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Special Report

'Special Report' Panel on the Second Presidential Debate; Candidate's Economic Plans

This is a rush transcript of "Special Report With Brit Hume" from October 8, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R-ARIZ.) PRESIDENTIAL CANDIDATE: By the way, my friends, I know you grow weary of this back and forth.

There was an energy bill on the floor of the Senate loaded down with goodies, billions for the oil companies, and it was sponsored by Bush and Cheney. You know who voted for it? You might never know. That one.

(END VIDEO CLIP)

BRIT HUME, HOST: Well, imagine, "that one." That got a lot of attention as the moment of the night. The McCain campaign thought it was a great moment for them, and the Obama campaign thought it was a good moment for him.

So, some thoughts on all this now from Fred Barnes, executive editor of The Weekly Standard, Nina Easton, Washington Bureau Chief for Fortune magazine, and Jeff Birnbaum, managing editor digital of The Washington Times, FOX News contributors all three.

All right, well, your thoughts, Jeff, on the debate and where it took McCain and where he needs to go.

JEFF BIRNBAUM, MANAGING EDITOR DIGITAL, THE WASHINGTON TIMES: Well, I thought the debate was not very exciting, let's just say. It really was a snooze for part of it, and it could not be that way for McCain to do what he needed to do. He needed to make this a homerun, and I think, at best, he had a double.

HUME: What did Obama have?

BIRNBAUM: A double as well, but he was on his way to third, I think, in a lot of people's estimation.

HUME: He had a head start, huh?

BIRNBAUM: He rounded second.

And what McCain needed to do was to prove that this was his favorite format and really go after Obama.

And even though they had signaled, the McCain campaign had, that that's what they were going to do, they were going question Obama's judgment and his character, McCain pulled his punches and instead unveiled a new proposal on mortgages, which turned out not to be all that new and was very difficult to understand, and really didn't advance the ball at all.

If McCain had actually confronted Obama, perhaps, it might have been more exciting, and it might have been a bigger ballgame for — a better ballgame for John McCain.

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: John McCain needs to get a message, and he needs to get a message fast.

This is a candidate who's always run on his personal history and relied on his personal history. Now he is up against a candidate who has similarly interesting personal history, compelling personal history, but also happens to have a message-

HUME: Which is "change"?

EASTON: Which is change. And by the way, you don't represent change, you represent the last eight years. Just like George W. Bush and just like as I used to say about George W. Bush, "the energizer bunny," he repeats that message over and over again. And he is incredibly disciplined about that.

What do we have from John McCain? Well, first he was going to govern like a responsible commander in chief. No, wait, wait, I'm a maverick, a reformer. Here's Sarah Palin.

You know, I'm going to suspend my campaign and come to Washington and help with this Treasury bill and this Treasury rescue plan.

No, no, I don't like that Treasury rescue plan so much after all, we found out last night. I have my own idea.

He is just all over the map. He cannot stay focused. And the only thing he can stay focused on right now are personal attacks.

HUME: If he doesn't have a message, don't you think he ought to be trying one out until something works?

EASTON: He needs to be sticking with it, I mean sticking with a compelling message that works.

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: That debate last night, that was the worst in human history. There is no question about that. It was dreadful.

HUME: Wait a minute. Was that worse than The Des Moines Register debate earlier this year?

BARNES: But Tom Brokaw approached that Nurse Ratchet-woman as a limit, and he go very close to her — as some overbearing person who intruded in the debate entirely unnecessarily and made the debate worse.

But there wasn't — you know, that's not the reason why John McCain didn't make much headway.

Look, the first thing John McCain needs for the financial system to stabilize and for the stock market to stop going down and start going up.

EASTON: Good luck.

I mean, this is a financial crisis that is not only hurting McCain, it's destroying the whole Republican Party. Senate candidates, House candidates, gubernatorial candidates, they're all sinking as a result, all over the country.

OK, McCain can't affect that. But Nina is right. He needs one clear message. And he doesn't have one.

HUME: Well, can you really think a clear message, whatever it would be, would overcome the circumstances?

BARNES: Yes, I think it would—and, again, if he had the discipline of Barack Obama.

You know there was another thing that Barack Obama said over and over again-"I'm looking out for the middle class. When I'm president in Washington, I'm looking out for the middle class. And this guy over here, 'this one,' McCain is just looking out for the rich people."

HUME: He's not.

Brit, you know with that soundbite you had, if that's the most important soundbIte from the debate, nothing happened.

BIRNBAUM: I think McCain has the makings of a message, and it's not on the spending side, where he loves to be. It should be on taxes.

I think there's a real difference between these two, that if you go with Obama, he will raise your taxes. It's not credible what he says—

HUME: Jim Angle had a good report tonight on how Obama is right about the number of small businesses that would get a tax break and the number who would have their taxes increased. But the number that would have their taxes increased are the ones that do the most jobs creation.

