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Editor's note: This is part one of the transcript for the Democratic presidential debate sponsored by CNN and the Congressional Black Caucus Institute on January 21, 2008. Click here to connect to part two or part three.

Sen. Hillary Clinton, Sen. Barack Obama and former Sen. John Edwards answered questions from CNN's Wolf Blitzer, Joe Johns and Suzanne Malveaux in a debate sponsored by CNN and the Congressional Black Caucus Institute, Monday night.

Hillary Clinton, left, Barack Obama, center, and John Edwards answer questions on Monday night.

JOE JOHNS, CNN: Senator Clinton, good evening.

The number-one issue for Americans of both parties is the economy, and today the news is simply not good. Markets around the world are in a tailspin because of fears of a U.S. recession. So far this year, the Dow has lost nearly 9 percent.

How much money would your stimulus plan put in the pockets of the average South Carolinian?

SEN. HILLARY CLINTON: Well, Joe, I'm glad you started with the economy, because that is the number-one issue. What's been happening in the markets, what's been happening with the home mortgage crisis, $100-a- barrel oil, so many of the issues that are really at the kitchen tables of Americans today and what they're talking to me about.

We have to stimulate the economy. I began calling for some kind of economic action plan back at the beginning of December. I have a package of $110 billion; $70 billion of that would go towards dealing with the mortgage crisis, which, unfortunately, I don't think that President Bush has really taken seriously enough.

I would have a moratorium on home foreclosures for 90 days to try to help families work it out so that they don't lose their homes. We're in danger of seeing millions of Americans become basically, you know, homeless and losing the American dream.

I want to have an interest rate freeze for five years, because these adjustable-rate mortgages, if they keep going up, the problem will just get compounded. And we need more transparency in the market.

Then, I think we need to give people about $650, if they qualify -- which will be millions of people -- to help pay their energy bills this winter. You know, there are so many people on fixed incomes and working people who are not going to be able to afford the spike in energy costs.

We need to make sure that we start jumpstarting the jobs in this country again. That's why I want to put money into clean energy jobs, green-collar jobs, and also make sure we have a fund that will help communities deal with the consequences of the home foreclosure crisis and make sure the unemployment system is up to the task.

And then we will have money for rebates, but let's make them the right rebates. Everything we know about President Bush's plans would leave 50 million to 70 million Americans out, because a lot of our seniors on fixed incomes don't pay income taxes. But that doesn't mean they're immune from the energy costs and the health care costs and everything else that's going up around them.

And we have a huge number of working people who thankfully don't pay income tax. They pay payroll tax. They pay a lot of other taxes. President Bush's plan would do nothing to help them.

But thankfully we've got leaders of the Congressional Black Caucus here who are going to make sure that we get the right kind of stimulus. And that's what the Democrats are going to support.

It's imperative we do it. It's a part of economic justice, which on Dr. King's holiday is part of his unfinished legacy.


Senator Obama?


SEN. BARACK OBAMA: Well, we do meet on the King holiday. And I think it's important to remember that, in the march on Washington, where Dr. King always talks about -- or it's always repeated, the dream speech that is so famous -- that march was for jobs, as well as justice.

And, unfortunately, we have not made the kind of progress that we need in having a balanced economy, and George Bush has made it worse.

George Bush has consistently skewed our tax code to the wealthy. He has squandered billions of dollars in a war that I believe should never have been authorized and should have never been waged.


We have not made the investments that are needed in our school system. You travel around South Carolina along the corridor of shame, and you've got children who are going to schools that were built in the 1800s. And they are not able to compete in an international economy.

So it is absolutely critical right now to give a stimulus to the economy. And Senator Clinton mentioned tax rebates. That wasn't the original focus of her plan. I think recently she has caught up with what I had originally said, which is we've got to get taxes into the -- tax cuts into the pockets of hard-working Americans right away.

And it is important for us to make sure that they are not just going to the wealthy. They should be going to folks who are making $75,000 a year or less, and they should be going to folks who only pay payroll tax, but typically are not paying income tax.

If we do that, then not only can we stimulate the economy, those are the folks who are most likely to spend money right away.

BLITZER: Do you agree with her, $650 is a good number for a tax rebate?

OBAMA: Well, I think that we are going to have to get some immediate money. What I do is I say, for a typical family, $500 for a tax rebate per family.

