In their second debate, U.S. presidential candidates Sens. John McCain (R-AZ) and Barack Obama (D-IL) sparred over the limping U.S. economy and energy policy; both tied the country’s recovery to the latter. Obama faulted McCain for a record of deregulation that he said has contributed to the current crisis; McCain, for his part, presented a new economic proposal under which the U.S. Treasury would buy up problem mortgages, in effect refinancing them (NYT) at prices homeowners can afford. The Wall Street Journal cites McCain’s campaign as saying the plan would cost roughly $300 billion. Opinion surveys have shown respondents more confident in Obama’s ability to handle an economic crisis.

Here are some foreign policy highlights from the debate:

ENERGY: Both candidates stressed the need for energy independence, with Obama citing it as a national security concern (WashPost). Obama also said developing new sources of energy would serve as a major boost for the U.S. economy, creating jobs the way the technology boom did in the 1990s. McCain said he would increase use of nuclear power, which he said is a clean and safe source of energy. “I know that we can reprocess the spent nuclear fuel,” McCain said. “The Japanese, the British, the French do it.” Obama said he also favors nuclear power “as one component of our overall energy mix.”

DEFENSE: McCain touted his opposition to invading Lebanon and his support for U.S. military efforts in Kosovo and Bosnia as evidence that he has strong judgment in deciding when the United States should get involved militarily in a crisis. “[T]he challenge is to know when the United States of American can beneficially effect the outcome of a crisis, when to go in and when not, when American military power is worth the expenditure of our most precious treasure,” he said.

Obama noted Iraq’s “enormous strain” on the U.S. budget. “We’re spending $10 billion a month in Iraq at a time when the Iraqis have a $79 billion surplus,” he said. “[W]e need that $10 billion a month here in the United States.”

IRAN: Both candidates again said they would not allow Iran to develop nuclear weapons. “If Iran acquires nuclear weapons, all the other countries [in the Middle East] will acquire them, too,” McCain warned.

Obama said he would “never take military options off the table” with regard to Iran and said it is “important that we don’t provide veto power to the United Nations or anyone else in acting in our interests.”