Democratic Presidential Candidates Debate for Jan. 15

DEMOCRATIC PRESIDENTIAL CANDIDATES PARTICIPATE IN A

DEBATE ON MSNBC

JANUARY 15, 2008

SPEAKERS: SEN. HILLARY RODHAM CLINTON, D-N.Y.

FORMER SEN. JOHN EDWARDS, D-N.C.

SEN. BARACK OBAMA, D-ILL.

NATALIE MORALES, MODERATOR

BRIAN WILLIAMS, MODERATOR

TIM RUSSERT, MODERATOR

[*]

WILLIAMS: Before we get under way, we need to thank all of our

hosts for this evening, in part so our candidates don't feel the need

to.

The Nevada Democratic Party. That includes Senate Majority

Leader Harry Reid.

The U.S. Hispanic Chamber of Commerce.

The African-American organization known as 100 Black Men of

America.

Also, our local Nevada partners in this: Impacto; the African-

American Democratic Leadership Council; and, of course, the College of

Southern Nevada.

We have told the members of our vast studio audience here tonight

that we cannot allow applause or any outbursts following the

candidates' responses.

We will open with a Q&A format, allowing for 90-second answers,

lights will alert the candidates to the end of time; some 30-second

answers; and then follow-ups at the moderator's discretion.

Finally, for tonight's debate of the top three Democratic

contenders, I am joined by my partner Tim Russert, our Washington

bureau chief and of course moderator of "Meet the Press" on NBC; and

Natalie Morales of "Today" on NBC, who will be handling some of the

thousands of e-mail questions we've received over the past few days

directed to the candidates.

We thank you all for being here.

And before we begin with the questioning, we have to mix a bit of

breaking political news with the business of our debate tonight. At

this hour, as we come on the air, we are prepared to report that NBC

News is projecting that when all the votes are counted in tonight's

Michigan primary, Mitt Romney is the projected winner of that contest.

Again, in the Michigan primary tonight, a former Massachusetts

governor, a son of the state of Michigan, Mitt Romney, will be the

projected winner.

WILLIAMS: That is according to an NBC News estimate. And now,

we can begin with the questioning tonight.

As we sit here, this, as many of you may know, is the Reverend

Martin Luther King's birthday. Race was one of the issues we expected

to discuss here tonight. Our sponsors expected it of us. No one,

however, expected it to be quite so prominent in this race as it has

been over the last 10 days.

We needn't go back over all that has happened, except to say that

this discussion, before it was over, involved Dr. King, President

Johnson, even Sidney Poitier, several members of Congress, and a

prominent African-American businessman supporting Senator Clinton, who

made what seemed to be a reference to a party of Senator Obama's

teenage past that the Senator himself has written about in his

autobiography.

The question to begin with here tonight, Senator Clinton, is: How

did we get here?

CLINTON: Well, I think what's most important is that Senator

Obama and I agree completely that, you know, neither race nor gender

should be a part of this campaign.

CLINTON: It is Dr. King's birthday. The three of us are here in

large measure because his dreams have been realized. John, who is, as

we know, the son of a millworker and really has become an

extraordinary success, as Senator Obama who has such an inspirational

and profound story to tell America and the world; I, as a woman, who

is also a beneficiary of the civil rights movement and the women's

movement and the human rights movement, and the Democratic Party has

always been in the forefront of that.

So I very much appreciate what Senator Obama and I did yesterday,

which is that we both have exuberance and sometimes uncontrollable

supporters; that we need to get this campaign where it should be.

We're all family in the Democratic Party. We are so different

from the Republicans on all of these issues in every way that affects

the future of the people that care so much about.

So I think that it's appropriate on Dr. King's birthday, his

actual birthday, to recognize that all of us are here as a result of

what he did, all of the sacrifice, including giving his life, along

with so many of the other icons that we honor.

CLINTON: But I know that Senator Obama and I share a very strong

commitment to making sure that this campaign is about us as

individuals.

WILLIAMS: Senator Obama, same question?

OBAMA: Well, I think Hillary said it well. You know, we are,

right now, I think, in a defining moment in our history. We've got a

nation at war. Our planet is in peril. And the economy is putting an

enormous strain on working families all across the country.

Now, race has always been an issue in our politics and in this

country. But one of the premises of my campaign and, I think, of the

Democratic Party -- and I know that John and Hillary have always been

committed to racial equality -- is that we can't solve these

challenges unless we can come together as a people and we're not

resorting to the same -- or falling into the same traps of division

that we have in the past.

OBAMA: I think our party has stood for that. Dr. King stood for

that. I hope that my campaign has inspired that same sense, that

there's much more that we hold in common than what separates us.

And that is how I want to move this campaign forward and I hope

that's how it moves forward.

WILLIAMS: Senator Edwards, you waded into this topic

tangentially yesterday.

EDWARDS: Well, the only thing I would add is I had the

perspective of living in the South, including a time when there was

segregation in the South.

And I feel an enormous personal responsibility to continue to

move forward. Now, we've made great progress, but we're not finished

with that progress.

