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Obama Video Clips > 2008-09-17 - Steve Kroft 60 min interview - Elko NV

(CBS) On Wednesday, September 17, 2008, 60  Minutes correspondent Steve Kroft interviewed Senator Barack Obama in Elko, Nev

(the  video and the transcript of the interview don't match up. It cold be CBS highly edited the interview. This could be the transcript of the raw interview? Clip 2 - talks about his story. )

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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.

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Video Clip Part 1  

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(CBS) A year ago, Barack Obama was an even longer shot to win his party's nomination than John McCain. Against improbable odds, the first-term senator from Illinois defeated Hillary Clinton with a message of change and is trying to convince the country that he is ready to lead, running against the record of one of the most unpopular administrations in American history.

Steve Kroft: This is the biggest financial crisis this country has had, a lot of people say, since the Great Depression.

Sen. Barack Obama: Right.

Kroft: What caused it? Who's to blame?

Obama: Hey, look, there were a lot of factors involved. But I think there is no doubt that if we had had a regulatory system that had kept pace with the changes in the financial system, that would have had an enormous impact in containing some of the problems that are out there. I mean, you've got greedy CEOs and investors who are taking too much risk. But that's why we set up rules of the road, to prevent that from spreading into the system as a whole. And, unfortunately, we had a lot of deregulation. And instead of modifying the rules for this new economy, we just eliminated them. So we've got to change our regulatory system. But, Steve, there's a bigger problem. And that is that the economy has not been working for ordinary Americans.

Kroft: Senator McCain made some of the same noises this week, blaming Wall Street greed, promising reform and oversight, and new regulations to protect investors. What's the difference between the two of you?

Obama: Well, the difference is, I think, that I've got a track record of actually believing in this stuff. And, you know, Senator McCain, fairly recently, said, "I'm a deregulator." It's one of his top chief economic advisors was Phil Gramm , who was one of the architects of deregulation in this sector. And he's always taken great pride in believing that we have to eliminate regulations.

Kroft: Really in some ways, this past week has been historic.

Obama: Absolutely.

Kroft: Do you think that Secretary of Treasury Paulson has done the right thing?

Obama: I think by the time Secretary Paulson and Federal Reserve Chairman Bernanke were looking at these problems, they had no good options left.

Kroft: Should the government be bailing out all of these banks and insurance companies? We're talking about hundreds and hundreds of billions of dollars.

Obama: I think that our basic principle has to be that you don't bail out shareholders. You don't bail out CEOs who are getting golden parachutes and $100 million bonuses. That you are doing everything you can to protect taxpayers, making sure that people are able to stay in their homes, and that their mortgages don't go overboard because of bad decisions that other people make.

Kroft: You think we're in a recession?

Obama: Oh, I think there's no doubt that we're gonna see, when the numbers come out, that we are officially in recession. I think, for a lot of people, they've been feeling like we've been in a recession for years now. When their wages and incomes don't go up, and the cost of gas and groceries and home heating oil and prescription drugs are all going up, that feels awfully like a recession to them.

Kroft: Do you think the worst is over?

Obama: It's hard to say.

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(CBS) 60 Minutes spoke with Sen. Obama on Wednesday in Elko, Nev., a heavily Republican mining town of less than 20,000 people in a remote corner of this battle ground state. The town is lined with casinos, Basque restaurants, and legal brothels. It is not the kind of place you would expect to find a presidential candidate with 47 days left till the election. But Obama has been here three times, hoping to scrounge a few thousand votes that could help him carry Nevada and put him in the White House. The election is that close.

"John McCain actually said that if he's president, he'll take on and I quote, the ol’ boys network in Washington. I am not making this up. This is someone who's been in Congress for 26 years The ol’ boy network? In the McCain campaign, that's called a staff meeting. Come on," Obama told the crowd in Elko.

The Wall Street debacle had stalled the post-convention momentum of Sen. McCain and Gov. Sarah Palin, and brought Obama's strongest issue, the economy, back to center stage. And Obama is trying everything he can to keep it there.

Kroft: This is the most aggressive speech I've seen you give…in a while.

Obama: Right.

Kroft: What changed?

Obama: Well, partly, it's just, we're getting closer to the election. Partly, as you will recall, we, for several weeks, were putting up with a lot of silliness from the other side. Britney Spears ads, we were talking about lipstick and pigs, and one of the things that we felt very strongly was that we had to make the contrast between John McCain's economic agenda and ours very clear.

