QUESTION: If, despite your best diplomatic efforts, Iran attacks Israel, would you be willing to commit U.S. troops in support and defense of Israel? Or would you wait on approval from the U.N. Security Council?

MCCAIN: Well, thank you, Terry (ph). And thank you for your service to the country.

I want to say, everything I ever learned about leadership I learned from a chief petty officer. And I thank you, and I thank you, my friend. Thanks for serving.

Let -- let -- let me say that we obviously would not wait for the United Nations Security Council. I think the realities are that both Russia and China would probably pose significant obstacles.

And our challenge right now is the Iranians continue on the path to acquiring nuclear weapons, and it's a great threat. It's not just a threat -- threat to the state of Israel. It's a threat to the stability of the entire Middle East.

If Iran acquires nuclear weapons, all the other countries will acquire them, too. The tensions will be ratcheted up.

What would you do if you were the Israelis and the president of a country says that they are -- they are determined to wipe you off the map, calls your country a stinking corpse?

Now, Senator Obama without precondition wants to sit down and negotiate with them, without preconditions. That's what he stated, again, a matter of record.

I want to make sure that the Iranians are put enough -- that we put enough pressure on the Iranians by joining with our allies, imposing significant, tough sanctions to modify their behavior. And I think we can do that.

I think, joining with our allies and friends in a league of democracies, that we can effectively abridge their behavior, and hopefully they would abandon this quest that they are on for nuclear weapons.

But, at the end of the day, my friend, I have to tell you again, and you know what it's like to serve, and you know what it's like to sacrifice, but we can never allow a second Holocaust to take place.

BROKAW: Senator Obama?

OBAMA: Well, Terry, first of all, we honor your service, and we're grateful for it.

We cannot allow Iran to get a nuclear weapon. It would be a game-changer in the region. Not only would it threaten Israel, our strongest ally in the region and one of our strongest allies in the world, but it would also create a possibility of nuclear weapons falling into the hands of terrorists.

And so it's unacceptable. And I will do everything that's required to prevent it.

And we will never take military options off the table. And it is important that we don't provide veto power to the United Nations or anyone else in acting in our interests.

It is important, though, for us to use all the tools at our disposal to prevent the scenario where we've got to make those kinds of choices.

And that's why I have consistently said that, if we can work more effectively with other countries diplomatically to tighten sanctions on Iran, if we can reduce our energy consumption through alternative energy, so that Iran has less money, if we can impose the kinds of sanctions that, say, for example, Iran right now imports gasoline, even though it's an oil-producer, because its oil infrastructure has broken down, if we can prevent them from importing the gasoline that they need and the refined petroleum products, that starts changing their cost-benefit analysis. That starts putting the squeeze on them.

Now, it is true, though, that I believe that we should have direct talks -- not just with our friends, but also with our enemies -- to deliver a tough, direct message to Iran that, if you don't change your behavior, then there will be dire consequences.

If you do change your behavior, then it is possible for you to re-join the community of nations.

Now, it may not work. But one of the things we've learned is, is that when we take that approach, whether it's in North Korea or in Iran, then we have a better chance at better outcomes.

When President Bush decided we're not going to talk to Iran, we're not going to talk to North Korea, you know what happened? Iran went from zero centrifuges to develop nuclear weapons to 4,000. North Korea quadrupled its nuclear capability.

We've got to try to have talks, understanding that we're not taking military options off the table.

BROKAW: All right, gentlemen, we've come to the last question.

And you'll both be interested to know this comes from the Internet and it's from a state that you're strongly contesting, both of you. It's from Peggy (ph) in Amherst, New Hampshire. And it has a certain Zen-like quality, I'll give you a fair warning.

She says, "What don't you know and how will you learn it?"

(LAUGHTER)

Senator Obama, you get first crack at that.

OBAMA: My wife, Michelle, is there and she could give you a much longer list than I do. And most of the time, I learn it by asking her.

But, look, the nature of the challenges that we're going to face are immense and one of the things that we know about the presidency is that it's never the challenges that you expect. It's the challenges that you don't that end up consuming most of your time.

But here's what I do know. I know that I wouldn't be standing here if it weren't for the fact that this country gave me opportunity. I came from very modest means. I had a single mom and my grandparents raised me and it was because of the help of scholarships and my grandmother scrimping on things that she might have wanted to purchase and my mom, at one point, getting food stamps in order for us to put food on the table.

Despite all that, I was able to go to the best schools on earth and I was able to succeed in a way that I could not have succeeded anywhere else in this country.

The same is true for Michelle and I'm sure the same is true for a lot of you.

And the question in this election is: are we going to pass on that same American dream to the next generation? Over the last eight years, we've seen that dream diminish.

Wages and incomes have gone down. People have lost their health care or are going bankrupt because they get sick. We've got young people who have got the grades and the will and the drive to go to college, but they just don't have the money.

And we can't expect that if we do the same things that we've been doing over the last eight years, that somehow we are going to have a different outcome.

We need fundamental change. That's what's at stake in this election. That's the reason I decided to run for president, and I'm hopeful that all of you are prepared to continue this extraordinary journey that we call America.

But we're going to have to have the courage and the sacrifice, the nerve to move in a new direction.

Thank you. BROKAW: Senator McCain, you get the last word. Senator Obama had the opening. You're last up.

MCCAIN: Well, thank you, Tom. And I think what I don't know is what all of us don't know, and that's what's going to happen both here at home and abroad.

The challenges that we face are unprecedented. Americans are hurting tonight in a way they have not in our generation.

There are challenges around the world that are new and different and there will be different -- we will be talking about countries sometime in the future that we hardly know where they are on the map, some Americans.

So what I don't know is what the unexpected will be. But I have spent my whole life serving this country. I grew up in a family where my father was gone most of the time because he was at sea and doing our country's business. My mother basically raised our family.

I know what it's like in dark times. I know what it's like to have to fight to keep one's hope going through difficult times. I know what it's like to rely on others for support and courage and love in tough times.

I know what it's like to have your comrades reach out to you and your neighbors and your fellow citizens and pick you up and put you back in the fight.

That's what America's all about. I believe in this country. I believe in its future. I believe in its greatness. It's been my great honor to serve it for many, many years.

And I'm asking the American people to give me another opportunity and I'll rest on my record, but I'll also tell you, when times are tough, we need a steady hand at the tiller and the great honor of my life was to always put my country first.

Thank you, Tom.

BROKAW: Thank you very much, Senator McCain.

That concludes tonight's debate from here in Nashville. We want to thank our hosts here at Belmont University in Nashville and the Commission on Presidential Debates. And you're in my way of my script there, if you will move.

(APPLAUSE)

In addition to everything else, there is one more presidential debate on Wednesday, October 15, at Hofstra University in New York, moderated by my friend, Bob Schieffer of "CBS News."

Thank you, Senator McCain. Thank you, Senator Obama. Good night, everyone, from Nashville.