SIMPSON: Brief, Governor Clinton. Thank you. We have a question right here.

AUDIENCE QUESTION: Yes. How has the national debt personally affected each of your lives? And if it hasn't, how can you honestly find a cure for the economic problems of the common people if you have no experience in what's ailing them?

PEROT: May I answer that?

SIMPSON: Well, Mr. Perot -- yes, of course.

PEROT: Who do you want to start with?

AUDIENCE QUESTION: My question is for each of you, so-

PEROT: It caused me to disrupt my private life and my business to get involved in this activity. That's how much I care about it. And believe me, if you knew my family and if you knew the private life I have, you would agree in a minute that that's a whole lot more fun than getting involved in politics.

But I have lived the American dream. I came from very modest background. Nobody's been luckier than I've been, all the way across the spectrum, and the greatest riches of all are my wife and children. That's true of any family.

But I want all the children -- I want these young people up here to be able to start with nothing but an idea like I did and build a business. But they've got to have a strong basic economy and if you're in debt, it's like having a ball and chain around you.

I just figure, as lucky as I've been, I owe it to them and I owe it to the future generations and on a very personal basis, I owe it to my children and grandchildren.

SIMPSON: Thank you, Mr. Perot. Mr. President.

BUSH: Well, I think the national debt affects everybody.

AUDIENCE QUESTION: You personally.

BUSH: Obviously it has a lot to do with interest rates --

SIMPSON: She's saying, "you personally"

AUDIENCE QUESTION: You, on a personal basis -- how has it affected you?

SIMPSON: Has it affected you personally?

BUSH: I'm sure it has. I love my grandchildren --

AUDIENCE QUESTION: How?

BUSH: I want to think that they're going to be able to afford an education. I think that that's an important part of being a parent. If the question -- maybe I -- get it wrong. Are you suggesting that if somebody has means that the national debt doesn't affect them?

AUDIENCE QUESTION: What I'm saying is --

BUSH: I'm not sure I get -- help me with the question and I'll try to answer it.

AUDIENCE QUESTION: Well, I've had friends that have been laid off from jobs.

BUSH: Yeah.

AUDIENCE QUESTION: I know people who cannot afford to pay the mortgage on their homes, their car payment. I have personal problems with the national debt. But how has it affected you and if you have no experience in it, how can you help us, if you don't know what we're feeling?

SIMPSON: I think she means more the recession -- the economic problems today the country faces rather than the deficit.

BUSH: Well, listen, you ought to be in the White House for a day and hear what I hear and see what I see and read the mail I read and touch the people that I touch from time to time. I was in the Lomax AME Church. It's a black church just outside of Washington, D.C. And I read in the bulletin about teenage pregnancies, about the difficulties that families are having to make ends meet. I talk to parents. I mean, you've got to care. Everybody cares if people aren't doing well.

But I don't think it's fair to say, you haven't had cancer. Therefore, you don't know what's it like. I don't think it's fair to say, you know, whatever it is, that if you haven't been hit by it personally. But everybody's affected by the debt because of the tremendous interest that goes into paying on that debt everything's more expensive. Everything comes out of your pocket and my pocket. So it's that.

But I think in terms of the recession, of course you feel it when you're president of the U.S. And that's why I'm trying to do something about it by stimulating the export, vesting more, better education systems.

Thank you. I'm glad you clarified it.

SIMPSON: Governor Clinton.

CLINTON: Tell me how it's affected you again.

AUDIENCE QUESTION: Um --

CLINTON: You know people who've lost their jobs and lost their homes?

AUDIENCE QUESTION: Well, yeah, uh-huh.

CLINTON: Well, I've been governor of a small state for 12 years. I'll tell you how it's affected me. Every year Congress and the president sign laws that make us do more things and gives us less money to do it with. I see people in my state, middle class people -- their taxes have gone up in Washington and their services have gone down while the wealthy have gotten tax cuts.

I have seen what's happened in this last 4 years when -- in my state, when people lose their jobs there's a good chance I'll know them by their names. When a factory closes, I know the people who ran it. When the businesses go bankrupt, I know them.

And I've been out here for 13 months meeting in meetings just like this ever since October, with people like you all over America, people that have lost their jobs, lost their livelihood, lost their health insurance.