EDWARDS: And the struggles and sacrifice of Dr. King and many

others who gave blood, sweat, tears, and in some cases, their lives to

move America toward equality.

And I saw it. I saw it when four young men walked into a

Woolworth luncheon counter in Greensboro, North Carolina, and sat

down, had the courage and strength to do the right thing. And they

literally stood up, stood up on behalf of African Americans, on behalf

of southerners, on behalf of Americans helped move this country

forward in a really serious way.

And having seen the pain and the struggle and the sacrifice of so

many up close -- because I lived with it. I lived with it in my years

growing up -- I think we, all of us, have an enormous responsibility

not to go back but to go forward.

And I would just add, I think it goes far beyond the Democratic

Party. This is about America and about creating real equality in

America across the waterfront.

WILLIAMS: Questioning continues with Tim Russert.

RUSSERT: In terms of accountability, Senator Obama, Senator

Clinton on Sunday told me that the Obama campaign had been pushing

this storyline. And, true enough, your press secretary in South

Carolina -- four pages of alleged comments made by the Clinton people

about the issue of race.

In hindsight, do you regret pushing this story?

OBAMA: Well, not only in hindsight, but going forward. I think

that, as Hillary said, our supporters, our staff get overzealous.

They start saying things that I would not say. And it is my

responsibility to make sure that we're setting a clear tone in our

campaign, and I take that responsibility very seriously, which is why

I spoke yesterday and sent a message in case people were not clear

that what we want to do is make sure that we focus on the issues.

Now, there are going to be significant issues that we debate, and

some serious differences that we have.

OBAMA: And I'm sure those will be on display today.

What I am absolutely convinced of is that everybody here is

committed to racial equality -- has been historically. And what I

also expect is that I'm going to be judged as a candidate in terms of

how I'm going to be improving the lives of the people in Nevada and

the people all across the country, that they are going to ultimately

be making judgments on can I deliver on good jobs at good wages; can I

make sure that our home foreclosure crisis is adequately dealt with;

are we going to be serious about retirement security; and are we going

to have a foreign policy that makes us safe.

If I'm communicating that message, then I expect to be judged on

that basis. And if I'm not, then I expect to be criticized on that

basis. That's the kind of campaign that we want to run and that we

have run up until this point.

RUSSERT: Do you believe this is a deliberate attempt to

marginalize you as the black candidate?

OBAMA: No. As I said, I think that if you've looked not just at

this campaign, but at my history, my belief is that race is a factor

in our society, but I think what happened in Iowa is a testimony to

the fact that the American public is willing to judge people on the

basis of who can best deliver the kinds of changes that they're so

desperately looking for.

OBAMA: And that's the kind of movement that we want to build all

across the country, and that, I think, is the legacy of Dr. King that

we need to build on.

RUSSERT: In New Hampshire, your polling was much higher than the

actual vote result.

Do you believe, in the privacy of the voting booth, people used

race as an issue?

OBAMA: No. I think what happened was that Senator Clinton ran a

good campaign up in New Hampshire. And, you know, I think that people

recognize we've got some terrific candidates who are running vigorous

campaigns.

It's going to be close everywhere we go. It's close here in

Nevada. It's going to be close in South Carolina.

And, you know, at any given moment, people are going to be making

judgments based on who they think is best speaking to them about the

urgent problems that they're facing in this country.

OBAMA: Now, the one thing I'm convinced about -- and this was

true in Iowa and this was true in New Hampshire, as well -- is that

change is going to happen because the American people determine that

change is going to happen.

And that's what I draw from Dr. King's legacy. You know, what

happens in Washington is important. And we've got to have elected

officials that are accountable and serious about moving forward on the

goals of opportunity and upward mobility.

But if we don't have an activated people, a unified people,

black, white, Latino, Asian, who are all moving in the same direction,

demanding that change happens, then Washington, special interests,

lobbyists end up dominating the agenda. That's what I want to change.

RUSSERT: Senator Clinton, in terms of accountability, you told

me on Sunday morning, "Any time anyone has said anything that I

thought was out of bounds, they're gone. I've gotten rid of them."

RUSSERT: Shortly thereafter, that same afternoon, Robert

Johnson, at your event, said, quote, "When Barack Obama was doing

something in the neighborhood, that I won't say what he was doing, but

he said it in his book," widely viewed as a reference to Senator

Obama's book ,"Dreams From My Father" from 1995, where he talked about

his drug use as a teenager.

Will you now not allow Robert Johnson to participate in any of

your campaign events because of that conduct?

CLINTON: Well, Bob has put out a statement saying what he was

trying to say and what he thought he had said. We accept him on his

word on that.

But, clearly, we want to send a very clear message to everybody

that this campaign is too important for us to either get diverted or,

frankly, get the message of what we want to do for our country

subverted by any kind of statements or claims that are just not part

of who I am or who Barack or John are.

CLINTON: Because I think what's critical here is that the

American people understand clearly what is at stake in this election.

The stakes are really high, and there's an urgent need for leadership

on a range of issues, you know, some of which are now becoming right

here in front of us about whether or not people are going to be able

to keep their homes in Nevada, whether they're going to have jobs.

