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Good evening from the Ford Center for the Performing Arts at the University of Mississippi in Oxford. I'm Jim Lehrer of "The NewsHour" on PBS, and I welcome you to the first of the 2008 presidential debates between the Republican nominee, Senator John McCain of Arizona, and the Democratic nominee, Senator Barack Obama of Illinois. The Commission on Presidential Debates is the sponsor of this event, and the three other presidential and vice presidential debates coming in October. Tonight's will primarily be about foreign policy and national security, which by definition includes the global financial crisis. It will be divided roughly into nine-minute segments. Direct exchanges between the candidates and moderator follow-ups are permitted after each candidate has two minutes to answer the lead question in an order determined by a coin toss. The specific subjects and questions were chosen by me. They have not been shared or cleared with anyone. The audience here in the hall has promised to remain silent -- no cheers, no applause, no noise of any kind -- except right now, as we welcome Senators Obama and McCain. (Cheers, applause.) Let me begin with something General Eisenhower said in his 1952 presidential campaign. Quote, "We must achieve both security and solvency. In fact, the foundation of military strength is economic strength," end quote. With that in mind, the first lead question: Gentlemen, at this very moment tonight, where do you stand on the financial recovery plan? First response to you, Senator Obama. You have two minutes. less more

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Well, thank you very much, Jim, and thanks to the commission and the University of Mississippi, Ole Miss, for hosting us tonight. I can't think of a more important time for us to talk about the future of the country. You know, we are at a defining moment in our history. Our nation is involved in two wars, and we are going through the worst financial crisis since the Great Depression. And although we've heard a lot about Wall Street, those of you on Main Street, I think, have been struggling for a while, and you recognize that this could have an impact on all sectors of the economy. And you're wondering: How's it going to affect me? How's it going to affect my job? How's it going to affect my house? How's it going to affect my retirement savings or my ability to send my children to college? So we have to move swiftly and we have to move wisely. And I've put forward a series of proposals that make sure that we protect taxpayers as we engage in this important rescue effort. Number one, we've got to make sure that we've got oversight over this whole process. $700 billion potentially is a lot of money. Number two, we've got to make sure that taxpayers, when they are putting their money at risk, have the possibility of getting that money back and gains if the market and when the market returns. Number three, we've got to make sure that none of that money is going to pad CEO bank accounts or to promote golden parachutes. And number four, we've got to make sure that we're helping homeowners, because the root problem here has to do with the foreclosures that are taking place all across the country. Now, we also have to recognize that this is a final verdict on eight years of failed economic policies -- promoted by George Bush, supported by Senator McCain -- a theory that basically says that we can shred regulations and consumer protections and give more and more to the most, and somehow prosperity will trickle down. It hasn't worked. And I think that the fundamentals of the economy have to be measured by whether or not the middle class is getting a fair shake. That's why I'm running for president. And that's what, I hope, we're going to be talking about tonight. less more

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Senator McCain, two minutes.

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Well, thank you, Jim. And thanks to everybody. And I do have a sad note tonight. Senator Kennedy is in the hospital. He is a dearly beloved friend to all of us. Our thoughts and prayers go out to the lion of the Senate. I also want to thank the University of Mississippi for hosting us tonight. And Jim, I -- I've been not feeling too great about a lot of things lately. So have a lot of Americans who are facing challenges. But I'm feeling a little better tonight, and I'll tell you why. Because as we're here tonight in this debate, we are seeing for the first time in a long time Republicans and Democrats together sitting down, trying to work out a solution to this fiscal crisis that we're in. And have no doubt about the magnitude of this crisis. And we're not talking about failure of institutions on Wall Street, we're talking about failures on Main Street and people who will lose their jobs and their credits and their homes if we don't fix the greatest fiscal crisis probably in -- certainly in our time, and I've been around a little while. But the point is -- the point is, we are finally seeing Republicans and Democrats sitting down and negotiating together and coming up with a package. This package has transparency in it. It has to have accountability and oversight. It has to have options for loans to failing businesses rather than the government taking over those loans. We have to -- it has to have a package with a number of other essential elements to it. And yes, I went back to Washington, and I met with my Republicans in the House of Representatives. And they weren't part of the negotiations, and I understand that. And it was the House Republicans that decided that they would be part of the solution to this problem. But I want to emphasize one point to all Americans tonight: This isn't the beginning of the end of this crisis. This is the end of the beginning, if we come out with a package that will keep these institutions stable. And we've got a lot of work to do. And we've got to create jobs. And one of the areas, of course, is to eliminate our dependence on foreign oil. less more

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All right. Let's go back to my question, how you all stand on the recovery plan. And talk to each other about it. What do -- could -- we got five minutes. We can negotiate a deal right here. But -- I mean, are you -- do you favor this plan, Senator Obama? less more

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Well -- well --

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And you, Senator McCain? Do you -- are you in favor of this plan?

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We haven't seen the language yet, and I do think that there's constructive work being done out there. So for the viewers who are watching, I am optimistic about the capacity of us to come together with a plan. The question I think that we have to ask ourselves is, how did we get into this situation in the first place? Two years ago, I warned that because of the subprime lending mess, because of the lax regulation, that we were potentially going to have a problem and tried to stop some of the abuses in mortgages that were taking place at the time. Last year, I wrote to the secretary of the Treasury to make sure that he understood the magnitude of this problem and to call on him to bring all the stakeholders together to try to deal with it. So -- so the question I think that we've got to ask ourselves is, yes, we've got to solve this problem short-term. And we are going to have to intervene. There's no doubt about that. But we're also going to have to look at how is it that we've shredded some many regulations, we did not set up a 21st century regulatory framework to deal with these problems. And that, in part, has to do with an economic philosophy that says that regulation is always bad. less more

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Are you going to vote for the plan, Senator McCain?

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I -- I -- I hope so, and I believe so --

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As a United States senator, you'll vote to -- you're going to vote for the plan?

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Sure. Sure, but -- but let me -- let me point out I also warned about Fannie Mae and Freddie Mac and warned about corporate greed and excess and CEO pay and all that. A lot of us saw this train wreck coming. But there's also the issue of responsibility. You've mentioned President Dwight David Eisenhower. President Eisenhower, on the night before the Normandy invasion, went into his room, and he wrote out two letters. One of them was a letter congratulating the great members of the military and Allies that had conducted and succeeded in the greatest invasion in history -- still, to this day, and forever. And he wrote out another letter, and that was a letter of resignation from the United States Army for the failure of the landings at Normandy. Somehow we've lost that accountability. I've been heavily criticized because I called for the resignation of the chairman of the Securities and Exchange Commission. We've got to start also holding people accountable, and we've got to reward people who succeed. But somehow in Washington today -- and I'm afraid on Wall Street -- greed is rewarded, excess is rewarded, and corruption, or certainly a failure to carry out our responsibility, is rewarded. As president of the United States, people are going to be held accountable in my administration. And I promise you that'll happen. less more

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Do you have something directly to say, Senator Obama, to Senator McCain about what he just said?

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Well, I think Senator McCain's absolutely right that we need more responsibility, but we need it not just when there is a crisis. I mean, we've had years in which the reigning economic ideology has been what's good for Wall Street but not what's good for Main Street. And there are folks out there who have been struggling before this crisis took place. And that's why it's so important, as we solve this short-term problem, that we look at some of the underlying issues that have led to wages and incomes for ordinary Americans to go down, the -- the -- a health care system that is broken, energy policies that are not working, because 10 days ago John said that the fundamentals of the economy are sound. less more

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Say -- say it directly to him.

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I do not think that they are.

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Say it directly to him.

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Oh, I'll -- the -- John, 10 days ago, you said that the fundamentals of the economy are sound. (Laughter.)

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(Laughs.)

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And --

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Are you afraid I couldn't hear him? (Laughter.)

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I'm just determined to get you all to talk to each other. I'm going to try. (Laughs.)

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The -- and -- and I just fundamentally disagree. And unless we are holding ourselves accountable day-in, day-out, not just when there's a crisis for folks who have power and influence and can hire lobbyists but for the nurse, the teacher, the police officer who frankly at the end of each month, they've got a little financial crisis going on. They're having to take out extra debt just to make their mortgage payments. We haven't been paying attention to them. And if you look at our tax policies, it's a classic example. less more

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So Senator McCain, do you agree with what Senator Obama just said? And if you don't, tell him what you disagree with.

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No, I, look, we've got to fix the system. We've got fundamental problems in the system. And Main Street is paying a penalty for the excesses and greed in Washington, D.C., and in the Wall Street. So there's no doubt that we have a long way to go, and obviously stricter interpretation and consolidation of the various regulatory agencies that weren't doing their job that has brought on this crisis. But I have a fundamental belief in the goodness and strength of the American worker. And the American worker is the most productive, the most innovative. America is still the greatest producer, exporter and importer. But we've got to get through these times. But I have a fundamental belief in the United States of America. And I still believe, under the right leadership, our best days are ahead of us. less more

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All right. Let's go to the next lead question, which is essentially following up on this same subject. And you get two minutes to begin with, Senator McCain. And using your word, fundamental, are there fundamental differences between your approach and Senator Obama's approach to what you would do as president to lead this country out of the financial less more

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Well, the first thing we have to do is get spending under control in Washington. It's completely out of control. It's gone -- we have now presided over the largest increase in the size of government since the Great Society. We Republicans came to power to change government and government changed us. And the -- the worst symptom of this disease is what my friend Tom Coburn calls "earmarking as a gateway drug," because it's a gateway. It's a gateway to out-of-control spending and corruption. And we have former members of Congress now residing in federal prison because of the evils of this earmarking and pork-barrel spending. You know, we spent $3 million to study the DNA of bears in Montana. I don't know if that was a criminal issue or a paternal issue, but the fact is that it was $3 million of our taxpayers' money and it has got to be brought under control. As president of the United States, I want to assure you, I've got a pen -- this one's kind of old -- I've got a pen and I'm going to veto every single spending bill that comes across my desk. I will make them famous. You will know their names. Now, Senator Obama, you wanted to know one of the differences. He has asked for $932 million of earmark pork-barrel spending, nearly a million dollars for every day that he's been in the United States Senate. I suggest that people go up on the website of -- of Citizens Against Government Waste, and they'll look at those projects. That kind of thing is not the way to rein in runaway spending in Washington, D.C. That's one of the fundamental differences that Senator Obama and I have. less more

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Senator Obama, two minutes.

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Well, Senator McCain is absolutely right that the earmarks process has been abused, which is why I suspended any requests for my home states, whether it was for senior centers or what have you, until we cleaned it up. And he's also right that oftentimes lobbyists and special interests are the ones that are introducing these kinds of requests, although that wasn't the case with me. But let's be clear: earmarks account for $18 billion in last year's budget. Senator McCain is proposing -- and this is a fundamental difference between us -- $300 billion in tax cuts to some of the wealthiest corporations and individuals in the country, $300 billion. Now, $18 billion is important; $300 billion is really important. And in his tax plan, you would have CEOs of Fortune 500 companies getting an average of $700,000 in reduced taxes, while leaving 100 million Americans out. So my attitude is we've got to grow the economy from the bottom up. What I've called for is a tax cut for 95 percent of working families, 95 percent. And that means that the ordinary American out there who's collecting a paycheck every day -- they've got a little extra money to be able to buy a computer for their kid, to fill up on this gas that is killing them. And over time that, I think, is going to be a better recipe for economic growth than the -- the policies of -- of President Bush that John McCain wants to -- wants to follow. less more

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Senator McCain?

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Well, again, I don't mean to go back and forth, but he --

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No, that's fine.

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-- Senator Obama suspended those requests for pork barrel projects after he was running for president of the United States. He didn't happen to see that light there in the first three years as a member of the United States Senate. Nine hundred and thirty-two million dollars in requests maybe to Senator Obama is not a lot of money. But the point is that you -- see, I hear this all the time. It's only $18 billion. Do you know that it's tripled in the last five years? Do you know that it's gone completely out of control, to the point where it corrupts people? It corrupts people. That's why we have, as I said, people under federal indictment and charges. It's a system that's got to be cleaned up. I have fought against it. My career -- I have fought against it. I was called the sheriff by the -- (chuckles) -- one of the senior members of the Appropriations Committee. I didn't win Miss Congeniality in the United States Senate. Now, Senator Obama didn't mention that along with his tax cuts he is also proposing some $800 billion in new spending on new programs. Now, that's the fundamental difference between myself and Senator Obama. I want to cut spending. I want to keep taxes low. The worst thing we could do in this economic climate is to raise people's taxes. less more

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I don't know where John's getting his figures. Let's just be clear. What I do is, I close corporate loopholes, stop providing tax cuts to corporations that are shipping jobs overseas, so that we're giving tax breaks to companies that are investing here in the United States. I make sure that we have a health care system that allows for everyone to have basic coverage. I think those are pretty important priorities. And I'd pay for every dime of them. But let's go back to the original point. John, nobody is denying that $18 billion is important. And absolutely we need earmark reform. And when I'm president, I will go line by line to make sure that we are not spending money unwisely. But the fact is that eliminating earmarks alone is not a recipe for how we're going to get the middle class back on track. And when you look at your tax policies that are directed primarily at those who are doing well and you are neglecting people who are really struggling right now, I think, that is a continuation of the last eight years. And we can't afford another four. less more

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Respond directly to him about, to Senator Obama about that, about the, his -- he's made it twice now about your tax, your policies about tax cuts.

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Well, well, let me give you an example of what Senator Obama finds objectionable. the business tax. Right now the United States of America business pays the second highest business taxes in the world, 35 percent. Ireland pays 11 percent. Now, if you're a businessperson and you can locate anyplace in the world, then obviously if you go to the country where it's 11 percent tax versus 35, you're going to be able to create jobs, increase your business, make more investment, et cetera. I want to cut that business tax. I want to cut it so that businesses will remain and -- in the United States of America and create jobs. But again, I want to return, it's a lot more than $18 billion in pork-barrel spending. I can tell you it's rife. It's throughout. The United States Senate will take up a continuing resolution tomorrow or the next day -- sometime next week -- with 2,000 -- 2,000 -- look at them, my friends. Look at 'em. You'll be appalled. And Senator Obama is a recent convert, after requesting $932 million worth of pork-barrel spending projects. So the point is, I want people to have tax cuts. I want every family to have a $5,000 refundable tax credit so they can go out and purchase their own health care. I want to double the dividend, from $3,500 to $7,000, for every dependent child in America. I know that the worst thing we could possibly do is to raise taxes on anybody, and a lot of people might be interested in Senator Obama's definition of "rich." less more

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Senator Obama, do you have a question for Senator McCain on that?

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Well, let me just make a couple of points.

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All right.

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My -- here's what I can tell the American people: 95 percent of you will get a tax cut. And if you make less than $250,000 -- less than a quarter-million dollars a year -- then you will not see one dime's worth of tax increase. Now, John mentioned the fact that business taxes on paper are high in this country, and he's absolutely right. Here's the problem: There are so many loopholes that have been written into the tax code, oftentimes with support of Senator McCain, that we actually see our businesses pay effectively one of the lowest tax rates in the world. And what that means, then, is that there are people out there who are working every day who are not getting a tax cut, and you want to give them more. It's not like you want to close the loopholes. You just want to add an additional tax cut over the loopholes, and that's a problem. Just one last point I want to make. Senator McCain talked about providing a $5,000 health credit. Now, what he doesn't tell you is that he intends to, for the first time in history, tax health benefits. So you may end up getting a $5,000 tax credit. Here's the only problem: Your employer now has to pay taxes on the health care that you're getting from your employer, and if you end up losing your health care from your employer, you've got to go out on the open market and try to buy it. It is not a good deal for the American people, but it's an example of this notion that the market can always solve everything and that the less regulation we have the better off we're going to be. less more

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Well, you know, let me just --

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We got to go another lead question --

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You know, this is -- this is -- I know we have to, but this is a classic example of walking the walk and talking the talk. We had an energy bill before the United States Senate. It was festooned with Christmas-tree ornaments. It had all kinds of breaks for the oil companies, I mean billions of dollars' worth. I voted against it; Senator Obama voted for it. less more

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John, you want to give oil companies another ($)4 billion.

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So you got to look at our record. You've got to look at our records. That's the important thing. Who fought against wasteful and -- and earmark spending? Who has been the person who has tried to keep spending under control? Who is the person who has believed that the best thing for America is -- is to have a tax system that is fundamentally fair? And I've fought to simplify it, and I have proposals to simplify it. Let's give every American a choice: two tax brackets, generous dividends, and -- and two -- and let Americans choose whether they want the -- the existing tax code or they want a new tax code. And so, again, look at the record, particularly the energy bill. But again, Senator Obama has shifted on a number of occasions. He has voted in the United States Senate to increase taxes on people who make as low as $42,000 a year. less more

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That's not true, John. That's not true.

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And that's just a fact. Again, you can look it up.

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Look, it's just not true. And if we want to talk about oil company profits, under your tax plan, John -- this is undeniable -- oil companies would get an additional $4 billion in tax breaks. Now, look, we all would love -- less more

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(Chuckles.)

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-- to lower taxes on everybody, but here's the problem: if we are giving 'em to oil companies, then that means that there are those who are not going to be getting them. And -- and --

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In all due respect, you already gave 'em to the oil companies. (Laughs.)

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No, but John, the -- the fact of the matter is is that I was opposed to those tax breaks, tried to strip them out. We've got an energy bill on the Senate floor right now that contains some good stuff, some stuff you want, including drilling offshore. But you're opposed to it because it would strip away those tax breaks that have gone to oil companies. less more

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All right. All right. Speaking of things that both of you want, another lead question: It has to do with the rescue, the financial rescue thing that we started, started asking about. And what, and the first answer is to you, Senator Obama. As president, as a result, whatever financial rescue plan comes about and a billion, $700 billion, whatever it is it's going to cost. less more

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Right.

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What are you going to have to give up, in terms of the priorities that you would bring as president of the United States, as a result of having to pay for the financial rescue plan?

