very clear to you, I am not in

favor of tax cuts for the wealthy. I am in favor of leaving the tax rates alone and reducing

the tax burden on middle-income Americans by doubling your tax exemption for every child

from $3,500 to $7,000, to giving every American a $5,000 refundable tax credit and go out

and get the health insurance you want, rather than mandates and fines for small businesses,

as Senator Obama's plan calls for. And let's create jobs and let's get our economy going

again and let's not raise anybody's taxes.

Senator Obama, we have another question from the Internet.

Tom, can I respond to this briefly?

Look, guys, the rules were established by the two campaigns. We worked very hard on

this. This will address, I think, the next question.

The tax issue, because I think it's very important. Go ahead.

There are lots of issues that we're going to be dealing with here tonight. We have a

question from Langdon in Ballston Spa, New York, and that's about huge unfunded obligations

for Social Security, Medicare, and other entitlement programs that will soon eat up

all the revenue that's in place and then go into a deficit position.

Since the rules are pretty loose here, I'm going to add my own to this one. Instead of

having a discussion, let me just ask you as a coda to that. Would you give Congress a

date certain to reform Social Security and Medicare within two years after you take office?

Because in a bipartisan way, everyone agrees that's a big ticking time bomb that will eat

us up maybe even more than the mortgage crisis.

Well, Tom, we're going to have to take on entitlements, and I think we've got to do

it quickly. We're going to have a lot of work to do, so I can't guarantee that we're going

to do it in the next two years. But I'd like to do it in my first term as President.

But I think it's important to understand we're not going to solve Social Security and Medicare

unless we understand the rest of our tax policies. And, Senator McCain, I think the straight

talk expressed loss of wheel on that one. So let's be clear about my tax plan and Senator

McCain's, because we're not going to be able to deal with entitlements unless we understand

the revenues coming in. I want to provide a tax cut for 95 percent of Americans. Ninety-five

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. And we provide a 50 percent tax credit so that they can buy health insurance for

their workers, because there are an awful lot of small businesses that I meet all across

America that want to do right by their workers, but they just can't afford it. Some small

business owners, a lot of them can't even afford health insurance for themselves. Now,

in contrast, Senator McCain wants to give a $300 billion tax cut to 200 of it to the

largest corporations, and 100,000 of it — 100 billion of it going to people like CEOs on

Wall Street. He wants to give the average Fortune 500 CEO an additional $700,000 in

tax cuts. That is not fair, and it doesn't work. Now, if we get our tax policies right

so that they're good for the middle class, if we reverse the policies of the last eight

years that got us into this fix in the first place and that Senator McCain supported, then

we are going to be in a position to deal with Social Security and deal with Medicare, because

we will have a health care plan that actually works for you, reduces spending and costs

over the long term, and Social Security that is stable and solvent for all Americans and

not just some.

Mr. McCain, two years for reform of entitlement programs.

I'll answer the question. Look, it's not that hard to fix Social Security, Tom. It's just

tough decisions.

And Medicare.

I want to get to Medicare in a second. Social Security is not that tough. We know what the

problems are, my friends, and we know what the fixes are. We've got to sit down together,

cross the table. It's been done before. I saw it done with our wonderful Ronald Reagan,

the conservative from California and the liberal Democrat, Tip O'Neill, from Massachusetts.

That's what we need more of. And that's what I've done in Washington. Senator Obama has

never taken on his party leaders on a single major issue. I've taken them on. I'm not too

popular sometimes with my own party, much less his.

So Medicare is going to be a little tougher. It's going to be a little tougher because

we're talking about very complex and difficult issues. My friends, what we have to do with

Medicare is have a commission, have the smartest people in America come together, come up with

recommendations. And then, like the base closing commission idea we had, then we should have

Congress vote up or down. Let's not let them fool with it anymore. There's too much special

interest and too many lobbyists working there.

So let's have and let's have the American people say, fix it for us. Now, just back

on this on this tax, you know, again, it's back to our first question here about rhetoric

and record. Senator Obama has voted 94 times to either increase your taxes or against tax

cuts. That's his record. When he ran for the United States Senate from Illinois, he said

he would have a middle-income tax cut. You know, he came to the Senate and never once

proposed legislation to do that. So let's look at our record. I've fought higher taxes.

I have fought excess spending. I have fought to reform government. Let's look at our records,

my friends, and then listen to my vision for the future of America. And we'll get our economy

going again. And our best days are ahead of us.

Mr. Daly. Senator McCain, thank you very much. I'm going to stick by my part of the pack

and not ask a follow-up here. The next question does come from the hall. For Senator McCain,

it comes from Section C over here. And it's from Ingrid Jackson. Ingrid.

Senator McCain, I want to know, we saw that Congress moved pretty fast in the face of

an economic crisis. I want to know what you would do within the first two years to make

sure that Congress moves fast as far as environmental issues like climate change and green jobs.

Senator McCain. Well, thank you. Look, we are in tough economic times. We all know that.

