TONIGHT THERE ARE TWO BIG QUESTIONS THAT WILL BE ADDRESSED. ONE IS, WHAT IS SMART POWER IN PURSUIT OF DEFENSE, DIPLOMACY AND DEVELOPMENT. AND ANOTHER IS HOW CAN OUR COUNTRY HARNESS SMART POWER TO ADDRESS GREAT GLOBAL PROBLEMS? DEFENSE, DIPLOMACY AND DEVELOPMENT, AND CLOSELY RELATED ISSUES OF TERRORISM, ENERGY INDEPENDENCE AND THE GREATEST ECONOMIC TURMOIL THAT THIS NATION HAS EXPERIENCED IN THREE GENERATIONS. ECONOMIC TURMOIL SO EX-EXTENSIVE THAT IN FACT IT PROVOKED STEVEN COLBERT TO ASK THIS WEEK, IS YOUR MONEY SAFE, OR IS IT IN A BANK?

WE NEED SMART POWER, SERIOUSLY, MORE THAN EVER BEFORE IN OUR HISTORY. THE VERY PHRASE SMART POWER WOULD HAVE APPEALED TO PLATO WHO IS STILL A WORTHY STARTING POINT IN OUR THINKING ABOUT POLITICS. PLATO QUOTED, UNLESS PHILOSOPHERS BECOME KING IN OUR COUNTRIES OR THOSE WHO ARE NOW CALLED KINGS AND RULERS COME TO BE SUFFICIENTLY INSPIRED WITH A GENUINE DESIRE FOR WISDOM. AND THAT IS TO SAY THAT POLITICAL POWER AND PHILOSOPHY MEET TOGETHER, THERE CAN BE NO REST FROM TROUBLES FOR STATES NOR YET FOR ALL MANKIND.

WELL, I CERTAINLY DON'T EXPECT NOR WOULD I EVER PROPOSE THAT PHILOSOPHERS RULE OUR COUNTRY. INDEED, PHILOSOPHERS THAT I KNOW HAVE ENOUGH TROUBLE RUNNING THEIR OWN ACADEMIC DEPARTMENTS. BUT I DO THINK THAT WE NEED TO, INDEED WE MUST, ENCOURAGE OUR PUBLIC OFFICIALS AND OUR FELLOW CITIZENS TO THINK MORE PHILOSOPHICALLY ABOUT HOW TO CREATE BETTER LAWS, WISER PUBLIC POLICYS THAT HELP BIND US TOGETHER IN MUTUALLY BENEFICIAL WAYS IN AN EVER MORE CONNECTED WORLD. INDEED, WHAT WE REALLY NEED IS ALSO WISE RULERS WHO CAN DEMONSTRATE THE GREATEST SOCRATIC WISDOM OF ALL, WHICH IS KNOWING WHAT THEY DO NOT KNOW, AND REACHING OUT TO OTHERS TO HELP FIGURE OUT HOW MUCH WE CAN KNOW, AND HOW MUCH WE CAN PROCESS BOTH EMPIRICALLY AND PHILOSOPHICALLY TO MAKE THIS A BETTER, SAFER, MORE ECONOMICALLY PRODUCTIVE AND MORE JUST WORLD.

NOW, DURING TIMES OF CRISIS AMERICAN LEADERS HAVE OFTEN TURNED FOR GUIDANCE TO EMINENT STRATEGYISTS AND STATESMEN WHO DIVIDE THEIR TIME BETWEEN THE PRIVATE AND PUBLIC REALMS, THEY ARE BOTH PUBLIC SERVANTS AND THEY ALSO KNOW THE PRIVATE WORLD THAT INTERSECT WITH PUBLIC SERVICE. IN THE OLD DAYS THEY WERE CALLED THE WISE MEN. TODAY THEY COME IN NOT ONE BUT TWO GENDER, BUT THIS EVENING WE ARE PRIVILEGED TO HAVE WITH US -- WE ARE PRIVILEGED TO HAVE WITH US THIS EVENING TWO GENUINELY WISE MEN, AND YES, THEY ARE MEN, OF VAST INTELLECTUAL POWERS AND POWERFUL INFLUENCE IN AND OUT OF GOVERNMENT, HENRY KISSINGER AND ROBERT RUBIN HAVE BEEN SHAPERS OF POLICY AND THEY HAVE BEEN MAKERS OF HISTORY.

THEY ARE NOT AFRAID OF SPEAKING TRUTH TO POWER. THEY ARE NOT AFRAID TO TELL THE WORLD WHAT THEY DO AND DO NOT KNOW, WHAT THE LIMITS OF KNOWLEDGE ARE, AND IF WE ARE TO PURSUE A STRATEGY OF SMART POWER FOR BUILDING A SAFER MORE JUST AND EVER MORE INTERDEPENDENT WORLD, WHERE BETTER TO BEGIN THAN WITH A DIALOGUE BETWEEN THESE TWO WISE MINDS. AND I HAVE TO SAY, WHERE BETTER TO CONDUCT THIS DIALOGUE THAN A UNIVERSITY CAMPUS. NOT JUST ANY UNIVERSITY CAMPUS, BUT AT PENN, THE UNIVERSITY COMMITTED TO CARRYING FORWARD BEN FRANKLIN'S LEGACY OF INTEGRATING THEORY AND PRACTICE. UNIVERSITYS THAT SHARE THIS COMMITMENT OF INTEGRATING THEORY AND PRACTICE ARE OUR COUNTRY'S MOST VALUABLIC ASSETS IN BUILDING A SAFER MORE JUST MORE ECONOMICALLY AND ENVIRONMENTALLY SUSTAINABLE WORLD. SO I WANT TO APPLAUD THE CENTER FOR U.S. GLOBAL ENGAGEMENT FOR PRESSING FORWARD WITH ITS CAMPAIGN TO PROMOTE THE VALUES OF DEVELOPMENT AND DIPLOMACY IN AMERICAN FOREIGN POLICY, AND HAVING THE WISDOM TO HIGHLIGHT ONE OF THE THREE PRONGS OF THE PENN COMPACT THAT IS GLOBAL ENGAGEMENT. BRAVO, AND LET'S GIVE A HAND FOR THE U.S. CENTER FOR GLOBAL ENGAGEMENT. /#* HE HAS THE INTELLIGENCE, THE COMMITMENT TO THE HIGHEST VALUES OF PUBLIC SERVICE, AND THE CAN-DO SPIRIT TO HAVE THIS CITY MOVING FORWARD IN SAFETY, EDUCATION AND IN ECONOMIC OPPORTUNITY. PLEASE WELCOME PHILADELPHIA'S GREAT MAYOR, THE MAN, MAYOR MICHAEL NUTTER.

MAYOR NUTTER: HELLO. GOOD EVENING, EVERYONE, AND AMY, THANK YOU. DR. GUTMANN. THANK YOU SO MUCH FOR THAT INTRODUCTION AND THE OPPORTUNITY TO HE SPEND A FEW MINUTES WITH YOU. LET ME FIRST AND FOREMOST, ON BEHALF OF ALL THE CITIZENS OF THE CITY OF PHILADELPHIA AND THOSE IN THE REGION AROUND PHILADELPHIA, WELCOME YOU TO OUR GREAT CITY AND TO THIS INCREDIBLE INSTITUTION, THE ANNENBERG CENTER FOR PERFORMING ARTS. THIS IS A WONDERFUL NIGHT IN PHILADELPHIA, THAT YOU WOULD GIVE US THE HIGH HONOR TO HAVE THIS EVENT HERE, AND AS DR. GUTMANN DID, I WOULD ALSO LIKE TO RECOGNIZE THE CENTER FOR U.S. GLOBAL ENGAGEMENT, THE WORK YOU ARE DOING TO HELP ENSURE SAFETY AND SECURITY, NOT JUST ACROSS OUR NATION BUT AROUND THE WORLD HAVE QUITE IMPORTANT. AND I WANT TO ESPECIALLY WELCOME TO PHILADELPHIA, OF COURSE, CNN'S FRANK SESNO AND OUR TWO INCREDIBLE GUESTS, DR. HENRY KISSINGER AND DR. ROBERT RUBIN. WE HAVE CERTAINLY KNOWN FOR SOMETIME THIS WONDERFULLY PHILADELPHIA IS OFTEN CHARACTERIZED AS THE BIGGEST SMALL TOWN IN AMERICA. IT IS A QUITE COSMO POLL TAN CITY BUT IT IS ALSO A GREAT CITY OF NEIGHBORHOODS AND PEOPLE WHO CARE ABOUT THIS COMMUNITY. THIS "IMPACT '08" BUILDING A BETTER AND SAFER WORLD CONFERENCE IS A CONCERN THAT PHILADELPHIA ALSO SHARES AND THAT WE ARE INTERCONNECTED IN SO MANY DIFFERENT WAYS, NOT JUST IN OUR REGION AND NOT JUST IN OUR STATE, NOT ONLY HERE BUT ACROSS THE COUNTRY, BUT AROUND THE WORLD, AND HAVING THIS KIND OF CONFERENCE RIGHT HERE IN PHILADELPHIA HELPS TO BRING INTO FOCUS THE KINDS OF ISSUES THAT YOU HAVE BEEN WORKING ON FOR SOMETIME THAT WILL BECOME, OF COURSE, A MAJOR TOPIC OF DISCUSSION. AS WE SEE THE INTERNATIONAL FINANCIAL CRISIS ENGULF NOT JUST CITIES OR STATES, OF COURSE, EVEN COUNTRIES, BUT IT BRINGS TO BEAR HOW INTERCONNECTED WE ARE IN A GLOBAL ECONOMY, AND THAT AS A MAYOR OF A MAJOR CITY, THOSE ISSUES ALSO COME TUMBLING RIGHT TO OUR OWN FRONT DOOR. AND WE HAVE HAD TO MAKE SOME ADJUSTMENTS TO OUR OWN HERE IN PHILADELPHIA. THESE FINANCIAL CRISES THAT WE HEAR ABOUT ARE NOT JUST ABOUT FANNIE MAE AND FREDDIE MAC AND A NUMBER OF COMPANIES, BUT MAJOR CITIES AROUND THE COUNTRY ARE NOW FACING SIGNIFICANT DEFICITS AND HAVING TO ADJUST THEIR OWN PROGRAMS AS WE PROVIDE SERVICES TO CITIZENS.

I'M ALSO PLEASED TO BE A PART OF THE LOCAL IMPACT '08 GROUP. OF COURSE, DR. GUTMANN IS A PART OF THAT, OUR GREAT GOVERNOR, ED REIN DELL, FORMER MAYOR OF THE STEVE OF PHILADELPHIA IS ALSO A PART OF THIS GROUP AS WELL. WE ARE PLEASED TO HAVE YOU HERE AND LOOK FORWARD TO THE CONVERSATION BUT MORE IMPORTANTLY, TO FIGURE OUT HOW TO ENSURE A SAFER AND BETTER PLACE, THIS LITTLE CITY OF PHILADELPHIA AND OUR ROLE IN THE LARGER GLOBAL MARKETPLACE. THE EVENTS OF THIS CONFERENCE ARE SIGNIFICANT FOR CITIES LIKE PHILADELPHIA AND CITIES ALL AROUND THE WORLD. AND I JUST WANT TO SAY THANK YOU SO MUCH FOR BEING HERE. HAVE A GREAT NIGHT.

GOOD EVENING, EVERYONE, MY NAME IS LIZ SCHRAYER I AM THE DIRECT OF THE CENTER FOR THE CENTER FOR GLOBAL ENGAGEMENT AND IT'S WONDERFUL TO WELCOME YOU TO IMPACT '08 IN PENNSYLVANIA. I KNOW IT'S A SPECIAL NIGHT IN THIS CITY AND WE WANT TO PROMISE YOU TO DO OUR BEST TO MAKE SURE YOU GET HOME FOR THE MAJORITY OF THE EVENING WORLD SERIES GAME. I WANT TO EXTEND A SPECIAL THANK YOU TO DR. GUTMANN AND YOUR TEAM AT THE UNIVERSITY OF PENNSYLVANIA ALONG WITH THE PENNSYLVANIA CHAMBER OF BUSINESS AND INDUSTRY, THE WORLD AFFAIRS COUNCIL OF PHILADELPHIA, AND ALL THOSE NAMES THAT YOU SAW WHEN YOU WALKED IN ON OUR LIST OF ADVISORY COUNCIL IN HELPING US GET THIS LAUNCHED TONIGHT.

WE ARE GOING TO TALK ABOUT A CRITICAL ISSUE THE FACING THE NEXT PRESIDENT OF THE UNITED STATES. THE ISSUE OF AMERICA'S ROLE IN THE WORLD. IN THIS TIME OF ECONOMIC CRISIS, WE ARE ALL ACUTELY AWARE OF HOW INTERCONNECTED OUR WORLD IS, A WORLD WHERE INFECTIOUS DISEASE TO TERRORISM HAVE NO BORDERS, WHERE THE SECURITY AND ECONOMIC PROSPERITY OF AMERICA IS LINKED WITH THE SECURITY AND ECONOMIC PROSPERITY OF ALL THE NATIONS THROUGHOUT THE WORLD. AND AS YOU KNOW OR YOU WOULDN'T BE HERE TONIGHT, WHAT HAPPENS THROUGHOUT THE GLOBE MATTERS TO EACH OF US EACH AND EVERY DAY HERE IN PENNSYLVANIA.

SO JUST 18 MONTHS AGO IN THE U.S. CHAMBER OF COMMERCE IN WASHINGTON, D.C., WE LAUNCHED AN EFFORT TO ADDRESS THIS VERY ISSUE, AND AN EFFORT THAT IS NON-PARTISAN, WE HAVE BEEN QUITE INNOVATIVE -- AND YOU CAN SEE CALLED IMPACT '08 BUILDING A BETTER SAFER WORLD. WE ARE LED BY TWO TREMENDOUS INDIVIDUALS, OUR NATIONAL CO-CHAIRS SECRETARY OF STATE MADELIENE ALBRIGHT, A DEMOCRAT, FORMER SECRETARY OF DEFENSE, FRANK CAR LUCCI, REPUBLICAN WHO FRANKLY DON'T SEE EYE-TO-EYE ON MANY ISSUES, BUT THEY SHARE A COMMON BELIEF AND JOIN TOGETHER TO CALL ON THE NEXT PRESIDENT, WHOEVER IT ENDED UP, WHEN WE STARTED THIS EFFORT 19 MONTHS AGO, TO TAKE THE CHALLENGES AND OPPORTUNITIES OF THE 21ST CENTURY AND TO ADDRESS IT WITH BOLD NEW IDEAS. WE ALL UNDERSTAND THAT MILITARY ALONE CANNOT KEEP AMERICA SAFE. IMPACT '08 CALLS ON ALL THE TOOLS IN OUR NATIONAL SECURITY TOOL KIT. SOME CALL FOR HARD POWER USE, SOME HAVE CALLED FOR THE USE OF SOFT POWER AND IMPACT '08 CALLS FOR THE USE OF SMART POWER. THE IDEA OF INTERNATIONAL GREATING DEFENSE, DEVELOPMENT, AND DIPLOMACY TOGETHER. AND WE THINK THAT'S SMART.

AS OUR SECRETARY OF DEFENSE, ROBERT GATES HAS SAID, WE CANNOT KILL OR CAPTURE OUR WAY TO VICTORY. IT HAS BECOME CLEAR THAT AMERICA'S CIVILIAN INSTITUTIONS OF DIPLOMACY AND DEVELOPMENT HAVE BEEN CHRONICLY UNDER-MANNED AND UNDERFUNDED FOR FAR TOO LONG RELATIVE TO WHAT WE TRADITIONALLY /-P SPEND ON THE MILITARY AND RELATIVE TO THE RESPONSIBILITIES AND CHALLENGES OUR NATION HAS AROUND THE WORLD.

LIKE SECRETARY GATES, IMPACT '08 URGES THE NEXT PRESIDENT TO ELEVATE OUR NON-MILITARY TOOLS OF ENGAGEMENT, INVESTING IN GLOBAL HEALTH, GLOBAL DEVELOPMENT AND GLOBAL DIPLOMACY, AND NOT JUST BECAUSE IT'S THE RIGHT THING TO DO, BUT ALSO BECAUSE IT'S THE SMART THING TO DO. WE ARE VERY, VERY PROUD OF OUR EXTENSIVE LIST OF PROMINENT NATIONAL SECURITY AND FOREIGN POLICY EXPERTS THAT HAVE ENDORSED OUR EFFORT, INCLUDING OUR TWO FEATURE GUESTS THIS EVENING, OVER 50 RETIRED FORMER MILITARY COMMANDERS, DEMOCRATS, REPUBLICANS, INDEPENDENTS, WE HAVE TRAVELED ACROSS THIS COUNTRY OVER THE LAST 18 MONTHS, WE HAVE BEEN IN IOWA, AND NEW HAMPSHIRE, OHIO AND FLORIDA, AND AS I SAID AT THE OPENING, WE ARE THRILLED TO WELCOME PENNSYLVANIA INTO OUR TEAM TO RAISE OUR VOICES, ALL OF YOU HERE TONIGHT ARE BUSINESS LEADERS, ACADEMIC LEADERS, COMMUNITY LEADERS, STUDENT LEADERS WHOSE VOICES CAN MAKE A DIFFERENCE.

WE HAVE A TREMENDOUS PROGRAM TONIGHT, WE ARE GOING TO GET STARTED WITH OUR FUTURE GUEST, DR. KISSINGER AND SECRETARY RUBIN AND WE WILL CONCLUDE TONIGHT WITH SURROGATES REPRESENTING BOTH OF THE PRESIDENTIAL CANDIDATES, GOVERNOR ED REIN DELL, AND SECRETARY JOHN LAYMAN TO INTRODUCE OUR MODERATOR PLEASE WELCOME THE COMPTROLLER OF WORLD AFFAIRS IN PHILADELPHIA. THANK YOU FOR BEING HERE THIS EVENING.