But also, for senior citizens, get a supplement to their Social Security check, because they get that every month. We know exactly how to do it. And that would provide seniors all across the country right away some money to help pay for their heating bills and other expenses that they've got right now.

BLITZER: Correct me if I'm wrong, Senator Edwards. Your plan does not call for a tax rebate, does it?

FORMER SEN. JOHN EDWARDS: No, that's exactly right. Can I start by saying how proud I am to be here tonight, a debate sponsored by the Congressional Black Caucus on Dr. King's holiday?

And particularly on this night, when we're honoring the legacy of Dr. King, central to his work was the idea of fighting for real equality between the races, fighting to end poverty in America, his famous Poor People's Campaign, which he was engaged in at the time of his death, fighting for garbage workers, actually, in Memphis.

And the chasm between the rich and the poor in America is wide. It is getting worse. The rich are get richer. And we've added five million people to the poverty rolls in just over the course of the last seven years, which is...

BLITZER: But what about the stimulus package?

EDWARDS: Here's what we should do. That's why I'm getting to this. What Bush does is he leaves 50 million -- as Hillary pointed out -- 50 million Americans. They're low-income Americans and moderate-income Americans. They are completely left out of the stimulus package.

If we're actually going to deal with the legacy of Dr. King, if we're going to deal with this issue of poverty -- and I have a comprehensive plan to do that, it is the cause of my life, to end poverty in this country -- we also have to include all Americans in this stimulus plan.

Now, one difference between what I have proposed and what my two colleagues have proposed is I have done something that not only stimulates the economy, but creates long-term benefits, investment in green infrastructure, which creates jobs.

Instead of just getting money out in the short term, this will actually create jobs over the long term, create green infrastructure.

Yes, we need to do something about the mortgage crisis. I want to mention one last thing.

There is one other issue that was mentioned in passing by the two of them, which is the issue of jobs. And there is a difference between myself and my colleagues on this issue of jobs, because they both supported the Peru trade deal.

My view is the Peru trade deal was similar to NAFTA. And this is crucial to the state of South Carolina...


EDWARDS: ... no, no -- and crucial to the state of the South Carolina and jobs in South Carolina. South Carolina has been devastated by NAFTA and trade deals like NAFTA.

BLITZER: I just want to be precise. What you're proposing are really long-term objectives. In terms of a short-term stimulus package, you disagree with them on an immediate tax rebate.

EDWARDS: No, no. What I'm saying is if we do what we should do to green the economy, if we change our unemployment insurance laws, modernize them to make them available to more people, to more Americans, if we in fact give help to the states, which gets money straight into the economy and we deal with the mortgage crisis in a serious way with a home rescue fund to provide transitional financing for those people who are about to lose their homes, all those things will stimulate the economy.

BLITZER: I'll let both of you respond, but let me let Senator Obama respond first.


OBAMA: Let me just respond to a couple of things. I think the idea of bringing jobs is important, which is why that's central to my energy plan. But, Wolf, you're exactly right, that is a long-term agenda. That is not going to deal with the immediate crisis we have right now.

You've got the European markets dropped 5 percent. The expectation is that the Dow Jones tomorrow may do the same. We could be sliding into an extraordinary recession unless we stimulate the economy immediately. That's point number one.

Point number two, on trade, John is exactly right that you travel around South Carolina and you see the textile mills that John's father worked in closed, all over the region. And it is absolutely true that NAFTA was a mistake.

I know that Hillary on occasion has said -- just last year said this was a boon to the economy. I think it has been devastating, because our trade agreements did not have labor standards and environmental standards that would assure that workers in the U.S. were getting a square deal.

But the only thing I want to differ on John is this whole notion of Peru. The Peru trade deal had labor and environmental agreements in it. Peru is an economy the size of New Hampshire. Over 90 percent of the goods coming from Peru already come in under various free trade agreements.

And, John, you voted for permanent trade relations with China, which I think anybody who looks at how we structure trade in this country would tell you has been the biggest beneficiary and the biggest problem that we have with respect to trade, particularly because they're still manipulating the currency.

BLITZER: I'll let you respond, but, Senator Clinton, I want to get back to the issue of an immediate stimulus for the economy.

CLINTON: That's what I want to get back to.

BLITZER: Because who knows what the markets are going to be like tomorrow and there are a lot of people out there who are suffering already. But go ahead and respond.

CLINTON: Well, I want to just clarify a couple of points. My original plan was $70 billion in spending with a $40 billion contingency that was part of the original plan, in order to have that money available for tax rebates.