You know, I went door to door in Las Vegas last week and, you

know, I've met construction workers who've been laid off. I met a

casino employee who's already been laid off.

So what people talk to me about is not what somebody they never

heard of said, but what we say, what we're for, what we're standing

for, and what we're going to be pushing for.

So I accept what he said, but I think what's important is what I

say and what each of us says about the kind of president we intend to

be and how we're going to get there.

RUSSERT: Were his comments out of bounds?

CLINTON: Yes, they were.

CLINTON: And he has said that.

WILLIAMS: We're going to continue the questioning now with

Natalie Morales.

MORALES: Thank you, Brian.

And this is a question for Senator Edwards. It comes to us from

Margaret Wells from San Diego, California.

Senator, she's asking, "The policy differences among the

remaining candidates is so slight that we appear to be choosing on the

basis of personality and life story. That being said, why should I,

as a progressive woman, not resent being forced to choose between the

first viable female candidate and the first viable African American

candidate?"

EDWARDS: Well, I think that the decision for every voters in

this election should revolve around first whether you believe America

needs change. If you do, who you think will be most effective in

bringing about that change. We have different perspectives on that.

I think the system in Washington is broken. I don't think it

works. And I think the American people, middle-class Americans, are

struggling and suffering.

They can't pay for their health care. They're losing their jobs.

They can't pay for their kids to go to college.

This is a very personal thing for me.

EDWARDS: Hillary mentioned a minute ago that I grew up in a

family of millworkers. I was the first person in my family to

actually be able to go to college.

And so this battle for real opportunity for everybody, the kind

of chances I've had in my own life, is central to everything I do. It

is central to this campaign. It is a personal, personal fight for me.

And I think the decision that voters make about who can best

fight for the middle class, who will never give up on the fight for

universal health care, who will actually stand up strongly and

affirmedly to -- for the right to organize, for unions to be able to

organize in the workplace.

These things are not academic for me; they are my life. I

believe in them to my soul and I will fight with every fiber of my

being to make sure that everybody gets that kind of opportunity, and I

think there are some differences on policy and perspective between the

three of us, and I hope we get a chance to talk more about that

tonight.

MORALES: Senator Edwards, as a follow-up to Margaret Wells'

question, what is a white male to do running against these historic

candidacies?

(LAUGHTER)

EDWARDS: You know, I have to say on behalf of my party, and I've

said this many times, I'm proud of the fact that we have a woman and

an African American who are very, very serious candidates for the

presidency. They've both asked not to be considered on their gender

or their race. I respect that.

I do believe, however, that it says really good things about

America. I think I actually believe that both through these primaries

and caucuses and in the general election, that the American people are

going to make decisions based on who we are, what we stand for, and

what we're fighting for.

WILLIAMS: Question for Senator Obama. You won the women's vote

in Iowa, but Senator Clinton won the women's vote in New Hampshire,

and there probably isn't an American alive today who hasn't heard the

post-game analysis of New Hampshire, all the reasons the analysts give

for Senator Clinton's victory. Senator Clinton had a moment where she

became briefly emotional at a campaign appearance.

WILLIAMS: But another given was at the last televised debate,

when you, in a comment directed to Senator Clinton, looked down and

said, "You're likable enough, Hillary."

That caused Frank Rich to write, on the op-ed page of the New

York Times, that it was "your most inhuman moment, to date." And it

clearly was a factor and added up.

Senator Obama, do you regret the comment, and comments like that,

today?

OBAMA: Well, I absolutely regret it because that wasn't how it

was intended. I mean, folks were giving Hillary a hard time about

likability. And my intention was to say, "I think you're plenty

likable."

(LAUGHTER)

And it did not come out the way it was supposed to.

But, you know, I do think that, during the course of that debate,

there was a tendency to parse out what is, I think, not an issue.

I think all three of these candidates are good, capable people.

And what we really should be focusing on is who's got a vision for how

we're going to move the country forward?

And I believe that, right now, the only way we're going to move

the country forward is if we can bring the country together, not just

Democrats but independents, Republicans who have also lost trust in

government, and we are able to push aside the special interests and

the lobbyists, and we are truthful with the American people and

enlisting them in changing how our health care system works, how our

economy works, what our tax code looks like.

OBAMA: And that is going to be an issue that, I think, all of us

are going to have to struggle with over the coming days. It's not

going to be an issue of, you know, who's got the nicest smile or, you

know, who's going to be fun to have a beer with.

It's going to be, who can provide the leadership that makes sure

the country is moving forward through what I anticipate are going to

be some difficult times, and who is going to be able to transform how

Washington works in a fundamental way.

WILLIAMS: And one more question about that last televised

debate, Senator Edwards. Afterwards, Senator Clinton said it was as

if you and Senator Obama had formed a buddy system against her.

Senator Clinton put out an Internet ad that was entitled "Piling On."

Looking back on it, the campaign for New Hampshire in total, do

you admit that it might have looked that way?

EDWARDS: Might have looked that way or actually was that way? I

don't think it was that way. I mean, my job as a candidate for

president of the United States is to speak the truth as I see it.

