KROFT: The McCain campaign, right now, is characterizing you as just another big-spending liberal. And that, as a result of this, you wants to raise taxes.
OBAMA: Right. They're wrong. And I think they're being deliberately misleading when they run these ads. Every independent analyst who's taken a look at it says that I provide more tax relief to middle class families than John McCain does. So let's be absolutely clear. Under my tax plan, 95 percent of American workers would get a tax cut. Ninety-five percent. If you are making less than $250,000, you would not see a single dime of tax increase. Not on anything.
KROFT: And at what level would the tax break start to kick in, salary-wise?
OBAMA: I would say if you are making $150,000 a year or less, you are definitely getting a tax cut under my plan. Between $150,000 and $250,000, you're probably gonna stay roughly the same. It is true, if you make more than $250,000 a year, you'll probably pay a slightly higher rate. But you'll probably still pay lower taxes than you did back in the 90s. And you definitely will be paying lower taxes than you did under Ronald Reagan. So this notion that we are actually high raising taxes is simply not true. And the McCain folks should know it's not true because you've got people in places like the Heritage Foundation, conservative think tanks, who've acknowledged that we give more middle class tax relief than he does. And you know, I think that if this ends up being a debate about tax policy, that's a debate I'm happy to have. Because we are gonna make the tax system work for the nurse, the firefighter, the police officer, the teacher. And John McCain has nothing to offer them. In fact, he leaves 100 million people without any tax relief whatsoever.
KROFT: But you are planning on taxes, certainly, for the people over two hundred and fifty thousand dollars a year.
KROFT: To increase revenues to pay for some of your plans.
KROFT: Is it a good idea to be raising taxes at a time when the country seems to be broke?
OBAMA: Well, keep in mind that we are cutting taxes for 95 percent of the people who are more likely to spend the money to go and put that money to work in a small business. Who are more likely to give a boost to the economy, a stimulus to the economy, at a time when it's needed. This is part of the flaw of the Bush/McCain doctrine when it comes to the economy, which is that if all the money is captured at the top that, somehow, that that prosperity has trickled down. It has not worked. We've tried this for eight years. The simple point that I would make, when it comes to the economy, is if you like what's happened over the last eight years, then John McCain is your man because he is not promising to do anything significantly different. I think that the last eight years have not been good for the American economy. Neither short term or long term. And so that's why I offer a decisive break. Not only on tax policy, but also on energy policy, health care policy, and education policy. That is a huge choice between myself and John McCain. And if voters are focused on that choice, then you know, I feel confident about the conclusions they're gonna draw when they go into the voting booth on November 4th.
KROFT: What about health care? Let's talk about health care for a second. What would be the difference for people in the United States without health care if you're elected as opposed to John McCain?
OBAMA: Well, let's start with the people who have health insurance, which are still the vast majority of Americans. They mostly get health insurance on the job. Here's what I would propose: I would go to employers and I would say, "Let's work to lower your health care premiums. And we're gonna do it a couple of ways. We'll put in place a catastrophic reinsurance plan so that you can make your the premiums you pay, Mr. Employer, more manageable. And you can pass on those savings to your employees. We're gonna emphasize prevention and use health IT to make the system more efficient." So we estimate that we can save employers the equivalent about of about $2,000 to $2,500 per family that they're covering. Those savings get passed onto families. It's put in their pocket. If you don't have health insurance, then we're gonna set up a pool that's similar to the health care I have as a member of Congress, that members of Congress give themselves. And my attitude is the uninsured should be able to buy into that. It should emphasize prevention. We should crack down on insurers to make sure that they're providing choice and that they're not denying claims unfairly. We should negotiate for the cheapest available price on drugs. And if we emphasize prevention and wellness, we can make the system more rational. Use those savings to subsidize people who can't afford even the modest premiums that are charged under a congressional health care plan. So, under my plan, if you don't have health insurance, you can get health insurance like the health insurance I have. If you do have health insurance, we're gonna lower your premiums. Now, here's what John McCain's suggesting. He is, for the first time, going to tax health care benefits. Never been done before, since the period of the employer based health care plan. So he's gonna tax for the first time, those benefits. What he says is you, Mr. Individual Worker, will get a $5,000 tax credit. And you can go buy it on the open market, and the marketplace is gonna work great, and there's gonna be competition. And that will reduce cost. Here's the problem. Health care for you or your family member may cost $12,000. And now you've got a $7,000 gap. You are out of luck. Or you may be 55 years old. And maybe you had a heart attack. Good luck going on the open market without an employer sponsored health care plan and actually getting insurance. You have no chance of getting it because you've got a preexisting condition. So the studies now estimate that, potentially, you could have to 20 million more people without health insurance under John McCain's plan than don't have health insurance right now. Now, that can't be a good answer to the health care crisis that we have in this country. It this is the same approach that George Bush offered. It is approach that says, "Anything that is marketplace is good. And anything that involves government is bad." But the fact of the matter is that what we need is commonsense solutions that uses the marketplace, but also has the government as a participant to make sure everybody gets a fair shake. In this case, gets decent health care.
