McCain, lagging in the polls, went on the attack, trying to distance himself from President George W. Bush. Obama pushed back against McCain's attempts to connect him to a 1960s radical.
McCain, criticizing Obama for wanting to wage "class warfare" and raise taxes, again proposed a spending freeze, and assailed earmarks and outlined a proposal to use $300 billion of the bailout package to help struggling homeowners -- mentioning that Hillary Rodham Clinton backed a similar plan.
"I will not stand for a tax increase on small business income," McCain
said. "And what you want to do to Joe the Plumber and millions more
like him is have their taxes increased and not be able to realize the
dream of owning their own business."
Obama, who was on the defensive much of the night yet remained unruffled, had a quick retort.
"He has been watching ads of Senator McCain's," Obama said, adding that his plan would provide a tax cut for 95 percent of working families.
McCain pushed back hard against the key claim of Obama's campaign, that he is a Bush clone, ticking off his record of bucking his party on the environment and the prosecution of the war.
"Senator Obama, I am not President Bush," McCain said. "If you wanted to run against President Bush you should have run four years ago. I'm going to give a new direction to this economy in this country."
But Obama, who has maintained a steady lead in the national polls, stuck to his key argument that a McCain administration would look much like the current one.
"If I've occasionally mistaken your policies for George Bush's policies, it's because on the core economic issues that matter to the American people -- on tax policy, on energy policy, on spending priorities -- you have been a vigorous supporter of President Bush," he said.
For a while, even after the moderator brought up negative campaigning, the candidates tiptoed around any mention of Bill Ayers, a 1960s anti-war radical. McCain focused on Obama outspending him in negative ads and flip-flopping on a pledge to accept public financing and called on him to repudiate charges that the climate at some of his rallies was akin to the segregationist-era 1960s.
But Obama, who has addressed what he sees as a beside-the-point and flimsy attack on the stump and in television interviews, was clearly ready for the fight and was the first to mention Bill Ayers by name. "Mr. Ayers has become the centerpiece of Senator McCain's campaign over the last two or three weeks," Obama said, his manner cool and measured as he looked into the camera and checked off the history of his association with Ayers.
Polls show Obama with a lead of about 8 points, a margin that has held steady over the last week, despite McCain's hard-hitting character-based attacks, which seem to have damaged the Republican nominee more than the front-runner.
McCain wrapped up the debate by returning to his campaign theme.
"I've spent my entire life in the service of this nation and putting my country first," he said. " ... And I hope you'll give me an opportunity to serve again. I'd be honored and humbled."
Obama made a direct appeal for votes adding that he would "work every single day tirelessly on your behalf and on the behalf of the future of our children."
The candidates, who are both in New York Thursday night, have 19 more days to make their case to voters.