And let's keep, never forget the struggle that Americans are in today. But when we can

ñ when we have an issue that we may hand our children and our grandchildren a damaged

planet, I have disagreed strongly with the Bush administration on this issue. I traveled

all over the world looking at the effects of greenhouse gas emissions. Joe Lieberman

and I introduced the first legislation. And we forced votes on it. That's the good news,

my friends. The bad news is we lost. But we kept the debate going. And we kept this issue

to posing to Americans the danger that climate change opposes.

Now, how ñ what's the best way of fixing it? Nuclear power. Senator Obama says that

it has to be safe or disposable or something like that. Look, I was on Navy ships that

had nuclear power plants. Nuclear power is safe and it's clean. And it creates hundreds

of thousands of jobs. And I know that we can reprocess the spent nuclear fuel, the Japanese,

the British, and the French do it. And we can do it, too. Senator Obama has opposed

that. We can move forward and clean up our climate and develop green technologies and

alternative energies for hybrid, for hydrogen, for battery-powered cars so that we can clean

up our environment and at the same time get our economy going by creating millions of

jobs. We can do that, we as Americans, because we're the best innovators, we're the best

producers, and 95 percent of the people who are our market live outside of the United

States of America.

Senator Obama?

This is one of the biggest challenges of our times. And it is absolutely critical that

we understand this is not just a challenge, it's an opportunity. Because if we create

a new energy economy, we can create 5 million new jobs easily here in the United States.

It can be an engine that drives us into the future the same way the computer was the engine

for economic growth over the last couple of decades. And we can do it, but we're going

to have to make an investment. The same way the computer was originally invented by a

bunch of government scientists who were trying to figure out for defense purposes how to

communicate, we've got to understand this is a national security issue as well. And

that's why we've got to make some investments. And I've called for investments in solar,

wind, geothermal. Contrary to what Senator McCain keeps on saying, I favor nuclear power

as one component of our overall energy mix. But this is another example where I think

it is important to look at the record. Senator McCain and I actually agree on something.

He said a while back that the big problem with energy is that for 30 years, politicians

in Washington haven't done anything. What Senator McCain doesn't mention is he's been

there 26 of them. And during that time, he voted 23 times against alternative fuels.

Twenty-three times. So it's easy to talk about this stuff during a campaign, but it's important

for us to understand that it requires a sustained effort from the next president.

One last point I want to make on energy. Senator McCain talks a lot about drilling, and that's

important. But we have 3 percent of the world's oil reserves, and we use 25 percent of the

world's oil. So what that means is that we can't simply drill our way out of the problem.

And we're not going to be able to deal with the climate crisis if our only solution is

to use more fossil fuels that create global warming. We're going to have to come up with

alternatives, and that means that the United States government is working with the private

sector to fund the kind of innovation that we can then export to countries like China

that also need energy and are setting up one coal-powered plant a week. We've got to make

sure that we're giving them the energy that they need or helping them to create the energy

that they need.

MR. CLINTON. Gentlemen, you may not have noticed, but we have whites around here. They have

red and green and yellow, and they are a signal to where we are.

MR. BOOKER. I'm just trying to keep up with John.

MR. CLINTON. Okay, here, John.

MR. BOOKER. Take it like Tom. Wave like that way, and I'll look at you.

All right. Here's a follow-up to that one-minute discussion. It's a simple question.

MR. CLINTON. Sure.

MR. BOOKER. Should we fund a Manhattan-like project that developed a nuclear bomb to deal

with global energy and alternative energy, or should we fund 100,000 garages across America,

the kind of industry and innovation that developed Silicon Valley?

MR. CLINTON. I think pure research and development investment on the part of the United States

government is certainly appropriate. I think once it gets into productive stages that we

ought to obviously turn it over to the private sector.

By the way, my friends, I know you grow a little weary of this back and forth. It was

an energy bill on the floor of the Senate loaded down with goodies, billions for the

oil companies, and it was sponsored by Bush and Cheney. You know who voted for it? You

might never know. That one. You know who voted against it? Me. I have fought time after time

against these bills that come to the floor, and they have all kinds of goodies and all

kinds of things in them for everybody, and they buy off the votes. I vote against them,

my friends. I vote against them. But the point is also, on oil drilling, oil drilling offshore

now is vital so that we can bridge the gap. We can bridge the gap between imported oil,

which is a national security issue as well as any other, and it will reduce the price

of a barrel of oil because when people know there's a greater supply, then the cost of

that will go down. That's fundamental economics. We've got to drill offshore, my friends, and

we've got to do it now. And we can do it. And as far as nuclear power is concerned,

again, again, look at the record. Senator Obama has approved storage and reprocessing

of spent nuclear fuel. And I'll stop, Tommy, and you didn't even weigh it. Thanks.

Thank you very much, Senator. Next question for you, Senator Obama, and it comes from

the E section over here, and it's from Lindsey Trella. Lindsey?

Senator, selling health care coverage in America as a marketable commodity has become a very

profitable industry. Do you believe health care should be treated as a commodity?

Well, as I travel around the country, this is one of the single most frequently asked

issues that I get, is the issue of health care. It is breaking family budgets. I can't

tell you how many people I meet who don't have health insurance. If you've got health

insurance, most of you have seen your premiums double over the last eight years, and your

co-payments and deductibles have gone up 30 percent just in the last year alone. And

if you're a small business, it's a crushing burden. So one of the things that I have said

from the start of this campaign is that we have a moral commitment, as well as an economic

imperative, to do something about the health care crisis that so many families are facing.