I hope that we could do it through spending, and here's why: I don't want to necessarily open up the tax code while we've got Republicans in the Senate who are going to try to come back and open up making Bush's tax cuts permanent.


I understand that that's a real risk. So I was hoping to be able to do it through spending, but the crisis has gotten too deep, and what happened in the markets globally today is a huge wakeup call.

The president should convene the working group on financial markets. He should ask the secretary of treasury to do this immediately. I know that there's been talking going on, but the president's proposed stimulus package is not adequate. It is too little too late and it doesn't give enough money to the people who are hardest hit by the increased costs in energy and everything else.


As a further point, I do believe that the green-collar job piece of this is important. That's why I have $5 billion to do it. There are programs already. Oakland, California, Mayor Dellums is working to have a green-collar job program. We could put hundreds and hundreds of young people to work right now, putting solar panels in, insulating homes.

That would give them jobs and it would move us more quickly to a green economy. And I think that if you look at this from a jobs and justice, a stimulation and long-term planning effort, we need to lay down the markers now. And that's why the Congress, under the leadership of a lot of the people who are chairs of committees and subcommittees who are here today are going to play a major role in this. And we've got to hold the line against President Bush with his ill-advised approach to stimulating the economy.

BLITZER: All right. We're staying on topic. We're staying on this subject, but I want to ask Suzanne Malveaux to ask a question and then all of you will be able to weigh...

EDWARDS: You have to give me a chance to respond to Senator Obama.

BLITZER: All right, go ahead, respond quickly and then Suzanne.

EDWARDS: Thank you.

Well, first of all, what I have proposed for green-collar jobs will create jobs within 30 or so days, so we will have an immediate impact on the economy and stimulate the economy. Second, no one has to explain to me what these trade deals have done to South Carolina, to North Carolina. My father, who's sitting right out there in the audience, worked in the mills for 36 years and we have seen what these trade deals have done to people who have worked hard all their lives.

EDWARDS: And the problem with Peru, Barack, is you are leaving the enforcement of environmental and labor regulations in the hands of George Bush.

I wouldn't trust George Bush to enforce anything, certainly no trade obligations.


BLITZER: All right. Ten seconds, go ahead.


OBAMA: Well, the only point I would make is that in a year's time, it'll be me who's enforcing them.


And so we're going to make sure that the right thing is being done. And, John, you tell an extraordinarily powerful story. I mean, you understand what's happened with respect to trade here and I think it is powerful when you talk about it.

But keep in mind, I first moved to Chicago to be a community organizer with churches who were trying to deal with the devastation of steel plants that had closed in that region. And so I spent 3.5 years working alongside folks who had lost their jobs.

And I know what it's like for families to have put their life and their heart and soul into a company, building profits for shareholders, and then suddenly they had the rug pulled out from under them. Not only have they lost their job, they've lost their health care, they've lost their pension benefits.

And it is absolutely critical for us to understand that NAFTA was an enormous problem. The permanent trade relations with China, without some of the enforcement mechanisms that were in there, that you voted for, was also a significant problem.

And we've got to all move forward as Democrats to make sure that we've got trade deals that work for working people and not just for corporate profits.

BLITZER: All right. Suzanne Malveaux, go ahead.


SUZANNE MALVEAUX, CNN: I'd like to follow-up with Senator Obama. It was just a few days ago that Senator Clinton asserted that she was the strongest candidate when it comes to fiscal responsibility.

She says that the new programs that she proposes she essentially can pay for. She says that you have failed in that regard in the tune of some $50 billion worth of new programs that you cannot account for.

How do you respond to that charge?

OBAMA: What she said wasn't true. We account for every single dollar that we propose.

Now, this, I think, is one of the things that's happened during the course of this campaign, that there's a set of assertions made by Senator Clinton, as well as her husband, that are not factually accurate.

And I think that part of what the people are looking for right now is somebody who's going to solve problems and not resort to the same typical politics that we've seen in Washington.


That is something that I hear all across the country. So when Senator Clinton says -- or President Clinton says that I wasn't opposed to the war from the start or says it's a fairytale that I opposed the war, that is simply not true.

When Senator Clinton or President Clinton asserts that I said that the Republicans had had better economic policies since 1980, that is not the case.

Now, the viewers aren't concerned with this kind of back-and- forth. What they're concerned about is who's actually going to help the get health care, how are they going to get their kids...


