Cspans washington journal live every day with news and policy issues that impact you. Coming up sunday morning, editor and publisher of the political report will talk about key house and senate races. And the impact of campaign 2016 on congressional races. Then the president of the National Organization for women will discuss Donald Trumps comments and alleged behavior toward women and the impact on the election. Mr. Trump using president clintons marriage infidelities as a campaign issue. And the concerns of women voters. As former speaker of house and 2012 president ial campaign Newt Gingrich on the latest developments in campaign 2016. The growing divide in the Republican Party over donald trump and the potential impact on other races. Be sure to watch cspans washington journal live at 7 00 eastern sunday morning. Join the discussion. The 2008 president ial debate between illinois senator barack obama and republican senator john mccain of arizona. Their final debate focused on domestic issues held at Hofstra University. This is just over an hour and a half. Mr. Schieffer good evening and welcome to the third and last president ial debate of 2008 sponsored by the commission on president ial debates. Im Bob Schieffer of cbs news. The rules tonight are simple. The subject is domestic policy. I will divide the next hour and a half into nineminute at nts and ask a question the beginning of each segment. Each candidate will have two minutes to respond and well have a discussion. I will encourage them to ask followup questions of each other. F they do not, i will. The audience behind me has promised to be quiet except at this moment when we welcome barack obama and john mccain. [applause] gentlemen, welcome. By now weve heard all the talking points. Lets try to tell the people tonight some things they havent heard and lets get to it. Another very bad day on wall treet as both of you know. Both of you proposed new plans this week to address the economic crisis. Senator mccain you propose ad 52 billion plan that includes new tax cuts on Capital Gains, tax breaks for seniors. Write offs for stock losses among other things. Senator obama, you proposed 60 billion in tax cuts for middle income and lower income people, more tax breaks to create jobs, new spending for public works projects to create jobs. I will ask both of you why is your plan better than his . Enator mccain, you go first. Senator mccain let me say thank you, bob, and thanks to hofstra and our beloved nancy reagan is in the hospital tonight so our thoughts and prayers are going with you. Good to see you again, senator obama. Americans are hurting right now and theyre angry. Theyre hurting and theyre angry. Theyre innocent victims of greed and excess on wall street. Nd as well as washington, d. C. Theyre angry and they have every reason to be angry. They want this country to go in a new direction. There are elements of my proposal which you just outlined which i wont repeat but we also have to have a shortterm fix in my view and longterm fixes. Let me just talk to you about one of the shortterm fixes. The catalyst for this housing criess was the fannie and freddie mae which caused sub prime lending situations which caused the Housing Market in america to collapse. Until we ced that reverse this decline in Home Ownership and paut floor under it so people have not only the hope and belief they can stay in their homes and realize the American Dream but that value will come up. We have allocated 750 billion. Lets take 300 of that and go in and buy those home loan mortgages and negotiate with those people in their homes, 11 million homes for more so they can afford to pay the mortgage, stay in their home. I know the criticism. What about the citizen that stayed in their homes . That paid their mortgage payments . It doesnt help that person in their home if the next door neighbors house is abandoned. Weve got to reverse this. We ought to put the home owners first and i am disappointed secretary paulson and others have not made that their first priority. Bob all right. Senator obama. Senator obama i want to thank Hofstra University for hosting us and senator mccain and thank you, bob. We are experiencing the worst financial crisis since the great depression. The Financial Rescue plan senator mccain and i supported s an important first step. I pushed for some core principles, making sure the taxpayers can get their money back if theyre putting money up. Making sure c. E. O. s are not enriching themselves through this process. I think it is going to take some time to work itself out. What we havent yet seen is a rescue package for the middle class because the fundamentals of the economy were weak even before this latest crisis. I propose four specific things that i think can help. Number one lets focus on jobs. I want to end the tax breaks for companies shipping jobs overseas. And provide a tax credit for every Company Creating a job right here in america. Number two, lets help families right away by providing them a tax cut, a middle class tax cut for people making less than 200,000 and lets allow them to access their i. R. A. Accounts without penalty if theyre experiencing a crisis. Now, senator mccain and i agree with your idea that we have to help home owners. Thats why we included in the financial package a proposal to get home owners in a position where they can renegotiate their mortgages. I disagree with senator mccain on how to do it because the way snowstorm senator mccain has designed his plan it could be a giveaway for banks and we dont want to waste taxpayer money. Weve got to get the financial package working much quicker than its been working. The last point i want to make, we have longterm challenges in this economy that have to be dealt with. We have to fix our Energy Policy