BERNARD SHAW: On behalf of the Commission on Presidential Debates, I am pleased to welcome you to the second presidential debate. I am Bernard Shaw of CNN, Cable News Network. My colleagues on the panel are Ann Compton of ABC NEWS; Margaret Warner of Newsweek magazine; and Andrea Mitchell of NBC NEWS. The candidates are Vice President George Bush, the Republican nominee; and Governor Michael Dukakis, the Democratic nominee. (Applause)

For the next 90 minutes we will be questioning the candidates following a format designed and agreed to by representatives of the two campaigns. However, there are no restrictions on the questions that my colleagues and I can ask this evening, and the candidates have no prior knowledge of our questions. By agreement between the candidates, the first question goes to Gov. Dukakis. You have two minutes to respond. Governor, if Kitty Dukakis were raped and murdered, would you favor an irrevocable death penalty for the killer?

DUKAKIS: No, I don't, Bernard. And I think you know that I've opposed the death penalty during all of my life. I don't see any evidence that it's a deterrent, and I think there are better and more effective ways to deal with violent crime. We've done so in my own state. And it's one of the reasons why we have had the biggest drop in crime of any industrial state in America; why we have the lowest murder rate of any industrial state in America. But we have work to do in this nation. We have work to do to fight a real war, not a phony war, against drugs. And that's something I want to lead, something we haven't had over the course of the past many years, even though the Vice President has been at least allegedly in charge of that war. We have much to do to step up that war, to double the number of drug enforcement agents, to fight both here and abroad, to work with our neighbors in this hemisphere. And I want to call a hemispheric summit just as soon after the 20th of January as possible to fight that war. But we also have to deal with drug education prevention here at home. And that's one of the things that I hope I can lead personally as the President of the United States. We've had great success in my own state. And we've reached out to young people and their families and been able to help them by beginning drug education and prevention in the early elementary grades. So we can fight this war, and we can win this war. And we can do so in a way that marshals our forces, that provides real support for state and local law enforcement officers who have not been getting that support, and do it in a way which will bring down violence in this nation, will help our youngsters to stay away from drugs, will stop this avalanche of drugs that's pouring into the country, and will make it possible for our kids and our families to grow up in safe and secure and decent neighborhoods.

SHAW: Mr. Vice President, your one-minute rebuttal.

BUSH: Well, a lot of what this campaign is about, it seems to me Bernie, goes to the question of values. And here I do have, on this particular question, a big difference with my opponent. You see, I do believe that some crimes are so heinous, so brutal, so outrageous, and I'd say particularly those that result in the death of a police officer, for those real brutal crimes, I do believe in the death penalty, and I think it is a deterrent, and I believe we need it. And I'm glad that the Congress moved on this drug bill and have finally called for that related to these narcotics drug kingpins. And so we just have an honest difference of opinion: I support it and he doesn't.

SHAW: Now to you, Vice President Bush. I quote to you this from Article III of the 20th amendment to the Constitution. Quote: "If at the time fixed for the beginning of the term of the President the President-elect shall have died, the Vice President elect shall become president," meaning, if you are elected and die before inauguration day

BUSH: Bernie.

SHAW: automatically automatically, Dan Quayle would become the 41st President of the United States. What have you to say about that possibility?

BUSH: I'd have confidence in him. And I made a good selection. And I've never seen such a pounding, an unfair pounding, on a young Senator in my entire life. And I've never seen a presidential campaign where the presidential nominee runs against my vice presidential nominee; never seen one before. (Applause)

But you know, Lloyd Bentsen jumped on Dan Quayle, when Dan Quayle said, he's had roughly the same amount of experience. He had two terms in the Congress. He had two terms in the Senate, serving his second term. He founded authored, the job training partnership act. It says to American working men and women that are thrown out of work for no fault of their own that they're going to have jobs. We're moving into a new competitive age, and we need that kind of thing. He, unlike my opponent, is an expert in national defense; helped amend the INF treaty so we got a good, sound treaty, when these people over here were talking about a freeze. If we'd listened to them, we would never have had a treaty. And so I have great confidence in him. And it's turning around. You know, the American people are fair. They don't like it when there's an unfair pounding and kind of hooting about people. They want to judge it on the record itself. And so I'm proud of my choice. And you know, I don't think age is the only criterion. But I'll tell you something, I'm proud that people who are 30 years old and 40 years old now have someone in their generation that is going to be vice president of the United States of America. I made a good selection. The American people are seeing it, and I'm proud of it; that's what I'd say. And he could do the job.

SHAW: Gov. Dukakis, your one-minute rebuttal.