What I want you to understand is the national debt is not the only cause of that. It is because America has not invested in its people. It is because we have not grown. It is because we've had 12 years of trickle down economics. We've gone from first to twelfth in the world in wages. We've had 4 years where we've produced no private sector jobs. Most people are working harder for less money than they were making ten years ago.

It is because we are in the grip of a failed economic theory. And this decision you're about to make better be about what kind of economic theory you want, not just people saying I'm going to go fix it but what are we going to do? I think we have to do is invest in American jobs, American education, control American health care costs and bring the American people together again.

AUDIENCE QUESTION: Thank you.

SIMPSON: Thank you, Governor Clinton.

We are a little more than halfway through this program and I'm glad we're getting the diversity of questions that we are, and I don't want to forget these folks on the wings over here so let's go over here. Do you have a question?

AUDIENCE QUESTION: Yes, I do. My name is Ben Smith. I work in the financial field, counseling retirees, and I'm personally concerned about three major areas.

One is the Social Security Administration or trust fund is projected to be insolvent by the year 2036. And we funded the trust fund with IOUs in the form of Treasury bonds. The Pension Guarantee Fund, which backs up our private retirement plans for retirees, is projected to be bankrupt by the year 2026, not to mention the cutbacks by private companies. And Medicare is projected to be bankrupt maybe as soon as 1997.

And I would like from each of you a specific response as to what you intend to do for retirees relative to these issues, not generalities but specifics because I think they're very disturbing issues.

SIMPSON: President Bush, may we start with you?

BUSH: Well, the Social Security -- you're an expert and I could, I'm sure, learn from you the details of the Pension Guarantee Fund and the Social Security Fund. The Social Security system was fixed about 5 years, and I think it's projected out to be sound beyond that. So at least we have time to work with it.

But on all of these things, a sound economy is the only way to get it going. Growth in the economy is gonna add to the overall prosperity and wealth. I can't give you a specific answer on Pension Guarantee Fund. All I know is that we have firm government credit to guarantee the pensions. And that is very important. But it's -- the full faith and credit of the U.S., in spite of our difficulties, is still pretty good. It's still the most respected credit.

So I would simply say, as these dates get close, you're going to have to reorganize and refix as we did with the Social Security Fund. And I think that's the only answer. But the more immediate answer is to do what this lady was suggesting we do, and that is to get this deficit down and get on without adding to the woes, and then restructure.

One thing I've called for that has been stymied, and I'll keep on working for it, is a whole financial reform legislation. It is absolutely essential in terms of bringing our banking system and credit system into the new age instead of having it living back in the dark ages. And it's a big fight. And I don't want to give my friend Ross another shot at me here but I am fighting with the Congress to get this through. And you can't just go up and say I'm going to fix it. You've got some pretty strong-willed guys up there that argue with you.

But that's what the election's about. I agree with the governor. That's what the election's about. And sound fiscal policy is the best answer, I think, to all the three problems you mentioned.

SIMPSON: Thank you. Mr. Perot.

PEROT: On the broad issue here, when you're trying to solve a problem, you get the best plans. You have a raging debate about those plans. Then out of that debate, with leadership, comes consensus. Then, if the plans are huge and complex like health care, I would urge you to implement pilot programs. Like the old carpenter says measure twice, cut once. Let's make sure this thing's as good as we all think it is at the end of the meeting.

Then finally, our government passes laws and freezes the plan in concrete. Anybody that's ever built a successful business will tell you you optimize, optimize, optimize after you've put something into effect. The reason Medicare and Medicaid are a mess is we froze them.

Everybody knows how to fix them. There are people all over the federal government, if they could just touch it with a screwdriver, could fix it.

Now, back over here. See, we've got a $4 trillion debt and only in America would you have $2.8 trillion of it or 70% of it financed 5 years or less. Now, that's another thing for you to think about when you go home tonight. You don't finance long-term debt with short-term money. Why did our government do it? To get the interest rates down. A 1% increase in interest rates in that $2.8 trillion is $28 billion a year.

Now, when you look at what Germany pays for money and what we don't pay for money, you realize there's quite a spread, right, and you realize this is a temporary thing and there's going to be another sucking sound that runs our deficit through the roof.

