SHAW: From historic Danville, Kentucky, good evening and welcome to this year's only vice presidential debate sponsored by the Commission on Presidential Debates. I'm Bernard Shaw of CNN, moderator.

Tonight we come to you from Newlin Hall in the Norton Center for the Arts on the campus of Centre College. To President John Roush, the faculty here, students and community leaders statewide, we thank you for hosting this debate.

The candidates are the Republican nominee, former Defense Secretary Dick Cheney of Wyoming, and the Democratic nominee, Senator Joseph Lieberman of Connecticut.

The commission, these candidates and their campaign staffs have agreed to the following rules:

A candidate shall have two minutes to respond to the moderator's question. The other candidate shall have two minutes to comment on the question or the first candidate's answer. When I exercise the moderator's discretion of extending discussion of a question, no candidate may speak for more than two minutes at one time. This audience has been told no disruptions will be tolerated.

A prior coin toss has determined that the first question will go to the Democratic candidate.

Senator, few hard-working Americans would base their well-being on bonuses they hope to get five or 10 years from now. Why do you -- and you, Secretary Cheney -- predict surpluses you cannot possibly guarantee to pay for your proposed programs?

LIEBERMAN: Bernie, before I answer that very important question, let me first thank you for moderating the debate. Let me thank the wonderful people here at Centre College and throughout Kentucky for being such gracious hosts. And let me give a special thank you to the people of Connecticut, without whose support over these last 30 years I would never have had the opportunity Al Gore has given me this year. And finally, let me thank my family, that is here with me, my wife, Hadassah, our children, our siblings and my mom.

My 85-year-old mom gave me some good advice about the debate earlier today. She said, "Sweetheart," as she is prone to call me, "Remember, be positive and know that I will love you no matter what your opponent says about you."

(LAUGHTER)

Well, Mom, as always, that was both reassuring and wise.

I am going to be positive tonight. I'm not going to indulge in negative personal attacks. I'm going to talk about the issues that I know matter to the people of this country: education, health care, retirement security and moral values. I'm going to describe the plan that Al Gore and I have for keeping America's prosperity going and making sure that it benefits more of America's families, particularly the hard-working middle class families who have not yet fully benefited from the good times we've had.

And, Bernie, I'm going to explain tonight how we're going to do all this and remain fiscally responsible.

Let me briefly get to your question.

SHAW: You have about 10 seconds.

(LAUGHTER)

LIEBERMAN: All right. We're not spending any more than is projected by the experts. In fact, unlike our opponents, we're setting aside $300 billion in a reserve fund just in case those projections the nonpartisan experts make are not quite right.

We understand that balancing the budget, keeping America...

SHAW: Your time is up, Senator.

LIEBERMAN: ... out of debt is the way to keep interest rates down and the economy growing.

SHAW: Secretary Cheney.

CHENEY: Well, I, too, want to join in thanking the folks here in Centre College in Danville, Kentucky, for sponsoring this and making all of this possible.

And I am delighted to be here tonight with you, Joe. And I, too, want to avoid any personal attacks. I promise not to bring up your singing.

(LAUGHTER)

LIEBERMAN: Well, I promise not to sing.

CHENEY: Good.

I think this is an extraordinarily important decision we're going to make on November 7. We're really going to choose between what I consider to be an old way of governing ourselves of high levels of spending, high taxes, an ever more intrusive bureaucracy, or a new course, a new era, if you will. And Governor Bush and I want to offer that new course of action.

With respect to the surplus, Bernie, we've got to make some kind of forecast. We can't make 12 month decisions in this business. We're talking about the kinds of fundamental changes in programs and government that are going to affect people's lives for the next 25 or 30 years. And while it may be a little risky in some respects from an economic standpoint to try to forecast surpluses, I think it's -- you have to make some planning assumption on which to proceed.

We care a great deal about the issues that are at stake here. And one of the difficulties we have, frankly, is that for the last eight years, we ignored a lot (of) these problems. We haven't moved aggressively on Social Security. We haven't moved, for example, on Medicare. There are important issues out there that need to be resolved, and it's important for us to get on with that business. And that's what Governor Bush and I want to do.

SHAW: You alluded to problems. There's no magic bullet, Secretary Cheney. And this question is to you. No magic bullets to solve the problems of public education, but what's the next best solution?

CHENEY: Well, I think public education is the solution. Our desire is to find ways to reform our educational system, to return it to its former glory. I'm a product of public schools. My family, my wife and daughters, all went to public schools. And we believe very much in the public school system.

But if you look at where we are, from this standpoint in the nation, the recent exams, for example, the National Assessment of Educational Progress, independent nonpartisan testing service shows that there's been no progress on reading scores in the last eight years, almost no progress on math. The achievement gap between minority and non-minority students is as big as it's ever been. We've had a significant increase in spending for education nationwide, but it's produced almost no positive results.

That's really unacceptable from our standpoint, because if you look at it and think about it, we now have in our most disadvantaged communities, nearly 70 percent of our fourth-graders can't read at basic level. We've graduated 15 million kids from high school in the last 15 years who can't read at basic level. They are permanently sentenced to a lifetime of failure.

And what we want to do, what Governor Bush and I want to do, is to change that. We think we know how to do it. Governor Bush has done it in Texas. We want to emphasize local controls, so that the people here in Danville, Kentucky, decide what's best for their kids.

And we want to insist on high standards. One of the worst things we can do is fail to establish high standards, in effect to say to a youngster, because of their ethnic background or their income level, we don't have the same kind of expectations from you that we have for everybody else.

And we want accountability. We have to test every child every year to know whether or not we're making progress with respect to achieving those goals and objectives. So we think it's extraordinarily important. This is probably the single most important issue in this campaign. Governor Bush has made it clear that when he's elected, this will be his number one priority as a legislative -- major to submit to the Congress.

SHAW: Senator?

LIEBERMAN: Bernie, Al Gore and I are committed to making America's public schools the best in the world. And I disagree with what my opponent has said. A lot of progress has been made in recent years. Average testing scores are up and a lot of extraordinary work is being done by tens of thousands of parents and teachers and administrators all around America. But there's more to be done.

And if you'll allow me, I want to go back to your last question because it leads to this question. I think both of us agree that, leaving aside the Social Security and Medicare surpluses, there's $1.8 trillion in surplus available to spend over the next 10 years. As I said before, we're being fiscally responsible about it. We're taking $300 billion off the top to put into a reserve fund. The rest of it, we're going to use for middle class tax cuts and investments in programs like education.

Now, there's a big difference here between these two tickets. Our opponents are going to spend $1.6 trillion of the $1.8 trillion surplus projected on that big tax cut that Al Gore talked about the other night so effectively.

We're saving money to invest in education. You cannot reform education and improve it in this country without spending some money. Al Gore and I have committed $170 billion for that purpose: to recruit 100,000 new teachers to reduce the size of classrooms, to help local school districts build new buildings so our children are not learning in crumbling classrooms.

And we're not just going to stop at high school. We're going to go on and give the middle class the ability to deduct up to $10,000 a year in the cost of college tuition. Now, that's a tremendous lifesaving change which will help people carry on their education and allow them to develop the kinds of skills that will help them succeed in the high tech economy of today.

CHENEY: Very important issue, Bernie. Maybe we could extend on education for a moment?

SHAW: You're asking me to invoke the moderator's discretion on further discussion?

CHENEY: I am asking you to invoke the moderator's discussion, as is your discretion.

SHAW: It is so granted.

CHENEY: Thank you, sir.

LIEBERMAN: Your Honor, do I get a chance to respond?

SHAW: Of course you do.

LIEBERMAN: Thank you.

SHAW: The secretary will have two minutes, and then you will have two minutes.

LIEBERMAN: Thank you.

CHENEY: Let's talk about this question of the surplus, because it really drives a lot of what we're talking about here, Joe.

And if you look at our proposal, we take half of the projected surplus and set it aside for Social Security, over $2.4 trillion. We take roughly a fourth of it for other urgent priorities, such as Medicare reform and education and several of these other key programs we want to support, and we take roughly one-fourth of it and return it in the form of a tax cut to the American taxpayer.

CHENEY: We think it is extraordinarily important to do that. But it is a fundamental difference between our two -- our two approaches.