So here's what I would do. If you've got health care already, and probably the majority of

you do, then you can keep your plan if you are satisfied with it. You can keep your choice

of doctor. We're going to work with your employer to lower the cost of your premiums by up to

$2,500 a year. And we're going to do it by investing in prevention. We're going to do

it by making sure that we use information technology so the medical records are actually

on computers. Instead of you filling forms out in triplicate when you go to the hospital,

that will reduce medical errors and reduce costs. If you don't have health insurance,

you're going to be able to buy the same kind of insurance that Senator McCain and I enjoy

as federal employees. Because there's a huge pool, we can drop the cost, and nobody will

be excluded for preexisting conditions, which is a huge problem. Now, Senator McCain has

a different kind of approach. He says that he's going to give you a $5,000 tax credit.

What he doesn't tell you is that he is going to tax your employer-based health care benefits

for the first time ever. So what one hand giveth, the other hand taketh away. He would

also strip away the ability of states to provide some of the regulations on insurance companies

to make sure that you're not excluded for preexisting conditions, or your mammograms

are covered, or your maternity is covered. And that is fundamentally the wrong way to

go. In fact, just today, business organizations like the United States Chamber of Commerce,

which generally are pretty supportive of Republicans, said that this would lead to the unraveling

of the employer-based health care system. That, I don't think, is the kind of change

that we need. We've got to have somebody who's fighting for patients and making sure that

you get decent, affordable health care. And that's something that I'm committed to doing

as President.

MR. SCHIEFFERMANN

Senator McCain.

SEN. MCCAIN

Well, thank you for the question. You really identify one of the really major challenges

that America faces. Copayments go up, costs go up, skyrocketing costs, which make people

less and less able to afford health insurance in America. And we need to do all of the things

that are necessary to make it more efficient. Let's put health records online. That'll reduce

medical errors, as they call them. Let's have community health centers. Let's have walk-in

clinics. Let's do a lot of things to impose efficiencies. But what is at stake here in

this health care issue is the fundamental difference between myself and Senator Obama.

As you notice, he starts talking about government. He starts to say, government will do this,

and government will do that, and then government will. And he'll impose mandates. If you're

a small business person and you don't insure your employees, Senator Obama will fine you.

That's remarkable. If you're a parent and you're struggling to get health insurance

for your children, Senator Obama will fine you. I want to give every American a $5,000

refundable tax credit. They can take anywhere, across state lines. Why not? Don't we go across

state lines when we purchase other things in America? Of course it's okay to go across

state lines, because in Arizona, they may offer a better plan that suits you best than

it does here in Tennessee. And if you do the math, those people who have employer-based

health benefits, if you put the tax on it and you have what's left over, and you add

$5,000 that you're going to get as a refundable tax credit, do the math, 95% of the American

people will have increased funds to go out and buy the insurance of their choice and

to shop around and to get, all those people will be covered except for those who have

these gold-plated, Cadillac kinds of policies. You know, like hair transplants. I might need

one of those myself. But the point is that we have got to give people choice in America,

and not mandate things on them, and give them the ability. Every parent I know would acquire

health insurance for their children if they could. Obviously small business people want

to give their employees health insurance. Of course they all want to do that. We've

got to give them the wherewithal to do it. We can do it by giving them, as a start, a

$5,000 refundable tax credit to go around and get the health insurance policy of their

choice.

Borg. Quick discussion. Is health care in America a privilege, a right, or a responsibility,

Senator McCain?

I think it's a responsibility in this respect, in that we should have available and affordable

health care to every American citizen, to every family member. And with the plan that

I have, that will do that. But government mandates, I'm always a little nervous about.

But it is certainly my responsibility, certainly small business people and others. And they

understand that responsibility. American citizens understand that. Employers understand that.

But they certainly are a little nervous when Senator Obama says, if you don't get the health

care policy that I think you should have, that you're going to get fined. And by the

way, Senator Obama has never mentioned how much that fine might be. Perhaps we might

find that out tonight.

Well, why don't we – let's talk about this, Tom, because there was just a lot of stuff

out there.

Perfectly right responsibility. Sorry about that.

I think it should be a right for every American in a country as wealthy as ours for us to

have people who are going bankrupt because they can't pay their medical bills. For my

mother to die of cancer at the age of 53 and have to spend the last months of her life

in a hospital room arguing with insurance companies because they're saying that this

may be a preexisting condition and they don't have to pay her treatment, there's something

fundamentally wrong about that.

So let me just talk about this fundamental difference. And, Tom, I know that we're under

time constraints, but Senator McCain threw a lot of stuff out there.

Number one, let me just repeat, if you've got a health care plan that you like, you

can keep it. All I'm going to do is help you to lower the premiums on it. You'll still

have choice of doctor. There's no mandate involved. Small businesses are not going to

have a mandate. What we're going to give you is a 50 percent tax credit to help provide

health care for those that you need.

