Airdate: Thursday, November 2,
Moderator: KUER News Director Kat Snow

SNOW: Good evening I'm Kat Snow. Tonight we are live here in the Eccles Broadcast Center with Republican Derek Smith and Democrat Jim Matheson. They are in the last days of a very tight race for Utah's 2nd Conressional District. Welcome gentlemen to KUER.

CANDIDATES: Thank you. Good to be here.

SNOW: So let's get started. I thought we'd start tonight with the question I'll throw out to the citizen panel for just a few comments on one of the issues that's been big in this race or that the candidates have made large in this race, federal controlled versus local control of education. Is that a concern for very many of you? What do you think the issue is in that? Let's just hear a few responses and then we'll ask the candidates to respond to that.

PANELIST: Federal control, local control for education. We hear Derek Smith saying that we hear Jim Matheson's thinking supports local control. What do you think about that issue?

PANELIST: I'll respond to that. I have observed having spent a number of years in Washington when money is attached to legislature there comes control. I, in fact, working in the U. S. Department of Education can testify that as money is appropriated and is administered by the various departments there comes federal control. You cannot have money-federal money without having control. It just follows, and so we talked about local control but more incident how we think we're going to affect local control when all you're talking about is spending federal money.

SNOW: Do you have any response to that? Derek Smith why don't you start. It's been a big issue in your campaign.

SMITH: I'm a father and I have a daughter in the public schools out in the Jordan School District so I am very concerned about this. I want to have teachers and parents more involved in the budgeting process and what I hear when I go out and speak with teachers and superintendents of the school districts around the valley is that although the federal government is providing a relatively small portion of the budget, something on the order of six or seven percent, the amount of paperwork that comes with that small amount of money is completing outsized. It's disproportionate to the amount of money that comes and so it puts a terrible burden on the teachers over and above the actual in the classroom time that they spend. So I would like to see the paperwork burden significantly reduced and I'd like to see block grants made down to a district level so that people at a district level and maybe even lower could have more input on how the federal dollars are spent.

SNOW: Marian what do you think about that as a teacher?

MARIAN: I think that how it plays out in the classroom with federal money is we don't see it very often. If it does hit the district level like you say, we won't see that either. That's just kind of the reality of it. What the majority of my people are worried about is when the money is tied to test scores. Both of you have talked about the idea of holding students and teachers accountable through a national test. What concerns the majority of teachers about that is who makes the test, how can you hold several communities accountable for the same test when we come from so many different areas. I think Mr. Smith you're the one that said that you wanted to bring it down to local control so the that the people that are in control of the money are the people who know the names of the kids. My concern is if we have a national test, they don't even know the name of my school or my city or what subject I teach. If we start holding teachers accountable federally with test scores, I think we're going to see a really big problem.

SMITH: I think that is a good point and when I've gone out and talked with other teachers around the valley most of them have expressed a similar opinion, but they've also said that they would be happy to be held to an accountability standard but what they really crave is to be more involved in deciding how money is spent and being able to have more of an impact, like you said, see more of those dollars actually materialize in the classroom. So I think that there's a couple of things that we need to do specifically. I was out talking with the superintendent of the Jordan School District a couple of days ago and he told me about an experience that they've out there where because of Title IX of all things. They were forced to spend millions of dollars to build softball diamonds that duplicated what they already had. It wasn't good enough for the federal government to let the students-the boys and the girls take turns. They wanted them to be able to play at the same time of day so that took money away from other vital programs, being able to build schools. I think that's the kind of federal mandate that just doesn't make any sense for anybody in the community and keeps the money from being able to get down to a classroom level.

PANELIST: Where do you stand on the testing?

SMITH: On the testing? Well I think that we do need to have accountability but I don't know that doing it at a federal level is the appropriate step.

PANELIST: Who should make the test?

SMITH: Well I think that it shouldn't be at a federal level. It should be state or lower.

SNOW: Jim Matheson do you want to respond to this issue?

MATHESON: Well we've had a couple of issues raised. First of all Ray was talking about the issue of we're running for congress and that's a federal level and we've both been talking about local control. You're absolutely right. Our role in congress ought to be rather limited on this issue. Because I support the tradition of state and local control in terms of administration and curriculum decisions at the school level. That's a tradition we've had in our country for a long time. That's one we ought to maintain. To the extent the federal government is involved I think we need to do this without any undo strings attached. I do see a federal role though that could be expanded upon and that has to do with class size reduction. That doesn't get into curriculum decisions and that doesn't get into administrative decisions but not every school district in this country has the same economic base and clearly here in Utah we feel the strength of class size issues and to the extent that we can use federal funds for hiring new teachers and building new classrooms I'm open to that type of program within the context of prudent federal fiscal policy. Now with respect to the accountability issue that was raised, I certainly don't want a national test and beyond that I think we need to make sure we don't oversimplify this in terms of looking at just test scores of kids. If I'm a school teacher and I'm given a classroom with 18 kids all from stable homes where their parents are actively involved in their education, I'll produce some good test scores, and if you put me in a classroom with 35 kids with some tough home life it's a lot more difficult for me to produce those test scores. So when we start talking about accountability, which is a general concept I do support, it's going to be very difficult but we ought to come up with some type of accountability measure that accommodates all the variables or at least all the significant variables that are going to affect performance in the classroom and it's not just the teacher. There are other people to be held accountable, including the State Legislature and the funding level and the parents and the students and the teachers.