... going to college, and that's the kind of campaign I've tried to run. I think that's the kind of campaign we should all try to run.


CLINTON: Well, I couldn't agree more. But I do think that your record and what you say does matter. And when it comes to...


... a lot of the issues that are important in this race, it is sometimes difficult to understand what Senator Obama has said, because as soon as he is confronted on it, he says that's not what he meant.

The facts are that he has said in the last week that he really liked the ideas of the Republicans over the last 10 to 15 years, and we can give you the exact quote.

Now, I personally think they had ideas, but they were bad ideas. They were bad ideas for America.


They were ideas like privatizing Social Security, like moving back from a balanced budget and a surplus to deficit and debt.

And with respect to putting forth how one would pay for all of the programs that we're proposing in this campaign, I will be more than happy, Barack, to get the information, because we have searched for it.

You have a lot of money that you want to put into foreign aid, a very worthy program. There is no evidence from your Web site, from your speeches, as to how you would pay for it.

Now, why is this important? It's important because I think elections are about the future. But how do you determine what will happen in the future? Well, you have to look to the record, you have to look to what we say in campaigns, and what we have done during our careers.

And I want to be just very explicit about this. We are not, neither my campaign nor anyone associated with it, are in any way saying you did not oppose the war in Iraq.

CLINTON: You did. You gave a great speech in 2002 opposing the war in Iraq. That was not what the point of our criticism was.

It was after having given that speech, by the next year the speech was off your Web site. By the next year, you were telling reporters that you agreed with President Bush in his conduct of the war. And by the next year, when you were in the Senate, you were voting to fund the war time after time after time.

BLITZER: All right.

CLINTON: So it was more about the distinction between words and action. And I think that is a fair assessment for voters to make.


BLITZER: OK. Thank you, Senator. Senator, we're a little off topic. I have to let Senator Obama respond, then Senator Edwards, who's going to come...

OBAMA: We're off topic, but...

BLITZER: But go ahead and respond, and then I want to get back to this issue that we're talking about, fiscal responsibility. But go ahead.

OBAMA: Let's talk about it.

Hillary, I will be happy to provide you with the information about all -- all the spending that we do. Now, let's talk about Ronald Reagan. What you just repeated here today is...

CLINTON: Barack...

OBAMA: Wait. No. Hillary, you just spoke.

CLINTON: I did not say anything about Ronald Reagan.

OBAMA: You just spoke for two minutes.

CLINTON: You said two things.

OBAMA: You just...

CLINTON: You talked about admiring Ronald Reagan and you talked about the ideas...

OBAMA: Hillary, I'm sorry. You just...

BLITZER: Senator...

CLINTON: I didn't talk about Reagan.

OBAMA: Hillary, we just had the tape. You just said that I complimented the Republican ideas. That is not true.

What I said -- and I will provide you with a quote -- what I said was is that Ronald Reagan was a transformative political figure because he was able to get Democrats to vote against their economic interests to form a majority to push through their agenda, an agenda that I objected to. Because while I was working on those streets watching those folks see their jobs shift overseas, you were a corporate lawyer sitting on the board at Wal-Mart.


OBAMA: I was fighting these fights. I was fighting these fights. So -- but I want to be clear.

So I want to be clear. What I said had nothing to do with their policies. I spent a lifetime fighting a lifetime against Ronald Reagan's policies. But what I did say is that we have to be thinking in the same transformative way about our Democratic agenda.

We've got to appeal to Independents and Republicans in order to build a working majority to move an agenda forward. That is what I said.


OBAMA: Now, you can dispute that, but let me finish.

Hillary, you went on for two minutes. Let me finish.

The irony of this is that you provided much more fulsome praise of Ronald Reagan in a book by Tom Brokaw that's being published right now, as did -- as did Bill Clinton in the past. So these are the kinds of political games that we are accustomed to.

CLINTON: Now, wait a minute.

Wolf, wait a minute. Wait a minute. Just a minute.

BLITZER: Senator Edwards, let them wrap up. Then I'm going to come to you.


CLINTON: I just want -- I just to clarify -- I want to clarify the record. Wait a minute.

EDWARDS: There's a third person in this debate.

BLITZER: Wait a minute, Senator Edwards. Hold on.

There has been a specific charge leveled against Hillary Clinton, so she can respond. Then I'll bring in Senator Edwards.

CLINTON: I just want to be sure...

OBAMA: Go ahead and address what you said about...

