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Candidates duck $700 billion question

In debate, both express support for bailout, but are vague on what its cost would force them to give up as president.

by Nina Easton, Washington bureau chief
Last Updated: September 27, 2008: 12:16 PM ET

WASHINGTON (Fortune) -- We know that Barack Obama and John McCain want fast action to address the financial crisis. We know that while they support the broad outlines of Treasury Secretary Henry Paulson's $700 billion plan to bail out ailing financial institutions they want strict oversight and a limit on the pay of executives whose companies take part in the rescue.

What we still don't know after Friday's first presidential debate is how either would cope with the aftermath come January.

Obama's answer was vague. The Democrat said, as he has in the past few days, that "there is no doubt" that the rescue is going to affect his spending plans. But when asked specifically by the debate's low-key moderator, PBS's Jim Lehrer, what parts of his ambitious spending agenda he would give up, Obama would only offer hundreds of billions in items he wouldn't give up: health care, energy independence, education.

McCain, by contrast, was guilty of failing to add up the numbers. The Republican proposed an across-the-board freeze in spending, but one that wouldn't touch defense or entitlements or the expensive Bush tax cuts. That's not going to get the country out of the deeper fiscal hole Paulson and Congress will be digging.

The candidates' answers to the question of what to do about the financial crisis was the least satisfying round of this 90-minute debate, broadcast on a Friday night from the University of Mississippi with a silence-imposed audience.

The two men went deep on foreign policy, the original subject of the debate, and the outcome to their thrusting and jabbing on matters of substance there was mostly considered a draw (though I thought McCain had the edge).

But the news of the moment, the financial crisis facing the nation, had to be addressed. Over the past two weeks, as turmoil has rocked the markets, neither has found that right combination of being decisive and thoughtful and presidential.

Wall Street (unfortunately) has handed the campaign the most spontaneous - and momentous - issue of the campaign, and neither has been able to grab it.

The debate offered more of the same: Obama outlined his principles for going forward - ensuring security and solvency, moving swiftly, creating oversight and an upside for taxpayers, banning fat salaries for CEOs and helping homeowners. McCain gave a different version of the same answer, saying he wanted transparency and accountability.

Pre-debate more telling

If the debate didn't enlighten voters much on how the candidates would handle the crisis, the tumultuous week leading up to the debate revealed the nominees' two very different governing styles.

McCain projected the image of a man of action as he suspended his campaign to rush to Washington. His decisions were rapid-fire-and at times appeared scattershot. (He opposed the AIG bailout before supporting it hours later.)

Obama, by contrast, tried to position himself as serious, cautious, and not in a hurry to make any decisions. By now, we've been told repeatedly that he regularly consults with Paulson and Paul Volcker and Bob Rubin-but what specifically would Obama do?

The debate gave them both the chance to spell out what they would do. Instead, we were reminded that McCain has long hated the enormous size of mortgage guarantors Fannie Mae and Freddie Mac; Obama hates deregulation; and both of them hate, as McCain puts it, "greed, corporate excess and CEO excess."

And just in case you'd forgotten, McCain took the opportunity, over and over, to remind you that he really hates legislative earmarks. And Obama, he really hates tax cuts for the rich.

It would have helped the country if we had learned more. To top of page

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