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Well, there are a range things that are probably going to have to be delayed. We don't yet know what our tax revenues are going to be. The economy is slowing down. So it's hard to anticipate right now what the budget's going to look like next year. But there's no doubt that we're not going to be able to do everything that, I think, needs to be done. There are some things that, I think, have to be done. We have to have energy independence. So I've put forward a plan to make sure that in 10 years time, we have freed ourselves from dependence on Middle Eastern oil, by increasing production at home but most importantly by starting to invest in alternative energies -- solar, wind, biodiesel -- making sure that we're developing the fuel- efficient cars of the future right here in the United States, in Ohio and Michigan instead of Japan and South Korea. We have to fix our health care system, which is putting an enormous burden on families. Just -- a report just came out that the average deductible went up 30 percent on American families. They are getting crushed, and many of them are going bankrupt as a consequence of health care. I'm meeting folks all over the country. We have to do that now, because it'll actually make our businesses and our families better off. The third thing we have to do is we've got to make sure that we're competing in education. We've got to invest in science and technology. China had a space launch and a space walk. We've got to make sure that our children are keeping pace in math and in science. And one of the things I think we have to do is make sure that college is affordable for every young person in America. And I also think that we're going to have to rebuild our infrastructure, which is falling behind -- our roads, our bridges, but also broadband lines that reach into rural communities; also making sure that we have a new electricity grid to get the alternative energy to population centers that are using them. So there's some -- some things that we've got to do structurally to make sure that we can compete in this global economy. We can't shortchange those things. We've got to eliminate programs that don't work, and we've got to make sure that the programs that we do have are more efficient and cost less. less more

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Are you -- what priorities would you adjust as president, Senator McCain, because of the financial bailout cost?

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Well, look, look, we -- no matter what, we've got to cut spending. We have -- as I said, we've let government get completely out of control. Senator Obama has the most liberal voting record in the United States Senate. It's hard to reach across the aisle from that far to the left. (Chuckles.) (View cut data) The point -- the point is -- the point is we need to examine every agency of government. First of all, by the way, I'd eliminate ethanol subsidies. I oppose ethanol subsidies. I think that we have to return, particularly in defense spending, which is the largest part of our appropriations -- we have to do away with cost-plus contracts. We now have defense systems that the costs are completely out of control. We tried to build a little ship called the Littoral Combat Ship that supposed to cost $140 million, ended up costing $400 million and we still haven't done it. So we need to have fixed-cost contracts. We need very badly to understand that defense spending is very important and vital, particularly in the new challenges we face in the world, but we have to get a lot of the cost overruns under control. I know how to do that. I saved the taxpayers $6.8 billion by fighting a contract that was negotiated between Boeing and DOD that was completely wrong. And we fixed it and we killed it and the people ended up in federal prison. So I know how to do this, because I've been involved in these issues for many, many years. But I think that we have to examine every agency of government and find out those that are doing their job and keep them and find out those that aren't and eliminate them. And we'll have to scrub every agency of government. less more

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If I hear the two of you correctly, neither one of you is suggesting any major changes in what you want to do as president as a result of the financial bailout. Is that what you're saying?

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Well, no, the --

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I'm --

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As -- as I said before, Jim, there -- there are going to be things that end up having to be --

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Like what?

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-- deferred and delayed. Well, look, the -- I want to make sure that we are investing in energy in order to free ourselves on dependence on foreign oil. Now, that is a big project. That is a multi-year project. less more

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But you're not willing to give that up, are you?

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But -- well, I'm not willing to give up the need to do it, but there may be individual components of it that we can't do. But -- but John's right that we've got to make some cuts. We right now give $15 billion every year as subsidies to private insurers under the Medicare system. It doesn't work any better through this private insurers; they just skim off $15 billion. That was a giveaway, and part of the reason is is because lobbyists are able to shape how Medicare works. They did it on the prescription drug bill. They've done it with respect to Medicare. And we are going to have to change the culture. One of -- you know, Tom -- or John mentioned me being wildly liberal. Mostly that's just me opposing George Bush's wrongheaded policies since -- that I -- since I've been in Congress. But I think that it is also important to recognize that I worked with Tom Coburn, the most conservative -- one of the most conservative Republicans, who John already mentioned, to set up what we call a Google for Government, which says that we are going to list every dollar of federal spending to make sure that the taxpayer can take a look and see who, in fact, is -- is promoting some of these spending projects that John's been railing about. less more

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What I'm trying to get at is this --

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Excuse me -- excuse me, if I may, Senator. I'm trying to get at that you all -- one of you is going to be the president of the United States come January, at the -- in the middle of a huge financial crisis that is yet to be resolved. (View cut data) And what I'm trying to get at is how this is going to affect you not in very -- in small ways, but in major ways, and the approach you would take as -- to the presidency. less more

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Well, how about a spending freeze on everything but Defense, Veteran(s) Affairs and entitlement programs?

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Spending freeze?

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I think we ought to seriously consider, with the exceptions of caring for our veterans, national defense and several other vital issues.

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Would you go for that?

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Well, the problem with a spending freeze is you're using a hatchet where you need a scalpel. There are some programs that are very important that are currently underfunded. I want to increase early childhood education. And the notion that we should freeze that when there may be, for example, this Medicare subsidy I think doesn't make sense. Let me tell you another place where I'd like to look for some savings. We're currently spending $10 billion a month in Iraq when they have a $79 billion surplus. It seems to me that if we're going to be strong at home as well as strong abroad, that we've got to look at bringing that war to a close. less more

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Look, we're sending $700 billion a year overseas to countries that don't like us very much. Some of that money ends up in the hands of terrorist organizations. We have to have the wind, tide, solar, natural gas, flex-fuel cars and all that, but we also have to have offshore drilling and we also have to have nuclear power. (View cut data) Senator Obama opposed both storing and reprocessing of spent nuclear fuel. You can't get there from here. And the fact is that we can create 700,000 jobs by building, constructing 45 new nuclear power plants by the year 2030. Nuclear power is not only important as far as eliminating our dependence on foreign oil but it's also important as far as climate change is concerned, an issue that I have been involved in for many, many years. And I've proud of the work that I've done there, along with Senator Clinton. less more

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Let me see, before we go to another lead question, let me see if I can figure out a way to ask the same question a different, slightly different way here. Are you, are you willing to acknowledge, both of you, that this financial crisis is going to affect the way you rule the country, as president of the United States, beyond the kinds of things that you've already, I mean, is it a major move? Is it going to have a major effect? less more

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There is no doubt that it's going to affect our budgets. There is no doubt about it. The -- not only -- even if we get all $700 billion back, let's assume the markets recover; we're holding assets long enough that eventually taxpayers get it back. And that happened during the Great Depression, when Roosevelt purchases a whole bunch of homes. Over time, home values went back up. And in fact, government made a profit. If we're lucky and we do it right, that could potentially happen. But in the short term, there's an outlay. And we may not see that money for a while. And because the economy is slowing down, I think, we can also expect less tax revenue. So there's no doubt that as president, I'm going to have to make some tough decisions. The only point I want to make is this, that in order to make those tough decisions, we've got to know what our values are and who we're fighting for and what our priorities are. (View cut data) And if we are spending $300 billion on tax cuts for people who don't need them and weren't even asking for them and we are leaving out health care, which is crushing on people all across the country, then I think we have made a bad decision, and I want to make sure we're not shortchanging our long-term priorities. less more

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Well, I want to make sure that we're not handing the health care system over to the federal government which is basically what would ultimately happen with Senator Obama's health care plan. I want the families to make the decisions between themselves and their -- and their doctors, not the federal government. Look, we have to obviously cut spending. I have fought to cut spending. Senator Obama has $800 billion in new spending programs. I would suggest he start by canceling some of those new spending programs that he has. We can, I think, adjust spending around to take care of the very much-needed programs including taking care of our veterans. But I also want to say again, a healthy economy with low taxes, with not raising anyone's taxes is probably the best recipe for eventually having our economy recover. And spending restraint has got to be a vital part of that. And the reason -- one of the major reasons why we're in the difficulties we're in today is because spending got out of control. We owe China $500 billion. And spending, I know, can be brought under control because I have fought against excessive spending my entire career. And I got plans to reduce and eliminate unnecessary and wasteful spending. (View cut data) And if there's anybody here who thinks there aren't agencies of government where spending can be cut and their budget slashed, they have not spent a lot of time in Washington. less more

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But I just have to have make this point, Jim. John, it's been your president, who you said you agreed with 90 percent of the time, who presided over this increase in spending, this orgy of spending, and enormous deficits. And you voted for almost all of his budgets. So to stand here after eight years and say that you're going to lead on controlling spending and, you know, balancing our tax cuts so that they help middle-class families, when over the last eight years that hasn't happened, I think just is, you know, kind of hard to swallow. less more

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It's -- it's --

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Quick response to Senator Obama.

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-- it's well-known -- it's well-known that I have not been elected Miss Congeniality in the United States Senate, nor with the administration. I have opposed the president on spending, on climate change, on torture of prisoners, on -- on Guantanamo Bay, on a long -- on the way that the Iraq war was conducted. I have a long record, and the American people know me very well. less more

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All right --

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And that is independent and a maverick of the Senate. And I'm happy to say that I've got a partner that's a good maverick along with me now.

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All right. Let's go to another subject. Lead question. Two minutes to you, Senator McCain. Much has been said about the lessons of Vietnam. (View cut data) What do you see as the lessons of Iraq?

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I think the lessons of Iraq are very clear, that you cannot have a failed strategy that will then cause you to nearly lose a conflict. Our initial military success, we went into Baghdad and everybody celebrating, and then the war was very badly mishandled. I went to Iraq in 2003 and came back and said we've got to change the strategy. This strategy requires additional troops, it requires a fundamental change in strategy, and I fought for it. And finally we came up with a great general and a strategy that has succeeded. This strategy has succeeded, and we are winning in Iraq. And we will come home with victory and with honor. And that withdrawal is the result of every counterinsurgency that succeeds. And I want to tell you that now that we will succeed and our troops will come home, and not in defeat, that we will see a stable ally in the region and a fledgling democracy. The consequences of defeat would have been increased Iranian influence, it would have been increasing sectarian violence, it would have been a -- a wider war, which the United States of America might have had to come back. So there was a lot at stake there. And thanks to this great general, David Petraeus, and the troops who serve under him, they have succeeded, and we are winning in Iraq, and we will come home -- and we will come home as we have when we have won other wars and not in defeat. less more

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Two minutes for how you see the lessons of Iraq, Senator Obama.

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Well, this is an area where Senator McCain and I have a fundamental difference because, I think, the first question is whether we should have gone into the war in the first place. Now, six years ago, I stood up and opposed this war, at a time when it was politically risky to do so, because I said that not only did we not know how much it was going to cost, what our exit strategy might be, how it would affect our relationships around the world and whether our intelligence was sound but also because we hadn't finished the job in Afghanistan. We hadn't caught bin Laden. We hadn't put al Qaeda to rest. And as a consequence, I thought that it was going to be a distraction. Now, Senator McCain and President Bush had a very different judgment. And I wish I had been wrong, for the sake of the country, and they had been right. But that's not the case. We've spent over $600 billion so far, soon to be a trillion. We have lost over 4,000 lives. We have seen 30,000 wounded. And most importantly from a strategic, national security perspective, al Qaeda is resurgent, stronger now than at any time since 2001. We took our eye off the ball and not to mention that we are still spending $10 billion a month, when they have a $79 billion surplus, at a time when we are in great distress here at home and we just talked about the fact that our budget is way overstretched, and we are borrowing money from overseas to try to finance just some of the basic functions of our government. (View cut data) So I think the lesson to be drawn is that we should never hesitate to use military force, and I will not as president in order to keep the American people safe. But we have to use our military wisely, and we did not use our military wisely in Iraq. less more

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Do you agree with that lesson of Iraq?

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No, the next president of the United States is not going to have to address the issue as to whether we went into Iraq or not. The next president of the United States is going to have to decide how we leave, when we leave, and what we leave behind. That's the decision of the next president of the United States. Senator Obama said the surge could not work, said it would increase sectarian violence, said it was doomed to failure. Recently on a television program he said it exceeded our wildest expectations. But yet, after conceding that, he still says that he would oppose the surge if he had to decide that again today. Incredibly -- incredibly -- Senator Obama didn't go to Iraq for 900 days, and never asked for a meeting with General Petraeus. less more

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Well, let's go at some of these --

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Senator Obama is the chairperson of a committee that oversights NATO, that's in Afghanistan. To this day he's never had a hearing.

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What about that point?

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I mean, it's remarkable.

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All right, what about --

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Which point? You raised a whole bunch of them.

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Well, the latter point. I know. All right.

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Yeah. (Chuckles.)

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Let's go to the latter point and we'll back up, the point about your not having been --

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Look, the -- I'm very proud of my vice presidential selection, Joe Biden, who's the chairman of the Senate Foreign Relations Committee. And as he explains and as John well knows, the issues of Afghanistan, the issues of Iraq, critical issues like that don't go through my subcommittee because they're done as a committee as a whole. (View cut data) But that's Senate inside baseball. Let's get back to the core issue here. Senator McCain is absolutely right that the violence has been reduced as a consequence of the extraordinary sacrifice of our troops and our military families. They have done a brilliant job and General Petraeus has done a brilliant job. But understand, that was a tactic designed to contain the damage of the previous four years of mismanagement of this war. less more

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Senator --

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And so -- so John likes -- John, you like to pretend like the war started in 2007. You talk about the surge. The war started in 2003. And at the time, when the war started, you said it was going to be quick and easy. You said we knew where the weapons of mass destruction were. You were wrong. You said that we were going to be greeted as liberators. You were wrong. You said that there was no history of violence between Shi'a and Sunni and you were wrong. less more

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(Inaudible) -- Senator Obama --

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And so if the question is of judgment, about whether or not --

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Senator Obama doesn't know what --

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-- whether or not -- if the question who is best equipped as the next president to make good decisions about how we use our military, how we make sure that we are prepared and ready for the next conflict, then I think we can take a look at our judgment. less more

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We got a lot a lot on plate here --

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I'm afraid -- I'm afraid Senator Obama doesn't understand the difference between a tactic and a strategy, but the important -- I'd like to tell you, two 4ths of July ago I was in Baghdad. General Petraeus invited Senator Lindsey Graham and me to attend a ceremony where 688 brave young Americans whose enlistment had -- had expired were reenlisting to stay and fight for Iraqi freedom and American freedom. (View cut data) I was honored to be there. I was honored to speak to those troops. And you know, afterwards we spent a lot of time with them. And you know what they said to us? They said, "Let us win." They said, "Let us win. We don't want our kids coming back here." And this strategy and this general, they are winning. Senator Obama refuses to acknowledge that we are winning in Iraq. less more

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That's not true. That's not true.

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They just passed an electoral -- an election law just in the last few days. There is social/economic progress, and a strategy -- a strategy of going into an area, clearing and holding, and the people of the country then become allied with you. They inform on the bad guys, and peace comes to the country, and prosperity. That's what's happening in Iraq, and it wasn't a tactic. It was a strategy -- less more

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Let me see --

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Jim, this is a big --

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-- and that same strategy will be employed in Afghanistan by this great general.

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Jim --

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And Senator Obama, who after promising not to vote to cut off funds for the troops, did the incredible thing of voting to cut off the funds for the troops in Iraq and Afghanistan.

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Jim, there are a whole of bunch of things we got to answer. First of all, let's talk about this -- this troop funding issue, because John always brings this up. Senator McCain cut -- Senator McCain opposed funding for troops in legislation that had a timetable because he didn't believe in a timetable. I opposed funding a mission that had no timetable and was open-ended, giving a blank check to George Bush. (View cut data) We had a difference on the timetable. We didn't have a difference on whether or not we were going to be funding troops. We had a legitimate difference. And I absolutely understand the difference between tactics and strategy. And the strategic question that the president has to ask is not whether or not we are employing a particular approach in the country, once we have made the decision to be there. The question is, was this wise? We have seen Afghanistan worsen, deteriorate. We need more troops there. We need more resources there. Senator McCain in the rush to go into Iraq said, you know what; we've been successful in Afghanistan; there is nobody who can pose a threat to us there. This is at a time when bin Laden was still out. And now they've reconstituted themselves. Secretary of Defense Robert Gates himself acknowledges, the war on terrorism started in Afghanistan and it needs to end there. But we can't do it if we are not going to give Iraq back its country. Now, what I've said is, we should end this war responsibly; we should do it in phases. But in 16 months, we should be able to reduce our combat troops, put, provide some relief to military families and our troops and bolster our efforts in Afghanistan so that we can capture and kill bin Laden and crush al Qaeda. And right now the commanders in Afghanistan as well as Admiral Mullen have acknowledged that we don't have enough troops to deal with Afghanistan because we still have more troops in Iraq than we did before the surge. less more

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Admiral Mullen suggests that Senator Obama's plan is dangerous for America.

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That's not the case.

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That's what -- that's what Admiral Mullen said. And I --

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What he said was a precipitous withdrawal would be dangerous. He did not say that.

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Well, that's what Admiral Mullen said, was --

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That's not true.

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And also General Petraeus said the same thing. Osama bin Laden and General Petraeus have one thing in common that I know of: they both said that Iraq is the central battleground. Now, General Petraeus has praised the successes, but he said those successes are fragile. And if we set a specific date for withdrawal -- and by the way, Senator Obama's original plan they would have been out last spring, before this surge ever had a chance to succeed. And I -- and I'm -- I'm -- understand why Senator Obama was surprised and said that the surge succeeded beyond his wildest expectations. Didn't exceed beyond mine -- less more

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Well --

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-- because I know that that's a strategy that has worked and can succeed. But if we snatch defeat from the jaws of victory and adopt Senator Obama's plan, then we will have a wider war and it'll make things more complicated throughout the region, including in Afghanistan. less more

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Afghanistan. Lead -- a new lead question. Having resolved Iraq, we'll move to Afghanistan. (Laughter.) And it goes to you, Senator Obama, and it's -- it's -- it picks up on a point that's already been made. Do you think more troop -- more U.S. troops should be sent to Afghanistan? How many, and when? less more

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Yes, I think we need more troops. I've been saying that for over a year now. And I think that we have to do it as quickly as possible because it's been acknowledged by the commanders on the ground the situation is getting worse, not better. We had the highest fatalities among U.S. troops this past year than at any time since 2002. And we are seeing major offensive taking place -- al Qaeda and Taliban crossing the border and attacking our troops in a brazen fashion. (View cut data) They are feeling emboldened. And we cannot separate Afghanistan from Iraq, because what our commanders have said is we don't have the troops right now to deal with Afghanistan. So I would send two to three additional brigades to Afghanistan. Now, keep in mind that we have four times the number of troops in Iraq, where nobody had anything to do with 9/11 before we went in, where in fact there was no al Qaeda before we went in, but we have four times more troops there than we do in Afghanistan. And that is a strategic mistake, because every intelligence agency will acknowledge that al Qaeda is the greatest threat against the United States and that -- Secretary of Defense Gates acknowledged the central front, the place where we have to deal with these folks is going to be in Afghanistan and in Pakistan. So here's what we have to do comprehensively, though -- it's not just more troops. We have to press the Afghan government to make certain that they are actually working for their people. And I've said this to President Karzai. Number two, we've got to deal with a growing poppy trade that has exploded over the last several years. Number three, we've got to deal with Pakistan, because al Qaeda and the Taliban have safe havens in Pakistan across the border in the northwest regions and although, you know, under George Bush, with the support of Senator McCain, we've been giving them $10 billion over the last seven years, they have not done what needs to be done to get rid of those safe havens. And until we do, Americans here at home are not going to be safe. less more

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Afghanistan, Senator McCain.

