QUARLES: Vice-President Bush, four years ago you would have allowed federal financing of abortions in cases of rape and incest ass well as when the mother's life was threatened. Does your position now agree with Reagan who in Sunday's debate came very close to saying abortion is murder?

BUSH: You know, there has been - I have to make a confession - an evolution in my position. There's been 15 million abortions since 1973, and I don't take that lightly. There's been a million and a half this year. The president and I do favor a human rights amendment. I favor one that would have an exception for incest and rape, and he doesn't, but we both - only for the life of the mother. And I agree with him on that. So yes, my position's evolved, but I'd like to see the American who faced with 15 million abortions isn't rethinking his or her position and I'll just stand with the answer. I support the president's position - and comfortably - from a moral standpoint.

QUARLES: So you believe it's akin to murder?

BUSH: No, I support the president's position.

QUARLES: Fine. Congresswoman Ferraro, what are your views on the separation of church and state with regard to abortions, and do you believe it was right for the archbishop of Philadelphia to have those letters read in the pulpits and urged the voters to fight abortion with their vote?

FERRARO: Let me say first of all I believe very, very sincerely in the separation of church and state. I'm taking it from the historical viewpoint, if you go back to the 1600s when people came here, the reason they came to this country was to escape religious persecution, and that's the same reason why people are coming here today in the 1940s to escape Nazism, now in the 1980s and 1984 when they can get our of the country to escape communism so they can come here and practice their religion. Our country is founded on the principle that our government should be neutral as far as religion is concerned. Now what's happened over the past several years, and quite frankly I'm not going to let you lay on me the intrusion of state politics into religion or religion into politics by my comments with reference to the president's policies, because it started in 1980 when this administration was running for office and the Reverend Jerry Falwell became very, very involved in the campaign. What has happened over the past four years has been I think a real fudging of that line with the separation of church and state. The actions of the archbishops let me say to you I feel that they have not only a right but a responsibility to speak up, and even though I've been the person that they're speaking up about, l feel they do have the responsibility to do so, and I have no problem with it, no more than I did a priest who marched at the time of Vietnam and no more than I did at the time when Martin Luther King marched at the time of the civil rights marches. I have absolutely no problem with them speaking up, I think they have an obligation as well as a right. But what I do have a problem with is when the president of the United States gets up in Dallas and addresses a group of individuals and said to them that anybody who doesn't support his constitutional amendment for prayer in the schools is intolerant of religion. Now there are numerous groups who don't support that prayer in the school, numerous religious groups. Are they intolerant of religion? Is that what the president is saying? I also object, when I am told, that the Reverend Falwell has been told that he would pick two of our Supreme Court justices. That's going a little bit far. In that instance, let me say to you it is more than a fudging at the line, it is a total intrusion, and I think that it's in violation of our Constitution.

QUARLES: Congresswoman Ferraro, as a devout Catholic, does it trouble you that so many of the leaders of your church disagree with you, and do you think that you're being treated unfairly in any way by the Catholic church?

FERRARO: Let me tell you that I did not come to my position on abortion very lightly. I am a devout Catholic. When I was running for Congress 1978 I sat and met with a person I felt very close to, a monsignor currently a bishop. I spoke to him about my personal feelings that I would never have an abortion, but I was not quite sure if I were ever to become pregnant as result of a rape if I would be that self-righteous. I then spoke to him; he said, Gerry, that's not good enough. There you can't support that position. I said okay. That's my religious view; I will accept the teaching of the church, but I cannot impose my religious views on someone else. I truly take an oath as a public official to represent all the people in my district, not only the Catholics. If there comes a time where I cannot practice my religion and do my job properly, I will resign my job.

VANOCUR: Vice-President Bush, your rebuttal.

BUSH: Well, I respect that statement, I really and truly do. We have difference on a moral question here on abortion. I notice that Mr. Mondale keeps talking in the debate and now it's come here about Mr. Falwell. And I don't know where this canard could have come from about Mr. Falwell picking the Supreme Court justices. Ronald Reagan has made one super outstanding, the only one he's made, appointment to the Supreme Court and that was Sandra Day O'Connor, and Mr. Falwell opposed her nomination. We still have respect for him, but he opposed it, and so I hope this lays to rest this slander against the president. We want justices who will interpret the Constitution, not legislate it.

VANOCUR: Congresswoman Ferraro, your rebuttal?

FERRARO: Yes, I still find it very difficult to believe because in the platform, which this Republican party passed in Dallas - one of the things they was they said that this position on abortion would be a litmus test, not only for Supreme Court justices but for other federal justices. That, again, seems to me a blurring of the line of the separation between church and state.

VANOCUR: The next questioning from Mr. Boyd.

BOYD: Like many Americans, each of you has recently had an unhappy experience with the Internal Revenue Service. I'm going to prolong your ordeal. Congresswoman Ferraro, you disagree with the rule that says that a candidate must report the income or assets of his or her spouse if you get any benefit from them. Your husband's tax return showed that yon did benefit because he paid the mortgage and the property taxes on your home. Now the ethics committee is examining this question, but it won't report it's findings until after the election. Would you be willing to ask that committee, which is controlled by Democrats, to hurry up its work and report before the election.

FERRARO: Let me say to you that I already did that. I wanted them to move ahead. If you recall, I spent about an hour and 45 minutes speaking to 200 reporters on August 21, which is the day after I was required to file my financial statement, and I sat for as long as they had questions on the issue, and I believe that they were satisfied. I filed more information than any other candidate for a national office in the history of this country. Not only did I agree to file my tax returns, after a little bit of prodding my husband also agreed to file his with the - not only the ethics committee but the FEC. Bur the action that you're speaking about with the ethics committee was started by a right-wing legal organization - foundation - knowing that I would have to - that there would be an automatic inquiry. We have filed the necessary papers, I have asked them to move along. Unfortunately, the House, I believe, went out of session today, so I don't know if they will move. But quite frankly, I would like that to be taken care of anyway, because I just want it cleared up.