SPEAKER: THANK YOU. ISN'T SHE TERRIFIC. SHE IS TOO MODEST TO TELL YOU BUT SHE IS THE ONE WHO FOUNDED THE CENTER FOR GLOBAL ENGAGEMENT SO LET'S GIVE AN APPLAUSE FOR LYNN. I AM RAVI SALOGRAM VICE CHAIRMAN OF THE WORLD AFFAIRS COUNCIL OF PHILADELPHIA. THE WORLD AFFAIRS COUNCIL IS SO PLEASED TO CO-HOST THIS EVENING'S EVENT AND I AM EXCITED TO SEE SO MANY OF OUR MEMBERS HERE IN ATTENDANCE. THIS IS A CRITICAL MOMENT FOR AMERICA'S RELATIONSHIP WITH THE WORLD. POLLS TELL US OUR COUNTRY'S GLOBAL LEADERSHIP ROLE AND OUR IMAGE HAS BEEN DAMAGED IN RECENT YEARS, AND THEY ARE FURTHER THREATENED BY THE CURRENT ECONOMIC CRISIS.

GROWING UP IN INDIA, AS I DID, LIFE IN AMERICA SYMBOLIZED THE ULTIMATE DREAM. LET ME ILLUSTRATE. AS A 10-YEAR-OLD, I REMEMBER APPLYING TO BECOME A MEMBER OF THE AMERICAN CHEMICAL SOCIETY. I GOT A BEAUTIFUL NOTE FROM THE PRESIDENT OF THE SOCIETY, SAYING, SORRY, THAT I WAS TOO YOUNG. BUT ENCLOSED WAS A GORGEOUS HARD-BOUND BOOK. I CAN STILL REMEMBER THE GLOSSY COVER, CALLED "THE GOLDEN BOOK OF CHEMISTRY. " IT WAS PROFOUND AND LEFT AN INDELIBLE MARK ABOUT AMERICANS AND THEIR GENEROSITY AND TODAY I AM PROUD TO CALL AMERICA MY HOME.

THE NEXT PRESIDENT FACES TREMENDOUS CHALLENGES IN KEEPING AMERICA SAFE AND SECURE AND RESTORING OUR GLOBAL LEADERSHIP. WE WANT OTHER 10-YEAR-OLDS TO THINK OF AMERICA THE WAY I DID WHEN I GREW UP IN INDIA. THERE ARE ALSO ENORMOUS OPPORTUNITIES FOR THE NEXT PRESIDENT TO STRENGTHEN OUR GLOBAL ENGAGEMENT AND PUT GREATER EMPHASIS ON NON-MILITARY TOOLS OF DEVELOPMENT AND DIPLOMACY.

IT IS APPROPOS THAT I QUOTE FROM A SPEECH FROM OUR MODERATOR THIS EVENING, FRANK SESNO GAVE AT A UNIVERSITY. I QUOTE "THE NEXT PRESIDENT WILL HAVE TO BRING TOGETHER DIS-SEPARATE PARTS OF THE WORLD AND GET THEM TALKING. WE ARE SO GOOD AT YELLING, AND SO GOOD AT ISOLATING EXTREMES OF A CONVERSATION, BUT WE NEVER GET AROUND TO DISCUSSING SOLUTIONS. THE NATIONAL DEBATE SHOULD FOCUS ON THREE PARTS, DEFINE THE ISSUES, DEBATE THE THEM, AND TRY TO FIND WAYS TO FIX THEM. " LADIES AND GENTLEMEN, IT IS MY PRIVILEGE TO INTRODUCE OUR ELOQUENT, THOUGHTFUL MODERATOR, FRANK SESNO, CNN CORRESPONDENT AND CENTER OF MEDIA AT GEORGE WASHINGTON UNIVERSITY. FRANK HAS COLLECTED SO MANY AWARDS, I CAN RECITE THEM ALL NIGHT, BUT HE HAS HAD AN EMMY, AN OVER SEAS PRESS AWARD AND MANY MORE. AS WASHINGTON BUREAU CHIEF OF CNN, FRANK HAS COVERED MOST OF THE STORIES OF THE PAST TWO DECADES AND WOULD GIVE BARBARA WALTERS A RUN FOR THE MONEY IN TERMS OF THE NUMBER OF PRESIDENTS AND LUMINARYS HE HAS INTERVIEWED. HE IS PARTICULARLY FOCUSED ON INTERNATIONAL AFFAIRS AND POLITICS. TODAY HE HOSTS THE CENTER'S CUTTING EDGE WEB BASED TALK SHOW AMONG OTHER PROJECTS. LADIES AND GENTLEMEN, PLEASE WELCOME FRANK/S*E SNO.

MR. SESNO: GOOD EVENING, EVERYONE, I AM QUITE CERTAIN I DON'T DESERVE THAT INTRODUCTION BUT THANK YOU SO MUCH FOR THOSE GRACIOUS REMARKS. BEFORE WE GET GOING AND THERE IS A LOT WE ARE GOING TO DO AND ACCOMPLISH. JUST A LITTLE QUICK CENSUS. HOW MANY STUDENTS HAVE WE GOT IN THE GROUP? HOW MANY FACULTY HAVE WE GOT WITH US? IF YOU HADN'T NOTICED, YOU ARE BALD OUTNUMBERED. HOW MANY COMMUNITY MEMBERS? THAT'S TERRIFIC. HOW MANY OF YOU HOLD A PASSPORT? OKAY. NOW WE ARE TALKING.

WELL, GOOD EVENING. AND I WOULD LIKE VERY MUCH TO THANK THE CENTER FOR U.S. GLOBAL ENGAGEMENT, THE ANNENBERG SCHOOL AND ALL OF TONIGHT'S HOSTS FOR THIS REMARKABLE FORUM. I PROMISE YOU, YOU WILL BE ENGAGED, AND THANK ALL THE PHILLIES FANS HERE -- NOW WE PROMISE A GREAT DEAL OF INSIGHT AND WE WILL START BEFORE I GO ANY FURTHER WITH ONE BIG NEWS ITEM. DR. KISSINGER, YOU ARE A DIPLOMAT, BUT YOU ARE ALSO A BASEBALL FAN. WHO'S GOING TO WIN THE WORLD SERIES?

DR. KISSINGER: I AM A YANG KEY FAN; AIAN KEY FAN, SO --

MR. SESNO: YOU ARE OUT TO MAKE FRIENDS ALL OVER THE PLACE, AREN'T YOU? WELL, IT'S A GREAT PLEASURE TO BE HERE WITH TWO OF OUR NATION'S MOST DISTINGUISHED PUBLIC SERVANTS AND WISEMEN ON GLOBAL AFFAIRS, ECONOMIC AFFAIRS, TO DISCUSS THE GLOBAL CHALLENGES THAT CONFRONT THE NEXT PRESIDENT, THIS COUNTRY, AND THE WORLD. WE, OF COURSE, HAVE DR. HENRY KISSINGER, ONE OF THE NATION'S FOREMOST EXPERTS ON FOREIGN POLICY AND DIPLOMATIC HISTORY AS WELL AS INTERNATIONAL AFFAIRS, HE SERVED AS SECRETARY OF STATE, AS YOU KNOW UNDER PRESIDENTS NIXON AND FORD. /PROBT RUBIN IS ONE OF THE MOST RESPECTED ECONOMIC EXPERTS IN THE COUNTRY. AS SECRETARY OF TREASURY UNDER PRESIDENT CLINTON HE GUIDED THE COUNTRY THROUGH SOMETIMES DIFFICULT ISSUES TO EXPAND THE COUNTRY'S FREE TRADE ALLIANCES AND TURMOIL IN THE U.S. FINANCIAL SYSTEM AND IF I'M NOT MISTAKEN, SOMETHING WE ONCE CALLED A BUDGET SURPLUS, A WHILE AGO.

BEFORE WE BEGIN OUR CONVERSATION, BOTH OF THESE GENTLEMEN HAVE ENDORSED THE CENTER'S MESSAGE ON THE IMPORTANCE OF USING ALL THE TOOLS IN THE COUNTRY'S DIPLOMATIC TOOLBOX TO ENGAGE THE WORLD. AND THE IMPORTANCE OF ELEVATING AND STRENGTHENING U.S. DEVELOPMENT AND DIPLOMATIC PROGRAMS HAS TRULYIC TOOLS IN PURCHASE, TRUELY /STRA TEACHIC TOOLS IN THE NATION'S. WE HAVE FOUND THAT WE ARE GOING TO INVITE YOU TO SUBMIT QUESTIONS AND WE WILL GET CARDS THROUGHOUT THE EVENING AND I WILL ENCORPORATE THOSE IN THE CONVERSATION AND NEARLY WHATEVER YOU X I WILL PASS ALONG. LET'S BEGIN, DR. KISSINGER, IN TWO WEEKS WE WILL ELECT A NEW PRESIDENT. TWO WEEKS AGO, AFTER WHAT SEEMS LIKE AN ETERNITY OF A CAMPAIGN, WHAT DO YOU BELIEVE ARE THE MOST CRITICAL ISSUES, GLOBAL ISSUES THAT WILL CONFRONT THE NEXT PRESIDENT WHEN HE RAISES HIS RIGHT HAND AND TAKES THAT OATH OF OFFICE?

DR. KISSINGER: YOU KNOW, I THINK THE MOST USEFUL THING HE CAN DO FOR HIMSELF IS TRY TO UNDERSTAND THE NATURE OF THE INTERNATIONAL ENVIRONMENT THAT HE FACES RATHER THAN TO SEGMENT IT INTO A SERIES OF SPECIFIC ISSUES REQUIRING A QUICK ANSWER. AND HE WILL BE FACING A SITUATION IN WHICH DIFFERENT PARTS OF THE WORLD ARE GOING THROUGH DIFFERENT CHANGES. THERE ARE A WHOLE SERIES OF CHANGES GOING ON GLOBALLY WHICH HAS NEVER HAPPENED BEFORE, BUT THEY DON'T NECESSARILY FOLLOW THE SAME RHYTHM OR CAN BE HANDLED WITH THE SAME ANSWERS.

IF YOU TAKE EUROPE, OR THE ATLANTIC AREA, WHEN I WENT TO COLLEGE, WHEN I TAUGHT IN COLLEGE, WHEN IN TERMS OF THE STATE SYSTEM, THE STATE AS WE HAVE KNOWN IT HISTORICALLY IS DECLINING IN EUROPE AND THEY ARE TRYING TO FORM THE EUROPEAN UNION, BUT THEY ARE BETWEEN THEIR PAST, WHICH HAS REJECTED THE FUTURE THEY HAVEN'T YET REACHED. AND THAT CREATES A SITUATION IN WHICH THE GOVERNMENTS WHICH ARE STILL HELD RESPONSIBLE IN SITUATIONS LIKE THE FINANCIAL CRISIS DO NOT HAVE THE SAME NATIONAL AUTHORITY THAT THEY HAD BEFORE. SO HOW DO YOU DIVIDE A GLOBAL SYSTEM OF ECONOMICS IN WHICH THE POLITICAL AND ECONOMIC ARE NOT SYNCHRONIZED. THAT IS THE PROBLEM IN EUROPE -- OR A PROBLEM. THEN YOU HAVE ASIA WHICH IS MORE LIKE 19TH CENTURY EUROPE, IN THE SENSE THAT THE COUNTRIES THINK OF EACH OTHER AS STRATEGIC RIFLES. IN ASIA IT'S CONCEIVABLE BUT NOT LIKELY THEN WE HAVE THE COMPLEX ISSUES IN THE MIDDLE EAST IN WHICH THE STATES CREATED AFTER WORLD WAR I ARE CONSIDERED AND SOME UNIVERSAL IDEOLOGY IS ATTEMPTING TO REPLACE THEM AND WE ARE ATTEMPTING TO CREATE A STRUCTURE AND THAT PRODUCES THE ISSUE, IT'S LIKE, IRAQ, AFGHANISTAN, PAKISTAN, IRAN, WHICH REALLY HAVE TO BE LOOKED AT IN -- AS A COMPLEX AND IN ADDITION, IT'S A WHOLE SET OF PROBLEMS WHICH ARE UNIQUE IN HISTORY THAT IS GLOBAL PROBLEMS WHICH CAN ONLY BE DEALT WITH ON A GLOBAL BASIS.

MR. SESNO: SUCH AS CLIMATE CHANGE?

DR. KISSINGER: CLIMATE CHANGE, NUCLEAR PRO LIVERATION AND THE PRESIDENT WILL HAVE TO DEAL WITH ALL THESE ISSUES SIMULTANEOUS AND IN THE AFTERMATH OF FINANCIAL CRISIS WHICH IN ITSELF WILL RAISE QUESTIONS ABOUT THE NATURE OF THE INTERNATIONAL SYSTEM. SO ON THE ONE HAND THIS IS A HUGE SET OF PROBLEMS, IT'S ALSO A UNIQUE OPPORTUNITY TO TACKLE THE PROBLEM OF WORLD ORDER, AND FROM THE POINT OF VIEW FOR ALL THE TOOLS THAT HAVE BEEN MENTIONED HERE.

MR. SESNO: WHAT YOU ARE SAYING IS, THIS NEW PRESIDENT, AND MAYBE THIS CALLS FOR REORGANIZING THE DEPARTMENT OF STATE OR NATIONAL SECURITY COUNCIL BUT IS LOOKING FOR A NEW GLOBAL PATTERN.

DR. KISSINGER: YES. AND THE BEST THING HE CAN DO AT THE BEGINNING IS TO GET WHOEVER IS TRUSTED ADVISORS TOGETHER AND ASK THEM, WHAT DO THEY REALLY THINK WE ARE TRYING TO DO HERE? BECAUSE OTHERWISE HE WILL BE DROWNED IN TACTICAL PROBLEMS.

MR. SESNO: WITH THE CRISIS MOVING SO FAST AND THE WORLD MOVING SO FAST, WILL HE HAVE TIME FOR THAT?

DR. KISSINGER: THE PROBLEM IN WASHINGTON IS ALWAYS THAT THE URGENT TENDS TO DRIVE OUT THE IMPORTANT. (A/PHRAUZ).

DR. KISSINGER: THE ART OF POLICY MAKING IS TRYING TO MAKE A LITTLE SPACE FOR THE IMPORTANT BECAUSE THE PRESIDENT F HE TRYS TO TACKLE EACH PROBLEM INDIVIDUALLY HE WILL BE DROWNED BETWEEN CONFLICTS WITH PEOPLE AND HE WILL BE ADJUDICATING AND THIS IS THAT NOT A REFLECTION ON ANY ONE PERSON, BECAUSE THIS IS THE GOVERNMENT GOING ASTRAY. THE SECOND PROBLEM, IN MY UNFORTUNATELY NOT TOO LONG OBSERVATION IS THAT PRESIDENTS STAGGER AFTER INAUGURATION AFTER YEARS OF EXHAUSTING CONTROVERSY AND SUDDENLY IT'S A HONEY MOON PERIOD AND THEY ARE SO RELAXED ABOUT IT AND SO HAPPY, THAT THEY ARE RELUCTANT TO TAKE ANYTHING ON THAT STARTS IT ALL OVER AGAIN. AND THAT'S THE MOMENT THAT THEY OUGHT TO TAKE ON THE TOUGH PROBLEMS.

MR. SESNO: LET ME TURN TO YOU THEN, SECRETARY RUBIN, BECAUSE IT'S NOT GOING TO BE MUCH OF A HONEY MOON IF WHAT WE SEE IN THE MARKETS AND FINANCIAL CRISES CONTINUE, BECAUSE IT'S RELENTLESS. SO WHAT WOULD YOU SAY FROM YOUR PROSPECTIVE IS THE CRITICAL PROBLEMS FACING THE NEXT PRESIDENT?

