Economy dominates debate

NASHVILLE, Tenn. – On a day in which the stock market took another sharp plunge, presidential candidates John McCain and Barack Obama clashed repeatedly here Tuesday night over the causes of the economic meltdown that has shaken the country and offered sharply contrasting prescriptions for how to restore stability.

McCain played the role of the aggressor throughout the 90-minute debate, accusing his Democratic rival of favoring major tax and spending increases and of relying too often on big government programs to reshape the nation’s health-care system. He said he would do more to shake up Washington and bring cooperation to the capital.

“I have a clear record of bipartisanship,” he said. “The situation today cries out for bipartisanship. Senator Obama has never taken on his leaders of his party on a single issue.”

Obama countered by accusing the Republican of favoring Bush administration policies that he said had helped put the economy in dire straits. Those policies, he charged, called for less regulation and were based on the belief that by letting markets run wild, “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.”

McCain used the debate to promote another approach to solving the economic crisis, saying he would have the government buy up bad mortgages and renegotiate them at the current lower housing values, thereby allowing struggling homeowners to remain in their homes. He argued that until the housing markets stabilize, the economy will continue to falter, and he sought to use the idea to demonstrate his independence from the Bush administration.

“It’s my proposal, it’s not Senator Obama’s proposal, it’s not President Bush’s proposal,” he said. “But I know how to get America working again, restore our economy and take care of working Americans.”

Although economic issues dominated much of the debate, some of the most pointed exchanges were over foreign policy. McCain charged that Obama had been wrong on the “surge” of U.S. troops in Iraq and accused his rival of “talking loudly” by threatening to attack Pakistan. Obama accused McCain of getting his facts wrong and said it was McCain whose rhetoric was belligerent.

“This is the guy who sang, ‘Bomb, bomb, bomb Iran,’ who called for the annihilation of North Korea,” Obama said. “That I don’t think is an example of ‘speaking softly.’ This is the person who, after we had – we hadn’t even finished Afghanistan, where he said, ‘Next up, Baghdad.’ ”

The debate came after two weeks of focus on the economy that has shifted the electoral map in Obama’s favor. McCain was under pressure Tuesday to shake up the race with a dominating performance, but the likelihood is that, as sharp as some of the exchanges were, the contest may not change significantly as a result.

Obama has opened up a lead in national polls and in some of the most important battleground states. Last week, McCain pulled out of Michigan, a state he had hoped to convert to his column. In the past few days, new polls show Obama leading in Ohio, which is critical to the Republican’s hopes.

Even McCain’s running mate, Alaska Gov. Sarah Palin, had said that it was time for the gloves to come off. Over the past few days, the McCain-Palin campaign has gone after Obama’s character and pointedly questioned his association with William Ayers, who was once a member of a 1960s domestic terrorist group. But while he was aggressive, McCain steered clear of those kinds of personal attacks. Instead, he laid out his differences with Obama largely on policy grounds, and repeatedly questioned whether his rival has the judgment and experience to run the country.

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 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.

The Obama campaign called the mortgage idea “old news,” saying that a similar Treasury Department program is already under way as part of the economic rescue package and that Obama backed it.

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.

“In his short career, he does not understand our national security challenges,” McCain said. “We don’t have time for on-the-job training.”

Obama bristled at the statement and McCain’s suggestion, as he put it, that “I don’t understand” elements of foreign policy. The Democrat used his response to reframe his critique of the Iraq war as a diversion from vital U.S. security interests.

“It’s true; there are some things I don’t understand,” Obama said sarcastically. “I don’t understand how we ended up invading a country that had nothing to do with 9/11 while Osama bin Laden and al-Qaida are setting up base camps and safe havens to train terrorists to attack us. That was Senator McCain’s judgment, and it was the wrong judgment.”