Colorado. I'm Jim Lehrer of the PBS NewsHour, and I welcome you to the first of the 2012

presidential debates between President Barack Obama, the Democratic nominee, and former

Massachusetts Governor Mitt Romney, the Republican nominee.

This debate and the next three — two presidential, one vice- presidential — are sponsored by

the Commission on Presidential Debates.

Tonight's 90 minutes will be about domestic issues, and will follow a format designed

by the commission. There will be six roughly 15-minute segments, with two-minute answers

for the first question, then open discussion for the remainder of each segment.

Thousands of people offered suggestions on segment subjects of questions via the Internet

and other means, but I made the final selections, and for the record, they were not submitted

for approval to the commission or the candidates.

The segments, as I announced in advance, will be three on the economy and one each on health

care, the role of government, and governing, with an emphasis throughout on differences,

specifics and choices. Both candidates will also have two-minute closing statements.

The audience here in the hall has promised to remain silent. No cheers, applause, boos,

hisses — among other noisy distracting things — so we may all concentrate on what the

candidates have to say. There is a noise exception right now, though, as we welcome President

Obama and Governor Romney. (Cheers, applause.)

Gentlemen, welcome to you both.

Let's start the economy, segment one. And let's begin with jobs. What are the major

differences between the two of you about how you would go about creating new jobs? You

have two minutes — each of you have two minutes to start. The coin toss has determined,

Mr. President, you go first.

PRESIDENT BARACK OBAMA: Well, thank you very much, Jim, for this opportunity. I want to

thank Governor Romney and the University of Denver for your hospitality.

There are a lot of points that I want to make tonight, but the most important one is that

20 years ago I became the luckiest man on earth because Michelle Obama agreed to marry

me. (Laughter.) And so I just want to wish, Sweetie, you happy anniversary and let you

know that a year from now, we will not be celebrating it in front of 40 million people.

(Laughter.)

You know, four years ago we went through the worst financial crisis since the Great Depression.

Millions of jobs were lost. The auto industry was on the brink of collapse. The financial

system had frozen up. And because of the resilience and the determination of the American people,

we've begun to fight our way back.

Over the last 30 months, we've seen 5 million jobs in the private sector created. The auto

industry has come roaring back and housing has begun to rise. But we all know that we've

still got a lot of work to do. And so the question here tonight is not where we've been

but where we're going. Governor Romney has a perspective that says if we cut taxes, skewed

towards the wealthy, and roll back regulations that we'll be better off.

I've got a different view. I think we've got to invest in education and training. I think

it's important for us to develop new sources of energy here in America, that we change

our tax code to make sure that we're helping small businesses and companies that are investing

here in the United States, that we take some of the money that we're saving as we wind

down two wars to rebuild America and that we reduce our deficit in a balanced way that

allows us to make these critical investments.

Now, it ultimately is going to be up to the voters, to you, which path we should take.

Are we going to double down on the top-down economic policies that helped to get us into

this mess, or do we embrace a new economic patriotism that says, America does best when

the middle class does best? And I'm looking forward to having that debate.

MR. LEHRER: Governor Romney, two minutes.

MR. ROMNEY: Thank you, Jim. It's an honor to be here with you, and I appreciate the

chance to be with the president. I am pleased to be at the University of Denver, appreciate

their welcome and also the presidential commission on these debates.

And congratulations to you, Mr. President, on your anniversary. I'm sure this was the

most romantic place you could imagine here — here with me, so I — (laughter) — congratulations.

This is obviously a very tender topic. I've had the occasion over the last couple of years

of meeting people across the country. I was in Dayton, Ohio, and a woman grabbed my arm,

and she said, I've been out of work since May. Can you help me?

Ann yesterday was a rally in Denver, and a woman came up to her with a baby in her arms

and said, Ann, my husband has had four jobs in three years, part-time jobs. He's lost

his most recent job, and we've now just lost our home. Can you help us?

And the answer is yes, we can help, but it's going to take a different path, not the one

we've been on, not the one the president describes as a top-down, cut taxes for the rich. That's

not what I'm going to do.