If you look, frankly, by our numbers and the numbers of the Senate Budget Committee, which has totaled up all the promises that Vice President Gore has made during the course of the campaign, they are some $900 billion in spending over and above that projected surplus already, and we still have a month to go in the campaign.

The fact is that the program that we put together we think is very responsible. The suggestion that somehow all of it is going for tax cuts isn't true. Another way to look at it is that over the course of the next 10 years we'll collect roughly $25 trillion in revenue. We want to take about 5 percent of that and return that to the American taxpayer in the form of tax relief.

We have the highest level of taxation now we've had since World War II. The average American family is paying about 40 percent in federal, state and local taxes. We think it is appropriate to return to the American people so that they can make choices themselves in how that money ought to be spent, whether they want to spend it on education or on retirement or on paying their bills. It's their choice. It's their prerogative.

We want to give them the opportunity to make those kinds of choices for themselves. And we think this is a totally reasonable approach.

SHAW: Senator?

LIEBERMAN: Bernie, let me start with the numbers. With all respect, the Senate Budget Committee estimates that Dick Cheney has just referred to are the estimates of the partisan Republican staff of the Senate Budget Committee.

We're using the numbers presented by the nonpartisan Congressional Budget Office.

And we start with an agreement, which is that the surplus in the Social Security fund should be locked up and used for Social Security. That's where the agreement ends.

We also agree and believe and pledge that the surplus in the Medicare trust fund should also be locked up, with a sign on it that says, "Politicians, keep your hands off."

Our opponents do not do that. In fact, they raid the Medicare trust fund to pay for, well, their tax cut and other programs that they can't afford because they've spent so much on the tax cut.

Let me come back to the remaining $1.8 trillion that we both talked about. The numbers show that $1.6 trillion goes to that big tax cut, which, as Al Gore said the other night, sends 43 percent to the top 1 percent.

But really worse than that, when you add on the other spending programs that our opponents have committed to, plus the cost of their plan to privatize Social Security, by our calculation they are $1.1 trillion in debt. And that means we go back down the road to higher interest rates, to higher unemployment, to a kind of stealth tax increase on every American family, because when interest rates go up, so too do the cost of mortgage payments, car payments, student loans, credit card transactions.

So if we've learned anything over the last eight years, it is that one of the most important things the government can do, the federal government, probably the most important, is to be fiscally responsible.

And that's why Al Gore and I are committed to balancing the budget every year. In fact, to paying off the debt by the year 2012, when, by our calculation, our opponents' economic plan still leaves America $2.8 trillion in debt.

SHAW: Time. The next question goes to you.

Gentlemen, this is the 21st century, yet on average an American working woman in our great nation earns 75 cents for each dollar earned by a working male. What do you males propose to do about it?

LIEBERMAN: Well, it's a good and important question. Obviously, in our time, fortunately, great advances have been made by women achieving the kind of equality that they were too long denied. But, Bernie, your question is absolutely right. Women, actually the number I have, receive 72 cents for every dollar a man receives in a comparable job.

Al Gore and I have issued an economic plan in which we've stated specific goals for the future. And one of those goals is to eliminate the pay gap between men and women. It's unfair and it's unacceptable.

And the first way we will do that is by supporting the Equal Pay Act, which has been proposed in Congress, which gives women the right to file legal actions against employers who are not treating them fairly and not paying them equally.

Secondly, we're going to do everything we can using governmental support of business agencies, such as the Small Business Administration, to help women business owners have an opportunity to invest and begin businesses and make larger incomes themselves.

And there are other civil rights and human rights laws that I think can come to play here.

So, bottom line, this is an unfair and unacceptable situation. And even though as the economy has risen in the last eight years, America's women have risen with it and received more income, until women are receiving the same amount of pay for the same job they're doing as a man receives, we've not achieved genuine equality in this country. And Al Gore and I are committed to closing that gap and achieving that equality.

You know, in so many families, women are a significant bread earner or the only bread earner, so this cause affects not only the women, but families and the children as well.

SHAW: Mr. Secretary?

CHENEY: Bernie, I certainly share the view that we ought to have equal pay for equal work regardless of someone's gender, and we've made major progress in recent years. I think we've still got a ways to go.

But I also think it's not just about the differential with respect to women. If you look, for example, at our opponents' tax proposal, they discriminate between stay-at-home moms with children that they take care of themselves and those who go to work or who, in fact, have their kids taken care of outside the home. You, in effect, as a stay-at-home mom, get no tax advantage under the Gore tax plan, as contrasted with the Bush proposal, which, in fact, provides tax relief for absolutely everybody who pays taxes.

CHENEY: And it's important to understand that the things that we're trying to change and the things that we're trying to address in the course of the campaign, what are agenda is for the future, or plans are for the future, focus very much upon giving as much control as we can to individual Americans, be they men or women, be they single or married, as much control as possible over their own lives.

Especially in the area of taxation, we want to make certain that the American people have the ability to keep more of what they earn and then they get to decide how to spend it.

The proposal we have from Al Gore, basically, doesn't do that. It, in effect, lays out some 29 separate tax credits. And if you live your life the way they want you to live your life, if you do in fact behave in a certain way, then you qualify for a tax credit and at that point you get some relief.

The bottom line, though, is 50 million American taxpayers out there get no advantages at all out of the Gore tax proposal, whereas under the Bush plan, everybody who pays taxes will, in fact, get tax relief.

LIEBERMAN: Bernie, might I have an opportunity to respond here?

SHAW: You can respond, senator, but I caution you gentlemen that if you do this consistently, we're not going to cover a lot of topics. And after the senator responds, you don't have to feel compelled to respond to the senator.

CHENEY: Depends on what he says, Bernie.

(LAUGHTER)

LIEBERMAN: Right. This is an important difference between us, and I want to try to clarify it briefly if I can. The first thing is that, in fact, the tax relief program that Al Gore and I have proposed, one of those many tax credits for the middle class that Dick just referred to, includes a $500 tax credit for stay-at-home moms, just as a way of saying we understand that you are performing a service for our society, we want you to have that tax credit.

Second, the number of 50 million Americans not benefiting from our tax cut program is absolutely wrong. It's an estimate done on an earlier form of our tax cut program, and it's just plain wrong.

And, secondly, although Governor Bush says that his tax cut program, large as it is, gives a tax cut to everybody, as the newspapers indicated earlier this week, the Joint Committee on Taxation -- again, a nonpartisan group in Congress -- has said that 27 million Americans don't get what the governor said they would in their tax cut program.

Again, Al Gore and I want to live within our means. We're not going to give it all away in one big tax cut, and certainly not to the top 1 percent of the public that doesn't need it now.

So we're focusing our tax cuts on the middle class, in the areas where they tell us they need it: tax credits for better and more expensive child care; tax credits for middle class families that don't have health insurance from their employers; the tax deduction I talked about earlier, a very exciting deduction for up to $10,000 a year in the cost of a college tuition; a $3,000 tax credit for the cost -- well, actually, for a family member who stays home with a parent or grandparent who's ill; and a very exciting tax credit program that I hope I'll have a chance to talk about later, Bernie, that encourages savings by people early in life and any time in life by having the federal government match savings for the 75 million Americans who make $100,000 or less up to $2,000 a year.

So very brief, very briefly, if a young couple making $50,000 a year saves $1,000, the government will put another $1,000 in that account. By the time they retire, they'll not only have guaranteed Social Security, but more than $200,000 in that retirement fund. Now that's...

SHAW: You're time is up, Senator.

LIEBERMAN: Thank you, sir.

CHENEY: Bernie, you have to be a CPA to understand what he just said. The fact of the matter is that the plan is so complex that an ordinary American's never going to be able to figure out what they even qualify for.

And it is a classic example of wanting to have a program, in this case a tax program, that will in fact direct people to live their lives in certain ways rather than empowering them to make decisions themselves.

It is a big difference between us. They like tax credits. We like tax reform and tax cuts.

SHAW: Mr. Secretary, this question is for you. Would you support the effort of House Republicans who want legislation to restrict distribution of the abortion drug, RU-486?

CHENEY: Bernie, the abortion issue is a very tough one, without question, and a very important one. And Governor Bush and I have emphasized that while we clearly are both pro-life, that's what we believe, that we want to look for ways to try to reduce the incidents of abortion in our society. Many on the pro-choice side have said exactly the same thing. Even Bill Clinton, who's been a supporter of abortion rights has advocated reducing abortion to make it as rare as possible.

