OMAHA — Worries about the nation’s economic problems and tax policy dominated Tuesday’s debate between Republican incumbent Lee Terry and Democratic challenger Jim Esch.

Both Esch and Terry tried to convince voters at Creighton University that electing their opponent to represent Nebraska’s 2nd District in the U.S. House would hurt the economy.

Terry said Esch would raise taxes, and “I think the best way to economic growth is to lower taxes.’’

Terry said he’s stood up in his years in Congress for cutting spending and lowering taxes.

“Someone’s got to stand up, and you’ve got to be able to trust that person,’’ Terry said.

But Esch questioned how effective Terry has been in fighting spending.

“The national debt has nearly tripled in the time my opponent’s been in office,’’ Esch said.

Terry said Esch opposes extending the Bush tax cuts of 2001 and 2003, including a per-child tax credit, and an end to the so-called marriage penalty and death tax.

Esch said he’s never said he would raise taxes, but “I think we need to start paying for things again.’’

The race in the district that includes the state’s largest city has heated up in recent weeks. Democratic presidential hopeful Barack Obama has campaign staff in the state, trying to register thousands of new Democrats.

And Terry will likely benefit from the excitement generated by a visit Sunday from Republican vice presidential nominee Sarah Palin.

Nebraska is one of just two states that can split its electoral votes, so if Obama won in the 2nd District, he would get one electoral vote.

Many of the questions from Creighton students and faculty Tuesday involved taxes and the financial meltdown that has sent the stock market spiraling.

Terry blamed the meltdown on “an irrational exuberance in the lending market.’’

Terry supported the $700 billion bailout package after opposing an earlier version because he said it was a good step even if it wasn’t perfect.

“If a person who was laid off came to me and said, ‘What did you do to try and help?’ I could have said nothing, or I could have said something,’’ Terry said.

Esch said the meltdown could be blamed on relaxed regulations and lack of oversight on Wall Street.

“My opponent was a part of that process and voted for that deregulation,’’ Esch said.

But Terry said he didn’t believe the meltdown was caused by the bill to which Esch referred, a 1999 law that removed barriers between investment banks and commercial banks that were erected in 1933, in response to the 1929 stock market crash.

One question was about the proposed privatization of social security.

Terry said he makes no apologies for his support of individual retirement accounts, which would allow social security money to be invested in the stock market.

Said Esch: “When you’ve got a safety net, why would you risk it … in a stock market we’ve just seen collapse.’’