PANELIST: If I may piggyback on that question. To be very specific, you both have mentioned class size at some point. I want to know at the end-if either of you are elected-at the end of your term what number will be on my roll in my fourth period class, if you have your way?

SNOW: Jim Matheson.

MATHESON: Well it's funny. I was over at West High on Tuesday and they tell me that the average student/teacher ratio in the state ran by 23 to1, and in that particular school there were some classes, for example some special ed classes that had numbers in the teens, but I got a list of every teacher at that school and it listed their average class size over the seven periods they teach and there were a significant number of teacher's teaching English or math that were up in the 40s. So first of all average numbers are averages, and it doesn't necessarily reflect what's going on in each individual classroom. I'm not going to tell you what the right number is because it's primarily a state and local issue quite frankly. I want to help with class size reduction. I think we need to move in that direction. It's not the only variable that's a factor for success in our classroom. By the way, there are a lot of other variables, but clearly I think we all agree that it is one variable that is going to help us.

PANELIST: One thing that is passed on this whole decision is there's a real difference between the Republican party and the Democratic party on how monies are allocated to the states. Republicans-right now the President has been holding the Congress in abeyance because he wants money for construction. Republicans say they'd like to have the money available to spend as they see it is necessary in each state. We have about 30 or 40 federal programs that are linked to elementary and secondary education right now on the books, and they must be spent for specific purposes. The Democrats have been doing that for many years. I was there watching for 25 years. The Republicans, on the other hand, said we'd like to spend money but we want to give the school districts the right-the states the right to spend it as they see it's needed in each specific area. I think that's a real problem in Congress that needs to be addressed. Specific allocation of money has gone too far and the Democrats have been pushing that for 25-30 years. Republicans try to move away from that and let the school districts make the decision, parents and school board. I'd like you to address that question.

SNOW: Derek Smith why don't you start and if you want to answer the class size question Marian raised you're welcome to do so as well.

SMITH: Let me see if I can weave them together. This is exactly this issue I've been campaigning on clear back before the primary and the convention is we should have less central planning by the Department of Education and block grant the money down to a district level. So I was out with the Granite School District a couple of days ago and they told me that they desperately needed some-I think it was reading specialists in one of the schools. They didn't have the money to do it any other way so they had to finagle some federal funds, worked around the kind of mandates that you're talking about to be able to get those specialists into the school, and there are other issues. I think we are well intentioned in terms of mandates. There's money that comes from the federal government specifically to reduce class size. The problem is what it covers is some extra money to hirer some additional teachers, reduce the class size one time the first year, then each subsequent year it just keeps you at that same level with a little cost of living allowance increase, but it doesn't let you continue reducing class sizes. It just keeps you at that level and after seven years the money is gone and the district's back to figuring out how to pay for it to begin with. I think that coming back to your specific question, of course, that's not something we'll be able to deal with at a federal level but I think the things we can look at a federal level that impact many schools in the valley is federally mandated inclusion. I support special education but I don't think that we should tell the teachers, like yourself, that you're going to have federally mandated inclusion with no extra money to pay for it. I think we have to fully fund those programs so that you have sufficient aides or additional teaching resources to be able to deal with the extra burden that you'll be facing. So I agree that we need more local control and I think that block granting is the first step.

MATHESON: As I said at the start and I've been saying through this campaign I certainly support the notion of state and local control because it's quite clear when you look across this country. Different communities and different regions have different issues they have to address. So I believe that we ought to push that back where it's at the state and local level where people are making decisions about educational issues.

PANELIST: Let me ask you both though, I talked today to some of these-went to disability law center because from the talking I did to teachers they've said that the most forms that were the most difficult and most paper work had to do with special ed kids and kids with disabilities. That was really the only place they actually felt there was real burden where they got a lot of complaints. So I called the center and said, you know, why is that so? Whose purpose does that serve and what is it all about? Do you want to see it changed, and they said, "we could see a little streamlining" but the main concern they have is those documents are the only way they have to know whether or not the child with a disability is giving the education right that they are guaranteed by U. S. Supreme Court ruling. They're guaranteed the same education. Not separate but equal education and so the forms are the way the school district has to show, yes we are doing it right and we deserve to get this money and the forms are also the way that parents of kids with disabilities or disability rights advocates have to say, "Look here's a child who is not getting what they need." If they don't have at least some or specific enough information on the forms they cannot advocate ultimately for the child and so the child will lose out. Now let me ask you this, how do you respond to that problem A and B the other reason that they do that at the federal level is that according to the person that I talked to, states do not do a good job of guaranteeing equal rights from state to state to state. So in other words, if you have one set of rights for disabled kids in Utah and a different set of what you can expect in schools if those kids are in Oregon or if those kids are in Wyoming or somewhere else you don't have equality of rights-of educational rights across the land. So the reason the federal government does these mandates is because the federal government has to guarantee by the law, by the Supreme Court ruling, and the U. S. Constitution equal rights to every child with a disability in every part of the country. How do you do block grants and how do you streamline and still guarantee those children's rights? Derek Smith.

