Hillary Clinton and Barack Obamawith Charlie Gibson and George Stephanopoulos

“ You know, I believe in the principle that you pay as you go, and you don't propose tax cuts unless you are closing other tax breaks for individuals. And you don't increase spending unless you're eliminating some spending or you're finding some new revenue. That's how we got an additional $4 trillion worth of debt under George Bush. That is helping to undermine our economy, and it's going to change when I'm president of the United States. ”

“ People are frustrated not only with jobs moving and incomes being flat, health care being too expensive, but also that special interests have come to dominate Washington, and they don't feel like they're being listened to.
I think this election offers us an opportunity to change that, to transform that frustration into something more hopeful, to bring about real change. And I'm running for president to ensure that the American people are heard in the White House. That's my commitment, if the people of Pennsylvania vote for me and the people of America vote for me. ”

“ OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair.
And what I want is not oppressive taxation. I want businesses to thrive and I want people to be rewarded for their success. ”

“ There is a lot of concern across Pennsylvania and America. People do feel as though their government is not solving problems, that it is not standing up for them, that we've got to do more to actually provide the good jobs that will support families, deal once and for all with health care for every American, make our education system the true passport to opportunity, restore our standing in the world. ”

“ And middle-class homeowners who currently don't itemize on their tax filings, they would be able to get a deduction the same way that wealthy individuals do.
Now, here's the reason why that's important. We have seen wages and incomes flat or declining at a time when costs have gone up. And one of the things that we've learned from George Bush's economic policies, which John McCain now wants to follow, is that pain trickles up. And so, partly because people have been strapped and have had a tough time making ends meet, we're now seeing a deteriorating housing market. ”

“ OBAMA: Well, Charlie, I just have to respond real quickly to Senator Clinton's last comment. What I have proposed is that we raise the cap on the payroll tax, because right now millionaires and billionaires don't have to pay beyond $97,000 a year.
That's where it's kept. Now most firefighters, most teachers, you know, they're not making over $100,000 a year. In fact, only 6 percent of the population does. And I've also said that I'd be willing to look at exempting people who are making slightly above that. ”

“ CLINTON: Well, let me start by saying that I think we know that we've got to get back to an economy that works for everyone. The president has been very good for people who are doing well, and that's great. But it was better for our country when we had an economy that lifted everyone up at the same time, and we had that during the 1990s; you know, 22.7 million new jobs, more people lifted out of poverty than any time in our recent history. A typical family saw a $7,000 increase in income. ”

“ CLINTON: Well, I think we have to beat John McCain, and I have every reason to believe we're going to have a Democratic president and it's going to be either Barack or me. And we're going to make that happen.
And what is important is that we understand exactly the challenges facing us in order to defeat Senator McCain.
He will be a formidable candidate. There isn't any doubt about that. He has a great American story to tell. He's a man who has served our country with distinction over many years, but he has the wrong ideas about America. ”

“ And when it comes to November, and people are going into the polling place, they're going to be asking, are we going to go through four more years of George Bush economic policies; are we going to go through four more years of George Bush foreign policy?
And if we as Democrats and if I as the nominee have put forward a clear vision for how we're going to move the country forward, deal with issues like energy dependence, lower gas prices, provide health care, get our troops out of Iraq, that is a debate that I'm happy to have and a debate that I'm confident I can win. ”

“ And I am absolutely confident that during the general election that when I'm in a debate with John McCain, people are not going to be questioning my patriotism, they are going to be questioning how can you make people's lives a little bit better. ”

“ We are going to be tackling some of the biggest issues that any president has dealt with in the last 40 years. Our economy is teetering not just on the edge of recession, but potentially worse. Our foreign policy is in a shambles. ”

“ OBAMA: Well, you're right. And that's why people are cynical, because decade after decade, we talk about energy policy or we talk about health care policy, and through Democratic and Republican administrations, nothing gets done.
Now, I think many of the steps that Senator Clinton outlined are similar to the plans that we talked about. It is absolutely true that we've got to investigate potential price gouging or market manipulation. I have strongly called for a windfall profits tax that can provide both consumers relief and also invest in renewable energies. ”

“ And one of the centerpieces of my economic plan would be to say that we are going to offset the payroll tax, the most regressive of our taxes, so that families who are earning -- who are middle-income individuals making $75,000 a year or less, that they would get a tax break so that families would see up to a thousand dollars worth of relief.
Senior citizens who have earnings of less than $50,000 wouldn't have to pay income tax on their Social Security. ”

“ I'm probably more likely to ask advice of the current president's father than president himself because I think that when you look back at George H.W. Bush's foreign policy, it was a wise foreign policy.
And how we executed the Gulf War, how we managed the transition out of the Cold War, I think, is an example of how we can get bipartisan agreement. I don't think the Democrats have a monopoly on good ideas. I think that there are a lot of thoughtful Republicans out there.
The problem is, we've been locked in a divided politics for so long that we've stopped listening to each other. ”