thats giving our wealth away. Weve got to fix our Health Care System and weve got to invest in our Education System for every young person to be ble to work. Bob would you thrike ask a question . Senator a couple days ago senator obama was in ohio and had an encounter with a plumber. His name is joe and joe wants to buy the business hes been in all these years. Worked 10, 12 hours a day and he wanted to buy the business but he looked at your tax plan and he saw that he was going to pay much higher taxes. You were going to put him in a higher tax bracket. Which was going to increase his taxes and cause him not to be , e to employ people which joe was trying to realize the American Dream. Senator obama talks about the very, very rich. Joe, ill tell you, not only help you buy that business you worked your whole life for and be able and ill keep your taxes low and ill provide available and Affordable Health care for you and your employees and i will not havedaybreak i will not stand for a tax increase on Small Business income. 50 of Small Business income taxes are paid by Small Businesses. Thats 60 million jobs in america. What you want to do to joe the plumber and millions more like him is have their taxes increased and not be able to realize the American Dream of owning their own business. Thats what joe believes. Senator obama he has been watching some ads of senator mccains. Let me tell you what im actually going to do. I think tax policy is a major difference between senator mccain and myself. We both want to cut taxes. The difference is who we want to cut taxes for. Senator mccains, the center piece of his economic proposal is to provide 200 billion in some onal tax breaks to of the wealthiest companies in america. Exxon mobile and other companies would get an additional billions of dollars in tax breaks. What ive said is i want to provide a tax cut for 95 of working americans. 95 . If you make less than 250,000 a year, then you will not see your income tax go up, your Capital Gains tax go up, your payroll tax. Not one dime. And 95 of working families, 9 of you will get a tax cut. 9 of you will get a tax cut. Independent studies have looked at our plan and concluded i provide three times the amount of tax relief to middle class families than senator mccain does. The conversation i had with joe the plumber, what i essentially said to him was five years ago when you werent in a position to buy your business you needd tax cut then. What i want to do is make sure the plumber, the nurse, the firefighter, the teacher, the young entrepreneur who doesnt yet have money, i want to give them a tax break now. And that requires us to make some important choices. Last point ill make about Small Businesses not only do 98 of Small Businesses make less than 250,000 but i also want to give them additional tax breaks because they are the drivers of the economy and produce the most jobs. Senator mccain senator obama wound up his conversation with joe the plumber, we need to spread the wealth around. In other words take joes money, give it to president obama and let him spread the wealth around. I want joe to be able to spread that wealth around. The whole premise behind senator obamas plans are class warfare, lets spread the wealth around. I want Small Businesses and by the way the Small Businesses were talking about would receive an increase in their taxes right now. Why would you want to increase anybodys taxes right now . Why would you want to do that to anyone, anyone in america . When we have such a tough time, when these Small Business people like joe the plumber are going to create jobs unless you ke that money from him and spread the wealth around. Im not going to do that in my administration. Senator obama if i can answer the question number one i want to cut taxes for 95 of americans. It is true my friends, warren buffet for example, could aford o pay a little more in taxes in order to give additional tax cuts to joe the plumber before he was at the point where he could make 250,000. I think exxon mobile, which profits billion record over the last several quarters, they can afford to pay a little more so ordinary families who are hurting out there, trying to figure out how theyre going to afford food, how theyre going to save for their kids College Education, they need a place. So look. Nobody likes taxes. I would prefer that none of us have to pay taxes including myself but ultimately weve got to pay for the Core Investments that make this economy strong. Senator mccain nobody likes taxes. Lets not raise taxes. Okay . The fact is businesses in America Today are paying second highest tax rate of anywhere in the world. Our tax rates for business in america is 35 . Ireland its 11 . Where are Companies Going to go where they can create jobs and they can do best in business . We need to cut tax rates on businesses and encourage it. Of all times. We need to encourage business and create jobs not spread the wealth around. Bob lets go to another topic thats related so if you have other things you want to say you can get back to that. This question goes to you first, senator obama. We found out yesterday this years deficit will reach an astounding record high 455 million. Some experts say it could go to a trillion dollars next year. Both of you have said you want to reduce the deficit but the committee for a responsible federal budget ran the numbers on both of your proposals and they say the cost of your proposals even with the savings you claim can be made each will add more than 200 million to the deficit. Arent you both ignoring reality . Wont some of the programs youre proposing have to be trimmed, postponed, even eliminated . Give us some specifics on what youre going to cut back. Senator obama . Senator obama first of all i think it is important for the