BLITZER: We have got a long time to. You'll have a good opportunity.

CLINTON: We're just getting warmed up.


CLINTON: Now, I just -- I just want to be clear about this. In an editorial board with the Reno newspaper, you said two different things, because I have read the transcript. You talked about Ronald Reagan being a transformative political leader. I did not mention his name.

OBAMA: Your husband did.

CLINTON: Well, I'm here. He's not. And...

OBAMA: OK. Well, I can't tell who I'm running against sometimes.


CLINTON: Well, you know, I think we both have very passionate and committed spouses who stand up for us. And I'm proud of that.

But you also talked about the Republicans having ideas over the last 10 to 15 years.

OBAMA: I didn't say they were good ones.

CLINTON: Well, you can read the context of it.

OBAMA: Well, I didn't say they were good ones.

CLINTON: Well, it certainly...

OBAMA: All right, Wolf.

CLINTON: It certainly came across in the way that it was presented, as though the Republicans had been standing up against the conventional wisdom with their ideas. I'm just reacting to the fact, yes, they did have ideas, and they were bad ideas.

OBAMA: I agree.

CLINTON: Bad for America, and I was fighting against those ideas when you were practicing law and representing your contributor, Resco, in his slum landlord business in inner city Chicago.


OBAMA: No, no, no.

BLITZER: Hold on one second. Hold on.

Senator Edwards -- Senator Edwards has been remarkably patient during this exchange. And I want him -- I don't know if you want to get involved in this, Senator Edwards.

EDWARDS: What I want to say first is, are there three people in this debate, not two?


EDWARDS: And I also want to know -- I also want to know on behalf of voters here in South Carolina, this kind of squabbling, how many children is this going to get health care? How many people are going to get an education from this? How many kids are going to be able to go to college because of this?

EDWARDS: We have got to understand -- you know, and I respect both of my fellow candidates -- but we have got to understand this is not about us personally. It is about...


... what we are trying to do for this country and what we believe in.

Now, fiscal responsibility, which I think was the question. It was a little hard to tell there at the end of that. But I think the question was about fiscal responsibility.

I have proposed, I think, the most aggressive, most progressive agenda of the three of us up here. And I was the first to come out with a universal health care plan, first to come out with a global warming plan, first -- and, to the best of my knowledge, only at this point -- to come out with a comprehensive, detailed plan to end poverty in America, since we are on Dr. King's day.

This is the cause of my life. Everything I have proposed, I have come up with a way to pay for it. And I've been very explicit about how it should be paid for, not abstract, not rhetoric, very, very explicit.

But I do have to say, in response to something Senator Clinton said just a minute ago, both Senator Obama and I have said Social Security needs a solution. And we have said we won't privatize, we won't cut benefits, we won't raise the retirement age. Same thing that Hillary has said.

But she has proposed nothing about how we're going to create revenue to keep Social Security alive and talked about fiscal responsibility. Here's the problem: If you don't have -- this is not complicated. The American people understand it. If you've got more money going out than is coming in, you're going to eventually run out of money.

And you've got to have a way to pay for it, which is why -- now, let me finish this. Lord knows you let them go on forever.


What I'm saying is we have to be consistent in what we're saying. I have said I think Hillary doesn't want to talk about raising taxes. Let's just be honest about that.

Barack and I have both said that you've got to do something about the cap on Social Security taxes, which is now capped at $97,000. It means if somebody is making $80,000 a year, every dime of their income is taxed for Social Security. But if you are making $50 million a year, only the first $97,000 is taxed.

That's not right. And people ought to be paying their Social Security taxes. But the American people deserve to know what we're going to do.

We can disagree. There's nothing wrong with that, so they can make an informed choice, but they at least deserve to know where they stand and what we'd do.

BLITZER: We're staying on the economy, but I want Joe Johns to ask another question so we can continue this dialogue.

JOHNS: All right. Well, Senator Edwards, let's dig a little deeper on the economic mess we're in currently.

In 2006, a study from the Center for Responsible Lending found that African-Americans are something like 30 percent more likely to be sold a subprime loan than white borrowers with similar credit histories and income.

The South Carolina NAACP said last month that the American dream for too many Americans, too many African-Americans is a national nightmare. The national NAACP has even filed a class-action lawsuit against 12 nationwide lenders.

So the bottom-line question really is: Do you believe that lenders have specifically targeted African-Americans? Is this subprime mess really also an issue of race?