Kroft: You've been running for 18 months on the topic of change.

Kroft: I mean, they've gotten some traction.

Obama: Right.

Kroft: Particularly with women. Last time I talked to you, Sarah Palin was a name.

Kroft: How did she change the race?

Obama: You know, look. She's a skilled politician. I think she was an unexpected choice, which is always fascinating for the media. She sort of came out of nowhere. And so, it gave, I think, the McCain campaign some energy, a boost. Over time, people want to know, what are the policies? And the policies of John McCain haven't changed since Sarah Palin was named as the vice-presidential candidate.

With that, he waded back in the crowd to try and find the person who was yelling at him. It turned out to be an African-American woman. She wanted to tell Obama that she had just lost her husband of 70 years, and that he tried to live long enough to vote for him.
 

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(CBS) The candidate was riding a resurgence in the polls, at least for the time being, although they still show a weakness with white working class voters and significant concerns about his lack of executive experience.

Kroft: Why do you think you'd be a good president?

Obama: Well, I think that when you think about the challenges we face, these are challenges that require us to look forward and not backwards; when it comes to the economy I think we have to realize that we are now in a global economy.

Kroft: Why you? I mean, why do you think you would be a good president?

Obama: Well, I was gonna get to that.

Kroft: All right.

Obama: I think both by training and disposition. I understand where we need to take the country.

Kroft: But what is there specifically about you. You mentioned disposition. What skills and traits do you have that would make you a good president?

Obama: I am a practical person. One of the things I'm good at is getting people in a room with a bunch of different ideas who sometimes violently disagree with each other and finding common ground, and a sense of common direction. And that's the kind of approach that I think prevents you from making some of the enormous mistakes that we've seen over the last eight years.

Kroft: Suppose you wake up on the day after the election, the president-elect of the United States. What are you gonna do? I mean, how are you gonna govern? …You've never run anything. And now, all of a sudden, you're in charge of…running the United States.

Obama: Look, if the question is executive experience, then Senator McCain and I are on equal footing. If people want to know what I'm gonna do, I'm gonna call in the Joint Chiefs of Staff. And I'm gonna tell them, "We need to find a way to bring this war in Iraq to a close. And we want to do it safely and protect our troops. But we are gonna get it done because we can't keep spending $10 billion a month in Iraq when the Iraqis themselves aren't taking responsibility. "And we have to refocus our attention on Afghanistan."

The second thing I'm gonna do is we're gonna pull together a working group, including our treasury secretary, and everybody involved in our economy, and we are gonna make an assessment of where are we? What do we need to do in terms of stabilizing the financial markets and the housing markets?

Third thing we're gonna do is we're gonna finally have an energy proposal that has moved through Congress that includes increasing production, but also make sure that we are making this economy more energy efficient.

Fourth thing we're gonna do is get moving on a health care plan that finally provides people health insurance at affordable rates. The people who know me, the people who've worked with me and for me understand that I know how to make things run and get things done. Otherwise I wouldn't be here, sitting, having this interview with you. It's not just because, you know, I can give a good speech once in a while.

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(CBS) Friday in Coral Gables, Fla., Obama was surrounded by a financial brain trust that includes three former treasury secretaries and a former Federal Reserve chairman who are advising him on the Wall Street crisis and on his ambitious and expensive economic agenda - $60 billion to create jobs improving infrastructure, $150 billion to develop alternative energy sources, and a similar amount for health care.

Kroft: The McCain campaign, right now, is characterizing you as just another big spending liberal. And that, as a result of this, who wants to raise taxes.

Obama: Right. They're wrong. And I think they're being deliberately misleading. 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 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.

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.

The most expensive part of the Obama program is the health heath insurance plan, which would make coverage for children mandatory, and promises affordable government subsidized insurance to all Americans, with premiums based on a percentage of their income.

Kroft: How much is it gonna cost? $150 billion it's gonna cost, right?

Obama: It is. If it is. But we pay for every dime that we propose to spend. 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.

Kroft: So this is paid for with the increased taxes on people who make more than 250,000…dollars a year.

Obama: It's rolling back the Bush tax cuts. It's closing corporate tax loopholes. But 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…

Obama: It's a lot.

Kroft: …billion.

Obama: Right.

Kroft: Is it gonna go up under an Obama administration?

