CAROLE SIMPSON: Good evening and welcome to this second of three presidential debates between the major candidates for president of the U.S. The candidates are the Republican nominee, President George Bush, the independent Ross Perot and Governor Bill Clinton, the Democratic nominee.

My name is Carole Simpson, and I will be the moderator for tonight's 90-minute debate, which is coming to you from the campus of the University of Richmond in Richmond, Virginia.

Now, tonight's program is unlike any other presidential debate in history. We're making history now and it's pretty exciting. An independent polling firm has selected an audience of 209 uncommitted voters from this area. The candidates will be asked questions by these voters on a topic of their choosing -- anything they want to ask about. My job as moderator is to, you know, take care of the questioning, ask questions myself if I think there needs to be continuity and balance, and sometimes I might ask the candidates to respond to what another candidate may have said.

Now, the format has been agreed to by representatives of both the Republican and Democratic campaigns, and there is no subject matter that is restricted. Anything goes. We can ask anything.

After the debate, the candidates will have an opportunity to make a closing statement.

So, President Bush, I think you said it earlier -- let's get it on.

PRESIDENT GEORGE BUSH: Let's go.

SIMPSON: And I think the first question is over here.

AUDIENCE QUESTION: Yes. I'd like to direct my question to Mr. Perot. What will you do as president to open foreign markets to fair competition from American business and to stop unfair competition here at home from foreign countries so that we can bring jobs back to the US?

ROSS PEROT: That's right at the top of my agenda. We've shipped millions of jobs overseas and we have a strange situation because we have a process in Washington where after you've served for a while you cash in, become a foreign lobbyist, make $30,000 a month, then take a leave, work on presidential campaigns, make sure you've got good contacts and then go back out.

Now, if you just want to get down to brass tacks, first thing you ought to do is get all these folks who've got these 1-way trade agreements that we've negotiated over the years and say fellas, we'll take the same deal we gave you. And they'll gridlock right at that point because for example, we've got international competitors who simply could not unload their cars off the ships if they had to comply -- you see, if it was a 2-way street, just couldn't do it. We have got to stop sending jobs overseas.

To those of you in the audience who are business people: pretty simple. If you're paying $12, $13, $14 an hour for a factory worker, and you can move your factory south of the border, pay $1 an hour for labor, hire a young -- let's assume you've been in business for a long time. You've got a mature workforce. Pay $1 an hour for your labor, have no health care -- that's the most expensive single element in making the car. Have no environmental controls, no pollution controls and no retirement. And you don't care about anything but making money. There will be a job-sucking sound going south.

If the people send me to Washington the first thing I'll do is study that 2000-page agreement and make sure it's a 2-way street.

One last point here. I decided I was dumb and didn't understand it so I called a "Who's Who" of the folks that have been around it, and I said why won't everybody go south; they said it will be disruptive; I said for how long. I finally got 'em for 12 to 15 years. And I said, well, how does it stop being disruptive? And that is when their jobs come up from a dollar an hour to $6 an hour, and ours go down to $6 an hour; then it's leveled again, but in the meantime you've wrecked the country with these kind of deals. We got to cut it out.

SIMPSON: Thank you, Mr. Perot. I see that the president has stood up, so he must have something to say about this.

BUSH: Carole, the thing that saved us in this global economic slowdown has been our exports, and what I'm trying to do is increase our exports. And if indeed all the jobs were going to move south because there are lower wages, there are lower wages now and they haven't done that. And so I have just negotiated with the president of Mexico the North American Free Trade Agreement -- and the prime minister of Canada, I might add -- and I want to have more of these free trade agreements, because export jobs are increasing far faster than any jobs that may have moved overseas. That's a scare tactic, because it's not that many. But any one that's here, we want to have more jobs here. And the way to do that is to increase our exports.

Some believe in protection. I don't; I believe in free and fair trade, and that's the thing that saved us. So I will keep on as president trying to get a successful conclusion to the GATT Round, the big Uruguay Round of trade which will really open up markets for our agriculture particularly. I want to continue to work after we get this NAFTA agreement ratified this coming year. I want to get one with Eastern Europe; I want to get one with Chile. And free and fair trade is the answer, not protection.

And, as I say, we've had tough economic times, and it's exports that have saved us, exports that have built.

SIMPSON: Governor Clinton.

GOVERNOR CLINTON: I'd like to answer the question, because I've actually been a governor for 12 years, so I've known a lot of people who have lost their jobs because of jobs moving overseas, and I know a lot of people whose plants have been strengthened by increasing exports.

The trick is to expand our export base and to expand trade on terms that are fair to us. It is true that our exports to Mexico, for example, have gone up and our trade deficit has gone down; it's also true that just today a record high trade deficit was announced with Japan.

