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 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.

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