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First of all, I won't repeat the mistake that I regret enormously, and that is after we were able to help the Afghan freedom fighters and drive the Russians out of Afghanistan, we basically washed our hands of the region, and the result over time was the Taliban, al Qaeda, and the -- a lot of the difficulties we are facing today. So we can't ignore those lessons of history. Now, on this issue of aiding Pakistan, "if you're going to aim a gun at somebody," George Schultz, our great secretary of State, told me once, "you better be prepared to pull the trigger." I'm not prepared at this time to cut off aid to Pakistan, so I'm not prepared to threaten it, as Senator Obama apparently wants to do, as he has said that he would announce military strikes into Pakistan. We've got to get the support of the people of -- of Pakistan. He said that he would launch military strikes into Pakistan. Now, you don't do that. You don't say that out loud. If you have to do things, you have to do things, and you work with the Pakistani government. Now, the new president of Pakistan, Qadari (sic/Zardari), has got his hands full. And this area on the border is not been governed since the days of Alexander the Great. I've been to Waziristan. I can see how tough that terrain is. It's ruled by a handful of tribes. And yes, Senator Obama calls for more troops, but what he doesn't understand, it's got to be a new strategy -- the same strategy that he condemned in Iraq -- that's going to have to be employed in Afghanistan. And we're going to have to help the Pakistanis go into these areas and obtain the allegiance of the people, and it's going to be tough. (View cut data) They've intermarried with al Qaeda and the Taliban. And it's going to be tough. But we have to get the cooperation of the people in those areas. And the Pakistanis are going to have to understand that that bombing in the Marriott Hotel in Islamabad was a signal from the terrorists that they don't want that government to cooperate with us in combatting the Talipan -- Taliban and jihadist elements. So we've got a lot of work to do in Afghanistan. But I'm confident, now that General Petraeus is in the new position of command, that we will employ a strategy which not only means additional troops. And by the way, there have been 20,000 additional troops, from 32 to 53,000, and there needs to be more. So it's not just the addition of troops that matters. It's a strategy that will succeed. And Pakistan is a very important element in this. And I know how to work with them. And I guarantee you, I would not publicly state that I'm going to attack them. less more

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Nobody talked about attacking Pakistan. Here's what I said, and if John wants to disagree with this, he can let me know, that if the United States has al Qaeda, bin Laden, top-level lieutenants in our sights, and Pakistan is unable or unwilling to act, then we should take them out. Now, I think that's the right strategy. I think that's the right policy. And John, I -- you're absolutely right that presidents have to be prudent in what they say. But you know, coming from you who, you know, in the past have threatened extinction for North Korea and, you know, sung songs about bombing Iran, I don't know, you know, how credible that is. I think this is the right strategy. Now, Senator McCain is also right that it's difficult. This is not an easy situation. (View cut data) You've got cross-border attacks against U.S. troops, and we've got a choice. We could allow our troops to just be on the defensive and absorb those blows again and again and again if Pakistan is unwilling to cooperate, or we have to start making some decisions. And the problem, John, with -- with the strategy that's been pursued was that for 10 years we coddled Musharraf; we alienated the Pakistani population because we were anti-democratic; we had a 20th century mind-set that basically said, well, you know, he may be a dictator, but he's our dictator; and as a consequence, we lost legitimacy in Pakistan. We spent $10 billion. And in the meantime, they weren't going after al Qaeda, and they are more powerful now than any time since we began the war in Afghanistan. That's going to change when I'm president of the United States. less more

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I don't think that Senator Obama understands that there was a failed state in Pakistan when Musharraf came to power. Everybody who was around then and had been there and knew about it knew that it was a failed state. But let me tell you, you know, this business about bombing Iran and all that -- let me tell you my record. Back in 1983, when I was a brand-new United States congressman, the one -- the person I admired the most and still admire the most, Ronald Reagan, wanted to send Marines into Lebanon. And I saw that, and I saw the situation. And I stood up and I voted against that because I was afraid that they couldn't make peace in a place where 300 or 400 or several hundred Marines would make a difference. Tragically, I was right. Nearly 300 Marines lost their lives in the bombing of the barracks. And then we had -- then we had the first Gulf War. I supported -- I supported that. I supported us going into Bosnia when a number of my own party and colleagues was against that operation in Bosnia. It was the right thing to do to stop genocide and to preserve what was necessary inside of Europe. I supported what we did in Kosovo. I supported it because ethnic cleansing and genocide was taking place there. And I have a record. In Somalia, I opposed that we should turn -- turn the force in Somalia from a peacekeeping force into a peacemaking force, which they were not capable of. So I have a record. I have a record of being involved in these national security issues, which involved the highest responsibility and the toughest decisions that any president can make, and that is to send our young men and women into harm's way. And I'll tell you, I had a town hall meeting in Wolfeboro, New Hampshire, and a woman stood up and she said, "Senator McCain, I want you to do me the honor of wearing a bracelet with my son's name on it. He was 22 years old and he was killed in combat outside of Baghdad" -- Matthew Stanley -- "before Christmas last year." This was last August a year ago. And I said, I will -- "I will wear his bracelet with honor." And this was August a year ago. And then she said, "But, Senator McCain, I want you to" do every -- "promise me one thing, that you'll do everything in your power to make sure that my son's death was not in vain." That means that that mission succeeds, just like those young people who reenlisted in Baghdad, just like the mother I met at the airport the other day whose son was killed. (View cut data) And they all say to me that we don't want to defeat. I know what it's like when an army is defeated. A war that I was in where we had an army that -- it wasn't through any fault of their own, but they were defeated. And I know how hard it is to -- for that -- to -- for an army and a military to recover from that. less more

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Senator --

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And it did. And we will win this one, and we won't come home in defeat and dishonor and probably have to go back if we fail.

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Jim, let me just make a point. I've got a bracelet, too, from Sergeant -- from the mother of Sergeant Ryan David Jopek, given to me in Green Bay. And she asked me, "Can you please make sure that another mother's not going through what I'm going through?" Now, the -- no U.S. soldier ever dies in vain, because they are carrying out the missions of their commander in chief. And we honor all the service that they've provided. And they've -- our troops have performed brilliantly. The question is for the next president -- are we making good judgments about how to keep America safe -- precisely because sending our military into battle is such an enormous step. And the point that I originally made is that we took our eye off Afghanistan; we took our eye off the folks who perpetrated 9/11. They are still sending out videotapes. And Senator McCain, nobody's talking about defeat in Iraq, but, you know, I have to say that we are having enormous problems in Afghanistan because of that decision. And it is not true that you have consistently been concerned about what happened in Afghanistan. I mean, at -- at one point, while you were focused on Iraq, you said, well, we can muddle through Afghanistan. You don't muddle through the central front on terror. And you don't muddle through going after bin Laden. You don't muddle through stamping out the Taliban. I think that is something that we have to take seriously. And when I'm president, I will. (Cross talk.) less more

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You know, you might, you might think that with that kind of concern, that Senator Obama would have gone to Afghanistan particularly given his responsibilities as the subcommittee chairman. And by the way, when I'm subcommittee chairman, we take up the issues under my subcommittee. But the important thing is, the important thing is, I've visited Afghanistan and I've traveled to Waziristan and I've traveled to these places. And I know what our security requirements are and I know what our needs are. And so the point is that we will prevail in Afghanistan. But we need the new strategy and we need it to succeed. But the important thing is, if we suffer defeat in Iraq, which General Petraeus predicts we will if we adopted Senator Obama's set date for withdrawal, then that will have a calamitous effect on Afghanistan and American national security interest in the region. Senator Obama doesn't seem to understand, there's a connection between the two. less more

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I have some good news and bad news for the two of you. You all are even on time, which is remarkable considering we've been going at it for --

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Testimony to you, Jim.

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Well, I don't know about that. But the bad news is that all my little five-minute things have run over. So anyhow, we'll adjust as we get there. But the amount of time is even. New, new, new lead question and it goes two minutes to you, Senator McCain. What is your reading of the threat from Iran right now to the security of the United States? less more

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My reading of the threat from Iran is that if Iran acquires nuclear weapons, it's an existential threat to the state of Israel. And it is a threat to the region, because the other countries in the region will feel a compelling requirement to acquire nuclear weapons as well. Now, we cannot allow a second Holocaust. Let's just make that very clear. But I have proposed for a long time -- and I've had conversation with foreign leaders about -- forming a league of democracies. Let's be clear and let's have some straight talk: the Russians are preventing significant action in the United Nations Security Council. I have proposed a league of democracies, a group of people -- a group of countries that share common interests, common values, common ideals. And they also control a lot of the world's economic power. We could impose significant, meaningful, painful sanctions on the Iranians that I think could have a beneficial effect. The Iranians have a lousy government, so therefore their economy is lousy even though they have significant oil revenues. So I am convinced that together we can, with the French, with the British, with the Germans and other countries -- democracies around the world, we can affect Iranian behavior. But have no doubt -- but have no doubt that the Iranians continue on the path to the acquisition of a nuclear weapon as we speak tonight. And it is a threat not only in the region, but around the world. But I'd also like to point out the Iranians are putting the most lethal IEDs into Iraq, which are killing young Americans. There are special groups in Iran that are coming into Iraq and are being trained in Iran. (View cut data) And there is the -- are the Republican Guard in Iran, which Senator Kyl had an amendment in order to declare them a sponsor of terror. Senator Obama said that would be provocative. So this is a serious threat. This is a serious threat to the security in the world, and I believe we can act, and we can act with our friends and allies and -- and reduce that threat as quickly as possible. But have no doubt about the ultimate result of them acquiring nuclear weapons. less more

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Two minutes on Iran, Senator Obama.

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Well, let me just correct something very quickly. I believe that the Republican Guard of Iran is a terrorist organization. I've consistently said so. What Senator McCain refers to is a measure in the Senate that would try to broaden the mandate inside of Iraq to deal with Iran. And ironically, the single thing that has strengthened Iran over the last several years has been the war in Iraq. Iraq was Iran's mortal enemy. That was cleared away, and what we've seen over the last several years is Iran's influence grow. They have funded Hezbollah. They have funded Hamas. They have gone from zero centrifuges to 4,000 centrifuges to develop a nuclear weapon. So obviously our policy over the last eight years has not worked. Now, Senator McCain is absolutely right; we cannot tolerate a nuclear Iran. It would be a game-changer. Not only would it threaten Israel, a country that is our stalwart ally, but it would also create an environment in which you could set up an arms race in the Middle East. Now here's what we need to do. We do need tougher sanctions. I do not agree with Senator McCain that we're going to be able to execute the kind of sanctions we need without some cooperation from countries, like Russia and China, that are -- I think Senator McCain would agree -- not democracies but have extensive trade with Iran but potentially have an interest in making sure Iran doesn't have a nuclear weapon. But we're also going to have to, I believe, engage in tough, direct diplomacy with Iran, and this is a major difference that I have with Senator McCain. This notion that by not talking to people we are punishing them has not worked. It has not worked in Iran. It has not worked in North Korea. In each instance, our efforts at isolation have actually accelerated their efforts to get nuclear weapons. That will change when I'm president of the United States. less more

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Senator, what about talking?

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Well, Senator Obama twice said in debates that he would sit down with Ahmadinejad, Chavez and Raul Castro without precondition, without precondition. Now, here is -- (struggles with pronunciation) -- Ahmadinejad -- less more

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That's tough.

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-- who is -- Ahmadinejad, who is now in New York talking about the extermination of the State of Israel, of wiping Israel off the map, and we're going to sit down without precondition across the table to legitimize and give a propaganda platform to a person that is espousing the extermination of the State of Israel and therefore -- then giving them more credence in the world arena -- and therefore saying they've probably been doing the right thing because you will sit down across the table from them and that will legitimize their illegal behavior. The point is that throughout history, whether it be Ronald Reagan, who wouldn't sit down with Brezhnev, Andropov or Chernenko until Gorbachev was ready with glasnost and perestroika or whether it be Nixon's trip to China, which was preceded by Henry Kissinger many times before he went -- look, I'll sit down with anybody, but there's got to be preconditions, and those preconditions would apply that we wouldn't legitimize with a face-to-face meeting a person like Ahmadinejad. Now, Senator Obama said without precondition. less more

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Senator?

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Right, the -- so let -- let's talk about this. First of all, Ahmadinejad's not the most powerful person in Iran

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(Chuckles.)

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-- so he -- he may not be the right person to talk to. But I reserve the right as president of the United States to -- to meet with anybody at a time and place of my choosing if I think it's going to keep America safe. And I -- I'm glad that Senator McCain brought up the history -- the bipartisan history -- of us engaging in direct diplomacy. Senator McCain mentioned Henry Kissinger, who's one of his advisers, who along with five recent secretaries of State just said that we should meet with Iran -- guess what? -- without precondition. This is one of your own advisers. Now, understand what this means, "without preconditions." It doesn't mean that you invite them over for tea one day. What it means is that we don't do what we've been doing, which is to say until you agree to do exactly what we say, we won't have direct contacts with you. There's a difference between preconditions and preparation. Of course we've got to do preparation, starting with low-level diplomatic talks, and it may not work because Iran is a rogue regime. But I will point out that I was called naive when I suggested that we need to look at exploring contacts with Iran, and you know what, President Bush recently sent a senior ambassador, Bill Burns, to participate in talks, with the Europeans, around the issue of nuclear weapons. Again, it may not work, but if it doesn't work then we have strengthened our ability to form alliances to impose the tough sanctions that Senator McCain just mentioned. (View cut data) And when we haven't done it, as in North Korea, let me just take one more example. In North Korea, we cut off talks. They're a member of the axis of evil. We can't deal with them. And you know what happened? They went -- they quadrupled their nuclear capacity. They tested a nuke. They tested missiles. They pulled out of the non-proliferation agreement. And they sent nuclear secrets potentially to countries like Syria. When we reengaged, because again the Bush administration reversed course on this, then we have at least made some progress. Although right now because of the problems in North Korea, we are seeing it on shaky ground. And I just, so I just have to make this general point, that the Bush administration, some of Senator McCain's own advisers all think this is important. And Senator McCain appears resistant. He even said the other day that he would not meet potentially with the prime minister of Spain because he, you know, he wasn't sure whether they were aligned with us. I mean, Spain. Spain is a NATO ally. If we can't meet with our friends, I don't know how we're going to lead the world in terms of dealing with critical issues like terrorism. less more

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I'm not going to set the White House visitors schedule before I'm president of the United States. I don't even have a seal yet. (Laughter.) Look, Dr. Kissinger did not say that he would approve of face-to- face meetings between the president of the United States and the -- and Ahmadinejad. He did not say that. less more

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Of course not.

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He said that there could be secretary-level and lower-level meetings. I've always encouraged them. The Iranians have met with Ambassador Crocker in Baghdad. What Senator Obama doesn't seem to understand: that if without precondition, you sit down across the table from someone who has called Israel a stinking corpse and wants to destroy that country and wipe it off the map, you legitimize those comments. (View cut data) This is dangerous. It isn't just naive, it's dangerous. And so we just have a -- a fundamental difference of opinion. less more

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I --

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As far as North Korea is concerned, our secretary of State, Madeleine Albright, went to North Korea. By the way, North Korea, most repressive and brutal regime probably on Earth. The average South Korean is three inches taller than the average North Korean. A huge gulag. We don't know what the status of the "Dear Leader's" health is today, but we know this, that the North Koreans have broken every agreement that they've entered into. And we ought to go back to a little bit of Ronald Reagan's "trust, but verify" -- less more

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Well --

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-- and certainly not sit down --

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Quick.

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-- across the table from -- without precondition, as Senator Obama said -- he did twice -- I mean it's just dangerous.

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Quick.

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Look, I mean, Senator -- Senator McCain keeps on using this example that suddenly the president would just meet with somebody without doing any preparation, without having low-level talks. Nobody's been talking about that, and Senator McCain knows it. This is a mischaracterization of my position. When we talk about preconditions -- and Henry Kissinger did say we should have contacts without preconditions -- the idea is that we do not expect to solve every problem before we initiate talks. And you know, the Bush administration has come to recognize that it hasn't worked, this notion that we are simply silent when it comes to our enemies. And the notion that we would sit with Ahmadinejad and not say anything while he's spewing his nonsense and -- and his vile comments is ridiculous. Nobody -- nobody's even talking about that. So -- less more

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So -- so let me get this right. We sit down with Ahmadinejad and he says "we're going to wipe Israel off the face of the Earth," and we say, "No, you're not"?

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Yeah --

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Oh, please.

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No, no, let me tell you something --

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By the way, my friend Dr. Kissinger, who's been my friend for 35 years --

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Right.

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-- would be interested to hear this conversation --

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Oh, I will be --

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-- and Senator Obama's depiction of his -- of his positions on the issue.

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We will take a look --

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I've known him for 35 years, and I guarantee you he would not -- he would not say that presidential, top-level --

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Nobody's talking about that.

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-- of course he encourages and other people encourage contacts and negotiations and all other things.

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Well --

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We do that all the time.

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We're going to go to a new lead --

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And Senator Obama is parsing words when he says "precondition" means "preparation."

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Hold on. I am not parsing words.

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He's -- he's parsing words, my friends.

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I am using the same words that your advisers use. Please go ahead.

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New lead question --

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(Chuckles.)

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-- Russia, goes to you, two minutes, Senator Obama. How do you see the relationship with Russia? Do you see them as a competitor? Do you see them as an enemy? Do you see them as a potential partner?

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Well, I think that given what's happened over the last several weeks and months, our entire Russian approach has to be evaluated, because a resurgent and very aggressive Russia is a threat to the peace and stability of the region. Their actions in Georgia were unacceptable. They were unwarranted. And at this point it is absolutely critical for the next president to make clear that we have to follow through on our six-party -- or the six-point cease-fire. They have to remove themselves from South Ossetia and Abkhazia. It is absolutely important that we have a unified alliance and that we explain to the Russians that you cannot be a 21st century superpower or power and act like a 20th century dictatorship. And we also have to affirm all the fledgling democracies in that region -- you know, the Estonians, the Lithuanians, the Latvians, the Poles, the Czechs -- that we are in fact going to be supportive and in solidarity with them in their efforts. They are members of NATO. (View cut data) And to countries like Georgia and the Ukraine, I think, we have to insist that they are free to join NATO if they meet the requirements. And they should have a membership action plan immediately to start bringing them in. Now, we also can't return to a Cold War posture with respect to Russia. It's important that we recognize there are going to be some areas of common interest. One is nuclear proliferation. They have not only 15,000 nuclear warhead but they've got enough to make another 40,000. And some of those loose nukes could fall into the hands of al Qaeda. This is an area where I've led on in the Senate, working with a Republican, ranking member of the Senate Foreign Relations Committee, Dick Lugar, to deal with the proliferation of loose nuclear weapons. That's an area where we're going to have to work with Russia. But we have to have a president who is clear that you don't deal with Russia based on staring into his eyes and seeing his soul. You deal with Russia based on, what are your, what are the national security interests of the United States of America? And we have to recognize that the way they've been behaving lately demands a sharp response from the international community and our allies. less more

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Two minutes on Russia, Senator McCain.

