This is a rush transcript from "America's Election HQ," October 23 2008. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM: All right. With 12 days left until Election Day, what are the candidates thinking and feeling now as they get closer to November 4th? It has been a long, hard road. So, looking back, what have they learned?

Time magazine's Joe Klein sat down with Barack Obama. He asked the candidate about his gut decisions from financial rescue and his decision not to suspend his campaign, to the war in Iraq and his major speech on race in America as well. The article is entitled "Why Barack Obama is Winning" and it appears in the latest issue of "Time" magazine.

Joe, good to have you here tonight. Thanks very much for coming.

JOE KLEIN, TIME MAGAZINE: Good to be here, Martha.

Video: Watch Martha's interview with Joe Klein

MACCALLUM: You know, you talked about his gut and what it tells him. I just want to pull up one of the quotes from your piece. This is when you asked him about whether or not — his decision whether or not to go back during the economic crisis.

And he says, "We were getting phone calls from people from Washington, and I think there were some on our staff who were thinking that maybe we should interject and respond in some way. My strong feeling was that the situation was of such seriousness that it was important not to chase the cameras. One of the benefits of running this 22-month gauntlet is that you have been through some ups and downs and you start realizing that what seems important or clever or in need of some dramatic moment, a lot of times just needs reflection and care. And I think that was an example of where my style at least worked."

More interviews, videos and tools on 'America's Election HQ' homepage

What is that? What is that, you know, mean actually to you?

KLEIN: Well, what he was talking about was McCain had made the preemptive decision.

MACCALLUM: Right.

KLEIN: . to suspend his campaign. And Obama's initial reaction was — no, I don't want to do that, and his inner stance reaction was — no, I don't have to do. But all of a sudden, they start getting calls from Democrats in Congress and that sort of thing, and they, you know, they're saying if you don't suspend your campaign, McCain is going to look, you know, above it, like a statesman and you're going to look like a politician.

And he had to make a gut-level decision at that moment about what to do and he decided to push ahead because he was on the phone with Bernanke, he was on the phone with Paulson, he was, you know, he was on top of the situation. But he was also aware of the fact that both he and McCain were really peripheral players here. They didn't have the levers of power and he didn't want to make it seem other than it was.

So — I mean, that was a gut decision that kind of plays to who he is. I mean, he's a no drama guy. To my mind, the more interesting decision was his decision to have a confrontation with David Petraeus in Baghdad.

MACCALLUM: Right. And I want to ask about that in a second. But I'll tell you, one other thing that I read when I read the quote that we just looked at, and that was — often I find him responding to questions and talking about his experience as a campaigner, as, you know, sort of as his experience. You know, this is how I thought my style worked here. This is sort of, you know, a moment when we felt you don't want to chase the cameras.

And I thought he's talking from the prism of, you know, of being a candidate. And I thought to myself.

KLEIN: (INAUDIBLE)

MACCALLUM: I couldn't help but to think to myself, you know, he's also a senator from Illinois, while an economic crisis is unfolding but his mindset seems to be in most of these responses as, you know, as candidate, as career.

KLEIN: But that really isn't fair, Martha.

MACCALLUM: Maybe it's not, but I'm telling you that's what I thought, what I was getting (ph).

KLEIN: But, no, I'll tell you why it's not fair — because he was doing the substantive work. I talked to a very prominent Republican about the White House meeting in the Oval Office with President Bush, and Obama came to that meeting with four things that he wanted to be in the package, and he had some questions for both Paulson and Bernanke.

MACCALLUM: Right.

KLEIN: This prominent Republican said to me that when the president turned to John McCain and said, "What do you want, John" — McCain had nothing to say. So, I think that the amazing thing to — about this has been how quickly he's been able to come up to speed. He chose people like Paul Volcker. And so, McCain has some good advisors as well.

MACCALLUM: Right, I mean, that, you know, we've all talk to people.

KLEIN: But you have to understand.

MACCALLUM: . (INAUDIBLE) had a very different take on that moment as well.

KLEIN: I don't know.

MACCALLUM: So, I'm sure you've heard about it as well. But I understand.

KLEIN: I kind of trust — I kind of trust my sources. And you have to — you have to realize that on issue after issue in this interview, you know.

MACCALLUM: Right.

KLEIN: . you know, which was not about campaign or election things, it was all about substance, he had very substantive views and he was willing to think in my presence which is kind of bright line test to me.

MACCALLUM: Let's talk about the evolution in that regard, that you see in him, from when you first meet him a couple of years ago. That he.

KLEIN: I think he trusts his instincts more than now than he did then.

MACCALLUM: Yes.

KLEIN: But, you know, the key here is that he's gotten more confident. And when he talks, he said some really interesting stuff about the economy. You know, he was very candid. He said we've had an easy credit economy for the last 20 years, we're not going to be able to have that in the future, and we now have to figure out what the next thing that's going to turbo-charge our economy is, and he believes.

MACCALLUM: And he said that's energy.

KLEIN: He believes that's an alternative energy economy.

MACCALLUM: Got it. And I think he's probably right about that. And both the candidates are very.

KLEIN: Although I don't that he's right about that. I certainly hope he's right about that. But.

MACCALLUM: Well, both candidates seem to, you know.

KLEIN: Yes.

MACCALLUM: . that's going to.

(CROSSTALK)

KLEIN: No, it's one thing.

MACCALLUM: It's just interesting. (INAUDIBLE), they're wrapping us up here. Joe Klein, thank you very much.

KLEIN: We can't talk about Petraeus?

MACCALLUM: Good to see you here. We'll make — we'll do next time. And you're coming in my afternoon show.

KLEIN: OK.

MACCALLUM: I love to talk to you about it again. Thank you, Joe.

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