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Economy takes center stage at McCain-Obama debate

THE ASSOCIATED PRESS

October 8, 2008

NASHVILLE, Tenn. - Barack Obama and John McCain clashed repeatedly over the causes and cures for the worst economic crisis in 80 years last night in a debate in which Republican McCain called for a sweeping $300 billion program to shield homeowners from mortgage foreclosure.

"It's my proposal. It's not Sen. Obama's proposal. It's not President Bush's proposal," McCain said at the outset of a debate he hoped could revive his fortunes in a presidential race trending toward his rival.

In one pointed confrontation on foreign policy, Obama bluntly challenged McCain's steadiness. "This is a 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." That came after McCain accused him of foolishly threatening to invade Pakistan and said, "I'm not going to telegraph my punches, which is what Sen. Obama did."

The debate was the second of three between the two major party rivals, and the only one to feature a format in which voters seated a few feet away posed questions to the candidates. The final debate is on Long Island at Hofstra University next Wednesday.

They were polite, but the strain of the campaign showed. They criticized one another repeatedly as topics turned to energy, spending, taxes and health care. At one point, McCain referred to Obama as "that one," rather than speaking his name.

"It's good to be with you at a town hall meeting," he opened, jabbing at Obama, who has spurned McCain's calls for numerous such joint appearances across the fall campaign.

They debated at Belmont University four weeks before Election Day in a race that has lately favored Obama, both in national polls and surveys in pivotal battleground states. Many of the questions dealt with an economy in trouble.

Obama said the current crisis was the "final verdict on the failed economic policies of the last eight years" that President Bush pursued and were "supported by Sen. McCain." He contended Bush, McCain and others had favored deregulation of the financial industry, predicting that would "let markets run wild and prosperity would rain down on all of us. It didn't happen."

McCain's pledge to have the government help individual homeowners avoid foreclosure went considerably beyond the $700 billion bailout that recently cleared Congress. While he said bailout money should be used to help homeowners, the bailout legislation merely gave the Treasury Department authority to purchase mortgages directly.

"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 be able to make those payments and stay in their homes," he said.

"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 get some trust and confidence back to America."

McCain also said it was important to reform Medicare, Medicaid and Social Security. "My friends, we are not going to be able to provide the same benefit for present-day workers that present-day retirees have today," he said, without elaborating.

The two men also competed to demonstrate their qualifications as reformers at a time voters are clamoring for change.

McCain accused Obama of being the Senate's second-highest recipient of donations from individuals at Fannie Mae and Freddie Mac, the two now-disgraced mortgage industry giants. "There were some of us who stood up against it," McCain said of the lead-up to the financial crisis. "There were others who took a hike."

Obama shot back that McCain's campaign manager, Rick Davis, has a stake in a Washington lobbying firm that got thousands of dollars monthly from Freddie Mac until recently.

WHAT THEY SAID

ON THE ECONOMY

Obama

"We are in the worst financial crisis since the Great Depression. ... this is a final verdict on the failed economic policies ... that essentially said that we should strip away regulations, let the market run wild."

McCain