KROFT: You said people can go out and buy the health insurance that you have in congress.
KROFT: For how much?
OBAMA: Well, similar health care. So the idea would be . . .
KROFT: Yeah, but how much?
OBAMA: . . . what I get at the federal health insurance program, that all federal workers get. So it's not just members of Congress, but it's people who are part of the federal government. And I don't know exactly what the premiums would be, 'cause it would depend on what a family of four, with their various profiles, what they wanted. But here's what we would do is we'd make sure it was affordable. And that it was at a percentage of what their incomes would be. So that it was manageable. And so if you are a janitor who's not making a lot of money, let's say you make $20,000, or $25,000 a year, obviously, you're gonna be subsidized more than if you are somebody making $60,000 or $70,000 a year. You may still have trouble getting health care for a whole variety of reasons. Maybe you're self employed. But we're gonna provide you probably less of a subsidy. You will still be getting much lower costs than if you go out there on the marketplace on your own.
KROFT: How much is it gonna cost? $150 billion, right?
OBAMA: It is. It is. But we pay for every dime that we propose to spend. You know, one of the things that I'm very proud of and, you know, this was confirmed by a Wall Street Journal article, that our proposals are largely paid for. Not every line by line. I haven't put together an actual budget. But, roughly speaking. I believe in pay as you go. That if you want to propose a new program, you better cut some old ones. If you want to expand a program, then you better figure out where the money's coming from. And that's why I've said that one of the jobs of the next president, especially if it's me, because I think there's gonna be a lot of scrutiny about 'is this guy another tax and spend liberal,' is to make sure that we are going line by line through the federal budget and eliminating waste that is not making people's lives better. And I've got concrete examples. I mean, we, right now, are subsidizing the insurance companies to provide a private version of Medicare when the public version of Medicare works just fine. We subsidized them to the tune of $15 billion. Now, think about that. That's $15 billion right there that we could use to make sure that children in America have health insurance [they] don't currently have. That's a bad way to spend money. I'm gonna end it when I'm president.
KROFT: So this is paid for with the increased taxes on people who make more than $250,000 a year?
OBAMA: It's rolling back the Bush tax cuts. It's closing corporate tax loopholes. But it's also cutting programs of the sort that I just talked about. Look I don't make a claim that we are going to be able to eliminate our deficit within my first term as president.
KROFT: Right now it's, what, $400 billion?
OBAMA: It's a lot.
KROFT: Is it gonna go up under an Obama administration?
