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Obama, McCain clash on financial crisis

world Updated: Oct 08, 2008 14:14 IST

AP
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Republican John McCain, urgently needing to turn his campaign around, clashed in a debate with Democrat Barack Obama over the causes and cures for a massive financial crisis that has frightened Americans and dimmed his prospects for winning the presidency.

Tuesday's debate, the second of three, came as polls show Obama building a small but significant lead just four weeks before the Nov 4 election. It also came as both campaigns exchanged some of the harshest personal attacks of the race.

Both candidates shied away from such rancor as they answered domestic and international policy questions from voters in the audience at Belmont University. Instead they repeated many of the points they made in their Sept 26 debate but neither candidate landed any knockout blow.

In that regard, Obama emerged from the debate with the advantage because time is running out for McCain to change the course of a race clearly moving Obama's way.

Obama, looking to link McCain to President George W Bush, described the financial crisis as the "final verdict on the failed economic policies of the last eight years" that Bush pursued and McCain supported.

He contended that Bush, McCain and others had favored deregulation of the financial industry, predicting that would "let markets run wild and prosperity would rain down on all of us. It didn't happen."

McCain pointed to large donations Obama received from individuals at two now-disgraced mortgage industry giants, Fannie Mae and Freddie Mac, whom he blamed for precipitating the housing crisis that triggered the meltdown by backing risky mortgages. "There were some of us who stood up against this," McCain said of the failure to impose new regulations on the mortgage giants ahead of the current financial crisis. "There were others who took a hike."

McCain, a 72-year-old veteran senator, entered the debate in a precarious position. He has long faced the difficult task of persuading voters to elect another Republican president despite the intense unpopularity of Bush after eight years in the White House. That challenge has deepened with retirement accounts evaporating, tens of thousands of homes in foreclosure, unemployment climbing and the stock market plunging including a 5 per cent loss on Tuesday. Polls show voters have more confidence in Obama's ability to handle the economy. But his inability to lock up the race also reflects how many Americans remain uncertain about Obama, a 47-year-old first-term senator seeking to become the United States' first black president.

Obama looked to strike a balance between appearing sufficiently knowledgeable to appear presidential, while avoiding long-winded, academic-style answers that has led some Americans to see him as aloof.

He stressed his understanding of the plight of everyday Americans worried about their jobs, falling home values and health care. He talked about his mother fighting with insurance companies while she was dying of cancer at age 53.

The town-hall style format was seen as an advantage for McCain, who does best before small audiences. He appeared comfortable as he addressed audience members directly and in interacting with Obama. In the first debate, he avoided looking at his rival. McCain offered a major new proposal: a $300 billion program for the US government to buy up bad home mortgages directly from homeowners and mortgage providers.

`It's my proposal, it's not Senator Obama's proposal, it's not President Bush's proposal," he said.

McCain's pledge to have the government help individual homeowners avoid foreclosure went beyond the details of the bailout that recently cleared Congress. The legislation allows but does not require Treasury to purchase mortgages directly. Obama has said previously that idea should be studied, and his campaign contended McCain's proposal was not a new one.

McCain also said it was important to reform the giant benefit programs such as Medicare, Medicaid and Social Security. "My friends, we are not going to be able to provide the same benefit for present-day workers that present-day retirees have today," he said, although he did not elaborate.

On national security, the candidates repeated familiar positions on Iraq. McCain chided Obama for opposing the buildup of US troops in Iraq that is credited, in part, with reducing violence. McCain said his rival "was wrong about Iraq and the surge. He was wrong about Russia when they committed aggression against Georgia. And in his short career he does not understand our national security challenges. We don't have time for on the job training." Obama countered with a trace of sarcasm that he did not understand some things like how the United States could face the challenge it does in Afghanistan after spending years and hundreds of billions of dollars in Iraq.

"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."

McCain accused Obama of foolishly threatening to invade Pakistan and said, "I'm not going to telegraph my punches, which is what Sen. Obama did." Obama responded by challenging McCain's steadiness. "This is a guy who sang bomb, bomb, bomb Iran, who called for the annihilation of North Korea."

The candidates avoided the vitriol of recent days which included attacks on Obama's links to William Ayers, a former radical who engaged in violent acts 40 years ago. Obama's campaign responded by releasing a video about McCain's involvement in a financial scandal two decades ago.

The candidates were polite, but the strain of the campaign showed. At one point, McCain referred to Obama as "that one," rather than speaking his name.

Their insults were more on issues than on character. McCain quipped at one point that trying to pin down Obama's tax plan was like "trying to nail Jell-O (gelatin) to the wall." But, responding to a question from moderator Tom Brokaw, about possible Treasury secretaries, McCain suggested a prominent Obama supporter, financier Warren Buffett, as a possibility, along with former eBay CEO Meg Whitman.

Brokaw, a veteran NBC newsman, also asked the candidates when they would use troops for a humanitarian crisis, even if US national security is not at risk.

Citing the World War II Holocaust and the mass killings in Rwanda, Obama said that "when ethnic cleansing is happening somewhere around the world and we stand idly by, that diminishes us." But he said "There's a lot of cruelty around the world. We're not going to be able to be everywhere all the time." McCain said "we must do whatever we can to prevent genocide," but said this has to be balanced by whether the US can really help in a situation, citing failed US interventions in Lebanon in the 1980s and Somalia in the 1990s.

The audience was selected by Gallup, the polling organization, and was split three ways among voters leaning toward McCain, those leaning toward Obama and those undecided. Brokaw screened their questions and also chose others that had been submitted online. The third and final presidential debate of the campaign will be on Oct 15.