Debate highlighted candidates' positions on economic crisis

OXFORD, Miss. — In their first debate of the 2008 presidential campaign, Sens. John McCain and Barack Obama immediately discarded the scheduled topic of foreign affairs Friday night and waded into a discussion of the nation's financial crisis, with both saying they are optimistic that Congress will agree on a financial bailout plan in the coming days.

The Republican nominee, who had not committed to the debate until late Friday morning, said bipartisanship would carry the day. "We have finally seen Republicans and Democrats sitting down and negotiating together and coming up with a package," McCain said.

Obama laid out his own priorities for the federal bailout plan before training his fire on McCain, linking him to the president.

"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," he said.

The exchange over the fiscal crisis came before the two returned to a heated back-and-forth over the wars in Iraq and Afghanistan, and the fight against terrorism in Pakistan.

Although McCain has spoken critically of the bailout, and allied with House conservatives to drastically rework the original White House plan, he told moderator Jim Lehrer that he is likely to vote for the plan.

"Sure, sure," he responded, when the PBS host pressed him on his stance.

As the two parties wallowed in the recriminations of the bailout deal that collapsed Thursday, McCain and Obama both began Friday in Washington with no resolution to the question of whether they would square off in the evening. McCain spent about 90 minutes on Capitol Hill, meeting with Senate Minority Leader Mitch McConnell, R-Ky., and House Minority Leader John Boehner, R-Ohio, and speaking with Treasury Secretary Henry Paulson and others by phone, according to aides.

Sen. Lindsey Graham, R-S.C., a key McCain ally, offered an early clue that McCain was likely to attend, saying on NBC's "Today Show" early Friday that the Republican nominee could leave Washington without a deal in place.

"What's more important than anything, that when we go to Mississippi tonight, both candidates can say that the Congress is working, back in business," Graham said.

McCain spokesman Brian Rogers conceded that his candidate had waded into a morass and taken some serious hits on Thursday.

"This stuff is not pretty. But it's not usually this public," he said. "He took some heat. But he's a tough guy. He's back working on it.

"Politically — politically, yesterday was a good day for the Democrats. But this thing will be judged in the coming days, based on what actually happens, and the results," Rogers said.

Obama spent the morning making a flurry of phone calls from his Washington hotel room, talking to Paulson, House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., and the Senate banking chairman, Christopher Dodd, D-Conn.

But as Obama prepared to head toward Oxford, the fate of the debate still remained in doubt. Finally, McCain's campaign released a statement late in the morning saying that there had been "significant progress" toward a deal on a financial sector bailout, including the return of House Republicans to negotiations.

"The McCain campaign is resuming all activities and the Senator will travel to the debate this afternoon. Following the debate, he will return to Washington to ensure that all voices and interests are represented in the final agreement, especially those of taxpayers and homeowners," the statement said.

The two men departed for Memphis about the same time late Friday morning. Inside the Obama campaign, which had effectively sidelined itself during the episode, aides never seriously doubted that the debate would go forward. Advance work was continuing in Oxford. On Thursday night, campaign workers learned that McCain's bus, the Straight Talk Express, was waiting at the Memphis airport to pick up the candidate if and when he arrived.

Presidential debates typically consume days of preparation, and this year, with polls showing a consistently tight race, the two campaigns acknowledged that the stakes could not be higher. Obama had been scheduled to spend three days in Clearwater, Fla., this week to prepare with foreign policy experts. But he left the group behind to travel to Washington on Thursday to meet with McCain, President Bush and senior lawmakers in both parties. He did not join his team again until Friday afternoon in Oxford.

As Obama boarded his plane on Friday, he told reporters he was "optimistic" about a bailout deal. But in a swipe at McCain's intervention in the sensitive talks that were expected to stretch through the weekend, Obama continued, "At this point, my strong sense is that the best thing that I can do, rather than to inject presidential politics into some delicate negotiations, is to go down to Mississippi and explain to the American people what is going on and my vision for leading the country over the next four years."

Both campaigns expected to return to Washington this weekend, although as of late Friday, Obama was still planning to attend campaign rallies on Saturday in Greensboro, N.C., and Fredericksburg, Va. He was scheduled to speak to the Congressional Black Caucus at a dinner in Washington on Saturday night.

The debate was planned as a forum to discuss international matters, most important the war in Iraq, a central issue in the election. But the meltdown on Wall Street was all but certain to consume considerable airtime, especially given McCain's highly publicized actions during the past 48 hours.

For the Republican, a foreign policy debate was expected to play to his strength. His campaign is particularly eager to air the candidates' differences on the troop "surge" in Iraq. Obama opposed the buildup when Bush proposed it in January 2007, but has since conceded that it has worked, although Iraq still faces many problems. McCain strongly supported the plan from the outset and has repeatedly pressed for Obama to acknowledge that he was wrong.

McCain strategist Steve Schmidt called the surge "one of the biggest differences that has occurred in real time, a commander-in-chief test, that voters can evaluate."

The GOP nominee took a big risk in early 2007 when he called for the significant escalation of an unpopular war, and now, Schmidt told reporters on Monday, "John McCain, more than any other person, is responsible for the change in strategy that has led this country to the edge of victory in Iraq."

McCain and Obama are slated to meet two more times in the coming weeks, with debates scheduled for Oct. 7 in Nashville, Tenn., and Oct. 15 at Hofstra University in New York. The vice presidential candidates, Alaska Gov. Sarah Palin, R, and Sen. Joseph Biden, Del., are scheduled to debate Thursday in St. Louis.