OBAMAN: It's gonna go down. But it's not gonna go away, because we dug ourselves a deep hole. I mean, one of the ironies, when I hear John McCain talking about, you know, he's gonna be this fiscal hawk -- his party has presided over the most fiscally irresponsible government that that we have seen in recent memory. I mean, they just blew up the budget. Earmarks, pork barrel projects. John McCain, the bane of his existence, supposedly, skyrocketed under the Republican administration. And so the notion that these guys have credentials when it comes to fiscal policy, is laughable. Democrats -- when Bill Clinton was in office, he left a surplus. We made some tough decisions. And so the mythology that somehow Republicans are more responsible fiscal stewards than Democrats is just not born out by the facts. And it's not gonna be born out by an Obama administration's policies.
KROFT: Iraq. You said that would be one of the first things that you would have done. When we talked to you the first time in Springfield back in February of 2007, you had proposed, at that time, a piece of legislation that would have had all the troops out in 16 months. Which many say would have been out by today, if it would have been passed. We would have missed the surge. We would have missed the reduction in violence.
OBAMA: Oh, wait, wait, wait, Steve. I mean, now you're just engaging in a huge hypothetical. We don't know what would have happened if we had initiated the plan that I put forward at the beginning of 2007. What we know is that the only long-term solution in Iraq is a political accommodation between the Shia, the Sunni, and the Kurds. And the fact of the matter is that, as successful as our troops have been in lowering the violence in Iraq, and they have performed brilliantly -- and General Petraeus, who just recently moved on to become the head of CENTCOM, is to be congratulated for his great work -- but the truth of the matter is we still don't have an oil agreement. We still don't have provincial elections. The commanders on the ground themselves acknowledge that the political progress that's needed has not been made. And the point that I made in that legislation, from the start, was that the only way we can start applying some pressure on the Iraqis, to get them to take some responsibility, is to not just give them a blank check. To not just say, "We are gonna be here for as long as you want policing your streets. Spending $10 billion reconstructing Baghdad at a time when you turn out to have a $79 billion surplus." The point I was making is they have to take responsibility for their country. People here in America, our military families, they have sacrificed enormously. Taxpayers in America have sacrificed enormously. So we all welcome the reduction in violence. But the notion that somehow this was the only way for us to solve the problem, and that the problem has been solved, I completely disagree with.
KROFT: The McCain campaign, the last day or two, has been running nothing but ads talking about you and the surge. That you were opposed to the surge.
OBAMA: That's all they had to talk about. You notice that according to the McCain mythology, I guess the Iraq war started with the surge. They seem to forget that there were five years before that where they got everything wrong. Where they anticipated that we would be greeted as liberators. Where they said this would be easy. These are John McCain's quotes. That this would all pay for itself. Because the Iraqi oil revenues would more than cover it. That we had sufficient troops. I mean, the fact of the matter is that John McCain has been consistently wrong on Iraq. And the judgment that I made at the beginning, which was that this was a endeavor that was going to end up costing us dearly in blood and treasure, without clear consequences, and would distract us from going after the terrorists in Afghanistan and al Qaeda, that turned out to be right. I wish it hadn't been, because it's been a very costly enterprise. And now's a time for us to bring this to a close. Even the Iraqi prime minister and the Iraqi government recognize it's time to have a time frame. The Bush administration has talked about time horizons. And John McCain, moving forward, is the only one who stubbornly clings to reasons to stay in Iraq.
KROFT: You want a couple more brigades for Afghanistan. What would you have them do?
OBAMA: Well, they have to be added as part of a broader comprehensive strategy. You know, when I met with President Karzai, I insisted, "We've got to do something about the corruption. We've got to strengthen Afghan forces. We've got to make sure that we are rooting out the heroin trafficking, the poppy crops that have made Afghanistan, at this point, a narco state." And that's gonna require, not just two addition brigades, which I have been calling for for a year and a half, well before Senator McCain realized that we couldn't just, quote, "Muddle through," as he had suggested. But what we also have to do is to have the kinds of civilian leadership and focus on economic development, agricultural development. All those things are gonna make a difference in making the Afghan government more effective for its own people. The final element, which may be as important as anything, is we've got to strengthen our relationship with Pakistan in way that is effective in rooting out al Qaeda and the Taliban, because that's where the base camps are. That's where the safe havens are. We gave $10 billion to Pakistan over seven years. And instead of using it to root out these terrorists, they essentially bought military equipment that they were using to worry about India. That has been a mistake. We were lock, stock, and barrel with Musharraf, a dictator who increasingly generated resentment among his own people. That was a mistake. So we now have a new democracy in Pakistan. It's relatively fragile. But we've got to work to regain the confidence and trust of the Pakistani people. And get them to recognize having al Qaeda in the foothills, in the mountains of Pakistan, is not just a danger to the United States, it's also a danger to them.
