Clinton has arrived in st. Louis in tonights debate Washington University. Here we see her getting off of her plane about an hour and a half ago. And donald trump has also made his way to st. Louis. Heres a tweet from Kellyanne Conway showing mr. Trump on his plane, alongside Reince Priebus and former new york city mayor, rudy giuliani. Now, lets take a look at the scene outside of the debate hall at Washington University in st. Louis. It will give you a sense of whats going on is we prepare for tonights debate. It gets underway at 9 00 eastern. Our coverage starts at 7 30 p. M. Here on cspan. Look now ate a another president ial debate. This time, 2008 with democratic senator barack obama facing republican senator john mccain at Hofstra University in hempstead, new york. This is an hour and a half. Schieffer good evening. And welcome to the third and last president ial debate of 2008, sponsored by the commission on president ial debates. Im Bob Schieffer of cbs news. The rules tonight are simple. The subject is domestic policy. I will divide the next hourandahalf into nineminute segments. I will ask a question at the beginning of each segment. Each candidate will then have two minutes to respond, and then well have a discussion. Ill encourage them to ask followup questions of each other. If they do not, i will. The audience behind me has promised to be quiet, except at this moment, when we welcome barack obama and john mccain. [applause] gentlemen, welcome. By now, weve heard all the talking points, so lets try to tell the people tonight some things that they they havent heard. Lets get to it. Another very bad day on wall street, as both of you know. Both of you proposed new plans this week to address the economic crisis. Senator mccain, you proposed a 52 billion plan that includes new tax cuts on Capital Gains, tax breaks for seniors, writeoffs for stock losses, among other things. Senator obama, you proposed 60 billion in tax cuts for middle income and lowerincome people, more tax breaks to create jobs, new spending for public works projects to create jobs. I will ask both of you why is your plan better than his . Senator mccain, you go first. Mccain well, let let me say, bob, thank you. And thanks to hofstra. And, by the way, our beloved nancy reagan is in the hospital tonight, so our thoughts and prayers are going with you. Its good to see you again, senator obama. Americans are hurting right now, and theyre angry. Theyre hurting, and theyre angry. Theyre innocent victims of greed and excess on wall street and as well as washington, d. C. And theyre angry, and they have every reason to be angry. And they want this country to go in a new direction. And there are elements of my proposal that you just outlined which i wont repeat. But we also have to have a shortterm fix, in my view, and long term fixes. Let me just talk to you about one of the shortterm fixes. The catalyst for this housing crisis was the fannie and freddie mae that caused subprime lending situation that now caused the Housing Market in america to collapse. I am convinced that, until we reverse this continued decline in Home Ownership and put a floor under it, and so that people have not only the hope and belief they can stay in their homes and realize the American Dream, but that value will come up. Now, we have allocated 750 billion. Lets take 300 of that billion and go in and buy those home loan mortgages and negotiate with those people in their homes, 11 million homes or more, so that they can afford to pay the mortgage, stay in their home. Now, i know the criticism of this. Mccain well, what about the citizen that stayed in their homes . That paid their mortgage payments . It doesnt help that person in their home if the next door neighbors house is abandoned. And so weve got to reverse this. We ought to put the homeowners first. And i am disappointed that secretary paulson and others have not made that their first priority. Schieffer all right. Senator obama . Obama well, first of all, i want to thank Hofstra University and the people of new york for hosting us tonight and its wonderful to join senator mccain again, and thank you, bob. I think everybody understands at this point that we are experiencing the worst financial crisis since the great depression. And the Financial Rescue plan that senator mccain and i supported is an important first step. And i pushed for some Core Principles making sure that taxpayer can get their money back if theyre putting money up. Making sure that ceos are not enriching themselves through this process. And i think that its going to take some time to work itself out. But what we havent yet seen is a rescue package for the middle class. Because the fundamentals of the economy were weak even before this latest crisis. So ive proposed four specific things that i think can help. Number one, lets focus on jobs. I want to end the tax breaks for companies that are shipping jobs overseas and provide a tax credit for every company thats creating a job right here in america. Number two, lets help families right away by providing them a tax cut a middleclass tax cut for people making less than 200,000, and lets allow them to access their ira accounts without penalty if theyre experiencing a crisis. Now senator mccain and i agree with your idea that weve got to help homeowners. Thats why we included in the financial package a proposal to get homeowners in a position where they can renegotiate their mortgages. I disagree with senator mccain in how to do it, because the way senator mccain has designed his plan, it could be a giveaway to banks if were buying full price for mortgages that now are worth a lot less. And we dont want to waste taxpayer money. And weve got to get the