Jan. 15 Democratic debate transcript

Williams: Time is up, Senator.
We're going to get some more e-mail questions from Natalie Morales.

Morales: All right. And this one is directed to Senator Obama.
It comes from a resident of Miami, Florida: "As a middle class retiree whose primary source of income is dividends, capital gains from stock investments, what if any safeguards would you put in place to protect us from your proposed reversal of the Bush tax cuts on these investment vehicles?"

Sen. Obama:  Well, what I would do is I would exempt middle income folks, potentially, from increases in capital gains and dividends. But what I have insisted upon is that we make our tax code fair. And if for example, my friend and Hillary's friend, Warren Buffett, makes $46 million last year, and he is paying a lower rate on -- a lower tax rate than his secretary, there is something fundamentally unjust about that.

Yeah. And I think, you know, he acknowledges it. And by the way, he has offered $1 million to any CEO of a Fortune 500 company who can prove that they pay a higher tax rate than their secretary.

Now, nobody has taken them up on the offer, by the way. So part of the reason is because he primarily gets his income from dividends and capital gains, and he's taxed at a lower rate. That has to change, and that's part of a broader shift that I'm proposing in our tax rates.

We were talking earlier about lower and middle income people really getting squeezed. I've said we need to provide tax relief to them. If you're making less than $75,000 a year, we are proposing that we offset the payroll tax to give you relief, $1,000 for the average family. That if you're a senior citizen who is making less than $50,000 a year, or getting less than $50,000 in Social Security benefits, then you shouldn't have to pay taxes on that Social Security income.

Homeowners who do not itemize their deductions, we want to give you a mortgage deduction credit, and we're going to pay for that by closing loopholes, closing tax havens, and yes, rolling back some of these breaks that have gone disproportionately to the wealthiest Americans.

That will help the economy grow, because part of the reason we've got a bubble financially -- first in the Internet sphere and then in the real estate market -- is because of what John referred to earlier.

You've got all this money going to the top 1 percent, and they're looking for ways to park the money. We need the money in the hands of hard-working Americans who deserve it. They will know how to spend it, and they will actually help spur business growth across the country.

Williams: Time is up, Senator. One more question from Natalie.

Morales: And this one is for Senator Clinton, and you spoke already about foreclosure rates. So on that subject -- this was coming from Christian Denny from Henderson, Nevada: "Senator Clinton, recently, while visiting Las Vegas, you mentioned your plan to freeze interest rates to help prevent foreclosures. Are you aware of any long-term effects on the housing market and our economy that this may cause?"

Sen. Clinton:  Well, Natalie, I think that the question really goes to the heart of what we're trying to do here. We have short-term, medium-term and long-term goals when it comes to our economy.

You know, the Federal Reserve is cutting interest rates in order to spur the economy.
But because of a lot of the way these mortgages were structured, the interest rates are going to keep going up. And a lot of people who can pay what they're paying now will not be able to pay what they're expected to pay next month or the month after that.

So freezing the interest rates is not only a way of being able to stabilize the housing market, but it also is in line with what the Fed is doing on monetary policy.

In other words, you can't be cutting interest rates in one part of the economy and letting them go through the roof in the other part and expect to be able to stimulate the kind of economic growth that we need to have right now.

I have other pieces of my economic action plan.
In addition to dealing with the home foreclosure issue on the moratorium and the rate freeze, I'd like to have a fund of about $30 billion that communities and states could go to work in order to prevent foreclosures and the consequences of foreclosures.

When I was talking about this issue last week here in Las Vegas, somebody from the mayor's office said they're starting to see a slowdown in property tax receipts.

That means police services and other services start to deteriorate. That compounds the problem.
I want to see money in the pockets of people who are having trouble paying their energy bills. That stimulates the economy.

I want to make sure the unemployment compensation system is there for people as they begin to get laid off, which is happening here in Las Vegas and around the country.

And then, finally, I want to have about $5 billion put to work right now to employ people in green-collar jobs like I saw when I was in L.A. last week with electrical workers being trained to put in solar panels.

And then, if we need additional stimulation, we should look at tax rebates for middle class and working families, not for the wealthy who've already done very well under George Bush.