DUKAKIS: Bernard, this was the first presidential decision that we as nominees were called upon to make. And that's why people are so concerned. Because it was an opportunity for us to demonstrate what we were looking for in a running mate. More than that, it was the first national security decision that we had to make. The Vice President talks about national security. Three times since World War II, the Vice President has had to suddenly become the President and commander in chief. I picked Lloyd Bentsen, because I thought he was the best qualified person for the job. (Applause) Mr. Bush picked Dan Quayle, and before he did it, he said, watch my choice for vice president, it will tell all And it sure did. It sure did. (Applause)

SHAW: Ann Compton for the Vice President.

COMPTON: Thank you, Bernie. Mr. Vice President, yes, we read your lips: no new taxes. But despite that same pledge from President Reagan, after income tax rates were cut, in each of the last five years, some Federal taxes have gone up, on Social Security, cigarettes, liquor, even long distance telephone calls. Now that's money straight out of people's wallets. Isn't the phrase, no new taxes, misleading the voters?

BUSH: No, because I'm pledged to that, and yes, some taxes have gone up. And the main point is, taxes have been cut, and yet income is up to the Federal Government by 25 percent in the last three years. And so what I want to do is keep this expansion going. I don't want to kill it off by a tax increase. More Americans at work today than at any time in the history of the country, and a greater percentage of the work force. And the way you kill expansions is to raise taxes. And I don't want to do that, and I won't do that. And what I have proposed is something much better. And it's going to take discipline of the executive branch; it's going to take discipline of the congressional branch. And that is what I call a flexible freeze that allows growth about 4 percent or the rate of inflation but does not permit the Congress just to add on spending. I hear this talk about a blank check. The American people are pretty smart: they know who writes out the checks. And they know who appropriates the money. It is the United States Congress. And by two to one, Congress is blamed for these deficits. And the answer is to discipline both the executive branch and the congressional branch by holding the line on taxes. So I'm pledged to do that. And those pessimists who say it can't be done, I'm sorry, I just have a fundamental disagreement with them

SHAW: Gov. Dukakis, your one-minute response.

DUKAKIS: Ann, the Vice President made that pledge. He's broken it three times in the past year already. So it isn't worth the paper it's printed on. And what I'm concerned about is that if we continue with the policies that Mr. Bush is talking about here this evening, the flexible freeze somebody described it the other day as a kind of economic slurpee he wants to spend billions on virtually every weapons system around. He says he's not going to raise taxes, though he has broken that pledge repeatedly. He says he wants to give the wealthiest one percent of the people in this country a five-year $40 billion tax break, and we're going to pay for it. And he's been proposing all kinds of programs for new spending costing billions. Now if we continue with these policies, this trillion and a half dollars worth of new debt that's already been added on the backs of the American taxpayer is going to increase even more, and if we continue with this for another four years, then I'm worried about the next generation, whether we can ever turn this situation around. No, we need a chief executive who is prepared to lead; who won't blame the Congress; who will lead to bring down that deficit, who will make tough choices on spending

SHAW: Governor

DUKAKIS: will go out and do the job that we expect of him and do it with the Congress of the United States. (Applause)

SHAW: And to Governor Dukakis.

COMPTON: Governor, let me follow up on that by asking you you've said it many times that you have balanced ten budgets in a row in Massachusetts. Are you promising the American people here tonight that within a four-year presidential term, you will balance the federal budget?

DUKAKIS: No, I'm not sure I can promise that; I don't think either one of us can really. There is no way of anticipating what may happen. I will say this: that we will set as our goal a steady, gradual reduction of the deficit, which will require tough choices on spending; it will require a good strong rate of economic growth; it will require a plan that the president works out with the Congress doesn't blame them, works it out with them, which brings that deficit down; it will require us to go out and collect billions and billions of dollars in taxes owed that aren't being paid in this country. And that's grossly unfair to the average American who is paying his taxes and paying them on time and doesn't have any alternative: it's taken out of his paycheck. Mr. Bush says we are going to put the IRS on every taxpayer. That's not what we are going to do. I'm for the taxpayer bill of rights. But I think it's unconscionable, Ann, that we should be talking or thinking about imposing new taxes on average Americans when there are billions out there, over $100 billion, in taxes owed that aren't being paid. Now, I think if we work together on it, and if you have a president that will work with the Congress and the American people, we can bring that deficit down steadily, $20, $25, $30 billion a year, build economic growth, build a good strong future for America, invest in those things which we must invest in economic development, good jobs, good schools for our kids, college opportunity for young people, decent health care and affordable housing, and a clean and safe environment. We can do all of those things, and at the same time build a future in which we are standing on a good strong fiscal foundation. Senator Bentsen said, as you recall at the debate with Senator Quayle, that if you give any of us $200 billion worth of hot checks a year, we can create an illusion of prosperity. But sooner or later that credit card mentality isn't going to work. And I want to bring to the White House a sense of strength and fiscal responsibility which will build a good strong foundation under which this country, or above which country can move, grow, invest, and build the best America for its people and for our kids and our grandkids.