So what is the answer? Let me just mention three things very quickly. Number one, make sure that other countries are as open to our markets as our markets are to them, and, if they're not, have measures on the books that don't take forever and a day to implement.

Number two, change the tax code. There are more deductions in the tax code for shutting plants down and moving overseas than there are for modernizing plant and equipment here. Our competitors don't do that. Emphasize and subsidize modernizing plant and equipment here, not moving plants overseas.

Number three, stop the federal government's program that now gives low-interest loans and job training funds to companies that will actually shut down and move to other countries, but we won't do the same thing for plants that stay here.

So more trade but on fair terms -- and favor investment in America.

SIMPSON: Thank you. I think we have a question over here.

AUDIENCE QUESTION: This is for Governor Clinton. In the real world, that is, outside of Washington, D.C., compensation and achievement are based on goals defined and achieved. My question is about the deficit. Would you define in specific dollar goals how much you would reduce the deficit in each of the 4 years of a Clinton administration and then enter into a legally binding contract with the American people, that if you did not achieve those goals that you would not seek a 2nd term? Answer yes or no and then comment on your answer, please.

CLINTON: No, and here's why. And I'll tell you exactly why. Because the deficit now has been building up for 12 years. I'll tell you exactly what I think can be done. I think we can bring it down by 50% in 4 years and grow the economy. Now, I could get rid of it in 4 years in theory on the books now, but to do it you'd have to raise taxes too much and cut benefits too much to people who need them and it would even make the economy worse.

Mr. Perot will tell you, for example, that the expert he hired to analyze his plan says that it will bring the deficit down in 5 years but it will make unemployment bad for 4 more years. So my view is, sir, you have to increase investment, grow the economy and reduce the deficit by controlling health care costs, prudent reductions in defense, cuts in domestic programs and asking the wealthiest Americans and foreign corporations to pay their fair share of taxes and investing and growing this economy.

I ask everybody to look at my economic ideas and 9 Nobel prize winners and over 500 economists and hundreds of business people, including a lot of Republicans said, this is the way you've got to go. If you don't grow the economy you can't get it done. But I can't foresee all the things that will happen, and I don't think a president should be judged solely on the deficit.

Let me also say, we're having an election today. You'll have a shot at me in 4 years and you can vote me right out if you think I've done a lousy job and I would welcome you to do that.

SIMPSON: Mr. President.

BUSH: Well, I'm a little confused here, because I don't see how you can grow the deficit down by raising people's taxes. You see, I don't think the American people are taxed too little. I think they're taxed too much. I went for one tax increase and when I make a mistake I admit it. I said that wasn't the right thing to do.

Governor Clinton's program wants to tax more and spend more -- $150 billion in new taxes, spend another $220. I don't believe that's the way to do it.

Here's some thing that'll help. Give us a balanced budget amendment. He always talks about Arkansas having a balanced budget and they do, but he has a balanced budget amendment. Have to do it. I'd like the government to have that. And I think it would discipline not only the Congress, which needs it, but also the executive branch.

I'd like to have what 43 governors have -- the line item veto, so if the Congress can't cut, and we've got a reckless spending Congress, let the president have a shot at it by wiping out things that are pork barrel or something of that nature.

I've proposed another one. Some sophisticates think it may be a little gimmicky. I think it's good. It's a check- off. It says to you as a taxpayer -- say you're going to pay a tax of 1000 bucks or something. You can check 10% of that if you want to, in the 1 box, and that 10%, $100, or if you're paying $10,000, whatever it is, $1000, check it off and make the government, make it lower the deficit by that amount.

And if the Congress won't do it, if they can't get together and negotiate how to do that, then you'd have a sequester across the board. You'd exempt Social Security -- I don't want to tax or touch Social Security. I'm the president that said hey, don't mess with Social Security, and we haven't.

So I believe that we need to control the growth of mandatory spending, back to this gentleman's question. That's the main growing thing in the budget. The program that the president -- two-thirds of the budget, I as president never get to look at, never get to touch. We've got to control that growth to inflation and population increase, but not raise taxes on the American people now. I just don't believe that would stimulate any kind of growth at all.

SIMPSON: How about you, Mr. Perot?

PEROT: Well, we're $4 trillion in debt. We're going into debt an additional $1 billion, little more than $1 billion every working day of the year.

Now, the thing I love about it -- I'm just a businessman. I was down in Texas taking care of business, tending to my family. This situation got so bad that I decided I'd better get into it. The American people asked me to get into it. But I just find it fascinating that while we sit here tonight we will go into debt an additional $50 million in an hour and a half.

Now, it's not the Republicans' fault, of course, and it's not the Democrats' fault. And what I'm looking for is who did it? Now, they're the 2 folks involved so maybe if you put them together, they did it.

