And I think those are the kind of broad issues that a president has to take into account.
GIBSON: And, Senator Obama, your campaign manager, David Plouffe, said, "When he is" -- this is talking about you -- "When he is elected president, we will be out of Iraq in 16 months at the most. There should be no confusion about that."
So you'd give the same rock-hard pledge, that no matter what the military commanders said, you would give the order to bring them home?
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.
Now, I will always listen to our commanders on the ground with respect to tactics, once I've given them a new mission, that we are going to proceed deliberately, in an orderly fashion, out of Iraq, and we are going to have our combat troops out. We will not have permanent bases there.
Once I have provided that mission, if they come to me and want to adjust tactics, then I will certainly take their recommendations into consideration. But, ultimately, the buck stops with me as the commander-in-chief.
And what I have to look at is not just the situation in Iraq, but the fact that we continue to see Al Qaida getting stronger in Afghanistan and in Pakistan. We continue to see anti-American sentiment fanned all across the Middle East.
We are overstretched in a way -- we do not have a strategic reserve at this point. If there was another crisis that was taking place, we would not have a brigade that we could send to deal with that crisis that isn't already scheduled to be deployed in Iraq.
That is not sustainable; that's not smart. National security policy is going to change when I'm president.
STEPHANOPOULOS: Senator Obama, let's stay in the region. Iran continues to pursue a nuclear option. Those weapons, if they got them, would probably pose the greatest threat to Israel.
During the Cold War, it was the United States policy to extend deterrence to our NATO allies. An attack on Great Britain would be treated as if it were an attack on the United States.
Should it be U.S. policy now to treat on Iranian attack on Israel as if it were an attack against the United States?
OBAMA: Well, our first step should be to keep nuclear weapons out of the hands of the Iranians. And that has to be one of our top priorities, and I will make it one of our top priorities when I'm president of the United States.
I have said I will do whatever is required to prevent the Iranians from obtaining nuclear weapons.
I believe that that includes direct talks with the Iranians, where we are laying out very clearly for them: Here are the issues that we find unacceptable, not only development of nuclear weapons, but also funding terrorist organizations like Hamas and Hezbollah, as well as their anti-Israel rhetoric and threats toward Israel.
I believe that we can offer them carrots and sticks, but we've got to directly engage and make absolutely clear to them what our posture is. Now, my belief is that they should also know that I will take no options off the table when it comes to preventing them from using nuclear weapons or obtaining nuclear weapons.
And that would include any threats directed at Israel, or any of our allies.
STEPHANOPOULOS: So you would extend our deterrent to Israel?
OBAMA: As I said before, I think it is very important that Iran understands that an attack on Israel, is an attack on our strongest ally in the region, one that we -- one whose security, we consider paramount. And that would be an act of aggression that we would -- that I would consider an attack that is unacceptable. And the United States would take appropriate action.
STEPHANOPOULOS: Senator Clinton, would you?
CLINTON: Well, in fact, George, I think that we should be looking to create an umbrella of deterrence that goes much further than just Israel. Of course, I would make it clear to the Iranians that an attack on Israel would incur massive retaliation from the United States.
But I would do the same with other countries in the region. We are at a very dangerous point with Iran. The Bush policy has failed. Iran has not been deterred. They continue to try to not only obtain the fissile material for nuclear weapons, but they are intent upon using their efforts to intimidate the region and to have their way when it comes to the support of terrorism in Lebanon and elsewhere.
And I think that this is an opportunity, with skillful diplomacy, for the United States, to go to the region and enlist the region in a security agreement vis-a-vis Iran.
It would give us three tools we now don't have. Number one, we've got to begin diplomatic engagement with Iran. And we want the region and the world to understand how serious we are about it. I would begin those discussions at a low level. I certainly would not meet with Ahmadinejad because even again today he made light of 9/11, and said that he's not even sure it happened and that people actually died.
He's not someone who would have an opportunity to meet with me in the White House. But I would have a diplomatic process that would engage him.
And secondly, we've got to deter other countries from feeling 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 the security umbrella and forswear their own nuclear ambitions. And finally, we cannot permit Iran to become a nuclear weapons power. And this administration has failed in our efforts to convince the rest of the world that that is a danger, not only to us, and not just to Israel but to the region and beyond.
Therefore, we have not to have this process that reaches out beyond even who we would put under the security umbrella, to get the rest of the world on our side to try to impose the kind of sanctions and diplomatic efforts that might prevent this from occurring.
STEPHANOPOULOS: Let me turn to the economy. That is the No. 1 issue on Americans' minds right now. Yesterday, Senator McCain signaled that the No. 1 one issue in the general election campaign on the economy is going to be taxes. And he says that both of you are going to raise taxes not just on the wealthy, but on everyone. Here's what he said in his speech yesterday.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN, R-ARIZ.: All these tax increases are under the fine print of the slogan hope. They're going to raise your taxes by thousands of dollars a year and they have the audacity to hope you don't mind.