SHAW: Mr. Vice President, your response.

BUSH: The Governor has to balance the budget in his state he is required to by law. He has raised taxes several times. I wish he would join me, as a matter of fact, in appealing to the American people for the balanced budget amendment for the federal government and for the line-item veto. (Applause) I'd like to have that line-item veto for the president, because I think that would be extraordinarily helpful. And I won't do one other thing that he's had to do: took $29 million out of his state pension fund that's equivalent at the federal level of taking out of the Social Security trust fund. I'm not going to do that; I won't do that. (Applause) And so I'm still a little unclear as to whether he's for or against the tax increase. I have been for the taxpayer bill of rights all along. And this idea of unleashing a whole bunch-an army, a conventional force army, of IRS agents into everybody's kitchen I mean, he's against most defense matters, and now he wants to get an army of JRS auditors going out there. (Laughter) I'm against that; I oppose that. (Boos and applause)

SHAW: I'm going to say this and I'm going to say it once to every person in this auditorium: what these candidates are about is of utmost seriousness to the American voters; they should be heard and you should be quiet. If you are not quiet, I am going to implore the candidates to do something about quieting their own partisans. But we cannot get through this program with these outbursts. Margaret Warner for Governor Dukakis.

WARNER: Good evening, Governor, Mr. Vice President. Governor, you won the first debate on intellect, and yet you lost it on heart.

BUSH: Just a minute.

WARNER: You'll get your turn.

DUKAKIS: I don't know if the vice president agrees with that.

WARNER: The American public admired your performance, but didn't seem to like you much. Now, Ronald Reagan has found his personal warmth to be a tremendous political asset. Do you think that a president has to be likable to be an effective leader?

DUKAKIS: Margaret, may I go back and just say to the vice president that I didn't raid the pension fund of Massachusetts you are dead wrong, George, we didn't do that. As a matter of fact, I'm the first governor in the history of my state to fund that pension system, and I'm very proud of that. (Applause) I have been in politics for twenty-five years, Margaret; I've won a lot of elections, I've lost a few, as you know, and learned from those losses. I won the Democratic nomination in fifty-one separate contests. I think I'm a reasonably likable guy. (Laughter, scattered applause) I'm serious though I think I'm a little more lovable these days than I used to be back in my youth when I began in my state legislature. But I'm also a serious guy. I think the presidency of the United States is a very serious office, and I think we have to address these issues in a very serious way. So I hope and expect that I will be liked by the people of this country as president of the United States; I certainly hope I will be liked by them on the 8th of November. (Laughter) But I also think it's important to be somebody who is willing to make those tough choices. Now, we have just heard two or three times from the vice president: he's not going to raise taxes. I repeat, within days after you made that pledge, you broke it; you said, well, maybe as a last resort we'll do it. And you supported legislation this year that's involved tax increases not once, but twice. So that pledge isn't realistic, and I think the vice president knows it; I think the people of this country know it. The fact of the matter is that the next president of the United States is going to have to go to the White House seriously, he is going to have to work with the Congress seriously he can't turn to the Congress and blame them for the fact that we don't have a balanced budget and that we have billions and billions of dollars in red ink. And I am going to be a president who is serious, I hope and expect will be liked by the American people. But more than that, to do the kind of job that I'm elected to do, will do it with as much good humor as I can, but at the same time will do it in a way which will achieve the goals we want for ourselves and our people. And I think we know what they are: a good strong future, a future in which there is opportunity for all of our citizens.

SHAW: One minute from the Vice President.

BUSH: I don't think it's a question of whether people like you or not to make you an effective leader. I think it's whether you share the broad dreams of the American people, whether you have confidence in the people's ability to get things done or whether you think it all should be turned over, as many of the liberals do, to Washington, D.C. You see, I think it's a question of values, not likability or loveability, it's a question in foreign affairs in experience, knowing world leaders, knowing how to build on a superb record of this administration in arms control, because you'd know exactly how to begin. You have to learn from experience that making unilateral cuts in defense system is not the way that you enhance peace. You've got to understand that it is only the United States that can stand for freedom and democracy around the world and we can't turn it over to the United Nations or other multilateral organizations. It is, though, trying to understand the heartbeat of the country. And I know these campaigns get knocked a lot, but I think I'd be a better President now for having had to travel to these communities and understand the family values and the importance of neighborhood. (Applause)

BUSH: Please.