My plan has five basic parts. One, get us energy independent, North American energy

independent. That creates about four million jobs. Number two, open up more trade, particularly

in Latin America; crack down on China if and when they cheat. Number three, make sure our

people have the skills they need to succeed and the best schools in the world. We're far

away from that now. Number four, get us to a balanced budget. Number five, champion small

business.

It's small business that creates the jobs in America. And over the last four years small-business

people have decided that America may not be the place to open a new business, because

new business startups are down to a 30-year low. I know what it takes to get small business

growing again, to hire people.

Now, I'm concerned that the path that we're on has just been unsuccessful. The president

has a view very similar to the view he had when he ran four years ago, that a bigger

government, spending more, taxing more, regulating more — if you will, trickle-down government

would work. That's not the right answer for America. I'll restore the vitality that gets

America working again.

Thank you.

MR. LEHRER: Mr. President, please respond directly to what the governor just said about

trickle-down — his trickle-down approach. He's — as he said yours is.

PRESIDENT OBAMA: Well, let me talk specifically about what I think we need to do.

First, we've got to improve our education system. And we've made enormous progress drawing

on ideas both from Democrats and Republicans that are already starting to show gains in

some of the toughest-to- deal-with schools. We've got a program called Race to the Top

that has prompted reforms in 46 states around the country, raising standards, improving

how we train teachers. So now I want to hire another hundred thousand new math and science

teachers and create 2 million more slots in our community colleges so that people can

get trained for the jobs that are out there right now. And I want to make sure that we

keep tuition low for our young people.

When it comes to our tax code, Governor Romney and I both agree that our corporate tax rate

is too high. So I want to lower it, particularly for manufacturing, taking it down to 25 percent.

But I also want to close those loopholes that are giving incentives for companies that are

shipping jobs overseas. I want to provide tax breaks for companies that are investing

here in the United States.

On energy, Governor Romney and I, we both agree that we've got to boost American energy

production.

And oil and natural gas production are higher than they've been in years. But I also believe

that we've got to look at the energy source of the future, like wind and solar and biofuels,

and make those investments.

So, all of this is possible. Now, in order for us to do it, we do have to close our deficit,

and one of the things I'm sure we'll be discussing tonight is, how do we deal with our tax code,

and how do we make sure that we are reducing spending in a responsible way, but also how

do we have enough revenue to make those investments? And this is where there's a difference because

Governor Romney's central economic plan calls for a $5 trillion tax cut, on top of the extension

of the Bush tax cuts, so that's another $2 trillion, and $2 trillion in additional military

spending that the military hasn't asked for. That's $8 trillion. How we pay for that, reduce

the deficit and make the investments that we need to make without dumping those costs

on the middle-class Americans I think is one of the central questions of this campaign.

MR. LEHRER: Both of you have spoken about a lot of different things, and we're going

to try to get through them in as specific a way as we possibly can.

But first, Governor Romney, do you have a question that you'd like to ask the president

directly about something he just said?

MR. ROMNEY: Well, sure. I'd like to clear up the record and go through it piece by piece.

First of all, I don't have a $5 trillion tax cut. I don't have a tax cut of a scale that

you're talking about. My view is that we ought to provide tax relief to people in the middle

class. But I'm not going to reduce the share of taxes paid by high- income people. High-income

people are doing just fine in this economy. They'll do fine whether you're president or

I am.

The people who are having the hard time right now are middle- income Americans. Under the

president's policies, middle-income Americans have been buried. They're — they're just

being crushed. Middle-income Americans have seen their income come down by $4,300. This

is a — this is a tax in and of itself. I'll call it the economy tax. It's been crushing.

The same time, gasoline prices have doubled under the president, electric rates are up,

food prices are up, health care costs have gone up by $2,500 a family.

Middle-income families are being crushed. And so the question is how to get them going

again, and I've described it. It's energy and trade, the right kind of training programs,

balancing our budget and helping small business. Those are the — the cornerstones of my plan.

But the president mentioned a couple of other ideas, and I'll just note: first, education.