DR. RUBIN: I REMEMBER IN 1993, EARLY ON LLOYD BENSON, PRESIDENT CLINTON'S FIRST SECRETARY OF TREASURY, I WAS WITH LLOYD AND HE SAID TO PRESIDENT CLINTON, CLINTON WAS TRYING TO WHETHER TO DO HEALTHCARE AND BUDGET DEFICIT AT THE SAME TIME, THE PRESIDENT HOWEVER POPULAR HAS A LIMITED AMOUNT OF POLITICAL CAPITAL AND LIMITED INSTITUTIONAL CAPACITY AND YOUR THRESHOLD DECISION HAS TO BE WHAT YOUR PRIORITIES HAVE TO BE AND YOU IF YOU TRY TO DO THAN YOUR CAPACITY CAN ENABLE YOU TO DO EFFECTIVELY, CAN YOU WIND UP BEING INEFFECTIVE AT EVERYTHING YOU DO AND LOSE YOUR PRESIDENCY RIGHT AT THE BEGINNING. SO I THINK THE NEXT CHALLENGE FOR THE NEXT PRESIDENT AND THIS IS ONE YOU FACE DURING THE TRANSITION AT PRESIDENT-ELECT IS TO MAKE THE EXCRUCIATINGLY DIFFICULT CHOICES OF THE IMPERATIVE OF CRITICAL ISSUES THAT ANY PRESIDENT HAS FACED IN RECENT TIMES. HENRY KNEW ABOUT THIS MUCH MORE THAN I DO, IRAQ, AFGHANISTAN, MAYBE PAKISTAN AND IRAN, POSSIBLY RUSSIA, WHATEVER, IS GEOPOLITICAL ISSUES YOU CANNOT PUT ASIDE. YOU HAVE TO DEAL WITH THOSE. WE HAVE A FINANCIAL CRISIS OF THE UTMOST IMPORTANCE, CERTAINLY THE MOST DIFFICULT SINCE THE 1930'S, THERE HAS BEEN NOTHING LIKE IT SINCE THE 1930'S, HE HAS GOT TO DEAL WITH THAT, FRANK. AND AT THE SAME TIME I BELIEVE THAT WE CANNOT DEFER FACING OUR LONG-TERM ECONOMIC CHALLENGES AS WELL, BUT HE'S GOING TO HAVE TO MAKE UP THE VARIOUS LONG-TERM CHALLENGES AS TO WHICH ONCE HE IS GOING TO DEAL WITH EARLY ON AND WHICH ONE HE SEQUENCES DOWN THE ROAD. AND TO FINISH THAT THOUGHT, AT THE VERY LEAST WE HAVE TO ESTABLISH FISCAL CONDITIONS BUT IN THE FIRST PLACE WE HAVE TO HAVE A VERY LARGE FISCAL STIMULUS. THE DEBATE ON THE FISCAL STIMULUS, THE SHORT-SIDE OF IT, AMONGST THOSE WHO SUPPORT IT, IS SHORTLY 1% OF GDP AND THE LONG SIDE IS $300 BILLION. WHEN THE CONGRESSIONAL BUDGET OFFICE ANNOUNCES THE DEFICIT PROJECTIONS IN '09, MY GUESS IT WILL BE A NUMBER SOMEWHERES IN THAT NEIGHBORHOOD OF 9 HUNDRED BILLION OR TRILLION DOLLARS SO WE HAVE A VERY SERIOUS FISCAL SITUATION UPON WHICH WE WILL BE PILING ADDITIONAL DEFICITS, SO WHILE I THINK IT'S IMPORTANT TO DEAL WITH A FISCAL STIMULUS, I THINK HE HAS TO FIND A WAY TO MARRY THAT IN A WAY THAT IS REAL AND THEREFORE CREDIBLE WITH THE MARKETS WHERE THEY PLAN TO RESTORE OUR SOUND FISCAL CONDITION ONCE THE ECONOMY IS HEALTHY AGAIN. AT THE SAME TIME, HE HAS ENERGY, HEALTHCARE, BASIC RESEARCH, INFRASTRUCTURE, EHE QUIPPING THE POOR, AND AN ENORMOUS ECONOMIC ISSUE AND YOU CANNOT DO THAT ALL AT ONE TIME, UNLESS HE WANTS TO DROWN HIMSELF, AS HENRY SAID, THE THRESHOLD DECISION IS HOW MANY OF THESE PRIORITYS CAN I ADDRESS IN THE FIRST INSTANCE AND WHICH ONES SHOULD THEY BE?

MR. SESNO: AND BY THE WAY, WHY DID I REALLY WANT THIS JOB.

DR. RUBIN: I WAS JOKING WITH ONE OF THE CANDIDATES AND I SAID, "ARE YOU SURE YOU WANT TO DO THIS?" AND HE SAID IT'S A LITTLE LATE TO BE THINKING ABOUT THAT.

MR. SESNO: WE ARE GOING TO GET INTO THESE QUESTIONS OF ENGAGING THE WORLD, BUT AS I MENTIONED AT THE OUTSET, UNDER BILL CLINTON WE SAW A BUDGET SURPLUS FOR THE FIRST TIME IN WHAT WAS IT 38 YEARS OR SOMETHING?

DR. RUBIN: 1968. WE ARE NOW TALKING ABOUT A POTENTIAL A TRILLION DOLLAR DEFICIT.

DR. RUBIN: WHAT'S THE DIFFERENCE. $900 BILLION IS A LOT OF MONEY.

MR. SESNO: BUT THE BABY BOOMERS HAVE ALREADY STARTED TO COLLECT SOCIAL SECURITY, AND IT COMES AT AN ECONOMIC SLOWDOWN THAT LOWERS TAX RECEIPTS.

DR. RUBIN: WELL, THAT'S IN THE TRILLION.

MR. SESNO: WHAT DOES THAT MEAN FOR RUNNING ROOM FOR THE NEXT PRESIDENT AND THE STATURE AND STANDING OF THE UNITED STATES IN THE WORLD.

DR. RUBIN: MY VIEW. AND I THINK THAT -- AND I DON'T KNOW IF HENRY WHO WOULD BE FAR MORE WISE THAN I WOULD BE ON THIS -- THE CAPACITY OF THE UNITED STATES TO FUNCTION GEO POLITICALLY IS IN MEASURE GROUND ON OUR ECONOMY AND WE HAVE TO GET OUR ECONOMY BACK ON TRACK AGAIN. I THINK ONE OF THE GREAT CHALLENGES FOR THE NEXT PRESIDENT, AND I WILL GIVE YOU MY VIEW, FRANK, AS TO ONE WAY TO THINK ABOUT HOW TO DO THIS. I BELIEVE WE DO HAVE TO HAVE A VERY LARGE FISCAL STIMULUS NOW. AND ONCE WE GET IN A HEALTHIER STATE WE HAVE TO GET BACK WITH RESPECT TO OUR FISCAL CONDITION. ON THE OTHER HAND, THESE GREAT DOMESTIC CHALLENGES, ENERGY, HEALTHCARE AND THE REST ARE CRITICAL IF WE ARE EVER GOING TO BE SUCCESSFUL ECONOMICALLY. SO I THINK WHAT YOU NEED TO HAVE IS A MULTI-YEAR PROCESS PUT IN PLACE. WHILE YOU NEED TO PUT IN PLACES A PROCESS. THESE ARE BOTH HOUSES TO TRY TO TAKE SOME JOINT POLITICAL ACCOUNTABILITY FOR WHAT ARE POLITICALLY EXCRUCIATING ISSUES ON TAXS, ON SPENDING AND ON PUTTING THE ENTITLEMENTS IN A SUSTAINABLE POSITION. AND THAT I THINK IS AN APPROACH WHICH AT LEAST OFFERS YOU A CHANCE OF DEALING WITH THESE ISSUES THAT ARE OTHERWISE SO POLITICALLY FRAYED AS I FEAR, NOT TOO LIKELY TO BE SUSCEPTIBLE TO BE ADDRESSED IN A TERM POLITICAL SYSTEM. AND IF YOU CAN DEAL AND PUT IN PLACE A HEALTHCARE REFORM PROGRAM THAT SERIOUSLY CONSTRAINS THE RATE OF INCREASE OF HEALTHCARE COSTS THAT IS CENTRAL TO YOUR FISCAL POSITION, BECAUSE MEDICARE IS THE SINGLE MOST PROBLEM IN TERMS OF OUR LONG-TERM FISCAL POSITION. SO THERE IS A CONSISTENCY IF YOU WILL BETWEEN ADDRESSING THESE FISCAL YEARS AND GETTING OUR FISCAL HOUSE IN ORDER AND YOU HAVE TO GO ON ALL TRACKS AT THE SAME TIME AND IT'S GOING TO BE EXTREMELY DIFFICULT AND MADE MORE DIFFICULT BECAUSE OUR FISCAL POSITION HAS DETERIORATED SUBSTANTIALLY OVER THE COURSE OF A DECADE.

MR. SESNO: LET ME COME TO YOU WITH A QUESTION -- CAN YOU HEAR ME? OKAY. WELL, WE MADE NEED ANOTHER MICROPHONE BUT I WILL SPEAK AS LOUDLY AS I CAN. YOU GOT ME NOW? IS THE MIKE WORKING? THANK YOU. APOLOGYS. HERE'S A QUESTION FROM THE FLOOR TO THIS POINT. WITH THE ECONOMIC CRISIS, THE CURRENT ECONOMIC CRISIS HOW CAN AMERICA MAINTAIN ITS STATUS AS A SUPERPOWER?

DR. KISSINGER: A SUPERPOWER REALLY DEPENDS ON YOUR PERFORMANCE. AND I DON'T KNOW WHETHER IT IS A LAW OF NATURE THAT THE UNITED STATES MUST BE THE SINGLE DOMINANT POWER IN THE WORLD, BUT WHAT THE PRESENT CRISIS WILL DO, AND I THINK IT IS ALSO A HEALTHY THING IS TO ENABLE -- IT FORCES US TO ESTABLISH PRIORITYS. AND CHOOSING AMONG FOREIGN POLICY ISSUES. WE CANNOT HANDLE EVERY ISSUE THAT ENGAGES OUR INTEREST IN THE WORLD SIMULTANEOUSLY.

MR. SESNO: MONEY IS GOING TO BE VERY TIGHT.

DR. KISSINGER: BUT THERE ARE A LOT OF THINGS THAT YOU CAN DO THAT DO NOT REQUIRE HUGE EXPENDITURES. A CONCEPT OF HOW YOU HANDLE PROLIVERATION AND HOW YOU DEAL WITH THE ENVIRONMENT, THE INTELLECTUAL AND POLITICAL EFFORT. WE SHOULD STOP OBSESSING ABOUT SUPERPOWER STATUS AND TRY TO ADDRESS THE ISSUES THAT MUST BE ADDRESSED, NO MATTER WHAT THE SITUATION, WHATEVER OUR ASSESSMENT OF THE FINANCIAL CRISIS, IN MY VIEW AND BOB MAY CONTRADICT THIS, WE WILL EMERGE AS ECONOMICALLY THE STRONGEST NATION IN THE WORLD FOR THE NEXT DECADE. IN ANY CASE. AND MILITARILY WE WILL BE SURELY THE STRONGEST NATION. SO WE HAVE THE MATERIAL TO PLAY A SIGNIFICANT ROLE. AND WHETHER WE ARE THE ABSOLUTELY DOMINANT NATION IN THE WORLD OR NOT, IN ORDER TO HAVE A PROGRESSING PEACEFUL ORDER, OUR TASK WILL BE TO INVOLVE OTHER NATIONS IN THE CREATION OF THAT ORDER. SO THAT THEY THINK IT IS THEIR OWN, AND NOT AN AMERICAN DESIGN ALONE. THAT WILL BE OUR BIG TASK. AND THAT I THINK IS WITHIN OUR CAPABILITY.

MR. SESNO: WHAT IS YOUR RESPONSE?

DR. RUBIN: I GUESS MY RESPONSE WOULD BE THIS, FRANK. I AGREE WITH HENRY. I THINK ONCE WE GET THROUGH THIS CRISIS, AND THIS CRISIS IS A VERY SERIOUS CRISIS. /EUS A QUESTION OF OVERLEVERAGING AND OTHER ISSUES BUT IT HAS TURNED INTO WHAT HAD BEEN A SERIOUS SET OF ISSUES IN THE CREDIT MARKETS WITH SUBPRIME MORTGAGES AND SO FORTH INTO A PSYCHOLOGICAL CRISIS AND THIS HAS BECOME A PERVASIVE ANXIETY AND CONCERN. AND WHAT PUBLIC POLICY HAS TO DO, PUBLIC POLICY HAS THE CAPABILITY, AND IT HAS THE STRENGTH TO ADDRESS THIS, AND I THINK THE PROBABILITY IS HIGH, AS A MATTER OF FACT, THAT IT'S STRONG ENOUGH TO RESOLVE THE PSYCHOLOGICAL CRISIS PART OF THIS WITHIN A REASONABLE PERIOD OF TIME, BUT EVEN AFTER THAT, WE WERE HAVING DIFFICULT TIMES OVER THE COURSE OF THE PAST YEAR, BEFORE THE CRISIS STARTED, BEFORE THE CRISIS OF THE ECONOMY STARTED. SO I THINK WHETHER IT'S ANOTHER YEAR OR YEAR AND A HALF OR WHATEVER DURING WHICH THE CRISIS OF CONFIDENCE WILL PASS RELATIVELY SOON BUT IT IS STILL GOING TO REMAIN DIFFICULT FOR QUITE SOMETIME BUT I THINK WE WILL EMERGE FROM THAT AND BECOME THE MOST POWERFUL ECONOMY IN THE WORLD AND ALL THE REST WITH ONE IMPORTANT CAVEAT. WE HAVE CONSEQUENTIAL CHALLENGES TO MEET AND WE CAN BE A ROBUST ECONOMY FOR A LONG TIME TO COME BUT WE CAN BE STRONG BECAUSE OF OUR LONG-TERM DINE /PHEUFPL BUT TO DO THAT WE HAVE TO DO A FAR BETTER JOB THAN WE HAVE IN RESTORING A SOUND FISCAL FRAMEWORK AND WITHIN THE CONTEXT OF THAT FRAMEWORK DEAL WITH OUR EDUCATIONAL ISSUES, OUR HEALTHCARE ISSUES, OUR RESEARCH AND THE REST. BUT OUR FUNDAMENTAL QUESTION FOR OUR COUNTRY IS CAN OUR POLITICAL SYSTEM FUNCTION EFFECTIVELY ENOUGH TO MEET THE CHALLENGES WE FACE. IF WE CAN, I THINK WE CAN FACE IT AND IF BECAN DO THAT WE CAN REMAIN A MAJOR GEOPOLITICAL FORCE. IF OUR DEMOCRATIC POLITICAL SYSTEM CAN'T FUNCTION EFFECTIVELY ENOUGH, THEN WE FACE A DIFFERENT SET OF ISSUES AND PROBLEMS AND HISTORY OF THE UNITED STATES AT LEAST HAS BEEN ONE OF RESILIENCE AND RISING TO MEET OUR CHALLENGES BUT THERE IS A LOT THAT WE HAVE TO DO MORE EFFECTIVELY.

DR. KISSINGER: CAN I MAKE ONE COMMENT? I AGREE WITH WHAT YOU SAY BUT THE DOMESTIC SITUATION, BUT WITH RESPECT TO THE INTERNATIONAL SITUATION AND THE FINANCIAL ONE, THEY ARE TWO PROBLEMS OF CONFIDENCE. ONE IS THE ONE OF THE MARKETS. AND THAT WILL BE DEALT WITH OR NOT, AND I THINK IT WILL BE DEALT WITH.

MR. SESNO: I'M GETTING WORRIED HERE.

DR. KISSINGER: THE SECOND PROBLEM IS, THAT EVERY COUNTRY IN THE WORLD THAT IS AFFECTED BY THIS CRISIS WILL HAVE TO REEXAMINE IT'S OWN PRIORITYS ALSO. AND WE HAVE TO ASK OURSELVES HOW WE GOT TO THIS POINT, BUT THEY HAVE TO ASK THEMSELVES AS WELL. AND THEREFORE, CONDITIONS EXIST WHERE THE TENDENCY OF SLIDING ALONG AND WAITING FOR SOME CRISIS TO IM/PEL EVENTS TO ACTION CAN BE MODIFIED AND CAN LEAD TO THE EMERGENCE OF A NEW PATTERN OF INTERNATIONAL RELATIONS.

IF YOU LOOK BACK TO 1945, EUROPE WAS DEVASTATED. WE HAD NO EXPERIENCE IN INTERNATIONAL AFFAIRS. IF YOU LISTED THE PROBLEMS OF THE POST WORLD WAR II, THEY WERE VAST AND WE INSTILLED OUT OF THIS AN IDEA OF INTERNATIONAL ORDER THAT LASTED FOR A CENTURY AND WITH ALL ITS UPS AND DOWNS ACHIEVED ITS PRINCIPAL OBJECTIVES. THAT ORDER IS NOW GONE, IN A WAY, BECAUSE PARTLY BECAUSE OF SUCCESS AND PARTLY BECAUSE THE WORLD HAS BECOME GLOBAL AND PARTLY BECAUSE ECONOMICS HAVE CHANGED. BUT WE SHOULD LOOK AT THIS PRESENT PERIOD AS AN OPPORTUNITY AND NOT JUST WRING OUR HANDS AT THE VARIOUS CRISES.

MR. SESNO: LET ME USE THIS POINT TO TURN TO THIS TOPIC OF PRECISELY HOW AMERICA ENGAGES THE WORLD, PRECISELY HOW THIS TOOLBOX THAT YOU HEARD MENTIONED HERE THIS EVENING ALREADY IS GOING TO BE USED AND WHAT SHOULD BE IN IT.

YOU BOTH ENDORSED THIS STATEMENT BY THE CENTER'S IMPACT '08 NATIONAL CO-CHAIRS MADELIENE ALBRIGHT AND FRANK CARLUCCI, A DEMOCRAT AND REPUBLICAN. CALLING ON THE NEXT PRESIDENT TO STRENGTHEN AND ELEVATE THE NON-MILITARY TOOLS, DEVELOPMENT, DIPLOMACY, TRADE. WE HEARD THE SECRETARY OF DEFENSE, ROBERT GATES SAY THE SAME THING, IN VERY ELOQUENT TERMS FROM A MILITARY MAN.

WHAT DO YOU THINK THE NEXT ADMINISTRATIONNEEDS TO DO TO ACCOMPLISH THIS?

DR. RUBIN: TO ACCOMPLISH WHAT?

MR. SESNO: TO ACCOMPLISH THE USE OF ALL THESE TOOLS, THE ELEVATION OF DEVELOPMENT, DIPLOMACY, TRADE AS A MEANS OF EMBRACING AND ENGAGING THE WORLD.