SMITH: Every teacher and administrator I've talked to in the valley acknowledges the need for some consistency to ensure the kind of fairness that you're talking about but literally we're driving teachers out of the profession because the paperwork has just gotten completely out of control and I understand what the original intent was but, for instance, in the Jordan School District they talked about for one of these kids, that everybody wants to see get a good education, in one year if you put the paperwork that they need to fill out and put it up on the wall it would go floor to ceiling around all four walls in this room and then some. They're saying to our teachers here come the special ed kids but there's no additional money, no additional aides, and after you get done teaching them all day long you get to do three or four hours a day of paperwork and then they're shocked and shaken that we can't find new special ed teachers and we're burning out the regular teachers. I think it's a program run amuck and every administrator I've talked to has said that they have specific ideas of ways that they could streamline the paperwork burden substantially. Still accomplish the same goal but a lot less micromanaging from the federal government would go a long way.

SNOW: Jim Matheson.

MATHESON: Well we talked about the notion of federal funding with undo strings attached and I recognize based on the conversation that you, for example, today with the disabled children's advocates-

SNOW: Disability of Life.

MATHESON: That there is some level of accountability that needs to be met and we ought to try to find a way to do it efficiently as we can and we got to make sure that we fund those mandates and that's one area where I'm not sure the federal government has lived up to it's obligation so far in terms of special education programs, but I'm not going to tell you no strings attached. There's got to be some accountability on this issue. I agree with what the advocates have told you today.

SNOW: More questions from the panel. Margaret Rosetto.

PANELIST: My question to both candidates is about the Patient's Bill of Rights. Do you support it and if you do support it why?

SNOW: Jim Matheson.

MATHESON: I do support the Norwood/Dingle Patient's Bill of Rights. It is tied up right now in a conference committee between the House and the Senate. There is one sticking point that has caused some problems and that is concern that employers would be held liable if they select a particular health plan and an employee at some point subsequent to that is stricken with some health problem that that plan does not cover. That was not the legislative intent and Norwood and Dingle have indicated that they're prepared to change that language or at least to firm up that language to eliminate that concern. Beyond that I support the Patient's Bill of Rights because it tends to push things back toward a doctor/patient relationship in terms of who is making decisions about healthcare and I think that's the fundamental viewpoint upon which we ought to be making healthcare decisions.

SNOW: Derek Smith.

SMITH: I absolutely support more doctor control over the process. The problem with the Patient's Bill of Rights the way that it passed the House were a couple of things. One is this employee liability notion that if you're going to go out and provide health insurance for your employees and you're a small business and that employee has a bad outcome and can come back and sue you, I think that that's something that would have a chilling effect on the ability of employers to provide health insurance in the first place, and I think what you'd find is small employers would just stop offering it and that's an undesirable outcome by any measure. So I think we have to resolve that problem. The second problem is the way the original legislation passed the House said there were these competing interests. One is if you have a problem should you immediately go to a lawsuit, which is what the trial lawyers support, or should there be a committee made up of physicians that you can immediately go to with your complaint or your problem or your grievance and they'll immediately hear the grievance. It doesn't mean that you still can't go to litigation if you want to but it's intent to try and resolve your problem quickly without resorting to lawyers and the inevitable delays and expense that get involved. I can guarantee you if we make the lawyers more involved in this process healthcare will not get less expensive it will get more expensive. So I don't think that being sue happy is the way of solving the problem. No one wants to see HMOs get away with the kinds of previous abuses that we've seen. So I support the Republican version of the Patient's Bill of Rights which would resolve those two problems and I'm hopeful that that is the form it will take when it comes out of conference.

PANELIST: I'm wondering if along that HMO line that you're talking about, wouldn't it be better to take away the vertical integration that is growing. This trend that is growing in the nation right now where insurance companies own hospitals. Now to me that's a huge conflict of interest and I think that it results in bad patient care. You have hospitals that are bragging that they can discharge a patient from open heart surgery the day after he's had his procedure and saying, "Isn't that great. Look at how we're cutting costs," and I think that patient's are truly suffering from this. In addition to that we're seeing that Medicare reimbursement per procedure has actually declined over the last several years. It's not even held flat. Medicare is reimbursing at a lower level each year and it's making doctors reluctant to take on Medicare patients. Now if we want to solve the social security problem by not providing good care for these seniors then I guess that the way we should-

SNOW: Killing them off is what you're suggesting.

PANELIST: Right.

SNOW: By bad healthcare. Derek Smith.

SMITH: I can remember talking about vertical integration when I knocked on your door walking through you neighborhood clear before the primaries and it's still bugging you so this has been a persistent issue for you, but it's an excellent question. What we definitely can't have is vertical integration that seeks to squeeze every dime out of the process for the sake of profit for the sake of outcomes. That is exactly the kind of thing that we don't want more of.

PANELIST: Can I just ask a question? I didn't really ask my question. Would you support deregulating-I don't know if that's the right word-but prohibiting insurance companies from owning hospitals or having interest in hospitals so that we don't have this problem.