“ So if the military commanders in Iraq came to you on day one and said this kind of withdrawal would destabilize Iraq, it would set back all of the gains that we have made, no matter what, you're going to order those troops to come home?
CLINTON: Yes, I am, Charlie. And here's why: You know, thankfully we have a system in our country of civilian control of the military. And our professional military are the best in the world. They give their best advice and then they execute the policies of the president. ”

“ So I still believe in affirmative action as a means of overcoming both historic and potentially current discrimination, but I think that it can't be a quota system and it can't be something that is simply applied without looking at the whole person, whether that person is black or white or Hispanic, male or female.
What we want to do is make sure that people who have been locked out of opportunity are going to be able to walk through those doors of opportunity in the future. ”

“ How are you going to make the case to them why you're the better candidate and more electable in November?
What do you say to them -- minute-and-a-half each. And by a flip of the coin, Senator Clinton goes first.
CLINTON: Well, I say to them what I've said to voters across America -- that we need a fighter back in the White House. We need someone who's going to take on the special interests. ”

“ OBAMA: Because the commander in chief sets the mission, Charlie. That's not the role of the generals. And one of the things that's been interesting about the president's approach lately has been to say, well, I'm just taking cues from General Petraeus.
Well, the president sets the mission. The general and our troops carry out that mission. And unfortunately we have had a bad mission, set by our civilian leadership, which our military has performed brilliantly. But it is time for us to set a strategy that is going to make the American people safer. ”

“ Our economy is in a shambles. And most importantly, the American people have lost trust in their government, not just Democrats but independents and Republicans who've been disillusioned about promises that have been made election after election, decade after decade. ”

“ OBAMA: That commission raised the retirement age, Charlie, and also raised the payroll tax. And so Senator Clinton, if she -- she can't have it both ways. You can't come at me for proposing a solution that will save Social Security without burdening middle- income Americans, and then suggest that somehow she's got a magic solution. ”

“ And certainly the weeks that I have spent criss-crossing Pennsylvania, from Erie to Lancaster County, and meeting a lot of wonderful people, says to me that despite whatever frustration anyone has with our government, people are resilient, they are positive, and they're ready for leadership again that will summon them to something greater than themselves, and that we will deliver on that if given a chance. ”

“ This is the kind of manufactured issue that our politics has become obsessed with and, once again, distracts us from what should be my job when I'm commander in chief, which is going to be figuring out how we get our troops out of Iraq and how we actually make our economy better for the American people. ”

“ And what my entire body of work over the last 20 years has been devoted to is getting blacks, whites, Hispanics, Asians, Native Americans, young, old to work together, starting when I was a community organizer. And my own life embodies that diversity. That's what America's about and that's what this campaign has been about. ”

“ They end up being much more concerned about votes around things like guns, where traditions have been passed on from generation to generation. And those are incredibly important to them.
And yes, what is also true is that wedge issues, hot-button issues, end up taking prominence in our -- in our politics. And part of the problem is that when those issues are exploited, we never get to solve the issues that people really have to get some relief on, whether it's health care or education or jobs. ”

“ And secondly, we've got to deter other countries from feeling that they have to acquire nuclear weapons. You can't go to the Saudis or the Kuwaitis or UAE and others who have a legitimate concern about Iran and say: Well, don't acquire these weapons to defend yourself unless you're also willing to say we will provide a deterrent backup and we will let the Iranians know that, yes, an attack on Israel would trigger massive retaliation, but so would an attack on those countries that are willing to go under this security umbrella and forswear their own nuclear ambitions. ”

“ Do you still favor the licensing of guns? And in 1996, your campaign issued a questionnaire, and your writing was on the questionnaire that said you favored a ban on handguns.
OBAMA: No, my writing wasn't on that particular questionnaire, Charlie. As I said, I have never favored an all-out ban on handguns.
What I think we can provide is common-sense approaches to the issue of illegal guns that are ending up on the streets. We can make sure that criminals don't have guns in their hands. We can make certain that those who are mentally deranged are not getting a hold of handguns. ”

“ But the problem is that that's the kind of politics that we've been accustomed to. And I think Senator Clinton learned the wrong lesson from it, because she's adopting the same tactics.
What the American people want are not distractions. They want to figure out, how are we actually going to deliver on health care; how are we going to deliver better jobs for people; how are we going to improve their incomes ”

“ And during the course of these last 15 months, my bet's paid off because the American people have responded in record numbers, and not just people who are accustomed to participating, but people who haven't participated in years. I talked to a woman here in Pennsylvania, 70 years old, she whispered to me, "I've never voted before, but I'm going to vote in this election." ”

“ The reason we've attracted new people into the process, the reason we've generated so much excitement, the reason that we have been so successful in so many states across the country, bridging racial lines, bridging some of the old divisions, is because people recognize that unless we do, then we're not going to be able to deliver on the promises that people hear every 4 years, every 8 years, every 12 years. ”

“ So the problem that we have in our politics, which is fairly typical, is that you take one person's statement, if it's not properly phrased, and you just beat it to death. And that's what Senator Clinton's been doing over the last four days. ”