Democratic presidential candidate Sen. Barack Obama,
D-Ill., greets Republican presidential candidate Sen. John McCain,
R-Ariz., at the start of a town hall-style presidential
debate at Belmont University in Nashville, Tenn.
John McCain tried get out in front of the burgeoning economic turmoil Tuesday at his second presidential debate with Barack Obama, announcing a new plan to prevent foreclosures by allowing the government to buy up mortgages.
But the debate, two-thirds of which focused on the economy, again proved the mess on Wall Street would continue to drive the campaign discourse in a direction that seems to be hurting the Republican nominee in the polls.
Both candidates, facing off in a town hall-style format in Nashville, accused each other of contributing to the financial unrest.
Obama repeatedly portrayed his rival as a deregulator who helped let the markets run wild.
"He believes in deregulation in every circumstance," Obama said. "That's what we've been going through in the past eight years. It hasn't worked, and we need fundamental change."
McCain said only he has the bipartisan record of speaking out against abuses in the financial system and opposing excessive spending in government.
"Fannie and Freddie were the catalyst, the match that started this forest fire. There were some of us, some of us who stood up against it, there were others that took a hike," he said.
McCain, in his new proposal, called on the Treasury Department to step in and basically renegotiate mortgages of homeowners who are struggling to afford them.
His campaign said the plan, which would have the government directly purchase mortgages and replace them with "manageable" fixed-rate mortgages, would cost about $300 billion. The campaign in a statement said part of the $700 billion the government approved in its financial rescue package could go toward this purpose.
"It's my proposal. It's not Senator Obama's proposal. It's not President Bush's proposal," McCain said at the debate.
"Is it expensive? Yes," McCain said. "But we all know, my friends, until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy, and we've got to get some trust and confidence back to America."
Obama last month sounded a similar idea but was not as detailed.
Moderated by NBC's Tom Brokaw, the debate in Nashville featured questions submitted by voters in the audience and on the Internet.
The candidates spoke within a few feet of each other, pacing on the floor at the center of a semi-circle of undecided voters. The two were mostly polite, but the strain of the campaign showed. At one point, McCain referred to Obama as "that one."
The two men criticized one another repeatedly as the topics turned to energy, spending, taxes, health care and foreign policy.
In one pointed confrontation on foreign policy, Obama bluntly challenged McCain's steadiness.
"This is a guy who sang 'bomb, bomb, bomb Iran,' who called for the annihilation of North Korea -- that I don't think is an example of speaking softly."
That came after McCain accused him of foolishly threatening to invade Pakistan and said, "I'm not going to telegraph my punches, which is what Senator Obama did."
The candidates spent several minutes talking about health care -- an issue Obama tried to bring back as a focal point in the campaign over the weekend.
Obama said McCain was going to require taxes on the health benefits workers receive from their employers at the same time his plan would wipe out the ability of states to enforce their own regulations to require tests such as mammograms.
McCain countered that under his rival's plan "Senator Obama will fine you" if parents fail to obtain coverage for their children but had yet to say what the fine would be. "Perhaps we will find that out tonight," he said.
Obama quickly followed up, saying that McCain "voted against the expansion" of the children's health care program the government runs.
The two men prefer dramatically different approaches to easing the problem of millions of uninsured Americans. McCain favors a $5,000 tax credit that he says would allow families to find and afford health care on their own.
Obama wants to build on the current system, in which millions receive coverage through the workplace, with government funding to help uninsured families obtain coverage.
The candidates met at Belmont University, as polls show McCain facing an increasingly challenging electoral landscape.
The national Gallup tracking poll Tuesday showed Obama up 9 points, and surveys show McCain also trailing in critical battlegrounds.
With the intense focus on economic turmoil appearing to have hurt McCain -- whose strong suit is considered foreign policy -- the Republican nominee's campaign has recently moved to shift focus to Obama's personal relationships, bringing up his ties to 1960s radical William Ayers.
But those ties did not come up Tuesday in Nashville.
Each candidate instead took pains to explain to voters why he was the best choice to steer the economy away from recession.
Shortly before the start of the debate, FOX News learned that Obama recently called on his economic advisers to draft an updated economic agenda to address uninsured and jobless Americans.
"We are in the worst financial crisis since the Great Depression," Obama said at the top of the debate. "I believe this is a final verdict on the failed economic policies of the last eight years, strongly promoted by President Bush and supported by Senator McCain."
He said that in the wake of news that American International Group sent executives on a $440,000 retreat after the federal government bailed out the company, the Treasury should demand that money back and demand that AIG executives be fired.
McCain accused Obama of being the Senate's second-highest recipient of donations from individuals at Fannie Mae and Freddie Mac, the two now-disgraced mortgage industry giants.
Obama shot back that McCain's campaign manager, Rick Davis, has a stake in a Washington lobbying firm that received thousands of dollars a month from Freddie Mac until recently.
Asked whom they would appoint as their treasury secretary, neither McCain nor Obama definitively named a candidate. McCain mentioned supporter and former eBay CEO Meg Whitman as a possibility, while Obama mentioned supporter and billionaire Warren Buffet.
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