SHAW: Margaret Warner for the Vice President.

WARNER: I'd like to follow up on that Mr. Vice President. The tenor of the campaign you've been running, in terms of both the issues and your rhetoric has surprised even some of your friends. Senator Mark Hatfield who's known your family a long time and who knew your father, the late Senator Prescott Bush, said, and I quote, "If his father were alive today, I'm sure his father would see it as a shocking transformation." Is Senator Hatfield right?

BUSH: What was he referring to?

WARNER: He was referring to your performance in the campaign.

BUSH: I think my dad would be pretty proud of me, because I think we've come a long long way and I think, you know three months ago, I remember some of the great publications in this country had written me off. And what I've had to do is define, not just my position, but to define his and I hope I've done it fairly. And the reason I've had to do that is that he ran on the left in the Democratic primary, ran firmly and ran with conviction and ran on his record. And then at that Democratic convention, they made a determination and they said there, ideology doesn't matter, just competence. And in the process the negatives began. It wasn't me that was there at that convention. Thank God I was up in the with Jimmy Baker camping out and I didn't have to hear all the personal attacks on me out of that Democratic convention. And I'm not the one that compared the President of the United States rotting from like a dead fish from the head down. I didn't do that. But I have defined the issues and I am not going to let Governor Dukakis go through this election without explaining some of these very liberal position he's the one a liberal, traditional liberal a progressive liberal Democrat. He's the one that brought up, to garner primary votes, the whole question of the ACLU. And I have enormous difference with the ACLU on their politic agenda. Not on their defending some minority opinion on the right or the left. I support that. But what I don't like is this left wing political agenda and therefore I have to help define that and if he's unwilling to do it, if he says ideology doesn't matter, I don't agree with him. (Applause)

SHAW: One minute from Governor Dukakis.

DUKAKIS: Well, Margaret, we've heard it again tonight and I'm not surprised, the labels. I guess the Vice President two or three times, said I was coming from the left. In 1980, President Reagan called you a liberal for voting for Federal gun control. And this is something Republicans have used for a long time. They tried it with Franklin Roosevelt and Harry Truman and John Kennedy. It's not labels. It's our vision of America. And we have two fundamentally different visions of America. The Vice President is complacent, thinks we ought to stick with the status quo, doesn't think we ought to move ahead, thinking things are okay as they are. I don't. I think this is a great country, because we've always wanted to do better, to make our country better, to make our lives better. We've always been a nation which was ambitious for America and we move forward. And that's the kind of America I want. That's the kind of leadership I want to provide. But I don't think these labels mean a thing and I would hope that tonight in the course of the rest of this campaign, we can have good solid disagreements on issues. There's nothing the matter with that. But let's stop labeling each other and lets' get to the heart of the matter which is the future of this country. (Applause)

SHAW: Andrea Mitchell, for the Vice President.

MITCHELL: Mr. Vice President, Governor. Mr. Vice President, let me return for a moment to the issue of the budget, because so much has already been put off limits in your campaign that most people do not believe that the flexible freeze alone will solve the problem of the deficit. So, let's turn to defense for a moment. Pentagon officials tell us that there is not enough money in the budget to handle military readiness, preparedness, as well as new weapons systems that have been proposed, as well as those already in the pipeline. You were asked in the first debate what new weapons systems you would cut. You mentioned three that had already been canceled. Can you tonight share with us three new weapons systems that you could?

BUSH: If I knew of three new weapons systems that I thought were purely waste and weren't protected by the Congress, they wouldn't be in the budget. They would not be in the budget, but you want one now? I'll give you one, that HMET, that heavy truck, that's cost what is it $850 million and the Pentagon didn't request it and, yet, a member of Congress, a very powerful one, put it in the budget. I think we can save money through this whole very sophisticated concept, Andrea, that I know you do understand of competitive strategies. It is new and it is very very different than what's happened, but it's not quite ready to be totally implemented. But it's very important. I think we can say, through the Packard Commission Report and I'm very proud that David Packard, the originator of that report, is strongly supporting me. So, it's not a question of saying our budget is full of a lot of waste. I don't believe that. I do think this. We're in the serious stages of negotiation with the Soviet Union on the strategic arms control talks. And we're protecting a couple of options in terms of modernizing our strategic forces. My Secretary of Defense is going to have to make a very difficult decision in which system to go forward with. But we are protecting both of them. We are moving forward with negotiations and, you see, I just think it would be dumb negotiating policy with the Soviets to cut out one or the other of the two options right now. The Soviets are modernizing. They continue to modernize and we can't simply we've got enough nuclear weapons, let's freeze. We can't do that. We have to have modernization, especially if we achieve the 50 percent reduction in strategic weapons that our President is taking the leadership to attain. And, so, that's the way I'd reply to it and I believe we can have the strongest and best defense possible if we modernize, if we go forward with competitive strategies and if we do follow through on the Packard Commission report.

