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Inside Politics

Transcript: Bush, Kerry debate domestic policies

Sen. John Kerry and President Bush debate domestic policy in Tempe, Arizona, Wednesday.
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Which do you think will decide the presidential election?
Domestic issues
Foreign policy
John F. Kerry
Bob Schieffer
George W. Bush

TEMPE, Arizona (CNN) -- The following is the second part of a running transcript of the final debate between President George W. Bush and Sen. John Kerry held Wednesday night at Arizona State University.

CBS News anchor Bob Schieffer moderated the debate that focused on domestic policy.

All answers are linked to the questions in the box to the right.

Question 8: Who is responsible for rising health care costs?

SCHIEFFER: Mr. President, let's have a new question. It goes to you. And let's get back to economic issues.

Health insurance costs have risen over 36 percent over the last four years according to The Washington Post. We're paying more. We're getting less.

I would like to ask you: Who bears responsibility for this? Is it the government? Is it the insurance companies? Is it the lawyers? Is it the doctors? Is it the administration?

BUSH: Gosh, I sure hope it's not the administration.

There's a -- no, look, there's a systemic problem. Health care costs are on the rise because the consumers are not involved in the decision-making process.

Most health care costs are covered by third parties. And therefore, the actual user of health care is not the purchaser of health care.

And there's no market forces involved with health care.

It's one of the reasons I'm a strong believer in what they call health savings accounts.

These are accounts that allow somebody to buy a low-premium, high-deductible catastrophic plan and couple it with tax-free savings.

Businesses can contribute, employees can contribute on a contractual basis. But this is a way to make sure people are actually involved with the decision-making process on health care.

Secondly, I do believe the lawsuits -- I don't believe, I know -- that the lawsuits are causing health care costs to rise in America. That's why I'm such a strong believer in medical liability reform.

In the last debate, my opponent said those lawsuits only caused the cost to go up by 1 percent. Well, he didn't include the defensive practice of medicine that costs the federal government some $28 billion a year and costs our society between $60 billion and $100 billion a year.

Thirdly, one of the reasons why there's still high cost in medicine is because this is -- they don't use any information technology. It's like if you looked at the -- it's the equivalent of the buggy and horse days, compared to other industries here in America.

And so, we've got to introduce high technology into health care. We're beginning to do it. We're changing the language. We want there to be electronic medical records to cut down on error, as well as reduce cost.

People tell me that when the health care field is fully integrated with information technology, it'll wring some 20 percent of the cost out of the system.

And finally, moving generic drugs to the market quicker.

And so, those are four ways to help control the costs in health care.

SCHIEFFER: Sen. Kerry?

KERRY: The reason health care costs are getting higher, one of the principal reasons is that this administration has stood in the way of common-sense efforts that would have reduced the costs.

Let me give you a prime example.

In the Senate we passed the right of Americans to import drugs from Canada. But the president and his friends took it out in the House, and now you don't have that right.

The president blocked you from the right to have less expensive drugs from Canada.

We also wanted Medicare to be able to negotiate bulk purchasing. The VA does that. The VA provides lower-cost drugs to our veterans. We could have done that in Medicare.

Medicare is paid for by the American taxpayer. Medicare belongs to you. Medicare is for seniors, who many of them are on fixed income, to lift them out of poverty.

But rather than help you, the taxpayer, have lower cost, rather than help seniors have less expensive drugs, the president made it illegal -- illegal -- for Medicare to actually go out and bargain for lower prices.

Result: $139 billion windfall profit to the drug companies coming out of your pockets. That's a large part of your 17 percent increase in Medicare premiums.

When I'm president, I'm sending that back to Congress and we're going to get a real prescription drug benefit.

Now, we also have people sicker because they don't have health insurance. So whether it's diabetes or cancer, they come to hospitals later and it costs America more.

We got to have health care for all Americans.

SCHIEFFER: Go ahead, Mr. President.

BUSH: I think it's important, since he talked about the Medicare plan, has he been in the United States Senate for 20 years? He has no record on reforming of health care. No record at all.

He introduced some 300 bills and he's passed five.

No record of leadership.

I came to Washington to solve problems.

I was deeply concerned about seniors having to choose between prescription drugs and food. And so I led.