KROFT: You were one of the first people to say that the United States ought to follow the Taliban and al Qaeda back into the tribal territories of Pakistan.
OBAMA: Here's what I said. Is that we can't tolerate al Qaeda having base camps and safe havens where they are planning attacks against U.S. targets. That's not acceptable. So what I've also said is that we have to work with the Pakistanis. Insist on their cooperation. Provide them aid contingent on their cooperating in going after the terrorists who are there. And what I've also said is if we have a high value al Qaeda target in our sights, then we need to make sure that if the Pakistanis are unwilling or unable to go after them, that we do. That's commonsense. And I think that's appropriate. That is not, as John McCain suggested at the time, a call to bomb an ally. Or invade Pakistan. It is an extension of a basic principle that I will abide by as commander in chief. Which is, if somebody strikes us -- in this case killing 3,000 Americans -- then there is no safe harbor for them. And we have to insist that those people are killed or brought to justice.
KROFT: The Pakistan this week said that if they find Americans on their soil carrying out combat or military operations, they'll fire on the Americans.
OBAMA: Well, I look that is a slightly different issue. And that has to do with Taliban forces or militias of some sort engaging in brazen raids into Afghanistan that are affecting our troops. And then trying to run back over the border. And we have to be able to make sure that our troops defend themselves. Pakistan has to give us some assurance that we are not just gonna be subject to sniper fire. And the minute they cross some imaginary line in a pile of rock, that somehow we can't go after them. So this requires effect diplomacy with Pakistan. It requires winning over the hearts and minds of Pakistanis. And that's why, for example, I have proposed that we increase the amount of foreign aid that's devoted to building schools in Pakistan, and providing improved quality of life for people. If all the Pakistanis see about America is footage on television of soldiers, then that gives them one impression. It's another impression for them to see, you know what the Americans have helped fund this health clinic. Or are helping my son to read, and eventually maybe get a better life for himself. Those kind of investments, that kind of influence, is something that we have not applied as much as we need to over the last eight years.
KROFT: Is a nuclear-armed Iran a direct threat to the United States?
OBAMA: Yes. I think that a nuclear-armed Iran is not just a threat to us, it's a threat to Israel. And it is a game-changer in the region. It's unacceptable. And that's why I've said that I won't take any options off the table, including military, to prevent them from obtaining a nuclear weapon. But I do think that it is important for us to use all the arrows in our quiver. And we have not applied the kind of tough diplomacy over the last eight years that I think could have made a difference. The Bush administration in its final year has started to change its mind. And we saw them send a very seasoned and outstanding diplomat, William Burns, to participate in talks with the Europeans who had provided an offer to the Iranians to start standing down on their nuclear program. So we need to participate in those talks, primarily so that we can gather all our allies together in a consensus that problem is not us, it's not our recalcitrance, it's not our unwillingness to talk to the Iranians. The Iranians are at fault. And that's why the entire international community should mobilize around applying very tough sanctions on in the Iranian banking sector, in cutting off sales of refined petroleum products that they desperately need for their economy. That can really put the squeeze on them so that they understand that there's a huge price to pay when it comes for them continuing this nuclear program.
KROFT: If, a year from now, or a year and a half from now, intelligence estimates indicate that Iran has the capability to build the nuclear weapon, would you take military action? All the diplomacies fail.
