The Real State of the Union

January 14, 2003

Let me say how pleased I am to be here sponsored by the New America Foundation and the Atlantic Monthly. And let me do a shameless plug for a book - the author of which you've heard already - it's a book that came from the folks that are involved with the New America Foundation, and it's called The Radical Center. There are many books that we call, from a government point of view, "self-help books." This is a very readable book. I don't agree with all the ideas, but there are an awful lot of very good ones there and the challenge is to get from where we are to being able to accept and discuss some of the ideas in that book, so if you haven't bought it yet you should. You'll enrich the Foundation and its authors, and you'll also find a book that I managed to get through on a cross-country plane trip, which is my measure of how easy a book is to read.

You will not hear much about the real issues in the State of the Union address, which is coming up later this month. And that is unfortunate, and that is not simply a product of the problems with the President and his Administration, although in my position, of course, I tend to focus on those differences. It is also a symptom of the problem of my own party in Congress, because the plain truth of the matter is that we're debating the wrong issues in Congress.

I'll give you many examples, but I want to start with the most important. I am a member of a rare breed that is both fiscally conservative and socially progressive. I've been Governor so long that I've actually been through two recessions instead of one, and I came to office in 1991 in the worst recession in New England since the depression. It was a very difficult time, we had to cut the budget and we had to also cut income taxes. I did that not because I'm an ideological devotee of income tax cuts, but because we had the highest marginal income taxes in the United States and you don't get new jobs coming to your state if you have the highest marginal income taxes in the United States.

Since that time, eleven or twelve years ago, we've pared down our debt by 23%, we've gone from the worst bond rating in New England to the best bond rating in New England and today we are not cutting higher education, we are not cutting K-12 education, we are not cutting the number of people who are eligible for Medicaid. Why? Because we set aside an enormous rainy day fund. We used the surpluses to pay off the debt, and we invested the surplus in one-time expenditures such as building new capital projects, and I did not allow the legislature ever to spend on ongoing operating revenues more than the growth of the state domestic product. If we only had that kind of fiscal management in the United States of America -- think what a strong country we would be.

One of the lovely partisan plugs I have is that we have not had a Republican president who's balanced the budget in 34 years. And since this is Washington, I'll add the caveat that in fact we may not have had one since Eisenhower, because the last budget balanced by a Republican was the 1969 budget, and many would argue that that was really Johnson's budget. Now, that is a pretty sad commentary about the party that has the reputation among Americans of being the fiscally responsible party. The truth is that if you want a fiscally responsible government, you are much more likely to get it if you vote for a Democrat than if you vote for a Republican. That is a fact.

The two parties are about to debate in Congress whether new tax cuts should be 600 and some-odd billion dollars or $136 billion. That is not the right debate. The right debate is whether we should have a tax cut at all, because we are facing a $350 billion deficit next year, the largest deficit in the history of the United States, and that does not include the money that we are lining up to spend by invading Iraq. Poor old Larry Lindsay got fired for telling the truth, which is that it's going to cost $250 billion dollars. Even if you believe the new guy, it's $50 billion. Harry Truman at least had the grace to cut social programs in order to pay for the war in Korea.

I call this the Argentine Fiscal Policy - we are headed down a path in this country of borrow and spend, borrow and spend. George Bush 41 had it right: this is voodoo economics, and we ought to say, "enough." The Democrats ought to stand up to the President and say, "Mr. President, we think we ought to stimulate the economy and we love the idea of helping middle class people, but the right thing to do is to repeal your tax cut because it did nothing to stimulate the economy and let's not talk any more about tax cuts until we have found, Mr. President, how we are going to pay our bills, how we're going to balance the budget."

And everybody is so afraid to talk about that in my party because they see the President's popularity ratings and they think, boy, people really want tax cuts; we'd better not say anything about it. The chief characteristic of American politicians of both parties is that they constantly underestimate the American voters, who are much smarter than politicians think they are. Most Americans understand that you spend a dollar once, not twice.

If you say, "Shall we repeal the tax cut?" people will shuffle their feet and say "No, probably not." If you say, "Would you rather have a tax cut or would you rather have a prescription benefit for Medicare? Would you prefer a tax cut or shall we fully-fund special education so people might be able to lower their property taxes? Would you prefer a tax cut or shall we restore the 20% transportation funds going to the states that are now being cut because of the enormous deficits as far as the eye can see?" Every single time the vast majority of Americans will pick better roads, better schools, and better health care. And no one in my party or the President's party is giving Americans the choice. I'm going to do that.