Obama: No. It's gonna go down. But it's not gonna go away. Because we dug ourselves a deep hole.

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(CBS) Kroft: Iraq. When we talked to you the first time, 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 means they 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. 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. 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. 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. The fact of the matter is that John McCain has been consistently wrong on Iraq. And now's the 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.

Obama wants to move an additional 7, 000 troops to Afghanistan, where he says the military situation is rapidly deteriorating.

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. 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. 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 common sense. And I think that's appropriate.

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.
 

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(CBS) Like Sen. McCain, Barack Obama’s life has been unconventional - and in many ways just as inspiring - community organizer, law professor, legislator, best selling author, U.S. senator. Born 47 years ago, to a white mother and a father from Kenya who were both students at the University of Hawaii, he was raised under modest circumstances by white family members and left to struggle with his own identity.

Clip 2 - talkes about his story-

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. You know, 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. 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, we've got these common values. But we come from all kinds of different places. And if we can 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.

And Senator Obama took a large step toward that goal last month in Denver when he accepted the Democratic Party’s nomination, and admitted backstage that he’d overcome some long odds.

Kroft: Did you ever doubt it was gonna happen?

Obama: Of course.

Kroft: When?

Obama: Well, let’s see. About a year ago we were down 30 in Iowa. But I never doubted that it could happen.

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CBS) Kroft: When we did our very first interview, and I asked you, "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. 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 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. 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 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. But what I know is this: 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? And I'm confident that if they think I can help 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.
 

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 Transcript: Sen. Obama, Part 1 Part 1 (raw interview?)

STEVE KROFT: What do you think the biggest problem is right now facing this country?

SENATOR BARACK OBAMA: Well, I think the most immediate is the financial crisis, but the underlying problem is our economy, which, for the last eight years, has been managed under a theory the Bush administration, shared by John McCain, that you give more and more to those with the most, and that somehow it's gonna trickle down on everybody else. That you are anti-regulation, just as an ideological matter, whether it makes sense or not. And the result has been declining wages and incomes. Rises in price. Tougher for people to save, though tougher for people to retire or send their kids to college. We've seen 600,000 jobs lost so far this year. So the biggest challenge, I think, for the next president is to get our financial system on firmer footing. And then move to the underlying problems that are facing the economy that have prevented ordinary Americans from living up to that American promise that that they hold so dearly.

KROFT: This is the biggest financial crisis this country has had, a lot of people say, since the Great Depression.

OBAMA: Right.

KROFT: What caused it? Who's to blame?

OBAMA: Hey look, there were a lot of factors involved. But I think there is no doubt that if we had had a regulatory system that had kept pace with the changes in the financial system, that would have had an enormous impact in containing some of the problems that are out there. I mean, you've got greedy CEOs and investors who are taking too much risk. But that's why we set up rules of the road to prevent that from spreading into the system as a whole. And, unfortunately, we had a lot of deregulation. And instead of modifying the rules of this new economy, we just eliminated them. And that made it easier for people to engage in wild speculation, enjoy huge profits on the up sides. But then asking, now, taxpayers to bail them out when things go south. So we've got to change our regulatory system. But the Steve, there's a bigger problem. And that is that the economy has not been working for ordinary Americans. Since George Bush came into office, the average income of a family in America has gone down $2,000. That's in contrast to when Bill Clinton was president, when it went up $7,500. And that reduced purchasing power means that, not only are families scrimping when it comes to groceries and gas and trying to figure out how to pay their mortgage, they're falling into debt. They're taking out more credit card loans. They are more reliant on home equity and refinancing. And all those things contributed to some of the problems that we have right now. If we don't help create jobs, make sure that people's incomes are going up, revitalizing our economy with innovations in investment in infrastructure, creating a green economy, a clean economy so that we're no longer dependant on Middle Eastern oil. Unless we take some of those structural steps over the next few years we're gonna keep on slipping behind.

KROFT: On the question of the financial crisis, Senator McCain made some of the same noises this week, mentioning some of the same things that you did just now -- you know, blaming Wall Street greed, promising reform and oversight, and new regulations to protect investors. What's the difference between the two of you?