With respect to the question of RU-486. We believe that, of course, that's its recently been approved by the FDA, that it really was a question of whether or not it was safe to be used by women. They didn't address the, sort of, the question of whether or not there should or should not be abortion in the society, so much as evaluate that particular drug.

What we'd like to be able to do is to look for ways to reach across the divide between the two points of view and find things that we can do together to reduce the incidence of abortion. We look at such things as promoting adoption as an alternative, encouraging the parental notification, and we also think banning the horrific practice of partial-birth abortions is an area where there could be agreement.

Congress has twice passed, by overwhelming margins, significant number of votes from both parties, the ban on partial-birth abortions. Twice it's been vetoed by Bill Clinton and Al Gore. Now, we would hope that eventually they would recognize that that's not a good position for them to be in.

With respect to the RU-486 proposal, at this stage, I haven't looked in particular at that particular piece of legislation. Governor Bush made it clear the other night that he did not anticipate that he would be able to go in and direct the FDA to reverse course on that particular issue, primarily because they say the decision they made was on the efficacy of the drug, not the question of whether or not we supported abortion.

LIEBERMAN: Bernie, this is a very important question and it is one on which these two tickets have dramatically different points of view. My answer is no, I would not support legislation that is being introduced in Congress to override the Food and Drug Administration decision on RU-486.

LIEBERMAN: The administration, FDA, worked 12 years on this serious problem, they made a judgment based on what was good for women's health; a doctor has to prescribe and care for a woman using it. I think it's a decision that we ought to let stand because it was made by experts.

But let me say, more generally, that the significant difference here on this issue is that Al Gore and I respect and will protect a woman's right to choose and our opponents will not. We know that this is a difficult, personal, moral, medical issue. But that is exactly why it ought to be left, under our law, to a woman, her doctor and her God.

Now, one area in which we agree, Al Gore and I, is that we believe that the government ought to do everything it can to reduce the number of unwanted pregnancies, and therefore the number of abortions.

And, incidentally, here there is good news to report. The number of abortions is actually down in America over the last eight years. In fact, over the last eight years the number of teen-age pregnancies has dropped 20 percent. And the reason it has is that there are good programs out there that Al Gore and I will continue to support, such as family planning and programs that encourage abstinence.

But when the health of a woman is involved, I think the government has to be respectful. I supported, in fact, a bill in the Senate that would have prohibited late-term abortions, except in cases where the health or life of the mother was involved.

LIEBERMAN: I did not support the so-called partial-birth abortion bill because it would have prohibited abortion -- that form of abortion at any state of the pregnancy, regardless of the effect on the health and life of the woman, and that's unacceptable.

SHAW: This question is for you, senator.

If Yugoslavia's Slobodan Milosevic prevails, notwithstanding the election results, would you support his overthrow?

LIEBERMAN: Well, there is good news from Belgrade today, Bernie, as you know, but it's unconfirmed. The encouraging news is that the state news agency is reporting that Mr. Kostunica is the president-elect and there are some press reports, but they're unconfirmed, that Milosevic has actually left Belgrade.

Now that is a very happy ending to a terrible story, and it's the end of a reign of terror.

It that does -- if that is not confirmed and does not happen, then I think the United States, with its European allies, ought to everything we can to encourage the people of Serbia to do exactly what they've been doing over the last few days, to rise up and end this reign of terror and bring themselves -- by Milosevic -- and bring themselves back into the family of nations where they will be welcomed by the United States and others.

You know, I'm very proud on this night, as it appears that Milosevic is about to or has fallen, of the leadership role the United States played in the effort to stop his aggression and genocide in Bosnia and Kosovo.

I know our opponents have said that they thought that was an overreaching. It wasn't. It was a matter of principle and America's national interests and values. And the fact is that we stopped the aggression, we stopped the genocide, and therefore strengthened our relationship with our European allies in NATO and, in fact, made the United States more respected and trusted by our allies and more feared by our enemies.

I think that Vice President Gore played a critical role, passionate, purposive role, in leading the administration, along with Republican supporters like Bob Dole and John McCain, to do the right thing in the Balkans. And hopefully tonight we are seeing the final results of that bold and brave effort.

SHAW: Secretary Cheney?

CHENEY: Well, I noted, Bernie, that, like Joe, certainly I'm pleased to see what's happened in Yugoslavia today. I hope it marks the end of Milosevic. I think that probably more than anything else, it's a victory for the Serbian people. They have taken to the streets to support their democracy, to support their vote.

In some respects, this is a continuation of a process that began 10 years ago all across Eastern Europe, and it's only now arrived in Serbia. We saw it in Germany, we saw it in Romania, we saw it in Czechoslovakia, as the people of Eastern Europe rose up and made their claim for freedom. And I think we all admire that.

CHENEY: I think with respect to how this process has been managed most recently, we want to do everything we can to support Mr. Milosevic's departure. Certainly, though, that would not involve committing U.S. troops. I do think it's noteworthy that there appears to be an effort under way to get the Russians involved.

I noted the other night, for example, Tuesday night in the debate in Boston, Governor Bush suggested exactly that, that we ought to try to get the Russian's involved to exercise some leverage over the Serbians and Al Gore pooh-poohed it. But now it's clear from the press that in fact that's exactly what they were doing. That it's -- that Governor Bush was correct in his assessment and his recommendation.

He has supported the administration on Kosovo. He lobbied actively against passage of the Byrd-Warner provision, which would have set a specific deadline, one they felt was too soon for forcing U.S. troops out. So he's been supportive of the policy that we've seen with respect to Yugoslavia, and I think he deserves a lot of credit for that.

I'd go beyond that. I think this is an opportunity for the United States to test President Putin of Russia, that in fact now is the time when we ought to find out whether or not he is indeed committed to democracy, whether or not he's willing to support the forces of freedom in democracy diplomatically in the area there of Eastern Europe. And it's a test for him, in effect, or whether he represents the old guard in the Soviet Union.

One of the most important challenges we face as a nation is how we manage that process of integrating those 150 million Eastern Europeans into the security and economic framework of Europe.

SHAW: Your question, Mr. Secretary.

You and Governor Bush charge that the Clinton-Gore administration have presided over the deterioration and overextension of America's armed forces. Should U.S. military personnel be deployed as warriors or peacekeepers?

CHENEY: My preference is to deploy them as warriors. There may be occasion when it's appropriate to use them in a peacekeeping role, but I think that role ought to be limited and I think there ought to be a time limit on it.

The reason we have a military is to be able to fight and win wars, and to maintain it with sufficient strength so that would-be adversaries are deterred from ever launching a war in the first place.

I think that the administration has, in fact, in this area, failed in a major responsibility. We've seen a reduction in our forces far beyond anything that was justified by the end of the Cold War. At the same time, we've seen a rapid expansion of our commitments around the world as troops have been sent hither and yon. Testimony just last week by the Joint Chiefs of Staff before the House Armed Services Committee pointed out a lot of these problems, that the, for example, General Mike Ryan of the Air Force, that with 40 percent fewer aircraft, he's now undertaking three times as many deployments on a regular basis as he had to previously.

So we're overcommitted and we're under-resourced. This has had some other unfortunate effects.

I saw a letter, for example, the other day, from a young captain stationed down at Fort Bragg, graduate of West Point, '95, getting ready to get out of the service because he's only allowed to train with his troops when fuel is available for the vehicles and only allowed to fire their weapons twice a year. He's concerned that if he ever had to send them into combat, it would mean lives lost.

That is a legitimate concern, and this is a very important area, in the fact the U.S. military is worse off today than it was eight years ago. It is a major responsibility for us in the future and a high priority for myself and Governor Bush will be to rebuild the U.S. military, to give them the resources they need to do the job we ask them to do for us and to give them good leadership.

SHAW: Senator, you're shaking your head in disagreement.

LIEBERMAN: Well, I am, Bernie. And most important, I want to assure the American people that the American military is the best-trained, best-equipped, most powerful force in the world, and that Al Gore and I will do whatever it takes to keep them that way.

It's not right and it's not good for our military to run them down, essentially, in the midst of a partisan political debate.

The fact is that you've got to judge the military by what the military leaders say. And Secretary Bill Cohen, a good Republican, General Shelton, chairman of the Joint Chiefs of Staff, both will tell you that the American military is ready to meet any threat we may face in the world today.