Let me talk about domestic policy. In 1948, Harry Truman -- hardly a left wing radical -- added to our platform the notion that has been adopted by every other country in the industrialized world, that we ought to have health insurance for every American. Jimmy Carter tried it. Bill Clinton tried it. And it failed. There is no particular reason that we should not have health care for all Americans. I'm going to take a second to tell you how I think that can be done, because clearly there were a lot of mistakes made in the 1990s, some of which I had some connection with in terms of selling a health care plan that would cover everybody.

In Vermont, everybody under 18 has health insurance. We expanded Medicaid so that it's a middle class entitlement and we cover everybody under 18 with Medicaid if they don't have private insurance. So we essentially have 96% covered, 3% eligible, so we have 99% of all our kids eligible to have health insurance. If we can do that in a small rural state with the 26th largest income in the country, certainly we can do that in the United States of America, budget deficit notwithstanding. Let me tell you very briefly how I want to do it. It's partly political, and it's partly based on my experience of what works and what can pass.

I want to expand Medicaid to cover everybody under the age of 23. It's dirt cheap; we did it while we were cutting taxes and cutting the budget. Taking care of kids doesn't cost anything. I've never met a 20 year old who was willing to go to a physician; if you give them a voucher to buy health care they're simply going to go buy a Harley-Davidson and then they'll go see a physician. So health care for everybody up to 23 is a no-brainer and it's cheap to do. The way you do it is simply to tell the states if you guarantee health care for everybody up to 23 with Medicaid, the federal government will take over your responsibilities for poor seniors. The states get a great deal out of that. The dual-eligibles are much more expensive than kids are, and it's a much faster rising item in the state's budget. An over 65 prescription benefit added to Medicare makes that a reasonable insurance policy. It can't be too expensive. But it can be done.

Between ages 23 and 65, we can keep the system we have, which is the employer-based system. We would simply subsidize small businesses, individuals who work for themselves, and individuals who work for corporations that don't give health insurance or work part-time. If we do that, the insurance companies will like it because we send more business their way, although they may have to have large pools. We'd have to have guaranteed issue and community ratings as we do in Vermont. If we do that, the doctors and hospitals are happy because they see less uncompensated care. If we do that the National Federation of Independent Businesses doesn't fight us, because many of their members are now getting help buying health care. If we do that, we stimulate the economy, because the part of the economy that creates the largest number of jobs in this country is the small business sector, which we do very little for, and their biggest single problem is coping with the ever-expanding and rapidly rising cost of health care.

So with this system that I just laid out, we could get it through Congress, because the only interest group we'd have to take on is the pharmaceutical lobby; it's a big lobby, but at least we wouldn't be taking on five interest groups at once. Secondly, it makes sense and it stimulates the economy because it helps that section of the economy which is more vulnerable and is more likely to produce jobs. And thirdly, of course, it provides every American with health insurance. How do we pay for it? The cost is approximately half of the President's tax cut, so I'll leave it to your imagination how I want to pay for it.

This is another example of debating the wrong issue. For the past 8 years the United States Congress has been debating about whether to pass the Republican or the Democratic version of the Patients' Bill of Rights. The argument is about whether or not you can sue your HMO. I just get a kick out of all the politicians that thump the table and say, "By God, we want a Patients' Bill of Rights."

It doesn't matter which bill passes, or if neither bill passes. The truth is, not one more American is going to have health insurance and your policy is not going to be one nickel cheaper. The end result of the debate on health care is that nothing is going to happen, because no one is going to notice whether you can sue your HMO or not - except probably the trial lawyers.

The debate they should be having -- but the folks in my party are so timid they don't dare -- is how do we get to universal health care for all Americans, and which is the best system to do it? Or should we do it at all? The Republicans will take the side that we shouldn't do it; the Democrats ought to take the side that we should do it, and then we can have a debate. I think my system has the advantage based on my personal experience in Vermont that it can pass, which is a pretty substantial advantage when you consider the history of this issue since 1948. We need to change the debate in Congress.

Let's see what else has been done. Republicans and Democrats - everybody running for President except me - got together for this wonderful bipartisan bill, which I call the "No School Board Left Standing Bill," that is the second-largest unfunded mandate in the history of education. If you go to any of the ten states that have the best school systems, the property tax bill is astronomical; in New Hampshire, for example, it comes to $109 million dollars. Can you imagine what the people of New Hampshire are going to expect in the way of explanation when all these folks come there who voted to raise their taxes by $109 million?