And in 2006, our seniors will get a prescription drug coverage in Medicare.

SCHIEFFER: Sen. Kerry? Thirty seconds.

KERRY: Once again, the president is misleading America.

I've actually passed 56 individual bills that I've personally written and, in addition to that, and not always under my name, there is amendments on certain bills.

But more importantly, with respect to the question of no record, I helped write -- I did write, I was one of the original authors of the early childhood health care and the expansion of health care that we did in the middle of the 1990s. And I'm very proud of that.

So the president's wrong.

(Back to top)

Question 9: How will Kerry pay for an expanded health care plan?

SCHIEFFER: Let me direct the next question to you, Sen. Kerry, and again, let's stay on health care.

You have, as you have proposed and as the president has commented on tonight, proposed a massive plan to extend health-care coverage.

You're also talking about the government picking up a big part of the catastrophic bills that people get at the hospital.

And you have said that you can pay for this by rolling back the president's tax cut on the upper 2 percent.

You heard the president say earlier tonight that it's going to cost a whole lot more money than that.

I'd just ask you, where are you going to get the money?

KERRY: Well, two leading national news networks have both said the president's characterization of my health-care plan is incorrect. One called it fiction. The other called it untrue.

The fact is that my health-care plan, America, is very simple. It gives you the choice.

I don't force you to do anything. It's not a government plan.

The government doesn't require you to do anything. You choose your doctor. You choose your plan.

If you don't want to take the offer of the plan that I want to put forward, you don't have [to].

You can keep what you have today, keep a high deductible, keep high premiums, keep a high co-pay, keep low benefits.

But I got a better plan. And I don't think a lot of people are going to want to keep what they have today.

Here's what I do: We take over Medicaid children from the states so that every child in America is covered.

And in exchange, if the states want to -- they're not forced to, they can choose to -- they cover individuals up to 300 percent of poverty. It's their choice.

I think they'll choose it, because it's a net plus of $5 billion to them.

We allow you -- if you choose to, you don't have to -- but we give you broader competition to allow you to buy into the same health care plan that senators and congressmen give themselves.

If it's good enough for us, it's good enough for every American. I believe that your health care is just as important as any politician in Washington, D.C.

You want to buy into it, you can. We give you broader competition. That helps lower prices.

In addition to that, we're going to allow people 55 to 64 to buy into Medicare early. And most importantly, we give small business a 50 percent tax credit so that after we lower the costs of health care, they also get, whether they're self-employed or a small business, a lower cost to be able to cover their employees.

Now, what happens is when you begin to get people covered like that -- for instance in diabetes, if you diagnose diabetes early, you could save $50 billion in the health care system of America by avoiding surgery and dialysis.

It works. And I'm going to offer it to America.

SCHIEFFER: Mr. President?

BUSH: In all due respect, I'm not so sure it's credible to quote leading news organizations about -- oh, nevermind.

Anyway, let me quote the Lewin report.

The Lewin report is a group of folks who are not politically affiliated. They analyzed the senator's plan. It cost $1.2 trillion.

The Lewin report accurately noted that there are going to be 20 million people, over 20 million people added to government-controlled health care.

It would be the largest increase in government health care ever.

If you raise the Medicaid to 300 percent, it provides an incentive for small businesses not to provide private insurance to their employees.

Why should they insure somebody when the government's going to insure it for them?

It's estimated that 8 million people will go from private insurance to government insurance.

We have a fundamental difference of opinion. I think government-run health will lead to poor-quality health, will lead to rationing, will lead to less choice.

Once a health-care program ends up in a line item in the federal government budget, it leads to more controls.

And just look at other countries that have tried to have federally controlled health care. They have poor-quality health care.

Our health-care system is the envy of the world because we believe in making sure that the decisions are made by doctors and patients, not by officials in the nation's capital.


KERRY: The president just said that government-run health care results in poor quality.

Now, maybe that explains why he hasn't fully funded the VA, and the VA hospital is having trouble, and veterans are complaining.

Maybe that explains why Medicare patients are complaining about being pushed off of Medicare. He doesn't adequately fund it.

But let me just say to America: I am not proposing a government-run program.

That's not what I have. I have Blue Cross/Blue Shield.