And the fact is, judging by its results, from Desert Storm to the Balkans, Bosnia and Kosovo, to the operations that are still being conducted to keep Saddam Hussein in a box in Iraq, the American military has performed brilliantly.

In fact, this administration has turned around the drop in spending on the military that began in the mid-80s and went right through the Bush-Cheney administration in the early years of the Clinton administration, but now that stopped. In fact, we passed the largest pay increase in a generation for our military.

And the interesting fact here, in spite of the rhetoric that my opponent has just spoken, is that the reality is that if you look at our projected budgets for the next 10 years, Al Gore and I actually commit more than twice as much, $100 billion in additional funding for our military, than Governor Bush does.

And their budget allows nothing additional for acquisition of new weapons systems, and that's something that the same General Mike Ryan of the Air Force and all the other chiefs of the services will not be happy about, because they need the new equipment, the new systems, that Al Gore and I are committed to giving them.

CHENEY: Bernie, this is of special interest of mine. I'd like a chance to elaborate further, if I might?

The, the facts are dramatically different. I'm not attacking the military, Joe. I have enormous regard for the men and women of the U.S. military. I had the great privilege of working with them for the four years I was secretary of defense, and no one has a higher regard than I do for them.

But it's irresponsible to suggest that we should not have this debate in a presidential campaign, that we should somehow ignore what is a major, major concern. And if you have friends or relatives serving in the U.S. military, you know there's a problem.

CHENEY: If you look at the data that's available: 40 percent of our Army helicopters that are not combat ready; combat readiness level in the Air Force that's dropped from 85 percent to 65 percent; significant problems of retention.

The important thing for us to remember is that we're a democracy, and we're defended by volunteers. Everybody out there tonight wearing the uniform, standing on guard to protect the United States, is there because they volunteered to put on the uniform. And when we don't give them the spare parts they need to maintain their equipment, when we don't give our pilots the flying hours they need to maintain their proficiency, when we don't give them the kind of leadership that spells out what their mission is, and lets them know why they're there and what they're doing, why they're putting their lives at risk, then we undermine that morale.

That is an extraordinarily valuable trust. There is no more important responsibility for a president of the United States than his role as commander in chief, and the obligation that he undertakes on behalf of all of us to decide when to send our young men and women to war.

When we send them without the right kind of training, when we send them poorly equipped or with equipment that's old and broken down, we put their lives at risk. We will suffer more casualties in the conflict if we don't look to those basic, fundamental problems.

Now, with all due respect Joe, this administration has a bad track record in this regard, and it's available for anybody who wants to look at the record and wants to talk to our men and women in uniform and wants to spend time with the members of the Joint Chiefs, wants to look at readiness levels and other indicators.

Final point, the issue of procurement is very important because we're running now off the build up of the investment we made back during the Reagan years.

SHAW: Time, sir.

CHENEY: As that equipment gets old, it has to be replaced. And we've taken money out of the procurement budget to support other ventures; we have not been investing in the future of the U.S. military.

LIEBERMAN: Bernie, I think it's very important to respond to this. Yes, of course it's an important debate to have as part of this campaign, but I don't want either the military to feel uneasy or the American people to feel insecure. And what I'm saying now I'm basing on service on the Senate Armed Services Committee, talking to exactly the people that Cheney has mentioned: the secretary of defense, the chiefs of staff. I've visited our fighting forces around the world, and I'm tell you that we are ready to meet any contingency that might arise.

The good news here, and the interesting news, is that we have met our recruitment targets in each of the services this year. In fact, in the areas where our opponents have said we are overextended, such as the Balkans, the soldiers there have the higher rate of reenlistment than anywhere else in the service because they feel a sense of purpose, a sense of mission.

In fact, this administration has begun to transform the American military, to take it away from being a Cold War force, to prepare it to meet the threats of the new generation of tomorrow of weapons of mass destruction, of ballistic missiles, of terrorism, even of cyber-warfare.

And the fact is that Governor Bush recommended in his major policy statement on the military earlier this year that we skip the next generation of military equipment: helicopters, submarines, tactical air fighters, all the rest.

That would really cripple our readiness, exactly the readiness that Dick Cheney is talking about.

Al Gore and I are committed to continuing this acquisition program, transforming the military. There's fewer people in uniform today, but person to person -- person by person, unit by unit, this is the most powerful and effective military not only in the world today, but in the history of the world.

SHAW: Time.

LIEBERMAN: And, again, Al Gore and I will do whatever is necessary to keep it that way.

SHAW: Senator Lieberman, this question to you. Once again in the Middle East, peace talks on the one hand, deadly confrontations on the other, and the flash point, Jerusalem, and then there's Syria. Is United States policy what it should be?

LIEBERMAN: Yes, it is. It has truly pained me in the last week, Bernie, to watch the unrest and the death occurring in the Middle East between the Israelis and the Palestinians. So much work has been done by the people there with the support of this administration, so much progress has been made in the original Oslo Agreements between the Israelis and the Palestinians adopted in 1993, in the peace between Israel and Jordan thereafter. I mean, America has a national strategic interest and a principled interest in peace in the Middle East.

And Al Gore has played a critical role in advancing that process over the last eight years.

What pains me, as I watch the unrest in recent days between the Israelis and the Palestinians, is that these two peoples have come, in some senses, generations forward, centuries forward in the last seven years. They are so close to a final peace agreement. I hope and pray that the death and unrest in the last week will not create the kinds of scars that make it hard for them to go back to the peace table with American assistance and achieve what I'm convinced a great majority of the Israeli and Palestinian people want, indeed, people throughout the Middle East, which is peace.

Secretary Albright has been in Paris meeting with Prime Minister Barak and Chairman Arafat. I hope and pray that her mission is successful, that there is a cease-fire, and the parties return to the peace table.

Now, we've been on a very constructive course in the Middle East, played an unusual, unique role, and I am convinced that Al Gore and I, I commit that Al Gore and I will continue to do that. I hope I might, through my friendship in Israel and throughout the Arab world, play a unique role in bringing peace to this sacred region of the world.

CHENEY: Bernie, it's -- it has been a very, very difficult area to work in for a long time. Numerous administrations, going back certainly to World War II, have had to wrestle with the problem of what should happen in the Middle East.

We made significant breakthroughs, I think, at the end of the Bush administration because of the Gulf War.

CHENEY: In effect, we had joined together with Arab allies and done enormous damage to the Iraqi armed forces, and Iraq at the time was the biggest military threat to Israel.

By virtue of the end of the Cold War, the Soviets were no longer a factor. They used to fish in troubled waters whenever they had the opportunity in the Middle East. But with the end of the Soviet Union, the implosion, if you will, of the empire, that created a vacuum, if you will, and made it easier for us to operate there.

We were able to, I think, reassure both Arabs and Israelis that the United States would play a major role there, that we had the ability and the will to deploy forces to the region if we had to, to engage in military operations to support our friends and oppose our foes. And, of course, we were able to convene the Madrid Conference that, in effect, was the first time Arab and Israeli sat down face-to-face and began this process of trying to move the peace process forward.

I think also a lot of credit goes to some great men like Yitzhak Rabin. His tragic passing was of major consequence, a great tragedy for everybody who cares about peace in the Middle East. He was a man who had the military stature to be able to confidently persuade the Israelis, I think, to take some risk for peace. I think Prime Minister Barak has tried the same thing.

I hope that we can get this resolved as soon as possible. My guess is that the next administration is going to be the one that's going to have to come to grips with the current state of affairs there. I think it's very important that we have an administration where we have a president with firm leadership, who has the kind of track record of dealing straight with people, of keeping his word, so that friends and allies both respect us and our adversaries fear us.

SHAW: This question is for you, Mr. Secretary.

If Iraq's president, Saddam Hussein, were found to be developing weapons of mass destruction, Governor Bush has said he would, quote, "Take him out." Would you agree with such a deadly policy?

CHENEY: We might have no other choice. We'll have to see if that happens. The thing about Iraq, of course, was at the end of the war, we had pretty well decimated their military. We had put them back in a box, so to speak. We had a strong international coalition raid against them, effective economic sanctions and a very robust inspection regime that was in place, so that the inspection regime, under UN auspices, was able to do a good job of stripping out the capacity to build weapons of mass destruction, the work that he'd been doing that had not been destroyed during the war, and biological chemical agents as well as a nuclear program.

