Obama: Wall St. bailout may delay spending programs

By Steve Holland

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 Republican John McCain in opinion polls six weeks before election day November 4, told NBC's "Today" show that even though the rescue plan costs $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.

McCain was campaigning in Ohio and Michigan, two states the McCain camp considers important to his hopes of victory.

His vice presidential running mate, Alaska Gov. Sarah Palin, who has faced criticism that she lacks foreign policy experience, planned to meet the 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.