I've spoken the truth, I will continue to speak the truth whatever the

consequences are and whatever the perception that people have is.

I do believe that I am a candidate for president who is fighting

for change, who believes that we have entrenched, moneyed interests in

this country that are preventing the middle class from having a real

chance. And it's drug companies, insurance companies, oil companies.

There are lobbyists. Barack spoke about them just a few minutes ago.

It's why I've never, the whole time I've been in public life,

taken a dime from Washington lobbyist or special interest PAC, because

I do believe those people stand between America and the change that it

so desperately needs, in real ways.

EDWARDS: They're the reason we don't have universal health care.

They're the reason we have a trade policy that's cost America millions

of jobs. They're the reason we have an insane tax policy that

actually gives tax breaks to American companies sending jobs overseas.

The promise of America that I and millions of others have lived

-- and then we are in Nevada tonight, a place that people come to in

the thousands every day to find the promise of America because they

believe in it.

It is central to everything we are as a nation. And I do believe

that promise is being jeopardized by very well-financed monied

interests. I believe that's the truth, and I'm going to keep saying

it.

WILLIAMS: Tim?

RUSSERT: Senator Clinton...

PROTESTER: Will you stop all these race-based questions?

These are race-based questions...

RUSSERT: Senator Clinton, your husband said that Senator Obama

very well could be the nominee -- he could win.

With that in mind, when you say that Senator Obama is raising

false hopes, and you refuse to say whether he's ready to be president,

what are the consequences of those comments in the fall against the

Republicans?

CLINTON: Well, Tim, we're in a hard-fought primary season. I

think each of us recognize that. You know, we're the survivors of

what has been a yearlong campaign.

But I certainly have the highest regard for both Senator Obama

and Senator Edwards. I've worked with them. I have, you know,

supported them in their previous runs for office. There's no doubt

that when we have a nominee, we're going to have a totally unified

Democratic Party.

The issue for the voters here in Nevada, South Carolina and then

all of the states to come is, who is ready on day one to walk into

that Oval office, knowing the problems that are going to be there

waiting for our next president: a war to end in Iraq, a war to

resolve in Afghanistan, an economy that I believe is slipping toward a

recession, with the results already being felt here in Nevada with the

highest home foreclosure rate in the entire country, 47 million

Americans uninsured, an energy policy that is totally wrong for

America, for our future?

CLINTON: President Bush is over in the Gulf now begging the

Saudis and others to drop the price of oil. How pathetic. We should

have an energy policy right now putting people to work in green collar

jobs as a way to stave off the recession, moving us towards energy

independence.

All of that and more is waiting for our next president.

You know, obviously each of us believes that we are the person

who should walk into the oval office on January 20th, 2009. I'm

presenting my experience, my qualifications, my ideas, my vision for

America.

CLINTON: And it's routed in the voices that I hear, that I've

heard for 35 years, of people who want a better life for themselves

and their children. And I'm going to keep putting forward what I have

done and what I will do. And this is what this election, I think, is

really about.

RUSSERT: You may think you are the best prepared, but would you

acknowledge that Senator Obama and Senator Edwards are both prepared

to be president?

CLINTON: Well, I think that that's up to the voters to decide.

I think that's something that voters have to make a decision about on

all of us. They have to look at each and every one of us and imagine

us in the Oval Office, imagine us as commander in chief, imagine us

making tough decisions about everything we know we're going to have to

deal with, and then all of the unpredictable events that come through

the door of the White House and land on the desk of the president.

RUSSERT: Senator Obama, you gave an interview to the Reno

Gazette-Journal and you said, "We all have strengths and weaknesses."

WILLIAMS: You said one of your weaknesses is, quote, "I'm not an

operating officer."

Do the American people want someone in the Oval Office who is an

operating officer?

OBAMA: Well, I think what I was describing was how I view the

presidency. Now, being president is not making sure that schedules

are being run properly or the paperwork is being shuffled effectively.

It involves having a vision for where the country needs to go.

It involves having the capacity to bring together the best people

and being able to spark the kind of debate about how we're going to

solve health care; how we're going to solve energy; how we are going

to deliver good jobs and good wages; how we're going to keep people in

their homes, here in Nevada; and then being able to mobilize and

inspire the American people to get behind that agenda for change.

That's the kind of leadership that I've shown in the past.

OBAMA: That's the kind of leadership that I intend to show as

president of the United States. So, what's needed is sound judgment,

a vision for the future, the capacity to tap into the hopes and dreams

of the American people and mobilize them to push aside those special

interests and lobbyists and forces that are standing in the way of

real change, and making sure that you have a government that reflects

the decency and the generosity of the American people.

That's the kind of leadership that I believe I can provide.

RUSSERT: You said each of you have strengths and weaknesses. I

want to ask each of you quickly, your greatest strength, your greatest

weakness.

OBAMA: My greatest strength, I think is the ability to bring

people together from different perspectives to get them to recognize

what they have in common and to move people in a different direction.

And as I indicated before, my greatest weakness, I think, is when it

comes to -- I'll give you a very good example.