SHAW: Governor Dukakis, one minute.

DUKAKIS: Well, Andrea, we've just had another example of why the Vice President's mathematics just don't add up. I think you know because you've covered these issues, that there's no way that we can build all of the weapons the Vice President says he wants to build within the defense budget. Everybody knows that including the people at the Pentagon. Now, my defense secretary is going to have a lot to do with those decisions, but it's going to be the President who's going to have to ultimately decide before that budget goes to the Congress what weapons systems are going to go and what are going to stay. We are not going to spend the billions and trillions that Mr. Bush wants to spend on Star Wars. We're not going to spend billions on MX's on railroad cars, which is a weapons system we don't need, can't afford and won't help our defense posture at all. We're not going to spend hundreds of millions on a space plane from Washington to Tokyo. Those are decisions that the chief executive has to make. Yes, we're going to have a strong and credible and effective nuclear deterrent. We're going to go forward with the Stealth and the D-5 and the advance cruise missile and good conventional forces. But the next President of the United States will have to make some tough and difficult decisions. I'm prepared to make them, the Vice President is not.

SHAW: Governor, Andrea has a question for you.

MITCHELL: Governor, continuing on that subject, then, you say we have to do something about conventional forces. You have supported the submarine launch missile, the D-5 you just referred to. Yet, from Jerry Ford to Jimmy Carter to Ronald Reagan, there has been a bipartisan consensus in favor of modernizing the land based missiles. Now, you have ruled out the MX and the Midgetman. More recently, some of your aides have hinted at some flexibility you might show about some other new form of missile. Can you tell us tonight why you have rejected the wisdom of people as diverse as Sam Nunn, Henry Kissinger, Al Gore, people in both parties and what type of land based missile would you consider?

DUKAKIS: Well, Andrea, today we have 13,000 strategic nuclear warheads, on land, on air and in the sea. That's an incredibly powerful nuclear deterrent. I don't rule out modernization, and there are discussions going on now in the Congress, I know with the Pentagon, about a less expensive modernized land-based leg of the triad. But there are limits to what we can spend. There are limits to this nation's ability to finance these weapons systems. And one of the things that the Vice President either ignores or won't address is the fact that you can't divorce our military security from our economic security. How can we build a strong America militarily that's teeter-tottering on a mountain of debt? And if we go forward with the kinds of policies that the Vice President is suggesting tonight and has in the past, that debt is going to grow bigger and bigger and bigger. So military security and economic security go hand in hand. And we will have a strong and effective and credible nuclear deterrent. We're going to have conventional forces that are well maintained, well equipped, well trained, well supported. And we have serious problems with our conventional forces at the present time, and they'll get worse unless we have a president who is willing to make some of these decisions. And we also have important domestic priorities, in education and housing and health care, in economic development, in job training, in the environment. And all of these things are going to have to be addressed. That's why I say again to all of you out there who have to deal with your household budgets and know how difficult it is that the next President has to do the same. I want the men and women of our Armed Forces to have the support they need to defend us; the support they need when they risk our lives to keep us free and to keep this country free. But we cannot continue to live on a credit card. We cannot continue to tell the American people that we're going to build all of these systems, and at the same time, invest in important things here at home, and be serious about building a strong and good America. And that's the kind of America I want to build.

SHAW: One minute for the Vice President.

BUSH: I think the foremost (Applause)

BUSH: Can we start the clock over? I held off for the applause.

SHAW: You can proceed, sir.

BUSH: I think the foremost responsibility of a president really gets down to the national security of this country. The Governor talks about limits, what we can't do, opposes these two modernization systems, talks now about well, we'll develop some new kind of a missile. It takes eight years, ten years, to do that. He talked about a nuclear freeze back at the time when I was in Europe trying to convince European public opinion that we ought to go forward with the deployment of the INF weapons. And thank God, the freeze people were not heard. They were wrong. And the result is, we deployed, and the Soviets kept deploying, and then we negotiated from strength. And now we have the first arms control agreement in the nuclear age to ban weapons. You just don't make unilateral cuts in the naive hope that the Soviets are going to behave themselves. World peace is important, and we have enhanced the peace. And I'm proud to have been a part of an administration that has done exactly that. Peace through strength works.