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Well, I was interested in Senator Obama's reaction to the Russian aggression against Georgia. His first statement was, both sides ought to show restraint -- again a little bit of naivete there. He doesn't understand that Russia committed serious aggression against Georgia And Russia has now become a nation fueled by petrol dollars that is basically a KGB-apparatchik-run government. I looked into Mr. Putin's eyes and I saw three letters: a K, a G and a B. And their aggression in Georgia is not acceptable behavior. I don't believe we're going to go back to the Cold War. (View cut data) I am sure that that will not happen. But I do believe that we need to bolster our friends and allies. And that wasn't just about a problem between Georgia and Russia. It had everything to do with energy. There's a pipeline that runs from the Caspian through Georgia through Turkey, and of course we know that the Russians control other sources of energy into Europe, which they have used from time to time. It's not accidental that the presidents of Latvia, Estonia, Lithuania, Poland and Ukraine flew to Georgia, flew to Tbilisi -- where I have spent significant amount of time with a great young president, Misha Saakashvili -- and they showed solidarity with him, but also they are very concerned about the Russian threats to regain their status of the old Russian empire. Now, I think the Russians ought to understand that we will support -- we, the United States -- will support the inclusion of Georgia and Ukraine in -- in the -- the natural process, inclusion into NATO. We also ought to make it very clear that the Russians are in violation of their cease-fire agreement, they have stationed additional troops in Abkhazia and South Ossetia. By the way, I went there once, and we went inside and drove in, and there was a huge poster. And this is -- this is Georgian territory, and there was a huge picture of Vladimir Putin, and it said, "Vladimir Putin: our president." It was very clear, the Russian intentions towards Georgia. They were just waiting to seize the opportunity. So this is a very difficult situation. We want to work with the Russians, but we also have every right to expect the Russians to behave in a fashion in keeping with a -- with a -- with a country who respects international boundaries and the norms of international behavior. And watch Ukraine. This whole thing has got a lot to do with Ukraine, Crimea, the base of the Russian fleet in Sevastopol and the breakdown of the political process in Ukraine between Tymoshenko and Yushchenko -- is a very serious problem. (View cut data) So watch Ukraine and let's make sure that we -- that the Ukrainians understand that we are their friend and ally. less more

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Senator, do you have a major difference with what he just said?

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No, actually, I think Senator McCain and I agree for the most part on these issues. Obviously, I disagree with this notion that somehow we did not forcefully object to Russians going into Georgia. I immediately said that this was illegal and objectionable. And absolutely, I wanted a cessation of the violence, because it put an enormous strain on Georgia. And that's why I was the first to say that we have to rebuild the Georgian economy and called for a billion dollars that has now gone in to help them rebuild, because part of Russia's intentions here was to weaken the economy to the point where President Saakashvili was so weakened that he might be replaced by somebody that Putin favored more. Two points I think are important to -- to think about when it comes to Russia: Number one is we have to have foresight and anticipate some of these problems. So back in April, I warned the administration that you had Russian peacekeepers in Georgian territory. That made no sense whatsoever. And what we needed to do was replace them with international peacekeepers and a special envoy to resolve the crisis before it boiled over. That wasn't done, but had it been done, it's possible we could have avoided the -- the issue. The second point I want to make is -- is the issue of energy. Russia is, in part, resurgent and Putin is feeling powerful because of petro-dollars, as Senator McCain mentioned. That means that we, as one of the biggest consumers of oil -- 25 percent of the world's oil -- have to have an energy strategy not just to deal with Russia but to deal with many of the rogue states we've talked about -- Iran, Venezuela -- and that means, yes, increasing domestic production and offshore drilling. (View cut data) But we only have 3 percent of the world's oil supplies and we use 25 percents of the world's oil, so we can't simply drill our way out of the problem. What we're going to have to do is to approach it through alternative energy like solar and wind and biodiesel and, yes, nuclear energy, clean coal technology. And you know, I've got a plan for us to make a significant investment over the next 10 years to do that. And -- and I have to say, Senator McCain and I, I -- I think, agree on the importance of energy, but Senator McCain mentioned earlier the importance of looking at a record. Over 26 years, Senator McCain voted 23 times against alternative energy like solar and wind and biodiesel. And so we -- we -- we -- we got to -- we got to walk the walk and not just talk the talk when it comes to energy independence because this is probably going to be just as vital for our economy and the -- the pain the people are feeling at the pump -- and you know, winter's coming and home heating oil -- as it is our national security and the issue of climate change that's so important. less more

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We've got time for one more lead question segment. We're way out of -- we're out of --

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Could I -- could I quickly respond.

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You could be -- quick response and then we'll go to the next.

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No one from Arizona -- (chuckles) -- is against solar. And Senator Obama says he's for nuclear, but he's against reprocessing and he's against storing, so --

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That's -- that's just not true, John.

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-- so it's hard to get there from there.

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John, I'm sorry, that -- that's not true.

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And offshore drilling is also something that is very important, and it is a bridge. And we know that if we drill offshore and exploit a lot of these reserves, it will help, at least temporarily, relieve our energy requirements, and it will have I think an important effect on the price of a barrel of oil. less more

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I -- I just have to respond very quickly just to correct the -- just to correct the record.

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So I want to say that with the Nunn-Lugar thing --

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Excuse me, sir. SEN. OBAMA. (Inaudible.)

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-- I supported Nunn-Lugar back in the early 1990s when a lot of my colleagues didn't. That was the key legislation at the time, and put us on the road to eliminating this issue of nuclear waste and the -- the nuclear fuel that has to be taken care of. less more

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I -- I just have to correct the record here. I have never said that I object to nuclear waste. What I've said is that we have to store if safely. MR. LEHRER. (Inaudible.) SEN. OBAMA. And Senator McCain, he says -- he talks about Arizona, I've got to make this point, Jim. MR. LEHRER. Okay. less more

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He objects -- he objects to --

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I have voted for alternate fuel all of my time -- (Cross talk.)

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All right. Fair enough. Let's move on. You got one more -- (Cross talk.)

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This is last lead question, you have two minutes each. The question is this, beginning with you, Senator McCain. What do you think the likelihood is that there would be another 9/11-type attack on the Continental United States? less more

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I think it's much less than it was the day after 9/11. I think it -- that we have a safer nation, but we are a long way from safe. And I want to tell you that one of the things I'm most proud of, among others -- because I have worked across the aisle. I have a long record on that -- on a long series of reforms. But after 9/11, Senator Joe Lieberman and I decided that we needed a commission, and that was a commission to investigate 9/11 and find out what happened and fix it. And we were -- we were opposed by the administration -- another area where I differed with this administration. And we were stymied until the families of 9/11 came and they descended on Washington and we got that legislation passed. And there were a series of recommendations, as I recall, more than 40. And I'm happy to say that we've gotten written into law most of those reforms recommended by that commission. I'm proud of that work, again, bipartisan, reaching across the aisle, working together, Democrat and Republican alike. So we have a long way to go in our intelligence services. We have to do a better job in human intelligence, and we've got to make sure that we have people who are trained interrogators so that we don't ever torture a prisoner ever again. We have to make sure that our technological and intelligence capabilities are better. (View cut data) We have to work more closely with our allies. I know our allies and I can work much more closely with them. But I can tell you that, I think, America is safer today than it was in 9/11. But that doesn't mean that we don't have a long way to go. And I'd like to remind you also, as a result of those recommendations, we probably had the largest reorganization of government since we established the Defense Department. And I think that those men and women in those agencies are doing a great job. But we still have a long way to go before we can declare America safe. And that means doing a better job along our borders as well. less more

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Two minutes, Senator Obama.

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Well, first of all, I think that we are safer in some ways. Obviously we've poured billions of dollars into airport security. We have done some work in terms of securing potential targets. But we still have a long way to go. We've got to make sure that we're hardening our chemical sites. We haven't done enough in terms of transit. We haven't done enough in terms of ports. And the biggest threat that we face right now is not a nuclear missile coming over the skies; it's in a suitcase. This is why the issue of nuclear proliferation is so important. It is the -- the biggest threat to the United States is a terrorist getting a hands on nuclear weapons. And we, we are spending billions of dollars on missile defense. And I actually believe that we need missile defense because of Iran and North Korea and the potential for them to obtain or to launch nuclear weapons. But I also believe that when we are only spending a few hundred million dollars on nuclear proliferation, then we're making a mistake. The other thing that we have to focus on though is al Qaeda. They are now operating in 60 countries. (View cut data) We can't simply be focused on Iraq. We have to go to the root cause, and that is in Afghanistan and Pakistan. That's going to be critical. We are going to need more cooperation with our allies. And one last point I want to make. It is important for us to understand that the way we are perceived in the world is going to make a difference in terms of our capacity to get cooperation and root out terrorism. And one of the things that I intend to do as president is to restore America's standing in the world. We are less respected now than we were eight years ago or even four years ago. And this is the greatest country on Earth. But because of some of the mistakes that have been made -- and I give Senator McCain great credit on the torture issue, for having identified that as something that undermines our long-term security -- because of those things, we, I think, are going to have a lot of work to do in the next administration to restore that sense that America's that shining beacon on a hill. less more

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Do you agree there's much to be done in a new administration to restore -- well, I won't repeat what he --

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But I -- but in the case of missile defense, Senator Obama said it had to be, quote, "proven." That wasn't proven when Ronald Reagan said we would do SDI, which is missile defense, and it was major -- a major factor in bringing about the end of the Cold War. We seem to come full circle again. Senator Obama still doesn't quite understand or doesn't get it that if we fail in Iraq, it encourages al Qaeda. They would establish a base in Iraq. The -- the consequences of defeat, which would result from his plan of withdrawal and according to date certain, regardless of conditions, according to our military leaders, according to every expert, would lead to possible defeat, loss of all the fragile sacrifice that we've made of American blood and treasure, which grieves us all. All of that would be lost if we followed Senator Obama's plan to have specific dates with withdrawal regardless of conditions on the ground. MR. LEHRER. Do -- SEN. MCCAIN. And General Petraeus says we have had great success, but it's very fragile. And we can't do what Senator Obama wants to do. That is a central issue of our time, and I think Americans will judge very seriously as to whether that's the right path or the wrong path and who should be the next president of the United States. less more

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You see the same connections that Senator McCain does?

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Oh, there's no doubt. Look, over the last eight years, this administration, along with Senator McCain, have been solely focused on Iraq. That has been their priority. That has been where all our resources have gone. In the meantime, bin Laden is still out there. He is not captured. He is not killed. Al Qaeda is resurgent. In the meantime, we've got challenges, for example, with China, where we are borrowing billions of dollars -- they now hold a trillion dollars' worth of our debt. And they are active in countries like -- in regions like Latin America and Asia and Africa. They are -- the conspicuousness of their presence is only matched by our absence, because we've been focused on Iraq. We have weakened our capacity to project power around the world because we have viewed everything through this single lens. Not to mention -- look at our economy. We are now spending 10 or -- billion dollars or more every month. And that means we can't provide health care to people who need it. We can't invest in science and technology, which will determine whether or not we are going to be competitive in the long term. There has never been a country on earth that saw its economy decline and yet maintained its military superiority. So this is a national security issue. We haven't adequately funded veterans' care. I sit on the Veterans Affairs Committee and we've got -- I meet veterans all across the country who are trying to figure out, how can I get disability payments? (View cut data) I've got post-traumatic stress disorder and yet I can't get treatment. So we have put all chips in right there, and nobody is talking about losing this war. What we are talking about is recognizing that the next president has to have a broader strategic vision about all the challenges that we face that's been missing over the last eight years. That sense is something that I want to restore. less more

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I've been involved, as I mentioned to you before, in virtually every major national security challenge we've faced in the last 20-some years. There are some advantages to experience and knowledge and judgment, and I -- and I honestly don't believe that Senator Obama has the knowledge or experience, and has made the wrong judgments in a number of areas, including his initial reaction to Russian aggression in Georgia, to his -- you know, we've seen this stubbornness before, in this administration, to cling -- SEN. OBAMA. (Chuckles.) SEN. MCCAIN. -- to a belief that somehow the -- the surge has not succeeded, and failing to acknowledge that he was wrong about the surge, is -- shows to me that we -- that -- that we need more flexibility in a president of the United States than that. As far as other issues that he brought up are concerned, I know the veterans. I know them well. And I know that they know that I'll take care of them, and I've been proud of their support and their -- and their recognition of my service to the veterans. And I love them, and I'll take care of them, and they know that I'll take care of them. And that's going to be my job. But also, I have the ability and the knowledge and the background to make the right judgments to keep this country safe and secure. Reform, prosperity and peace: these are major challenges to the United States of America. I don't think I need any on-the-job training. I'm ready to go at it right now. less more

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Well, let me just make a closing point. My father came from Kenya. That's where I get my name. And in the '60s, he wrote letter after letter to come to college here in the United States, because the notion was that there was no other country on earth where you could make it if you tried. The ideals and the values of the United States inspired the entire world. I don't think any of us can say that our standing in the world now, the way children around the world look at the United States, is the same. And part of what we need to do, what the next president has to do, and this is part of our judgment -- this is part of how we are going to keep America safe -- is to, to send a message to the world that we are going to invest in issues like education; we are going to invest in issues that relate to how ordinary people are able to live out their dreams. And that is something that I'm going to be committed to as president of the United States. less more

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Few seconds. We're almost finished.

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Jim, when I came home from prison, I saw our veterans being very badly treated. And it made me sad. And I embarked on an effort to resolve the POW/MIA issue, which we did in a bipartisan fashion. And then I worked on normalization of relations between our two countries, so that our veterans could come all the way home. I guarantee you, as president of the United States, I know how to heal the wounds of war. I know how to deal with our adversaries. And I know how to deal with our friends. less more

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Good evening from Washington University in St. Louis, Missouri. I'm Gwen Ifill of "The Newshour" and "Washington Week" on PBS. Welcome to the first and the only 2008 vice presidential debate between the Republican nominee, Governor Sarah Palin of Alaska, and the Democratic nominee, Joe Biden of Delaware. The Commission on Presidential Debates is the sponsor of this event and the two remaining presidential debates. Tonight's discussion will cover a wide range of topics, including domestic and foreign policy matters. It will be divided roughly into five-minute segments. Each candidate will have 90 seconds to respond to a direct question and then an addition two minutes for rebuttal and follow-up. The order has been determined by a coin toss. The specific subjects and questions were chosen by me, and have not been shared or cleared with anyone on the campaigns or on the commission. The audience here in the hall has promised to remain very polite: no cheers, applause, no untoward outbursts -- except right at this minute, now, as we welcome Governor Palin and Senator Biden. (Cheers, applause.) less more

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(To Sen. Biden.) Nice to meet you.

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(To Gov. Palin.) Take care tonight.

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(To Sen. Biden.) Hey, can I call you Joe?

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(To Gov. Palin.) You can call me Joe.

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(To Sen. Biden.) Okay. Thanks.

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(To Gov. Palin.) Thank you.

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(To Sen. Biden.) Thank you. (To Ms. Ifill.) Thank you, Gwen. Thank you. Thank you. Thank you. (Cheers, applause.)

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Welcome to you both. As we had determined by a coin toss, the first question will go to Senator Biden, with a 90-second follow up from Governor Palin. The House of Representatives this week passed a bill, a big bailout bill -- or didn't pass it, I should say -- less more

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(Laughs.)

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-- the Senate decided to pass it and the House is wrestling it -- with it still tonight. As America watches these things happen on Capitol Hill, Senator Biden, was this the worst of Washington or the best of Washington that we saw play out? less more

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Let me begin by thank you, Gwen, for hosting this. And Governor, it's a pleasure to meet you, and it's a pleasure to be with you. I think it's neither the best or worst of Washington, but it's evidence of the fact that the economic policies of the last eight years have been the worst economic policies we've ever had. As a consequence, you've seen what's happened on Wall Street. If you need any more proof positive of how bad the economic theories have been -- this excess of deregulation, the failure to oversee what was going on, letting Wall Street run wild -- I don't think you needed any more evidence than what you see now. So the Congress has been put in -- Democrats and Republicans, have been put in a very difficult spot. But Barack Obama laid out four basic criteria for any kind of rescue plan here. He first of all said there has to be oversight. We're not going to write any checks to anybody unless there's oversight for the -- of the secretary of Treasury. He secondly said you have to focus on homeowners and folks on Main Street. Thirdly, he said that if -- you have to treat the taxpayers like investors in this case. And lastly, what you have to do is make sure the CEOs don't benefit in this, because this could end up in the long run people making money off of this rescue plan. And so a consequence of that, it brings us back to maybe the fundamental disagreement between Governor Palin and me and Senator McCain and Barack Obama. And that is that the -- we're going to fundamentally change the focus of the economic policy. We're going to focus on the middle class, because it's -- when the middle class is growing, the economy grows and everybody does well, not just focus on the wealthy and corporate America. less more

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Thank you, Senator. Governor Palin?

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Thank you, Gwen. And I thank the commission also. I appreciate this privilege of being able to be here and speak with Americans. You know, I think a good barometer here, as we try to figure out has this been a good time or a bad time in America's economy is go to a kids' soccer game on Saturday and turn to any parent there on the sideline and ask them, "How are you feeling about the economy?" And I'll betcha you're going to hear some fear in that parent's voice, fear regarding the few investments that some of us have in the stock market -- did we just take a major hit with those investments? -- fear about how are we going to afford to send our kids to college; a fear, as small business owners, perhaps, how we're going to borrow any money to increase inventory or hire more people. The barometer there, I think, is going to be resounding that our economy is hurting and the federal government has not provided the sound oversight that we need and that we deserve. And we need reform to that end. Now John McCain, thankfully, has been one representing reform. Two years ago, remember, it was John McCain who pushed so hard with the Fannie Mae and Freddie Mac reform measures. He sounded that warning bell. People in the Senate with him and his colleagues didn't want to listen to him and wouldn't go towards that reform that was needed then. I think that that alarm has been heard, though, and there will be that greater oversight again, thanks to John McCain's bipartisan efforts that he was so instrumental in bringing folks together over this past week, even suspending his own campaign to make sure he was putting excessive politics aside and putting the country first. less more

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You both would like to be vice president. Senator Biden, how, as vice president, would you work to shrink this gap of polarization which has sprung up in Washington, which you both have spoken about here tonight? less more

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Well, that's what I've done my whole career, Gwen, on very, very controversial issues, from dealing with violence against women to putting 100,000 police officers in the street to trying to get something done about the genocide in -- that was going on in Bosnia. And I -- I have been able to reach across the aisle. I think it's fair to say that I have as -- almost as many friends on the Republican side of the aisle as I do the Democratic side of the aisle. But I -- am I able to respond to -- are we able to stay on the -- on the topic? less more

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You may if you like.

