On government spending:
McCain said he would consider a spending freeze on everything but defense, veterans affairs and entitlement programs in order to cut back on government spending.
Obama disagreed, saying, "The problem is, you're using a hatchet where you need a scalpel.
"There are some programs that are very important that are currently underfunded," Obama said.
He agreed that the government needs to cut spending in some areas, but he said other areas, such as early childhood education, need more funding.
McCain repeated his call to veto every bill with earmarks.
Obama said the country "absolutely" needs earmark reform but said, "the fact is, eliminating earmarks alone is not a recipe for how we are going to get the middle class back on track."
On the bailout proposal:
Obama said that the United States was facing its worst financial crisis since the Great Depression.
McCain said he was encouraged that Republicans and Democrats were working together to solve the crisis.
Obama refused to be pinned down on whether he would support a $700 billion plan proposed by President Bush's top economic advisers, saying the final details of the proposal were not known.
McCain said he hoped to be able to vote for it.
On the likelihood of another terrorist attack:
McCain that another attack on the scale of the September 11 hijackings is "much less likely" now than it was the day after the terrorist attacks.
"America is safer now than it was on 9/11," he said, "But we have a long way to go before we can declare America safe."
Obama agreed that the United States is "safer in some ways" but said the country needed to focus more on issues such as nuclear non-proliferation and restoring America's image in the world.
On relations with Russia:
Obama called for a re-evaluation of the United States' approach to Russia in light of the country's recent military action in the Caucasus.
"You cannot be a 21st-century superpower and act like a 20th-century dictatorship," he said.
McCain accused Obama of responding naively to Russia's invasion of neighboring Georgia last month by calling on both sides to exercise restraint.
McCain said he would support the inclusion of Georgia and Ukraine in NATO.
On Iran:
McCain said Iranian nuclear weapons would be an "existential threat to the state of Israel" and would encourage other countries in the Middle East to seek nuclear weapons as well.
"We cannot allow another Holocaust," he said.
Obama agreed that the United States "cannot tolerate a nuclear Iran," calling for tougher sanctions from a range of countries including Russia and China.
McCain called for a new "league of democracies" to stand firm against Iran.
On Iraq:
McCain said the next president will have to decide when and how to leave Iraq and what the United States will leave behind.
The Republican candidate said that the war had been badly managed at the beginning but that the United States was now winning, thanks to a "great general and a strategy that succeeded."
"Sen. Obama refuses to acknowledge that we are winning in Iraq," McCain said.
Obama responded, "that's not true; that's not true."
He blasted McCain as having been wrong about the war at the start, saying McCain had failed to anticipate the uprising against U.S. forces and violence between rival religious groups in the country.
"At the time when the war started, you said it was quick and easy. You said we knew where the weapons of mass destruction were," Obama said, citing the key White House policy justifying the 2003 invasion.
"You were wrong. You said that we were going to be greeted as liberators. You were wrong," he said.
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