OBAMA: I ask my staff member to hand me paper until two seconds

before I need it because I will lose it. You know, the --- you

know...

(LAUGHTER)

And my desk and my office doesn't look good. I've got to have

somebody around me who is keeping track of that stuff.

And that's not trivial; I need to have good people in place who

can make sure that systems run. That's what I've always done, and

that's why we run not only a good campaign, but a good U.S. Senate

office.

RUSSERT: Senator Edwards, greatest strength, greatest weakness?

EDWARDS: I think my greatest strength is that for 54 years, I've

been fighting with every fiber of my being.

In the beginning, the fight was for me. Growing up in mill towns

and mill villages, I had to literally fight to survive.

But then I spent 20 years in courtrooms fighting for children and

families against really powerful well-financed interests. I learned

from that experience, by the way, that if you're tough enough and

you're strong enough and you got the guts and you're smart enough, you

can win. That's a fight that can be won.

It can be won in Washington, too, by the way.

And I've continued that entire fight my entire time in public

life.

EDWARDS: So I've got what it takes inside to fight on behalf of

the American people and on behalf of the middle class.

I think weakness, I sometimes have a very powerful emotional

response to pain that I see around me, when I see a man like Donnie

Ingram (ph), who I met a few months ago in South Carolina, who worked

for 33 years in the mill, reminded me very much of the kind of people

that I grew up with, who's about to lose his job, has no idea where

he's going to go, what he's going to do.

I mean, his dignity and self-respect is at issue. And I feel

that in a really personal way and in a very emotional way. And I

think sometimes that can undermine what you need to do.

RUSSERT: Senator Clinton?

CLINTON: Well, I am passionately committed to this country and

what it stands for. I'm a product of the changes that have already

occurred, and I want to be an instrument for making those changes

alive and real in the lives of Americans, particularly children.

CLINTON: That's what I've done for 35 years. It is really my

life's work. It is something that comes out of my own experience,

both in my family and in my church that, you know, I've been blessed.

I think to whom much is given, much is expected.

So I have tried to create opportunities, both on an individual

basis, intervening to help people who have no where else to turn, to

be their champion. And then to make those changes. And I think I can

deliver change. I think I understand how to make it possible for more

people to live up to their God-given potential.

I get impatient. I get, you know, really frustrated when people

don't seem to understand that we can do so much more to help each

other. Sometimes I come across that way. I admit that. I get very

concerned about, you know, pushing further and faster than perhaps

people are ready to go.

But I think that, you know, there is a difference here. I do

think that being president is the chief executive officer. I respect

what Barack said about setting the vision, setting the tone, bringing

people together. But I think you have to be able to manage and run

the bureaucracy.

CLINTON: You've got to pick good people, certainly, but you have

to hold them accountable every single day.

We've seen the results of a president who, frankly, failed at

that. You know, he went in to office saying he was going to have the

kind of Harvard Business School CEO model where he'd set the tone,

he'd set the goals and then everybody else would have to implement it.

And we saw the failures. We saw the failures along the Gulf

Coast with, you know, people who were totally incompetent and

insensitive failing to help our fellow Americans. We've seen the

failures with holding the administration accountable with the no-bid

contracts and the cronyism.

So I do think you have to do both. It's a really hard job, and

in America we put the head of state and the head of government

together in one person.

CLINTON: But I think you've got to set the tone, you've got to

set the vision, you've got to set the goals, you've got to bring the

country together.

And then you do have to manage and operate and hold that

bureaucracy accountable to get the results you're trying to achieve.

RUSSERT: Senator Obama, Senator Clinton invoked your name. I'll

give you a chance to respond.

OBAMA: Well, there's no doubt that you've got to be a good

manager. And that's not what I was arguing. The point, in terms of

bringing together a team, is that you get the best people and you're

able to execute and hold them accountable.

But I think that there's something, if we're going to evaluate

George Bush and his failures as president, that I think are much more

important. He was very efficient. He was on time all the time, and

you know, and had...

(LAUGHTER)

OBAMA: You know, I'm sure he never lost a paper. I'm sure he

knows where it is. What he could not do is to listen to perspectives

that didn't agree with his ideological predispositions.

What he could not do is to bring in different people with

different perspectives and get them to work together.

OBAMA: What he could not do is to manage the effort to make sure

that the American people understood that, if we're going to go into

war, that there are going to be consequences and there are going to be

costs.

And we have to be able to communicate what those costs are; and

to make absolutely certain that, if we're going to make a decision to

send our young men and women into harm's way, that it's based on the

best intelligence and that we've asked tough questions before we went

into fight.

I mean, those are the kinds of failures that have to do with

judgment. They have to do with vision, the capacity to inspire

people. They don't have to do with whether or not he was managing the

bureaucracy properly.

That's not to deny that there has to be strong management skills

in the presidency. It is to say that what has been missing is the

ability to bring people together, to mobilize the country, to move us

in a better direction, and to be straight with the American people.

OBAMA: That's how you get the American people involved.

WILLIAMS: Time for the rebuttal has expired.

Senator Obama, a fresh question here.