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Yeah. Well, you know, until two weeks ago, it was two Mondays ago John McCain said at 9:00 in the morning that the fundamentals of the economy were strong. Two weeks before that, he said George -- we've made great economic progress under George Bush's policies. Nine o'clock, the economy was strong; 11:00 that same day, two Mondays ago, John McCain said that we have an economic crisis. That doesn't make John McCain a bad guy, but it does point out he's out of touch. Those folks on the sidelines knew that two months ago. less more

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Governor Palin, you may respond.

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John McCain, in referring to the fundamental of our economy being strong, he was talking to and he was talking about the American workforce. And the American workforce is the greatest in this world, with the ingenuity and the work ethic that is just entrenched in our workforce. That's a positive, that's encouragement, and that's what John McCain meant. Now, what I've done as a governor and as a mayor is truly had that track record of reform, and I've joined this team that is a team of mavericks, with John McCain also with his track record of reform, where we're known for putting partisan politics aside to just get the job done. Now, Barack Obama, of course, he's pretty much only voted along his party lines -- in fact, 96 percent of his votes have been solely along party line -- not having that proof for the American people to know that his commitment, too, is, you know, put the partisanship, put the special interests aside and get down to getting business done for the people of America. Missing end We're tired of the old politics as usual. And that's why, with all due respect, I do respect your years in the U.S. Senate, but I think Americans are craving something new and different, and that new energy and that new commitment that's going to come with reform. I think that's why we need to send the maverick from the Senate and put him in the White House, and I'm happy to join him there. less more

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Governor, Senator, neither of you really answered that last question about what you would do as vice president. (Laughter.) I'm going to come back to that throughout the evening to try to see if we can look forward, as well. Now, let's talk about -- the next question is to talk about the subprime lending meltdown. Who do you think was at fault? I start with you, Governor Palin. Was it the greedy lenders? Was it the risky home-buyers who shouldn't have been buying a home in the first place? And what should you be doing about it? less more

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Darn right it was the predator lenders, who tried to talk Americans into thinking that it was smart to buy a $300,000 house if we could only afford a $100,000 house. There was deception there. And there was greed, and there is corruption on Wall Street. And we need to stop that. Again, John McCain and I, that commitment that we have made, and we're going to follow through on that, getting rid of that corruption. One thing that Americans do at this time also, though, is let's commit ourselves -- just everyday American people -- Joe six-pack, hockey moms across the nation -- I think we need to band together and say, never again. (View cut data) Never will we be exploited and taken advantage of again by those who are managing our money and loaning us these dollars. We need to make sure that we demand from the federal government strict oversight of those entities in charge of our investments and our savings. And we need also to not get ourselves in debt. Let's do what our parents told us before we probably even got that first credit card. Don't live outside of our means. We need to make sure that as individuals we're taking personal responsibility through all this. It's not the American people's fault that the economy is hurting like it is, but we have an opportunity to learn a heck of a lot of good lessons through this and say never again will we be taken advantage of. less more

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Senator.

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Well, Gwen, two years ago, Barack Obama warned about the subprime mortgage crisis. John McCain said shortly after that in December he was surprised there was subprime mortgage problem. John McCain, while Barack Obama was warning about what we had to do, was literally giving an interview to the Wall Street Journal saying that, "I'm always for cutting regulations." We let Wall Street run wild. John McCain -- and he's a good man -- but John McCain thought that the answer is that tried and true Republican response: deregulate, deregulate. So what you had is you had overwhelming, quote, "deregulation." You had actually the belief that Wall Street could self-regulate itself. (View cut data) And while Barack Obama was talking about reinstating those regulations, John, on 20 different occasions in the previous year and a half, called for more deregulation. Matter of fact, John recently wrote an article in a major magazine saying that he wants to do for the health care industry, deregulate it and let the free market move, like he did for the banking industry. So deregulation was the promise, and guess what? Those people who -- and say don't go into debt, they can barely pay to fill up their gas tank. I was recently at a -- my local gas station, asked a guy named Joey Danko (ph) -- I said, Joey, I -- how much it cost to fill your tank? Do you know what his answer was? He said, "I don't know, Joe; I never have enough money to do it." The middle class needs relief, tax relief. They need it now. They need help now. The focus'll change with Barack Obama. less more

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Governor, please, if you want to respond to what he said about Senator McCain's comments about health care?

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I'd -- I'd like to respond about the tax increases. And you know, we -- we can speak in agreement here that darn right we need tax relief for Americans so that jobs can be created here. Now, Barack Obama and Senator Biden also voted for the largest tax increases in U.S. history. Barack had 94 opportunities to side on the people's side and reduce taxes, and 94 times he voted to increase taxes or not support a tax reduction -- 94 times. Now, that's not what we need to create jobs and really bolster and heat up our economy. We do need the private sector to be able to keep more of what we earn and produce. Government's going to have to learn to be more efficient and live with less, if that's what it takes to rein in the government growth that we've seen today. But we do need tax relief, and Barack Obama even supported increasing taxes as late as last year for those families making only $42,000 a year. That's a -- that's a lot of middle-income average American family -- to increase taxes on them -- I think that is the way to kill jobs and to continue to harm our economy. less more

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Senator?

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The charge is absolutely not true. Barack Obama did not vote to raise taxes. The vote she's referring to -- John McCain voted the exact same way. It was a budget procedural vote. John McCain voted the same way. It did not raise taxes. Number two, using the standard that the governor uses, John McCain voted 477 times to raise taxes. It's a bogus standard. But if you notice, Gwen, the governor did not answer the question about deregulation, did not answer the question of defending John McCain about not going along with the deregulation, letting Wall Street run wild. He did support deregulation, almost across the board. That's why we got in so much trouble. less more

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Would you like to have an opportunity to answer that before we move on?

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Oh, I'm still on the tax thing, because I want to correct you on that again. And I want to let you know what I did as a mayor and as a governor. And I may not answer the questions the way that either the moderator or you want to hear, but I'm going to talk straight to the American people and let 'em know my track record also. (View cut data) As mayor, every year I was in office I did reduce taxes. I eliminated personal property taxes and eliminated small-business inventory taxes. And as governor, we suspended our state fuel tax. We did all those things knowing that that is how our economy would be heated up. Now, as for John McCain's adherence to rules and regulations, and pushing for even harder and tougher regulations, that is another thing that he has -- is known for, though. Look at the tobacco industry. Look at campaign finance reform. less more

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Okay, our time is up here.

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Okay.

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I'm going to move on to the next question. Senator Biden, you want to talk about taxes, let's talk about taxes.

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Good.

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You have proposed raising taxes on people who earn over $250,000 a year. The question for you is, why is that not class warfare? And the same question for you, Governor Palin, is you have proposed a tax the employer health benefits, which some studies say would actually throw 5 million more people onto the rolls of the uninsured. I want to know why that isn't taking things out on the poor. Starting with you, Senator Biden. less more

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Well, Gwen, where I come from, it's called fairness, just simple fairness. The middle class is struggling. The middle class, under John McCain's tax proposals, 100 million families -- middle-class families -- households, to be precise -- they got not a single change -- they got not a single break in taxes. No one making less than $250,000 under Barack Obama's plan will see one single penny of their tax raised, whether it's their capital gains tax, their income tax, investment tax, any tax. And 95 percent of the people in the United States of America making less than $150,000 will get a tax break. Now, that seems to me to be simple fairness. The economic engine of America is the middle class. It's the people listening to this broadcast. When you do well, America does well, even the wealthy do well. This is not punitive. John wants to add 300 million dollars -- billion dollars in new tax cuts per year for corporate America and the very wealthy while giving virtually nothing to the middle class. We have a different value set. The middle class is the economic engine. It's fair. They deserve the tax breaks, not the super wealthy, who are doing pretty well. They don't need any more tax breaks. And by the way, they'll pay no more than they did under Ronald Reagan. less more

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Governor?

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I do take issue with some of the principle there with that redistribution-of-wealth principle that seems to be espoused by you. But when you talk about Barack's plan to -- tax increase affecting only those making $250,000 a year or more, you're forgetting the millions of small businesses that are going to fit into that category. So they're going to be the ones paying higher taxes, thus resulting in fewer jobs being created and less productivity. Now, you said recently that higher taxes or asking for higher taxes -- or paying higher taxes is patriotic. In the middle class of America, which is where Todd and I have been, you know, all of our lives, that's not patriotic. Patriotic is saying, government, you know, you're not always a solution; in fact, too often you're the problem. So government, lessen the tax burden on the private sector and on our families, and get out of the way and let the private sector and our families grow and thrive and prosper. And increased tax formula that Barack Obama is proposing, in addition to nearly a trillion dollars in new spending that he's proposing, is a backwards way of trying to grow our economy. less more

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All right.

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Governor, are you interested in defending Senator McCain's health care plan?

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I am, because he's got a good health care plan that is detailed, and I want to give you a couple of details on that. He's proposing a $5,000 tax credit for families so that they can get out there and they can purchase their own health care coverage. And that's a smart thing to do. That's budget neutral. That doesn't cost the government anything, as opposed to Barack Obama's plan to mandate health care coverage and have this universal, government-run program. And unless you're pleased with the way that the federal government has been running anything lately, I don't think that it's going to be real pleasing for Americans to consider health care being taken care by the feds. But a $5,000 health care credit through our income tax, that's budget neutral, that's going to help. And he also wants to erase those artificial lines between states so that, through competition, we can cross state lines. And if there's a better plan offered somewhere else, we'd be able to purchase that. GOV. PALIN. So affordability and accessibility will be the keys there, with that $5,000 tax credit also being offered. less more

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Thank you, Governor. Senator?

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Gwen, I don't know where to start. We don't call a redistribution in my neighborhood -- Scranton, Claymont, Wilmington, the places I grew up -- to give the fair -- to say that not giving ExxonMobil another $4 billion tax cut this year, as John calls for, and giving it to middle-class people to be able to pay to get their kids to college -- we don't call that redistribution; we call that fairness, number one. Number two, factually, 95 percent of small businesses in America, their owners make less than $250,000 a year. They would not get one single, solitary penny increase in taxes, those small businesses. Now with regard to the -- to the health care plan, you know, it's -- one with one hand you give it; the other, you take it. You know how Barack Obama -- excuse me. You know how John McCain pays for his $5,000 tax credit you're going to get, a family will get? He taxes as income every one of you out there, every one of you listening who has a health care plan through your employer. That's how he raises $3.6 trillion on your -- taxing your health care benefit, to give you $5,000 plan, which, his website points out, will go straight to the insurance company. And then you're going to have to replace a $12,000 -- that's the average cost of the plan you get through your employer; it costs $12,000 -- you're going to have to pay -- replace $12,000 plan, because 20 million of you are going to be dropped. Twenty million of you will be dropped. So you're going to have to place -- replace a $12,000 plan with a $5,000 check you've just given to the insurance company. I call that the ultimate Bridge to Nowhere. less more

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Thank you, Senator. Now -- (laughter) -- I want to get -- try to get you both to answer a question that neither of your principals quite answered when my colleague Jim Lehrer asked it last week. Starting with you, Senator Biden, what promises -- given the events of the week -- the bailout plan, all of this -- what promises have you and your campaigns made to the American people that you are not going to be able to keep? less more

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Well, the one thing we may have to slow down is a commitment we made to double foreign assistance. We'll probably have to slow that down. We also are going to make sure that we do not go forward with the tax cut proposals of the -- of John McCain -- the existing one for people making over ($)250,000, which is $130 billion this year alone. We're not going to support the $300 billion tax cut that they have for corporate America and the very wealthy. We're not going to support another $4 billion tax cut for ExxonMobil. And what we're not going to also hold up on, Gwen, is we cannot afford to hold up on providing for incentives for new jobs by an energy policy creating new jobs. We cannot slow up on education to give -- because that's the engine that is going to give us the economic growth and competitiveness that we need. And we are not going to slow up on the whole idea of providing for affordable health care for Americans -- none of which, when we get to talk about health care, is as my -- as the governor characterized -- characterizd -- characterized. The bottom line here is that we are going to, in fact, eliminate those wasteful spending that exist in the budget right now. A number of things -- I don't have time because the light is blinking -- that I won't be able to mention, but one of which is the $100 billion tax dodge that, in fact, allows people to take their post office box offshore, avoid taxes. I call that unpatriotic. I call that unpatriotic. That's what I'm talking about. less more

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Governor? Governor?

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Well, the nice thing about running with John McCain is I can assure you he doesn't tell one thing to one group and then turns around and tells something else to another group, including his plans that will make this bailout plan, this rescue plan even better. I want to go back to the energy plan, though, because this is -- this is an important one that Barack Obama, he voted for in '05. Senator Biden, you would remember that in that energy -- energy plan that Obama voted for, that's what gave those oil companies those big tax breaks. Your running mate voted for that. You know what I had to do in the state of Alaska? I had to take on those oil companies and tell them, no, you know, any of the greed there that has been kind of instrumental, I guess, in their mode of operation, that wasn't going to happen in my state. And that's why Tillerson at Exxon and Mulva at ConocoPhillips, bless their hearts, they're doing what they need to do as corporate CEOs, but they're not my biggest fans, because what I had to do up there in Alaska was to break up a monopoly up there and say, you know, the people are going to come first and we're going to make sure that we have value given to the people of Alaska with those resources. And those huge tax breaks aren't coming to the big multinational corporations anymore, not when it adversely affects the people who live in a state and, in this case, in a country who should be benefiting at the same time. So it was Barack Obama who voted for that energy plan that gave those tax breaks to the oil companies that I, then, had to turn around, as a governor of an energy-producing state and kind of undo in my own area of expertise, and that's energy. less more

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So, Governor, as vice president, there is nothing that you have promised as a candidate that you would -- that you wouldn't take off the table because of this financial crisis going on?

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There is not. And how long have I been at this, like five weeks? So there hasn't been a whole lot that I'm promised, except to do what is right for the American people -- put government back on the side of the American people, stop the greed and corruption on Wall Street. And the rescue plan has got to include that massive oversight that Americans are expecting and deserving. And I don't believe that John McCain has made any promise that he would not be able to keep, either. less more

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Senator.

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(Chuckles.) Again -- let me -- let me -- let's talk about the tax breaks. Barack Obama -- Obama voted for an energy bill because, for the first time, it had real support for alternative energy. When there were separate votes on eliminating the tax breaks for the oil companies, Barack Obama voted to eliminate them, John did not. Now, let me just ask a rhetorical question. If John really wanted to eliminate them, why is he adding to his budget an additional $4 billion in tax cut for ExxonMobils of the world that, in fact, have already made $600 billion since 2001? And look, I agree with the governor. She imposed a windfall profits tax up there in Alaska. That's what Barack Obama and I want to do. We want to be able to do for all of you Americans, give you back a thousand bucks like she's been able to give back money to her folks back there. But John McCain will not support a windfall profits tax. They've made $600 billion since 2001, and John McCain wants to give them -- all by itself, separate, no additional bill -- all by itself another $4 billion tax cut. If that is not proof of what I say, I'm not sure what can be. So I hope the governor is able to convince John McCain to support our windfall profits tax, which she supported in Alaska, and I give her credit for it. less more

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Next question, Governor Palin, still on the economy. Last year Congress passed a bill that would make it more difficult for debt-strapped mortgage holders to declare bankruptcy to get out from under that debt. This is something that John McCain supported. Would you have? less more

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Yes, I would have. But here again, there have been so many changes in the conditions of our economy in just even these past weeks, that there has been more and more revelation made aware now to Americans about the corruption and the greed on Wall Street. We need to look back even two years ago and we need to be appreciative of John McCain's call for reform, with Fannie Mae, with Freddie Mac, with the mortgage lenders, too, who were starting to really kind of rear that head of abuse. And the colleagues in the Senate weren't going to go there with (them/him ?). So we have John McCain to thank for at least warning people. And we also have John McCain to thank for bringing, in a bipartisan effort, people to the table so that we can start putting politics aside, even putting the campaign aside, and just do what's right to fix this economic problem that we are in. It is a crisis. It's a toxic mess, really, on Main Street that's affecting Wall Street. And now we have to be ever vigilant in also making sure that credit markets don't seize up. That's where the Main Streeters like me -- that's where we would really feel the effects. less more

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Senator Biden, you voted for this bankruptcy bill. Senator Obama voted against it. Some people have said that mortgage holders really paid the price.

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Well, mortgage holders didn't pay the price. Only 10 percent of the people who are -- have been affected by this whole switch from Chapter 7 to Chapter 13. It gets complicated. But the point of this, Barack Obama saw the glass as half-empty, I saw it as half-full. We disagreed on that. And 85 senators voted one way, and 15 voted the other way. But here's the deal. Barack Obama pointed out two years ago that there was a subprime mortgage crisis and wrote to the secretary of Treasury. And he said: You better get on the stick here. You better look at it. John McCain said as early as last December, quote -- I'm -- I'm paraphrasing -- I'm surprised about this subprime mortgage crisis, number one. Number two, with regard to bankruptcy now, Gwen, what we should be doing now -- and Barack Obama and I support it -- we should be allowing bankruptcy courts to be able to readjust not just the interest rate you are paying on your mortgage to be able to stay in your home, but in -- be able to adjust the principal that you owe, the principal that that you owe. That would keep people in their homes, actually help banks by keeping them from going under. But John McCain, as I understand it -- I'm not sure of this, but I believe John McCain and the governor don't support that. There are ways to help people now, and the ways that we are offering are not being supported by -- by the Bush administration nor do I believe by John McCain and Governor Palin. less more

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Governor Palin, is that so?