Unfortunately, now we find ourselves in a situation where that started to fray on us, where the coalition now no longer is tied tightly together. Recently the United Arab Emirates and Bahrain, two Gulf states, have reopened diplomatic relations with Baghdad. The Russians and the French now are flying commercial airliners back into Baghdad, and, sort of, thumbing their nose, if you will, at the international sanctions regime. And, of course, the UN inspectors have been kicked out, and there's been absolutely no response.

So we're in a situation today where I think our posture vis-a-vis Iraq is weaker than it was at the end of the war.

CHENEY: I think that's unfortunate. I also think it's unfortunate we find ourselves in a position where we don't know for sure what might be transpiring inside Iraq. I certainly hope he's not regenerating that kind of capability. But if he were, if, in fact, Saddam Hussein were taking steps to try to rebuild nuclear capability or weapons of mass destruction, we'd have to give very serious consideration to military action to stop that activity. I don't think you can afford to have a man like Saddam Hussein with nuclear weapons, say, in the Middle East.

SHAW: Senator?

LIEBERMAN: Bernie, it would, of course, be a very serious situation if we had evidence, credible evidence, that Saddam Hussein was developing weapons of mass destruction.

But I must say, I don't think a political campaign is the occasion to declare exactly what we would do in that case. I think that's a matter of such critical national security importance that it ought to be left to those -- the commander in chief, the leaders of the military, the secretary of state -- to make that kind of decision without the heat of a political campaign.

The fact is that we will not enjoy real stability in the Middle East until Saddam Hussein is gone. The Gulf War was a great victory.

And, incidentally, Al Gore and I were two of the 10 Democrats in the Senate who crossed party lines to support President Bush and Secretary Cheney in that war.

LIEBERMAN: And we're both very proud that we did that.

But the war did not end with a total victory, and Saddam Hussein remained there. And as a result, we have had almost 10 years now of instability. We have continued to operate, almost all of this time, military action to enforce a no-fly zone. We have been struggling with Saddam about the inspectors. We ought to do and we are doing everything we can to get those inspectors back in there.

But, in the end, there's not going to be peace until he goes, and that's why I was proud to co-sponsor the Iraq Liberation Act with Senator Trent Lott, why I have kept in touch with the indigenous Iraqi opposition, broad-based, to Saddam Hussein. Vice President Gore met with them earlier this year. We are supporting them in their efforts, and we will continue to support them until the Iraqi people rise up and do what the people of Serbia have done in the last few days: get rid of a despot. We will welcome you back into the family of nations, where you belong.

SHAW: Time.

Senator Lieberman, this question is to you. Many experts are forecasting continuing chaotic oil prices on the world market. Wholesale natural gas prices here in our country are leaping, then there are coal and electricity. Have previous Republican and Democratic Congresses and administrations, including this one, done their job to protect the American people?

LIEBERMAN: Not enough. But this administration and Vice President Gore and I have had both a long-term strategy to develop energy independence and a short-term strategy. In fact, if this administration had been given the amount of funding that it had requested from the Republican Congress, we'd be further along in the implementation of that long-term strategy, which is aimed at developing alternative, cleaner sources of energy; aimed at giving tax credits to individuals and businesses to conserve and use energy more efficiently; aimed at a partnership for a new generation of vehicles with the American automobile industry, which is making great progress and can produce a vehicle that can get 80 miles per gallon.

We also have a short-term strategy to deal with exactly the kind of ups and downs of energy prices. And I know it was controversial, but Al Gore and I believed that it was important in the short term to reach into the Strategic Petroleum Reserve, take some of that oil that we have, put it in the market, show the big oil companies and the OPEC oil-producing countries that we've got some resources with which we can fight back. We're not just going to lay back and let them roll over our economy.

And we did it also because gasoline prices were rising and home heating inventories were real low. And our -- both of our tickets agree on LIHEAP, low-income housing assistance program, but our opponents really offer no assistance to middle class families who are hit by rising gas prices and a shortage of home heating oil.

The fact is that since the reserve was opened, the price of oil on world markets has dropped $6 a barrel. Now, that's a good result, and I'm proud of it.

SHAW: Mr. Secretary?

CHENEY: Bernie, this is an area where, again, I think Joe and I have fairly significant disagreements. My assessment is that there is no comprehensive energy policy today, that, as a nation, we are in trouble because the administration has not addressed these issues. We have the prospects of brownouts in California. We have potential heating -- home heating oil crisis in the Northeast. We've got gasoline prices rises various other places.

For years now, the administration has talked about reducing our dependence on foreign sources of oil, but they haven't done it. In fact, we've gone exactly in the opposite direction. We've got the lowest rate of domestic production of oil now in 46 years. You have to go back to 1954 to find a time when we produced as little oil as we do today. Our imports are an all-time record high. In the month of June, we imported almost 12 million barrels a day. That means we're more subject to the wide fluctuations and swings in price.

We have other problems. We don't have the refinery capacity. We haven't built a new refinery in this country for over 10 years. And the refineries are now operating at 96 or 97 percent of capacity, which means even with more crude available, they're probably not going to be able do to very much by way of producing additional home heating oil for this winter.

We have a long-term, serious, long-term problem of our growing dependence on foreign sources of energy.

CHENEY: That will always be the case, but we ought to be able to shift the trend and begin to move it in the right direction. We need to do a lot more about generating the capacity for power here at home. We need to get on with the business. And we think we can do it very safely and in an environmentally sound manner.

We don't think that we ought to buy into this false choice that somehow we cannot develop energy without being cautious with the environment. We can, and we've got the technology to do it, and we ought to do it.

We do support the low-income energy assistance program. We think that's very important so that senior citizens, for example, don't suffer this winter. But we need to get on to the business of having a plan to develop our domestic energy resources and producing more supplies. And this administration hasn't produced it.

LIEBERMAN: Bernie? Bernie, could I add a word to that?

SHAW: Mr. Secretary, senator, I'm going to continue.

LIEBERMAN: I yield.

SHAW: Thank you, sir.

Your congressional record: You sponsored a bill that said no to oil and gas exploration in Wyoming wilderness areas, your home state. However, you cosponsored a bill that said yes to drilling in the Arctic National Wildlife Refuge. Your explanation?

CHENEY: Well, Bernie, it just shows I've got a balanced approach to how we deal with environmental issues.

(LAUGHTER)

SHAW: Not a case of "not in my backyard"?

CHENEY: No, I think we have to make choices. And the Wyoming wilderness bill, frankly, was one of my proudest achievements as a member of Congress. I worked on that with my good friend Al Simpson, for example, for about four years. We set aside a part of Wyoming, nearly a million acres of wilderness, that ought to be separate and not be developed. We think that was important. There are a lot of areas around the country where Governor Bush and I, for example, support restraints.

CHENEY: We support the moratorium on drilling off the coast of California, but there are places where we think we ought to go forward and develop those resources. The Arctic National Wildlife Reserve is one of them. It's on the North Slope. It's right next to Prudhoe Bay. The infrastructure is there to be able to deliver that product to market. We think we can do it, given today's technology, in a way that will not damage the environment, will not permanently mar the countryside at all.

And so what we're looking for, I think, with respect to environmental policy and energy policy is balance. We do have to make choices. We recognize we have to make choices.

But the way you phrased the question, frankly, I welcome, because I think it shows that, in fact, we are trying to pursue a balanced approach. And the suggestion that somehow all we care about is energy development isn't true.

But we do have to get on with developing those resources or we're going to find ourselves ever more dependent on foreign sources. We're going to find that our -- the fact that we don't have an energy policy out there is one of the major storm clouds on the horizon for our economy.

I think if we look for something that could develop, some problem that could arise, that might, in fact, jeopardize our continuing prosperity, it's the possibility that we might find ourselves without adequate supplies of energy in the future, and there'd be no quicker way to shut down our economy than that.

SHAW: Senator?

LIEBERMAN: Bernie, we agree on the problem, but we couldn't disagree more on the response to the problem. The problem is accurately stated. No matter how strong we are economically, if we remain dependent on a source of energy that is outside our control, we're not going to be as strong as we should be, and others around the world can effectively yank our chain, and we cannot allow that to continue to happen.

I'm afraid that our opponents' response to this is one-sided, and it is essentially to develop the resources within the United States almost regardless of where.