Now, it's true that I say that you are going to have to make sure that your child has health

care, because children are relatively cheap to insure and we don't want them going to

the emergency room for treatable illnesses like asthma. And when Senator McCain says

that he wants to provide children health care, what he doesn't mention is he voted against

the expansion of the Children's Health Insurance Program that is responsible for making sure

that so many children who didn't have previously health insurance have it now.

Now, the final point I'll make is on this whole issue of government intrusion and mandates.

It is absolutely true that I think it is important for government to crack down on

insurance companies that are cheating their customers, that don't give you the fine print

so you end up thinking that you're paying for something and when you finally get sick

and you need it, you're not getting it. And the reason that it's a problem to go shopping

state by state, you know what insurance companies will do? They will find a state, maybe Arizona,

maybe another state, where there are no requirements for you to get cancer screenings, where there

are no requirements for you to have to get preexisting conditions. And they will all

set up shop there. That's how in banking it works. Everybody goes to Delaware because

they've got pretty loose laws when it comes to things like credit cards. And in that situation,

what happens is, is that the protections you have, the consumer protections that you need,

you're not going to have available to you. That is a fundamental difference that I have

with Senator McCain. He believes in deregulation in every circumstance. That's what we've been

going through for the last eight years. It hasn't worked. And we need fundamental change.

Senator, we want to move on now. We come back to the hall here. We're going to shift gears

here a little bit and we're going to go to foreign policy and international matters if

we can.

Before we leave that, did we hear the size of the fine?

Phil Elliott is over here in this section. And Phil Elliott has a question for Senator

McCain. Phil?

Senator McCain, how will all the recent economic stress affect our nation's ability to act

as a peacemaker in the world?

Well, I thank you for that question because there's no doubt that history shows us that

nations that are strong militarily over time have to have a strong economy as well. And

that is one of the challenges that America faces. But having said that, America and we'll

hear a lot of criticism, I've heard a lot of criticism about America and our national

security policy and all that. And much of that criticism is justified. But the fact

is America is the greatest force for good in the history of the world. My friends, we

have gone to all four corners of the earth and shed American blood in defense usually

of somebody else's freedom and our own. So we are peacemakers and we're peacekeepers.

But the challenge is to know when the United States of America can beneficially affect

the outcome of a crisis, when to go in and when not, when American military power is

worth the expenditure of our most precious treasure. And that question can only be answered

with someone with the knowledge and the 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. And I am convinced that my record, going back to my opposition

from sending the Marines to Lebanon to supporting our efforts in Kosovo and Bosnia and the first

Gulf War, and my judgment, I think, is something that I'm a record that I'm willing to stand

on. 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.

Senator Obama, the economic constraints on U.S. military action around the world.

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 Senator 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. So one of the difficulties with Iraq is that it has put an enormous strain, first

of all, on our troops, obviously, and they have performed heroically and honorably, and

we owe them an extraordinary debt of gratitude. But it's also put an enormous strain on our

budget. We've spent so far close to $700 billion, and if we continue on the path that we're

on, as Senator McCain is suggesting, it's going to go well over a trillion dollars.

We're spending $10 billion a month in Iraq at a time when the Iraqis have a $79 billion

surplus. Seventy-nine billion dollars. And we need that $10 billion a month here in the

United States to put people back to work, to do all these wonderful things that Senator

McCain suggested we should be doing but has not yet explained how he would pay for.

Now, Senator McCain and I do agree this is the greatest nation on Earth. We are a force

of good in the world. But there has never been a nation in the history of the world

that saw its economy decline and maintained its military superiority, and the strains

that have been placed on our alliances around the world, and the respect that's been diminished

over the last eight years, has constrained us in able to act on something like the genocide

in Darfur because we don't have the resources or the allies to do everything that we should

be doing. That's going to change when I'm President, but we can't change it unless we

fundamentally change Senator McCain's and George Bush's foreign policy. It has not worked

for America.

Senator Obama, let me ask you, let's see if we can establish tonight the Obama doctrine

and the McCain doctrine for the use of United States combat forces in situations where there's

a humanitarian crisis, but it does not affect our national security. Take the Congo, where

4.5 million people have died since 1998. Or take Rwanda in the earlier and dreadful days.

Or Somalia. What is the Obama doctrine for use of force that the United States would

send when we don't have national security issues at stake?

Well, we may not always have national security issues at stake, but we have moral issues

at stake. If we could have intervened effectively in the Holocaust, who among us would say that

we had a moral obligation not to go in? If we could have stopped Rwanda, surely if we

had the ability, that would be something that we would have to strongly consider and act.

So when genocide is happening, when ethnic cleansing is happening somewhere around the

world and we stand idly by, that diminishes us. And so I do believe that we have to consider

it as part of our interests, our national interests, in intervening where possible.

But understand that there's a lot of cruelty around the world. We're not going to be able

to be everywhere all the time. That's why it's so important for us to be able to work

in concert with our allies. Let's take the example of Darfur just for a moment. Right

now, there is a peacekeeping force that has been set up, and we have African Union troops

in Darfur to stop a genocide that has killed hundreds of thousands of people. We could

be providing logistical support, setting up a no-fly zone, at relatively little cost to

us. But we can only do it if we can help mobilize the international community and lead.