DR. RUBIN: I WILL TAKE ONE QUICK SHOT AT IT. I THINK THE SINGLE MOST THING IN TERMS OF DEVELOPING THE POOR NATIONS OF THE WORLD THE SINGLE MOST IMPORTANT THING CAN YOU DO ALTHOUGH IT'S A VERY HARD THING TO DO IS TRY TO HELP CREATE MORE EFFECTIVE GOVERNANCE IN THESE COUNTRIES ALL THE EVIDENCE SUGGESTS I AM A GREAT PROPONENT OF FOREIGN AID AND ASSISTANCE AND I WORKED VERY HARD FOR IT WITH THE TREASURY BUT UNLESS IT IS MARRIED WITH EFFECTIVE GOVERNANCE, IT HAS LITTLE EFFECT. THAT'S ONE THING TO TRY TO DO, BUT HOW TO DO IT, I MUST SAY IS A COMPLEX ISSUE AND NOT A LOT OF INSTANCES OF OUTSIDE FORCES BEING ABLE TO EFFECTIVELY WORK IN THAT AREA. THE OTHER POINT, FRANK IS THAT TRADE HAS ALWAYS BEEN A MUCH MORE POWERFUL TOOL IN TERMS OF AID. IN THE CONTEXT OF THE UNITED STATES, THE WORLD'S LARGEST MARKET, IF WE OPEN OUR MARKETS AS WE GO AROUND TO THE LABOR INTENSIVE GOODS AROUND THE WORLD THAT WOULD BE A GREAT BOOM TO THE DEVELOPING WORLD. I DON'T BELIEVE WE WILL HAVE THE SELF-CONFIDENCE TO DO THAT POLITICALLY UNTIL WE GET OUR OWN HOUSE IN ORDER AND UNTIL WE DO A BETTER JOB OF THOSE DISLOCATED BY TRADE. BUT IT IS ALSO A REALITY THAT TRADE LIBERALIZATION ALSO HAS DIS-LOCATIONAL AFFECTS AND WE HAVE NOT DEALT WITH THAT EFFECTIVELY AND WE WILL NOT BE ABLE TO MOVE FORWARD ON TRADE AND BE HELPFUL TO OURSELVES AND THE DEVELOPMENT OF THE WORLD UNTIL WE DEAL WITH THOSE SETS OF ISSUES.

MR. SESNO: PRESIDENT BUSH AT THE WHITE HOUSE GAVE A VERY EMPHATIC SPEAK ON THE IMPORTANCE OF INTERNATIONAL DEVELOPMENT IN THIS TOOLBOX. HE TALKED ABOUT AID TO AFRICA FOR HIV AIDS AND HE TALKED ABOUT THIS MILLENIUM ACCOUNT THAT TIES FOREIGN ASSISTANCE TO GOVERNMENT BEHAVIOR, THE KINDS OF THINGS YOU ARE TALKING ABOUT. WHAT DO YOU THINK THE ROLE CAN AND SHOULD BE FOR THE NEXT PRESIDENT IN PURSUING THIS DEVELOPMENT ASSISTANCE AND TRADE AND AID?

DR. KISSINGER: I THINK ISSUES YOU CAN DEAL WITH, WITH MONEY, ARE RELATIVELY EASY IF YOU HAVE ONCE ESTABLISHED PRIORITYS. SO THE PRESIDENT, OF COURSE, CAN EXPLAIN THE IMPORTANCE OF MORE SUPPORT AIDS RESEARCH. I THINK, THOUGH, THAT THESE ARE NOT PROBLEMS THAT TEAR THE BASE -- THE REAL PROBLEMS ARISE WHEN YOU HAVE AN ISSUE THAT IS DIPLOMATIC, DEVELOPMENT, ALL THESE ELEMENTS WRAPPED TOGETHER, AND THEN YOU LEARN TO DECIDE HOW TO VIEW IT. AND MY VIEW WHICH IS MAYBE NOT EXACTLY THE ORTHODOX VIEW IN THIS ROOM, IT'S THAT YOU CANNOT SEGMENT OUT ONE OF THEM AND SAY "THAT'S THE ONE THAT WE LIKE TO DO. "

MR. SESNO: ISN'T THAT THE WHOLE POINT, THAT YOU HAVE TO DO ALL OF THEM, ISN'T THAT THE POINT AND THE CHALLENGE?

DR. KISSINGER: YOU HAVE TO LEARN TO DO THEM TOGETHER. YOU TAKE THE ISSUE OF DIPLOMACY. WHEN YOU SHOULD TALK, IT'S OFTEN PRESENTED IN OUR DEBATE HERE AS A PSYCHIATRIC PROBLEM. GET SOMEBODY IN THE ROOM, WHEN YOU ARE IN THE ROOM WITH THEM, THE ATMOSPHERE CHANGES, YOU START MAKING MUTUAL CONCESSIONS, YOU BEGIN TO UNDERSTAND EACH OTHER BETTER, AND THE WORLD WILL THEN LIVE IN A HIGHER CONSCIOUSNESS AND HARMONY. I'M SURE THAT HAS HAPPENED SOMETIMES. I HAVE NEVER SEEN IT, BUT MAYBE IT IS A REFLECTION ON ME.

MR. SESNO: ALL THOSE YEARS WITH THE VIETNAMESE AND /KHEUPBS SOVIETS, THAT HAS NOT HAPPENED YET?

DR. KISSINGER: I THINK THERE IS A SECOND SIDE TO THE APPROACH TO DIPLOMACY, WHICH LOOKS AT IT AS A THEELOGICAL QUESTION, THAT SOMEBODY HAS TO BE MORALLY FIT TO BE IN THE ROOM WITH THEM BEFORE WE TALK TO HIM. AND SO FIRST THERE HAS TO BE A CONVERSION BEFORE THERE IS DIPLOMACY.

NOW I HAVE ALWAYS ADVOCATED A DIPLOMATIC CONTACT, BUT WHEN I LOOK AT MY EXPERIENCES. LET'S TAKE THE OPENING TO CHINA FOR WHICH IS OFTEN MENTIONED. ONE OF THE REASONS WHY THE OPENING OF CHINA OCCURRED WAS THAT THE SOVIET UNION MOVED OVER 40 DIVISIONS TO THE CHINESE BORDER. THAT CLEARED MAO'S MIND MORE THAN ALL THE ELOQUENT MESSAGES WE HAD SENT BEFORE. AND WHATEVER COUNTRY PUTIN WAS MADE BY THE ADMINISTRATION WE UNDERSTOOD MAYBE A LITTLE FASTER THAN OTHERS DID. SO THEN WE COULD HAVE CONVERSATIONS AND A LOT OF DIPLOMACY, AND ONE COULD APPLY THAT TO MANY NEGOTIATIONS. SO WHEN WE TALK OF SAY, NEGOTIATIONS WITH IRAN, WHICH I HAVE ADVOCATED AT REASONABLE LEVELS.

MR. SESNO: YOU DID IT RECENTLY AND GOT INTO A LITTLE TROUBLE FOR THAT AS WELL.

DR. KISSINGER: IF PEOPLE GO TO MY WEB SITE AND READ WHAT I HAVE WRITTEN, THEY CAN FIND IT OUT. I HAVE TO GIVE A COMMENTARY ON MY COMMENTARY. IT'S -- BUT I HAVE BELIEVED THAT IT'S IMPORTANT TO MAKE CLEAR THAT THE AMERICAN PEOPLE AND TO THE OTHER SIDE, THAT WHAT OUR VISION IS OF THE OUTCOME IN THE MIDDLE EAST. BECAUSE ONLY THAT WAY CAN WE JUSTIFY POTENTIAL CALLS FOR SACRIFICE AND SO FORTH. THIS ISN'T JUST A QUESTION OF GETTING INTO A ROOM WITH SOMEBODY.

IT REQUIRES US TO DO AN A SERIES OF THINGS IN BOTH THE POLITICAL AND ECONOMIC AND OTHER FIELDS THAT INDICATES THAT WE HAVE A CAPACITY TO MOVE TOWARDS THAT STRUCTURE IN THE REGION OUT OF WHICH THEN IRAN WILL STILL BE IT'S OWN CALCULATION. CAN THEY BE MESHED? THAT'S THE TASK OF DIPLOMACY.

MR. SESNO: JUST BEFORE WE GET BACK TO IRAN. TO BE CLEAR ON IRAN, HENRY KISSINGER SAYS THE UNITED STATES, WHOEVER THE NEXT PRESIDENTS, SHOULD ENGAGE THE CURRENT REGIME OF IRAN?

DR. RUBIN: YOU HAVE YOUR TELEVISION INTERVIEW.

MR. SESNO: I JUST WANT TO BE CLEAR.

DR. RUBIN: YOUR HISTORY IS COMING OUT.

MR. SESNO: I WANT YOU TO HAVE YOUR COMMENTARY.

DR. KISSINGER: I UNDERSTOOD IT. THE QUESTION IS SHOULD WE GO INTO A ROOM WITH THE IRANIAN PRESIDENT AT THE BEGINNING OF NEGOTIATIONS? THAT'S THE CONTROVERSIAL ISSUE. I THINK IF THE IRANIANS ARE SERIOUS THEY ARE NOT GOING TO FIELD AHMADINAJAD AS THEIR NEGOTIATOR. SO SHOULD WE AS PART OF A NEW ADMINISTRATION INCLUDE NEGOTIATION WITH IRAN? YES. BUT WE SHOULD BE READY TO DO IT AT AN APPROPRIATE LEVEL WITH A SERIOUS PROGRAM, AND WHICH ALSO REQUIRES THAT WE KNOW WHEN A STALEMATE HAS BEEN REACHED. BUT YES, I HAVE BEEN WRITING THIS AND I'M SURE YOU HAVE ALL READ IT. I'M EMBARRASSED TO REPEAT MYSELF.

MR. SESNO: ROBERT RUBIN, THIS PAST SUNDAY, COLIN POWELL GAVE HIS ADVICE, ALONG WITH HIS ENDORSEMENT AND HE SAID THE FOLLOWING WITH RESPECT TO THE ENGAGEMENT WITH THE WORLD. POWELL SAID WED HAVE TO DO MORE WITH RESPECT TO THE POVERTY SITUATION AROUND THE WORLD AND WE NEED TO INCREASE THE AMOUNT OF RESOURCES WE PUT INTO THE DEVELOPMENT PROGRAMS TO HELP THE REST OF THE WORLD BECAUSE WHEN YOU HELP THE POOREST IN THE WORLD YOU START TO MOVE THEM UP THE ECONOMIC AND SOCIAL LADDER AND THEY ARE NOT GOING TO BE MOVING TOWARD VIOLENCE OR TERRORISM OF A KIND THAT WE WORRY ABOUT. IS HE RIGHT OR IS HE NAIVE?

DR. RUBIN: SOMEWHERE AROUND THE MIDDLE OF THE 1990'S I THINK IT WAS THE BEGINNING OF THE SECOND TERM, FRANK, PRESIDENT CLINTON GAVE US ALL OF US WHO WORKED WITH HIM A COPY OF A BOOK BY ROBERT D. CAPLAN, BUT IT WAS A BOOK ABOUT THE ENORMOUS SELF-INTEREST THAT THE INDUSTRIAL COUNTRIES HAD IN THE POORER COUNTRIES COMBATTING POVERTY EFFECTIVELY. AND PART OF IT WAS TRYING TO AVOID THE DEVELOPMENT OF TERRORISM, SPREAD OF DISEASE, TRANSNATIONAL ENVIRONMENTAL ISSUES, GLOBAL WARMING AND EVERYTHING ELSE. I THINK HE WAS ABSOLUTELY RIGHT. BUT WHAT I DON'T AGREE WITH COLIN POWELL IS HOW YOU MOST EFFECTIVELY DO THAT. I THINK AIDS IS IMPORTANT. BUT OF THE THREE, AT LEAST I KNOW I THINK THE THREE PRIMARY MODALITYS I THINK THAT WOULD BE THE THIRD I PUT ON THE LIST. IF YOU LOOK AT THE HISTORY OF POOR COUNTRIES IN THE POST WORLD WAR II PERIOD WHAT YOU WILL FIND IS THAT COUNTRIES THAT HAD A 6% OR 7% RATE OF GROWTH HAVE BASICLY DONE IT BECAUSE THEY HAD GOVERNMENTS THAT WERE EFFECTIVE IN PUTTING IN PLACE SOUND POLICYS THAT HAD LONG-TERM OBJECTIVES AND VERY OFTEN THEY PAID A SHORT-TERM COST FOR THAT. SO I THINK EFFECTIVE GOVERNMENT IS THE PRIMARY INGREED /KWREPBTD TO ACCOMPLISH THIS AND THERE IS VERY LITTLE YOU CAN DO FROM OUTSIDE THE COUNTRY ON HOW A POLITICAL SYSTEM WILL OPERATE. I DON'T AGREE WITH WHAT YOU SAID BEFORE I WOULDN'T TIE AID TO GOVERNMENTAL PERFORMANCE BECAUSE THE PROBLEM THERE IS YOU HAVE LARGE NUMBERS OF POOR PEOPLE IN POOR COUNTRIES AND IT'S NOT THEIR FAULT THAT THEY HAVE AUTO KARATIC OR DICTATORIAL GOVERNMENTS WHO ARE ONLY INTERESTED IN THEIR OWN /POURP. YOU HAVE A TERRIBLE HUMANITARIAN PROBLEM AS WELL AS A SELF-INTEREST PROBLEM AS I MENTIONED. SECOND IS TRADE BUT WE HAVE AN ENORMOUS BACKLASH IN THE WORLD AGAINST TRADE LIBERALIZATION. AND CLEARLY FOREIGN POLICY IS IMPORTANT. WHETHER THOSE ARE THE RIGHT GOALS IN THE RIGHT STANDARD I DON'T KNOW.

MR. SESNO: DR. KISSINGER HERE'S A QUESTION ABOUT A COMMENT I SAID ABOUT EARLIER. PRESIDENT BUSH HAS DONE A LOT TO FIGHT HIV AIDS OVERSEAS. BOTH CONTINUE TO DOES THIS MATTER TO OUR SECURITY AND OUR LEADERSHIP?

DR. KISSINGER: IT MATTERS TO OUR LEADERSHIP. WE SHOULDN'T JUSTIFY THINGS AS BEING A SECURITY ISSUE PRIMARILY. I THINK IT IS IMPORTANT FOR THE UNITED STATES TO DEMONSTRATE TO THE WORLD AND ALSO TO ITSELF ITS CONCERN WITH A PLAGUE LIKE HIV AIDS, AND ITS AFFECTING A HUGE CONTINENT AND SO IT MATTERS. ACTUAL, IT USUALLY IRRITATES ME WHEN IT'S PUT FORWARD AS A SECURITY ISSUE.

MR. SESNO: COLIN POWELL DID THAT, THOUGH.

DR. KISSINGER: BUT I DON'T THINK IT'S A SECURITY ISSUE. I THINK IT'S AN ISSUE OF EXPRESSING OUR VALUES.

MR. SESNO: YOU DIS-AGREE WITH THE NOTION THAT RAISING PEOPLE FROM POVERTY ULTIMATELY ASSIST ITS AMERICAN SECURITY?

DR. KISSINGER: NO. I THINK THE CONVENTIONAL ARGUMENT IS THAT POOR PEOPLE ARE MORE LIKELY TO GO TO WAR, WHICH ISN'T TRUE. MOSTLY IT'S MIDDLE CLASS SOCIETYS THAT GO TO WAR THAT HAVE A CERTAIN MANTRA. I THINK THE WORLD WILL BE A MORE HOMO GENIUS WORLD THAT CAN UNDERSTAND ITSELF BETTER IF THE STANDARD OF LIVING BECOMES MORE COMPARABLE. AND I THINK IT IS AN EXPRESSION OF OUR HISTORIC CONSCIENCE. I DON'T THINK IT AFFECTS OUR SECURITY IN A VERY SHORT-TERM SENSE, EXCEPT BUT IF YOU LOOK AT EVEN IN AFRICA WHERE THE GENOCIDAL EVENTS OCCURRED, THEY WEREN'T CAUSED BY POVERTY AS MUCH AS THEY WERE CAUSED BY TRIBAL RIVALRYS. BUT I AM NOT ARGUING AGAINST ECONOMIC AID. I THINK ECONOMIC AID, I AGREED WITH THE OBJECTIVE OF THE PRESIDENT. I AGREE WITH THE BASIC POLICYS POWELL ADVOCATES, BUT I WOULD USE A DIFFERENT JUSTIFICATION. BUT THAT'S A GOOD SUBJECT FOR ACADEMIC SEMINARS.

MR. SESNO: I WOULD LIKE TO TAKE THE COURSE. QUESTION FROM THE FLOOR WHAT STEPS DOES THE NEXT PRESIDENT NEED TO TAKE TO RESTORE AMERICA'S MORAL AUTHORITY IN THE WORLD?

DR. RUBIN: MORAL AUTHORITY IN THE WORLD? WHAT DO YOU MEAN BY MORAL AUTHORITY? YOU ASKED THE QUESTION.

MR. SESNO: WHAT DO YOU THINK IT MEANS?

DR. RUBIN: I DON'T KNOW.

MR. SESNO: I COULD CITE A FEW GLOBAL ATTITUDE SURVEYS OR ANY NUMBER OF GLOBAL SURVEYS THAT SHOW THE RESPECT AND --

DR. RUBIN: THAT'S A DIFFERENT QUESTION. OKAY. RESPECT. I'M A BIT OF A MORAL /REL VISIT/RELAVIST.

MR. SESNO: DO YOU WANT TO GET INTO THAT?