Senators and congressmen have a wide choice. Americans ought to have it, too.

SCHIEFFER: Mr. President?

BUSH: Talk about the VA: We've increased VA funding by $22 billion in the four years since I've been president. That's twice the amount that my predecessor increased VA funding.

Of course we're meeting our obligation to our veterans, and the veterans know that.

We're expanding veterans' health care throughout the country.

We're aligning facilities where the veterans live now. Veterans are getting very good health care under my administration, and they will continue to do so during the next four years.

(Back to top)

Question 10: How will you fund Social Security?

SCHIEFFER: Mr. President, the next question is to you.

We all know that Social Security is running out of money, and it has to be fixed.

You have proposed to fix it by letting people put some of the money collected to pay benefits into private savings accounts. But the critics are saying that's going to mean finding $1 trillion over the next 10 years to continue paying benefits as those accounts are being set up.

So where do you get the money? Are you going to have to increase the deficit by that much over 10 years?

BUSH: First, let me make sure that every senior listening today understands that when we're talking about reforming Social Security, that they'll still get their checks.

I remember the 2000 campaign, people said: if George W. gets elected, your check will be taken away.

Well, people got their checks, and they'll continue to get their checks.

There is a problem for our youngsters, a real problem. And if we don't act today, the problem will be valued in the trillions.

And so I think we need to think differently.

We'll honor our commitment to our seniors. But for our children and our grandchildren, we need to have a different strategy.

And recognizing that, I called together a group of our fellow citizens to study the issue. It was a committee chaired by the late Senator Daniel Patrick Moynihan of New York, a Democrat.

And they came up with a variety of ideas for people to look at.

I believe that younger workers ought to be allowed to take some of their own money and put it in a personal savings account, because I understand that they need to get better rates of return than the rates of return being given in the current Social Security trust.

And the compounding rate of interest effect will make it more likely that the Social Security system is solvent for our children and our grandchildren.

I will work with Republicans and Democrats. It'll be a vital issue in my second term. It is an issue that I am willing to take on, and so I'll bring Republicans and Democrats together.

And we're of course going to have to consider the costs. But I want to warn my fellow citizens: The cost of doing nothing, the cost of saying the current system is OK, far exceeds the costs of trying to make sure we save the system for our children.

SCHIEFFER: Sen. Kerry?

KERRY: You just heard the president say that young people ought to be able to take money out of Social Security and put it in their own accounts.

Now, my fellow Americans, that's an invitation to disaster.

The CBO said very clearly that if you were to adopt the president's plan, there would be a $2 trillion hole in Social Security, because today's workers pay in to the system for today's retirees. And the CBO said -- that's the Congressional Budget Office; it's bipartisan -- they said that there would have to be a cut in benefits of 25 percent to 40 percent.

Now, the president has never explained to America, ever, hasn't done it tonight, where does the transitional money, that $2 trillion, come from?

He's already got $3 trillion, according to The Washington Post, of expenses that he's put on the line from his convention and the promises of this campaign, none of which are paid for.

Not one of them are paid for.

The fact is that the president is driving the largest deficits in American history. He's broken the pay-as-you-go rules.

I have a record of fighting for fiscal responsibility. In 1985, I was one of the first Democrats -- broke with my party. We balanced the budget in the '90s. We paid down the debt for two years.

And that's what we're going to do. We're going to protect Social Security. I will not privatize it. I will not cut the benefits. And we're going to be fiscally responsible. And we will take care of Social Security.

(Back to top)

Question 11: Will Social Security be left as a problem for future generations?

SCHIEFFER: Let me just stay on Social Security with a new question for Sen. Kerry, because, Sen. Kerry, you have just said you will not cut benefits.

Alan Greenspan, the chairman of the Federal Reserve, says there's no way that Social Security can pay retirees what we have promised them unless we recalibrate.

What he's suggesting, we're going to cut benefits or we're going to have to raise the retirement age.

We may have to take some other reform. But if you've just said, you've promised no changes, does that mean you're just going to leave this as a problem, another problem for our children to solve?

KERRY: Not at all. Absolutely not, Bob.

This is the same thing we heard -- remember, I appeared on "Meet the Press" with Tim Russert in 1990-something. We heard the same thing. We fixed it.