You know, and everybody's ducking it so I'm gonna say it, that we are not letting that surplus stay in the bank. We are not investing that surplus like a pension fund. We are spending that surplus to make the deficit look smaller to you than it really is.

Now, that -- put you in jail in corporate America if you kept books that way but in government it's just kind of the way things are. That's because it comes at you, not from you.

Now then, that money needs to be -- they don't even pay interest on it. They just write a note for the interest.

SIMPSON: Mr. Perot, can you wrap it up?

PEROT: Do you want to fix the problem or sound-bite it? I understand the importance of time but see, here's how we get to this mess we're in.

SIMPSON: But we've got to be fair.

PEROT: This is just 1 of 1000.

Now then, to nail it, there's one way out -- a growing, expanding job base. A growing, expanding job base to generate the funds and the tax revenues to pay off the mess and rebuild America. We've got to double-hit. If we're $4 trillion down, we should have everything perfect, but we don't. We've got to pay it off and build money to renew it- -spend money to renew it, and that's going to take a growing, expanding job base. That is priority one in this country. Put everybody that's breathing to work. And I'd love to be out of workers and have to import them, like some of our international competitors.

SIMPSON: Mr. Perot, I'm sorry. I'm going to --

PEROT: Sorry.

SIMPSON: And I don't want to sound-bite you but we are trying to be fair --

PEROT: Okay.

SIMPSON: -- to everyone.

PEROT: Absolutely. I apologize.

SIMPSON: All right. Governor Clinton.

CLINTON: I think I remember the question.

(Laughter.) Let me say first of all, I want to answer your specific question but first of all, we all agree that there should be a growing economy. What you have to decide is who's got the best economic plan. And we all have ideas out there, and Mr. Bush has a record. So I don't want you to read my lips and I sure don't want you to read his. I do hope you will read our plans.

Now, specifically, one, on Medicare, it is not true that everyone knows how to fix it. There are different ideas -- the Bush plan, the Perot plan, the Clinton -- we have different ideas. I am convinced, having studied health care for a year hard and talking to hundreds and hundreds of people all across America, that you cannot control the cost of Medicare until you control the cost of private health care and public health care, with managed competition, ceiling on cost, and radical reorganization of the insurance markets. You've got to do that; we got to get those costs down.

Number 2, with regard to Social Security, that program -- a lot of you may not know this -- it produces a $70 billion surplus a year. Social Security is in surplus $70 billion. Six increases in the payroll tax -- that means people with incomes of $51,000 a year or less pay a disproportionally high share of the federal tax burden, which is why I want some middle-class tax relief.

What do we have to do? By the time the century turns, we have got to have our deficit under control, we have to work out of so that surplus is building up so when the baby boomers like me retire, we're okay.

Number 3, on the pension funds, I don't know as much about it, but I will say this. What I would do is to bring in the pension experts of the country, take a look at it, and strengthen the pension requirements further, because it's not just enough to have the guarantee. We had a guarantee on the S&Ls, right? We had a guarantee -- and what happened? You picked up a $500-billion bill because of the dumb way the federal government deregulated it.

So I think we are going to have to change and strengthen the pension requirements on private retirement plans.

SIMPSON: Thank you. I think we have a question here on international affairs, hopefully.

AUDIENCE QUESTION: We've come to a position where we're in the new world order, and I'd like to know what the candidates feel our position is in this new world order, and what our responsibilities are as a superpower?

SIMPSON: Mr. President.

BUSH: Well, we have come to that position. Since I became president, 43, 44 countries have gone democratic, no longer totalitarian, no longer living under dictatorship or communist rule. This is exciting. New world order to me means freedom and democracy. I think we will have a continuing responsibility, as the only remaining superpower, to stay involved. If we pull back in some isolation and say we don't have to do our share, or more than our share, anymore, I believe you are going to just ask for conflagration that we'll get involved in the future.

NATO, for example, has kept the peace for many, many years, and I want to see us keep fully staffed in NATO so we'll continue to guarantee the peace in Europe.

But the exciting thing is, the fear of nuclear war is down. And you hear all the bad stuff that's happened on my watch; I hope people will recognize that this is something pretty good for mankind. I hope they'll think it's good that democracy and freedom is on the move. And we're going to stay engaged, as long as I'm president, working to improve things.