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That is not so, but because that's just a quick answer, I want to talk about, again, my record on energy versus -- your ticket's energy -- ticket also. I think that this is important to come back to, with that energy policy plan, again, that was voted for in '05. When we talk about energy, we have to consider the need to do all that we can to allow this nation to become energy-independent. It's a nonsensical position that we are in when we have domestic supplies of energy all over this great land, and East Coast politicians who don't allow energy-producing states like Alaska to produce these, to tap into 'em, and instead we're relying on foreign countries to produce for us -- we're circulating about $700 billion a year into foreign countries, some who do not like America; they certainly don't have our best interests at heart -- instead of those dollars circulating here, creating tens of thousands of jobs and allowing domestic supplies of energy to be tapped into and to start flowing into these very, very hungry markets. Energy independence is the key to this nation's future, to our economic future and to our national security. So when we talk about energy plans, it's not just about who got a tax break and who didn't -- and we're not giving oil company tax breaks -- but it's about a heck of a lot more than that. Energy independence is the key to America's future. less more

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Governor, I'm happy to talk to you in this next section about energy issues. Let's talk about climate change. What is true and what is false about what we have heard, read, discussed, debated about the causes of climate change? less more

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Yeah, well, as the nation's only Arctic state and being the governor of that state, Alaska feels and sees impacts of climate change more so than any other state, and we know that it's real. I'm not one to attribute every man -- activity of man to the changes in the climate. There is something to be said, also, for man's activities, but also for the cyclical temperature changes on our planet. But there are real changes going on in our climate, and I don't want to argue about the causes. What I want to argue about is how are we going to get there to positively affect the impacts? We have got to clean up this planet. We have got to encourage other nations also to come along with us. With the impacts of climate change, what we can do about that, as governor, I was the first governor to form a climate change sub- cabinet to start dealing with the impacts. We've got to reduce emissions. John McCain is right there with an all-of-the-above approach to deal with climate change impacts. We've got to become energy independent for that reason also. As we rely more and more on other countries that don't care as much about the climate as we do, we're allowing them to produce and to emit and even pollute more than America would ever stand for. So even in dealing with climate change, it's all the more reason that we have an all-of-the-above approach, tapping into alternative sources of energy and conserving fuel, conserving our petroleum products and our hydrocarbons so that we can clean up this planet and deal with climate change. less more

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Senator, what is true and what is false about the causes?

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Well, I think it is man-made. I think it's clearly man-made. And look, this probably explains the biggest fundamental difference between John McCain and Barack Obama and Sarah Palin and Joe Biden -- Governor Palin and Joe Biden. If you don't understand what the cause is, it's virtually impossible to come up with a solution. We know what the cause is. The cause is man-made. That's the cause. That's why the polar ice cap is melting. Now, let's look at the facts. We have 3 percent of the world's oil reserves. We consume 25 percent of the oils -- of the oil of the world. John McCain has voted 20 times in the last decade and a half against funding alternative energy sources, clean energy sources: wind, solar, biofuels, the way in which we can stop the greenhouse gases from emitting. We believe, Barack Obama believes by investing in clean coal and safe nuclear we can not only create jobs in wind and solar here in the United States, we can export it. China is building one to three new coal-fired plants burning dirty coal per week. It's polluting not only the atmosphere, but the West Coast of the United States. We should export the technology, by investing in clean coal technology. We should be creating jobs. John McCain has voted 20 times against funding alternative energy sources and thinks, I guess, the only answer is drill, drill, drill. Drill we must, but it will take 10 years for one drop of oil to come out of any of the wells that are going to begun to be drilled. In the meantime, we're all going to be in real trouble. less more

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Let me clear something up. Senator McCain has said that he supports caps on carbon emissions. Senator Obama has said he supports clean coal technology, which I don't believe you've always supported.

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I have always supported it. That's a fact.

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Well, clear it up for us, both of you, and start with Governor Palin.

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Yes, Senator McCain does support this. The chant is "drill, baby drill," and that's what we hear all across this country and our rallies, because people are so hungry for those domestic sources of energy to be tapped into. They know that even in my own energy-producing state, we have billions of barrels of oil and hundreds of trillions of cubic feet of clean, green natural gas. And we're building a nearly $40 billion natural gas pipeline, which is North America's largest and most expensive infrastructure project ever, to flow those sources of energy into hungry markets. Barack Obama and Senator Biden, you've said no to everything in trying to find a domestic solution to the energy crisis that we're in. You even called drilling -- safe, environmentally friendly drilling offshore -- as raping the outer continental shelf. There -- with new technology, with tiny footprints even on land, it is safe to drill, and we need to do more of that. But also in that all-of-the-above approach that Senator McCain supports, the alternative fuels will be tapped into -- the nuclear, the clean coal. I was surprised to hear you mention that because you had said that there isn't anything -- such a thing as clean coal, and I think you said it in a rope line, too, at one of the rallies. less more

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We do need -- we do need to keep within our two minutes.

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(Laughs.)

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But I just want to ask you, do you support capping carbon emissions?

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I do, I do.

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Okay. And on the clean coal issue.

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Absolutely, absolutely we do. We -- we've -- we call for setting hard targets, number one -- oh, I'm sorry.

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Clean coal. On clean coal.

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Oh, on clean coal. My record -- just take a look at the record. My record, for 25 years, has supported clean-coal technology. A comment made at a rope line was taken out of context. I was talking about exporting that technology to China so when they burn their dirty coal it won't be as dirty, it will be clean. But here's the bottom line, Gwen: how do we deal with global warming with continued addition to carbon emissions? And if the only answer you have is oil -- and John -- and -- and the governor says John's for everything. Well, why did John vote 20 times -- maybe he's for everything as long as it is not helped forward by the government. Maybe he's for everything if the free market takes care of it. less more

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The next --

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I don't know. But he voted 20 times against funding alternative energy systems.

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The next round of -- pardon me -- the next round of questions starts with you, Senator Biden.

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Sure.

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Do you support, as they do in Alaska, granting same- sex benefits to couples?

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Absolutely. Do I support granting same-sex benefits? Absolutely, positively. Look, in a(n) Obama-Biden administration, there will be absolutely no distinction from a constitutional standpoint or a legal standpoint between a same-sex and a heterosexual couple. The fact of the matter is that under the Constitution, we should be granted -- same-sex couples should be able to have visitation rights in the hospital, joint ownership of property, life insurance policies, et cetera. That's only fair. It's what the Constitution calls for. And so we do support, we do support making sure that committed couples in a same-sex marriage are guaranteed the same constitutional benefits as it relates to their property rights, their rights of visitation, their rights of insurance, the rights of ownership, as heterosexual couples do. less more

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Governor, would you support expanding that beyond Alaska to the rest of the nation?

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Well, not if it goes closer and closer towards redefining the traditional definition of marriage between one man and one woman; and unfortunately, that's sometimes where those steps lead. But I also want to clarify. If there's any kind of suggestion at all from my answer that I would be anything but tolerant of adults in America choosing their partners, choosing relationships that they deem best for themselves, you know, I am tolerant. And I have a very diverse family and group of friends, and even within that group you would see some who may not agree with me on this issue, some very dear friends who don't agree with me on this issue. But in that tolerance also, no one would ever propose, not in a McCain-Palin administration, to do anything to prohibit, say, visitations in a hospital or contracts being signed, negotiated between parties. But I will tell Americans straight-up that I don't support defining marriage as anything but between one man and one woman. And I think through nuances, we could go round and round about what that actually means, but I'm being as straight-up with Americans as I can in my non-support for anything but a traditional definition of marriage. less more

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Let's try to avoid nuance, Senator.

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Let me be straight for --

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Do you support gay marriage?

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No, Barack Obama nor I support redefining from a civil side what constitutes marriage. We do not support that. That is basically a decision to be able to be left to the faiths and people who practice their faiths, the determination what you call it. The bottom line, though, is -- and I'm glad to hear the governor -- I take her at her word, obviously -- that she thinks there should be no civil rights distinction, none whatsoever, between a committed gay couple and a committed heterosexual couple. If that's the case, we really don't have a difference. less more

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Is that what you said?

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Your question to him was whether he supported gay marriage and my answer is the same as his and it is that I do not.

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Wonderful, you agree. On that note, let's move to foreign policy. (Laughter.)

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Okay.

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You both have sons who are in Iraq or on their way to Iraq. You, Governor Palin, have said that you would like to see a real clear plan for an exit strategy. What should that be, governor?

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I am very thankful that we do have a good plan. And the surge and the counterinsurgency strategy in Iraq that has proven to work, I am thankful that that is part of the plan implemented under a great American hero, General Petraeus, and pushed hard by another great American, Senator John McCain. I know that the other ticket opposed this surge, in fact, even opposed funding for our troops in Iraq and Afghanistan. Barack Obama voted against funding troops there after promising that he would not do so. And Senator Biden, I respected you when you called him out on that. You said that his vote was political and you said it would cost lives. And Barack Obama at first said he would not do that. He turned around under political pressure and he voted against funding the troops. We do have a plan for withdrawal. We don't need early -- early withdrawal out of Iraq. We cannot afford to lose there or we're going to be no better off in the war in Afghanistan, either. We have got to win in Iraq. And with the surge that has worked, we're now down to pre-surge numbers in Iraq. That's where we can be. We can start putting more troops in Afghanistan as we also work with our NATO allies who are there strengthening us. And we need to grow our military. We cannot afford to lose against al Qaeda and the Shi'a extremists who are still there, still fighting us. But we're getting closer and closer to victory, and it would be a travesty if we quit now in Iraq. less more

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Senator?

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Gwen, with all due respect, I didn't hear a plan. Barack Obama's offered a clear plan: shift responsibility to the Iraqis, over the next 16 months draw down our combat troops -- ironically, the same plan that Maliki, the -- the prime minister of Iraq, and George Bush are now negotiating. The only odd man out here, only one left out, is John McCain, number one. Number two, with regard to Barack Obama not, quote, "funding the troops," John McCain voted the exact same way. John McCain voted against funding the troops because the amendment he voted for -- voted against had a timeline in it to draw down American troops, and John said "I'm not going to fund the troops if in fact there was a timeline." Barack Obama and I agree fully and completely on one thing: you've got to have a timeline to draw down the troops and shift responsibility to the Iraqis. We're spending $10 billion a month while the Iraqis have an $80 billion surplus. Barack says it's time for them to spend their own money, have the 400,000 military we've trained for them begin to take their own responsibility, and gradually, over six months -- 16 months, withdraw. John McCain -- this is a fundamental difference between us -- we will end this war. For John McCain, there is no end in sight to end this war. Fundamental difference: we will end this war. less more

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Governor?

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Your plan is a white flag of surrender in Iraq, and that is not what our troops need to hear today, that's for sure, and it's not what our nation needs to be able to count on. You guys opposed the surge, the surge worked. Barack Obama still can't admit the -- the surge works. We'll know when we're finished in Iraq when the Iraqi government can govern its people and when the Iraqi security forces can secure its people. And our commanders on the ground will tell us when those conditions have been met. And Maliki and Talabani also, in working with us, are knowing, again, that we're getting closer and closer to that point, that victory that's within sight. Now you said regarding Senator McCain's military policies there, Senator Biden, that you supported a lot of these things. In fact you said that you wanted to run -- you'd be honored to run with him on the ticket, and that's an indication, I think, of some of the support that you had, at least until you became the VP pick here. less more

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(Chuckles.)

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You also said that Barack Obama was not ready to be commander in chief. And I know, again, that you opposed the move that he made to try to cut off funding for the troops, and I respect you for that. I -- I don't know how you can defend that position now, but I -- I know that you know, especially with your son in the National Guard -- and I have great respect for your family also and the honor that you show our military -- Barack Obama, though -- another story there. Anyone I think who can cut off funding for the troops after promising not to -- that's another story. less more

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Senator Biden?

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John McCain voted to cut off funding for the troops. Let me say that again. John McCain voted against an amendment containing $1,600,000,000 that I had gotten to get MRAPs, those things that are protecting this -- the governor's son and, pray God, my son, and a lot of other sons and daughters. He voted against it. He voted against it, the funding, because, he said, the amendment had a timeline in it to end this war, and he didn't like that. But let's get straight who has been right and wrong. John McCain and Dick Cheney said, when I was saying we would not be greeted as liberators; we would not -- this war would take a decade, not the -- not a day, not a week, not six months; we would not be out of there quickly -- John McCain was saying the Sunnis and Shi'as got along with each other, without reading the history of the last 700 years. John McCain said there would be enough oil to pay for this. John McCain has been dead wrong. I love him. As my mother would say, God love him. But he's been dead wrong on the fundamental issues relating to the conduct of the war. Barack Obama has been right. They're the facts. less more

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Let's move on to Iran and Pakistan. I'm curious about what you think. Starting with you, Senator Biden, which is the greatest threat, a nuclear Iran or an unstable Pakistan? Explain why.

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Well, they're both extremely, extremely dangerous. I always have focused -- as you know -- (chuckles) -- Gwen, I've been focusing on for a long time, along with Barack, on Pakistan. Pakistan already has nuclear weapons. Pakistan already has deployed nuclear weapons. Pakistan's weapons can already hit Israel and the Mediterranean. Iran getting a nuclear weapon would be very, very destabilizing. They are more than -- they are not close to getting a nuclear weapon that's able to be deployed. So they're both very dangerous. They'd both be game-changers. But look, here's what the fundamental problem I have with John's policy about terror and stability. John continues to tell us that the central war in the front on terror is in Iraq. I promise you, if an attack comes in the homeland, it's going to come -- as our -- our security services have said -- it's going to come from al Qaeda planning in the hills of Afghanistan and Pakistan. That's where they live. That's where they are. That's where it will come from. And right now that resides in Pakistan. A stable government needs to be established. We need to support that democracy by helping them not only with their military, but with their governance as well as their economic well-being. There have been 7,000 madrassas built along that border. We should be helping them build schools to compete for those hearts and minds of the people in the region so that we actually are able to take on terrorism. And by the way, that's where bin Laden lives, and we will go at him if we have actionable intelligence. less more

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Governor, nuclear Pakistan -- unstable Pakistan, nuclear Iran -- which is the greater threat?

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Both are extremely dangerous, of course. And as for who termed that central war on terror being in Iraq, it was General Petraeus and al Qaeda, both leaders there -- and it's probably the only thing that they're ever going to agree on, but that it was the central war on terror is in Iraq. You don't have to believe me or John McCain on that; I would believe Petraeus and that leader of al Qaeda. An armed -- nuclear-armed especially -- Iran is so extremely dangerous to consider, they cannot be allowed to acquire nuclear weapons, period. Israel is in jeopardy, of course, when we're dealing with Ahmadinejad as a leader of Iran, Iran claiming that Israel is -- he termed it a stinking corpse, a country that should be wiped off the face of the Earth. Now, a leader like Ahmadinejad, who is not sane or stable when he says things like that, is not one whom we can allow to acquire nuclear energy, nuclear weapons. Ahmadinejad, Kim Jong Il, the Castro brothers, others who are dangerous dictators, are ones that Barack Obama has said he would be willing to meet with without preconditions being met first. An issue like that taken up by a presidential candidate goes beyond naivete and goes beyond poor judgment. A statement that he made like that is downright dangerous because leaders like Ahmadinejad, who would seek to acquire nuclear weapons and wipe off the face of the Earth an ally like we have in Israel, should not be met with without preconditions and diplomatic efforts being undertaken first. less more

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Governor and Senator, I want you both to respond to this. Secretaries of State Baker, Kissinger, Powell -- Baker, they have all advocated some level of engagement with enemies. Do you think this -- these former secretaries of State are wrong on that? less more

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No. And Dr. Henry Kissinger especially, and I had a good conversation with him recently, and he shared with me also his passion for diplomacy. And that's what John McCain and I would engage in also. But again, with some of these dictators -- who hate America and hate what we stand for, with our freedoms, our democracy, our tolerance, our respect for women's rights -- those who would try to destroy what we stand for cannot be met with just sitting down on a presidential level, as Barack Obama had said he would be willing to do. That is beyond bad judgment. That is dangerous. No, diplomacy is very important. First and foremost that is what we would engage in. But diplomacy is hard work by serious people. It's lining out clear objectives and having your friends and your allies ready to back you up there and have sanctions lined up also, before any kind of presidential summit would take place. less more

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Senator?

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Can I -- can I clarify this? That's just simply not true about Barack Obama. He did not say he'd sit down with Ahmadinejad. The fact of the matter is, it surprises me that Senator McCain doesn't realize that Ahmadinejad does not control the security apparatus in Iran. The theocracy controls the security apparatus, number one. Number two, five secretaries of State did say we should talk with and sit down. Now, John and Governor Palin now say they're all for -- they have a "passion," I think the phrase was, a "passion for diplomacy," and that we have to bring our friends and allies along. Our friends and allies have been saying, Gwen, sit down, talk, talk, talk. Our friends and allies have been saying that. Five secretaries of State, three of them Republicans. And John McCain has said he would go along with an agreement, but he wouldn't sit down. Now, how do you do that when you don't have your administration sit down and talk with the adversary? And look what President Bush did. After five years, he finally sent a high-ranking diplomat to meet with the highest-ranking diplomats in Iran in Europe to try to work out an arrangement. Our allies are on that same page. And if we don't go the extra mile in diplomacy, what makes you think the allies are going to sit with us? And last point I'll make: John McCain said as recently as a couple weeks ago, he wouldn't even sit down with the government of Spain, a NATO ally that has troops in Afghanistan with us now. I find that incredible. less more

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Governor, you mentioned Israel and your support for Israel.

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Yeah.

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What has this administration done right or wrong? This is the great lingering unresolved issue, the Israeli-Palestinian conflict. What have they done and is a two-state solution the solution?

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A two-state solution is the solution. And Secretary Rice, having recently met with leaders on one side or the other there also, still in these waning days of the Bush administration, trying to forge that peace. And that needs to be done, and that will be top-of-an-agenda item also under a McCain-Palin administration. Israel is our strongest and best ally in the Middle East. We have got to assure them that we will never allow a second Holocaust despite, again, warnings from Iran and any other country that would seek to destroy Israel that that is what they would like to see. We will support Israel: a two-state solution, building our embassy also in Jerusalem, those things that we look forward to being able to accomplish with this peace-seeking nation. And they have a track record of being able to forge these peace agreements. They succeeded with Jordan. They succeeded with Egypt. I'm sure that we're going to see more success there also. It's got to be a commitment of the United States of America, though. And I can promise you, in a McCain-Palin administration, that commitment is there to work with our friends in Israel. less more

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Senator?

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Gwen, no one in the United States Senate has been a better friend to Israel than Joe Biden. I would have never, ever joined this ticket were I not absolutely sure Barack Obama shared my passion. But you asked a question about whether or not this administration's policy had made sense, or something to that effect. It has been an abject failure, this administration's policy. In fairness to the Secretary Rice, she's trying to turn it around now in the seventh or eighth year. Here's what the president said when we said no. He insisted on elections on the West Bank when I said and others said and Barack Obama said big mistake, Hamas will win, you'll legitimize them. What happened? Hamas won. When we kicked -- along with France, we kicked Hezbollah out of Lebanon, I said and Barack said move NATO forces in there, fill the vacuum, because if you don't know -- if you don't, Hezbollah will control it. Now what's happened? Hezbollah is a legitimate part of the government in the country immediately to the north of Israel. The fact of the matter is, the policy of this administration has been an abject failure. And speaking of freedom being on the march, the only thing on the march is Iran. It's closer to a bomb. Its proxies now have a major stake in Lebanon, as well as in the Gaza Strip with Hamas. We will change this policy with thoughtful, real, live diplomacy that understand that you must back Israel in letting them negotiate, support their negotiation and stand with them, not insist on policies like this administration has. less more

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Has this administration's policy been an abject failure, as the senator says, Governor?