And that's what I intend to do when I'm President.

MR. SCHIEFFERMANN Senator McCain, the McCain doctrine, if you will.

SEN. MCCAIN Well, let me just follow up, my friends. If we had done what Senator Obama

wanted done in Iraq, and that was set a date for withdrawal, which General Petraeus, our

chief of staff, our chairman of our Joint Chiefs of Staff, said would be a very dangerous

course to take for America, then we would have had a wider war. We would have been back.

Iranian influence would have increased. Al Qaeda would have reestablished a base. There

was a lot at stake there, my friends. And I can tell you right now that Senator Obama

would have brought our troops home in defeat. I'll bring them home with victory and with

honor. And that is a fundamental difference.

The United States of America, Tom, is the greatest force for good, as I said. And we

must do whatever we can to prevent genocide, whatever we can to prevent these terrible

calamities that we have said never again. But it also has to be tempered with our ability

to beneficially affect the situation. That requires a cool hand at the tiller. This requires

a person who understands what are the limits of our capability are.

We went in to Somalia as a peacemaking organization. We ended up trying to be, excuse me, as peacekeeping

organization. We ended up trying to be peacemakers. And we ended up having to withdraw in humiliation.

In Lebanon, I stood up to President Reagan, my hero, and said, if we send Marines in there,

how can we possibly beneficially affect this situation, and said we shouldn't. Unfortunately,

almost 300 brave young Marines were killed. So you have to temper your decisions with

the ability to beneficially affect the situation and realize you're sending America's most

precious asset, American blood, into harm's way.

And again, I know those situations. I've been in them all my life. And I can tell you right

now, the security of your young men and women who are serving in the military are my first

priority right after our nation's security. And I may have to make those tough decisions,

but I won't take them lightly. And I understand that we have to say never again to a Holocaust

and never again to Rwanda. But we also better be darn sure we don't leave and make the situation

worse, thereby exacerbating our reputation and our ability to address crises in other

parts of the world.

Mr. Earnest. Senator McCain, thank you very much. Next question for Senator Obama. It

comes from the F section, and it's from Katie Hamm. Katie.

Q Should the United States respect Pakistani sovereignty and not pursue al Qaeda terrorists

who maintain bases there? Or should we ignore their borders and pursue our enemies, like

we did in Cambodia during the Vietnam War?

THE PRESIDENT Katie, it's a terrific question. And we have a difficult situation in Pakistan.

I believe that part of the reason we have a difficult situation is because we made a

bad judgment going into Iraq in the first place when we hadn't finished the job of hunting

down bin Laden and crushing al Qaeda. So what happened was we got distracted, we diverted

resources, and ultimately bin Laden escaped, set up base camps in the mountains of Pakistan

in the northwest provinces there. They are now raiding our troops in Afghanistan, destabilizing

the situation. They're stronger now than at any time since 2001. And that's why I think

it's so important for us to reverse course, because that's the central front on terrorism.

They are plotting to kill Americans right now. As Secretary Gates, the Defense Secretary,

said, the war against terrorism began in that region and that's where it will end. So part

of the reason I think it's so important for us to end the war in Iraq is to be able to

get more troops into Afghanistan, put more pressure on the Afghan government to do what

it needs to do, eliminate some of the drug trafficking that's funding terrorism. But

I do believe that we have to change our policies with Pakistan. We can't coddle, as we did,

a dictator, give him billions of dollars, and then he's making peace treaties with the

Taliban and militants. What I've said is we're going to encourage democracy in Pakistan,

expand our non-military aid to Pakistan so that they have more of a stake in working

with us, but insisting that they go after these militants. And if we have Osama bin

Laden in our sights and the Pakistani government is unable or unwilling to take them out, then

I think that we have to act. And we will take them out. We will kill bin Laden. We will

crush al Qaeda. That has to be our biggest national security priority.

Senator McCain.

Well, Katie, thank you. You know, my hero is a guy named Teddy Roosevelt. Teddy Roosevelt

used to say, walk softly, talk softly, but carry a big stick. Senator Obama likes to

talk loudly. In fact, he said he wants to announce that he's going to attack Pakistan.

Remarkable. You know, if you are a country and you're trying to gain the support of another

country, then you want to do everything you can that they would act in a cooperative fashion.

When you announce that you're going to launch an attack into another country, it's pretty

obvious that you have the effect that it had in Pakistan. It turns public opinion against

us. Now, let me just go back with you very briefly. We drove the Russians out with the

Afghan freedom fighters, drove the Russians out of Afghanistan, and then we made this

most serious mistake. We washed our hands of Afghanistan. The Taliban came back in,

al Qaeda, and we then had the situation that required us to conduct the Afghan war. Now,

our relations with Pakistan are critical because the border areas are being used as safe havens

by the Taliban and al Qaeda and other extremist organizations. And we have to get their support.

Now, General Petraeus had a strategy, the same strategy, very different because of the

conditions and the situation, but the same fundamental strategy that succeeded in Iraq,

and that is to get the support of the people. We need to help the Pakistani government go

into Waziristan, where I visited, a very rough country, and get the support of the people

and get them to work with us and turn against the cruel Taliban and others, and by working

and coordinating our efforts together, not threatening to attack them, but working with

them, and where necessary, use force, but talk softly, but carry a big stick.