SMITH: I think that we need to unbundle the discussion and talk about the kinds of economies of scale that you could get if you can buy sheets for 100 hospitals instead of one or pillows or electric beds or whatever the hospital supply is versus the outcome for patients. So I don't want to discourage the kinds of cost savings that you can get if you can purchase in mass like that just as an example, but I think that you could get there without having to say, "It's absolutely forbidden." I think you need to focus the regulation on the patient care side of it and not make it just completely off limits to do-

PANELIST: But how can you have patient care as the number one priority when the hospital interest is to save the insurance company money?

SMITH: I think there are ways to say money that don't necessarily impact patient care. Like group purchasing supplies or medications or-

PANELIST: Are you saying you would prohibit the companies from using the ways that would involve patient care. Using those ways of saving money because, I mean, if they have vertical integration aren't you going to prohibit certain ways of saving money? They're going to do whatever they can to save money. We're already seeing that doctors are being provided with incentives. They get cash rewards if they provide less service to their HMO patients.

SMITH: It's an interesting question. I mean the whole concept under the original intent of that proposal was that you've got to have managed care environment to be able to make healthcare more affordable and available. Now has the pendulum swung too far? Because I don't know that it's just integration. I mean every HMO at one time or another has been accused of the kinds of outcomes that you've been describing. Whether they were trying to save money by vertical integration or whether they were just compensating the doctors to discharge early.

PANELIST: You don't think it's a conflict of interest for a health insurance company to own a hospital?

SMITH: I think that the real core problem is, are HMOs a good idea or not. Because whether they're vertically integrated between the insurance company and the hospital really the issue is are you going to have a delivery mechanism that compensates positions for-you know get the patients out as quick as you can.

PANELIST: So are they a good idea or not?

SMITH: Well I think that they're a competing interest. A lot of people will tell you there would physically not be any safety net but for managed care. I personally think that the pendulum has swung a little bit too far the other way. I think we have too much bureaucracy and second-guessing of the physicians by accountants and people who are looking to maximize profit. So you know there's a middle ground in there but I think that the problem is really how HMOs are allowed-or any kind of managed care environment is allowed to operate.

SNOW: Jim Matheson, why don't you leap in on all these topics.

MATHESON: My concern about HMOs is that you cannot fully hold them accountable when bureaucrats make decisions that ought to be made from doctors and patients. That's why we ought to pass the Patient's Bill of Rights. I don't see an inherent problem where I would say we should ban the vertical integration, but I would want to increase the accountability as I just mentioned. Second issue you raised was the issue of Medicare reimbursement, which is an issue that was initiated in the 1997 Balance Budget Act and it has been a significant issue across healthcare. I know that teaching hospitals across the country are facing significant revenue shortfalls right now and they are actually losing money and that is certainly not in the long-term public interest. We want our academic research hospitals to conduct research and we want them to train good physicians and right now we're losing money, including right here at the University of Utah and we're losing money across the country at our teaching hospitals because once the primary funding sources for teaching hospital is the clinic work where they're reimbursed through Medicare, and so while Medicare reform is something that started then and is a good thing to do and we ought to keep looking at it it's had some unintended consequences in terms of how we're funding our hospital system here in this country and I think that we need to visit that issue and there may be a better way to help fund those hospitals instead of just relying on Medicare reimbursement as the primary funding source.

PANELIST: Would you be in favor of increasing Medicare reimbursement?

MATHESON: In terms of the teaching hospitals I'm not necessarily saying we should increase the Medicare reimbursement as much as I'm saying we should look for a different blend of funding and I would say it is in the public interest that we have good teaching hospitals, good academic research centers, and that may require some type of government funding quite frankly.

PANELIST: We're asking private physicians in the private sector who are saying that they are having a hard time accepting Medicare patients because they are losing money every time they take a Medicare patient.

MATHESON: You're right and I focused on the teaching hospital, but the broader question you're talking about. Clearly we ought to have a reimbursement structure that is a reasonable cost-based structure and today it appears it is not. I've talked to a number of physicians who have expressed this same concern where they lose money if they see a patient and that sure doesn't make sense, and so I think we need to take a look at revising those numbers. We also have some issues in terms of regional differences in terms of what is allowed for Medicare reimbursement, and I know here in Utah that's a real concern because we have very low reimbursement rates here for physicians in Utah and it creates a real burden on physicians here in Utah. So I think we need to revisit that side of the Medicare reimbursement equation as well is the geographic differences. It's part of the bigger issue we need to continue to look at reforming Medicare and we ought to make sure that we have Medicare work in a way where doctors are compensated for the service.

PANELIST: What could we do in Congress to remedy this situation. What would you do in Congress to remedy this very serious problem? Long-term future of healthcare.

MATHESON: Now you're introducing a new question which is the long-term issue about healthcare in the United States which is even a broader issue than what we've been talking about, and the short answer is I don't have a silver bullet solution for you. This is one of the most-in fact, I would say it is the most complicated issue that I've addressed throughout this campaign. I've met with people for the last 18 months and everyone does a great job of explaining the problems and no one does a great job of coming up with the good solution. So I'm not going to lie to you. I don't have ultimate solution to where we're going with healthcare, but I do think it's the most fundamental issue we face as a country over the next 10 to 20 years and what I think we ought to do is we ought to make sure of a couple of fundamental values that I think ought to drive our decision making. Number one-

PANELIST: --have had some commissions. The President had commissions and they gave him their recommendations and he turned them all down.