It may not come as news to you that there's a lot of false

information about you circulating on the Internet.

We received one e-mail, in particular -- usually once several

weeks; we've received three of them this week. This particular one

alleges, among other things, that you are trying to hide the fact that

you're a Muslim, that you took the oath of office on the Koran and not

the Bible...

(LAUGHTER)

... that you will not pledge allegiance to the flag or generally

respect it.

How do you -- how does your campaign go on about combating this

kind of thing?

OBAMA: Well, look, first of all, let's make clear what the facts

are: I am a Christian. I have been sworn in with a Bible.

WILLIAMS: I figured.

OBAMA: I pledge allegiance and lead the pledge of allegiance

sometimes in the United States Senate when I'm presiding.

I haven't been there lately because I've been in Iowa and New

Hampshire.

(LAUGHTER)

OBAMA: But you know, look, in the Internet age, there are going

to be lives that are spread all over the place. I have been

victimized by these lies. Fortunately, the American people are I

think smarter than folks give them credit for. You know, it's a

testimony -- these e-mails were going out in Iowa. They were going

out in New Hampshire. And we did just fine.

If we didn't do well, for example, in New Hampshire, it wasn't

because of these e-mails. It was because we didn't do what we needed

to do in our campaign.

So my job is to tell the truth, to be straight with the American

people about how I intend to end climate change, what I'm going to do

with respect to providing health care for every American, how we're

going to provide tax relief to hard-working Americans who are really

feeling the pinch, and to present my vision for where the country

needs to go.

If I'm doing that effectively, then I place my trust in the

American people that they will sort out the lies from the truth, and

they will make a good decision.

WILLIAMS: Senator Obama, thank you.

At this point, we are going to take the first of exactly three

breaks in the two-hour broadcast tonight. On the other side of this

break, among the topics we will take on the economy, when we continue

from Las Vegas after this.

(COMMERCIAL BREAK)

WILLIAMS: We are back live in Las Vegas, Nevada, with the three

top candidates for the Democratic nomination for president. Brian

Williams with Tim Russert, Natalie Morales.

WILLIAMS: We're going to continue the questioning here on the

topic of the economy. And then, within this portion of the broadcast,

we're going to try something new for this series, and that is, the

candidates will have two questions each to ask of their fellow

candidates.

So while they think about that, we will start off with the

economy and a question for you, Senator Clinton.

This evening on NBC Nightly News, our lead story was about the

fact that Citigroup and Merrill Lynch have both "gone overseas," as

some put it, hat in hand, looking for $20 billion in investment to

stay afloat from, among other things, the government of Singapore,

Korea, Japan, and the Saudi Prince Alwaleed, the man -- Rudolph

Giuliani turned his money back after 9/11.

This is -- strikes a lot of Americans as just plain wrong.

WILLIAMS: At the end of our report we said this may end up in

Congress.

What can be done? And does it strike you as fundamentally wrong,

that much foreign ownership of these American flagship brands?

CLINTON: Brian, I'm very concerned about this. You know, about

a month and a half or so ago I raised this concern, because these are

called sovereign wealth funds. They are huge pools of money, largely

because of oil and economic growth in Asia. And these funds are

controlled often by governmental entities or individuals who are

closely connected to the governments in these countries.

I think we've got to know more about them. They need to be more

transparent. We need to have a lot more control over what they do and

how they do it. I'd like to see the World Bank and the International

Monetary Fund begin to impose these rules, and I want the United

States Congress and the Federal Reserve Board to ask these tough

questions.

But let's look at how we got here.

CLINTON: We got here because, as I said on Wall Street on

December 5th, a lot of our big financial institutions, you know, made

these bets on these subprime mortgages. They helped to create this

meltdown that is happening, that is costing millions of people who

live in homes that are being foreclosed on or could be in the very

near future because the interest rates are going up.

And what they did was to take all these subprime mortgages and

conventional mortgages, bundle them up and sell them overseas to big

investors. So, we're getting the worst of both worlds.

We can't figure out, under this administration, what we should

do. I have a plan: a moratorium on foreclosures for 90 days,

freezing interest rates for five years, which I think we should do

immediately.

The administration is doing very little. And what we now see is

our financial institutions having to go hat in hand to borrow money

from these foreign funds. I'm very concerned about it.

CLINTON: I'd like to see us move much more aggressively, both to

deal with the immediate problem with the mortgages and to deal with

these sovereign wealth funds.

WILLIAMS: Senator Edwards, I neglected to point out that one of

the companies keeping these giant American banks afloat is Kuwait, a

nation, an economy arguably afloat itself today, as you know, thanks

to the blood, sweat and tears of American soldiers.

What would you do as a remedy?

EDWARDS: Well, the things that Senator Clinton just spoke about

are correct. We need more transparency. We need to know what's

actually happening. But the fundamental problem is what's happening

at the core of the American economy. What's happening to the economy

in America, if you look at it from distance, is we have economic

growth in America -- we still do -- but almost the entirety of that

economic growth is with the very wealthiest Americans and the biggest

multinational corporations.