EDWARDS: Yes, is the answer. I think they have targeted -- if they haven't been racially motivated, I don't know. There's no way for me to know what's inside their head.

But what they have done is they have targeted the lowest income, most vulnerable families. And anybody who's paying any attention to what's going on in America today understands, if you are African- American in this country today, you are likely to have a net worth of about 10 percent of what white families have.

This is not an accident. I mean, we can go put our heads against the wall and pretend that the past never happened, pretend that we didn't live through decades of slavery, followed by decades of segregation, followed by decades of discrimination, which is still going on today.


That history and that legacy has consequences. And the consequence has been that African-American families are more vulnerable. They're more vulnerable to payday lenders. They're more vulnerable to predatory lenders, which is why we desperately need a national law, which I have proposed, which would crack down on these predatory payday lenders.

It's not enough to do it state-by-state, because these predators just move from place to place to place.

I was in a neighborhood in Cleveland a few months ago, one-block radius, 38 houses under foreclosure, middle-class, African-American neighborhood. These people work. They put everything they had into their homes. And they were about to lose them because these predators have come into the neighborhood and taken everything they have.

So here are the solutions. Number one, we need a national predatory lending law. Number two, we've got to help low-income families save.

EDWARDS: They have nothing to fall back on. Many have no bank account. They don't deal with financial institutions. We need to teach financial literacy, we need to match what they're able to save so that they actually have something that they can fall back on in case they get in a place where they need more money.


BLITZER: All right. I want both Senator Clinton and Senator Obama to respond.

But, briefly, Senator Clinton, your proposal calls for a five- year moratorium on interest rates, 90-day moratorium on foreclosure, five year keeping those interest rates the same. Alan Greenspan suggested that we simply have to let this housing crisis exhaust itself. Trying to prevent the housing markets from going down merely prolongs the agony.

Does your plan, as he would seem to be suggesting, prolong the agony?

CLINTON: No. I think it helps to mitigate the agony. I mean, what I hear as I go in and out of people's homes and talk to so many who have already lost their homes, they're in foreclosure, they see these interest rates that are about to go up and they know they can't pay them, is that we take action now.

I've been calling for action since last March. When I first started calling for it, a lot of the same economists who now say don't do anything about it said, well, it won't be that bad. We'll be able to weather the crisis.

Well, the fact is, the mortgage crisis is not only destroying the dreams of Americans for home ownership, it is having a ripple effect across the world. So my moratorium for 90 days is a work-out. It's not a bailout. I want people to be able to see whether they can stay in their homes paying a rate that is affordable for them.

And the interest rate freeze is I think merited, because look at what's happening -- if you're a big bank that helped get us into this mess, you go borrow money from Abu Dhabi or somewhere. If you're a homeowner who has been at the bottom of this incredible scheme that was established, you're left holding the bag and you don't have the house anymore.

BLITZER: Thank you, Senator.

CLINTON: So I just disagree with those who say don't try to do anything to help the people who need the help right now.

BLITZER: Senator Obama.

OBAMA: I think that we need to help them. I think it is important to make sure that we're not helping out the speculators, but instead are helping out the homeowners who are actually living in their homes, who have the capacity to make the payments if they're not seeing a huge increase in their mortgage payments.

But understand this, this is not new. We have a history in this country of preying on low-income peoples because they don't have access to banks. The Community Reinvestment Act is oftentimes not enforced as it should be.

We've got to open up bank branches. We've got to give people access to financing so that they're not going to a payday loan operation.

I two years ago introduced a provision that would eliminate predatory lending, something that I had already helped to get passed at the state level. But it is important for us to understand that we've got to give ordinary working people access to financing. And it's important to understand that part of the reason that they are borrowing on their homes, they're borrowing on credit cards, is that the banks and financial institutions have dominated policy in Washington.

And this is an area where I've got a policy disagreement with Senator Clinton. When we talked a while back, just in the last debate, we talked about the bankruptcy bill, which had been pushed by the banks and the financial institutions, that said, basically, it will be harder for folks who have been lured into these teaser rates and then see their credit cards go up to 30 percent, that they would have a tougher time getting out of bankruptcy.

In the last debate, Senator Clinton said she voted for it but hoped that it wouldn't pass. Now, I don't understand that approach to legislation. I think it is important for us to stand up to these special interests consistently, all the time, and that's what I've done and that's what I will continue to...

BLITZER: I'm going to go to Suzanne...