OBAMA: Well, the difference is, I think, that I've got a track record of actually believing in this stuff. You know, I wrote a letter to Chairman Bernanke at the Federal Reserve and Secretary of Treasury Paulson over a year and a half ago, suggesting that we've got to get a handle on this subprime lending crisis. I gave a speech after the Bear Sterns incident indicating how we have to create a better regulatory structure so that taxpayers aren't ending up footing up the bill. But we're also stabilizing and creating transparency for investors. And, you know, Senator McCain, fairly recently, said, "I'm a deregulator." One of his top chief economic advisors was Phil Gramm, who was one of the architects of deregulation in this sector. And he's always taken great pride in believing that we have to eliminate regulations. So if, in fact, he's recognized that this is an area where we've got to tighten things up, I'm glad. But I don't think that Senator McCain can claim that he's got great credentials on this area.

KROFT: In some ways, this past week has been historic.

OBAMA: Absolutely.

KROFT: In the sense you've had a number of failures. Sales of distressed investment houses. Federal government taking over Fannie Mae and Freddie Mac, plus the largest insurance company in the country. Do you think do you think that was the right path? Do you do you think that Secretary of Treasury Paulson has done the right thing?

OBAMA: I think by the time Secretary Paulson and the Federal Reserve Chairman Bernanke were looking at these problems, they had no good options left. You know, let's take the example of AIG. There's no doubt that, had they simply stood back and allowed AIG to go into bankruptcy, that there would have been enormous ripple effects all throughout the economy, and some that we could not predict and would present huge risks. Not just to Wall Street, but to Main Street. So they didn't have a lot of good options. My point is that, as president, I want to avoid us getting into the situation where we just have bad options. We could have anticipated some of these problems by having more serious regulatory structures that are updated for the 21st century that the regulations we have now are still based in the 1930s and the Depression. Now, that's why we provide FDIC insurance protecting depositors in banks. But we don't have those same kinds of requirements in terms of capital requirements and liquidity requirements when it comes to some of these other instruments in investment banks and hedge funds. So we've gotta update all that. But, again, there is an underlying problem that has been taking place in communities all across the country, wherever I go. You talk to folks on farms, in factories in diners, VFW halls. What you hear from them is, "My wages and my income have not gone up in years. But my costs of everything from health care to prescription drugs to sending my kid to college have all skyrocketed." And that shows an underlying weakness in our economy, even when it was growing. We were seeing flat lining or declining wages in incomes. And I think that it's very important for the next president to get that economy back on track. And that's why I've put together very specific plans for how to do that.

KROFT: Should the government be bailing out all of these banks and insurance companies? And we're talking about hundreds and hundreds of billions of dollars.

OBAMA: I think that our basic principle has to be that you don't bail out shareholders. You don't bail out CEOs who are getting golden parachutes and $100 million bonuses. That you are doing everything you can to protect taxpayers. When it comes to Fannie Mae, Freddie Mac -- making sure that people are able to stay in their homes, and that their mortgages don't go overboard because of bad decisions that other people make, there may be a case for intervention. But I think the general principle is that what we don't want to do is to allow these folks to run up these big risks, and nobody's paying attention. Nobody's minding the store. And then we end up inheriting the bill. And that is preventable. That's a failure of oversight on the part of this administration. And it's something that I intend to change when I'm president.

KROFT: What would you have done differently? And what would you be doing now if you were in the White House?

OBAMA: Well, as I said before, what I'd be doing is making sure we didn't get into this fix to start with. We saw a lot of this coming. As I said, I write a letter to the treasury secretary and the chairman of the Federal Reserve board a year and a half ago saying, "We need to start dealing with this issue." Even after the Bear Sterns incident had taken place. That could have been a time where we had moved a little more aggressively and boldly. Now I look, hindsight is 20/20. I'm more interested in what we need to do moving forward. And I think the steps that we've gotta take number one, we've gotta stabilize the housing market. And you know, I want to pull together all the stakeholders involved. The financial institutions borrowers. Let's get a fix on what home values are. And try to stabilize the market so that it does not continue to drag down the rest of the economy. And the second thing we need to do is stabilize the financial market with the regulations that we're talking about. Then we can start moving on the big structural problems of our economy. Energy. Making sure that we're no longer entirely dependant on Middle Eastern oil. Making sure that we've got a health care system that's not a drag on the economy, and giving people what they need in terms of high quality health care at an affordable price. Education. Making sure that our kids are not just getting a high quality secondary education, but are going on to college. We're producing more scientists, more engineers. And investing in the kind of infrastructure that will help our economy grow over the long term. The fact that we're spending $10 billion a month in Iraq at a time when they're running a $79 billion surplus, I think, has a lot of people steamed, and rightly so. Because we've got investments to make here in broadband so that, in a rural community, like the one we're sitting in, a company that wants to locate here knows it can get direct high speed internet service. That could make a difference in terms of creating employment opportunities in rural communities all across America.

