94. U.S. Presidential Debate I

by John Whitesides, Political Correspondent, Reuters

Democrat Barack Obama and Republican John McCain battled over spending, taxes and the Iraq war on Friday, sharply questioning each other's judgment and ability to lead on the biggest issues facing the United States.

In a 90-minute debate that gave undecided voters their first chance to directly compare the White House candidates in the November 4 election, McCain and Obama traded heated jabs over the economy and security, highlighting broad policy differences but producing no major blunders or knockout blows.

McCain, 72, questioned the first-term senator's readiness for the White House.

"I honestly don't believe that Senator Obama has the knowledge or experience, and (he) has made the wrong judgments in a number of areas," the Arizona senator said.

Obama, 47, repeatedly tied McCain to the policies of unpopular Republican President George W. Bush and said both men had been too focused on the Iraq war while ignoring other problems. "The next president has to have a broader strategic vision about all the challenges we face," he said.

Neither candidate appeared to score a clear victory in the debate at the University of Mississippi, the first of three such encounters.

The debate between the vice presidential contenders, Republican Gov. Sarah Palin of Alaska and Democratic Sen. Joe Biden of Delaware, is next up on Thursday.

"I hope I made you proud tonight," McCain told cheering supporters at a small rally after the debate. He headed immediately back to Washington to take part in negotiations on a bailout package for the U.S. financial industry.

Both McCain and Obama said they were optimistic Congress would come up with a $700 billion rescue plan but agreed the huge price tag would limit their agendas as the next president.

'FINAL VERDICT'

McCain said he would freeze federal spending as president on most programs other than defense and veterans' care, and accused Obama of being a big-spending liberal who could not bring together Republicans and Democrats.

"Senator Obama has the most liberal voting record in the Senate," said McCain, who aggressively attacked Obama and at times put him on the defensive. "It's hard to reach across the aisle from that far to the left."

Obama said McCain would cut taxes for the wealthy and slash corporate tax rates, and said support of anti-regulatory approaches by Republicans like McCain had led to the collapse on Wall Street.

"This is a final verdict on eight years of failed economic policy promoted by George Bush and supported by Senator McCain," he said of the financial crisis.

McCain ended days of suspense earlier on Friday when he flew to Mississippi for the debate, backing away from his promise to skip the showdown if negotiations were not completed on the financial industry rescue.

The debate had been scheduled to focus on foreign policy and national security, but the turmoil on Wall Street has dominated the presidential campaign trail for nearly two weeks and was the first topic raised.

Public opinion polls have shown Obama making gains over the past week on the question of who could best lead the country on economic issues. Most polls have Obama holding a slight and growing lead over McCain.

The debate was expected to draw a big television audience, far more than the 40 million Americans who saw the speeches Obama and McCain gave at their party conventions.

IRAQ

Obama criticized the judgment of McCain, one of the staunchest advocates of the war, for supporting the March 2003 U.S.-led invasion of Iraq.

"The first question is whether we should have gone into this war in the first place," said Obama, an early war critic.

McCain said the big question facing the next president will be "how we leave and when we leave."

He said Obama showed poor judgment by opposing the "surge" policy that sent more troops to Iraq last year and has been credited with helping reduce violence there.

McCain also attacked Obama for his willingness to talk with leaders of hostile nations like Iran without preconditions.

But Obama pointed out that Henry Kissinger, the former secretary of state who is one of McCain's foreign policy advisers, supported the same approach.

The two candidates clashed on Pakistan, with Obama saying the United States should attack militants in Pakistan if Islamabad was unwilling to do so. McCain said he could not back such a policy.

"You don't do that. You don't say that out loud," McCain said.