MATHESON: Well I'm going to give you what I think we ought to do in terms of fundamental values. Number one is I think we ought to make sure that everyone in this country has access to some basic level of healthcare. I think that's a fundamental issue we ought to pursue as a country; and number two, I think we want to maintain a situation where people have a doctor/patient relationship where decisions are made and individuals ought to have the right to choose whatever doctor they want. I think that's another issue that's very important to me; and thirdly, I think we've got to find a reasonable effort to provide prescription drug coverage under Medicare. We don't provide it now. My concern on this though is that it's a budget buster and that's why I don't like either of the plans that have been proposed by the two presidential candidates. There are other plans that I think we need to be looking at instead because I think they're more responsible and in that context we ought to have a plan that incorporates help to those who truly need it. It ought to allow you to go to whichever doctor you want and whichever pharmacy you want. It should not be a government run drug program.

SNOW: You are listening to KUER-FM 90 in Salt Lake City and we're broadcasting live from the Eccle's Broadcast Center and we're having our debate with citizen panel and the candidates for the second congressional district in Utah. Democrat Jim Matheson and Republican Derek Smith. Derek do you want to address the long-term healthcare issue that Ray Warner just raised. Your solutions for the long-term for healthcare.

SMITH: I'd like to finish addressing the question about Medicare and what's happening with the physicians. You know as I've talked with physicians around the valley and around the country, the thing that absolutely drives them nuts is that every single reimbursement mechanism requires a unique and different set of forms and they, like the special ed teachers, are spending a disproportionate amount of their time filling out paperwork. In this case for reimbursement. I've talked with Nancy Jensen, the congresswoman from Connecticut on ways and means that's very in touch with this issue and told her about an idea that I have in talking with doctors around the country. If we could come up with a uniform standard way for reimbursement paperwork to be filled out, so that it's all the same including Medicare, and better yet put it on the web so you didn't have to worry about the paperwork flying around, you could cut down the amount of time doctors waste on filling out forms and they would be happy to see more patients, including more Medicare patients. It just drives them nuts to spend 30-40 percent of their time filling out forms.

PANELIST: Well good luck in that. The AMA came every single year so that they can publish a new book and have every single physician-

SMITH: But you know I've laid that idea on the AMA and the UMA and they've endorsed me and I think that they recognize that if we can really get to the core of it and cut down on that incredible burden and make it uniform that would really help the physicians and many of them would like to see more Medicare patients. They love to practice medicine. It's why they got in it in the first place. There're just going out of their mind on paperwork. You know when we talk about the healthcare issues that you've brought up, the interesting thing is because of our technology we have developed this incredible ability to deliver super advanced acute care. So you can go in and get CAT scans and MRIs, but you know what most of the time we're not very good about the primary care and make it available to everybody that needs it in the community, and so we've developed this system where we end up having a lot of people show up at the emergency room who don't have an emergency. They're treated, but that comes at a significant cost to us as a society. We're treating them in the very most expensive environment that exists when we could grow our community health resources. We could use that as a model. We could do some federal grants to grow entities and make primary care much more available in our community at a fraction of the cost of seeing everybody at the emergency room. There are a lot of steps that we could take and I think another issue that really hasn't being addressed, but is going to become an explosive issue over this next decade, is long-term care and how we're going to be able to pay for that. As we see those changes in the population demographics the same thing that's putting pressure on social security is going to result in the need for massive, additional long-term care and that isn't even part of the debate in this current campaign, but it needs to be looked at carefully because that is going to overwhelm almost all the rest of the discussion. So I think that we could talk about Medicare reform, but at the end of the day I favor the continuing list, the private system that we have and working to make it better. Working to make it more efficient as opposed to going to a single payer nationalized medicine environment. My family lived in Canada for period of time-

PANELIST: That's all right.

SMITH: You don't want to hear the story about Canada.

SNOW: You're right we want to get some more questions here.

SMITH: The bottom line is you don't want to go to a Canadian system.

SNOW: Darius Gray has a question.

PANELIST: Let's have a change of topic here. To Mr. Smith specifically. Where are on paying down the national debt with whatever surplus we might have?

SMITH: I would love to pay down the national debt. My concern is that the surplus is projected and it's based on an aggressive set of assumption and I believe that we need tax reform to spur the economy so that surplus actually materializes and if it does, paying down the debt would be my first priority.

PANELIST: Let me follow up with that. For so very many years when the House and the Senate were controlled by the Democrats the Republicans said that it was imperative that we pay down the national debt. It was the cry-the battle cry, and now that the Republicans control the House and the Senate the emphasis has changed, why?

SMITH: Well the fact is the Republicans actually have been paying down the debt. They've made some good strides on it and the reason I say that I think we need tax relief first is just look what's going on back in Washington right this minute. They're not paying down the debt. Instead they're spending right through the budget caps and the projective surplus is disappearing, even before it's materialized.

PANELIST: But isn't this the same whether you use that money to pay down the debt on projective money or give tax relief on projected money.

SMITH: I don't think it's the same thing at all. I think that if you don't provide economic stimulus to tax relief the projected surplus won't materialize.

PANELIST: Isn't there a stimulus to the economy by not having that debt load on the economy.