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No, I do not believe that it has been. But I'm so encouraged to know that we both love Israel, and I think that is a good thing to get agree to, Senator Biden. I respect your position on that. No. In fact, when we talk about the Bush administration, there's a time too when Americans are going to say enough is enough with your ticket on constantly looking backwards and pointing fingers and -- and doing the blame game. There have been huge blunders in the war. There have been huge blunders throughout this administration, as there are with every administration. But for a ticket that wants to talk about change and looking into the future, there's just too much finger-pointing backwards to ever make us believe that's where you're going. Positive change is coming, though. Reform of government is coming. We'll learn from the past mistakes in this administration and other administrations. And we're going to forge ahead with putting government back on the side of the people and making sure that our country comes first, putting obsessive partisanship aside. That's what John McCain has been known for. In all these years, he has been the maverick. He has ruffled feathers. But I know, Senator Biden, you have respected him for that, and I respect you for acknowledging that. But change is coming. less more

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Just looking backwards, Senator?

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Look, past is prologue, Gwen. The issue is, how different is John McCain's policy going to be than George Bush's? I haven't heard anything yet. I haven't heard how his policy's going to be different on Iran than George Bush's. I haven't heard how his policy is going to be different with Israel than George Bush's. I haven't heard how his policy in Afghanistan is going to be different than George Bush's. I haven't heard how his policy in Pakistan is going to be different than George Bush's. It may be, but so far it is the same as George Bush's, and you know where that policy has taken us. We will make significant change so once again we're the most respected nation in the world. That's what we're going to do. less more

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Governor, on another issue, interventionism, nuclear weapons, what should be the trigger or should there be a trigger when nuclear weapons use is ever put into play?

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Nuclear weaponry, of course, would be the be-all, end-all of just too many people and too many parts of our planet. So those dangerous regimes, again, cannot be allowed to acquire nuclear weapons, period. Our nuclear weaponry here in the U.S. is used as a deterrent, and that's a safe, stable way to use nuclear weaponry. But for those countries -- North Korea also under Kim Jong Il -- we have got to make sure that we're putting the economic sanctions on these countries and that we have friends and allies supporting us in this to make sure that leaders like Kim Jong Il and Ahmadinejad are not allowed to acquire, to proliferate or to use those nuclear weapons. It is that important. Can we talk about Afghanistan real quick also, though? less more

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Certainly.

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Okay. I'd like to just really quickly mention there too, that when you look back and you say that the Bush administration's policy on Afghanistan perhaps would be the same as McCain -- and that's not accurate. The surge principles, not the exact strategy, but the surge principles that have worked in Iraq need to be implemented in Afghanistan also. And that perhaps would be a difference with the Bush administration. Now, Barack Obama had said that all we're doing in Afghanistan is air raiding villages and killing civilians. And such a reckless, reckless comment, an untrue comment, again, hurts our cause. That's not what we're doing there. We're fighting terrorists and we're securing democracy, and we're building schools for children there so that there is opportunity in that country also. There will be a big difference there. And we will win in Afghanistan also. less more

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Senator, you may talk about nuclear use, if you like, and also about Afghanistan.

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I'll talk about both. With Afghanistan, facts matter, Gwen. The fact is that our commanding general in Afghanistan said today that a surge -- the surge principles used in Iraq will not -- let me say this again now. Our commanding general in Afghanistan said the surge principle in Iraq will not work in Afghanistan. Not Joe Biden; our commanding general in Afghanistan. He said we need more troops, we need government building, we need to spend more money on the infrastructure in Afghanistan. Look, we have spent more money -- we spend more money in three weeks on combat in Iraq than we've spent on the entirety of the last seven years that we have been in Afghanistan building that country. Let me say it again. Three weeks in Iraq; seven years -- seven years, or six and a half years, in Afghanistan. Now, that's number one. Number two, with regard to arms control and weapons, nuclear weapons require a nuclear arms control regime. John McCain voted against a comprehensive nuclear test ban treaty that every Republican has supported. John McCain has opposed amending the Nuclear Test Ban Treaty with an amendment to allow for inspections. John McCain has not been -- has not been the kind of supporter for dealing with and -- by the -- let me put it another way. My time's almost up. Barack Obama, first thing he did when he came to the United States Senate, new senator, reached across the aisle to my colleague Dick Lugar, a Republican, and said, "We've got to do something about keeping nuclear weapons out of the hands of terrorists." They put together a piece of legislation that, in fact, was serious and real. Every major -- I shouldn't say every -- on the two, at least, that I named, I know that John McCain has been opposed to extending the arm control regime in the world. less more

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Governor?

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Well, first, McClellan did not say definitively that the surge principles would not work in Afghanistan. Certainly, accounting for different conditions in that different country -- and conditions are certainly different. We have NATO allies helping us, for one, and even the geographic differences are huge. But the counterinsurgency principles also could work in Afghanistan. McClellan didn't say anything opposite of that. The counterinsurgency strategy, going into Afghanistan -- clearing, holding, rebuilding the civil society and the infrastructure -- can work in Afghanistan. And those leaders who are over there, who have also been advising George Bush on this, have not said anything different but that. less more

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Senator?

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Well, our commanding general did say that. The fact of the matter is that -- again, I'll just put it in perspective. While Barack and I and Chuck Hagel and Dick Lugar have been calling for more money to help in Afghanistan, more troops in Afghanistan, John McCain was saying two years ago, quote, "The reason we don't read about Afghanistan anymore in the paper, it's succeeded." Barack Obama was saying we need more troops there. Again, we spend in three weeks on combat missions in Iraq more than we spent in the entire time we have been in Afghanistan. That'll change in a Barack Obama administration. less more

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Senator, you have quite a record -- this is the next question here -- of being an interventionist. You have argued for intervention in Bosnia and Kosovo, initially in Iraq, in Pakistan, and now in Darfur, putting U.S. troops on the ground, boots on the ground. Is this something the American public has the stomach for? less more

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Well, I think the American public has a stomach for success. And my recommendations on Bosnia -- I admit I was the first one to recommend it. They saved tens of thousands of lives. And initially John McCain opposed it, along with a lot of other people. But the end result was it worked. And look what we did in Bosnia. We took Serbs, Croats and Bosniaks, being told by everyone -- I was told by everyone that this would mean that -- they've been fighting and killing each other for a thousand years, it could never work. There's a relatively stable government there now, as there is in Kosovo. With regard to Iraq, I indicated that it would be a mistake to go into -- I gave the president the power, I voted for the power, because he said he needed it not to go to war, but to keep the United States -- the U.N. in line, to keep sanctions on Iraq and not let them be lifted. From the -- I, along with Dick Lugar, before we went to war, said if we were to go to war without our allies, without the kind of support we needed, we'd be there for a decade, it would cost us tens of billions of dollars. John McCain said no, it was going to be okay. I don't have a stomach for genocide when it comes to Darfur. We can now impose a no-fly zone. It's within our capacity. We can lead NATO, if we're willing to take a hard stand. We can. I've been in those camps in Chad. I've seen the suffering. Thousands and tens of thousands of people have died and are dying. We should rally the world to act, and we should demonstrate it by our own movement to provide the helicopters to get those 21,000 forces of the African Union in there now to stop this genocide. less more

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Thank you, Senator. Governor.

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Oh, man, it's so obvious that I'm a Washington outside and someone just not used to the way you guys operate, because here you voted for the war and now you oppose the war. You're one who says, you know, as so many politicians do, I was for it before I was against it, or vice versa. Americans are craving that straight talk and just want to know, hey, if you voted for it, tell us why you voted for it. And it was a war resolution, and you had supported John McCain's military strategies pretty adamantly until -- until this race, and you had opposed very adamantly Barack Obama's military strategy, including cutting off funding for the troops, that attempt, all through the primary. And I watched those debates, and -- and so, you know, I remember what those were all about. But as for Darfur, we can agree on that also -- support of the no-fly zone, making sure that all options are on the table there also. America is in a position to help. What I've done in my position to help, as the governor of a state that's pretty rich in natural resources, we have a $40 billion investment fund, a savings fund, call the Alaska Permanent Fund. When I and others in the legislature found out that we had some millions of dollars in Sudan, we called for divestment through legislation of those dollars to make sure we weren't doing anything that would see -- be seen as condoning the activities there in Darfur. That legislation hasn't passed yet, but it needs to because all of us as individuals and as humanitarians and as elected officials should do all that we can to end those atrocities in that region of the world. less more

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Is there a line that should be drawn about when we decide to go in?

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Absolutely, there is a line that should be drawn.

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What is it?

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The line that should be drawn is whether or not we, A, first of all, have the capacity to do anything about it, number one; number two, there are certain new lines that have to be drawn internationally. When a country engages in genocide, when a country engages in harboring people who are killing our people -- terrorists -- and they will do nothing about it, that in fact -- at that point, that country, in my view and in Barack's view, forfeits their right to say you have no right to intervene at all. The truth of the matter, though, is that -- let's go back to John McCain's strategy. I never supported John McCain's strategy on the war. John McCain said exactly what Dick Cheney said. Go back and look at Barack Obama's statements and mine. Go look at JoeBiden.com -- contemporaneously held hearings in the summer before we went to war, saying if we went to war we would not be greeted as liberators, we would have a fight between the Sunnis and Shi'as, we would be tied down for a decade, it would cost us hundreds of billions of dollars. John McCain was saying the exact opposite. John McCain was lockstep with Dick Cheney at that point about how this was going to be easy. So John McCain's strategy in this war -- not just whether or not to go, the actual conduct of the war -- has been absolutely wrong from the outset. John McCain was lockstep with Dick Cheney at that point about how this was going to be easy. So John McCain's strategy in this war -- not just whether or not to go, the actual conduct of the war -- has been absolutely wrong from the outset. less more

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Governor?

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I beg to disagree with you again, here, on whether you supported Barack Obama or John McCain's strategies. Here again, you can say what you want to say a month out before people are asked to vote on this, but we listened to the debates. I think tomorrow morning, you know, the pundits are going to start doing the "who said what at what time" and we'll have proof of some of this. But again, John McCain, who knows how to win a war, who's been there and he's faced challenges and he knows what evil is and he knows what it takes to overcome the challenges here with our military. He knows to learn from the mistakes, from the blunders that we have seen in the war in Iraq, especially. He will know how to implement the strategies, working with our commanders, though, and listening to what they have to say, taking the politics out of these war issues. He'll know how to win a war. less more

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Thank you, Governor. Probably the biggest cliche about the vice presidency is that it's a "heartbeat away." Everybody's waiting to see what would happen if the worst happened. How would -- you disagree on some things, from your principles. You disagree on Alaska -- drilling in Alaska, the National Wildlife Refuge. You disagree on surveillance law, at least you have in the past. How would a Biden administration be different from an Obama administration, if that were to happen? less more

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God forbid that it would ever happen. It would be a national tragedy of historic proportions, if it were to happen. But if it did, I would carry out Barack Obama's policies: his policies of reinstating the middle class, making sure that they get a fair break; making sure that they have access to affordable health insurance; making sure they get serious tax breaks; making sure that we can help their children to get to college; making sure we have an energy policy that leads us in the direction of -- not only toward independence and a cleaner environment, but an energy policy that creates 5 million new jobs; a foreign policy that ends this war in Iraq; a foreign policy that goes after the one mission the American public gave the president after 9/11, to get and capture or kill bin Laden and to eliminate al Qaeda; a policy that would, in fact, engage our allies in making sure that we knew we were acting on the same page and not dictating, and a policy that would reject the Bush doctrine of preemption and regime change and replace it with a doctrine of prevention and cooperation. And ladies and gentlemen, this is the biggest-ticket item that we have in this election. This is the most important election you will ever, ever have voted in, any of you, since 1932, and where such stark differences -- I would follow through on Barack's policies because in essence I agree with every major initiative he is suggesting. less more

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Governor.

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And heaven forbid, yes, that that would ever happen, no matter how this ends up, that that would ever happen with either party. As for disagreeing with John McCain and how our administration would work, what do you expect? A team of mavericks; of course we're not going to agree a hundred percent one everything. And as we discuss ANWR there, at least we can agree to disagree on that one, and I'm going to keep pushing him on ANWR, though. I have so appreciated that he has never asked me to check my opinions on the door. And he wants deliberative debate and healthy debate so that we can make good policy. What I would do also if that were to ever happen, though, is to continue the good work that he is so committed to, and that's putting government back on the side of the people and get rid of the greed and the corruption on Wall Street and in Washington. I think we need a little bit of reality from Wasilla Main Street there brought to Washington, D.C., so that people there can understand how the average working-class family is viewing bureaucracy in the federal government and Congress, and the inaction of Congress. Just everyday, working-class Americans saying: You know, government, just get out of my way if you're going to do any harm and mandate more things on me and take more of my money and income tax and business taxes. We are going to have a choice in just a few weeks here on either supporting the ticket that wants to create jobs and bolster our economy and win the war, or you're going to be supporting a ticket that wants to increase taxes, which ultimately kills jobs and is going to hurt our economy. less more

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Can I respond? Look.

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Please.

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All you got to do is go down Union Street with me in Wilmington and go to Katy's (sp) Restaurant or walk into Home Depot with me, where I spend a lot of time, and you ask anybody in there whether or not the economic and foreign policy of this administration has made them better off in the last eight years. And then ask them whether there's a single major initiative that John McCain differs with the president on: on taxes, on Iraq, on Afghanistan, on the whole question of how to help education, on the dealing with health care. Look, the people in my neighborhood, they get it. They get it. And they know they've been getting the short end of the stick. So walk with me in my neighborhood. Go back to my old neighborhood in Claymont, an old steel town, or go up to Scranton with me. These people know the middle class has gotten the short end, the wealthy have done very well, corporate America's been rewarded. It's time we change it. Barack Obama will change it. less more

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Governor?

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Ah, say it ain't so, Joe. There you go again, pointing backwards again, though.

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(Laughs.)

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You prefaced your whole comment with "the Bush administration." Now, doggone it, let's look ahead and tell Americans what we have to plan to do for them in the future. You mentioned education, and I'm glad that you did. I know that education you are passionate about. And with your wife being at teacher for 30 years -- and God bless her; her reward is in heaven, right? I say, too, with education, America needs to be putting a lot more focus on that, and our schools have got to be really ramped up in terms of the funding that they are deserving. Teachers needed to be paid more. I come from a -- a house full of schoolteachers. My grandma was. My dad, who's in the audience today, he's a schoolteacher, had been for many years. My brother, who I think is the best schoolteacher in the year -- and here's a shout out to all those third graders at Gladys Wood Elementary School. You get extra credit for watching this debate. (Laughter.) Education in America has been, in some sense, in some of our states, just accepted to be a little bit lax. And we have got to increase the standards. No Child Left Behind was implemented, is not doing the job, though. We need flexibility in No Child Left Behind. We need to put more of an emphasis on the profession of teaching. We need to make sure that education in either one of our agendas I think absolute top of the line. My kids, as public school participants right now, it's near and dear to my heart. I'm very, very concerned about where we're going in education, and we have got to ramp it up and put more attention in that arena. less more

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Everybody gets extra credit tonight.

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(Laughs.)

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We're going to move on to the next question. (Laughter.) Governor, you said in July that you would have to -- someone would have to explain to you exactly what it is the vice president does every day. You, Senator, said you not be vice president under any circumstances. Now maybe this was just what was going on at the time. (Laughter.) less more

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(Chuckles.)

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But tell us now, looking forward, what it is that you think the vice presidency is worth now.

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Okay. In my comment there, it was a lame attempt at a joke, and yours was a lame attempt at a joke too, I guess, because nobody got it. (Laughter.) Of course we know what a vice president does.

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They didn't get yours or mine? Which one didn't they get?

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They didn't mine either. They didn't mine either. No, no. (Laughter.) No, of course we know what a vice president does, and that's not only preside over the Senate -- and we'll take that position very seriously also; I'm thankful that the Constitution would allow a bit more authority given to the vice president also, if that vice president so chose to exert it, in working with the Senate -- and making sure that we are supportive of the president's policies and making sure too that our president understands what our strengths are. John McCain and I have had good conversations about where I would lead with his agenda. And that is energy independence in America and reform of government over all, and then working with families of children with special needs. That's near and dear to my heart also. And in those arenas, John McCain has already tapped and said: That's where I want you; I want you to lead. And I said I can't wait to get there and go to work with you. less more

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Senator?

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Gwen, I hope we'll get back to education, because I don't know any government program that John is supporting -- not early education, more money for it. The reason No Child Left Behind was left behind was the money was left behind. We didn't fund it. But we can get back to that, I assume. With regard to the role of a vice president, I had a long talk, as I'm sure the governor did with her principal -- in my case, with Barack -- and let me tell you what Barack asked me to do. I have a history of getting things done in the United States Senate. John McCain would acknowledge that. My record shows that, on controversial issues. I would be the point person for the legislative initiatives in the United States Congress for our administration. I would also -- when asked if I wanted a portfolio, my response was no. But Barack Obama indicated to me he wanted me with him to help him govern. So every major decision he'll be making, I'll be sitting in the room to give him my best advice. He's president, not me. I'll give my best advice. And one of the things he said early on when he was choosing, he said he would pick someone who had an independent judgment, who wouldn't be afraid to tell him if he disagreed. That is sort of my reputation, as you know. So I -- I look forward to working with Barack and playing a -- a very constructive role in his presidency, bringing about the kind of change this country needs. less more

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Governor, you mentioned a moment ago that the Constitution might give the vice president more power than it has in the past. Do you believe, as Vice President Cheney does, that the executive branch does not hold complete sway over the office of the vice presidency; that is, it is also a member of the legislative branch? less more

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Well, our Founding Fathers were very wise there in allowing through the Constitution much flexibility there in the office of the vice president. And we will do what is best for the American people in tapping into that position and ushering in an agenda that is supportive and cooperative with the president's agenda in that position. Yeah, so -- and I -- I do agree with him that we have a lot of flexibility in there, and we'll do what we have to do to administer very appropriately the plans that are needed for this nation. And it is my executive experience that is partly to be attributed to my pick as VP with -- with McCain not only as a governor, but earlier on as a mayor, as an oil and gas regulator, as a business owner. It is those years of experience on an executive level that will be put to good use in the White House also. less more

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Vice presidents -- Cheney interpretation of the vice presidency?