And what do you get? A federal mandate which first of all identifies perfectly good schools as failing schools in half the cases - which the state of Ohio responded to by lowering standards so there'd be fewer failing schools, exactly the opposite of what the bill was intended to do. The bill also requires every school to certify that it allows quote-unquote constitutionally-protected school prayer in its school. The bill requires that the Boy Scouts be allowed to meet in any school building that allows anyone else to meet there. The bill requires that every school board send the names of rising juniors and seniors both to higher education establishments and to the military. Now these may be wonderful policies or they may be dreadful policies, but it seems to me that those policies ought to be the prerogatives of the local school boards and not the President of the United States and the Congress of the United States. What ever happened to local control?

We are debating the wrong issue. If you want to fix education you do not prescribe the Texas system and hope it fits the rest of the country. What you do is first fully fund special education so you allow school boards to put money in other places which they're now having to spend on the unfunded mandate, and they can make good choices. I truly believe that local people can make good choices. Republicans talk about it all the time, but when they get into the White House they certainly don't act like it. I think that if you fully-funded special education, and if you did accountability testing -- which we did in our state and it's very tough accountability testing -- 95% of school boards in this country would invest that money in smaller class size, better teacher pay, better facilities, better computers. Why don't we trust our communities to run the education system? I think they've done a pretty good job, at least in the states that I've put a lot of time in. Should we not have accountability? Of course we should have accountability. And I would applaud a national education bill that required accountability. But this education bill requires a little accountability and a lot of paperwork and mandates and nonsense that is going to make education - as it has in the state of Ohio - worse, not better. And I didn't hear one ounce of dissent when this bill passed, except for my two Senators and Congressman, for which I applaud them. It was bipartisan, feel-good nonsense, aimed at the 2004 election campaign and we can do better, we deserve better. And after I'm elected president, the State of the Union in 2005 will be a lot different from the last four States of the Union have been.

There are lots of things we can talk about, but let me close by talking about Iraq and foreign policy. There are two reasons I decided to run for president. The first is that I think the economic policy of the country was headed in a very bad direction. The other was that I disapproved of the President's approach to foreign policy. Our country, and our party, have again been stampeded by the unwillingness of the opposition party to stand up and at least have a discussion about the merits of the issue. The criticisms that I have of the President's foreign policy basically are two. The first is that it tends to be unilateralist - and it was isolationist before September 11 - and I think unilateralism in a world where we are the superpower, the strongest unchallenged power in the globe, is a mistake. Many of you read Foreign Affairs -- there was a very good article about a phenomenon called encirclement a couple of years ago, where at times in history when there has been one very large power unbalanced by other large powers, secondary powers have tended to encircle that power, both militarily and economically. The relationship between the United States and Europe is a very good example of that. Europeans are beginning to figure out how to use their economic power to encircle our interests. The Chinese are doing something similar, as are the ASEAN partners.

I think becoming a part of the world community is critical, and a lot of it is just tone. I know, because I've read it, that we cannot sign Kyoto because it does not require environmental standards for production of greenhouse gases from developing countries such as Brazil and China. But the tone could have been so much different. Instead of rejecting it out of hand as a job killer, what we should have done was said, "This is a flawed treaty. But it's a very good idea and it's a very good treaty and many nations have worked very hard to sign it. I think the United States should try to find a way to sign it. So let's see if we can renegotiate this so that the developing countries may have a much longer timetable to reduce greenhouse gases, but they will have to reduce it at some point. Or even so that the G-8 nations could help the developing countries with some of the costs of the environmental clean-up." The action is the same; we couldn't have signed - but wouldn't it have been a much better signal to the international community if we'd taken that position rather than the one we took, which was contemptuous? Contempt may feel good at the time because it puts somebody else down, but it is almost always a destructive emotion when acted on, and it is certainly destructive in world affairs.

I had the privilege of spending four hours with Gerhard Schroeder about a year and a half ago. There is no person on the European continent who is more pro-American than Gerhard Schroeder. I was appalled by what the President did after the German election, though I believe that the minister's comments were inappropriate. Nonetheless, we are not going to succeed in Afghanistan unless we have the help of the Turks and the Germans. And here we deliberately, openly, and for personal reasons opened this unnecessary rift with the Germans. I happened to be in South Korea a few days after the "Axis of Evil" remarks were made. Not only were the South Koreans appalled, our own diplomatic people in South Korea were appalled, and now we know why.

