Economic Crisis Dominates Debate

Gallery

Obama, McCain Square Off in Town Hall

Sens. John McCain and Barack Obama spar over which party is to blame for the nation's financial crisis and which candidate has a better plan for the future.

» LAUNCH PHOTO GALLERY

Tuesday's debate, held at Belmont University, was framed in a town hall format. The questions came from an audience of undecided and loosely aligned voters from the Nashville area, as well as from Internet submissions, with moderator Tom Brokaw of NBC News offering follow-ups.

McCain's announcement that he would direct the Treasury Department to buy failing mortgages was part of an aggressive push to give him a boost on an issue -- the economy -- with which he has struggled.

The plan, he said, would turn such mortgages over to the government, replacing them with "manageable, fixed-rate mortgages" for homeowners to reduce the chances of default. His advisers circulated talking points to Republican surrogates telling them to describe it as a "bold initiative" and to call it the "McCain Resurgence Plan."

But McCain did not fully explain how he would finance the $300 billion program, other than to say that it could dip into the money recently passed in the $700 billion economic rescue package.

Nor did he explain how it would square with his promise to freeze all government spending. McCain seemed to be proposing two opposing ideas at once: paring back on the budget, through cutting defense programs and earmarks, while at the same time adding an expensive program.

At another point in the debate, McCain was asked whether the United States should sponsor research and development programs to find new sources of energy. He said it should, then changed the subject to return to a core issue of his career: pork-barrel spending. Referring to his rival across the stage as "that one," McCain cited an energy bill, sponsored by Bush, that Obama had supported.

"There was an energy bill on the floor of the Senate loaded down with goodies, billions for the oil companies. And it was sponsored by Bush and Cheney. You know who voted for it? You might never know. That one," McCain said, gesturing toward his rival. "You know who voted against it? Me."

Audience member Lindsey Trella asked both candidates whether they view health care as a commodity.

Obama described the need for a "moral commitment" to providing health care and sharply criticized McCain for offering a $5,000 health-care tax credit without also explaining that he would impose new taxes on benefits. "So what one hand giveth, the other hand taketh away," he said. Citing other parts of McCain's plan, he added, "And that is fundamentally the wrong way to go."

McCain countered that Obama's plan would impose government intervention. "What is at -- at stake here in this health-care issue is the fundamental difference between myself and Senator Obama." He continued: "As you noticed, he starts talking about government. He's talked -- said government will do this and government will do that and then government will, and he'll impose mandates. If you're a small-business person, and you don't insure your employees, Senator Obama will fine you, will fine you. That's remarkable."

Obama said his plan would exempt small businesses and would provide a credit to companies for their employees' premiums.

Foreign policy occupied the last third of the debate, with the candidates clashing repeatedly on Pakistan and on their overall approaches to the use of U.S. military forces. McCain sharply criticized Obama's opposition to the troop surge in Iraq and his response to Russian aggression in Georgia, as he sought to sow doubts about his challenger's capacity to handle the commander-in-chief functions.