Mr. Rhodes. Senator McCain.

Mr. McCain.

Mr. Obama. Tom, just a quick follow-up on this. I think...

Mr. McCain. If we're going to have follow-ups, then I will want follow-ups.

Mr. Obama. No, no, no, I know. So I think we'll get at it if I can with this question.

Mr. McCain. You're fine with me. You're fine with me.

Mr. Obama. All right, let's have a follow-up.

Mr. McCain. You're fine with me.

Mr. Obama. Just a quick follow-up, because I think this is important.

Mr. McCain. I'm just a hired health care. So I mean...

Mr. Obama. You're doing a great job, Tom. Look, I want to be very clear about what I

said. Nobody called for the invasion of Pakistan. Senator McCain continues to repeat this. What

I said was the same thing that the audience here today heard me say, which is if Pakistan

is unable or unwilling to hunt down bin Laden and take him out, then we should. Now, that

I think has to be our policy, because they are threatening to kill more Americans. Now,

Senator McCain suggests that somehow, you know, I'm green behind the ears and I've just

spouted off and he's somber and responsible.

Mr. McCain. Thank you very much.

The President. Senator McCain, this is the guy who sang,

bomb, bomb, bomb Iran, who called for the annihilation of North Korea. That I don't

think is an example of speaking softly. This is the person who, after we had we hadn't

even finished Afghanistan, where he said, next up, Baghdad. So I agree that we have

to speak responsibly and we have to act responsibly. And the reason Pakistan, the popular opinion

of America had diminished in Pakistan was because we were supporting a dictator, Musharraf,

had given him $10 billion over seven years, and he had suspended civil liberties. We were

not promoting democracy. This is the kind of policies that ultimately end up undermining

our ability to fight the war on terrorism, and it will change when I'm President.

Mr. McCain. Tom, if we're going to go back and forth, I then I'd like to have equal time

to go to respond.

Mr. Osnos. Yeah, you get to last word here, and then we have to move on.

Mr. McCain. Not true. Not true. I have obviously supported those efforts that the United States

had to go in militarily, and I have opposed those that I didn't think so. I understand

what it's like to send young Americans in harm's way. I say I was joking with a veteran.

I hate to even go into this. I was joking with an old veteran friend who joked with

me about Iran. But the point is that I know how to handle these crises, and Senator Obama,

by saying that he would attack Pakistan, look at the context of his words. I'll get Osama

bin Laden, my friends. I'll get him. I know how to get him. I'll get him no matter what,

and I know how to do it. But I'm not going to telegraph my punches, which is what Senator

Obama did, and I'm going to act responsibly as I have acted responsibly throughout my

military career and throughout my career in the United States Senate. And we have fundamental

disagreements about the use of military power and how you do it, and you just saw it in

response to previous questions.

Can I get a quick response from the two of you about developments in Afghanistan this

week? The senior British military commander, who is now leaving after a second tour, and

their senior diplomatic presence there, Sherrod Cooper Coles, who is well known as an expert

in the area, both have said that we're failing in Afghanistan. The commander said we cannot

win there. We've got to get it down to a low-level insurgency, let the Afghans take it over.

Cooper Coles said what we need is an acceptable dictator. If either of you becomes president,

as one of you will, how do you reorganize Afghanistan's strategy, or do you? Briefly,

if you can.

Very briefly. We are going to have to make the Iraqi government start taking more responsibility,

withdraw our troops in a responsible way over time, because we're going to have to put some

additional troops in Afghanistan. General McKiernan, the commander in Afghanistan right

now, is desperate for more help because our bases and outposts are now targets for more

aggressive Afghan Taliban offensives. We're also going to have to work with the Karzai

government. And when I met with President Karzai, I was very clear that you are going

to have to do better by your people in order for us to gain the popular support that's

necessary. I don't think he has to be a dictator. We want a democracy in Afghanistan. But we

have to have a government that is responsive to the Afghan people. And, frankly, it's just

not responsive right now.

Senator McCain, briefly.

General Petraeus has just taken over a position of responsibility where he has the command

and will really set the tone for the strategy and tactics that are using. I've had conversations

with him. It is the same overall strategy. Of course we have to do some things tactically,

some of which Senator Obama is correct on. We have to double the size of the Afghan army.

We have to have a streamlined NATO command structure. We have to do a lot of things.

We have to work much more closely with the Pakistanis. But most importantly, we have

to have the same strategy which Senator Obama said wouldn't work, couldn't work, still fails

to admit that he was wrong about Iraq. He still will not admit that he was wrong about

the strategy of the surge in Iraq. And that's the same kind of strategy of go out and secure

and hold and allow people to live normal lives. And once they feel secure, then they lead

normal social, economic, political lives. The same thing that's happening in Iraq today.

So I have confidence that General Petraeus, working with the Pakistanis, working with

the Afghans, doing the same job that he did in Iraq, will again, we will succeed and we

will bring our troops home with honor and victory and not in defeat.