In fact, we put together a $5.6 trillion surplus in the '90s that was for the purpose of saving Social Security.

If you take the tax cut that the president of the United States has given -- President Bush gave to Americans in the top 1 percent of America -- just that tax cut that went to the top 1 percent of America would have saved Social Security until the year 2075.

The president decided to give it to the wealthiest Americans in a tax cut.

Now, Alan Greenspan, who I think has done a terrific job in monetary policy, supports the president's tax cut. I don't. I support it for the middle class, not that part of it that goes to people earning more than $200,000 a year.

And when I roll it back and we invest in the things that I have talked about to move our economy, we're going to grow sufficiently, it would begin to cut the deficit in half, and we get back to where we were at the end of the 1990s when we balanced the budget and paid down the debt of this country.

Now, we can do that.

Now, if later on after a period of time we find that Social Security is in trouble, we'll pull together the top experts of the country. We'll do exactly what we did it he 1990s. And we'll make whatever adjustment is necessary.

But the first and most important thing is to start creating jobs in America.

The jobs the president is creating pay $9,000 less than the jobs that we're losing. And this is the first president in 72 years to preside over an economy in America that has lost jobs, 1.6 million jobs.

Eleven other presidents -- six Democrats and five Republicans -- had wars, had recessions, had great difficulties; none of them lost jobs the way this president has.

I have a plan to put America back to work. And if we're fiscally responsible and put America back to work, we're going to fix Social Security.

SCHIEFFER: Mr. President?

BUSH: He forgot to tell you he voted to tax Social Security benefits more than one time. I didn't hear any plan to fix Social Security. I heard more of the same.

He talks about middle-class tax cuts. That's exactly where the tax cuts went. Most of the tax cuts went to low- and middle-income Americans. And now the tax code is more fair. Twenty percent of the upper-income people pay about 80 percent of the taxes in America today because of how we structured the tax cuts.

People listening out there know the benefits of the tax cuts we passed. If you have a child, you got tax relief. If you're married, you got tax relief. If you pay any tax at all, you got tax relief. All of which was opposed by my opponent.

And the tax relief was important to spur consumption and investment to get us out of this recession.

People need to remember: Six months prior to my arrival, the stock market started to go down. And it was one of the largest declines in our history. And then we had a recession and we got attacked, which cost us 1 million jobs.

But we acted. I led the Congress. We passed tax relief. And now this economy is growing. We added 1.9 million new jobs over the last 13 months.

Sure, there's more work to do. But the way to make sure our economy grows is not to raise taxes on small-business owners. It's not to increase the scope of the federal government. It's to make sure we have fiscal sanity and keep taxes low.

(Back to top)

Question 12: How do you view immigration?

SCHIEFFER: Let's go to a new question, Mr. President.

I got more e-mail this week on this question than any other question. And it is about immigration.

I'm told that at least 8,000 people cross our borders illegally every day. Some people believe this is a security issue, as you know. Some believe it's an economic issue. Some see it as a human-rights issue.

How do you see it? And what we need to do about it?

BUSH: I see it as a serious problem. I see it as a security issue, I see it as an economic issue, and I see it as a human-rights issue.

We're increasing the border security of the United States. We've got 1,000 more Border Patrol agents on the southern border.

We're using new equipment. We're using unmanned vehicles to spot people coming across.

And we'll continue to do so over the next four years. It's a subject I'm very familiar with. After all, I was a border governor for a while.

Many people are coming to this country for economic reasons. They're coming here to work.

If you can make 50 cents in the heart of Mexico, for example, or make $5 here in America, $5.15, you're going to come here if you're worth your salt, if you want to put food on the table for your families. And that's what's happening.

And so in order to take pressure off the borders, in order to make the borders more secure, I believe there ought to be a temporary worker card that allows a willing worker and a willing employer to mate up, so long as there's not an American willing to do that job, to join up in order to be able to fulfill the employers' needs.

That has the benefit of making sure our employers aren't breaking the law as they try to fill their workforce needs.

It makes sure that the people coming across the border are humanely treated, that they're not kept in the shadows of our society, that they're able to go back and forth to see their families. See, the card, it'll have a period of time attached to it.