(END VIDEO CLIP)
STEPHANOPOULOS: Senator Clinton, two-part question. Two-part question. Can you make an absolute "read my lips" pledge, that there will be no tax increases of any kind, for anyone earning under $200,000 a year? And if the economy is as weak a year from now, as it is today, will you continue -- will you persist in your plans to roll back the President Bush's tax cuts for wealthier Americans?
CLINTON: Well, George, I have made a commitment that I will let the taxes on people making more than $250,000 a year go back to the rates that they were paying in the 1990s.
STEPHANOPOULOS: Even if the economy is weak?
CLINTON: Yes, and here's why. Number one, I do not believe that it will detrimentally affect the economy by doing that. As I recall, you know, we used that tool during the 1990s to very good effect. And I think we can do so again.
I am absolutely committed to not raising a single tax on middle- class Americans, people making less than $250,000 a year.
In fact, I have a very specific plan of $100 billion in tax cuts that would go to help people afford health care, security retirement plans, you know, make it possible for people to get long-term care insurance and care for their parents and grandparents who they are trying to support, making college affordable and so much else.
Well, if you look at how we'd have to sequence that, we might not be able to do all of that at once. But if you go to my Web site, hillaryclinton.com, it is laid out there how I will pay for everything. Because everything I have proposed, I have put in how I would pay for it.
STEPHANOPOULOS: An absolute commitment, no middle-class tax increases of any kind?
CLINTON: No. That's right. That is my commitment.
GIBSON: Senator Obama?
STEPHANOPOULOS: Would you take the same pledge?
OBAMA: Well, I not only have pledged not to raise their taxes, I've been the first candidate in this race to specifically say I would cut their taxes.
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. 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. That also is a consequence of the lack of oversight and regulation of these banks and financial institutions that gave loans that they shouldn't have. And part of it has to do with the fact that you had $185 million by mortgage lenders spent on lobbyists and special interests who were writing these laws.
So the rules in Washington -- the tax code has been written on behalf of the well-connected. Our trade laws have -- the same thing has happened. And part of how we're going to be able to deliver on middle-class tax relief is to change how business is done in Washington, and that's been a central focus of our campaign.
GIBSON: Senator Obama, you both have now just taken this pledge on people under $250,000 -- and 200-and-what? $250,000?
OBAMA: Well, it depends on how you calculate it, but it would be between $200,000 and $250,000.
GIBSON: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.
But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.
OBAMA: Right.
GIBSON: And George Bush has taken it down to 15 percent.
OBAMA: Right.
GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.
So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
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. But what I also want to make sure is that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools.
And you can't do that for free.
OBAMA: And you can't take out a credit card from the Bank of China in the name of our children and our grandchildren, and then say that you're cutting taxes, which is essentially what John McCain has been talking about.
And that is irresponsible. I believe in the principle that you pay as you go. And, you know, 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.
GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.
OBAMA: Well, that might happen, or it might not. It depends on what's happening on Wall Street and how business is going. I think the biggest problem that we've got on Wall Street right now is the fact that we got have a housing crisis that this president has not been attentive to and that it took John McCain three tries before he got it right.
And if we can stabilize that market, and we can get credit flowing again, then I think we'll see stocks do well. And once again, I think we can generate the revenue that we need to run this government and hopefully to pay down some of this debt.
GIBSON: Senator Clinton?
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. The typical family saw $7,000 increase in income. And we have lost that.
You know, now, the typical family has lost at least $1,000. And the fact is that, you know, I don't want to take one more penny of tax money from anybody. But what I want to do is make some smart investments. And I was the first to come out with the strategic energy fund, where we need to be investing in clean, renewable energy. And I think we can put 5 million Americans to work.
I think we need to invest in our infrastructure. That also will get the economy moving again. And I believe we can put about 3 million people to work, and good union jobs, where people get a good wage with a good set of benefits that can support a middle class family with a rising standard of living.
I want to see us actually tackle the housing crisis, something I've been talking about for over a year. If I had been president a year ago, I believe we would have begun to avoid some of the worst of the mortgage and credit crisis because we would have started much earlier than we have.
In fact, I don't think we've really done very much at all yet in dealing with a way of freezing home foreclosures, of freezing interest rates, getting money into communities to be able to withstand the problems that are cause by foreclosures.
Governor Rendell has done a great job in Pennsylvania. He saw this coming. And unlike our current president, who either didn't know it or didn't care about it, he has really held the line. And Pennsylvania has been much less affected by home foreclosures.
But the president hasn't done that. And what I have proposed would do that. So, you've got to look at the entire economy. And from my perspective, yes, taxes is a piece of it. But you've got to figure out what is it we would invest in that would make us richer and safer and stronger tomorrow, which would help everybody.
GIBSON: I'm going to go to commercial break. But I just want to come back because of one thing you said. And I want to be clear, the question was about capital gains tax. Would you say, no, I'm not going to raise capital gains taxes?
CLINTON: I wouldn't raise it above the 20 percent, if I raised it at all. I would not raise it above what it was during the Clinton administration.