Mr. Daly. Senator McCain, this question is for you from the Internet. It's from Alden

in Hewitt, Texas. How can we apply pressure to Russia for humanitarian issues in an effective

manner without starting another Cold War?

Senator McCain. First of all, I say I don't think we're not going to have another Cold

War with Russia. But have no doubt that Russia's behavior is certainly outside the norms of

behavior that we would expect for nations which are very wealthy, as Russia has become

because of their petrodollars. Now, long ago I warned about Vladimir Putin. I said I looked

into his eyes and saw three letters, a K, a G, and a B. He has surrounded himself with

former KGB apparatchiks. He has gradually repressed most of the liberties that we would

expect for nations to observe. And he has exhibited most aggressive behavior, obviously

in Georgia, said before, watch Ukraine. Ukraine right now is in the sights of Vladimir Putin,

those that want to reassemble the old Soviet Union. We've got to show moral support for

Georgia. We've got to show moral support for Ukraine. We've got to advocate for their membership

in NATO. We have to make the Russians understand that there are penalties for this kind of

behavior, this kind of naked aggression into Georgia, a tiny country and a tiny democracy.

And so, of course, we want to bring international pressures to bear on Russia in hopes that

that will modify and eventually change their behavior. Now, the G8 is one of those, but

there are many others. But the Russians must understand that these kinds of actions and

activities are not acceptable. And hopefully we will use the leverage, economic, diplomatic

and others, and unite it with our allies, with our allies and friends in Europe who

are equally disturbed as we are about their recent behavior.

Mr. Earnest. Senator Obama will not be a re-ignition of the Cold War, but Russia is a challenge.

Senator Obama? We're winding down so we can keep track of the time.

The President Well, the resurgence of Russia is one of the

central issues that we're going to have to deal with in the next presidency. And for

the most part, I agree with Senator McCain on many of the steps that have to be taken,

but we can't just provide moral support. We've got to provide moral support to the Poles

and Estonia and Latvia and all the nations that were former Soviet satellites. But we've

also got to provide them with financial and concrete assistance to help rebuild their

economies. Georgia in particular is now at the brink of enormous economic challenges,

and some say that that's what Putin intended in the first place.

The other thing we have to do, though, is we've got to see around the corners. We've

got to anticipate some of these problems ahead of time. Back in April, I put out a

statement saying that the situation in Georgia was unsustainable because you had Russian

peacekeepers in these territories that were under dispute. And you knew that if the Russians

themselves were trying to obtain some of these territories or push back against Georgia,

that that was not a stable situation. So part of the job of the next Commander-in-Chief

in keeping all of you safe is making sure that we can see some of the 21st century challenges

and anticipate them before they happen. We haven't been doing enough of that. We tend

to be reactive. That's what we've been doing over the last eight years. And that has actually

made us more safe. That's part of what happened in Afghanistan, where we rushed into Iraq

and sent a lot of people to the hospital. And Senator McCain and President Bush suggested

that it wasn't that important to catch bin Laden right now and that we could muddle through.

And that has cost us dearly. We've got to be much more strategic if we're going to be

able to deal with all the challenges that we face out there. And one last point I want

to make about Russia. Energy is going to be key in dealing with Russia. If we can reduce

the amount of energy that we use to make mischief around the world, that will strengthen

us and weaken them when it comes to issues like Georgia.

This requires only a yes or a no. Ronald Reagan famously said that the Soviet Union was the

evil empire. Do you think that Russia, under Vladimir Putin, is an evil empire?

I think they've engaged in evil behavior. And I think that it is important that we understand

that we still have nationalist impulses that I think are very dangerous.

Senator McCain?

Maybe.

Maybe.

It depends on how we respond to Russia and depends on a lot of things. If I say yes,

then that means that we're reigniting the old Cold War. If I say no, it ignores their

Obviously, energy is going to be a big, big factor. And Georgia and Ukraine are both major

gateways of energy into Europe. And that's one of the reasons why it's in our interest.

But the Russians, I think we can deal with them. But they've got to understand that they're

facing a very firm and determined United States of America that will defend our interests

and that of other countries in the world.

All right. We're going to try to get in two more questions if we can. So we have to move

along. Over in Section A, Terry Shirey. Do I have that right, Terry?

Senator.

As a retired Navy chief, my thoughts are often with those who serve our country. I know both

candidates, both of you expressed support for Israel. If despite your best diplomatic

efforts, Iran attacks Israel, would you be willing to commit U.S. troops in support and

defense of Israel? Or would you wait on approval from the U.N. Security Council?

Well, thank you, Terry. And thank you for your service to the country. I want to say

everything I ever learned about leadership, I learned from a chief petty officer. And I

thank you. And I thank you, my friend. Thanks for serving. Let me say that we obviously

would not wait for the United Nations Security Council. I think the realities are that both

Russia and China would probably pose significant obstacles. And our challenge right now is

the Iranians continue on the path to acquiring nuclear weapons. And it's a great threat.

It's not just a threat to the state of Israel. It's a threat to the stability of the entire

Middle East. If Iran acquires nuclear weapons, all the other countries will acquire them, too.