We need a foreign policy not only which favors multilateralism and international cooperation; we need a foreign policy with some long-range vision. The most effective foreign policy initiative in the history of this country, and the most effective defense policy initiative in the history of this country, I would argue, was the Marshall Plan. It did exactly what the President promised during the campaign that he would not do; it was about nation building. And the best defense policy our country can ever have is to build other nations. What have we gotten from the billions of dollars we put into Europe post-war? Europe was the most disturbed and violent continent on the earth - its countries were at war with each other for nearly a thousand consecutive years. Sixty years later we have a continent that is united in an enormous economic union and a twelve-country monetary union; we have a continent which is our ally in terms of helping to support third-world economies, developing nations; we have a continent which is our ally in peacekeeping missions such as Bosnia and Afghanistan; and most important of all, we have not had to send thousands of American kids to die in Europe. That is what you get for nation building. Of course we want a strong military; our country needs well-trained, well-equipped troops. But in the longer term, we have to build middle class democracies where women fully participate in the economic, social, and political decision-making, because those kinds of countries do not go to war with each other and they do not willingly harbor groups like al-Qaeda.

The mistake that we're making in Iraq is this. First, our priorities are wrong. If you ask me what the greatest danger to America is today, it's not Iraq, it's al-Qaeda, and we have been distracted from the war on terror. I deeply respect Bob Graham for having the courage to vote 'no' on the Iraq resolution because it did not include Hamas and Hezbollah and the other terrorist groups. Because the number one threat to America is terrorism, not Iraq. Secondly, what is the second-greatest threat to America? It is nuclear-armed rogue nations, it is not Iraq, which does not possess nuclear weapons. North Korea is a serious problem which, as you know, I believe the President set the stage for early on. He announced - I can't imagine this; as a governor I wouldn't do this to the Chairman of the Ways and Means Committee, no matter how mad I was at him - he announced, while standing next to the President of South Korea, who he had not informed, that he was changing his policy toward North Korea away from a policy of engagement and towards a policy of isolation. If any governor did that to an important member of his party or the legislature they would get what we're now getting, except of course members of the legislature don't possess nuclear weapons.

Iraq is a serious problem. We cannot permit Saddam Hussein to possess nuclear weapons. And I actually think - although we got off to very much the wrong foot with Iraq because of the bellicosity and the unilateral proposals and so forth and so on -- that we are now where we should be. We have the United Nations imprimateur. We have inspectors on the ground. But the truth is, in my view, the President has not made a case. The President has to make the case to the American people. In 1962, when the Russians put missiles in Cuba, President Kennedy had a press conference and showed pictures of missiles in Cuba pointed at the United States, and there were very few Americans who didn't think that was a real threat to the United States of America. I don't expect the President to be able to have those kinds of pictures, but I do expect him to say what the danger is. The Vice President has said he thought there was a connection between al-Qaeda and Iraq. The Secretary of Defense has said we might have some evidence that nerve gas has been given to terrorists by Iraq. The President hasn't said anything other than that Saddam Hussein is evil, which we all agree with, but there are many evil people in the world, and we don't put 200,000 of our troops at risk in order to get rid of those evils.

The President's going to have to do two things to win me over and to win the country over. And I think the country will support the President if he does them, but he has not done them. He has to make the case that there's a clear and present danger that's large enough for our children and our grandchildren who may lose their lives in the service of their country. Secondly, he has to be truthful with the American people about how long this is going to take. Most of you in Washington know that Iraq is really three countries, not one: the Kurds, the Sunni, and the Shi'ites. They do not get along. It is extremely unlikely to think that six months after we get rid of Saddam Hussein - which I have no doubt we have the capacity to do - suddenly from the ashes a democratic nation will emerge with equal power-sharing where women fully participate in the political and economic life of the country.

I am frankly very nervous about what's going on in Afghanistan right now. I think the President conducted that war excellently. I give him and the American military full marks for driving the Taliban out of Afghanistan. I am very worried about what's happening now, where we apparently refuse to police the periphery and allow the warlords to do it for us. That is not going to build a democratic nation, and the risk is not just an ideological one of feeling good about building democracy, the risk is that if there's not democracy and security then as soon as we leave, al-Qaeda moves back in. We face the same risk in Iraq. If we were to go into Iraq and not stay there, and not try to build a democratic nation in a country where there are very few democratic traditions, the likelihood once we leave is that the void will be filled with al-Qaeda, the number one enemy not the number three enemy. We can do better.