Now, the facts are we have to fix it. I'm here tonight for these young people up here in the balcony from this college. When I was a young man, when I got out of the Navy I had multiple job offers. Young people with high grades can't get a job. People -- the 18- to 24-year-old high school graduates 10 years ago were making more than they are now. In other words, we were down to 18% of them were making -- 18- to 24-year- olds were making less than $12,000. Now that's up to 40%. And what's happened in the meantime? The dollar's gone through the floor.

Now, whose fault is that? Not the Democrats. Not the Republicans. Somewhere out there there's an extraterrestrial that's doing this to us, I guess. And everybody says they take responsibility. Somebody somewhere has to take responsibility for this.

Put it to you bluntly, American people. If you want me to be your president, we're going to face our problems. We'll down our debt. We'll pass on the American dream to our children, and I will not leave our children a situation that they have today.

When I was a boy it took 2 generations to double the standard of living. Today it will take 12 generations. Our children will not see the American dream because of this debt that somebody somewhere dropped on us.

SIMPSON: You're all wonderful speakers, and I know you have lots more to add, but I've talked to this audience, and they have lots of questions on other topics. Can we move to another topic, please? We have one up here, I think.

AUDIENCE QUESTION: Yes, I'd like to address all the candidates with this question. The amount of time the candidates have spent in this campaign trashing their opponents' character and their programs is depressingly large. Why can't your discussions and proposals reflect the genuine complexity and the difficulty of the issues to try to build a consensus around the best aspects of all proposals?

SIMPSON: Who wants to take that one? Mr. Perot, you have an answer for everything, don't you? Go right ahead, sir.

PEROT: No, I don't have an answer for everything. As you all know, I've been buying 30-minute segments to talk about issues. And tomorrow night on NBC, from 10:30 to 11 Eastern, we're going to talk about how you pay the debt down, so we're going to come right down to that one. We'll be on again Saturday night, 8 to 9 o'clock on ABC. So the point is --

BUSH: Like Jerry Brown, the 800 number.

PEROT: -- I couldn't agree with you more, couldn't agree with you more. And I have said again and again and again let's get off mud wrestling, let's get off personalities and let's talk about jobs, health care, crime, the things that concern the American people. I'm spending my money -- not PAC money, not foreign money, my money -- to take this message to the people.

SIMPSON: Thank you, Mr. Perot. So that seems directed; he would say it's you gentlemen that have been doing that. Mr. Clinton, Governor Clinton -- oh, President Bush, how would you like to respond?

BUSH: Well, in the first place, I believe that character is a part of being president. I think you have to look at it. I think that has to be a part of a candidate for president or being president. In terms of programs, I've submitted, what, 4 different budgets to the U.S. Congress in great detail. It's so heavy they'd give you a broken back. And everything in there says what I am for.

Now I've come out with a new agenda for America's renewal, a plan that I believe really will help stimulate the growth of this economy. My record on world affairs is pretty well known because I've been president for 4 years, so I feel I've been talking issues.

You know, nobody likes who shot John, but I think the first negative campaign run in this election was by Governor Clinton, and I'm not going to sit there and be a punching bag; I'm going to stand up and say, hey, listen, here's my side of it.

But character is an important part of the equation. The other night Governor Clinton raised my -- I don't know if you saw the debate the other night. You did -- suffered through that? Well, he raised the question of my father -- it was a good line, well rehearsed and well delivered. But he raised the question of my father and said, well, your father, Prescott Bush, was against McCarthy, you should be ashamed of yourself, McCarthyism. I remember something my dad told me -- I was 18 years old going to Penn Station to go on into the Navy, and he said write your mother -- which I faithfully did; he said serve your country -- my father was an honor, duty and country man; and he said tell the truth. And I've tried to do that in public life, all through it. That says something about character.

My argument with Governor Clinton -- you can call it mud wrestling, but I think it's fair to put in focus is -- I am deeply troubled by someone who demonstrates and organizes demonstration in a foreign land when his country's at war. Probably a lot of kids here disagree with me. But that's what I feel. That's what I feel passionately about. I'm thinking of Ross Perot's running mate sitting in the jail. How would he feel about it? But maybe that's generational. I don't know.

But the big argument I have with the governor on this is this taking different positions on different issues -- trying to be one thing to one person here that's opposing the NAFTA agreement and then for it -- what we call waffling. And I do think that you can't turn the White House into the Waffle House. You've got to say what you're for and you've got to --

SIMPSON: Mr. President, I'm getting time cues and with all due respect --

BUSH: Excuse me. I don't want to --

SIMPSON: I'm sorry.

BUSH: I don't want to --

SIMPSON: Governor Clinton.