financial package working much quicker than it has been working. Last point i want to make, though. Weve got some longterm challenges in this economy that have to be dealt with. Weve got to fix our Energy Policy thats giving our wealth away. Weve got to fix our Health Care System and weve got to invest in our Education System for every young person to be able to learn. Schieffer all right. Would you like to ask him a question . Mccain no. I would like to mention that a couple days ago senator obama was out in ohio and he had an encounter with a guy whos a plumber, his name is joe wurzelbacher. Joe wants to buy the business that he has been in for all of these years, worked 10, 12 hours a day. And he wanted to buy the business but he looked at your tax plan and he saw that he was going to pay much higher taxes. You were going to put him in a higher tax bracket which was going to increase his taxes, which was going to cause him not to be able to employ people, which joe was trying to realize the American Dream. Now senator obama talks about the very, very rich. Joe, i want to tell you, ill not only help you buy that business that you worked your whole life for and be able and ill keep your taxes low and ill provide available and Affordable Health care for you and your employees. And i will not have i will not stand for a tax increase on Small Business income. Fifty percent of Small Business income taxes are paid by Small Businesses. Thats 16 million jobs in america. And what you want to do to joe the plumber and millions more like him is have their taxes increased and not be able to realize the American Dream of owning their own business. Schieffer is that what you want to do . Mccain thats what joe believes. Obama he has been watching ads of senator mccains. Let me tell you what im actually going to do. I think tax policy is a major difference between senator mccain and myself. And we both want to cut taxes, the difference is who we want to cut taxes for. Now, senator mccain, the centerpiece of his economic proposal is to provide 200 billion in additional tax breaks to some of the wealthiest corporations in america. Exxon mobil, and other Oil Companies, for example, would get an additional 4 billion in tax breaks. What ive said is i want to provide a tax cut for 95 percent of working americans, 95 percent. If you make more if you make less than a quarter Million Dollars a year, then you will not see your income tax go up, your Capital Gains tax go up, your payroll tax. Not one dime. And 95 percent of working families, 95 percent of you out there, will get a tax cut. In fact, independent studies have looked at our respective plans and have concluded that i provide three times the amount of tax relief to middleclass families than senator mccain does. Obama now, the conversation i had with joe the plumber, what i essentially said to him was, five years ago, when you werent in a position to buy your business, you needed a tax cut then. And what i want to do is to make sure that the plumber, the nurse, the firefighter, the teacher, the young entrepreneur who doesnt yet have money, i want to give them a tax break now. And that requires us to make some important choices. The last point ill make about Small Businesses. Not only do 98 percent of Small Businesses make less than 250,000, but i also want to give them additional tax breaks, because they are the drivers of the economy. They produce the most jobs. Mccain you know, when senator obama ended up his conversation with joe the plumber we need to spread the wealth around. In other words, were going to take joes money, give it to senator obama, and let him spread the wealth around. I want joe the plumber to spread that wealth around. You told him you wanted to spread the wealth around. The whole premise behind senator obamas plans are class warfare, lets spread the wealth around. I want Small Businesses and by the way, the Small Businesses that were talking about would receive an increase in their taxes right now. Who why would you want to increase anybodys taxes right now . Why would you want to do that, anyone, anyone in america, when we have such a tough time, when these Small Business people, like joe the plumber, are going to create jobs, unless you take that money from him and spread the wealth around. Im not going to obama ok. Can i mccain were not going to do that in my administration. Obama if i can answer the question. Number one, i want to cut taxes for 95 percent of americans. Now, it is true that my friend and supporter, Warren Buffett, for example, could afford to pay a little more in taxes in order mccain were talking about joe the plumber. Obama in order to give in order to give additional tax cuts to joe the plumber before he was at the point where he could make 250,000. Then exxon mobil, which made 12 billion, record profits, over the last several quarters, they can afford to pay a little more so that ordinary families who are hurting out there theyre trying to figure out how theyre going to afford food, how theyre going to save for their kids College Education, they need a break. So, look, nobody likes taxes. I would prefer that none of us had to pay taxes, including myself. But ultimately, weve got to pay for the Core Investments that make this economy strong and somebodys got to do it. Mccain nobody likes taxes. Lets not raise anybodys taxes. Ok . Obama well, i dont mind paying a little more. Mccain the fact is that businesses in America Today are paying the second highest tax rate of anywhere in the world. Our tax rate for business in america is 35 percent. Ireland, its 11 percent. Where are Companies Going to go where they can create jobs and where they can do best in business . We need to cut the business