You ask any middle class family in America and they will tell you

they do not feel financially secure. They are worried about their

job. They are worried paying for health care. They're worried about

having to send their kids to college. They're worried about, in so

many cases, here in Nevada particularly, worried about their home

being foreclosed on.

EDWARDS: I spoke a few minutes ago about thousands of people

coming to Nevada everyday to try to find the promise of America, to

try to find a good job, a good home to meet the great moral test that

all of us have as Americans, which is to make certain that our

children have a better life than we had.

This is the great challenge that we're facing in this election.

We talked about other historic moments. It is an historic moment for

America in this election.

Are we going to do what our parents and our grandparents did, who

worked and struggled and suffered to ensure that we would have a

better life?

They have now passed that torch to us and it is our

responsibility, and it will be my responsibility as president to

ensure that our children and our grandchildren have a better life than

we had.

WILLIAMS: Tim?

Oh, Senator Obama, a rebuttal.

OBAMA: Well, not a rebuttal. I just want to pick up on a couple

of things that have been said.

Number one, part of the reason that Kuwait and others are able to

come in and purchase, or at least bail out, some of our financial

institutions is because we don't have an energy policy.

OBAMA: And we are sending close to $1 billion a day. And this

administration has consistently failed to put forward a realistic plan

that is going to reduce our dependence on foreign oil; is going to

invest in solar and wind and biodiesel.

You look at a state like Nevada; one thing I know is folks have

got a lot of sun here.

(LAUGHTER)

And yet we have not seen any serious effort, on the part of this

administration, to spur on the use of alternative fuels, raise fuel

efficiency standards on cars. That would make a substantial

difference in our balance of payments and that would make a

substantial difference in terms of their capacity to purchase our

assets.

And the second thing, I just want to point out, is that the

subprime lending mess -- part of the reason it happened was because we

had an administration that does not believe in any kind of oversight.

And we had the mortgage industry spending $185 million lobbying

to prevent provisions such as the ones that I've proposed over a year

ago that would say, you know, you've got to disclose properly what

kinds of loans you're giving to people on mortgages.

OBAMA: You've got to disclose if you've got a teaser rate and

suddenly their mortgage payments are going to jack up and they can't

pay for them. And one of the things that I intend to do as president

of the United States is restore a sense of accountability and

regulatory oversight over the financial markets.

We have the best financial markets in the world, but only if they

are transparent and accountable and people trust them. And,

increasingly, we have not had those structures in place.

WILLIAMS: Time is up, Senator.

RUSSERT: Senator Edwards, poor folks, middle class folks really

feeling the pinch.

EDWARDS: Yes.

RUSSERT: Bankruptcies are up 40 percent in one year, 5 percent

of credit card debts are now delinquent. In 2001, you voted for a

bankruptcy bill which was the precursor to the 2005 bankruptcy bill

that become law, which made it much tougher for middle class folks,

particularly women, when they became bankrupt.

RUSSERT: Do you regret that vote?

EDWARDS: I absolutely do. I should not have voted for that

bankruptcy law.

If you look at what's happening in America today, the

bankruptcies that are occurring, about half of them are the result of

medical costs. And the idea that any single mom who has a child who

gets catastrophically sick and incurs $30,000 of medical cost has to

go into bankruptcy as a result, and can't be relieved of that debt,

makes absolutely no sense. And it's not fair and it's not right.

And I spoke just a few minutes ago about the great struggles that

the middle class are faced with in this country, and you hear it every

single day. Because what's happening in America is jobs are leaving,

cost of everything is going up -- health care, college tuition,

everything -- and, on top of that, middle class incomes are not going

up.

EDWARDS: The incomes at the very top are going up. Profits of

big corporations are going up. But the incomes of middle class

families are not going up.

So the question is, what do we do about it? Besides having

somebody who truly understands in a personal way what's happening,

what would the president of the United States do? There are a bunch

of things we need to do.

We desperately need truly universal health care that covers every

single American and dramatically reduces health care costs. We do

need, as Barack spoke about just a few minutes ago, a radical

transformation of the way we produce and use energy. We can create at

least a million new jobs in that transition.

We need a national law cracking down on predatory and payday

lenders that are taking advantage of our most vulnerable families. We

ought to raise -- the national minimum wage is going up to $7.25 an

hour. That's fine. It's not enough.

The national minimum wage should be at least nine and a half

dollars an hour. It ought to be indexed to go up on its own. We need

to make it easier for kids to go to college. My proposal is that we

say to any young person in America who's willing to work when they're

in college, at least 10 hours a week, we'll pay for their tuition and

books at a state university or community college.

EDWARDS: And that can be paid for by getting rid of big banks as

the intermediary in student loans. They make $4 billion or $5 billion

a year. That money ought to be going to sending kids to college.

RUSSERT: Senator Clinton, you voted for the same 2001 bankruptcy

bill that Senator Edwards just said he was wrong about. After you did

that, the Consumer Federation of America said that your reversal on

that bill, voting for it, was the death knell for the opponents of the

bill. Do you regret that vote?