DR. RUBIN: NOT REALLY. BUT AGAIN, DR. KISSINGER WOULD GIVE YOU A BETTER GROUND TO VIEW THAN I HAVE, BUT THERE ARE TWO AREAS IN WHICH WE HAVE TO GET OUR HOUSE IN ORDER. NUMBER ONE, WE HAVE TO GET OURSELVES OUT OF THE FINANCIAL CRISIS BECAUSE A LOT OF OUR AUTHORITY IN THE WORLD DID LIE IN THE VIEW THAT THE UNITED STATES HAD DONE A REMARKABLE JOB OVER A LONG PERIOD OF TIME IN TERMS OF HAVING AN ECONOMIC STIFF SYSTEM THAT WORKED AND UP AND DOWN ON AND WE HAVE TO GET THROUGH THIS THING AND WE NOT ONLY HAVE TO GET THROUGH IT OURSELVES BUT WE HAVE TO PUT IN MUCH MORE EFFECTIVE WAYS OF WORKING WITH THE REST OF THE WORLD BUT THAT IS EASY TO SAY AND VERY, VERY DIFFICULT TO DO FOR A HOST OF REASONS. I'M NOT SURE WE CAN ACCOMPLISH THAT. THAT'S ONE THING WE HAVE TO DO. SECONDLY WE HAVE TO ENGAGE WITH THE REST OF THE WORLD. WITH THE FINANCIAL CRISIS IN 1985, AND 1997 AND 1998, WHILE THE UNITED STATES AND IMF CLEARLY PROVIDED LEADERSHIP, WE DID REACH OUT TO THE FELLOW G-SEVEN COUNTRIES AND TO AN EXTENT SOMETHING CALLED THE G-20 SO WE COULD WORK IN AN /SRAOEURLT OF MUTUAL -- AN ENVIRONMENT OF MARTIN LUTHER KING, JR. RESPECT -- ENVIRONMENT OF MUTUAL RESPECT AND WE PLAYED LESS OF A LEADING ROLE THAN WE DID IN THOSE DAYS BECAUSE THE REST OF THE WORLD IS TAKING ON A NEW POSITION ECONOMICALLY AND TO AN EXTENT GEO POLITICALLY. BUT WE HAVE TO WORK WITH THE REST OF THE WORLD IN A DIFFERENT MIND SET. AND I THINK THE NEW PRESIDENT WHOEVER IT MAY BE, BUT IN THE FIRST FEW DAYS OF A TRANSITION PERHAPS, EVEN, SHOULD BE SENDING OUT PEOPLE WITH STANDING TO BEGIN MEETING WITH LEADERS IN THE REST OF THE WORLD IN ORDER TO DISCUSS OR A/SKRAOEUB TO THEM SORT OF A NEW APPROACH TO ENGAGE THE REST OF THE WORLD. IT MAY BE A BAD, IDEA, I DON'T KNOW, IT JUST OCCURRED TO ME JUST AS I WAS SITTING HERE.

MR. SESNO: IT'S BECOMING A BRAINSTORMING SESSION. LET ME FOLLOW UP ON THIS PERSON'S QUESTION ABOUT MORAL AUTHORITY, AND IF I COULD ASSUME THAT -- AND WE HEAR THIS A LOT IN CRITICISM, THOSE PICTURES FROM ABU GHRAIB, THE EXISTENCE OF BEGAN TAN MOW, THAT HAS UNDERMINED THE STATUS OF THE MORAL STANDING OF AMERICA. WHAT DO YOU THINK ABOUT THAT?

DR. RUBIN: IF IT WERE ME, I WOULD CLOSE GUANTANAMO. BEFORE YOU CLAP, I HAVE TO KNOW WHAT THAT MEANS, I HONESTLY DON'T KNOW WHAT THE CONSEQUENCE OF DOING THAT IS. I THINK IT IS SOMETHING A LITTLE MORE COMPLICATED THAN THAT. I THINK THOSE THINGS ARE EASY, RIGHT? I THOUGHT JOHN MCCAIN SAID IT WELL WHEN HE OPPOSED TORTURE. IT'S NOT ABOUT WHETHER IT'S EFFECTIVE OR NOT IT'S ABOUT WHO WE ARE. AND THAT WAS HIS /TKPHEPBT AT THE TIME AND I THINK HE IS RIGHT. OUR SUPPORT FOR DEMOCRACY, ON THE ONE HAND WE ALL WANT TO LIVE IN A DEMOCRACY, IT'S A MUCH BETTER FORM OF GOVERNMENT TO LIVE IN, AT LEAST IN MY OPINION. ON THE OTHER HAND, IF YOU HAVE POOR NATIONS WHERE THEY DON'T HAVE FOOD, SHELTER AND HEALTHCARE, THE REALITY OF LIFE IS THAT ALMOST EVERY COUNTRY THAT HAS SUCCEEDED ECONOMICALLY AND SUCCEEDED FROM BRINGING THE DESPERATELY POOR OUT OF DESPERATE POVERTY HAVE MADE THEIR ESSENTIAL ECONOMIC REFORMS AT A TIME OF AN AUTHORITARIAN GOVERNMENT, INDIA IS THE -- CHILI -- PRETTY MUCH ACROSS THE BOARD. I AM IN FAVOR OF DEMOCRACY, I WOULD NOT WANT TO LIVE IN ANY OTHER FORM OF GOVERNMENT, BUT WHEN WE GET ON OUR HIGH HORSES ABOUT IT, WE SHOULD THINK ABOUT IT. BECAUSE DEMOCRACY WITHOUT EFFECTIVENESS MEANS THAT PEOPLE WILL CONTINUE TO LIVE IN DIRE POVERTY AND THAT COULD BE A WORSE CONSEQUENCE FOR PEOPLE THAN HAVING AN AUTHORITARIAN GOVERNMENT AND THERE HAVE BEEN AUTHORITARIAN GOVERNMENTS THAT HAVE BEEN TERRIBLE AND AFRICA IS PACKED WITH GOVERNMENTS THAT HAVE BEEN TERRIBLE. I'M TRYING TO MAKE AN OBSERVATION ABOUT HOW COMPLICATED IT IS WHEN YOU TRY TO ESTABLISH MORAL AUTHORITY.

DR. KISSINGER: MAY I MAKE ONE COMMENT ABOUT THIS SUBJECT. I DON'T THING WE SHOULD DRIVE MASOCHISM TO AN EXTREME. BECAUSE IF YOU LOOK AROUND THE WORLD, WHERE EXACTLY CAN YOU SAY THAT AMERICA IS THAT UNPOPULAR? IT'S NOT TRUE IN CHINA. IT'S NOT TRUE IN INDIA. IT'S NOT TRUE IN RUSSIA.

MR. SESNO: IT'S TRUE IN MUCH OF WESTERN EUROPE AND MUCH OF THE ISLAMIC WORLD.

DR. KISSINGER: BUT THEN WHEN YOU LOOK AT THE REGIONS, IN THE ISLAMIC WORLD YOU CANNOT A/SKRAOEUB IT PRIMARILY TO OUR PERFORMANCE, IT IS LARGELY AN ELEMENT OF THE EVOLUTION THAT IS GOING THROUGH THE ISLAMIC WORLD. IN WESTERN EUROPE IT HAS BEEN PARTLY PRODUCED BY SOME -- BY BEHAVIOR AT THE BEGINNING OF THE CURRENT ADMINISTRATION THAT ENABLED A CRITICISM ON SPECIFIC ISSUES.

MR. SESNO: KYOTO?

DR. KISSINGER: KYOTO AND THE WAY IRAQ WAS JUSTIFIED AND THE DOCTRINE, SO, THERE WERE MISTAKES. UNDOUBTEDLY THERE WERE AMERICAN MISTAKES MADE. BUT WHEN YOU LOOK AT SPECIFIC COUNTRIES, WHAT IS VERY IMPORTANT RIGHT NOW IS FOR AMERICANS TO ENGAGE PEOPLE IN THOSE COUNTRIES LIKE INDIA, CHINA, RUSSIA, ON COMMON PROJECTS. THAT IS THE BEST WAY TO REPAIR THE MORAL STATTURE, BUT THE SENSE THAT WE WERE NOT RELEVANT TO THEIR PROBLEMS OR THAT WE ARE IMPINGING ON THEM IN A WAY, THAT MAKES NO SENSE IN THEIR OWN CIRCUMSTANCES.

MR. SESNO: IF THE PERSON WHO WAS ASKING THIS QUESTION WAS NOT SOMEONE FROM THIS ROOM, BUT THE PRESIDENT-ELECT, AND SAID TO YOU, DR. KISSINGER, HOW DO I IMPROVE THE MORAL AUTHORITY OF THE UNITED STATES? WHAT WOULD YOU TELL HIM?

DR. KISSINGER: I WOULD TELL HIM IN THE ABSTRACT -- WELL, I AGREE THE ISSUES LIKE -- OF COURSE WE SHOULDN'T DO -- THAT'S RELATIVELY EASY TO DO. WHAT I WOULD TELL HIM, THOUGH, IS TRY TO FIND -- PICK AMONG THE ISSUES THAT WE HAVE, ENVIRONMENT, CLIMATE CHANGE, ENERGY, PROLIFERATION SOMETHING WHICH YOU CAN ENGAGE CONCERNED PEOPLE IN THE WIDE ARRAY OF COUNTRIES AND GET THEM TO WORK ON A COMMON PROJECT, SO THAT THEY FEEL WE ARE PART OF THEIR CONCERNS SECONDLY, START A SERIES OF DISCUSSIONS WITH WORLD LEADERS IN WHICH FOR ONCE WE DO NOT COME WITH A SOLUTION, BUT WITH A QUESTION, AND SAY LET'S HOW WOULD WE APPROACH WORKING ON THIS TOGETHER?

THEN WE WOULD PROBABLY FIND IT IS PARTLY A QUESTION OF MORAL STATURE BUT THIS IS STILL A COUNTRY WHERE MOST PEOPLE IN THE WORLD WANT TO GO. YOU CAN GO TO ANY EMBASSY AND SEE PEOPLE LINED UP WANTING TO COME HERE. THERE HAS BEEN A SORT OF DIS-ASSOCIATION WHICH WAS HARDLY BY THE NATURE OF MODERN COMMUNICATION TECHNOLOGY WHERE PEOPLE SIT IN THEIR OWN ROOMS AND START TYPING MESSAGES WITHOUT GETTING INTO REALLY ENGAGEMENT WITH OTHER PEOPLE.

MR. SESNO: WE HAD A CONVERSATION AND I HOPE SOME OF YOU SAW THIS AND MAYBE HEARD ABOUT IT AMONG FIVE SECRETARYS OF STATE AT THE UNIVERSITY OF WASHINGTON WHERE I TEACH AMONG OTHER THINGS, DR. KISSINGER YOU WERE THERE, OF COURSE, AND SECRETARY JAMES BAKER MADE A POINT ABOUT FOREIGN SERVICE. HE MADE A POINT THAT THERE ARE MORE -- THERE IS MORE PERSONNEL ON AN AIRCRAFT CARRIER THAN THE UNITED STATES HAS IN ITS FOREIGN SERVICE ACTIVELY ENGAGED ABROAD. DOES THE UNITED STATES IN ORDER TO ENGAGE THE WORLD, IN ORDER TO DO THESE THINGS AT ALL THESE LEVELS THAT YOU ARE TALKING ABOUT, NEED TO DRAMATICLY BOOST THE NUMBER OF PEOPLE WHO ARE REPRESENTING AND WORKING ON BEHALF OF THE UNITED STATES OF AMERICA ABROAD AS DIPLOMATS AND REPRESENTATIVES ON THE GROUND?

DR. KISSINGER: PROBABLY. BUT WHAT WE SHOULD ALSO DO, IF THAT WHEN THESE PEOPLE GO ABROAD THEY DO IT NOT JUST TO MAKE THEMSELVES FEEL GOOD, BUT TO REALLY GET INTO CONTACT WITH THE PEOPLE THAT THEY ARE -- WHERE THEY ARE SERVING.

MR. SESNO: WE BETTER NOT LOCK DOWN EMBASSYS IF WE DO THAT BECAUSE NOW YOU RUN INTO A SECURITY PROBLEM.

DR. KISSINGER: A LOT OF THINGS IN THE COUNTRIES AROUND THE WORLD THAT I VISIT. THERE IS A WHOLE NEW GENERATION IS GROWING UP THAT IS TRYING TO DEFINE THEIR NOTION OF HOW ONE SHOULD DEAL WITH THESE PROBLEMS. OF COURSE I HAVE ENGAGED WITH AMERICANS ON BUSINESS VENTURES BUT THEY ARE NOT ENGAGED WITH AMERICANS ON JOINT INTELLECTUAL VENTURES. AND I THINK THEY SHOULD BE.

MR. SESNO: HOW MANY STUDENTS HERE HAVE STUDIED OR INTEND TO STUDY ABROAD? HOW MANY OF YOU WOULD LIKE TO WORK ABROAD EITHER FOR THE GOVERNMENT, OR HOW ABOUT WORKING IN FOREIGN -- THE DIPLOMATIC CORPS OR SOMETHING? HOW MANY OF YOU WOULD LIKE TO WORK ABROAD IN BUSINESS? DOES THAT SURPRISE YOU?

DR. RUBIN: WHICH ONE?

MR. SESNO: THERE ARE A LOT OF HANDS FOR ALL OF THEM.

DR. RUBIN: YES. I KNOW EVEN AS TREASURER WE HAD A SMALL FOREIGN COMPLEMENT. IT'S EXTREMELY IMPORTANT THAT PEOPLE CAN ENGAGE IN THE COUNTRIES TO WHICH THEY ARE ASIGNED AND RELATE TO THE PEOPLE AND LEARN ABOUT THE CULTURES AND HOARSE AND THE REST AND IT'S RARE TO FIND PEOPLE WHO ARE REALLY ORIENTED IN A WAY THAT ENABLES THEM TO UNDERSTAND.

DR. KISSINGER: WE SHOULDN'T SELL OURSELVES SHORT. BECAUSE I REALLY DON'T KNOW ANY OTHER COUNTRY WHERE PEOPLE ARE THAT WILLING TO SERVE AND -- I MEAN THE SHOW OF HANDS SORT OF SHOWED THAT WHAT WE SOMETIMES LACK IS ENOUGH HISTORIC DEPTH TO UNDERSTAND HOW OTHER SOCIETIES GOT TO THEIR POINT. BUT THOSE ARE REMEADIBLE PROBLEMS.

DR. RUBIN: YOU MADE THE OBSERVATION THAT THIS COUNTRY HAS LONG BEEN A DESTINATION FOR MANY EXTREMELY CAPABLE PEOPLE AROUND THE WORLD. ON THE OTHER HAND WE HAVE MADE THAT VERY HARD OVER THE LAST FEW YEARS. AND I KNOW IN HARVARD WHERE I AM INVOLVED, IT IS FAR MORE DIFFICULT TO GET FACULTY MEMBERS AND STUDENTS THE SET OF CONSTRAINTS WE HAVE CREATED AND ONE OF THE FIRST THINGS THE NEXT PRESIDENT SHOULD DO IS TO FIND A MORE BALANCED, MAKE A MORE BALANCED JUDGMENT ABOUT SECURITY PROTECTION ON THE ONE HAND, AND THE ENORMOUS BENEFIT TO THIS COUNTRY OF BEING ABLE TO ATRACT THE BEST AND BRIGHTEST FROM AROUND THE WORLD.

MR. SESNO: WE ONLY HAVE A FEW MINUTES LEFT, BUT I WOULD LIKE TO PROPOSE TO YOU SOMETHING OF A LIGHTNING ROUND I WOULD LIKE TO PLAY WORD ASSOCIATION AND VERY QUICKLY TICK THROUGH A FEW THINGS. BUT I CAN'T LET THE NIGHT GO BY WITH HENRY KISSINGER AND ROBERT RUBIN WITHOUT ASKING SOME OF THESE THINGS BUT WE DON'T HAVE MUCH TIME. RUSSIA! ARE YOU WORRIED? ARE YOU WORRIED?

DR. KISSINGER: I THINK WE ARE IN DANGER OF MISPERCEIVING RUSH /SHAFPLT HERE IS A COUNTRY THAT IS TOUCHING ALL THE AREAS THAT I MENTIONED. THAT AT THE SAME TIME HAS A DECLINING POPULATION, A HUGE HEALTH PROBLEM, A HUGE DEMOGRAPHIC PROBLEM WHICH NOW HAS POWERFUL COUNTRIES AT ITS BORDERS, WHICH IS TRYING TO ASSERT A SENSE OF IDENTITY. THEIR HISTORY IS LEADS THEM TOWARDS A CERTAIN AMOUNT OF TRUCULENCE IN THEIR BEHAVIOR, BUT I THINK THE NEXT ADMINISTRATION SHOULD MAKE AB MAJOR EFFORT TO SEE WHETHER RUSSIA CAN BE BROUGHT INTO A PARTNERSHIP AND A COOPERATIVE RELATIONSHIP WITH ITS SURROUNDINGINGS AND NOT LET ITSELF SLIDE INTO A COLD WAR MENTALITY WHICH IS NO LONGER RELEVANT TO THIS PERIOD.

MR. SESNO: CHINA!

DR. RUBIN: WHAT ABOUT IT?

MR. SESNO: THE WORLD'S MANUFACTURER.

DR. RUBIN: I WAS IN CHINA LAST WEEK AND HENRY IS GOING NEXT WEEK. I DON'T KNOW IF YOU READ PLUTO AND HE WAS NICE TO THE ROMANS BECAUSE THEY CONTROLLED GREECE. SO I WENT TO CHINA IN THAT SPIRIT.

MR. SESNO: AND THEY ARE HOLDING A LOT OF OUR DEBT.

DR. RUBIN: I WAS NOT UNAWARE OF THAT WHEN THEY ASKED ABOUT THE U.S. ECONOMY AND ITS PROSPECTS. CHINA FACES ENORMOUS CHALLENGES OF ITS OWN AND I DON'T KNOW CHINA NEARLY AS WELL AS DR. KISSINGER BUT THERE ARE CHINESE LEADERS THAT ARE VERY IMPRESSIVE. THEY HAVE A KEY UNDERSTANDING OF THEIR ISSUES AND AN ECONOMIC SYSTEM THAT WITH ALL ITS PROBLEMS SEEMS TO ADDRESS ITS ISSUES. THEY ARE RIGHT NOW BUT THEY WILL BE AN EVEN MAJOR SOURCE OF POLITICAL POWER AND ECONOMIC /POURP AND IF WE NOT DIS-REGARD OUR DIFFERENCES PHILOSOPHICAL AND PRACTICAL BUT DEAL WITH THEM IN THE CONTEXT OF A CONSTRUCTIVE RELATIONSHIP, I THINK THE NEXUS BETWEEN OUR TWO COUNTRIES CAN PROVIDE A LOT OF LEADERSHIP IN THE DECADES TO COME.