OBAMA: You know, I am not going to engage in hypotheticals on this issue. Suffice it to say, I don't think it's acceptable for Iran to have a nuclear weapon. And I haven't taken any options, including military, off the table.
KROFT: If you got a call from the prime minister of Israel asking for U.S. support, or permission, for them to take it out.
OBAMA: I won't engage in that hypothetical either Steve. But Iran has made violent threats against Israel. They have funded terrorist activities through Hezbollah and Hamas. Israel has every right to take the threat of Iran very seriously. And Israel has a right to defend itself. That is not in any way an answer to the hypothetical that you provided, because I don't think I should be in the business of answering that hypothetical. I do know that the United States has to continue to provide all the assistance that's necessary to Israel so that it can protect itself. Israel is our stalwart ally. It has a special relationship with the United States, and we are gonna be unwavering in terms of their security.
KROFT: When you say Israel has the right to defend itself -- against an imminent attack, or some perceived threat of an attack?
OBAMA: Well, look, I mean, Israel is under constant threat. And I have generally been of the view that if I am the leader of Israel and, for example, Hezbollah captures two of my soldiers or more, what do I do? Do I allow some rogue terrorist group to capture U.S. military -- if it was US soldiers involved -- without taking appropriate action? Of course not. And you know, so what I try to do is to use the same criteria in judging Israel's actions as I would if I were thinking about my daughters under potential Katusha rocket fire. And, you know, I in those circumstances I think they have a right to take steps necessary to prevent their children from being blown up.
KROFT: When we did our very first interview, back in Springfield, I said, "Do you think the country's ready for a black president," you said that you didn't think it would hold you back. That if you don't win this race, it will be because of other factors. "Because I haven't shown the American people a vision for what where this country needs to go." Do you still believe that?
OBAMA: Yes. I believe it even more now. We're only 47 days out and I'm still here. Yeah.
KROFT: I know, for a fact, that there are there are a lot of people out there -- there are a lot of people right here in Elko -- who won't vote for you because you're black. There have been people that have told your campaign that, in various states, it's difficult. It's hard. There's some people that are not gonna buy this. I mean, there's not much you can do. But how do you deal with it? I mean are there ways that, from a political point of view, that you can deal with it? And how do you fight that?
OBAMA: Well, look the there is a historic aspect to this candidacy. There's no doubt about it. We haven't had an African-American nominee, much less president, before. So, you know, this is something new for America. And for the candidate, as well as for the country, you know, we're still you know working our way through this. But what I know is this. That after the toughest primary in history, against one of the best fields in history, I emerged as the nominee. Going up against a very formidable Republican machine and having been subject to constant attack and millions of dollars spent trying to scare people over the last two months, I'm still tied or in the lead with John McCain. That tells me that the American people are good. That they are judging me on my ideas and my vision, my values, and not my skin color. Now are there gonna be some people who don't vote for me because I'm black? Of course. There are probably some African-Americans who are voting for me because I'm black. Or maybe others who are just inspired by the idea of breaking new ground. And so I think all that's a wash. The bottom line is: am I viewed as somebody who's gonna be a champion for the guy who's waking up every day, working hard for a paycheck you know, who's bought home? Whose, you know, wife is working too, who's got a few kids. And, you know, maybe they don't know somebody named Barack Obama who lives on the south side of Chicago, but they do know that they're falling behind economically. And I'm confident that if they think I can help them, in their lives, if they think that I really care about making government work for them, that I've got a shot at getting their vote. And it may take a little more work on my part. But I don't mind working harder than the other guy.
KROFT: Senator McCain talks a great deal about his experience as a prisoner of war and how it has shaped him. What are the things, or what is the thing, that has shaped you?
OBAMA: Well, I don't think I can come up with something as powerful and unique as the experience Senator McCain talks about as a POW. He deserves extraordinary thanks for his service while in uniform. The story for me is of being born into pretty humble circumstances. Not having a dad in the house, but having a mother and grandparents who loved me. Who instilled in me some pretty you know, Midwestern Kansas values of hard work and stick-to-it-ness and honesty and looking out for other people.