I agree, education is key, particularly the future of our economy. But our training programs

right now, we got 47 of them housed in the federal government, reporting to eight different

agencies. Overhead is overwhelming. We got to get those dollars back to the states and

go to the workers so they can create their own pathways to getting the training they

need for jobs that will really help them.

The second area: taxation. We agree; we ought to bring the tax rates down, and I do, both

for corporations and for individuals. But in order for us not to lose revenue, have

the government run out of money, I also lower deductions and credits and exemptions so that

we keep taking in the same money when you also account for growth.

The third area: energy. Energy is critical, and the president pointed out correctly that

production of oil and gas in the U.S. is up. But not due to his policies. In spite of his

policies. Mr. President, all of the increase in natural gas and oil has happened on private

land, not on government land. On government land, your administration has cut the number

of permits and license in half. If I'm president, I'll double them. And also get the — the

oil from offshore and Alaska. And I'll bring that pipeline in from Canada.

And by the way, I like coal. I'm going to make sure we continue to burn clean coal.

People in the coal industry feel like it's getting crushed by your policies. I want to

get America and North America energy independent, so we can create those jobs.

And finally, with regards to that tax cut, look, I'm not looking to cut massive taxes

and to reduce the — the revenues going to the government. My — my number one principle

is there'll be no tax cut that adds to the deficit.

I want to underline that — no tax cut that adds to the deficit. But I do want to reduce

the burden being paid by middle-income Americans. And I — and to do that that also means that

I cannot reduce the burden paid by high-income Americans. So any — any language to the

contrary is simply not accurate.

MR. LEHRER: Mr. President.

PRESIDENT OBAMA: Well, I think — let's talk about taxes because I think it's instructive.

Now, four years ago when I stood on this stage I said that I would cut taxes for middle-class

families. And that's exactly what I did. We cut taxes for middle-class families by about

$3,600. And the reason is because I believe we do best when the middle class is doing

well.

And by giving them those tax cuts, they had a little more money in their pocket and so

maybe they can buy a new car. They are certainly in a better position to weather the extraordinary

recession that we went through. They can buy a computer for their kid who's going off to

college, which means they're spending more money, businesses have more customers, businesses

make more profits and then hire more workers.

Now, Governor Romney's proposal that he has been promoting for 18 months calls for a $5

trillion tax cut on top of $2 trillion of additional spending for our military. And

he is saying that he is going to pay for it by closing loopholes and deductions. The problem

is that he's been asked a — over a hundred times how you would close those deductions

and loopholes and he hasn't been able to identify them.

But I'm going to make an important point here, Jim.

MR. LEHRER: All right.

PRESIDENT OBAMA: When you add up all the loopholes and deductions that upper income individuals

can — are currently taking advantage of — if you take those all away — you don't

come close to paying for $5 trillion in tax cuts and $2 trillion in additional military

spending. And that's why independent studies looking at this said the only way to meet

Governor Romney's pledge of not reducing the deficit — or — or — or not adding to

the deficit, is by burdening middle-class families.

The average middle-class family with children would pay about $2,000 more. Now, that's not

my analysis; that's the analysis of economists who have looked at this. And — and that

kind of top — top-down economics, where folks at the top are doing well so the average

person making 3 million bucks is getting a $250,000 tax break while middle- class families

are burdened further, that's not what I believe is a recipe for economic growth.

MR. LEHRER: All right. What is the difference?

MR. ROMNEY: Well —

MR. LEHRER: Let's just stay on taxes for —

MR. ROMNEY: But I — but I — right, right.

MR. LEHRER: OK. Yeah, just — let's just stay on taxes for a moment.

MR. ROMNEY: Yeah. Well, but — but —

MR. LEHRER: What is the difference?

MR. ROMNEY: — virtually every — virtually everything he just said about my tax plan

is inaccurate.

MR. LEHRER: All right, go —

MR. ROMNEY: So — so if — if the tax plan he described were a tax plan I was asked to

support, I'd say absolutely not. I'm not looking for a $5 trillion tax cut. What I've said

is I won't put in place a tax cut that adds to the deficit. That's part one. So there's

no economist can say Mitt Romney's tax plan adds 5 trillion (dollars) if I say I will