DR. KISSINGER: THE REASON IT'S SO IMPORTANT IS BECAUSE AS COMMUNISM IS LOSING ITS RELEVANCE IN CHINA, IT'S IN EVERYBODY'S INTEREST THAT IT IS NOT REPLACED BY NATIONALISM, BUT BY A SENSE OF GLOBAL RESPONSIBILITY.

MR. SESNO: PALIN! YOU BRIEFED HER. HOW DID IT GO?

DR. RUBIN: I'LL BET IT WENT VERY WELL. SERIOUSLY.

DR. KISSINGER: THANK YOU.

DR. RUBIN: I BET IT WENT VERY WELL.

DR. KISSINGER: SHE IS AN INTELLIGENT COURAGEOUS LAID Y. BUT THAT IS NOT THE ISSUE YOU ARE RAISING, WHICH I AM NOT GOING TO ANSWER.

MR. SESNO: OBAMA. WE WILL LET YOU EACH SUM IT UP AND THEN YOU CAN GO HOME. I WANT A TARGET. VERY CARE /REUS MATTIC, BUT IS HE NAIVE?

DR. RUBIN: NO. LET ME EXPAND ON THAT, SLIGHTLY. I FIRST MET HIM ABOUT FOUR YEARS AGO WHEN HE ENTERED THE SENATE BECAUSE MY CHIEF OF TREASURY HAD BEEN AT THE HARVARD LAW REVIEW AND I GOT TO KNOW BARACK. IF YOU LOOK ON PAGES 71 THROUGH 75 ON "THE AUDACITY OF HOPE" IS THAT THE BOOK IT WAS ABOUT GLOBALIZATION. AFTER HILLARY DROPPED OUT BECAUSE I HAD BEEN SUPPORTING HER, AFTER HILLARY DROPPED OUT, I GOT INVOLVED WITH HIM. AND I SAID THIS TO HENRY ON THE WAY HERE, IN THE MIDST OF THIS PRESIDENTIAL CAMPAIGN THERE IS AT LEAST ONCE A WEEK HE WILL TAKE OFF THE CAMPAIGN FOR A HALF-HOUR TO ENGAGE WITH LARRY, MYSELF, PAUL, A FEW OTHERS WITH 0 FOCUS ON THE POLITICS OF THE MOMENT BUT WATER, WHAT IS -- RATHER, WHAT IS GOING ON, WHAT SHOULD WE DO ABOUT IT WITH A TREMENDOUS HE APPROACHES DECISIONS IN TERMS OF GETTING EVERYTHING OUT ON THE TABLE AS HE CAN. SO I DON'T THINK HE IS NAIVE AT ALL. HE HAS ALL THE PIECES TO REALLY BE A VERY SOPHISTICATED VERY INSIGHTFUL VERY THOUGHTFUL LEADER IF HE CAN GET ELECTED. SO THAT -- I HAVE DEVELOPED ENORMOUS REGARD FOR HIM.

MR. SESNO: LET ME BRING THIS CONVERSATION TO A CLOSE BY ASKING EACH OF YOU TO SPEND A COUPLE MINUTES WRAPPING UP.

DR. KISSINGER: I THINK WE WEREN'T GOING TO MAKE THIS A DISCUSSION ON CANDIDATES. AND BOB AND I ARE GOOD FRIENDS AND WE WILL WORK TOGETHER. BUT I SHOULD SAY SOMETHING ABOUT MCCAIN.

MR. SESNO: PLEASE. PLEASE.

DR. KISSINGER: I MET MCCAIN, SENATOR MCCAIN OVER 30 YEARS AGO, IN 1973. I HAD BEEN IN HANOI TO WORK OUT THE MODALITYS OF THE IMPLEMENTATION OF THE PEACE ACCORD WE HAD SIGNED TWO WEEKS EARLIER AND THAT INVOLVED THE SCHEDULE FOR RELEASE OF PRISONERS. AND ON MY LAST NIGHT IN HANOI, THE VIETNAMESE TOLD ME THAT I COULD TAKE COMMANDER MCCAIN ON MY PLANE WITH ME AS I LEFT THE NEXT DAY. AND I SAID I WON'T TAKE ANYONE OUT OF ORDER, AND HE WILL HAVE TO COME OUT IN THE ORDER WE AGREED AND NOT ON A SPECIAL PLANE OF THE UNITED STATES, UNLIKE THE OTHERS. SO HE HAD TO STAY SIX MORE WEEKS. FOUR MONTHS LATER THERE WAS A RECEPTION AT THE WHITE HOUSE NOR ALL THE -- FOR ALL THE RETURNING PRISONERS AND HE CAME UP TO ME AND HE SAID, I WANT TO THANK YOU FOR SAVING MY HONOR. AND HE DID NOT TELL ME THAT TWO AND A HALF YEARS EARLIER HE HAD ALREADY HAD AN OFFER TO BE RELEASED, AND REFUSED TO LEAVE UNLESS ALL HIS FELLOW PRISONERS WERE RELEASED WITH HIM.

SO, I THINK OF HIM AS A MAN OF EXTRAORDINARY CHARACTER, EXTRAORDINARY INTEGRITY, IN WHOM I HAVE VERY GREAT CONFIDENCE AND I DIDN'T COME HERE TO ADDRESS THIS ISSUE, AND BOB AND I ARE CLOSE FRIENDS, REGARDLESS OF THE FACT THAT WE WERE NOT ON THE SAME SIDE IN THIS. SO, I HAVE CONFIDENCE THAT IN THE CRISIS THAT WE ARE FACING, HE WILL APPROACH IT IN THE SPIRIT I ADMIRE. AND THAT'S ALL I WILL SAY. (APPLAUSE).

MR. SESNO: LET ME WRAP UP THIS TALK. LET ME PHRASE THE QUESTION THIS WAY, THEN. WHOEVER IS ELECTED OUR NEXT PRESIDENT AND STANDS TO DELIVER THAT INAUGURAL ADDRESS, WHAT IS THE SPIRIT THE PRESIDENT NEEDS TO INVOKE WHEN FACING THE AMERICAN PUBLIC IN UTTERING THE FIRST WORDS, DEFINING PRESUMABLY, HIS NEXT PRESIDENCY?

DR. RUBIN: MINE MAY NOT BE EXAM WHAT YOU WERE LOOKING FOR -- EXACTLY WHAT YOU ARE LOOKING FOR WHAT HE OUGHT TO SAY TO THE AMERICAN PEOPLE IS THE PROBLEMS WE FACE IN ALL ARENAS ARE NOT SIMPLE, THEY ARE COMPLEX, THEY DON'T INVOLVE CERTAINTIES, THEY INVOLVE ENORMOUS UNCERTAINTIES AND THAT THEY INVOLVE TRADEOFFS AND PROBABILITYS AND THAT INNEVITABLY, AND THAT THE FUTURE -- VIRTUALLY ALL OF THEM INVOLVE COST NOW FOR FUTURE BENEFIT, AND THAT THIS COUNTRY HAS ALL THE PIECES NECESSARY TO THRIVE AND BE A GREAT NATION FOR AS LONG AS ANY OF US CAN SEE IN THE FUTURE, BUT TO GET THERE WE HAVE ALL GOT TO WORK TOGETHER AS CITIZENS AND IN OUR POLITICAL SYSTEM TO APPROACH THESE ISSUES WITH FAR GREATER SERIOUSNESS THAN WE HAVE, TO RECOGNIZE COMPLEXITY AND UNCERTAINTY TO BASE OUR DECISIONS ON FACTS AND CIRCUMSTANCES AND NOT ON IDEOLOGIES AND POLITICS, AND TO MAKE POLITICALLY TOUGH DECISIONS AND WORK ACROSS PARTY LINES AND THAT TO ME OUGHT TO BE THE TONE HE OUGHT TO SET.

MR. SESNO: DR. KISSINGER?

DR. KISSINGER: I WOULD SUBSCRIBE TO ALL OF THIS A THEME OF UNITY AND I WOULD END IT WITH AN AFFIRMATION OF HOPE. I WOULD SAY THERE IS THESE ARE TREMENDOUS PROBLEMS BUT ALSO UNUSUAL OPPORTUNITY AND NOT EVERY GENERATION IS GIVEN THE OPPORTUNITY TO RECAST OUR SOCIETY AND THE PROSPECTS OF PEACE, BUT THE WHOLE SET OF PROBLEMS THAT HAVE NEVER BEEN FACED BY ANYBODY IN HISTORY. SO, WE SHOULD APPROACH THIS WITH HOPE, AND NOT KEEP LISTING ALL THE PROBLEMS WE HAVE AS AN OBSTACLE, AND I THINK WITH THIS ATTITUDE A BY-PARTISAN SPIRIT I THINK THIS COULD BECOME A VERY EXCITING PERIOD. MR. SESNO: I WOULD LIKE TO THANK BOTH OF YOU.

DR. RUBIN: THANK YOU.

DR. KISSINGER: THANK YOU.

SPEAKER: I WANT TO THANK FRANK SESNO, DR. KISSINGER, AND SECRETARY RUBIN TO WHAT I FOUND TO BE AN INCREDIBLY INSIGHTFUL, THOUGHTFUL AND ENGAGING THOSE ARE FOUR ADJECTIVES WE DON'T OFTEN GET TO USE IN AN ELECTORAL SEASON SO I AM PLEASED YOU HAVE BEEN ABLE TO HEAR FROM THEM. BUT WE ARE NOT DONE. MY NAME IS MICHAEL DELA CARPINI, ONE OF THE CO-HOSTS, THANK YOU. AND WE HEARD AS AMY GUTTERMAN MENTIONED FROM TWO OF OUT OF WISE MEN HAVE MENTIONED ON THE ISSUES OF ECONOMICS AND SECURITY BUT AS YOU ALL KNOW AS WELL OR BETTER THAN I, THAT WHILE THERE ARE ISSUES THAT THERE COULD BE SOME AGREEMENT ON, THE TWO POLITICAL PARTIES AND CANDIDATES HAVE DIFFERENT ANSWERS ON HOW BEST TO SOLVE THESE ISSUES. WHAT WE WILL DO FOR THE REMAINDER OF OUR SESSION IS HEAR FROM TWO REPRESENTATIVES OF OUR TWO CAMPAIGNS AND IMPORTANT AND THOUGHTFUL PEOPLE IN THEIR OWN RIGHT TO TALK TO US A LITTLE BIT ABOUT WHAT EACH OF THOSE PRESIDENTIAL CANDIDATES MIGHT DO AND WHAT THEIR STANDS ARE SHOULD THEY BE ELECTED TO THE HIGHEST OFFICE IN THE NATION AND THE WORLD. IT'S MY PLEASURE TO INTRODUCE THE FIRST OF THOSE TWO SPEAKERS, JOHN LEHMAN. JOHN LEHMAN HAS A LONG RESUME IN BOTH THE PRIVATE SECTOR AND PUBLIC SECTOR. HE SERVED AS SECRETARY OF THE NAVY UNDER RONALD REAGAN'S ADMINISTRATION. HE WAS A MEMBER OF THE 9/11 COMMISSION THAT WAS PUT IN PLACE AFTER THE TERRORIST ATTACKS OF SEPTEMBER 11TH IN THE HOPES OF BEING ABLE TO ADDRESS THOSE TYPES OF ISSUES MORE EFFECTIVELY IN THE FUTURE. HE IS CURRENTLY SENIOR INTERNATIONAL SECURITY ADVISOR TO JOHN MCCAIN, AND THE MCCAIN CAMPAIGN, AND LASTLY, AND PERHAPS MOST IMPORTANTLY HE IS AN ALUMNI AND HAS RECEIVED A PH.D. FROM OUR UNIVERSITY. SO WITHOUT FURTHER ADO, PLEASE JOIN ME IN WELCOMING JOHN LEHMAN OF THE MCCAIN CAMPAIGN.

MR. LEHMAN: WELL, THANK YOU VERY MUCH, DEAN. I WAS AFRAID FOR A MOMENT THAT YOU WERE GOING TO INTRODUCE ME AS SOMEONE WHO NEEDS NO INTRODUCTION. BECAUSE ONE OF MY EARLY MISTAKES IN MY CAREER IS WHEN I WORKED FOR DR. KISSINGER FOR EIGHT YEARS AND I HAD AN OPPORTUNITY TO INTRODUCE HIM AT A GATHERING LIKE THIS, AND I SAID HERE'S A MAN WHO NEEDS TO INTRODUCTION. AND AFTERWARDS HE TOOK ME ASIDE, AND HE SAID, LEHMAN, DON'T YOU UNDERSTAND THAT THOSE OF US WHO ARE INTRODUCED AS NEEDING NO INTRODUCTION ARE THE ONES WHO CRAVE IT THE MOST?

WELL, I WANT TO FIRST THANK THE CENTER FOR U.S. GLOBAL ENGAGEMENT AND THE UNIVERSITY OF PENNSYLVANIA FOR PUTTING THIS PROGRAM ON, AND FOR THE SUBJECT OF IT'S MATERIAL, WHICH IS THE INTEGRATION OF THE FULL RANGE OF OPPORTUNITYIES AND FORCES AT THE DISPOSAL OF THE NEW PRESIDENT. IT'S ALWAYS A PLEASURE, OF COURSE, TO BE BACK AT THE UNIVERSITY OF PENNSYLVANIA. AND I REMEMBER MY FATHER USED TO SAY, "JOHN, LET THE UNIVERSITY OF PENNSYLVANIA, A MODEST GOOD HUMORED BOY. IT WAS WASHINGTON THAT MADE HIM INSUFFERABLE. "AND SO IT IS. PENN CAN TAKE NO BLAME. I'M HERE TO TALK ABOUT JOHN MCCAIN'S APPROACH TO THE GLOBAL WORLD WE LIVE IN AND HOW TO DEAL WITH IT, AND THE INTEGRATION OF QUOTE, "SOFT POWER" WITH HARD POWER.

I WORKED WITH JOHN SINCE HE WAS A CAPTAIN IN THE NAVY AND I WAS A LIEUTENANT COMMANDER. I WORKED WITH HIM DURING HIS MORE THAN 20 YEARS IN UNIFORMED SERVICE, AND DURING HIS 26 YEARS IN THE CONGRESS OF THEUNITED STATES. I HAVE SEEN HIM IN EVERY KIND OF SITUATION, AND I'LL TRY TO DESCRIBE TO YOU WHAT IS A VERY BROAD AND DEEP APPROACH TO INTERNATIONAL AFFAIRS.

JOHN FIRST OF ALL WOULD NOT APPROVE OF TREATING THIS AS LIKE TWO SEPARATE TOOLBOXS. YOU'VE GOT THE HARD POWER, YOU'VE GOT MILITARY POWER, AND THEN YOU'VE GOT NON-MILITARY POWER, BECAUSE IT'S NOT REALLY THAT WAY. AND IF IT IS TO BE USED EFFECTIVELY, THE POWER OF THE UNITED STATES FOR GOOD, IT'S GOT TO BE LOOKED AT AS AN UNBROKEN CONTINUITY. BECAUSE AS HAS OFTEN BEEN SAID ABOUT DIPLOMACY, DIPLOMACY WITHOUT MILITARY POWER IS LIKE MUSIC WITHOUT MUSICAL INSTRUMENTS. IT'S THE SHADOW THAT POWER CASTS.

BUT THERE ARE SO MANY DIFFERENT TOOLS AT THE DISPOSAL OF THE PRESIDENT ALONG THIS UNBROKEN CONTINUUM THAT TO UNDERSTAND HOW THEY INTERACT AND WHAT SOME ARE GOOD FOR AND SOME ARE NOT IS SOMETHING THAT YOU LEARN BY LONG EXPERIENCE AND MAKING MISTAKES, AND LEARNING FROM THEM. TRADE IS OBVIOUSLY ONE OF THE MOST IMPORTANT ONES. OPENING UP THE ABILITY TO DEVELOP, BRING CAPITAL AND HELP TO TEACH EMERGING NATIONS HOW TO CREATE CAPITAL AND CREATE JOBS AND TO DEVELOP AN ECONOMY THAT CAN SUPPORT A RICH STANDARD OF LIFE. PART OF THAT, OF COURSE, IS INFORMATION. YOU HAVE TO BE ABLE TO PROVIDE THE KNOWLEDGE OF HOW TO DO THINGS. HOW NOT JUST TO DEVELOP ECONOMICALLY, BUT HOW TO PROVIDE MEDICAL CARE. HOW TO ADMINISTER IT. HOW TO PROVIDE SECURITY. THIS IS ALL INFORMATION THAT HAS TO BE PROVIDED IN A USABLE FORM. AND TO THE RIGHT PLACES.

THIS IS ALSO ANOTHER DEVELOPMENT OF TRAINING. CERTAINLY ONE OF THE MOST IMPORTANT CONTRIBUTIONS WE CAN MAKE IN THE WORLD IS TO HELP TO TRAIN PEOPLE HOW TO DO THINGS THAT CAN PROVIDE THE HEALTH SERVICES, THAT CAN PROVIDE THE ECONOMIC SECURITY AND CAN PROVIDE THE MILITARY SECURITY THAT ENABLES A SOCIETY TO BLOSSOM AND TO NOT BE PREY TO CHAOS AND TERRORISM.

FINANCE. THE OPPORTUNITY TO PROVIDE THE WHEREWITHAL TO ENABLE THE GROWTH OF ENTERPRISES AND JOBS AND TO PROVIDE JOBS IN HUMAN SERVICES AND HEALTHCARE ITSELF. THIS HAS NOT BEEN VERY EFFECTIVELY DONE BY GOVERNMENTS IN THE PAST. IT'S BEEN DONE FAR MORE EFFECTIVELY IN RECENT DECADES BY SMALL INITIATIVES, MICRO-FINANCE, NGO'S, PRIVATE ORGANIZATIONS THAT HAVE GONE AND SHOWN AT THE VILLAGE LEVEL AND AT THE FAMILY LEVEL HOW CREDIT WORKS AND HOW IT CAN BE OBTAINED TO DO SMALL THINGS LIKE OBTAINING THE RIGHT TOOLS TO MAKE A FARM MORE PRODUCTIVE.

