Second Presidential Debate: Transcript Highlights

With the pundits calling the second presidential debate mostly "status quo," the polls will likely show Obama with the slight edge that was his to keep. The lowest moment of the debate was, perhaps, when McCain referred to Obama as "that one."

The first question dealt with the mechanics of the recent $700,000 "Bailout" legislation.

Obama reminded viewers that it was republicans who said we should strip away regulations and let the market work for itself, which is in part how we ended up in the current financial crisis. He set out three specific elements of the fix that is needed in conjuction with the Bailout: 1) Make sure the bailout works properly, there is oversight, taxpayers get money back, and CEO's don't receive bonuses and golden parachutes as a consequence of this bailout. He then referred to the $400,000 junket that AIG executives took once they received a "bailout." 2) The middle class needs tax cuts, there must be help for homeowners, and state and local governments need assistance with setting up road projects 3) Fix the health care and energy systems that are putting an enormous burden on working families.

McCain said, "Americans are angry, upset and fearful. Our job is to fix the problem. My plan to fix it is to stop spending money in countries that don't like us very much. Let's not raise taxes on anybody [and] stop the spending spree in Washington. We're going to have to do something about home values, retirees' values continue to decline. I'd order the Secretary of Treasury to buy up bad home mortgages and renegotiate at the diminished value of the homes. It's expensive, my friends, but we have to stabilize home values." 

When asked about who might be qualified to replace Secretary Paulson in the Treasury, McCain named Warren Buffet and Meg Whitman stating it must be someone who inspired trust and confidence.

Obama: "Warren would be a pretty good choice... but there are other folks out there. The key is that it's not enough just to help those at the top. Prosperity is not going to trickle down. We have to help the middle class. The fundamentals of the economy (wages, income) have flatlined. It's harder to save, harder to retire." He would give a tax cut to 95% of middle class Americans. He said McCain is right to want to stabilize home prices, but the Treasury Secretary has to work on wages and income as well."

The candidates were asked how the Bailout helps the middle class.

McCain: "It's rescue. Because of greed and excess on Wall Street, Main Street is hurting. The economy will recover. One real catalyst that lit this fire was Fannie Mae and Freddie Mac. Bet you've never heard of them before this crisis. Obama and his friends made risky loans...Some of us stood up and said we have to enact legislation to stop this greed. The democrats defended Fannie Mae and Freddie Mac; they were getting money and campaign contributions from them. Obama was the second highest recipient from Fannie Mae and Freddie Mac. We have to shore up these institutions, but it's not enough. We have to buy up these bad loans, stabilize home prices, realize the American dream. Fannie Mae and Freddie Mac started this forest fire."

Obama: "We need a rescue package for you now...The treasury market has frozen up. Small businesses and some large ones can't get loans. If they can't get loans, they can't make payroll...[and] have to lay people off. Imagine a million companies going through that. It could have an adverse effect on everybody. Let's correct McCain's history. [With regard to] the deregulation of financial system, McCain is a deregulator and even bragged about it in March. Two years ago, I wrote to Secretary Paulson and Federal Reserve Chariman Bernanke that we have to deal with this. A year ago I said we have to regulate. McCain said we have to keep deregulating... I never promoted Fannie Mae; McCain has the lobbyists of Fannie Mae. But, your interest is not pointing fingers, [and] this is not the end of the process. It's important for us to work with homeowners. The treasury secretary has that power, but it hasn't been exercised yet. The president has to think about helping you, not just bailing out Wall Street."

Tom Brokaw interjected that Obama is saying it's going to get much worse to which Obama offered his own words: "We have a 20th century regulatory system and a 21st century economy. We're going to have help ordinary families stay in their homes, deal with issues like health care and energy, and not let lobbyists drive the economy."

McCain replied that we have to "act effectively... buy up bad loans, get rid of cronyism and special interests. We can fix our economy. American workers are the best in the world, the most innovative, best exporters, best importers, best workers in the world. We've got to give them a chance. They are the innocent bystanders here. We can do it."