American Public to understand the 750 billion rescue package if it is structured properly, and as president i will make sure it is structured properly, means that ultimately taxpayers get their money back. That is important to understand. But there is no doubt weve been living beyond our means. Well have to make some adjustments. Now what ive done throughout this campaign is to propose a net spending cut. I havent made a promise about to emphasize is i have been a strong po opponent of pay as you go. Every dollar i proposed i proposed an additional cut so it matches. And some of the cuts just to give an example, we spent 15 billion a year on subsidies to Insurance Companies. It doesnt help seniors get any better. It is not improving our Health Care System. Its just a giveaway. We need to eliminate a whole host of profwrams that dont work. I want to go through the federal budget line by line, page by page. Programs that dont work we should cut. Programs we need we should make them work better. What is true is that senator mccain and i have a difference in terms of the need to invest in america. In the American People. I mentioned health care earlier. If we make an investment now so people have coverage and prevent disease it will save on medicare and medicaid in the future. If we invest in a serious Energy Policy that will save on the amount of money were borrowing from china to send to saudi arabia. If we invest in our young people and their ability to go to college that will allow them to drive this economy into the 21st century. But what is absolutely true is that once we get through this economic crisis, and some of the specific proposals to get us out of this slump, we wont be able to go back to our provely gait ways and we have to embrace the responsibility, all of us, the federal government and individuals who may be living beyond their means. Bob senator . Senator mccain thanks. I want to get back to Home Ownership. During the depression years we had something called the Home Ownership loan corporation. They went out and bought up these mortgages and people were able to stay in their homes and eventually the value of the homes went up and they actually made money. This was a proposal made by senator clinton not too long ago. So obviously if we can start increasing home values then there will be creation of wealth. Bob the question is what are you going to try . Senator mccain first of all, we have to have Nuclear Power and stop sending 700 billion a year to countries that dont like us much. Wind, solar, offshore drilling which senator obama has opposed. And the point is weve become Energy Independent and we will create millions of jobs, millions of jobs in america. What would i cut . First of all, acrosstheboard spending freeze. Some people say that is a hatchet. Then i would get out a scapel. Okay . Because weve got we have presided over the largest increase. We have to have a new direction for this country. Weve presided over the largest increase in government since the great society. Government spending has gone completely out of control. 10 trillion in debt were giving to our kids. Lf a trillion dollars we owe china. I know how to save billions in defense spending. I know how to eliminate programs. Bob bob which one . Senator mccain the marketing assistance program, a number of subsidies for ethanol. I opposed it because i thought distorted the market and created inflation. Senator obama supported those subsidies. I would eliminate the tariff on imported sugar cane based ethanol from brazil. I know how to save billions and i saved the taxpayer 6. 8 billion by fighting deals for a couple years as you might recall a. Sweetheart deal between an aircraft manufacturer and d. O. D. People ended up in jail. I would fight for a line item veto and certainly veto every earmark pork barrel. Senator obama has asked for nearly 1 billion in pork barrel earmark projects including for an overhead projector in a planetarium in his hometown. Thats not the way we cut. Well cut out all the pork. Senator obama well, look. I think we do have a disagreement about acrosstheboard spending freezes. It sounds good. It is proposed periodically and doesnt happen. An acrosstheboard spending freeze is a hatchet and we do need a scapel because there are some programs that dont work at all. There are some that are under funded. And i want to make sure we are focused on those programs that work. Now, senator mccain talks a lot about earmarks. That is one of the Center Pieces of his campaign. Earmarks account for onehalf of 1 of the total federal budget. Theres no doubt the system needs reform and there are a lot of screwy things we end up spending money on. They need to be eliminated. It is not going to solve the problem. Now, the last thing i think we have to focus on is a little bit of history just so we understand what were doing going forward. When president bush came into office, we had a budget surplus. And the National Debt was a little over 5 trillion. It has doubled over the last eight years. And we are now looking at a deficit of well over half a trillion dollars, so one of the things i think we have to recognize is pursuing the same kinds of policies we pursued over the last eight years is not going to bring down the deficit and, frankly, senator mccain voted for four out of five of president bushs budgets. Weve got to take this in a new direction. Thats what i propose. Bob do either of you think you can balance the budget in four years . You have said previously you thought you could, senator mccain. Senator mccain sure i do. Senator obama, i am not president bush. He wanted to run against president bush you should have run four years ago. Im going to give a new direction to this economy and this country. Senator obama talks about voting for budgets.