'Meet the Press' transcript for Sept. 28, 2008

MR. BROKAW: But the picture economically is darker with every passing day, and here's what Robert Bixby, who is with the Concord Coalition, had to say about your two candidates. "I don't think either candidate is treating the deficit, or the debt, seriously. I don't see any proposals from either one that would make the situation any better." This is a nonpartisan observer who is looking at it. Senator Obama the other night was asked to name one program that he would cut given the economic realities. We're going to be at war in two countries, he wants to reform healthcare, have alternative energy and early childhood. He didn't name one program, Mr. Axelrod.

MR. AXELROD: That's not true, Tom. He talked about the Medicare Advantage program, which is a big giveaway to the insurance companies within the Medicare program. That's $15 billion a year right there. Another big item that we have to deal with is the $10 billion a month we're spending in Iraq while Iraq has a $79 billion surplus. Senator McCain would like to continue there indefinitely. The American people want to come home from Iraq, to send some troops from Afghanistan, and to begin investing that money here at home. So there are many things that we can do. Obviously, we're going to have to look at the budget, and Senator Obama said he's going to go through it line by line, and he's going to get rid of things that don't work. We have, for example, a one--a reading program that was installed by the Bush administration that turned out to be a big boondoggle. It's not helping any kids learn. We ought to say that doesn't work, let's get rid of it. And that's the approach he's going to take. If we're going to do the things we need to do, the things you mentioned, the things that are going to strengthen the middle class in our economy, we're going to have to be very, very flinty-eyed about what we can keep and what we don't.

MR. BROKAW: Mr. Schmidt, this is The Economist, and this is the issue right...

MR. SCHMIDT: Mm-hmm.

MR. BROKAW: ...before the Republican convention, and it says, "Bring back the real McCain." They say "Hawkish foreign policy, irresponsible tax cuts, more talk about religion and abortion: all those sounds too much like Bush Three, the label the Democrats are trying to hang around the Republican's neck. We preferred McCain One." Aren't you going to have to go back to McCain One given the reality of this economy?

MR. SCHMIDT: There's only one John McCain. It's the authentic leader that you've seen on display this week, putting his country first, going into the heat to try to solve a huge problem for this country. We reject the premise of it. I would like to respond to something that David said. It's important. Barack Obama, in the United States Senate, in a budget resolution vote that he said was his priorities, voted to increase taxes on people making as little as $42,000 a year. That's the record. That's the truth. What the Obama campaign does any time the record is criticized is they respond by saying that's a lie. It's dishonest politics. Fundamentally, we have a choice in this race between somebody who has a record of voting to cut spending, as someone who has been a protector of the taxpayer vs. Mr. Axelrod's candidate, Senator Obama, who on every occasion throughout his career, has been a vote for higher taxes, for more taxes, for injurious taxes on the American people. That's the record. Now, 38 days before...

MR. AXELROD: That is not the record. Here's, here's what the--here's what the--here's what the record is, David.

MR. SCHMIDT: ...38 days--let me finish, David--38 days before an election, he's trying to portray himself as a tax-cutting Ronald Reagan. Totally disconnected from reality. And with regard to Iraq, I would like to say this. What Senator McCain has said is our troops will come home, but they will come home in victory. We must finish the war we are on the edge of winning in that country because of the strategy that John McCain proposed and the strategy that Barack Obama opposed. Had Barack Obama had his way, this country would have lost the first...

MR. AXELROD: Tom.

MR. SCHMIDT: ...war of the 21st century...

MR. AXELROD: Tom.

MR. SCHMIDT: ...to al-Qaeda and to Islamic extremists with devastating consequences for the security of this country and the world.

MR. AXELROD: Al-Qaeda, al-Qaeda, Steve, al-Qaeda, as was discussed in the debate, the central front in the war on terror is Afghanistan and Pakistan.

MR. SCHMIDT: Not according to General Petraeus.

MR. AXELROD: Osama bin Laden is resurgent today because of the dreadful mistake that was made by Bush and McCain in taking this war to Iraq. But let's talk about taxes. The fact of the matter is that Senator Obama has been--he wrote the earned income tax credit in Illinois, cutting taxes for working families. They just have a difference in philosophy. Steve and Senator McCain believe, as George Bush does, that if we give lavish tax breaks to people at the top, it will trickle down and the economy will grow, and that's what he's proposing now, $300 billion in new tax breaks for corporations and the wealthy, and no way, really, to pay for it. It's the same philosophy with government. And the thing that we saw in that debate is that what Senator McCain was doing was essentially defending the same policies we've seen for the last eight years.