The tensions will be ratcheted up. What would you do if you were the Israelis and the

president of a country says that they are determined to wipe you off the map, cause your

country a stinking corpse? Now, Senator Obama, without precondition, wants to sit down and

negotiate with them. Without preconditions. That's what he stated. Again, a matter of record.

I want to make sure that the Iranians are put enough, that we put enough pressure on the

Iranians by joining with our allies, imposing significant, tough sanctions to modify their

behavior. And I think we can do that. I think joining with our allies and friends in a league

of democracies, that we can effectively abridge their behavior and hopefully they would

be more independent, this quest that they are on for nuclear weapons. But at the end of the

day, my friend, I have to tell you again, and you know what it's like to serve, and you

know what it's like to sacrifice, but we can never allow a second Holocaust to take place.

Senator Obama.

Well, Terry, first of all, we honor your service and we're grateful for it. We cannot allow

a second Holocaust to be perpetrated by a second-hand, second-hand nuclear weapon. It would be a

game changer in the region. Not only would it threaten Israel, our strongest ally in the

region and one of our strongest allies in the world, but it would also create a possibility

of nuclear weapons falling into the hands of terrorists. So it's unacceptable. And I will do

my best to make sure that we will never take military options off the table, and it is

important that we don't provide veto power to the United Nations or anyone else in acting

in our interests. It is important, though, for us to use all the tools at our disposal

to prevent the scenario where we've got to make those kinds of choices. And that's why

I'm here. If we can work more effectively with other countries, diplomatically, to tighten

sanctions on Iran, if we can reduce our energy consumption through alternative energy so

that Iran has less money, if we can impose the kinds of sanctions that, say, for example,

Iran right now imports gasoline even though it's an oil producer because its oil infrastructure

has broken down, if we can prevent them from importing the gasoline that they need and

the refined petroleum products, that starts changing their cost-benefit analysis. That

starts putting the squeeze on them. Now, it is true, though, that I believe that we should

have direct talks not just with our friends but also with our enemies to deliver a tough,

direct message to Iran that if you don't change your behavior, then there will be dire consequences.

If you do change your behavior, then it is possible for you to rejoin the community of

nations. Now, it may not work, but one of the things we've learned is, is that when

we take that approach, whether it's in North Korea or in Iran, then we have a better chance

at better outcomes. When President Bush decided we're not going to talk to Iran, we're not

going to talk to North Korea, you know what happened? Iran went from zero centrifuges

to develop nuclear weapons to 4,000. North Korea quadrupled its nuclear capability. We've

got to try to have talks, understanding that we're not taking military options off the

table.

MR. ROMNEY. All right, gentlemen, we've come to the last question, and you'll both be interested

to know. This comes from the Internet, and it's from a state that you're strongly contesting,

both of you. It's from Peggy in Amherst, New Hampshire. It has a certain Zen-like quality.

I'll give you a fair warning. She says, what don't you know, and how will you learn it?

Senator Obama, you get first crack at that.

THE PRESIDENT. My wife, Michelle, is there, and she could give you a much longer list

than I do. And most of the time I learn it by asking her. But, look, the nature of the

challenges that we're going to face are immense. And one of the things that we know about the

presidency is that it's never the challenges that you expect, it's the challenges that

you don't, that end up consuming most of your time. But here's what I do know. I know that

I wouldn't be standing here if it weren't for the fact that this country gave me opportunity.

I came from very modest means. I had a single mom, and my grandparents raised me, and it

was because of the help of scholarships and my grandmother's scrimping on things that

she might have wanted to purchase, and my mom at one point getting food stamps in order

for us to put food on the table. Despite all that, I was able to go to the best schools

on Earth. I was able to succeed in a way that I could not have succeeded anywhere else in

this country. The same is true for Michelle, and I'm sure the same is true for a lot of

people. And the question in this election is, are we going to pass on that same American

dream to the next generation? Over the last eight years, we've seen that dream diminish.

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've 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. Thank you.

Senator McCain, you get the last word. Senator Obama had the opening. Your last thought.

Well, thank you, Tom. And I think what I don't know is what all of us don't know. And that's

what's going to happen both here at home and abroad. The challenges that we face are

unprecedented. Americans are hurting tonight in a way they have not in our generation.

There are challenges around the world that are new and different. And there will be different.

We will be talking about countries sometime in the future that we hardly know where they

are on the map, some Americans. So what I don't know is what the unexpected will be.

But I have spent my whole life serving this country. I grew up in a family where my father

was gone most of the time because he was at sea and doing our country's business. My mother

basically raised our family. 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 is 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. And I'll rest on my record, but I'll also tell you, times are tough.

We need a steady hand at the tiller. And the great honor of my life was to always put my

country first. Thank you, Tom.

Thank you very much, Senator McCain.

That concludes tonight's debate from here in Nashville. We want to thank our hosts

here at Belmont University in Nashville and the Commission on Presidential Debates.

And you're in my way of my script there if you will move.

In addition to everything else, there is one more presidential debate on Wednesday,

October 15th at Hofstra University in New York, moderated by my friend Bob Schieffer

of CBS News. Thank you, Senator McCain. Thank you, Senator Obama. Good night, everyone,

from Nashville.

Thank you.