SMITH: What stimulates the economy is having more take-home pay in people's pockets so they spend it, they invest it, they put it to work. It has a ripple effect through the economy.

PANELIST: I don't mean to be argumentative and I thank you for answering the questions but the same sort of things I heard 25 or 30 years ago aren't being applied now. Then the argument that if the national debt is lower, the cost of money is lower, or all of the business in the society the economy would grow. But no one is making that argument any more. So whether it's money in the pocket because taxes have been decreased or money in the pocket because the cost of money has been decreased. I just don't understand why the thrust has changed for the Republican Party, and I know you can't answer it for the party but don't you see a valid reason for using that projected money to pay down the debt?

SMITH: I would love to pay down the debt but it doesn't happen. The fact is you leave money on the table and it gets spent on other projects.

PANELIST: Who decides that?

SMITH: Well right now both parties are doing that and to come back to the more theoretical answer, in my personal opinion, the difference there between the theory what you described means lower interest rates and, therefore, more access to capital. In my experience it doesn't actually translate to the businessman, particularly the small businessman trying to get access to capital and create jobs. Particularly when they're in the formative process they can't get credit from the bank and they don't have access to other forms of capital and I've been through that several times. So I actually believe that the theoretical argument about paying down the debt, making capital more available is just that, it's theoretical and I find that a little regressive. A tax cut is money that I can actually spend to put the work in the economy, hire more employees, get more inventory.

PANELIST: Mr. Matheson same question to you. You indicated that you'd like to see the debt paid down. You seem to be taking the position that formally was a Republican position. What's the justification?

MATHESON: Well I'm taking a position that's my position and that is this projected surplus represents a great opportunity. However, it probably won't be quite at much as projected. I do think it is based on some rather aggressive function, but if you're going to do a big tax cut like George W. Bush wants to do you're not going to have a surplus anymore and you're not going to be able to pay down the debt. There is a time and a place for tax cuts to stimulate the economy. "This is not the time," quoting Alan Greenspan and I believe that too. I'm very concerned about congress already busting through its own spending limits. We've got to show some fiscal discipline because when times are good is when you have any opportunity to really effect some change. Right now the national debt is roughly $20,000 per person in this country.

Interest expense on an annual basis for our federal government is roughly 15 percent of all the money we spend right now. That's the easiest government spending to cut. I'm convinced that if we continue our good times and I hope we do and I hope those projected surpluses are realized, I think the fundamental approach we ought to take is we ought to be aggressive about paying down our debt and I do believe it's going to lower interest rates, it's going to lower home mortgage rates, and it's going to lower costs of capital. It is going to lower costs of capital, and I think that helps with our economy as well.

PANELIST: Thank you both.

PANELIST: --the Alan Greenspan angle analyst have noticed if there's a big tax cut we've just gone through a whole series of increases when the State has been trying to slow the economy because it was felt that it was beginning to run out of control makes you think that if there's a big tax cut and the economy begins to speed up again we're not going to go to this same process of rising interest rates leading to rising inflation in order to slow the economy down because it's been going too fast?

SMITH: I submit to you that Alan Greenspan hasn't been out there trying to make a payroll for a long, long time. I don't believe the economy is overheated and every time they dial up the interest rate it hurts people, particularly the working people- PANELIST: You're not going to be in charge of what the interest rate is. Somebody else is and economic analyst are noting the person in charge and the general agreement of everybody is that this person has been managing the economy pretty darn well for a long time.

SMITH: What he has said was that he'd like to see the debt paid down, but if that isn't going to happen then it's absolutely preferable to have a tax cut then see increased government spending. I'm telling you right now there back there increasing government spending so I want to fight for tax relief.

PANELIST: Or you can go to Congress and fight to pay down the debt.

SMITH: And that I will, but you know what I reject the notion that a tax cut means there is no debt relief. That's what they said when Reagan was working it. That's what they said when Kennedy was working on it. Even back to Coolidge and Harding. I just reject that. You know that very time you do a tax cut it creates an economic stimulus and that is how we'll pay down the debt.

MATHESON: Not to go through too much history but when we did a big tax cut in the 80s we went into huge deficits for 20 years.

PANELIST: And rapid inflation.

MATHESON: And I think it's important, there's a time and a place to stimulate the economy with a tax cut and we'll be in a better position to do that if we show some discipline now and pay down our debt with this projected surplus. So if the economy does slow down at some point we will reduce that interest loan and we'll be able to afford a tax cut. In the long run we want to lower taxes. We all do and that ought to be our ultimate goal and this is a good step to do it. It's the best way to cut government spending.

PANELIST: Could I add on here-

SNOW: Claude Vandegraff.

PANELIST: --because I believe that what Derek has brought up is the very reason that people are cynical about politicians. I'm a reluctant Republican. They asked me what I was and I says, "I'm a reluctant Republican." Let me give you a couple of observations that I hope will elicit a little fire in you. I see your campaigns, I see a Democrat running on Republican values basically in this state because the state is there. I see the Republican running a very negative campaign and I know that there are many many Republicans who will not vote for someone who is part of this negative campaign. I see another problem. I see the issue of you represent the federal government rather than the state government and as such there are a number of conservative people, because I think Utah is basically conservative, who don't want to see a change of leadership in Congress and it's so close that if somebody votes for Mr. Matheson this could really change some things and I would like to know when you decided to go on a negative campaign because as a Republican I can tell you that you're in trouble because of it and why should a conservative state elect somebody who is going to go back and be a Democrat and perhaps switch things. It's a real problem to me if I were in your district and I know there's a lot of people in your district that probably think like I think.