BUSH: I get wound up because I feel strongly --

SIMPSON: Yes, you do.

CLINTON: Let me say first of all to you that I believe so strongly in the question you asked that I suggested this format tonight. I started doing these formats a year ago in New Hampshire and I found that we had huge crowds because all I did was let people ask questions and I tried to give very specific answers. I also had a program starting last year. I've been disturbed by the tone and the tenor of this campaign. Thank goodness the networks have a fact check so I don't have to just go blue in the face anymore. Mr. Bush said once again I was going to have $150 billion tax increase. When Mr. Quayle said that all the networks said, that's not true. He's got over $100 billion of tax cuts and incentives.

So I'm not going to take up your time tonight, but let me just say this. We'll have a debate in 4 days and we can talk about this character thing again. But the Washington Post ran a long editorial today saying they couldn't believe Mr. Bush was making character an issue and they said he was the greatest quote "political chameleon" for changing his positions of all times. Now, I don't want to get into that --

BUSH: Please don't get into the Washington Post.

CLINTON: Wait a minute. Let's don't -- you don't have to believe it. Here's my point. I'm not interested in his character. I want to change the character of the presidency. And I'm interested in what we can trust him to do and what you can trust me to do and what you can trust Mr. Perot to do for the next 4 years. So I think you're right and I hope the rest of the night belongs to you.

SIMPSON: May I -- I talked to this audience before you gentlemen came and I asked them about how they felt about the tenor of the campaign. Would you like to let them know what you thought about that, when I said are you pleased with how the campaign's been going? (Audience: "No.")

SIMPSON: Who wants to say why you don't like the way the campaign is going? We have a gentleman back here.

AUDIENCE QUESTION: And forgive the notes here but I'm shy on camera.

The focus of my work as a domestic mediator is meeting the needs of the children that I work with, by way of their parents, and not the wants of their parents. And I ask the three of you, how can we, as symbolically the children of the future president, expect the two of you, the three of you to meet our needs, the needs in housing and in crime and you name it, as opposed to the wants of your political spin doctors and your political parties?

SIMPSON: So your question is?

AUDIENCE QUESTION: Can we focus on the issues and not the personalities and the mud? I think there's a need, if we could take a poll here with the folks from Gallup perhaps, I think there's a real need here to focus at this point on the needs.

SIMPSON: How do you respond? How do you gentlemen respond to --

CLINTON: I agree with him.

BUSH: Let's do it.

SIMPSON: President Bush?

BUSH: Let's do it. Let's talk about programs for children.

AUDIENCE QUESTION: Could we cross our hearts? It sounds silly here but could we make a commitment? You know, we're not under oath at this point but could you make a commitment to the citizens of the U.S. to meet our needs, and we have many, and not yours again? I repeat that. It's a real need, I think, that we all have.

BUSH: I think it depends how you define it. I mean, I think in general, let's talk about these issues. Let's talk about the programs. But in the presidency, a lot goes into it. Caring goes into it. That's not particularly specific. Strength goes into it. That's not specific. Standing up against aggression. That's not specific in terms of a program. This is what a president has to do.

So in principle, though, I'll take your point and think we ought to discuss child care or whatever else it is.

SIMPSON: And you, too?

CLINTON: Ross had his hand up.

SIMPSON: Yes.

PEROT: Just no hedges, no ifs, ands and buts. I'll take the pledge because I know the American people want to talk about issues and not tabloid journalism. So I'll take the pledge and will stay on the issues.

Now, just for the record, I don't have any spin doctors. I don't have any speechwriters. Probably shows. I make those charts you see on television. But you don't have to wonder if it's me talking. See, what you see is what you get and if you don't like it, you got two other choices, right?

CLINTON: Wait a minute. I want to say just one thing now, Ross, in fairness. The ideas I express are mine. I've worked on these things for 12 years and I'm the only person up here who hasn't been part of Washington in any way for the last 20 years. So I don't want the implication to be that somehow everything we say is just cooked up and put in our head by somebody else. I worked 12 years very hard as a governor on the real problems of real people. I'm just as sick as you are by having to wake up and figure out how to defend myself every day. I never thought I'd ever be involved in anything like this.

PEROT: May I finish?

SIMPSON: Yes, you may finish.

PEROT: Very briefly?

SIMPSON: Yes, very briefly.

PEROT: And I don't have any foreign money in my campaign. I don't have any foreign lobbyists on leave in my campaign. I don't have any PAC money in my campaign. I've got 5.5 million hard-working people who put me on the ballot, and I belong to them. And they're interested in what you're interested in.

I take the pledge. I've already taken the pledge on cutting the deficit in half. I never got to say that. There's a great young group, Lead or Leave, college students, young people, who don't want us to spend their money. I took the pledge we'd cut it out.