We need to have real debates in Congress and this country that are not driven by polls. We need to have people lay out ideas that make sense and then sell them to the American people without worrying about the fact that they might be at 20% in the polls, because leadership is a combination of things, and I can tell you about it after having served 11 and a half years as governor. You have to follow the people that hired you there. They hired you to do certain things, one of which is to deliver every service and charge you nothing for it. But it's also about taking stands that are ahead of your people. It's about bringing people with you on key issues that they have yet to learn about. It's about changing the dialogue so that we can accommodate ideas like a renewable energy policy.

The American people are not stupid. How many people do you think come up to me on the street every day and say, "This Iraq war is about oil"? It's not exactly about oil, but in some ways it is, because we have no energy policy in this country worth the name. We have no renewable energy policy of any kind. And therefore we are beholden to the Saudis. We cannot put the kind of pressure on the Saudis that we need to put on so they'll stop funding Hamas - supposedly for the social mission, but some of that money is devoted into suicide bombing in Israel in the territories. We can do better. But we can only do better if we bring the American people in as our partners. That is what Atlantic Monthly has done, that is what the New America Foundation has done. As I puckishly said, you ask all the right questions, though I only agree with about a quarter of your answers. But we need to discuss this stuff in the public forum, because they're good ideas, and if we don't have a national discussion those ideas will never come to fruition and the folks up on the Hill will continue to be scared and poll-driven and following at all times. Following is only part of leadership - the rest is leading.

Question: What is your policy on trade?

That's a very short question. Unfortunately it's going to be a little lengthy for the answer. Free trade has served my state well. We've gained jobs from it, and we've lost some industrial jobs. Free trade has been a disaster in the Midwest where it's hollowed-out our industrial capacity. The reason I believe trade in general is a very positive thing is that it harks back to something I said about foreign and defense policy. I believe, and the reason I've supported trade, is that trade helps create middle class nations with democratic traditions and therefore makes a more secure world. Because in developing nations, as they become fully participatory in the international economy, theoretically middle classes should arise. I think what's happened in Mexico is an interesting example. What we've seen in Mexico is a significant creation of wealth, a significant increase in Mexican industrial capacity, and the beginnings of a nascent democratic tradition with the elevation of Vincente Fox and a different party then had control Mexico for the past seventy years. What we do not see yet is the creation of a middle class. And the reason we don't see that is that we've forgotten what created the middle class in our own country. And that was trade unions. I had this discussion with Bob Rubin and initially he was horrified. And I'll have some reasons about why that might be. I think we can't do free trade agreements any more without labor and environmental standards. Now when I was discussing this with Bob he said "that's exactly what the unions use to try and kill free trade." I think that's fighting the last war. The reason we need labor and environmental standards is not to protect American jobs - although it'll have the effect and do that - it is because the job that trade started out to accomplish cannot be completed without looking at our own history. The reason there's a middle class in this country is that in the early 1900s and late 1800s the trade union movement began to protect the people who were working in those factories where there were enormous concentrations of wealth that was not diffused to the entire society. The trade union movement began the development of the possibility that industrial workers could support a middle class lifestyle. The reason this country is the greatest country on earth, and is a stable democracy is that there's an enormous - and unfortunately shrinking - middle class and that middle class was created by (a) the emergence of small business and (b) more importantly the trade union movement. So if we're going to have our policy be successful and have trade in addition to creating - and in some parts of the country removing - American jobs, something more meaningful in terms of defense and foreign policy, we've got to find ways to create a middle class, so that the concentration of wealth in third world countries - because of trade - is diffused among the whole population. And that means free trade unions with international labor standards and it means we've got to stop other countries from being subsidized essentially by having lower environmental standards than we do. That is, if you go to a plant where they can put their effluent in the stream without any treatment and the same product's made in America and the company has to pay for treatment, clearly that's a large subsidy for the company that's in a third world country. That has to stop. So my position on trade, interestingly, is somewhat similar to the labor position on trade, having arrived at it for entirely different reason. If trade is to succeed in the long run as a defense policy and a foreign policy, you need labor and environmental standards to help create middle classes in developing countries.