MEDICAL, OF COURSE, IS ONE OF THE AREAS THAT JOHN MCCAIN HAS BEEN DEVOTED TO FOR REALLY ALL OF HIS LIFE. ONE OF THE THINGS HE LEARNED IN HIS EXPERIENCE IN VIETNAM WAS THE ALMOST TOTAL ABSENCE OF WHAT HE KNEW AND EXPERIENCED AS MODERN MEDICAL CARE. AND SO, TO BE ABLE TO PROVIDE THAT TO AREAS IN THE MOST BASIC WAY HAS BEEN A LESSON THAT HE HAS TRIED TO APPLY, STARTING IN VIETNAM. AS EVERYONE KNOWS, HE WAS THE FIRST MEMBER OF CONGRESS, THE FIRST AMERICAN OFFICIAL TO GO BACK TO VIETNAM TO FORGIVE AND FORGET WHAT HE WENT THROUGH IN TORTURE AND IMPRISONMENT AND TO INITIATE THE NORMALIZATION OF REGULATIONS AND TO BRING IN OPERATIONS LIKE OPERATION SMILE WHICH HE AND MRS. MCCAIN HAVE BEEN OPERATING WITH FOR MANY YEARS.

HE WAS THE FIRST TO INITIATE THE USE OF MILITARY POWER TO BRING THIS MEDICAL CARE TO AREAS OF SOUTHEAST ASIA WHEN HE INITIATED THE USE OF THE TWO NAVY HOSPITAL SHIPS, THE MERCY AND THE COMFORT, TO BRING VOLUNTEER DOCTORS FROM CARE AND OTHER ORGANIZATIONS TO CARRYING IN EACH SHIP 24 OPERATIONAL OPERATING ROOMS AND

TWO FIELD HOSPITALS, AND TO BRING THIS MILITARY ASSET TO BRING THEM AFTER THE VOLCANO ERUPTION AND NOW TO BRING THIS INESTIMABLE SERVICE BUT TRAINING AND MENTORING YOUNG MEDICAL TECHNICIANS AND SO FORTH IN THESE AREAS AROUND THE WORLD.

EDUCATION, OF COURSE, IS AN AREA WHERE HE WORKED VERY HARD TO TRY TO MAKE HAPPEN. OF COURSE, JOHN WAS THE FIRST ONE WHO PUT FORWARD THE 9/11 COMMISSION ON WHICH I SERVED. AND ONE OF THE INITIATIVES THAT HE FELT WAS MOST IMPORTANT AND OFFERED LEGISLATION TO ENACT WAS TO PROVIDE MINIMAL FUNDING, A TINY FRACTION OF JUST THE EARMARKS THAT WERE ADDED THAT YEAR FOR UNWANTED THINGS, PORK BARREL IN CONGRESS -- JUST HALF OF THOSE PORK BARREL ADD-ONS WOULD HAVE PAID FOR A SCHOOL TO MATCH EVERY ONE OF THE SAUDI-FUNDED MADRASES THAT ARE TEACHING AND PREACHING INTOLERANCE THROUGHOUT THE ISLAMIC WORLD TODAY. AND WHAT DID CONGRESS DO? NADA. THIS IS AN AREA THAT WOULD HAVE HUGE PAY-OFFS BECAUSE IDEAS HAVE CONSEQUENCES. AND HE HAS PUSHED HARD AND IN THE NEW ADMINISTRATION, THIS WILL BE A TOP PRIORITY. THESE ARE THE KINDS OF THINGS THAT HE HAS DONE. THERE ARE 25 DIFFERENT INITIATIVES IN WHAT WOULD BE CALLED SOFT POWER, MEDICAL ASSISTANCE, EDUCATION. HE HAS BEEN A STRONG SUPPORTER OF BONO AND THE ONE ORGANIZATION WHICH HAS DONE TREMENDOUS THINGS IN AFRICA, AND SHOWED THE WAY OF OTHER INITIATIVES THAT ARE NOT LOADED DOWN WITH THE BUREAUCRACY THAT TENDS TO COME WITH BIG INTERNATIONAL ORGANIZATIONS. AND, LET'S FACE IT, THE HISTORY OF THE UNITED STATES' ASSISTANCE HAS BEEN FRAUGHT WITH BUREAUCRACY WHERE THE OUTPUT HAS BEEN A FRACTION OF WHAT HAS BEEN APPROPRIATED. SO WHAT HE IS DETERMINED TO DO IS TO ENSURE THAT GOVERNMENT BECOMES AN ENABLER BUT NOT A BUREAUCRACY DISPENSER OF CASH BUT AN ENABLER TO ALLOW RESOURCES THAT ARE MADE AVAILABLE TO GO QUICKLY TO WHERE THEY CAN GET REAL EFFECT. AND THAT HAS BEEN HIS METHOD OF OPERATION ALL HIS CAREER. AND THAT'S WHY SO MANY PEOPLE IN THE NGO WORLD ARE SO STRONGLY BEHIND JOHN MCCAIN BECAUSE HE'S BEEN WALKING THE WALK, NOT JUST MAKING THE SPEECHS, WHICH HE HAS BEEN DOING TO ARTIC CUE LATER THE QUOTE "SOFT POWER" NECESSITYS, BUT HE HAS BEEN WALKING THE WALK AND GETTING THING DONE AND GETTING THINGS FUNDED AND GETTING MICRO-FINANCE UNDERWAY. AND HIS RECORD IS QUITE INCREDIBLE BECAUSE HE GETS THINGS DONE. HE WORKS ACROSS THE AISLE. HE IS A COMPLETELY NON-PARTISAN PERSON WHEN IT COMES TO THESE KINDS OF ISSUES AND NATIONAL SECURITY ISSUES. THAT'S WHY THE 9/11 COMMISSION WAS SUCH A SUCCESS, BECAUSE HE HAD IT DRAFTED IN A WAY THAT MADE IT ALMOST CERTAIN TO BE NON-PARTISAN. AND THAT'S WHY WE REACH UNANIMOUS CONCLUSIONS AND ALSO GOT 85% OF OUR RECOMMENDATIONS ENACTED.

SO THAT IS OBVIOUSLY WHY I FEEL SO STRONGLY ABOUT IT. NOW, THIS IS THE FIRST TIME THAT I'VE HAD THE HONOR TO BE A WARM-UP ACT FOR SOMEONE LIKE GOVERNOR RENDELL. I FEEL LIKE THE PEN GLEE CLUB AS THE LEAD ACT FOR THE ROLLING STONES, BUT I HAVE THIS HONOR, AND I AM VERY PLEASED, THOUGH I WON'T AGREE WITH EVERYTHING HE SAYS, TO BRING ON THE LEAD ACT.

GOV. RENDELL: THANK YOU, SECRETARY LEHMAN. THE PENNSYLVANIA CHAMBER OF BUSINESS AND INDUSTRY IS PROUD TO CO-SPONSOR TONIGHT'S PROGRAM TO SUPPORT THE IMPACT '08 IN PENNSYLVANIA INITIATIVE. PENNSYLVANIA'S PART OF THE GLOBAL ECONOMY AND OUR BUSINESSS WANT TO SEE AMERICA MAKE INTERNATIONAL DEVELOPMENT A HIGHER PRIORITY FOR U.S. FOREIGN POLICY.

SO, DURING THIS CRITICAL ELECTION IT'S ENCOURAGING TO HEAR SO MANY DISTINGUISHED LEADERS DISCUSSING HOW OUR NEXT PRESIDENT CAN BEST TACKLE SOME OF THE GREATEST GLOBAL CHALLENGES THAT EFFECT OUR SECURITY AND PROSPERITY HERE AT HOME.

GOVERNOR ED RENDELL, LONG TIME FRIEND OF THE SCHOOL AND PROUD GRADUATE OF THE UNIT OF PENNSYLVANIA CLASS OF 1965, I BELIEVE. WE ARE HONORED THAT HE IS CO-CHAIR OF THE CENTER'S IMPACT '08 IN PENNSYLVANIA ADVISORY COUNCIL ALONG WITH FORMER GOVERNOR TOM RIDGE. GOVERNOR RENDELL IS A FAVORITE SON OF PHILADELPHIA, HAVING SERVED AS MAYOR AND AS THE CITY'S DISTRICT ATTORNEY. HE IS A PREDOMINANT SUPPORTER OF SENATOR OBAMA AND IS APPEARING HERE TONIGHT AS OBAMA'S -- ON BEHALF OF OBAMA'S CAMPAIGN. LADIES AND GENTLEMEN, PLEASE WELCOME GOVERNOR ED RENDELL.

GOV. RENDELL: HELLO, EVERYONE. THANK YOU ALL VERY, VERY MUCH. YOU HAVE HEARD BOB RUBIN, YOU'VE HEARD HENRY KISSINGER. THE PHILLIES GAME JUST STARTED. WHAT ARE YOU DOING HERE? SOME OF YOU HEARD ME SPEAK, TEN, 15, 25 TIMES. YOU ARE FREE TO LEAVE. I WOULD NOT BE THE SLIGHTEST BIT, AND PARTICULARLY IF YOU ARE VOTING FOR SENATOR OWE BAM MARKS AND YOU WANT TO SEE THE GAME, I WILL GIVE YOU A 30-SECOND GRACE PERIOD TO GET UP AND LEAVE RIGHT NOW.

HELLO, EVERYONE. THERE YOU GO. SMART PEOPLE. SMART PEOPLE. ANYBODY ELSE? JUST STARTED. JUST STARTED. FIRST GAME OF THE WORLD SERIES. A LONG INTRODUCTION. SO JUST STARTED.I AM ACTUALLY GOING TO SPEAK ABOUT SOMETHING A LITTLE BIT OFF-POINT. I THINK MANY OF YOU ARE FAMILIAR WITH THE THINGS THAT THE SENATOR HAS STAKED OUT ON GLOBAL ENGAGEMENT, AIDS, AFRICA, DIFFERENT PLACES AROUND THE GLOBE. I AM GOING TO TALK ABOUT WHAT IS TO ME WHAT IS THE SINGLE GREATEST THREAT TO NATIONAL SECURITY. I DON'T THINK IT IS IN IRAQ, OR IRAN, OR AFGHANISTAN OR KOREA. I BELIEVE IT EXISTS RIGHT HERE AT HOME. AND UNLESS WE DO SOMETHING AND DO SOMETHING FAIRLY QUICKLY, ABOUT OUR COMPETITIVENESS, THIS COUNTRY WILL NOT BE 25 YEARS FROM NOW THE DOMINANT ECONOMIC POWER IN THE WORLD. WE RUN THE RISK OF BECOMING A SECOND CLASS COUNTRY IN THE WORLD COMMUNITY. OUR INFRASTRUCTURE, WHETHER IT'S OUR PHYSICAL INFRASTRUCTURE, OUR INTELLECTUAL INFRASTRUCTURE, IS VIRTUALLY CRUMBLING. YOU HAVE HEARD THE STATISTICS OF HOW OUR KIDS DO EDUCATIONALLY WHEN THEY ARE PAIRED IN TESTS WITH CHILDREN FROM FOREIGN COUNTRIES, 19TH IN MATH, 21ST IN SCIENCE. WORTH OF ALL, IN THE MOST IMPORTANT AND INTRICATE AREA OF PROBLEM SOLVING, 49 INDUSTRIAL NATIONS, OUR 12TH GRADERS CAME IN 31ST. THERE IS NO WAY WE ARE GOING TO REMAIN AN ECONOMIC POWER WITH THAT ON THE HORIZON.

WE HAVE TO DO THINGS, AND I BELIEVE WE HAVE TO DO SOME VERY SIGNIFICANT THINGS. REALLY MAKE INVESTMENTS IN OUR FUTURE WAY BEFORE THE ECONOMIC CRISIS HIT AMERICA. THE ECONOMIC CRISIS HAS CAUSED MANY PEOPLE, SOME OF MY FELLOW LEGISLATORS IN HARRISBURG TO SAY, WE'VE GOT TO STOP SPENDING MONEY. WE HAVE GOT TO JUST NOT SPEND MONEY, CONTINUE TO REDUCE TAXS AND HOPE WE CAN RIDE OUT THE STORM. THAT IS, LADIES AND GENTLEMEN, A PRESCRIPTION FOR DISASTER.

I WANT TO QUOTE SOMEONE I ADMIRE VERY MUCH AND HE AND I AND GOVERNOR SCHWARZENEGGER BUILT SOMETHING TO REBUILD THE AMERICAN INFRASTRUCTURE, IT'S MAYOR BLOOMBERG FROM NEW YORK. MAYOR BLOOMBERG SAID, "WHEN YOU WALK AWAY FROM THESE INVESTMENTS DURING TOUGH TIMES, YOU WALK AWAY FROM YOUR FUTURE. " THAT'S RIGHT. ONE OF THE REASONS I AM SO EXCITED ABOUT BARACK OBAMA'S CANDIDACY IS IN GENERAL HOW HE HAS HANDLED THE ECONOMIC CRISIS IN THE LAST SIX WEEKS BUT SPECIFICALLY AND HE SAID IT IN THE LAST TWO DEBATES OVER AND OVER AGAIN, THAT YES, WE HAVE TO CUT SPENDING AND WE HAVE TO REDUCE SPENDING, BUT THERE ARE SOME THINGS WHERE WE HAVE TO INCREASE SPENDING. AND HE GIVES US AN EXAMPLE OF EARLY CHILDHOOD EDUCATION. AND CERTAINLY IF WE ARE GOING TO BUILD THE INTELLECTUAL INFRASTRUCTURE WE ARE GOING TO NEED TO BE COMPETITIVE AROUND THE WORLD. WE HAVE TO START RIGHTS THERE. WE HAVE TO START RIGHT THERE AND HAVE TO MAKE SURE WE DO THE THING NECESSARY SO WE CAN COMPETE. WE HAVE TO MAKE IT EASIER FOR MIDDLECLASS KIDS TO GO TO COLLEGE. IT'S BECOMING A STRUGGLE. AND WHAT HAS HAPPENED IN THE LAST SIX OR SEVEN WEEKS IS GOING TO MAKE IT MORE OF A STRUGGLE. SO WE HAVE TO INVEST AND WE HAVE TO INVEST IN A NUMBER OF DIFFERENT THINGS. FIRST AND FOREMOST, EDUCATION. THAT PRIMARILY CAN'T BE A FEDERAL INVESTMENT BUT THE FEDERAL GOVERNMENT CAN INVEST IN THINGS THAT ARE IMPORTANT. AND JOIN WITH STATES IN PAYING FOR THINGS. FOR EXAMPLE, EARLY CHILDHOOD EDUCATION. WHEN I BECAME GOVERNOR, PENNSYLVANIA DIDN'T GIVE ONE DIME OF STATE FUNDING TO PRE-K EDUCATION. WE HAD ALMOST ALL OF OUR FEDERAL FUNDING IN PRE-K EDUCATION IN ALMOST JUST THE HEAD START AND WE SPEND NOW OVER $100 MILLION A YEAR. WE HAD 29% OF OUR KIDS IN FULL-DAY AND WE NOW HAVE 65% OF OUR KIDS. WITH A FEDERAL SHARING OF EARLY CHILDHOOD EDUCATION EXPENSES, WE COULD DO ALL WE NEED TO DO AND DO IT QUICKLY AND RAPIDLY. THAT IS IN MY JUDGMENT VERY CRUCIAL.

TEACHERS SALARY, PARTICULARLY IN SCIENCE, TECHNOLOGY AND MATH, THOSE ARE KEYS TO ECONOMIC COMPETITIVENESS. IF WE FALL DOWN, IF OUR CHILDREN AREN'T READY TO COMPETE IN SCIENCE, TECHNOLOGY, ENGINEERING AND MATH. WE ARE COOKED. AND WE NEED TO ATTRACT TEACHERS IN THOSE FOUR DISCIPLINES. AND IT'S VERY HARD BECAUSE THOSE FOUR DISCIPLINES ARE THE HOT DISCIPLINES RIGHT NOW WHERE GRADUATING SENIORS GET TERRIFIC PAY COMPARED TO TEACHING. THE FEDERAL GOVERNMENT NEEDS TO STEP IN AS SENATOR OBAMA SAYS AND REWARD TEACHERS FOR GOING INTO THOSE DISCIPLINES AND MAYBE GOING INTO THEM IN HARD TO TEACH AREAS THAT IS VERY IMPORTANT.