CLINTON: Wait, Wolf, I have to answer this.

BLITZER: I'm going to go to Suzanne Malveaux in a second, but I just want to give you a chance, Senator Obama, if you want to respond. Senator Clinton made a serious allegation that you worked for a slumlord. And I wonder if you want to respond.

OBAMA: I'm happy to respond. Here's what happened: I was an associate at a law firm that represented a church group that had partnered with this individual to do a project and I did about five hours worth of work on this joint project. That's what she's referring to.

Now, it's fine for her to throw that out, but the larger reason that I think this debate is important is because we do have to trust our leaders and what they say. That is important, because if we can't, then we're not going to be able to mobilize the American people behind bringing about changes in health care reform, bringing about changes in how we're going to put people back to work, changing our trade laws. And consistency matters. Truthfulness during campaigns makes a difference.


And that's what I've tried to do and I will continue to try to do as president of the United States.

CLINTON: Now, let me start with the claim about the bankruptcy bill. I said very clearly I regretted voting for it and I was happy that it didn't get into law.

By 2005, there was another run at a bankruptcy reform, motivated by the credit card companies and the other big lenders. I opposed that bill. I said very forcefully I opposed that bill.

There was a particular amendment that I think is very telling. It was an amendment to prohibit credit card companies from charging more than 30 percent interest.

Senator Obama voted for it. I voted against it. It was one of the biggest lobbyist victories on that very bad bill that the bankruptcy bill represented.

And I think it's important. You know, if you look at the recent article about Senator Obama's work on health care reform in the Illinois legislature, it's a very interesting piece about how he basically did the bidding of the insurance companies during that effort.

Now, I'm just saying that if we're going to...

OBAMA: That's...

CLINTON: ... be hurling these charges against one another, I'm used to taking the incoming fire. I've taken it for 16 years. But when you get into this arena...


... you can't expect to have a hands-off attitude about your record. And it is perfectly fair to have comparisons and contrasts. I voted against a 30 -- I voted for limiting to 30 percent what credit card companies could charge.

Senator Obama did not. That's a fact.


OBAMA: Absolutely. It is a fact, because I thought 30 percent potentially was too high of a ceiling. So we had had no hearings...


... on that bill. It had not gone through the Banking Committee. I don't know about a lot of folks here, most folks here, if they've got a credit card, are paying 29 percent. So under this provision, that would've been fine.

And we had not created the kind of serious...

EDWARDS: You voted against it because the limit was too high, is that what you just said?

OBAMA: That is exactly what I just said, John, because...

EDWARDS: So there's no limit at all.

OBAMA: ... there had been no discussions...


Hold on, John. Hold on. Listen to this. There had been no discussion about how we were going to structure this and this was something that had not gone through the committee and we hadn't talked about.

It didn't make sense for us to cap interest rates...

CLINTON: So you voted with the credit card companies.


CLINTON: That's the bottom line.

OBAMA: Hillary, I opposed that bill and you know I did.


CLINTON: Well...

OBAMA: And consistently did and unlike you and John who voted for it previously.

But here's the point. What we have to do is we've got to have consistency in how we vote. You can't say one thing during the campaign trail and then apologize afterward and say it was a mistake, and that has repeatedly happened during the course of this campaign...


... and I think that tells you the kind of president that folks are going to be.

CLINTON: Well, you know, Senator Obama, it is very difficult having a straight-up debate with you, because you never take responsibility for any vote, and that has been a pattern.

You, in the -- now, wait a minute. In the Illinois state legislature...


CLINTON: Just a minute. In the Illinois state senate, Senator Obama voted 130 times present. That's not yes, that's not no. That's maybe. And on issue after issue that really were hard to explain or understand, you know, voted present on keeping sex shops away from schools, voted present on limiting the rights of victims of sexual abuse, voted present time and time again.

And anytime anyone raises that, there's always some kind of explanation like you just heard about the 30 percent. It's just very difficult to get a straight answer, and that's what we are probing for.

OBAMA: I feel bad for John...

BLITZER (?): I know.


OBAMA: ... because I know John's not getting a lot of time here.

Let me just respond to this.

BLITZER (?): You can...

OBAMA: I feel pretty bad, I do. I feel pretty bad. But let's just respond to the example that was just thrown out.

The bill with respect to privacy for victims of sexual abuse is a bill I had actually sponsored, Hillary. I actually sponsored the bill. It got through the senate.