BOYD: Since that famous August 21 press conference on your family finances, you filed a new report with the ethics committee, and this showed that your previous reports were full of mistakes and omissions. For example, you failed to report about twelve trips that were paid for by special interest groups. In at least eighteen cases your holdings were misstated. Do you think it showed good leadership or attention to duty to blame all this on sloppy work by your accountant?

FERRARO: Well, what it showed was that - and it was truly that I hired an accountant who had been with our family for well over forty years. He was filling our those ethics forms. I did not spend the time with him - I just gave him my tax information and he did it. I have to tell you what we have done since I have hired a marvelous accountant. I've spent a lot of money having him go through all those ethics forms and he will be doing my taxes over the next eight years while we're in the White House so that the American public can be sure it's all been taken care of.

BOYD: Vice-President Bush, last year you paid less than 13 percent of your income in federal taxes. According to the IRS, someone in your bracket normally pays about 28 percent of his income. Now what you did was perfectly legal, but do you think it was fair, and is there something wrong with our tax laws that allows such large deductions for wealthy taxpayers?

BUSH: What that figure - and I kind of like the way Mrs. Ferraro and Mr. Zaccaro reported - because they reported federal taxes, state and local taxes - gives people a clearer picture. That year I happened to pay a lot of state and local taxes, which as you know are deducted from the other, and so I looked it up the other day, and we had paid - I think it's 42 percent - of our gross income in taxes. Now Mr. Mondale the other night took what I - I'll be honest - I think it was a cheap shot - at me, and we did a little looking around to see about his. We can't find his 198I tax return - it may have been released. Maybe my opponent knows whether Mr. Mondale released it. But we did find estimates that his income for those three years is a million, four hundred thousand dollars, and I think he paid about the same percentage as I did in total taxes. He also made a reference that troubled me very much, Mr. Boyd. He started talking about my chauffeur, and you know, I'm driven to work by the Secret Service - so is Mrs. Ferraro - so is Mr. Mondale - they protected his life for four years and now they've done a beautiful job for Barbara and mine. They saved the life of the president of the United States. I think that was a cheap shot - telling the American people to try to divide class - rich and poor. But the big question isn't whether Mrs. Ferraro is doing well. I think they're doing pretty well, and I know Barbara and I are doing well. And it's darn sure that Mr. Mondale is doing well, with a million four in income, but the question really is - after we get through this disclosure - is the tax cut fair? Are people getting a fair break, and the answer is the rich are paying 6 percent more on taxes and the poor are getting a better break. Those lower and middle-income people that have borne the burden for a long time. So yes, I favor disclosure. I've always disclosed. This year I had my taxes and everything I own in a blind trust - so blind - blinder than the president's, so I didn't even sign my tax return. But there seemed to be an interest in it so we went to the government ethics committee - they agreed to change the trust. The trust has been revealed, and I was sure glad to see that I had paid 42 percent of my gross income in taxes.

BOYD: Mr. Vice-President, how can you claim that your home is in Maine for tax purposes and at the same time claim that your home is in Texas for voting purposes? Are you really a Texan or a New Englander.

BUSH: I'm really a Texan. But I got one house. And under the law, every taxpayer is allowed, when he sells a house, and buys another house, to get the rollover. Everybody, if it turns out, and I may hire, I notice she said she has a new good accountant. I'd like to get his name and phone number because I think I've paid too much in the way of taxes. And residence, Mr. Boyd, legal residence, for voting, is very different. And the domicile, they call that, very different, than the house. That they say you're living in the vice-president's house. Therefore you don't get what every - I've got problems - what every other taxpayer gets. I got problems with the IRS, but so do a lot of people out there. I think I've paid too much. Nothing ethical. I'd like to get some money back.

VANOCUR: Congresswoman Ferraro, your rebuttal please.

FERRARO: Let me just say that I'd be happy to give the vice-president the name of my accountant, but I warn you, he's expensive. I think the question is whether or not the tax cuts and the tax system that's currently in our government, that our government uses, is fair; I think the tax system is unfair. But it's not something that we can address in the short term. The tax cuts that Vice-President Bush and I got last, three years ago, that this president gave out, no, that's not fair. If you earn $200,000 a year, you got a $25,000 tax cut. If you earned between $20,000 and $40,000, you may have gotten about $1,000 between ten and twenty, close to a hundred dollars and if you made less than $10,000 with all the budget cuts that came down the line, you suffered a loss of $400. That's not fair. That's basically unfair and not only is it unfair, but economically it has darn near destroyed this country. There's a $750 billion tax cut over a five-year period of time. That's one of the reasons we're facing these enormous deficits that we have today.

VANOCUR: Mr. Vice-President.

BUSH: No, I think I've said all I want to say. I do, I didn't fully address myself to Mr. Boyd's question no disclosure, I led the fight, I think, in 1968, in the House - I was in the House of Representatives for a couple of terms - and I led the fight for disclosure. I believe in it. Before I went into this job, I disclosed everything we had. We didn't have any private corporations, but I disclosed absolutely everything. Arthur Andersen made out an assets and liabilities statement that I believe went further than any other one. And then, to protect the public interest, we went into this blind trust. I believe in the blind trust because I believe a public official in this kind of job ought not to know whether he's gonna benefit, directly or indirectly, by some holding he might have or something of that nature. And, no, I support full disclosure.

VANOCUR: Thank you. That ends the part of this debate devoted to domestic affairs. We will now turn to foreign affairs and will begin the questioning with Mr. Mashek.