IN ADDITION TO EDUCATION, FIRST THE AMERICAN INFRASTRUCTURE. WE ARE NOT GOING TO BE COMPETITIVE WITH A CRUMBLING INFRASTRUCTURE. WE CANNOT MOVE GOODS AND BE GLOBALLY COMPETITIVE IF OUR INFRASTRUCTURE IS CRUMBLING. WHEN GOVERNOR SCHWARZENEGGER AND MAYOR BLOOMBERG AND I ANNOUNCED "BUILDING AMERICA'S FUTURE" IN JANUARY OF THIS YEAR WE ANNOUNCED IT ON AN ISLAND IN THE MIDDLE OF ONE OF THE CALIFORNIA FREE WAYS. IT WAS FRIGHTENING, EVEN THOUGH IT WAS 10:00 IN THE MORNING ON A SATURDAY, IT WAS STILL PRETTY FRIGHTENING. THE MAYOR AND GOVERNOR AND I ALL HAD LITTLE PROPS AND MY PROP WAS A MAP OF CHINA AND THE MAP OF THE UNITED STATES AND I HAD PINS FOR THE TEN LARGEST PORTS IN EACH COUNTRY. THE TEN LARGEST PORTS IN CHINA HANDLE THREE AND A HALF TIMES AS MUCH FREIGHT AS THE TEN LARGEST PORTS IN THE UNITED STATES. ONLY TWO PORTS IN THE UNITED STATES, THE PORT OF NEW YORK AND NEW JERSEY AND THE PORT OF LONG BEACH WOULD EVEN MAKE IT INTO THE TOP TEN IN CHINA. WE CAN'T COMPETE WITH THE INFRASTRUCTURE WE HAVE. IT'S NOT SAFE. YOU'VE SEEN IT IN LEVEES IN NEW ORLEANS AND THE LEVEES IN CEDAR RAPIDS. WE SIMPLY CAN'T COMPETE. WE CAN'T MOVE BRIDGES OVER ROADS AND HIGHWAYS IF CONGESTION CONTINUE TO DOMINATE. THE ONLY MAJOR DEVELOPED NATION IN THE WORLD THAT DOESN'T HAVE HIGH SPEED RAIL TRAFFIC BETWEEN CITIES AND AS A RESULT OUR AIRPORTS AND AIRLINES ARE GETTING CLOGGED AND IT DOESN'T WORK ANYMORE, THE AIR TRAVEL SYSTEM. WE HAVE TO INVEST SIGNIFICANTLY IN OUR INFRASTRUCTURE.

SENATOR OBAMA WANTS TO CREATE QUICKLY AN INFRASTRUCTURE REINVESTMENT BANK AND HE IS WILLING TO BEGIN FUNDING IT WITH $60 BILLION. THIS IS ABOVE AND BEYOND THE PROGRAMS THAT ARE ALREADY IN THE FUNDING THAT IS IN THE PIPELINE. THIS IS FOR SIGNIFICANT NEW PROJECTS THAT WILL HELP US BE COMPETITIVE.

ENERGY. YOU KNOW THERE IS A LOT OF TALK ABOUT ENERGY AND OBVIOUSLY RENEWABLE AND ALTERNATIVE ENERGY IS A HUGE ECONOMIC WEAPON. IT'S A WEAPON THAT WILL ALLOW US TO NUMBER ONE, HAVE A CLEANER AND BETTER ENVIRONMENT. NUMBER TWO, CREATE JOBS HERE IN AMERICA. I KNOW THAT BECAUSE OF OUR EXPERIENCE IN PENNSYLVANIA. PENNSYLVANIA IS THE LEADING STATE EAST OF THE MISSISSIPPI IN THE PRODUCTION OF GREEN ENERGY JOBS. IT PAYS OFF, AND THESE ARE GOOD PAYING JOBS. JOBS THAT REQUIRE ENGINEERING SKILLS, AND JOBS THAT LAID OFF STEEL WORKERS OR MACHINE SHOP WORKERS CAN DO AS WELL. THEY ARE VERY, VERY IMPORTANT FOR OUR ECONOMY. THIRDLY, THEY ARE CRUCIAL TO OUR NATIONAL SECURITY. WE EXPORT $700 BILLION A YEAR BRINGING IN FOREIGN OIL. THINK IF WE COULD KEEP 50% OF THAT HERE IN THE UNITED STATES. THINK OF WHAT IT DOES FOR OUR BALANCE OF TRADE, THINK OF WHAT IT DOES FOR CURRENCY, AND THINK OF WHAT IT DOES FOR ECONOMIC GROWTH AND VITALITY IN THE UNITED STATES, INSTEAD OF SPENDING THAT MONEY IMPORTING FOREIGN OIL, WE DO IT MAKING ELECTRIC CARS OR BIOFUELS OR ETHANOL. WE HAVE TO MAKE THE RENEWABLE ALTERNATIVE ENERGY TAX CREDIT PERMANENT. SENATOR OBAMA WANTS TO DO THAT. WE HAVE TO HAVE FEDERAL MANDATES LIKE PENNSYLVANIA AND 22 OTHER STATES HAVE, REQUIRING OUR UTILITYS TO GET A CERTAIN PERCENTAGE OF THEIR ELECTRICITY FROM ALTERNATIVE AND RENEWABLE STANDARDS. THAT MANDATE HAS BEEN DEFEATED IN THE CONGRESS SEVERAL TIMES. WE HAVE TO DO ALL OF THOSE THINGS AND WE HAVE TO INVEST REAL DOLLARS IN DEVELOPING THESE IDEAS. SO MANY OF THESE IDEAS ARE IN THE INSIPENT STAGES. THE STATE OF PENNSYLVANIA GIVES JEFFERSON MEDICAL SYSTEM A MILLION DOLLARS A YEAR FOR THE LAST THREE YEARS, JEFFERSON IS WORKING ON USING PART OF THE TOBACCO LEAF TO PRODUCE A CLEAN ETHANOL FUEL.

YOU MAY WANDER WHAT JEFFERSON HEALTH CENTER IS DOING TRYING TO PRODUCE A CLEAN BIOFUEL, BUT THEY ARE. AND IT'S IN THE INSIPENT STAGES. THERE IS A RACE GOING ON FOR ECONOMIC SUPREME /PHAES AND ALTERNATIVE AND RENEWABLE ENERGY. SENATOR OBAMA WANTS US TO NOT ONLY WIN THAT RACE BUT HE WANTS US TO BE EXPORTING ALL TECHNIQUES AND PRODUCTS IN RENEWABLE ENERGY TO CHINA. WOULDN'T THAT BE NICE FOR A CHANGE? THIRD ON ECONOMIC DEVELOPMENT, SENATOR OBAMA UNDERSTANDS THAT WE CAN'T STOP INVESTING IN RESEARCH. RESEARCH INTO DISEASE, RESEARCH INTO ADVANCED MATERIALS, RESEARCH IS THE KEY TO GROWTH OF OUR ECONOMY. WE HAVE ALWAYS BEEN THE COUNTRY WHERE ALMOST EVERYTHING WAS INVENTED AND WHERE NEW THINGS WERE INNOVATED. IT'S NOT HAPPENING ANY MORE. IN 2006 THE U.S. PATENT OFFICE REPORTED THAT FOR THE FIRST TIME IN ITS HISTORY, MORE THAN 51% OF THE PATENTS GRANTED WERE FROM FOREIGN COMPANIES OR FOREIGN NATIONALS.

WE ARE PRODUCING FAR LESS ENGINEERS THAN CHINA AND INDIA. AND THE LITTLE NATION OF SOUTH KOREA WITH 1/SIX OF OUR POPULATION GRADUATES AS MANY ENGINEERS AS WE DO NOW. IT'S ALL TIED TOGETHER, EDUCATION AND GROWTH AND INVESTMENT. BUT WE HAVE TO INVEST IN RESEARCH. AND SENATOR OBAMA WANTS TO TRIPLE THE FUNDING FOR NIH, GIVE IT ALL SORTS OF INCENTIVES, BROADEN THE RESEARCH AND DEVELOPMENT TAX CREDITS FOR PEOPLE WHO ARE THINKING OF DOING THINGS IN ADVANCED MATERIALS AND ADVANCED METALS. ALL OF THOSE THING ARE IN THE WAY TO PRODUCE ECONOMIC GROWTH. AND LASTLY, ONE OF THE THINGS THAT IS VERY ATRACT /TEUF TO ME AS A MANUFACTURING STATED GOVERNOR, WE HAVE BEEN GETTING KILLED FOR THE LAST EIGHT YEARS BY FOREIGN TRADE.

AND I AM A FREE TRADER TO THE EXTENT THAT MY SUPPORT WAS IMPORTANT AND IT WAS, AND I SUPPORTED NAFTA AND I SUPPORTED OPENING UP TRADE WITH CHINA AND I CHARACTERIZE MYSELF AS A FREE TRADER BUT AS A GOVERNOR OF A MANUFACTURING STATE, WE HAVE TO BE VIGILANT TO MAKE SURE THAT THAT FREE TRADE IS IN FACT FAIR TRADE, IT ISN'T RIGHT NOW. CHINA STEALS OUR INTELLECTUAL PROPERTY, MANIPULATES ITS CURRENCY TO GET A TREMENDOUS ADVANTAGE ON US, AND NO ONE IS WILLING TO FIGHT BACK AGAINST CHINA BECAUSE THEY CONTROL OUR DEBT. BARACK OBAMA WILL BE. HE SAID IN A LOUD AND CLEAR MESSAGE, OVER AND OVER AGAIN. THE BURN ADMINISTRATION HAS BROUGHT 1/THREE OF COMPLAINTS THAN THE CLINTON ADMINISTRATION D EVEN THOUGH THE COMPLAINTS AGAINST THE UNITED STATES HAVE GROWN IN THE BUSH YEARS. AND WE HAVE TO START FIGHTING BACK. IT IS UNFAIR. IT IS UNFAIR TO LET A FOREIGN NATIONS COME IN AND SELL THEIR CARS IN AMERICA WITHOUT ANY PROBLEMS AT ALL, AND YET HAVE AMERICAN CARMAKERS BE SEVERELY LIMITED TO THE NUMBER OF CARS THEY CAN SELL TO FOREIGN NATIONS. HARLEY DAVIDSON, YOU MAY THINK OF HARLEY AS A WISCONSIN COMPANY, BUT IT'S ACTUALLY THE LARGEST MANUFACTURING PLANT IS IN WORK, PENNSYLVANIA. THE HEAD OF HARLEY TOLD US AND THIS PROBLEM HAS FINALLY BEEN RESOLVED BUT WHEN THE -- THIS IS HIS CONTRIBUTION TO ECONOMIC GROWTH ALONG WITH ALL THE OTHER THINGS THAT GOVERNOR SCHWARZENEGGER HAS DONE, BUT WHEN THE -- GOVERNOR SCHWARZENEGGER MOVIES CAME OUT AND SYLVESTER STALLONE MOVIES CAME OUT AND THEY WERE RIDING HARLEY DAVIDSON, THEY BECAME ENORMOUSLY POPULAR IN JAPAN BECAUSE ALL THE MOTORCYCLES IN JAPAN ARE SMALL, NO BIG ENGINES AND FLIPPED OUT STYLE AND ALL THAT. THEY BECAME IMMEDIATELY POPULAR AND THERE WAS A RUSH TO BUY THEM AMONG JAPANESE. THE JAPANESE DIDN'T PUT A QUOTA ON, BUT THEY HAD A NEW DRIVERS TEST, THAT FOR A MOTORCYCLE ABOVE A CERTAIN LENGTH YOU HAVE TO PASS. BEFORE YOU COULD OWN ONE. THE NEW DRIVERS TEST WAS ALMOST IMPOSSIBLE FOR ANYBODY TO PASS, AND AS A RESULT, THE SALE OF HARLEY DAVIDSONS GROUND TO A HALT. IT TOOK US THREE YEARS BEFORE FILING A COMPLAINT TO THE WPO. IT'S GOT TO CHANGE.

FREE TRADE HAS TO BE FAIR TRADE. WE WANT AMERICANS TO CONTINUE TO SUPPORT FREE TRADE, AND WE CERTAINLY DO, OBVIOUSLY, SO MUCH OF THE WORLD'S ECONOMIC HEALTH IS DEPENDENT UPON FREE TRADE. IF WE WANT AMERICANS TO SUPPORT FREE TRADE, WE HAVE TO HAVE A SYSTEM THAT IS FAIR TO OUR PRODUCTS AS WELL. WE CAN'T HAVE AMERICAN EXPORTS TAXED AT A DIFFERENT RATE THAN FOREIGN EXPORTS ARE TAXED HERE. WE HAVE TO DO SOMETHING ABOUT THE VALUE-ADDED TAX DISPARITY FOR EXPORTS AND IMPORTS. THERE ARE SO MANY THINGS WE HAVE TO DO AND SENATOR OBAMA UNDERSTANDS ALL OF THIS.

BUT FIRST OF ALL I THINK AMERICA IS AT A REAL TURNING POINT IN ITS HISTORY. WE HAVE TO DECIDE FOR OURSELVES WHAT KIND OF COUNTRY WE ARE GOING TO BE AND DO WE WANT TO TAKE THE EASY WAY OUT? DO WE WANT TO HAVE LIVES THAT ARE UNCHALLENGED AND FAIRLY COMFORTABLE, OR DO WE WANT TO CHALLENGE OURSELVES TO HAVE A BETTER COUNTRY, AND A BETTER PLACE IN THE WORLD FOR OUR CHILDREN AND OUR GRANDCHILDREN?

IF WE WANT TO DO THAT, WE HAVE TO INVEST IN OUR FUTURE. THERE IS ABSOLUTELY NO QUESTION ABOUT IT. TODAY I WAS OUT IN A PLACE CALLED CLARATON, PENNSYLVANIA AND I WAS THERE FOR A $1.2 BILLION INVESTMENT THAT UNITED STATES STEEL IS MAKING IN MAKING IT MORE ENVIRONMENTALLY SUSTAINABLE IN ITS COKE PLANT. IT'S THE LARGEST COKE PLANT IN AMERICA AND SECOND LARGEST IN THE WORLD. COKE IS -- NOT WHAT YOU MIGHT THINK. IT IS A SUBSTANCE THAT IS CRUCIAL IN THE PRODUCTION OF STEEL. AND MOST OF THE COKE PRODUCED BY U.S. STEEL, CLARITAN GOES TO ITS OWN PLANTS NOT ONLY HERE IN AMERICA BUT TO OTHER PLANTS AS WELL. THEY ARE MAKING A $1.2 BILLION INVESTMENT. NOW IT'S TRUE THAT STEEL IS DOING FAIRLY WELL, MUCH BETTER THAN MOST ELEMENTS OF THE AMERICAN ECONOMY BUT STILL THE CEO KNEW THAT HE HAD TO DO THIS AND HAD TO DO IT NOW. AND HE DID IT WITHOUT FEAR OF HESITATION. HE INVESTED IN HIS OWN COMPANY'S GROWTH. AND THE QUESTION IS, ARE WE GOING TO LET PEOPLE WHO SAY, THE GOVERNMENT SHOULDN'T SPEND MONEY, THE GOVERNMENT SHOULDN'T DO THIS AND THE GOVERNMENT SHOULDN'T DO THAT, ARE WE GOING TO LET THEM DOMINATE AMERICAN POLITICAL CULTURE, OR ARE WE GOING TO ROLL UP OUR SLEEVES AND ONCE AGAIN USE THE GOVERNMENT AS A CATALYST FOR REAL INVESTMENT, REAL GROWTH, REAL ECONOMIC STRIDES AND I THINK THE ANSWER IS WE HAVE TO.

YOU'VE HEARD WHAT MAYOR BLOOMBERG SAID, AND I THINK HE IS A VERY WISE MAN, IF WE DON'T WE WILL LOSE OUR FUTURE. THE REASON WE SHOULD SUPPORT BARACK OBAMA IS BECAUSE HE UNDERSTANDS THIS. TO BE THE WORLD LEADER WE NEED TO DO TO INFLUENCE SO MANY OF THE ISSUES THAT SO MANY OF YOU CARE ABOUT, AMERICA HAS TO NOT JUST BE MILITARILY STRONG BUT ECONOMICALLY STRONG. I WOULD RESPECTFULLY SAY AND I HAVE A LOT OF RESPECT FOR SENATOR MCCAIN, AND WHEN I WAS MAYOR OF PHILADELPHIA, HE DID SOME THINGS TO HELP US IN OUR RECOVERY. BUT I RESPECTFULLY SAY THAT THE MCCAIN ECONOMIC POLICY IS A POLICY THAT IS ABSOLUTELY, WILL HEAD US TO DISASTER. TO STOP INVESTING, TO STOP SPENDING, TO JUST CUT TAXS AND CIRCLE THE WAGONS IS A RECIPE FOR DISASTER FOR THIS COUNTRY. CONVERSELY BARACK OBAMA KNOWS WHAT WE NEED, HE IS NOT AFRAID TO LEAD AND I BELIEVE HE WILL LEAD US FULLY BACK INTO A POSITION OF LEADERSHIP, EDUCATIONALLY, INFRASTRUCTUREWISE, RENEWABLE AND ALTERNATIVE ENERGY, TRADE POLICY, ALL THE THINGS WE NEED. RESEARCH. WE WON'T BE AFRAID TO INVEST. WE WON'T BE AFRAID TO GROW AND WE WON'T BE AFRAID TO DO WHAT AMERICANS DO BEST, THAN IS INVEST IN OURSELVES WITH CONFIDENCE THAT WE CAN BE THE BEST. THANK YOU ALL VERY, VERY MUCH.

SPEAKER: LET ME CONCLUDE BY ONE THING, THANK YOU TO GOVERNOR RIDGE WHO IS OUR HONORARY CHAIR AND GOVERNOR AND GOVERNOR RENDELL AND SECRETARY LEHMAN. THIS IS A TERRIFIC NIGHT, BUT YOU CAN MAKE IT A GREAT NIGHT. AND I'M NOT TALKING ABOUT THE PHILLIES GAME, BUT WHEN YOU WALK OUT OF HERE THERE IS A "TAKE ACTION" SHEET THAT EACH OF YOU HAD WILL BE HANDED. DURING A COMMERCIAL, TAKE FIVE MINUTES AND LOG ON TO THE COMPUTER AND SEND A MESSAGE TO BOTH CAMPAIGNS, MCCAIN AND OBAMA OR JUST THE ONE YOU ARE FOR AND TELL THEM OUR THEME OF TONIGHT, THAT PENNSYLVANIANS CARE ABOUT BUILDING A BETTER WORLD. TELL THEM YOU AGREE WITH HENRY KISSINGER AND ROBERT RUE BIN WHO BELIEVE WE NEED TO INVEST IN OUR NON-MILITARY TOOLS OF ENGAGEMENT. I THANK YOU FOR BEING A PART OF MAKING THIS A BETTER WORLD. ENJOY THE WORLD SERIES AND WE LOOK FORWARD TO SEEING YOU IN THE FUTURE.