CLINTON: Sure I do, but it never became law, as you know. It

got tied up. It was a bill that had some things I agreed with and

other things I didn't agree with, and I was happy that it never became

law. I opposed the 2005 bill as well.

But let's talk about where we are now with bankruptcy. We need

urgently to have bankruptcy reform in order to get the kind of options

available for homeowners. In addition to what I want to do, which is

the moratorium on foreclosures for 90 days to see what we can do to

work them out, and freezing interest rates for five years, and making

the mortgage industry more transparent so we actually know what

they're doing.

CLINTON: I mean, look what happened with Countrywide. You know,

Countrywide gets bought and the CEO, who was one of the architects of

this whole subprime mess, is set off with $100 million -- $100 million

in severance pay.

You know, the priorities and the values are absolutely wrong.

So, what we've got to do is move urgently.

In addition to what I proposed, I think we've got to reform the

bankruptcy law right now, going forward, so that people who are caught

in these subprime and now increasingly conventional loans that they

can't pay because of the way the interest rates are going up and many

of the fraudulent and predatory practices that got people into them in

the first place will have the option of getting relieved of this debt.

So there's a lot we need to do right now. And, you know, I want

to just add that the groups that sponsored this are primarily black

and brown groups that care deeply about these issues.

Everything we're talking about falls disproportionately on

African Americans, on Hispanics, on a lot of Asian Americans.

CLINTON: Here in Nevada, the African-American and Hispanic

communities are really the ones that are most victimized by these sub-

prime mortgages. They're the ones who are often the first to be let

go when the economy begins to slide. You know, in and out of the

homes that I have visited, and here in Las Vegas, those are the

stories that I am hearing.

So we need to move urgently. We have a lot of big agenda items

that I agree with John on: universal health care, college

affordability. But we can't wait. We're going to lose another, you

know, million Americans in home foreclosures.

We're going to see a deteriorating community across America

because homes will be left vacant. The housing market is down.

Nobody will buy those homes. Housing wealth, which the principle

source of American middle class wealth, is now decreasing.

So I have a real sense of urgency.

CLINTON: We need to be acting now. And I know that the

Democratic Congress, under Senator Harry Reid and Speaker Pelosi, are

going to do everything they can to address this.

RUSSERT: Senator Obama, the 2001 bankruptcy bill; the 2005

bankruptcy bill?

OBAMA: I opposed them both. I think they were a bad ideas.

Because they were pushed by the credit card companies. They were

pushed by the mortgage companies. And they put the interests of those

banks and financial institutions ahead of the interests of the

American people.

And this is typical. Now, Hillary's exactly right that we've got

to modify some of the fraudulent practices, predatory lending

practices.

I put in a bill, a year and a half ago, to make that happen.

Because it does affect communities, including my own, on the south

side of Chicago.

But, unless we are able to rid the influence of special-interest

lobbies in Washington, we're going to continue to see bad legislation

like that.

And that's why we're going to have to change how politics is done

in Washington.

Now, we have an immediate problem. I met with a number of folks

up in Reno, just two days ago, who are already seeing their homes

being foreclosed upon.

One of the things that we have to do is we have to release people

who are in bankruptcy as a consequence of health care; we've got to

give them a break.

OBAMA: One woman who I was with, her husband is a police

officer. He contracted cancer, went through chemotherapy, ends up

being hit by a car while in the line of duty, and they fall three,

four months behind on their health care payments, and that's it, they

can't make the payments on their house.

We've got to provide them some relief. I've put forward a $10

billion housing fund that can help bridge people who have been

responsible in making their payments. They're not speculators,

they're not trying to flip properties. They're in their own homes.

We've got to make sure that they can get the kinds of help that

they need to stay in their homes and make the payments and live out

the American dream that is so important to so many people.

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.

MORALES: 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?"

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.

OBAMA: 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.

OBAMA: 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?"

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.

CLINTON: 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.

CLINTON: That means police services and other services start to

deteriorate. That compounds the problem.

I want to see money in the pocket's 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.

WILLIAMS: Two bits of housekeeping at this point. I've been

asked to remind our candidates that we have a system of lights that

they can plainly see.

WILLIAMS: The yellow one starts flashing...

(LAUGHTER)

The yellow one starts flashing when they're starting to run out

of time...

(LAUGHTER)

... and the red one starts flashing when they are out of time.

And another reminder that only seven feet separates us from the

candidates.

(LAUGHTER)

Now to that segment we promised earlier. We asked the candidates

and their campaigns to come here tonight prepared with two questions,

one for each of their opposition candidates.

It's not our intention that these be novelty or, at all,

throwaway questions but that they be real questions. And we should

know, right away, here, whether this was a good or a very bad idea.

(LAUGHTER)

Senator Edwards, I would like to start with you. A question for

Senator Obama and a question for Senator Clinton?

EDWARDS: I get to do both, to begin with?

WILLIAMS: Sure.

(LAUGHTER)

EDWARDS: OK. Well, let me start this question. This is about

campaign finances. And let me start it by saying the obvious, which

is, all three of us have raised a great deal of money in this

campaign.

EDWARDS: And so this is not preachy or holier than thou in any