GIBSON: If I raised it at all. Would you propose an increase in the capital gains tax?
CLINTON: You know, Charlie, I'm going to have to look and see what the revenue situation is. You know, we now have the largest budget deficit we've ever had, $311 billion. We went from a $5.6 trillion projected surplus, to what we have today, which is a $9 trillion debt. I don't want to raise taxes against on anybody.
I'm certainly against one of Senator Obama's ideas, which is to lift the cap on the payroll tax, because that would impose additional taxes on people who are educators here in the Philadelphia area, or in the suburbs, police officers, firefighters and the like.
So I think we have to be very careful about how we navigate this. So the $250,000 mark is where I'm sure we're going. But beyond that, we are going to have to look and see where we are.
GIBSON: Very quickly, because I owe Senator Clinton time, but do you want to respond?
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 millionaires and billionaires don't have to pay beyond $97,000 a year. That is where it is capped. 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.
But understand the alternative is that, because we're going to have fewer workers to more retirees, if we don't do anything on Social Security, then those benefits will effectively be cut because we'll be running out of money.
GIBSON: But, Senator, but that's a tax. That's a tax...
OBAMA: Well, no, no, look...
GIBSON: ... on people under $250,000.
OBAMA: Let me finish my point here, Charlie. Senator Clinton said she certainly wouldn't do this, this was a bad idea. In Iowa, when she was outside of camera range, said to an individual there she'd certainly consider the idea and then that was recorded. And she apparently wasn't aware that it was being recorded.
So this is an option that I would strongly consider, because the alternatives, like raising the retirement age or cutting benefits or raising the payroll tax on everybody, including people who make less than $97,000 a year...
GIBSON: But there's a heck of a lot of...
OBAMA: ... those are not good policy options.
GIBSON: There's a heck of a lot of people between $97,000 and $200,000 and $250,000. If you raise the payroll taxes...
OBAMA: And that's...
GIBSON: ... that's going to raise taxes on them.
OBAMA: And that's why I've said, Charlie, that I would look at potentially exempting those who are in between.
But the point is we're going to have to capture some revenue in order to stabilize the Social Security system. You can't get something for nothing. And if we care about Social Security, which I do, and if we are firm in our commitment to make sure that it's going to be there for the next generation, and not just for our generation, then we have an obligation to figure out how to stabilize the system.
And I think we should be honest in presenting our ideas in terms of how we're going to do that and not just say that we're going to form a commission and try to solve the problem some other way.
CLINTON: Well, in fact, I am totally committed to making sure Social Security is solvent. If we had stayed on the path we were on at the end of my husband's administration, we sure would be in a lot better position, because we had a plan to extend the life of the Social Security Trust Fund and, again, President Bush decided that that wasn't a priority, that the war in Iraq and tax cuts for the wealthiest of Americans were his priorities, neither of which he's ever paid for.
I think it's the first time we've ever been taken to war and had a president who wouldn't pay for it.
But when it comes to Social Security, fiscal responsibility is the first and most important step. You've got to begin to rein in the budget, pay as you go, to try to replenish our Social Security Trust Fund.
And, with all due respect, the last time we had a crisis in Social Security was 1983. President Reagan and Speaker Tip O'Neill came up with a commission. That was the best and smartest way, because you've got to get Republicans and Democrats together. That's what I will do.
And I will say, number one, don't cut benefits on current beneficiaries. They're already having a hard enough time. And, number two, do not impose additional tax burdens on middle-class families.
There are lots of ways we can fix Social Security that don't impose those burdens, and I will do that.
OBAMA: That commission raised the retirement age, Charlie, and also raised the payroll tax. And so Senator Clinton -- 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.
CLINTON: But there are more progressive ways of doing it than, you know, lifting the cap. And I think we'll work it out. I have every confidence we're going to work it out. I know that we can make this happen.
GIBSON: On that point, we're going to take a break, commercial break. The Democratic debate from here in Philadelphia, before the Pennsylvania primary, will continue. Stay with us. We'll be back.
(COMMERCIAL BREAK)
ANNOUNCER: A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed. Live from the National Constitution Center in Philadelphia, Pennsylvania, once again, Charles Gibson and George Stephanopoulos.
GIBSON: Back to the Philadelphia debate, the Democratic debate, just less than a week now before the Pennsylvania primary. And I would be remiss, tonight, if I didn't take note of the fact that today is the one-year anniversary of Virginia Tech. And I think it's fair to say that probably every American during this day at one point or another, said a small prayer for the great people of that university and for those who died.
It also, I suspect, makes this an appropriate time to talk about guns. And it has not been talked about much in this campaign. And it's an important issue in the state of Pennsylvania. Both of you, in the past, have supported strong gun control measures. But now, when I listen to you on the campaign, I hear you emphasizing that you believe in an individual's right to bear arms. Both of you were strong advocates for licensing of guns. Both of you were strong advocates for the registration of guns.
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