KROFT: How serious is the financial situation?

OBAMA: Oh, I think it's very serious. I think this is as serious a financial problem that we've had since the Great Depression. Now, our economy is more diversified. It is stronger than it was back in the 30s. And I am absolutely confident that we are gonna be able to get back on track and grow. But it's gonna require some sensible steps. And it's gonna require a president who, I think, is committed to a different economic philosophy than the one that we've seen over the last eight years.

KROFT: Do you think we're in a recession?

OBAMA: Oh, I think there's no doubt that we're gonna see, when the numbers come out, that we are officially in recession. I think, for a lot of people, they've been feeling like we've been in a recession for years now. When their wages and incomes don't go up, and the cost of gas and groceries and home heating oil and prescription drugs are all going up, that feels awfully like a recession to them.

KROFT: I think one of the things that people are thinking is: are we headed for 1929? Are we headed for another depression?

OBAMA: No. We've got some structures in place, like the Federal Reserve Board. And you know, FDIC insurance is gonna protect depositors. It's gonna protect a lot of smaller investors. But what we do have is a big structural problem in a global economy that the Administration does not yet have a handle on, and we don't have the regulatory tools and place to manage. And so you know, the next president, I think, is gonna have to recognize that the economy has changed. Wall Street has now fundamentally changed. And government has to change with it. Now, in order for that to happen, we're gonna have to blow through the special interests, the lobbyists, the banks, the insurance companies, the financial institutions that have consistently blocked efforts at increased regulation and transparency. And, you know, during boom times, you know, they could argue, "Look, the market's working fine. Why do you guys want to meddle with success?" Well, part of it is to prevent situations like we have right now. I am a strong believer in the free market. We've got some of the best capital markets in the world. That's always been a strength of ours. But it works only if investors know what they're investing in. If regulators are able to look at the books and make sure that people aren't cooking those books. And we have not done enough of that in order to ensure the kind of trust and steadiness and calmness that an effect carp capital market needs.

KROFT: Do you think the worst is over?

OBAMA: It's hard to say. I think that we are going to continue to see a lot of institutions reluctant to lend money to other institutions because they don't know what their books look like. They don't know how many mortgages they're holding. And that's why it's so important for us to strengthen the housing market, make sure that we are getting more transparency and disclosure. We're gonna have to wring out some of the leverage, some of the borrowed money that has been used for all kinds of risky investments for years now that have created a lot of this speculation and risk taking. What I'm confident about is that, with the right leadership and the right guidance from the next president and his economic team, that we can get this economy back on track. We still have the best workers in the world. We still have the most creative people in the world. We've got, you know, extraordinary scientific and academic institutions that drive innovation. We still have very flexible financial markets, and a lot of talented and skilled people. And we've got a spirit of risk taking and innovation that has consistently made this economy grow. But all that has to be harnessed in a way that is good, not just for the few, but is good for the many. One of the interesting things that doesn't get talked enough about, because Republicans will constantly say, "Ah, you know, Democrats, they're anti-business. They're anti-corporate." Listen, I love businesses. I love corporations that are doing the right thing. They drive our economy. They produce jobs. They produce profits that get plowed back into the economy. I want to encourage entrepreneurship. But what I don't like is when businesses are putting their thumbs on the scale to advantage CEOs and, in some cases, shareholders, and disadvantage workers. What I don't like is when they're cooking the books. What I don't like is an economy that doesn't promote the kinds of honesty and transparent business practices that assure growth over the long term. And the last thing is, I want an economy that grows for everybody. There's a book that was recently written that showed that the economy has consistently grown faster under Democrat administrations than Republican administration. And there's been less inequality in the growth. It's grown more evenly. So this notion that there is a contradiction between us -- for example, changing our tax policy, as I've proposed so that we're giving cuts to 95 percent of workers, putting more money in their pockets to deal with rising costs. And that we're rolling back Bush tax cuts for the wealthiest Americans or corporations, making them close those tax loopholes and tax havens that they've got. That's not an anti-business measure. That is actually gonna grow the economy a lot faster than the out-of-balance approach that Bush has taken, and that that McCain now proposed.