Question: Is it possible to improve the budget situation in light of the looming Social Security problem?

Yes. But only with a fiscally-responsible Democrat in the White House. The truth is that the President paid for his tax cuts by taking money out of the social security trust fund and distributing it to the people who have the highest income in the country. That is the truth. That is the plain fact. And that has to be fixed immediately. There is a solution to the long term social security. The first thing is to not take the money. And it seems that President Clinton didn't do that, but President Reagan - I give the President's father, Bush 41, credit - because he did not believe in voodoo economics and his presidency actually did try to address the budget deficit for which he lost his base. It seems the only way you can get the Republicans to support you is if you're a spendthrift and borrow-and-spend and borrow-and-spend, which I find very interesting given the rhetoric of that party. So the way social security can be saved is first of all stop taking money out of the trust fund. Secondly, I think allowing people to invest their social security money in the stock market is foolish. And I can't believe any conservative would endorse this, because here's what happens. Let's just suppose I'm allowed - social security first of all is not a retirement program, it's a safety net for people so they don't starve if they don't have any other income - but let's just suppose I was allowed to invest my profits and I had the good fortune to work for the President's friend Ken Lay. I would have invested that money - my retirement money - in Enron and I'd be broke. What would happen then? The government would not let me starve, they would pay again. It's like guaranteeing the loans to Argentina, you bail out Citibank, not Argentina. Well we're doing exactly the same thing for people who talk about privatizing social security. Unless you're willing to let seniors starve if they make stupid investment decisions - or simply unlucky decisions - then you are essentially reinforcing profligacy. What stockbroker wouldn't say to somebody "why don't you invest in Enron because it'll triple and you'll be rich?" Knowing that the government will never let you be thrown out on the street so there is no downside risk. It's a financially irresponsible proposal. What I would do however is run social security the way we do the state pension funds and we would have a board and allow them to invest a small portion of the funds in things other than treasury bills so you could get the compounding of the market and so forth and so on but you don't take the individual risks that can often happen when you get individual investments. But the bottom line is none of the things in this debate make any sense unless you stop raiding the social security trust fund.

Question: The last time we had a Democrat who said deficits were a problem and taxes were going to have to go up it was Walter Mondale in 1984 and it was universally regarded as a major gaffe.

The voters learn from experience, but I would beg to differ with your historical memory. The last time there were ballooning deficits and did raise taxes was Bill Clinton and without a single Republican vote. The American people never wanted this tax cut to begin with. If you look at polling back in 2001, there was no big constituency. The American people have gotten a lot smarter about money, and they know the problems of the deficits. And I don't think for a minute that the American people think that these tax cuts are a good idea. There was an interesting article in The New York Times yesterday that talked with four middle class families around the country. Most people said, "keep the $300 and fix the education system or do something about health care." I gave a speech in New Hampshire, and I talked to a guy and he said, "Hey, Governor. Well, you're making some sense. I remember my $600 check but my 401k went down $60,000. I'd rather have the other situation." I don't believe it's a coincidence. I think Bob Rubin is one of my great heroes along with Paul Volcker of the last thirty or forty years. Bob Rubin had it right. When the government showed it was really serious about dealing with the deficit without a single Republican vote for President Clinton's fiscal package, that is when the boom started and the market took off. It is not a coincidence the market's doing what its doing. It is not going to get better with a $350 billion deficit, which does not even include whatever the price tag is of the war in Iraq. We have got to come to our financial senses in this country. I think that the American people are ahead of the President and the Congress on this.

Question: Medicaid is an important part of your health proposals, but what about the severe rationing and access problems Medicaid suffers from?

We raised our reimbursement rates significantly in Vermont. If you are going to make everyone under 23 eligible for Medicaid, you have to significantly increase reimbursement rates because Medicaid is essentially a losing proposition for most physicians. We did that. The American Academy of Pediatrics have essentially endorsed the plan I have laid out. These are the people that are going to be most affected by this. But you have to raise the reimbursement rates or the experience that you had will be the experience we'll have elsewhere. We also did some other things that helped. We put dental clinics in schools for example - the phenomenon you just discussed is particularly more difficult with dentists because most dentists are in small business practices. Many physicians are in hospital practices and they can afford the vagaries of the reimbursement systems. Dentists can't do that. And the dentists were perfectly happy to have us put dental clinics in low-income schools - kids that in some cases up to the age of twelve had never seen a dentist. Now they get the dental care, a semi-retired dentist can operate the practice even on Medicaid reimbursement because the state pays for all the equipment and there are no loans -- certainly no dental school loans. So there are lots of different things you can do. The reason I suggest what I suggest is because it'll work and I can get it passed. It's not the perfect system we might design if we were starting from zero, but we're not starting from zero, there are enormous numbers of entrenched interest groups. It's very important to me to have every American with health care.