It also means it takes pressure off the border. If somebody is coming here to work with a card, it means they're not going to have to sneak across the border. It means our border patrol will be more likely to be able to focus on doing their job.

Now, it's very important for our citizens to also know that I don't believe we ought to have amnesty. I don't think we ought to reward illegal behavior. There are plenty of people standing in line to become a citizen. And we ought not to crowd these people ahead of them in line.

If they want to become a citizen, they can stand in line, too.

And here is where my opponent and I differ. In September 2003, he supported amnesty for illegal aliens.

SCHIEFFER: Time's up. Senator?

KERRY: Let me just answer one part of the last question quickly, and then I'll come to immigration.

The American middle class family isn't making it right now, Bob.

And what the president said about the tax cuts has been wiped out by the increase in health care, the increase in gasoline, the increase in tuitions, the increase in prescription drugs.

The fact is, the take home pay of a typical American family as a share of national income is lower than it's been since 1929. And the take home pay of the richest 1 percent of Americans is the highest it's been since 1928.

Under President Bush, the middle class has seen their tax burden go up and the wealthiest's tax burden has gone down. Now that's wrong.

Now with respect to immigration reform, the president broke his promise on immigration reform. He said he would reform it. Four years later he is now promising another plan.

Here's what I'll do: Number one, the borders are more leaking today than they were before 9/11. The fact is, we haven't done what we need to do to toughen up our borders, and I will.

Secondly, we need a guest-worker program, but if it's all we have, it's not going to solve the problem.

The second thing we need is to crack down on illegal hiring. It's against the law in the United States to hire people illegally, and we ought to be enforcing that law properly.

And thirdly, we need an earned-legalization program for people who have been here for a long time, stayed out of trouble, got a job, paid their taxes, and their kids are American. We got to start moving them toward full citizenship, out of the shadows.

SCHIEFFER: Do you want to respond, Mr. President?

BUSH: Well, to say that the borders are not as protected as they were prior to September the 11th shows he doesn't know the borders. They're much better protected today than they were when I was the governor of Texas.

We have much more manpower and much more equipment there.

He just doesn't understand how the borders work, evidently, to say that. That is an outrageous claim.

And we'll continue to protect our borders. We're continuing to increase manpower and equipment.


KERRY: Four thousand people a day are coming across the border.

The fact is that we now have people from the Middle East, allegedly, coming across the border.

And we're not doing what we ought to do in terms of the technology. We have iris-identification technology. We have thumbprint, fingerprint technology today. We can know who the people are, that they're really the people they say they are when the cross the border.

We could speed it up. There are huge delays.

The fact is our borders are not as secure as they ought to be, and I'll make them secure.

(Back to top)

Question 13: Is it time to raise the minimum wage?

SCHIEFFER: Next question to you, Sen. Kerry.

The gap between rich and poor is growing wider. More people are dropping into poverty. Yet the minimum wage has been stuck at, what, $5.15 an hour now for about seven years. Is it time to raise it?

KERRY: Well, I'm glad you raised that question.

It's long overdue time to raise the minimum wage.

And, America, this is one of those issues that separates the president and myself.

We have fought to try to raise the minimum wage in the last years. But the Republican leadership of the House and Senate won't even let us have a vote on it. We're not allowed to vote on it.

They don't want to raise the minimum wage. The minimum wage is the lowest minimum wage value it has been in our nation in 50 years.

If we raise the minimum wage, which I will do over several years to $7 an hour, 9.2 million women who are trying to raise their families would earn another $3,800 a year.

The president has denied 9.2 million women $3,800 a year, but he doesn't hesitate to fight for $136,000 to a millionaire.

One percent of America got $89 billion last year in a tax cut, but people working hard, playing by the rules, trying to take care of their kids, family values, that we're supposed to value so much in America -- I'm tired of politicians who talk about family values and don't value families.

What we need to do is raise the minimum wage. We also need to hold onto equal pay. Women work for 76 cents on the dollar for the same work that men do. That's not right in America.

And we had an initiative that we were working on to raise women's pay. They've cut it off. They've stopped it. They don't enforce these kinds of things.

Now, I think that it a matter of fundamental right that if we raise the minimum wage, 15 million Americans would be positively affected.

We'd put money into the hands of people who work hard, who obey the rules, who play for the American Dream.