KROFT: What are the things that have molded you? Or the thing that's molded you?
OBAMA: Well you know, I'm somebody who's was born to pretty moderate circumstances, to a teenage mom. My father left when I was two. But I had a mother who loved me, and grandparents who loved me, and who instilled in me some plain mid-western values. Honesty. Hard work. Stick-to-it-ness. Looking out for other people. Showing other people respect. And I think what has shaped me is to work through some of the difficulties of my early years and realize that if I was gonna be true to those values, then I'd need to apply them in a larger setting. First, as a community organizer. Then, as a state legislator. Then, as a U.S. Senator. My mother, when I was a kid, used to always say, whenever she saw me misbehave or do something that was mean to somebody, she'd say: "How do you think that'd make you feel?" That sense of putting' yourself in somebody else's shoes, and seeing through their eyes. And what's shaped me most powerfully -- maybe because I'm half black and half white -- that a big chunk of my childhood, I was sort of an outsider, didn't quite fit anywhere. Part of what shapes me is, being able to find a connection with all kinds of different people, and want to bring them together and bridge misunderstandings, and bridge conflict, so that we can actually get things done. And that, I think is something that led me into public service. And in some ways, that's something very profoundly American about me. Because when I think about America at its core, it's we've got these common values, but we come from all kinds of different places. And if we unify around those values, that are quintessentially American values, then I don't think there's any problem that we can't solve in this country. And that's the kind of leadership that I want to provide for the White House.
KROFT: The differences between you and John McCain on energy. The price of the price of gasoline, the price of home heating fuel -- it's a major issues with people all over the country. What's the difference between you and Senator McCain on this?
OBAMA: Well, part of it is track record. I mean, John McCain and I agree when he said that part of the problem on energy is that people have been sitting in Washington for three decades and haven't done anything about it. The problem is, John McCain's been there 26 of 'em. And during those years, he was opposed to credits for solar power, wind power, bio-fuels. He, at times, has been against increased fuel efficiency standards, sometimes for them. But there's been a lack of consistency and a lack of concern on his part -- a lack of leadership -- when it comes to energy. Now what I've said is that we want to free ourselves from Middle Eastern oil in ten years. And that's something that we can accomplish. We can invest in more fuel-efficient cars, making sure they're built here in the U.S., instead of in China and Japan. We can make our buildings more energy efficient. We could drastically cut our energy consumption just by making our buildings more energy efficient. We can invest in solar, wind, bio-diesel, hydro-carbons, creating renewable fuel standard so that states are working with utilities all across the country to boost the use of renewable fuels. All those things I think -- not only are people ready and willing to pursue those ideas, they're hungry for 'em. But they don't have leadership. Now, what Senator McCain will say is, "Well, Obama doesn't want to drill." That's just not true. I've said repeatedly that we should increase domestic oil production. And I've said that I am willing to support a comprehensive package that includes drilling off-shore. But what I have said is, drilling alone can't be the answer, because even folks like T. Boone Pickens, who I think knows oil and is hardly a raving environmentalist, will tell you we've got three to four percent of the world's oil reserves. And we use 25 percent of the world's oil. So, that's not gonna work. John McCain will argue, "Well, I wanna promote nuclear." I've said that I support nuclear energy. I've got more nuclear plants in my home state than anywhere else in the country. I just want to make sure that we're storing the fuel safely. And finally, coal. Sometimes I take some heat from my own party about this, but I think it's unrealistic to say that we can't use coal at all. What we need to do is to figure out how do we sequester the pollutants that we get when burning coal so that we're not increasing global warming. And if we are able to harness that technology, then we are the Saudi Arabia of coal. And it would be foolish for us not to use this abundant resource. And, by the way, if we can figure out the technology, then we can also franchise it to China and India, so since they're building a coal fired power plant once a week we better make sure that they get the technology that is not contributing to climate change, as well.
part one of the transcript.