Addressing the cynicism of voters who are wondering why they should trust either candidate with their money, Obama acknowledged that citizens are carrying out their responsibilites. When George Bush took office, the national debt was $5 trillion. It has since doubled and the last eight years have experienced the biggest spending increase in history. He noted that McCain has votetd in favor of four of Bush's five proposed budgets. He said we need to make investments AND spending cuts and that "We need priorities that work for you, as aopposed to those dictated by lobbyists and special interests."

McCain then listed three democrats (one being Lieberman) with whom he has worked with as evidence of his bipartisanship and prove of his reputation as a reformer. He then said we need offshore drilling and must stop sending $700 billion overseas each year.

Brokaw asked about establishing priorities in these economically challenged times where we will have to make choices. McCain said we can do it all at once: take on health care, energy and entitlement programs (Social Security and Medicare). He said, "It's very important that we reform entitlement programs," referring to his plans to privatize and deregulate Social Security and Medicare.

Obama said health care, energy and then entitlements saying he would "go line by line through[entitlement program] items, eliminate those that don't work, and make sure those that do work better and cheaper."

With regard to breaking the habit of bad debt, Obama made the contrast between the $18 billion in earmarks that McCain plans to cut in order to balance the budget and the tax cuts in the amount of $200 billion ($700,000 a year, each) that McCain wants to give  Fortune500 CEO's.

With regard to Social Security and Medicare reform, Obama could not promise this would happen during his first two years in office, saying it was necessary the rest of our tax policies first. He then reiterated that under his tax plan, 95% of Americans would receive a tax cut - a fact McCain repeatedly misstates. Of McCain's $300 billion tax cuts, $200 billion would go to large corporations and $100 billion would go to Fortune500 CEO's.

When the candidates discussed energy, McCain spoke of his navy service and said he'd been on navy ships that utilized nuclear power and said it was clean. Obama said the energy problem is one of the biggest challenges of our time but offers us an opportunity. He said we have to invest in alternative energy and that it is a national security issue.

On health care, McCain seemed to scare people by stating that Obama would somehow "go after you" if you didn't have health care. Obama explained that if you have a health care plan you like, under his plan you can keep it and that mandates on health insurance for children keep children with treatable illnesses out of the emergency room - and emergency situations.

Brokaw then turned to foreign policy.

McCain said, basically, that Obama doesn't understand foreign policy to which Obama replied that he does not understand things like why we invaded a country that had nothing to do with 9/11.

Both candidates said they would not take military action off the table when it comes to Pakistan and when a retired navy chief from the audience asked whether each candidate would wait for UN Security Council approval before committing troops to Israel, McCain said, "Obviously not." Obama said we won't provide veto power to the UN, but that "it is important for us to use all the tools at our disposal to prevent the need to make those decisions."

In closing, Obama said, "...The international challenges we'll face are a mess...never ones you expect. It's the ones you don't expect that consume most of your time... I wouldn't' be standing here if our country didn't give me opportunity." He spoke of being raised by a single mom and his grandparents, being able to go to college with scholarships, his grandma scrimping to help, his mom being food stamps at one point.  "Despite [all] that, I went to the best schools and succeeded in a way that I couldn't anywhere else. Are we going to pass on that American dream to the next generation?" He said that over the last eight years,  the dream has diminished, wages and income have gone down, health care has been lost, medical costs have pushed people into bankruptcy, young people have no money for college. He said that "if we do the same things [we have] over the last eight years, we're going to have the same outcome. I'm hopeful you will want to continue this extraordinary journey we call America."

McCain's closing statement: "What I don't know is what all of us don't know, what's going to happen here and abroad. Americans are hurting in a way they have not [ever before] in our generation...we'll be talking about countries in the future that we don't even know where they are on a map. I've spent my life serving this country. My dad was gone. My mom raised us. I know what it's like in dark time, [to have to] keep ones hope going...to have your comrades reach out and pick you up. I believe in this country, its greatness, my great honor to serve it for many, many years, and am asking for another opportunity...[I will be a] steady hand at the tiller, [and] put my country first."

Just in: CNN polls showed that 39% of those polled declared Obama the winner, 27% said McCain won the debate and 35% declared it a tie

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Retired from a career in law and banking, Diana Raabe is a freelance writer/editor whose work has been featured on Gather.com for over three years. A member of The Loft Literary Center and the National Book Critics Circle, she blogs at The Raabe Review and, occasionally, Minnesota Campaign Report.