tax rate in america. We need to encourage business. Now, of all times in america, we need to cut peoples taxes. We need to encourage business, create jobs, not spread the wealth around. Schieffer all right. Lets go to another topic. Its related. So if you have other things you want to say, you can get back to that. This question goes to you first, senator obama. We found out yesterday that this years deficit will reach an astounding record high 455 billion. Some experts say it could go to 1 trillion next year. Both of you have said you want to reduce the deficit, but the Nonpartisan Committee for a responsible federal budget ran the numbers on both of your proposals and they say the cost of your proposals, even with the savings you claim can be made, each will add more than 200 billion to the deficit. Arent you both ignoring reality . Wont some of the programs you are proposing have to be trimmed, postponed, even eliminated . Give us some specifics on what youre going to cut back. Senator obama . Obama well, first of all, i think its important for the American Public to understand that the 750 billion rescue package, if its structured properly, and, as president , i will make sure its structured properly, means that ultimately taxpayers get their money back, and thats important to understand. But there is no doubt that weve been living beyond our means and were going to have to make some adjustments. Now, what ive done throughout this campaign is to propose a net spending cut. I havent made a promise about schieffer but youre going to have to cut some of these programs, certainly. Obama absolutely. So let me get to that. What i want to emphasize, though, is that i have been a strong proponent of payas yougo. Every dollar that ive proposed, ive proposed an additional cut so that it matches. And some of the cuts, just to give you an example, we spend 15 billion a year on subsidies to Insurance Companies. It doesnt under the medicare plan it doesnt help seniors get any better. Its not improving our Health Care System. Its just a giveaway. We need to eliminate a whole host of programs that dont work. And i want to go through the federal budget line by line, page by page, programs that dont work, we should cut. Programs that we need, we should make them work better. Now, what is true is that senator mccain and i have a difference in terms of the need to invest in america and the American People. I mentioned health care earlier. If we make investments now so that people have coverage, that we are preventing diseases, that will save on medicare and medicaid in the future. If we invest in a serious Energy Policy, that will save in the amount of money were borrowing from china to send to saudi arabia. If we invest now in our young people and their ability to go to college, that will allow them to drive this economy into the 21st century. But what is absolutely true is that, once we get through this economic crisis and some of the specific proposals to get us out of this slump, that were not going to be able to go back to our profligate ways. And were going to have to embrace a culture and an ethic of responsibility, all of us, corporations, the federal government, and individuals out there who may be living beyond their means. Schieffer times up. Senator . Mccain well, thank you, bob. I just want to get back to this Home Ownership. During the depression era, we had a thing called the Home Ownership loan corporation. And they went out and bought up these mortgages. And people were able to stay in their homes, and eventually the values of those homes went up, and they actually made money. And, by the way, this was a proposal made by senator clinton not too long ago. So, obviously, if we can start increasing home values, then there will be creation of wealth. Mr. Schieffer but what mccain but ok. All right. Schieffer the question was, what are you going to cut . Mccain energy well, first second of all, energy independence. We have to have Nuclear Power. We have to stop sending 700 billion a year to countries that dont like us very much. Its wind, tide, solar, natural gas, nuclear, offshore drilling, which senator obama has opposed. And the point is that we become Energy Independent and we will create millions of jobs millions of jobs in america. Ok, what what would i cut . I would have, first of all, acrosstheboard spending freeze, ok . Some people say thats a hatchet. Thats a hatchet, and then i would get out a scalpel, ok . Because weve got we have presided over the largest increase weve got to have a new direction for this country. We have presided over the largest increase in government since the great society. Government spending has gone completely out of control; 10 trillion dollar debt were giving to our kids, a halfatrillion dollars we owe china. I know how to save billions of dollars in defense spending. I know how to eliminate programs. Schieffer which ones . Mccain i have fought against well, one of them would be the marketing assistance program. Another one would be a number of subsidies for ethanol. I oppose subsidies for ethanol because i thought it distorted the market and created inflation senator obama supported those subsidies. I would eliminate the tariff on imported sugarcanebased ethanol from brazil. I know how to save billions. I saved the taxpayer 6. 8 billion by fighting a deal for a couple of years, as you might recall, that was a sweetheart deal between an aircraft manufacturer, dod, and people ended up in jail. But i would fight for a lineitem veto, and i would certainly veto every earmark porkbarrel bill. Senator obama has asked for nearly 1 billion in porkbarrel earmark projects schieffer times up. Mccain including 3 million for an overhead project