SNOW: Derek Smith why don't you go first.

SMITH: Well in my opinion, a negative campaign is the kind of thing that happened with Snow and Orton. It's the kind of thing that happened in my primary. I've been the recipient of that. This is not negative. This isn't personal. This is a comparison. These ads don't talk at all about how Jim would vote, they talk about what happens if the Congress of the United States goes to the Democrats and the fact of the matter is that we both campaign on one end to get rid of the death tax, we want to get rid of the marriage penalty. My party wants to cut those taxes and Jim's doesn't. So it's trying to point out what specifically it means to Utah if control of the House changes.

PANELIST: Are telling me that you do not believe that you're campaign has not been negative. Is that what you are really saying?

SMITH: My advertisements are comparisons, they're not personal attacks.

PANELIST: I'm not talking about the paper products. I'm talking about your TV ads.

SMITH: And so am I. My advertisements are specifically addressing what happens to Utah and the rest of the country if control of the House changes, and as you've observed that could be decided in this race.

PANELIST: Mr. Smith I have to agree with Bob on this. One of the issues that has troubled me in the campaign quarrel this year is the use of negative advertising. Earlier this week, I believe it was, I listened to Rush Limbaugh and he was talking about Republicans should not run away from negative advertising because it works. I've watched the television ads and to me those that you have run appear negative. At times I've wondered if you were running against Mr. Matheson or Mr. Clinton or Mrs. Clinton or the former representative from the State who was in the past seat as a Democrat. They've appeared negative. They've appeared to attack the party rather than issues.

SMITH: This campaign, make no mistake, could determine which party controls congress. So the discussion about what the impacts would be of that are absolutely legitimate campaign topics.

PANELIST: To follow that up with Mr. Matheson. If we have-I believe that you're going to go back and vote as a Democrat but you're going to have a lot of the Utah values, but what is going to happen is we are so close to the House changing hands that that's a scary issue for conservative people, and so why should we vote for you because that's the most important (unintelligible two people talking at once) right now-you two gentlemen right here in my view. What happens in Washington is all of this vote-this one seat right here may well make the difference.

MATHESON: We've had a lot of issues come up. First of all I wouldn't say "may well" there are 435 districts in this country-I'm not going to argue that it's an impossibility I would just say it's highly unlikely, but let me tell you this, I reject the notion that there are only two points of view. With the notion I had I take the title "representative" very literally and the important issue here ought to be the residents in the second congressional district ought to decide who they want representing them in Washington and whose prepared to recognize the diversity within our congressional district and represent that whole congressional district, and I think my campaign has been a very positive campaign. You guys can make the decision-the voters I guess are going to have to decide if it's negative or positive in terms of what's happened in this campaign. I don't feel very good about the tone of the dialog in this campaign against me. I think I've been the target of unfair, deceptive attacks, from multiple sources and I think that's wrong, but I think it speaks for itself and I think it's going to backfire. That's my sense of it, but what I want to tell you is this. I reject the notion that there are only two points of view in Washington. There's a range of view in both parties. Let me give you one example. There's a coalition called the Blue Dot Coalition. It's 30 very fiscally conservative Democrats. They have gone around the country. They're very selective in who they want to endorse. They came to Salt Lake, they interviewed me, they endorsed me. They gave me their maximum PAC contribution. Their agenda is an agenda that wants to be very aggressive about paying down the debt. Far more fiscally responsible than either Al Gore or George W. Bush quite frankly. That's the agenda I'm going to follow. So I can tell you right now I was raised in a household that believed you looked beyond party and you judge an idea by the quality of the idea, and it worked in Utah for many years and it's going to work for me in the House of Representatives because I'm going to reach across party lines and do what's right for all the residents of this congressional district.

PANELIST: The fact is-

PANELIST: If you were elected and you go back to Washington, the fact of the matter is when they select members to serve on various committees and when they choose chairmanship of various committees the party does that, not Blue Dot--not these independents or other groups it's made by the party. For you to represent Utah if you're not a party member you don't-you're never selected. I knew Gunn McKay was defeated in Utah because of his positions on many of these issues. Because he was unable to espouse Utah values. That's the trouble you have with going back to Washington and have to be a party member. You cannot vote independently and have party support.

MATHESON: I guess I'm afraid we disagree on this. I mean I'm a Democrat but I'm not a partisan.

PANELIST: I'd have to agree with you. I'm concerned. I'm not hiring a party when I give one of you my vote. I don't give a hoot about which party is out there if they're not giving me as a citizen what I want. I understand how the game is played and I'm sick and tired of the game. I'm not voting for a party. I used to be a conservative Republican. I am now a conservative and I'm a progressive. I'm a fiscal conservative and a social progressive. Neither of you might really fit my bill here but I'm not looking for the party and I'm sick of dab gun game that's been out there and is out there in Washington. I want someone who is listening to my issues and responding to those issues and I don't care what name they carry.