KROFT: Why do you think you'd be a good president?

OBAMA: Well, I think that when you think about the challenges we face, these are challenges that require us to look forward and not backwards. When it comes to the economy I think we have to recognize that we are now in a global economy. And that the measure of our success is: how well are we training our workers? How well are we investing in the new energy economy?

KROFT: Why you? I mean, why do you think you would be a good president?

OBAMA: Well, I was gonna get to that.

KROFT: Oh, okay. Okay. Go ahead.

OBAMA: I think both by training and disposition I understand where we need to take the country. Not just where we've been. And so, when it comes to the economy, I think I understand the knowledge economy. I think I understand what it's gonna take in order for us to reinvest in our manufacturing base, and what it's gonna take to ensure that we are freeing ourselves from dependence on foreign oil. How we can fix our health care system. These are issues that I've been working on for years. And issues on which I have a fundamental disagreement with George Bush and the dominant economic ideology that we've been seeing for so many years, and got us into this rut. John McCain embraces that philosophy. I've got a different view. And that's on just on the economy. Now, there's a parallel when it comes to foreign policy. Because the threats that we're gonna face in the 21st century are not the same threats we faced in the 20th. Fighting al Qaeda is going to be different than my grandfather, who fought in Patton's army in Europe. There's a different set of threats. Some of them, like terrorism, that we have to focus militarily, but also diplomatically, and use all elements of power. Some like climate change, that we're gonna have to strengthen our alliances and form partnerships. And it's gonna be much more of a task of persuasion. We can't, you know, use our military to make sure the planet doesn't get warmer. And so that kind of leadership, of being able to bring people together, to apply practical commonsense solutions based on facts, based on science, based on what works you know, that's been the approach I have taken consistently as a public servant. That's the kind of style that I think we need in the presidency right now.

KROFT: But what is there specifically about you? You mentioned disposition. You mentioned disposition. What skills and traits do you have that would make you a good president?

OBAMA: Yeah. You know I am very good at analyzing complicated problems. Hearing all voices. Getting all perspectives. And then taking some decisive action in terms of moving us in a direction that's gonna solve the problem. And you know, that was true when I worked across the aisle on issues like ethics reform, or nuclear proliferation. It's been true when I was in the state legislation, when I provided tax cuts to people who needed them. But also made sure that, as we were moving women from welfare to work, that they had the kinds of transportation assistance or health care assistance or other things that they needed. You know, I am a practical person, somebody who, I think, can cut through some very complicated problems and figure out the right course of action. Now, there's one other element that I think is important that we need in the presidency right now. And that is somebody who understands what it's like to struggle. And understands what people are going through all across America. You know, I come from pretty modest beginnings. And I know what it's like to scratch and claw to get to where I am. I know, you know, what it's like watching your mom have to go to school and work at the same time. Or, you know, watch your grandparents live in a small apartment because they're trying to help the next generation. You know, I don't get a sense that the kinds of folks that my mom and my grandparents were, the kinds of folks that Michelle's mom and dad were, who were able to make it 20, 30 years ago, even without a college education, I don't get a sense that people in those same circumstances now feel like they've got those opportunities. And I think an insistence that the American dream, American promise, gets passed on to the next generation, that somebody's fighting for that middle class, working class, for group of people who have to work, and are working very hard but aren't getting a real fair shake right now -- I think that's what's needed in the White House right now.

KROFT: We've talked a lot of times, and we've talked a lot about the issue of experience. And, according to the latest CBS News poll and all the polls, it still remains one of the things that people are concerned about with you -- the lack of executive experience. I mean, suppose you wake up on the day after the election, the president elect of the United States. What are you gonna do? I mean, how are you gonna govern?

OBAMA: Well, look.

KROFT: You've never run anything. And now, all of a sudden, you're in charge of running the United States.

OBAMA: Well

KROFT: Besides your campaign.