You know, I've done some tough things. It is the civil unions bill that basically guarantees all the same legal rights that I can have to gay and lesbian people. It was a tough thing to do. Most people in Vermont didn't support that, now they do because none of the things the right wing said were going to happen happened. So then people say "yeah, those guys, they didn't tell the truth, so I think the Governor did the right thing." Because most Americans believe that everyone ought to be treated equally. Now I guarantee you no other candidate running for president is going to bring up civil unions voluntarily, though I'm going to ask every one of them and I'll be interested to hear what they say. And you know, 95% of young people are straight, same as everybody else, but they want somebody who's not going to lie to them or fumble around and say, "Well on the one hand this, on the other hand that, maybe this, maybe that." That is not in my nature. I did not get to be governor longer than anybody else in the history of my state by saying "on the one hand this, on the other hand that." I told people what I thought they had to hear, and I did it without defensiveness and respectfully and I think that's what 20 year-olds want.

Q: I was wondering what your drug policies are?

I am in favor of really hammering dealers. You know they are merchants of death and destruction and misery. I believe the rest of the drug problem - the casual users - is a public health problem, not a criminal problem, and we ought to approach it using a medical model. I particularly like something we're starting to experiment with in Vermont and which is further along in some states which is drug courts where when drugs are the problem the court has wide discretion to sentence people to rehabilitation. As a physician - I was trained as a physician - you know, sentencing people to rehabilitation when they quote-unquote didn't want to go was something that you didn't do, but you know now I think the drug problem is so serious that it's smarter frankly to send casual users of serious drugs to rehab rather than jail. And it's cheaper in the long run. Even though they will fail rehabilitation three or four or five times, that's what you have to understand about substance abusers. From a medical point of view, as a physician, and also as a governor, I think we ought to treat drug abuse a public health problem. I'm not in favor of decriminalizing drugs. The reason is it sends a very bad message I think to young people, we already have a serious problem with the drugs that are legal, alcohol and tobacco, and adding a third drug, a series of drugs, is not a good idea. But I do think we ought to use a medical model and not a criminal model for most cases.

Question: Some say they know terrorism when they see it. Others say an indiscriminate attack on civilians is an act of terrorism. Sixty years ago America dropped two atomic bombs, does that fit the definition of terrorism?

I would say no. And the reason is that the targets of those bombs were the industrial sites. Certainly in Nagasaki. I think in Hiroshima there's more debate. But in a declared war, unless you deliberately target civilians, I don't think that's an act of terror and I don't think that's what the United States is doing. In terms of preemption, this is one of the differences I have with the present administration. I think what you say matters, and morals matter in foreign policy. We've had a policy of preemption for a long time and the examples you gave are exactly the right examples…there are some others that are very interesting -- Grenada where we supposedly rescued the surrounded medical students. We had a lovely liaison with their class on the beach. Panama, a more serious example. Haiti. There have been many examples of American intervention. In fact, if we had known five days before Osama bin Laden's people flew their planes into the World Trade Center we surely would have preempted that with great justification. I have said that I would not have given the President's speech as I would not have said many of the things that the President has said. One of the things I wouldn't have done is criticize Arafat. My opinion of Arafat is exactly the same as the President's. The reason I wouldn't have said it is that while it was a wonderful domestic speech, the people who have been oppressed by Arafat in the American Jewish community felt uplifted by that speech, it was great domestic politics, unfortunately it probably resulted in dramatically increased support for Arafat which we will now have to erode over a period of time. The same is true of the doctrine of preemption. The United States has used preemption and has preserved the right to preemption for many, many years, but by saying so we have now given the Chinese the opportunity to say "well, it's a clear and present danger in Taiwan. Preemptively we're now going to have to do what we have to do to Taiwan." It matters what you say. It goes back to the example I used earlier. Changing policy in North Korea standing next to the President of South Korea at a press conference without having informed him first - those things make a difference in foreign policy. We're doing it, and we've got to stop doing it.

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