I'm against drilling in the Arctic refuge. This is one of the most beautiful, pristine places that the good Lord has created on Earth, and it happens, fortunately, to be within the United States of America. It's just not worth it to do that for what seems to be the possibility of six months worth of oil seven to 12 years from now. That's not much of a response to the immediate problem that gasoline consumers and home heating oil customers are facing this winter.

There are more resources within the United States that we can develop. In fact, and this isn't mentioned much and appreciated much, but in the last eight years, drilling for gas on federal lands has gone up 60 percent, and it's been done in an environmentally protective way. In fact, the administration has encouraged the drilling for deep gas and oil that's going on on the western gulf today.

But the answer here is new technology that will create millions of new jobs.

Let me just say this: If we can get three miles more per gallon from our cars, we'll get a million -- we'll save a million barrels of oil a day, which is exactly what the refuge, at its best, in Alaska, would produce.

Now, the choice to me is clear.

We've got to develop fuel cells, alternative energy. We've got to encourage people to conserve...

SHAW: Time.

LIEBERMAN: ... and to be efficient.

SHAW: This question is for you, senator.

We all know Social Security is the backbone of the retirement system in our nation. Can either of you pledge tonight categorically that no one will lose benefits under your plans?

LIEBERMAN: Yes, indeed. I can pledge to the American people categorically that no one will lose benefits under our plan for Social Security as far forward as 2054.

And let me come back and say, Bernie, that Al Gore and I view Social Security as probably the best thing the government did in the second half -- or the last century. It has created a floor under which seniors cannot fall. And so many of them depend on it for their basic living, for their livelihood.

It is critically important to protect it. That's why Al and I have committed to putting that Social Security surplus in a lockbox, not touching it. And that's what allows us to keep Social Security solvent to 2054.

Our opponents have an idea for privatizing Social Security that will jeopardize Social Security payments to recipients. And I looked at this idea, and if I may use an oil industry analogy, which is to say that sometimes -- as you know, Dick, better than I -- you've got to drill deep to discover whether there's oil in a well.

For a while, I was drilling into this idea of privatization of Social Security, and the deeper I got, the drier the well became. And it seemed to me at the end that what it was going to do was dry up Social Security.

It requires taking as much as a trillion dollars out of the Social Security fund.

The independent analysts have said that would put the fund out of money in 2023, or if it's not out of money, benefits will have to be cut by over 50 percent. That's just not worth doing.

Al Gore and I are going to guarantee Social Security and add to it the retirement savings plan that I mentioned earlier, which will help middle class families looking forward have not only Social Security but a superb extra retirement account as well. Social Security-plus from us, with all respect, Social Security-minus from the Bush-Cheney ticket.

CHENEY: You won't be surprised, Bernie, if I disagree with Joe's description of our program.

The fact of the matter is the Social Security system's in trouble. It's been a fantastic program. It's been there for 65 years. It's provided benefits for senior citizens over that period of time, for my parents. It means a great deal to millions of Americans. And Governor Bush and I want to make absolutely certain that the first thing we do is guarantee the continuation of those payments, those benefits, and keep those promises that were made.

But if you look down the road, and if you're say 30 years old today, and I have two daughters about that age, they seriously question whether or not there will be any system left for them. And that's because the demographics that are at work out there. And it's almost an iron law: We know how many people there are. We know when they're going to reach retirement age.

CHENEY: We know when that baby boom generation's coming along. We know how long people are likely to live after that. That's going to drive the system into bankruptcy unless we reform it and deal with it.

The reform we would like to offer is to allow our young people to begin to take a portion of the payroll tax, 2 percent of it, and invest it in a personal retirement account. That does several things.

First of all, it gives them a stake in the Social Security system. That becomes their property. They own it. They can pass it on to their kids if they want. They don't have that kind of equity in Social Security today.

Secondly, we can generate a higher return off that investment that you get -- than you get in the existing system. Today, you get about a 2 percent return in your -- what you pay in to Social Security; we can generate, we think, at least 6 percent. All the evidence shows at least three times what we're able to get now.

And long term, by generating a bigger return, we'll put additional funds into the system that will help us survive that crunch that's otherwise going to hit in the future.

Bottom line is, there's a choice here. With respect, frankly, to Al Gore and Joe's plan, they don't reform Social Security at all. They add another huge obligation on top of it that future generations will have to pay. They don't touch the basic system itself. They don't reform it. They don't save it. We have a plan to do that and a plan to give our young people choice and more control over their own lives.

SHAW: Time.

Mr. Secretary, this question is for you. Washington is a cauldron of political bickering and partisanship. The American people, gentlemen, have had enough. How would you elevate political discourse and purpose?

CHENEY: Well, I think there are a number of ways to do it. First of all, I agree with your assessment.

I think, I've been out of Washington for the last eight years, Bernie, and spent the last five years running a company, global concern, and have been out in the private sector, building a business, hiring people, creating jobs. I've got a different perspective on Washington than I had when I was there in the past. I'm proud of my service in Washington for 25 years, but also proud that I had the opportunity to go out and get a difference experience.

And you're absolutely right: People are fed up. They've had enough with the bickering and the partisanship that seems to characterize the debate that goes on in the nation's capital.

I've seen it done differently, though. I've seen it done differently in Texas. I've watched George Bush. And one of the reasons I was eager to sign on when he asked me to become his running mate is because I've been so tremendously impressed with what's he's done as the governor of Texas.

He came in when he had a legislature completely controlled by the other party. He managed to reach across partisan lines and unite Republicans and Democrats and independents, put them to work to achieve good things for the state of Texas, partly because he didn't point the finger of blame, looking for scapegoats; he was quick to share the credit.

We ended up, as a result of that activity, at the end of his first term the top Democrat in the state, Lieutenant Governor Bob Bullock, endorsed the Republican governor, George Bush, for re-election.

It is possible to change the tone. It is possible to get people to work together and to begin to focus on achieving results. But I think it's going to take new leadership. I don't think you can do it, with all due respect to Al Gore, with somebody who spent all the last 24 years in that Washington environment and who campaigns on the basis of castigating others, of pointing the finger of blame at others in terms of blaming business or various and sundry groups for our failings.

I think you have to be able to reach out and work together and build coalitions. I think George W. Bush has done that in Texas and can do it at the national level.

SHAW: Senator?

LIEBERMAN: Bernie, you're absolutely right. There's too much partisanship in Washington. It puzzles me. You know, you'd think that people in public life and politics would want to do what would make them popular. And yet, too often people in both parties seem to act in a way that brings down the institutions of government and each of us individually, and it's a shame.

I have tried very hard in my career to call them as I see them and work with colleagues on both sides of the aisle to get things done. And I'm proud of my record in that regard, and I certainly think that would be an asset that I could bring to the vice presidency, should I be fortunate enough to be elected.

I mean, in my Senate career I've worked with Bob Dole, for instance, on Bosnia, and I worked with John McCain on cultural values. I worked with Connie Mack on foreign policy. I worked with Don Nickles on the International Religious Freedom Act. If I go on much longer, I'm going to get in trouble with my own party.

(LAUGHTER)

But the fact is that's the way thing get done, and I'm proud of those partnerships.

And let me say a word about Al Gore. In his years in the House and the Senate, he formed similar bipartisan partnerships. If you look back over the last eight years, the most significant accomplishments of this administration in which Al Gore was centrally involved were the result, most of them, of bipartisan agreements.

LIEBERMAN: I mean, after all, the Welfare Reform Act, which Al Gore promised to lead the effort on to get people off of welfare, to set time limits, to get people to enjoy the dignity of work, that was a bipartisan act that was adopted.

The Anti-Crime Act, which has lowered crime, or helped to lower crime more than 20 percent in our country today, also was bipartisan. And then the Balanced Budget Act of 1997, which was critical to getting our economy to the point, and our government to the point, of the unprecedented surplus we enjoy today also was bipartisan, and Al Gore was involved.

So I'd say that's exactly the kind of bipartisan leadership that he and I can bring to Washington to get things done.

CHENEY: With all due respect, Joe, there is just an awful lot of evidence that there has not been any bipartisan leadership out of this administration or out of Al Gore.

And the fact is, the Medicare problems have not been addressed; we've had eight years of promises on prescription drugs and no action. The Social Security problem has not been addressed; we've had eight years of talk and no action. The educational problem has not been addressed; we've have eight years of talk and no action.