OBAMA: Look, if the question is executive experience, then Senator McCain and I are on equal footing on that front. But you know, if people want to know what I'm gonna do, then they need to listen to what we're telling folks right now. I'm gonna call in the Joint Chiefs of Staff. And I'm gonna tell them, "We need to find a way to bring this war in Iraq to a close. And we want to do it safely and protect our troops. But we are gonna get it done because we can't keep spending $10 billion a month in Iraq when the Iraqis themselves aren't taking responsibility. And we have to refocus our attention Afghanistan." The second thing I'm gonna do is we're gonna pull together a working group including our treasury secretary, and everybody involved in our economy, and we are gonna make an assessment of where are we? What do we need to do in terms of stabilizing the financial markets and the housing markets. Third thing we're gonna do is we're finally gonna have an energy proposal that has moved through Congress that includes increasing production. But also make sure that we are making this economy more energy efficient. Fourth thing we're gonna do is get moving on a health care plan that finally provides health people health insurance at affordable rates. Now you know if people have watched my conduct as a legislator, my conduct as a presidential candidate, I think the one thing people probably have a pretty good sense of is that, you know, what this guy knows how to put together a team of really smart people; give them a sense of vision and direction; and get some good outcomes. And, you know, people don't think that I have enough experience to run the economy. I think it's important for them to understand that when you've got Warren Buffet endorsing you, it's not because he thinks he's gonna run the economy into the ground. When you've got generals and people who are, you know, former secretaries of defense or secretary to the Navy who have said, "This is somebody who can lead as commander in chief," they don't do that lightly. The people who know me, the people who've worked with me and for me both in the Senate and previously when I was in the state legislature, understand that I know how to make things run and get things done. Otherwise I wouldn't be here sitting having this interview with you. It's not just because you know, I can give a good speech once in a while.

KROFT: Who are the people that you would surround yourself with? Who are some of the people that you're considering to have in your cabinet?

OBAMA: Well, you know, I don't want to start giving names for specific positions. But I can tell you, for example, during this economic crisis the people I consult with are Paul Volcker, former Fed chairman; Bob Rubin , former Secretary of the Treasury; Larry Summers, also another Treasury secretary; Laura Tyson, former head of the Council of Economic Advisers; Paul O'Neill, former Treasury secretary under Bush. You know, so if you take a look at the kinds of people who are advising me, that will give you a sense of the direction I want to move when it comes to the economy. People who believe in markets, who've been very successful in the private sector but also recognize that we've gotta set up the rules of the road to work. When it comes to national security, you know, I look for guidance, not only from my own inner circle, not only my own team of advisors that include people like Secretary Albright, or former secretary of the Navy, Richard Danzig. You know, Susan Rice, former State Department officials. But it also you know draws from people like Dick Lugar, Republican ranking member on the Senate Foreign Relations Committee, with whom I have an extraordinarily close relationship. And who I've worked on critical issues surrounding nuclear proliferation. I think it's fair to say that when it comes to who I'm gonna choose for the Cabinet, my criteria is gonna be they're gonna be the best in their fields. They are going to be practical. Not ideological. They're gonna have integrity. They're gonna be in this for public interest and not for, you know, interests of self aggrandizement or cashing in later. And I want people who are gonna be independent and who argue with me. 'Cause one of the things you asked earlier about my leadership style, or why me. One of the things I'm good at is getting people in a room with a bunch of different ideas who sometimes violently disagree with each other and finding common ground and a sense of common direction. And that's the kind of approach that I think prevents you from making some of the enormous mistakes that we've seen over the last eight years.

KROFT: There have been presidential elections when people used to say this is a choice between Tweedledum and Tweedledee. This is not one of those elections.

OBAMA: No, there's a real choice here.

KROFT: What are the differences? The important differences, briefly, that separate you from John McCain.

OBAMA: Well, biggest differences, on the economy, John McCain wants to continue George Bush's economic philosophy. I don't think there's any dispute on that. You can't describe, and I don't think John McCain will be able to describe, a single significant area where he differs from the president. On his tax policy, he wants to do the same Bush tax cuts, but wants to extend them with $200 billion more in corporate tax cuts, including the companies like Exxon Mobile. On health care he wants to tax health care benefits for the first time, and then give people a tax credit that won't at all meet the cost of health care. So that's gonna be, potentially, 20 million people without health insurance. On education, he doesn't have a plan to make college affordable. So on most of these issues, he wants to continue what we've seen over the last eight years. I, obviously, want to move in a drastically different direction. On taxes, I want to cut taxes for 95 percent of Americans.
 

Transcript: Sen. Obama, Part 2 (Raw Itnerview)

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.

OBAMA: Yes.

KROFT: To increase revenues to pay for some of your plans.

OBAMA: Yes.

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.

OBAMA: Yes.

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.

(end of clip 2)

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.