And if we did that, we'd have more consumption ability in America, which is what we need right in order to kick our economy into gear. I will fight tooth and nail to pass the minimum wage.

BUSH: Actually, Mitch McConnell had a minimum-wage plan that I supported that would have increased the minimum wage.

But let me talk about what's really important for the worker you're referring to. And that's to make sure the education system works. It's to make sure we raise standards.

Listen, the No Child Left Behind Act is really a jobs act when you think about it.

The No Child Left Behind Act says, "We'll raise standards. We'll increase federal spending."

But in return for extra spending, we now want people to measure -- states and local jurisdictions to measure to show us whether or not a child can read or write or add and subtract.

You cannot solve a problem unless you diagnose the problem. And we weren't diagnosing problems. And therefore just kids were being shuffled through the school.

And guess who would get shuffled through? Children whose parents wouldn't speak English as a first language just move through.

Many inner-city kids just move through. We've stopped that practice now by measuring early. And when we find a problem, we spend extra money to correct it.

I remember a lady in Houston, Texas, told me, "Reading is the new civil right," and she's right.

In order to make sure people have jobs for the 21st century, we've got to get it right in the education system, and we're beginning to close a minority achievement gap now.

You see, we'll never be able to compete in the 21st century unless we have an education system that doesn't quit on children, an education system that raises standards, an education that makes sure there's excellence in every classroom.

(Back to top)

Question 14: Would Bush like to overturn Roe v. Wade?

SCHIEFFER: Mr. President, I want to go back to something Sen. Kerry said earlier tonight and ask a follow-up of my own.

He said -- and this will be a new question to you -- he said that you had never said whether you would like to overturn Roe v. Wade. So I'd ask you directly, would you like to?

BUSH: What he's asking me is, will I have a litmus test for my judges? And the answer is, no, I will not have a litmus test. I will pick judges who will interpret the Constitution, but I'll have no litmus test.

SCHIEFFER: Sen. Kerry, you'd like to respond?

KERRY: Is that a new question or a 30-second question?

SCHIEFFER: That's a new question for Senator -- for President Bush.

KERRY: Which time limit...

SCHIEFFER: You have 90 seconds.

KERRY: Thank you very much.

Well, again, the president didn't answer the question.

I'll answer it straight to America. I'm not going to appoint a judge to the court who's going to undo a constitutional right, whether it's the First Amendment, or the Fifth Amendment, or some other right that's given under our courts today -- under the Constitution. And I believe that the right of choice is a constitutional right.

So I don't intend to see it undone.

Clearly, the president wants to leave in ambivalence or intends to undo it.

But let me go a step further. We have a long distance yet to travel in terms of fairness in America.

I don't know how you can govern in this country when you look at New York City and you see that 50 percent of the black males there are unemployed, when you see 40 percent of Hispanic children -- of black children in some cities -- dropping out of high school.

And yet the president who talks about No Child Left Behind refused to fully fund -- by $28 billion -- that particular program so you can make a difference in the lives of those young people.

Now right here in Arizona, that difference would have been $131 million to the state of Arizona to help its kids be able to have better education and to lift the property tax burden from its citizens. The president reneged on his promise to fund No Child Left Behind.

He'll tell you he's raised the money, and he has. But he didn't put in what he promised, and that makes a difference in the lives of our children.

SCHIEFFER: Yes, sir?

BUSH: Two things. One, he clearly has a litmus test for his judges, which I disagree with.

And secondly, only a liberal senator from Massachusetts would say that a 49 percent increase in funding for education was not enough.

We've increased funds. But more importantly, we've reformed the system to make sure that we solve problems early, before they're too late.

He talked about the unemployed. Absolutely we've got to make sure they get educated.

He talked about children whose parents don't speak English as a first language? Absolutely we've got to make sure they get educated.

And that's what the No Child Left Behind Act does.


KERRY: You don't measure it by a percentage increase. Mr. President, you measure it by whether you're getting the job done.

Five hundred thousand kids lost after-school programs because of your budget.

Now, that's not in my gut. That's not in my value system, and certainly not so that the wealthiest people in America can walk away with another tax cut.

$89 billion last year to the top 1 percent of Americans, but kids lost their after-school programs. You be the judge.


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