PANELIST: And that's how a lot of Utahns are. Is conservative on one and on social values. I really believe it you know.

SMITH: You know the system isn't ideal but the fact is Jim and I are both going to be freshman. Either one of us that gets back there we're not running for president. We can't make policy. We're going to be asked to be part of a team. So it takes 218 votes. The fact is we're going to be asked to vote up or down on legislation and absolutely we want to work with and try and build consensus, but you know what, the difference here is when I talk to you about tax relief I'm dead serious about that because I know that the party will vote with me on that and there's a profound difference on the other side.

PANELIST: I know as a freshman you're not going to have much clout, but you're asking for our vote and I'm looking for someone who's got the guts and the fire in his or her belly to stand up and say, "What the party is doing even if I don't have much clout is the wrong way to go." I'm looking for someone who is willing to take moral high ground.

MATHESON: If I could respond to that. I would just like to say I have done that in this campaign. You know we were on KSL TV with the debate and we were each asked if we disagree with anything from the presidential nominees of our party. He could not identify one item in which he disagreed with George W. Bush. I listed items where I disagree with Al Gore because I'm prepared to stand up for who I am, what I believe in, and I'm going to represent the interest of the State of Utah and I share what you say. I hear it all the time going door to door. People are tired of partisan bickering in Washington and they want a change, and I got to tell you something, a lot of people are getting elected to office now-younger people I think in particular-they agree with this. They want to go back there and roll up their sleeves and do the people's business because that's why they're voting for it, is to go back and do the people's business. This trench warfare that's gone on between the parties is not productive, and if I go back to Washington that's not the path I want to go down.

SNOW: Let me let Lagora she hasn't had a question.

PANELIST: I think the thing that bothers me and a lot of people I've talked with is where your campaign monies come from. Can you answer that for us? I mean to me that scares me to death.

MATHESON: I'd love to answer that question in a couple of ways. I've received money from almost 4,000 contributors and the negative attacks against me select a handful and talk about them, and in reality, I've got contributions from all over the political spectrum. You saw-maybe you didn't-look at the advertisement in today's Deseret News and Salt Lake Tribune. A number of Republicans have put their name publicly in an ad supporting me. I have got support from all of the political spectrum. There is a range of thought in that spectrum where nobody agrees with each other on any idea, and the way I work as a candidate is this. A lot of these interest groups give you questionnaires. They ask you to fill them out and I say, "Look here's where I am on the issue. I'm not going to embrace all of your agenda at all. I'm going to tell you exactly where I am. If you want to give me money, that's your decision." Some groups require 100 percent purity, others don't. But the bottom line is they know where I am on the issues first. I'm not embracing their agenda. They're accepting my agenda and I encourage you to look at all of the range of contributions that I've got. I'm very proud of that actually because by definition the range of thought of those contributors I'm beholding anyone.

SNOW: Let me tell you all where you can find this information, which I downloaded today and listeners too. It's www.crp.org and then you can click-you know you can find your way to the individual candidate you're looking for. I would note that in the ratio, let's see Derek Smith has more money from tax and other contributors, less money from individuals total, and most of the money from himself. His own loan to himself. Jim Matheson has more money, about twice as much money from individuals as from PACs, and a very small amount of money in candidate loans, and you can get the most updated numbers from the web site that I told you about.

PANELIST: Gentlemen both of you have campaigned heavily on preserving social security-

SNOW: Keep it short we've got about three minutes. Short question.

PANELIST: It can't happen it's being administered now because excess-since it's conception excess social security funds have been used to buffer the national deficit. First in 1998, 30 million was taken from it. Of the 2.2 trillion of the federal debt that's not publicly held about one trillion is owed to the social security and I submit that that money has to be taken and put into an escrow fund that is inviolate except for social security funds and then before any tax cuts, any other entitlement, the one trillion paid back to social security.

SNOW: Gentlemen one minute each on this question. I'm sorry we're short. Jim Matheson will you start.

MATHESON: Really quick that money still is part of the social security trust fund but it's only been invested in government bonds and that's my problem with the social security system. Social security is a retirement fund, a disability insurance fund, and life insurance fund. It provides three different functions. Any other retirement fund or insurance fund in the world is invested in a broad range of assets. Social security is only invested in government bonds and I think we need to move beyond that in a very careful way because we don't want the government affecting our financial markets, but I think we need to take a portfolio approach and get a greater rate of return on our investment.

SNOW: Derek Smith.

SMITH: I agree with what you're saying about protecting the funds. I want to make sure that the funds that our seniors receive are undisturbed. We have to protect them and the retirees, but for people coming up in future generations I think that they should be allowed to invest a small portion of that money in a private account that they have the ability to control. Something that would get a higher rate of return, as a first step towards fixing the long-term problem and since I didn't get to respond to a lot of what you said I would just like to say if you want to talk about guts, I got in this race a long, long time ago. I took on an incumbent because I felt passionate about reforming education and lowering taxes and growing the economy and I put my money where my mouth is. So if those are the things you want to see happen I will fight for you to make that happen.

SNOW: Thank you gentlemen, Republican Derek Smith and Democrat Jim Matheson, and thank you citizen panelists and good evening.