Now, they've been in a position of responsibility in the White House with a powerful interest, if you will, in Washington D.C., and they've been unable to work with others.

And Medicare is a classic example. You had the Breaux commission, a good effort at a bipartisan solution for Medicare. Whether you bought or didn't buy the answer that was generated, the fact is the administration helped set it up and then pulled the plug on it because they'd rather have the issue than they would the solution.

This administration has not led from a bipartisan standpoint. And I really do think that Al Gore's record in this regard isn't very good.

LIEBERMAN: Bernie, Dick Cheney must be one of the few people in America who does -- who thinks that nothing has been accomplished in the last eight years.

I mean, the fact is that promises were made and promises were kept. I mean, has Al Gore -- did Al Gore make promises in 1992? Absolutely. Did he deliver? Big time, if I may put it that way. And that's the record.

Look at the 22 million new jobs. Look at the 4 million new businesses. Look at the lower interest rates, low rate of inflation, high rate of growth.

I think if you asked most people in America today that famous question that Ronald Reagan asked, "Are you better off today than you were eight years ago?" most people would say, "Yes."

And I'm pleased to see, Dick, from the newspapers, that you're better off than you were eight years ago, too.

(LAUGHTER)

CHENEY: And most of it -- and I can tell you, Joe, that the government had absolutely nothing to do with it.

(LAUGHTER)

(APPLAUSE)

SHAW: This question's to you, but...

LIEBERMAN: I can see my wife, and I think she's thinking, "Gee, I wish he would go out into the private sector."

CHENEY: Well, I'm going to try to help you do that, Joe.

LIEBERMAN: No...

(LAUGHTER)

(APPLAUSE)

LIEBERMAN: No, I think you've done so well there, I want to keep you there.

SHAW: Dick Cheney, Joe Lieberman, you are black for this question. Imagine yourself an African-American. You become the target of racial profiling, either while walking or driving. African-American Joseph Lieberman, what would you do about it?

LIEBERMAN: I'd be outraged. It is such an assault on the basic promise that America makes that the law will treat individuals as individuals regardless of their status -- that is to say their race, their nationality, their gender, their sexual orientation, et cetera, et cetera.

And the sad fact is that racial profiling occurs in this country. I have a few African-American friends who have gone through this horror, and, you know, it makes me want to kind of hit the wall because it is such an assault on their humanity and their citizenship. We can't tolerate it anymore.

That's why I've supported legislation, in the first instance, in Congress because it's the most we could get done to do hard studies, to make the case of the extent to which racial profiling is occurring in our country.

But it's also why I'm so proud that Al Gore said two things. First we would issue, if we're fortunate enough to be elected, an executive order prohibiting racial profiling, and secondly, the first civil rights act we would -- legislation we would send to Congress would be a national ban on racial profiling. It is just wrong. It is un-American. And to think that in the 21st century this kind of nonsense is still going on, we've got to stop it. And the only way to stop it, is through the law.

I mean, the law, after all, is meant to express our values and our aspirations for our society. And our values are violently contradicted by the kind of racial profiling that I know exists.

And I just had a friend a while ago, Bernie, who works in the government, works at the White House, African-American, stopped, surrounded by police, for no other cause than anyone can determine than the color of his skin. That can't be in America anymore.

SHAW: Mr. Secretary?

CHENEY: Well, Bernie, I'd like to answer your question to the best of my ability, but I don't think I can understand fully what it would be like. Try hard to put myself in that position, imagine what it would have been like, but, of course, I've been part of the majority and never been part of a minority group. But it has to be a horrible experience.

It's the sense of anger and frustration and rage that would go with knowing that the only reason you were stopped, the only reason you were arrested, was because of your color of your skin would make me extraordinarily angry. And I'm not sure how I would respond.

I think that we have to recognize that while we've made enormous progress in the U.S. in racial relations, and we have come a very long way, we still have a long way to go; that we still have not only the problems we're talking about here tonight in terms of the problems you mentioned of profiling, but beyond that, we still have an achievement gap in education, income differentials, differences in life span.

We still have, I think, a society that -- where we haven't done enough yet to live up to that standard that we'd all like to live up to, I think, in terms of equality of opportunity, that we judge people as individuals. As Martin Luther King said, we ought to judge people on the content of their character instead of the color of their skin.

I would hope that we can continue to make progress in that regard in the years ahead.

SHAW: Senator, sexual orientation. Should a male who loves a male and a female who loves a female have all, all the constitutional rights enjoyed by every American citizen?

LIEBERMAN: Very current and difficult question, and I've been thinking about it, and I want to explain what my thoughts have been.

Maybe I should begin this answer by going back to the beginning of the country and the Declaration of Independence, which says right there at the outset that all of us are created equal and that we're endowed, not by any bunch of politicians or philosophers, but by our creator with those inalienable rights to life, liberty and the pursuit of happiness.

At the beginning of our history, that promise, that ideal, was not realized or experienced by all Americans. But over time since then we have, we have extended the orbit of that promise. And in our time at the frontier of that effort is extending those kinds of rights to gay and lesbian Americans who are citizens of this country and children of the same awesome god, just as much as any of the rest of us are.

That's why I have been an original co-sponsor of the Employment Nondiscrimination Act, which aims to prevent gay and lesbian Americans who are otherwise qualified from being discriminated against in a workplace. And I've sponsored other pieces of legislation and other, taken other actions that carry out that ideal.

The question you pose is a difficult one, for this reason: It confronts or challenges the traditional notion of marriage as being limited to a heterosexual couple, which I support.

But I must say, I'm thinking about this because I have friends who are in gay and lesbian partnerships who have said to me, "Isn't it unfair that we don't have similar legal rights to inheritance, to visitation when one of the partners is ill, to health care benefits?" And that's why I'm thinking about it. And my mind is open to taking some action that will address those elements of unfairness while respecting the traditional religious and civil institution of marriage.

SHAW: Mr. Secretary?

CHENEY: This is a tough one, Bernie. The fact of the matter is, we live in a free society and freedom means freedom for everybody. We don't get to choose, and shouldn't be able to choose, and say, "You get to live free, but you don't."

And I think that means that people should be free to enter into any kind of relationship they want to enter into. It's really no one else's business in terms of trying to regulate or prohibit behavior in that regard.

The next step then, of course, is the question you asked of whether or not there ought to be some kind of official sanction, if you will, of the relationship or if these relationships should be treated the same way a conventional marriage is. That's a tougher problem. That's not a slam dunk.

I think the fact of the matter, of course, is that matter is regulated by the states. I think different states are likely to come to different conclusions and that's appropriate. I don't think there should necessarily be a federal policy in this area.

I try to be open-minded about it as much as I can and tolerant of those relationships.

And like Joe, I also wrestle with the extent to which there ought to be legal sanction of those relationships. I think we ought to do everything we can to tolerate and accommodate whatever kind of relationships people want to enter into.

SHAW: It occurs to me that your moderator has committed a boo-boo. I asked the racial profiling question of you; you responded. And then I asked the sexual orientation question of you. I should not have done that in terms of rotation. Gentlemen, I apologize.

LIEBERMAN: We forgive you.

(LAUGHTER)

SHAW: Thank you.

LIEBERMAN: You're human, like we are.

SHAW: Mr. Secretary, vice president of the United States of America, what would you bring to the job that your opponent wouldn't?

CHENEY: We clearly come from different political perspectives. Joe is a Democrat from New England; I'm a Republican from the West, from Wyoming. And I think that weighs into it to some extent. Clearly, we're both in the positions we're in because of our personal relationships with our principals.

I think the areas that I would bring are the things that Governor Bush emphasized when he picked me: that I had been White House chief of staff and ran the White House under President Ford; that I had spent 10 years in the House, eight of that in the leadership; served as secretary of defense; and then had significant experience in the private sector. And I think that where there are differences between Joe and myself in terms of background and experience, I clearly have spent a lot of time in executive positions, running large organizations, both in private business as well as in government.

CHENEY: And that's a set of qualifications that Governor Bush found attractive when he selected me. I'll leave it at that.

SHAW: Senator?

LIEBERMAN: Bernie, I have great respect for Dick Cheney. I don't agree with a lot of things he said in this campaign, but I have great respect for him. He was a very distinguished secretary of defense. And I don't have anything negative to say about him, so I want to say with the humility that is required to respond to this statement, that I think what I would bring to the office of the vice presidency is a lifetime's experience, growing up in a working-class family, having the opportunity to go to a great public school system, then to go onto college, and then to be drawn really by President Kennedy as well as the values of service my family gave me into public life, wanting to make a difference.