That was on the back of 12 other provisions that I was able to pass in the state legislature. Nobody has worked harder than me in the Illinois state legislature to make sure that victims of sexual abuse were dealt with, partly because I've had family members who were victims of sexual abuse and I've got two daughters who I want to protect.

What happened on that particular provision was that after I had sponsored it and helped to get it passed, it turned out that there was a legal provision in it that was problematic and needed to be fixed so that it wouldn't be struck down.

But when you comb my 4,000 votes in Illinois, choose one...


... try to present it in the worst possible light, that does have to be answered. That does have to be answered.

OBAMA: And as I said before, the reason this makes a difference -- and I understand that most viewers want to know, how am I going to get helped in terms of paying my health care? How am I going to get help being able to go to college?

All those things are important. But what's also important that people are not just willing to say anything to get elected. And...


BLITZER: Senator...

OBAMA: ... that's what I have tried to do in this campaign, is try to maintain a certain credibility.

I don't mind having policy debates with Senator Clinton or Senator Edwards. But what I don't enjoy is spending the week or two weeks or the last month having to answer to these kinds of criticisms that are not factually accurate.


OBAMA: And the press has looked at them. They are not accurate. And you need to present them as accurate.

BLITZER: We're going to be coming back.

CLINTON: Well, that law is still on the books. It was never struck down. That was there.

BLITZER: We're going to be visiting all these subjects, but I just want Senator Edwards to weigh in. Suzanne has got an excellent question coming up.

Go ahead.


EDWARDS: She's been wanting to ask it, too.

Can I just ask, though, before I do -- I mean, I hear the back and forth on this one particular vote, but it is -- I do think it's important, and I mentioned this about Senator Clinton earlier, to be fair, about Social Security. I do think it's important whether you are willing to take hard positions.

I mean, the members of the Congressional Black Caucus who are sitting in front of me right know they have to go to the floor of the House every day and vote on hard issues. And they have to vote up or down or not show up to vote -- one of those three choices. What I didn't hear was an explanation for why over 100 times you voted present instead of yes or no when you had a choice to vote up or down.


OBAMA: I'll be happy to answer it. Because in Illinois -- in Illinois, oftentimes you vote present in order to indicate that you had problems with a bill that otherwise you might be willing to vote for. And oftentimes you would have a strategy that would help move the thing forward.

Keep in mind, John, I voted for 4,000 bills. And if you want to know whether or not I worked on tough stuff, I passed the first racial...

EDWARDS: I don't question whether you worked on tough stuff.

OBAMA: No, no, no. Hold on a second.

EDWARDS: I don't question whether you worked on tough stuff.

OBAMA: No, no. But you...

EDWARDS: The question is, why would you over 100 times vote present? I mean, every one of us -- every one -- you've criticized Hillary. You've criticized me for our votes.

OBAMA: Right.

EDWARDS: We've cast hundreds and hundreds of votes. What you're criticizing her for, by the way, you've done to us, which is you pick this vote and that vote out of the hundreds that we've cast.



EDWARDS: And what -- all I'm saying is, what's fair is fair. You have every right to defend any vote. You do.

OBAMA: Right.

EDWARDS: And I respect your right to do that on any -- on any substantive issue. It does not make sense to me -- and what if I had just not shown up...

OBAMA: John -- John, Illinois...

EDWARDS: Wait, wait, wait. Wait, let me finish.

OBAMA: Hold on a second.

EDWARDS: What if I had just not shown up to vote on things that really mattered to this country? It would have been safe for me politically. It would have been the careful and cautious thing to do, but I have a responsibility to take a position...

OBAMA: John, you...

EDWARDS: ... even when it has political consequences for me.

(APPLAUSE) consequences. This -- most of these were technical problems with a piece of legislation that ended up getting modified.

But let's talk about taking on tough votes. I mean, I am somebody who led on reforming a death penalty system that was broken in Illinois, that nobody thought was good politics, but was the right thing to do.


OBAMA: I opposed legislation that now is being used against me politically to make sure that juveniles were not put in the criminal justice system as adults, even though it was not the smart thing to do politically. It was not smart for me to oppose the war at the start of this war, but I did so because it was the right thing to do.


OBAMA: So I understand that Illinois has a different system than Congress, and that it is fine to try to use that politically. But don't question, John, the fact that on issue after issue that is important to the American people, I haven't simply followed, I have led. E-mail to a friend E-mail to a friend

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