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Vice President Cheney's been the most dangerous vice president we've had probably in American history. He has -- he has -- the idea he doesn't realize that Article I of the Constitution defines the role of the vice president of the United States, that's the executive -- he works in the executive branch. He should understand that. Everyone should understand that. And the primary role of the vice president of the United States of America is to support the president of the United States of America, give that president his or her best judgment when sought, and as vice president to preside over the Senate only in a time when, in fact, there's a tie vote. The Constitution is explicit: the only authority the vice president has from the legislative standpoint is to vote only when there is a tie vote. He has no authority relative to the Congress. The idea he's part of the legislative branch is a bizarre notion invented by Cheney to aggrandize the power of a unitary executive, and look where it's gotten us. It has been very dangerous. less more

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Let's talk conventional wisdom for a moment. The conventional wisdom, Governor Palin, with you, is that your Achilles' heel is that you lack experience. Your conventional wisdom against you is that your Achilles' heel is that you lack discipline, Senator Biden. What is it, really, for you, Governor Palin? What is it really for you, Senator Biden? We'll start with you, Governor. less more

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My experience as an executive will be put to good use as a mayor and business owner and oil and gas regulator and then as governor of a huge state, a huge energy-producing state that is accounting for much progress towards getting our nation energy independence and that's extremely important. But it wasn't just that experience tapped into, it was my connection to the heartland of America: being a mom, being a -- one who is very concerned about a son in the war, about a special-needs child, about kids heading off to college -- how are we going to pay those tuition bills? -- about times and Todd and our marriage and our past where we didn't have health insurance. And we know what other Americans are going through as they sit around the kitchen table and try to figure out how are they going to pay out-of-pocket for health care. We've been there also. So that connection was important. But even more important is that world view that I share with John McCain, that world view that says that America is a nation of exceptionalism and we are to be that shining city on a hill, as President Reagan so beautifully said, that we are a beacon of hope and that we are unapologetic, here. We are not perfect as a nation, but together we represent a perfect ideal, and that is democracy and tolerance and freedom and equal rights, those things that we stand for that we can be put to good use as a force for good in this world. John McCain and I share that. And you combine all that with being a team with the only track record of making a -- really, a difference in where we've been and reforming, and that's a good team. It's a good ticket. less more

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Senator?

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You've been very kind, suggesting my only Achilles' heel is my lack of discipline. Others talk about my excessive passion. I'm not going to change. I have 35 years in public office, people can judge who I am; I haven't changed in that time. And by the way, a record of change -- I will place my record and Barack's record against John McCain's or anyone else in terms of fundamental accomplishments. I wrote the Crime Bill, put 100,000 cops on the street; wrote the Violence Against Women Act, but John McCain voted against both of them; was the catalyst to change the circumstance in Bosnia led by President Clinton, obviously. Look, I understand what it's like to be a single parent. When my wife and daughter died and my two sons were gravely injured, I understand what it's like as a parent to wonder what it's like if you're kid's going to make it. I understand what it's like to sit around the kitchen table with a father who says, I gotta leave, champ, because there's no jobs here. I gotta head down to Wilmington, and when we get enough money, honey, we'll bring you down. I understand what it's like. I'm much better off than almost all Americans now, I get a good salary as United States Senate. I live in a beautiful house that's my total investment that I have. So I am much better off now. But the notion that, somehow, because I'm a man, I don't know what it's like to raise two kids alone. I don't know what it's like to have a child you're not sure is going to make it. I understand, I understand as well as, with all due respect, the Governor or anybody else, what it's like for those people sitting around that kitchen table. And guess what? They're looking for help, they're looking for help. They're not looking for more of the same. less more

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Governor?

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People aren't looking for more of the same, they are looking for change. And John McCain has been the consummate maverick in the Senate over all these years. He's taken shots left and right from the other party and from within his own party because he's had to take on his own party when the time was right, when he recognized it was time to put partisanship aside and just do what was right for the American people. That's what I've done as governor also -- take on my own party when I had to and work with both sides of the aisle. In my Cabinet, appointing those who would serve regardless of party -- Democrats, Independents, Republicans, whatever it took to get the job done. Also, John McCain's maverick position that he's in, that's really propped up to and indicated by the supporters that he has. Look at Lieberman and Giuliani and Romney and Lingle and all of us who come from such a diverse background of policy and of partisanship, all coming together at this time recognizing he is the man that we need to leave in -- lead in these next four years, because these are tumultuous times. We have got to win the wars. We have got to get our economy back on track. We have got to not allow the greed and corruption on Wall Street anymore. And we have not got to allow the partisanship that has really been entrenched in Washington, D.C., no matter who's been in charge. When the Republicans were in charge, I didn't see a whole lot of progress there either; when the Democrats either, though, this go-round for the last two years. Change is coming, and John McCain is the leader of that reform. less more

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(Inaudible) -- very brief. Can I respond to that? Look.

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Please.

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Look, the maverick, let's talk about the maverick John McCain is. And again, I love him. He's been a maverick on some issues. But he has been no maverick on the things that matter to people's lives. He voted four to five times for George Bush's budget, which put us a half a trillion dollars in debt this year and over $3 trillion in debt since he's got there. He has not been a maverick in providing health care for people. He has voted against -- he voted against including another 3.6 million children in coverage that -- of the existing health care plan when he voted in the United States Senate. He's not been a maverick when it comes to education. He has not supported tax cuts and significant changes for people being able to send their kids to college. He's not been a maverick on the war. He's not been a maverick on virtually anything that genuinely affects the things that people really talk about around their kitchen table. Can we send -- can we get Mom's MRI? Can we send Mary back to school next semester? We can't make it. How are we going to heat the -- heat the house this winter? He voted against even providing for what they call LIHEAP, for assistance to people with oil prices going through the roof in the winter. So, maverick he is not on the important, critical issues that affect people at that kitchen table. less more

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Final question tonight before your closing statements, starting with you, Senator Biden. Can you think of a single issue -- and this is to cast light for people who are just trying to get to know you in your final debate, your only debate of this year. Can you think of a single issue, policy issue, in which you were forced to change a long-held view in order to accommodate changed circumstances? less more

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Yeah, I can. When I got to the United States Senate and went on the Judiciary Committee as a young lawyer, I was of the view and had been trained in the view that the only thing that mattered was whether or not a nominee appointed -- suggested by the president had a judicial temperament, had not committed a crime of moral turpitude, and was -- had been a good student. And it didn't take me long -- it was hard to change, but it didn't take me long, but it took about five years for me to realize that the ideology of that judge makes a big difference. That's why I led the fight against Judge Bork. Had he been in the court, I suspect there would be a lot of changes that I don't like and the American people wouldn't like, including everything from Roe v. Wade to issues relating to civil rights and civil liberties. And so that -- that -- that -- that was one of the intellectual changes that took place in my career, as I got a close look at it. And that's why I was the first chairman of the Judiciary Committee to forthrightly state that it matters what your judicial philosophy is; the American people have a right to understand it and to know it. But I did change on that, and -- and I'm glad I did. less more

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Governor?

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There have been times where, as mayor and governor, we have passed budgets that I did not veto and that I think could be considered as something that I quasi-caved in, if you will, but knowing that it was the right thing to do in order to progress the agenda for that year and to work with the legislative body, that body that actually holds the purse strings. So there were times when I wanted to zero-base budget and to cut taxes even more, and I didn't have enough support in order to accomplish that. But on the major principle things, no, there hasn't been something that I've had to compromise on because we've always seemed to find a way to work together. Up there in Alaska, what we have done is with bipartisan efforts, is work together and, again, not caring who gets the credit for what as we accomplish things up there. And that's been just a part of the operation that I wanted to participate in, and that's what we're going to do in Washington, D.C. also. Bringing both sides together, John McCain is known for doing that also, in order to get the work done for the American people. less more

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Let's come full circle. You both want to bring both sides together and you both talk about bipartisanship -- bipartisanship. Once again, we saw what happened this week in Washington. How do you change the tone, as vice president, as number two? less more

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Well, again, I believe John McCain, were he here -- and this is a dangerous thing to say in the middle of an election, but he would acknowledge what I'm about to say. I have been able to work across the aisle on some of the most controversial issues and changed my party's mind as well as Republicans', because I learned a lesson from Mike Mansfield. Mike Mansfield, the former leader of the Senate, said to me one day -- he -- I made a criticism of Jesse Helms. He said, "What would you do if I told you Jesse Helms and Dot Helms had adopted a child who had braces and was in real need?" I said I'd feel like a jerk. He said, "Joe, understand one thing: Everyone's sent here for a reason, because there's something in them that folks like. Don't question their motive." I have never since that moment in my first year questioned the motive of another member of the Congress or Senate with whom I've disagreed. I've questioned their judgment. I think that's why I have the respect I have and been able to work as well as I've been able to have worked in the United States Senate. That's the fundamental change Barack Obama and I will bring to this party -- not questioning other people's motives. less more

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Governor?

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You do what I did as governor and you appoint people regardless of party affiliation -- Democrats, independents, Republicans. You -- you walk the walk. You just don't just talk the talk. And even in my own family, it's a very diverse family, and we have folks of all political persuasion in there also. So I've grown up just knowing that, you know, at the end of the day, as long as we're all working together for the greater good, it's going to be okay. But the policies and the proposals have to got to speak for themselves also. And again, voters on November 4th are going to have that choice to either support a ticket, support policies that create jobs -- you do that by lowering taxes on American workers and on our businesses, and you build up infrastructure, and you rein in government spending, and you make our -- our nation energy-independent -- or you support a ticket that supports policies that will kill jobs by increasing taxes -- and that's what the track record shows, is a desire to increase taxes, increase spending -- a trillion-dollar spending proposal that's on the table, that's going to hurt our country -- and saying no to energy independence -- clear choices on November 4th. less more

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Governor Palin, you get the chance to make the first closing statement.

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Well again, Gwen, I do want to thank you and the commission. This is such an honor for me. And I appreciate, too, Senator Biden, getting to meet you finally also and getting to debate with you. And I would like more opportunity for this. I like being able to answer these tough questions without the filter, even, of the mainstream media kind of telling viewers what they've just heard. I'd rather be able to just speak to the American people like we just did. And it's so important that the American people know of the choices that they have on November 4th. I want to assure you that John McCain and I, we're going to fight for America. We're going to fight for the middle class, average, everyday American family like mine. I've been there. I know what the hurts are. I know what the challenges are. And thank God I know what the joys are, too, of living in America. We are so blessed. And I've always been proud to be an American and so has John McCain. We have to fight for our freedoms, also, economic and our national security freedoms. It was Ronald Reagan who said that freedom is always just one generation away from extinction. We don't pass it to our children in the bloodstream. We have to fight for it and protect it and then hand it to them so that they shall do the same, or we're going to find ourselves spending our sunset years telling our children and our children's children about a time in America back in the day when men and women were free. We will fight for it, and there is only one man in this race who has really ever fought for you, and that's Senator John McCain. less more

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Thank you, Governor. Senator Biden?

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Gwen, thank you for doing this and the commission. And Governor, it really was a pleasure getting to meet you. Look, folks, this is the most important election you've ever voted in your entire life. No one can deny that the last eight years we've been dug into a very deep hole, here at home with regard to our economy and abroad in terms of our credibility. And there's a need for a fundamental change on our economic philosophy, as well as our foreign policy. And Barack Obama and I don't measure progress toward that change based on whether or not we cut more regulations and how well CEOs are doing, or giving another $4 billion in tax breaks to the ExxonMobils of the world. We measure progress in America based on whether or not someone can pay their mortgage, whether or not they can send their kid to college, whether or not they're able to, when they send their child like we have abroad -- or I'm about to abroad, and John has as well I might add -- to fight, that they're the best equipped and they have everything they need, and when they come they're guaranteed that they have the best health care and the best education possible. You know, in the neighborhood I grew up in, it was all about dignity and respect, a neighborhood like most of you grew up in. And in that neighborhood, that was filled with women and men, mothers and fathers who taught their children if they believed in themselves, if they were honest, if they worked hard, if they loved their country, they could accomplish anything. We believed it, and we did. That's why Barack Obama and I are running, to reestablish that certitude in our neighborhoods. Ladies and gentlemen, my dad used to have an expression. He'd say, "Champ, when you get knocked down, get up." Well, it's time for America to get up together. America's ready, you're ready, I'm ready, and Barack Obama is ready to be the next president of the United States of America. May God bless all of you, and most of all, for both of us selfishly, may God protect our troops. less more

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That ends tonight's debate. We want to thank the folks here at Washington University in St. Louis and the Commission on Presidential Debates. There are two more debates to come: next Tuesday, October 7th, with Tom Brokaw at Belmont University in Nashville; and on October 15th at Hofstra University in New York with Bob Schieffer. Thank you, Governor Palin and Senator Biden. Good night, everybody. (Cheers, applause.) less more

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Good evening from Belmont University in Nashville, Tennessee. I'm Tom Brokaw of NBC News, and welcome to this 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 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 or 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? (Cheers, applause.) Gentlemen, we want to get under way immediately, if we can. Since you 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've 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 Allen Schaffer. first question from over here in Section A, from Allen Schaffer. Allen? less more

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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?

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Well, Allen, 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 e-mail 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. less more

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Senator McCain?

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Well, thank you, Tom. Thank you, Belmont University. And Senator Obama, it's good to be with you at a town hall meeting. And Allen, 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. And it's our job to fix the problem. Now, 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 want us very -- 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, who are here with us tonight? Five hundred 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, to decline. And people are no longer able to afford their mortgage payments. As president of the United States, Allen, 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. less more

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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? (Pause.) Senator McCain? less more

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Not you, Tom. (Laughter.)

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(Chuckles.) (Inaudible.) With good reason. (Laughter.)

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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 -- that individual. Supporter of Senator Obama's is Warren Buffet. 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 them. 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. less more

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Yup. All right. Senator McCain -- Senator Obama, who do you have in mind for a Treasury secretary?

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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's not just going to trickle down. We've got to help the middle class. And we've -- you know, 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's going to have to work on. less more

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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? less more

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Well, Senators, through this economic crisis, most of the people that 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. less more

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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 -- 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 in 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 could 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 and some members of Congress defended what, what Fannie and Freddie were doing. They, 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 Allen -- can realize the American dream and stay in their home. But Fannie and Freddie were the catalysts, the match that started this forest fire. There were some of us -- there were some of us that stood up against us; there was others who took a hike. less more

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Senator Obama.

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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 affect of 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 -- 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 reregulate. 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 pointing 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 home buyer, you as a homeowner, and not simply think about bailing out banks on Wall Street. less more

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Senator Obama, time for a 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? less more

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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 a(n) 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. less more

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Senator McCain, in all candor, do you think the economy's going to get worse before it gets better?

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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're the fundamental aspect of America's economy. They're the most innovative. They're the best -- they're most -- 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 got to give them a chance. They got -- we got to give them a chance to do their best again. less more

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Yeah.

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And they are the innocent bystanders here in what is the biggest financial crisis and challenge of our time. We can do it.

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Thank you, Senator McCain. We're going to continue over in Section F, as it turns out. Senator Obama, this is a question from (sic) you, from Teresa Finch. Teresa?

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

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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's coming in, you end up making cuts. 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 surplus. And now we have a $0.5 trillion 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's 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 our 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 know, 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 the policy in Washington lately, and that's mostly lobbyists and special interests. We've got to put an end to that. less more

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Senator McCain.

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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 -- 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 what Senator Obama has voted for -- 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 $1 billion 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 the 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 -- less more

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Senator --

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-- $700 billion a year overseas.

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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? less more

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That was --

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Senator McCain.

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The three priorities were health --

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The three, health -- health care, energy, and entitlement reform -- Social Security and Medicare. In what order will you put them in terms of priorities?

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I -- 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 -- that's my clear record. We can -- we can work on nuclear power plants, build a whole bunch of them, create millions of new jobs. We -- we have to have all of the above -- alternate -- 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. less more

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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. less more

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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, you know, in some cases countries like Iran are benefitting 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. 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. less more

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All right. Gentlemen, I want to just remind you one more time about time.

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(Laughs.)

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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. (Laughter.) We -- Senator McCain, for you, we have our first question from the Internet tonight. A child of the Depression, 78-year-old Fiorra 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?" less more

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Well, Fiorra, 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, 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 we don't, 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, we're not, 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's been doing. less more

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Senator McCain, thank you very much. Senator Obama?

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You know, a lot of you remember the tragedy of 9/11 and where you were on that day and, you know, 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 -- and a -- and a more unified country. And you know, President Bush did some smart things at the outset, but one of the opportunities that was missed when he spoke to the American people, he -- 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, you know, it's important to understand that the -- 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 -- 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. less more

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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? less more

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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 -- has, you know, 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 -- 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, you know, it's tough to ask a -- a teacher who's making 30 (thousand dollars) 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 -- 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. less more

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Senator McCain.

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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 -- 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 forego 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 be 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. less more

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Senator Obama, we have another question from the Internet.

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Tom, can I respond to this briefly, because --

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Well, look, guys, the rules --

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I understand.

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-- were established by the two campaigns. We worked very hard on this.

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Right.

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This will address, I think, the next question --

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

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(Laughs.) There are lots of issues that we're going to be dealing with here tonight.

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Let's go.

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And we have a question from Langdon (sp) 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 that's a big ticking time bomb that will eat us up, maybe even more than the mortgage crisis? less more

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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 -- but I think it's important to understand we're not going solve Social Security and Medicare unless we understand the rest of our tax policies. And you know, Senator McCain, I think, you know, the Straight Talk Express lost a 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 -- 95 percent. If you make less than a quarter million dollars a year, you will not see a single dime of your taxes go up. If you make $200,000 a year or less, your taxes will go down. Now, Senator McCain talks about small businesses. Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan. 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 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; 200 (billion dollars) of it to the largest corporations, and 100,000 of it -- 100 billion (dollars) 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. less more

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Senator McCain, two years for reform of entitlement programs?

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Sure. Hey, I'll answer the question. (Laughter.) Look, it's not that hard to fix Social Security, Tom. It's just tough decisions.

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And Medicare.

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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 across the table. It's been done before. I saw it done with our, 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, it's 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. less more

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Senator McCain, thank you very much. I'm going to stick by my part of the pact and not ask a follow-up here.

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(Laughs.)

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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?

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Senator McCain, I want to know -- we saw that Congress moved pretty fast in the face of a(n) 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. less more

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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 -- 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 -- and I introduced the first legislation, and we forced votes on it. That's the good news, my friends. Bad news is, we lost. But we kept the debate going, and we kept this issue to -- to posing to Americans the danger that climate change opposes (sic). Now how -- what's -- 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've -- 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 -- and I know that we can reprocess the spent nuclear fuel. The Japanese, the British, 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 alternate -- alternative energies for -- 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. less more

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Senator Obama?

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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 power plant a week. We've got to make sure that we're giving them the energy that they need or -- or helping them to create the energy that they need. less more

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Gentlemen, you may not have noticed, but we have lights around here.

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(Laughs.)

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They have -- they have red and green --

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All right.