You know, it's so easy now to say, hey, cut out foreign aid, we got a problem at home. I think the U.S. has to still have the Statue of Liberty as a symbol, caring for others. Right this very minute we're sending supplies in to help these little starving kids in Somalia. It's the U.S. that's taken the lead in humanitarian aid into Bosnia. We're doing this all around the world.

Yes, we got problems at home. And I think I got a good plan to help fix those problems at home. But because of our leadership, because we didn't listen to the freeze -- the nuclear-freeze group, do you remember -- freeze it, back in the late 70s -- freeze, don't touch it; we're going to lock it in now or else we'll have war. President Reagan said no, peace through strength. It worked. The Soviet Union is no more, and now we're working to help them become totally democratic through the Freedom Support Act that I led on, a great Democratic ambassador, Bob Strauss, over there, Jim Baker, all of us got this thing passed -- through cooperation, Ross -- it worked with cooperation, and you're for that, I'm sure, helping Russia become democratic.

So the new world order to me means freedom and democracy, keep engaged, do not pull back into isolation. And we are the U.S., and we have a responsibility to lead and to guarantee the security.

If it hadn't been for us, Saddam Hussein would be sitting on top of three-fifths of the oil supply of the world and he'd have nuclear weapons. And only the U.S. could do this. Excuse me, Carole.

SIMPSON: Thank you. Mr. Perot.

PEROT: Well, it's cost-effective to help Russia succeed in its revolution; it's pennies on the dollar compared to going back to the Cold War. Russia is still very unstable; they could go back to square one, and worse. All the nuclear weapons are not dismantled. I am particularly concerned about the intercontinental weapons, the ones that can hit us. We've got agreements, but they are still there.

With all this instability and breaking into republics, and all the Middle Eastern countries going over there and shopping for weapons, we've got our work cut out for us. So we need to stay right on top of that and constructively help them move toward democracy and capitalism.

We have to have money to do that. We have to have our people at work. See, for 45 years we were preoccupied with the Red Army. I suggest now that our number one preoccupation is red ink and our country and we've got to put our people back to work so that we can afford to do these things we want to do in Russia. We cannot be the policeman for the world any longer. We spent $300 billion a year defending the world. Germany and Japan spend around $30 billion a piece. If I can get you to defend me and I can spend all my money building industry that's a home run for me.

Coming out of World War II it made sense. Now, the other superpowers need to do their part. I'll close on this point. You can't be a superpower unless you're an economic superpower. If we're not an economic superpower, we're a used to be and we will no longer be a force for good throughout the world. And if nothing else gets you excited about rebuilding our industrial base maybe that will because job one is to put our people back to work.

SIMPSON: Governor Clinton, the president mentioned Saddam Hussein. Your vice president and you have had some words about the president and Saddam Hussein. Would you care to comment?

CLINTON: I'd rather answer her question first and then I'll be glad to. Because the question you ask is important. The end of the Cold War brings an incredible opportunity for change. Winds of freedom blowing around the world, Russia demilitarizing. And it also requires us to maintain some continuity -- some bipartisan American commitment to certain principles. And I would just say there are three things that I would like to say -- number one -- we do have to maintain the world's strongest defense. We may differ about what the elements of that are.

I think that defense needs to be -- with fewer people in permanent armed services but with greater mobility on the land, in the air and on the sea, with a real dedication to continuing development of high technology weaponry and well trained people. I think we're going to have to work to stop the proliferation of weapons of mass destruction. Got to keep going until all those nuclear weapons in Russia are gone and the other republics. Number 2, if you don't rebuild the economic strength of this country at home, we won't be a superpower. We can't have any more instances like what happened when Mr. Bush went to Japan and the Japanese prime minister said he felt sympathy for our country. We have to be the strongest economic power in the world. That's what got me into this race, so we could rebuild the American economy.

And number three, we need to be a force for freedom and democracy and we need to use our unique position to support freedom, whether it's in Haiti or in China or in any other place, wherever the seeds of freedom are sprouting. We can't impose it, but we need to nourish it and that's the kind of thing that I would do as president -- follow those three commitments into the future.