Obama: Wall St bailout may delay spending programs

NEW YORK (Reuters) - Democratic presidential nominee Barack Obama said on Tuesday a $700 billion Wall Street rescue plan would likely delay some campaign spending promises, as the reality sank in of the costs of the mammoth bailout.

Obama, who faces Republican John McCain in their first face-to-face debate on Friday in Mississippi, said if elected he might have to phase in some of his plans such as an overhaul of the U.S. health care system.

His campaign has estimated the cost of his health plan at between $50 billion and $65 billion a year.

Obama, who has a slight lead on McCain in opinion polls six weeks before election day November 4, told NBC's "Today" show that even though the rescue plan is pegged at costing $700 billion, "We don't anticipate that all that money gets spent right away and we don't anticipate that all that money is lost."

It is unclear what impact the plan would have on the U.S. budget, he said.

"Does that mean that I can do everything that I've called for in this campaign right away, probably not. I think that we are going to have to phase it in. A lot of it is going to depend on what our tax revenues look like," Obama said.

Speaking to reporters later in Clearwater, Florida, where he traveled for three days of debate preparation, Obama said he still thought a middle-class tax cut was essential.

"I think the middle-class tax cut that I've talked about -- 95 percent of Americans getting a tax cut -- is something that still makes sense in this kind of environment," he said.

McCain, campaigning in Ohio, sought to portray himself as an underdog going into the first of three debates with Obama, saying "These are going to be tough debates."

"Look, have no doubt about the capabilities of Sen. Obama to debate," McCain said in Berea, Ohio. "I mean, he's very, very good. He was able to defeat Sen. Hillary Clinton, who as we all know is very accomplished."

His vice presidential running mate, Alaska Gov. Sarah Palin, who has faced criticism that she lacks foreign policy experience, met leaders of Afghanistan and Colombia as well as former Secretary of State Henry Kissinger on the fringes of the U.N. General Assembly in New York.

The Wall Street bailout proposed by the Bush administration would cost almost as much as Washington has spent fighting the wars in Iraq and Afghanistan since late 2001. The estimated cost of those wars so far is around $800 billion, with about two-thirds of that for combat in Iraq.

Together, the wars and the bailout could add about $1.5 trillion to a national debt quickly approaching $10 trillion.

The sweeping proposal would have the Treasury buy up bad mortgage-related debts from financial institutions, including U.S. subsidiaries of foreign banks, to try to stem the worst financial storm since the 1930s Great Depression.

"TAKE A HIT"

Neither Obama nor McCain has said he would oppose the plan being negotiated with Congress, although both have been critical of it.

But the $700 billion price tag would almost certainly restrict the agenda and limit the number of costly programs advocated by whoever becomes the next president.

The turmoil on Wall Street has dominated the campaign and poses a political challenge for both candidates.

Neither wants to be seen as against a deal that could avert a much bigger crisis, but nor do they want to be too closely tied to a plan that has been criticized as a lifeline for Wall Street when homeowners and ordinary Americans are suffering.

"We want to make sure that taxpayers are benefiting," Obama said on NBC. "It can't be simply a bailout for investors, CEOs, shareholders. They've got to take a hit for the bad decisions that they make."

McCain, an Arizona senator, has been outspokenly critical of the federal bailout in an effort to distance himself from the unpopular administration of fellow Republican President George W. Bush and to strike a populist tone by decrying the Wall Street greed he says led to the financial meltdown.

"I think time is very short," McCain told reporters in Saginaw, Michigan. "I'm pleased to see that Congress is planning on acting rather rapidly. We also have to balance that with full scrutiny of the written legislation."

His campaign issued a new television ad accusing Obama of taking a cautious stand on the emergency plan.

"Obama and his liberal allies? Mum on the market crisis. Because no one knows what to do. More taxes. No leadership. A risk your family can't afford," the announcer in the ad says.

Obama and McCain have tried to project leadership on the crisis, although both have been essentially sidelined as the bailout is negotiated. They are each calling for a bipartisan board to oversee the rescue and are insisting that no Wall Street executives profit from taxpayer dollars.

A CNN poll released on Monday showed more Americans thought Obama would do a better job handling an economic crisis than McCain. In the survey of 1,020 people conducted Friday through Sunday, 49 percent said Obama would display good judgment in an economic crisis, compared with 43 who said that about McCain.

(Additional reporting by Deborah Charles, Ellen Wulfhorst and Patricia Wilson; editing by Philip Barbara)