And I've had extraordinary opportunities, thanks again to those folks back home in Connecticut, as a state senator, as an attorney general fighting to enforce the law to protect them and the environment and as consumers and to litigate on behalf of human rights, and the for the last 12 years as a member of the Senate of the United States focusing on national security questions, environmental protection, economic growth and values.

But perhaps what I most bring is a friendship and shared values and shared priorities with Al Gore.

I have tremendous respect for Al Gore. I've known him for 15 years. He's an outstanding person, as a public official and as a private person. His life is built on his faith; it's devoted to his family. He volunteered for service in Vietnam. From the beginning in Congress, he's been willing to take on the big interests and fight for average people. As vice president, he's been, I think, the most effective vice president in the history of the United States.

And he's got the right program to use the prosperity all the American people have earned to help, particularly hardworking, middle class families raise up their children to enjoy a better life. I think that's what this is all about, why I'm so proud to be his running mate.

SHAW: And because of my boo-boo, I'm going to direct this question again to Secretary Cheney.

Have you noticed a contradiction or hypocritical shift by your opponent on positions and issues since he was nominated?

CHENEY: Well, we've been trying very hard to keep this on a high plane, Bernie.

(LAUGHTER)

LIEBERMAN: Thanks, Bernie.

(LAUGHTER)

CHENEY: I do have a couple of concerns, where I liked the old Joe Lieberman better than I do the new Joe Lieberman. Let me see if I can put it in those terms.

Joe established, I thought, an outstanding record in his work on this whole question of violence in the media and the kinds of materials that were being peddled to our children, and many of us on the Republican side admired him for that.

There is, I must say, the view now, that having joined with Al Gore on the ticket on the other side, that that depth of conviction that we had admired before isn't quite as strong as it was, perhaps, in the past. The temptation, on the one hand, to criticize the activities of the industry, as was pointed out recently in the Federal Trade Commission, where they're taking, clearly, material meant for adults and selling it to our children, at the same time they are participating in fund-raising events with some of the people responsible for that activity, has been a source of concern for many of us.

We were especially disturbed, Joe, at a recent fund-raiser you attended where there was a comedian who got up and criticized George Bush's religion. And I know you're not responsible for having uttered any words of criticism of his religion, but to some extent, my concern would be, frankly, that you haven't been as consistent as you had been in the past, that a lot of your good friends like Bill Bennett and others of us, who'd admired your firmness of purpose over the years, have felt that you're not quite the crusader for that cause that you once were.

LIEBERMAN: Well, Bernie, you'll not be surprised to hear that I disagree. First, let me talk about that joke about religion, which I found very distasteful. And, believe me, if anybody has devoted his life to respecting the role of religion in American life and understands that Americans from the beginning of our history have turned to God for strength and purpose, it's me.

And any offense that was done, I apologize for. And I thought that humor was unacceptable.

Let me come to the question of Hollywood and then answer the general question.

Al Gore and I have felt for a long time, first as parents, and then only second as public officials, that we cannot let America's parents stand alone in this competition that they feel they're in with Hollywood to raise their own kids and give their kids the faith and the values that they want to give them. And I've been a consistent crusader on that behalf.

John McCain and I actually requested the Federal Trade Commission report that came out three or four weeks ago which proved conclusively that the entertainment industry was marketing adult-rated products to our children. Now that is just unacceptable. And one finding was that they were actually using 10 to 12-year-olds to test screen adult-rated products.

When that report came out, Al Gore and I said to the entertainment industry, "Stop it. And if you don't stop it in six months, we're going to ask the Federal Trade Commission to take action against you." There was no similar strong response from our opponents.

We repeated that message when we went to Los Angeles. I repeat it today. We will not stop until the entertainment industry stops marketing its products to our children.

Unfortunately, I'm running out of time, but let me just say that Al Gore and I...

SHAW: You're out.

LIEBERMAN: I'm out. Maybe I can come back to it.

SHAW: No, please continue. You have about 10 seconds, pardon the interruption.

LIEBERMAN: All right. Al Gore and I agree on most everything. We disagree on some things, and he said to me from the beginning, "Be yourself. That's why I chose you. Don't change a single position you have." And I have not changed a single position since Al Gore nominated me to be his vice president.

SHAW: Gentlemen, now closing statements. A prior coin toss has determined that you begin, Senator Lieberman.

LIEBERMAN: Thanks, Bernie. That went very quickly.

Thank you, Bernie, and thanks, Dick Cheney, for a very good debate.

I'm told that tens of millions of people have been watching this debate tonight. I must say that I wish one more person were here to watch it, and that's my dad, who died 15 years ago. If my dad were here, I would have the opportunity to tell him that he was right when he taught me that in America, if you have faith, work hard and play by the rules, there is nothing you cannot achieve. And here I am. Even the son of a man who started working the night shift on a bakery truck can end up being a candidate for vice president of the United States. That says a lot about the character of this nation and the goodness of you, the American people.

I will tell you that Hadassah and I have traveled around this country in the last couple of months and met thousands and thousands of parents just like our moms and dads: hardworking, middle-class people, paying their taxes, doing the jobs that keep the country running, trying so hard to teach their kids right from wrong, and believing in their hearts that their kids can make it.

And I agree with them.

But to make it, they need a leader who will stand up and fight for them, for good education, the best education in the world; for a sound retirement system; for prescription drug benefits for their parents; and for a government that is fiscally responsible, balances the budget, keeps interest rates down so that they can afford to buy a home or to send their kids to college. To me, Al Gore is that leader and will be that kind of president.

You know for 224 years, Americans have dreamed bigger dreams and tried bolder solutions than any other people on Earth. Now is not the time to settle for less than we can be. As good as things are today, Al Gore and I believe that with your help and God's help, we can make the future of this good and blessed country even better.

Thank you. God bless you and good night.

SHAW: Mr. Secretary?

CHENEY: Well, Bernie, I want to thank you and Joe as well. I've enjoyed the debate this evening. And I also want to thank the folks here at Centre College in Danville, Kentucky. They've really done a tremendous job of making this possible.

This is a very important decision we're going to make on November 7. We really have a fundamental choice between whether or not we continue with our old ways of big government, high taxes, and ever more intrusive bureaucracy, or whether we take a new course for a new era. Governor Bush and I want to pursue that new course.

We want to reform the Social Security system to guarantee that benefits will be there for our retired folks, as well as make it possible for our young people to invest a portion of their payroll tax into their retirement account that they'll control and give them greater control over their own lives.

We want to reform the Medicare system again to make certain the benefits are there for our senior citizens, but it's also to provide prescription drug coverage for them and to give them a range of choices in terms of the kind of insurance they have.

We want to reform the education system. We want to restore our public schools to the greatness that they once represented, so that every parent has the opportunity to choose what's best for their child and so that every child has an opportunity to share in the American dream.

We also want to reform the tax code. We think it's very important, now that we have a surplus, that a portion of that surplus go back to the people who earned it. It's not the government's money, it's your money. You're entitled to it, and we'd like to see to it, that we provide tax relief for everybody who pays taxes.

Finally, we think it's very important to rebuild the U.S. military. The military is in trouble, the trends are in the wrong direction. They're the finest men and women in uniform that you'll find anyplace in the world, but they deserve our support, they deserve the resources that we need to provide for them, and they deserve good leadership.

George Bush is the man to do this. I've seen him do it in Texas. What we need is to be able to reach across the aisle, put together coalitions of Republicans and Democrats, and build the kinds of coalitions that'll get something done finally in Washington.

George Bush is a good man, an honorable man, a man of great integrity. He'll make a first-rate president.

SHAW: Secretary Cheney, Senator Lieberman, your debate now joins American political history. We thank you.

LIEBERMAN: Thank you, Bernie.

SHAW: Well, you hear the appreciation here. And our thanks also to Centre College, the community of Danville, and of course the Bluegrass State, Kentucky.

Ladies and gentlemen, please join my colleague, moderator Jim Lehrer, for the next presidential debate, next Wednesday night, at Wake Forest University in Winston-Salem, North Carolina.

For the Commission on Presidential Debates, I'm Bernard Shaw. Good night from Danville, Kentucky.