EASTON: And Angle made that point, and we haven't heard that point from McCain.

BARNES: McCain said that 50 percent of the revenues from small businesses would be affected by this.

HUME: What does that tell you?

BARNES: It tells us that it would affect the small businesses that had bigger profits.

BIRNBAUM: But I think he could go to individuals. Tax cuts for individuals. That's a Republican plan. He could come up with one. It would stimulate the economy. He could make Main Street instead of Wall Street by staying away from capital gains.

I think he had it there but didn't quite grab it, and it may be too late for him to do so.

EASTON: And I would just also add he has to be careful of these attacks, the William Ayers on Barack Obama because he is starting to look so angry he vibrates. He has to be careful.

BARNES: Of course he has to attack.

BIRNBAUM: I disagree with that. I think he has to attack, or he has no chance of bringing down Obama's numbers.

BARNES: The one thing you don't want to be is a gentlemanly loser.

HUME: There are some big differences between the candidate's economic plans we have been talking about, and we will talk about that some more next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCAIN: Under my orders as president, the secretary of the treasury will carry out a homeownership resurgence plan. The United States government will purchase mortgages directly from homeowners and mortgage services and replace them with manageable mortgages.

SEN. BARACK OBAMA, (D-ILL.) PRESIDENTIAL CANDIDATE: If you make less than $250,000 a year—let me see a show of hands. How many people make less than a quarter million dollars a year?

All right. That seems to be most of you. You will not see a dime of increased taxes, not one dime.

(END VIDEO CLIP)

HUME: Indeed says Senator Obama, 95 percent of workers, taxpayers or people—he phrases it in different ways—will get a tax cut.

So McCain has an idea which is he wants to buy up the bad mortgages not from the banks so much, now, but actually from individuals and absorb them and let them stay in their homes. Obama has some ideas about the use of the tax code.

What about these plans? Which one is more compelling at this stage—Jeff?

BIRNBAUM: Well, I think the way that Obama describes his tax plan is certainly more compelling. I'm not sure that it actually works out that way.

HUME: Why do you say that?

BIRNBAUM: For one thing, he wants to increase the tax on capital gains, which is the tax on the profit from the sale of property and securities, and there are a lot of people who earn less than $250,000 who pay capital gains or are likely to pay capital gains.

He does have a variety of other tax reductions that will help people in that range. But it's very doubtful, in my view, that he would ever be able to enact them given the immense size that the federal budget deficit-

HUME: And the bailout...

BIRNBAUM: ...and the rest of his spending proposals as well.

I think that this promise, that that sound byte that we just saw of Obama, if he becomes president, will be played over and over again because it will be proven not to be true.

EASTON: Well, just going back to McCain, just in terms of clarity and consistency, last night was a disaster. This thing, this plan that he came up with, which, by the way, has been kicking around liberal circles—Hillary Clinton suggested it—was clearly something that they decided to throw in there at the last minute as a Hail Mary pass.

We talked to the campaign people today—$300 billion is the price tag, but they don't know how many people will take advantage of it, so how they come up with the price tag?

HUME: But they say that is $300 billion from the $700 billion. It's not an additional...

EASTON: From the $700 billion but they won't even tell you exactly where they will carve from the $700 billion, which, by the way, Congress has already passed a measure to help people to insure mortgages for people that are about to default.

The campaign said today this would be available for people who aren't even close to defaulting because we don't want them that distressed.

So, I mean, this is all over the map.

Second thing, he suggested Warren Buffett as his treasury secretary. I'm sorry, Warren Buffett is not only an avid Barack Obama supporter, he also is an avid opponent of the George Bush tax cuts.

HUME: He is a tax-increaser. Great investor but he's a tax- hiker.

EASTON: But what is this—where is McCain? It is so confusing.

BARNES: Are you suggesting there is a contradiction there? There is a horrible contradiction there! McCain's for cutting taxes, and he has probably the most prominent tax-raising rich man in the America, Warren Buffett, as the Treasury Secretary.

He's for all these spending cuts.

HUME: And he never briefed Mitt Romney on the plan. So Mitt Romney didn't know anything about it.

BARNES: And he has this huge plan.

The problem with Obama is that a lot of his tax cuts are just mailing out checks, and he's going to tax more — The people, if we're going to have a recovery, the people will have to invest, which will provide a recovery.

HUME: Any viewer watching this program tonight would think, "My God, if he is an Obama fan, he'd say, life is good, Obama has got it, he's going to win. McCain is stumbling all over the place. It's basically over." Fred, quickly, is it?

BARNES: No, I don't think it's over. But I re-read the transcript of the debate, and Obama did better than I thought.

EASTON: We have lived through this crazy race for too long to say it's over. It's never over till it's over.

HUME: But you are talking about an unpredictable event?

EASTON: Yes.

BIRNBAUM: Something has to intervene or Obama wins. Yes, that's the way it's going.

HUME: That is it for the panel.

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