Special Coverage for the First Presidential Debate - Friday September 26, 2008

Guests: Linda Douglass, Mike Murphy, Jim Lehrer, Barack Obama, John McCain

KEITH OLBERMANN, MSNBC ANCHOR: The stage at the Gertrude C. Ford Center for the Performing Arts at the University of Mississippi at Oxford. This is MSNBC's coverage of the first 2008 presidential debates. Question one has been answered. Both candidates are present. Along side my colleague, David Gregory, I'm Keith Olbermann. And David, no debate like this in our history. Scheduled for a year, thrown into doubt Wednesday. One candidate declares himself the winner this morning, and then afterwards publicly confirms he will participate. It's one of a kind.

DAVID GREGORY, MSNBC ANCHOR: As if we needed more drama as the backdrop for this debate, Keith, right? There's been a lot of a drama. A financial crisis in this country, a Wall Street bailout that is still winding its way through Capitol Hill, and yet these two men will be here for this debate. What is still a contest between two men who are not often seen side by side, and Americans are going to be able to make their judgment about them, how they answer questions, how their minds work, what kind of leaders they'll be. This is the first important test.

OLBERMANN: I'll be back with a new edition of "COUNTDOWN" at 11:00 Eastern. Chris Matthews and "HARDBALL" live at midnight. Rachel Maddow will be here at 1:00 a.m. And let's take you now-with the 30 second call just heard, I'm sure you heard it-we'll take you to stretcher (ph) with David Gregory- David.

GREGORY: All right, Keith, thank you very much. The format here, the moderator, Jim Lehrer of PBS. The candidates will be asked questions, they will respond and they'll have about five minutes to respond to each other and take the bait to each other. The debate-a lot on the economy, but the main subject is indeed foreign policy. Here now, Jim Lehrer at the University of Mississippi.

JIM LEHRER: 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.

(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.

OBAMA: 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.

LEHRER: Senator McCain, two minutes.

MCCAIN: Well, thank you, Jim. And thanks to everybody.And I do have a sad note tonight. Senator Kennedy is in the hospital. He's a dear and 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 have finally seen 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.

LEHRER: All right, let's go back to my question. How do you all stand on the recovery plan? And talk to each other about it. We've got five minutes. We can negotiate a deal right here.

But, I mean, are you-do you favor this plan, Senator Obama, and you, Senator McCain? Do you-are you in favor of this plan?

OBAMA: 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 shredded so many regulations? We did not set up a 21