Now, I will say this about the old John McCain. The old John McCain said that to cut, to cut taxes in the middle of a war was irresponsible. The old John McCain said, originally, that the Bush tax cuts offended him because they were too skewed to the wealthy. He then embraced them and made a Faustian bargain with the Bush faction and the, and the right wing of his own party in order to be the nominee of his party. And we've seen that on issue after issue. And now what he's offering is essentially a third Bush term, more of the same policies. They haven't worked. People want a change. They're not going to get that change from John McCain.

MR. BROKAW: All right. We--I'm going to end on two notes here if I can, very quickly. We have a crowded agenda this morning. Let's go back to this business about winning in Iraq, if we can. In fact, a number of people on the Republican have--side have said that we're winning. But in an interview with the BBC, General David Petraeus said he did not know that he would ever use the word victory about Iraq. "This is not the sort of struggle where you take a hill, plant a flag and go home to a victory parade. ... it's not" a "war with a simple slogan." So isn't it misleading in many ways for Senator McCain to say we are winning and we'll come home when we have declared victory?

MR. SCHMIDT: Well, absolutely not. Here is what victory means in Iraq. It means an Iraqi government that is able to protect its borders, and it means an Iraqi government that is able to protect its people, then moves forward on its path to democracy. This country was losing this war. Senator McCain stood up to the Bush administration, called for the firing of Don Rumsfeld, risked his political career to advocate a strategy almost by himself that has led us to the edge of victory there. Senator Obama opposed that strategy. In the debate you heard not one time from Senator Obama the words victory. We must win this war. This country doesn't have a choice. Senator Obama's judgment on issues of security to this country, whether it's on Iraq or calling Iran a tiny threat or saying that...

MR. AXELROD: Tom.

MR. SCHMIDT: ...he would sit down unconditionally with the Iranian president without preconditions make the world more dangerous. It is...

MR. AXELROD: It is, it is, it is...

MR. SCHMIDT: ...a fundamental consideration for the American people.

MR. AXELROD: ...ludicrous, it is ludicrous to assert after four years of mistake after mistake after mistake, when he didn't challenge Mr. Rumsfeld, when he didn't challenge the Bush policy, when he cheerleaded for it to then say that he was a critic of the policy.

MR. SCHMIDT: Just not true that he didn't challenge Secretary Rumsfeld.

MR. AXELROD: Just a, just a, just a second. Just a second, Steve. I let you speak.

MR. SCHMIDT: Not true, David.

MR. AXELROD: I let you speak, let me, let me finish.

MR. SCHMIDT: Not true.

MR. AXELROD: What has happened is, as Senator Obama predicted from the beginning, that we got distracted in Iraq and now Osama bin Laden, who was the person who attacked the United States, killed 3,000 American citizens, is now resurgent. He is stronger. And that's the result of the misbegotten decision of John McCain. And he stubbornly wants to continue, even as the Iraqis won't take responsibility, sitting on $79 billion of their own surplus while we spend $10 billion a month. It doesn't make sense. We can't take more of the same, Steve.

MR. BROKAW: In fairness to everybody here, I'm just going to end on one note, and that is that we continue to poll on who's best equipped to be commander in chief, and John McCain continues to lead in that category despite the criticism from Barack Obama by a factor of 53 to 42 percent in our latest NBC News/Wall Street Journal poll.

Gentlemen, thank you very much. I wish we could spend the rest...

MR. AXELROD: Thank you, Tom.

MR. BROKAW: ...of the day talking about these issues. But you're invited back, and I hope you'll make your second...

MR. AXELROD: Thank you. Thank you.

MR. BROKAW: ...appearance right here on MEET THE PRESS.

MR. SCHMIDT: Thank you, Tom.

MR. BROKAW: Thank you very much for being with us.

Coming up next, we kick off our 2008 Senate Debate series with the battleground state of Colorado. Former Congressman Bob Schaffer vs. Congressman Mark Udall. Also, former President Bill Clinton on Decision 2008 and his Clinton Global Initiative. It's only here on MEET THE PRESS.

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MR. BROKAW: A live debate on the Colorado Senate race plus former president Bill Clinton after this brief station break.

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