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CNN Novak, Hunt & Shields

Interviews With Jeanne Shaheen, John E. Sununu

Aired September 21, 2002 - 17:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


AL HUNT, CO-HOST: I'm Al Hunt. Robert Novak and I will question two candidates for the United States Senate seat in New Hampshire.
ROBERT NOVAK, CO-HOST: They are Governor Jeanne Shaheen, Democrat, and Congressman John E. Sununu, Republican. We will question Congressman Sununu later, but first we will interview Governor Shaheen.

(BEGIN VIDEOTAPE)

NOVAK (voice-over): Jeanne Shaheen, a former schoolteacher and businesswoman, first made her political mark as Jimmy Carter's New Hampshire campaign manager in 1976. After three terms in the State Senate, she was elected governor in 1996, and reelected in 1998 and 2000.

While stressing her nonpartisanship in a predominantly Republican state, Governor Shaheen has attacked Congressman Sununu on the issue of corporate governance.

(BEGIN VIDEO CLIP, "SHAHEEN POLITICAL AD")

NARRATOR: She has the courage to stand up to both political parties, to champion mainstream New Hampshire values, always has.

GOV. JEANNE SHAHEEN (D), NEW HAMPSHIRE: We can't be driven by partisan politics. We can't be driven by the special interests.

(END VIDEO CLIP)

(END VIDEOTAPE)

NOVAK: Governor Shaheen, Congressman Sununu has accused you of being a big taxer. If you are elected to the Senate, would you vote to roll back President Bush's tax cuts as Senator Kennedy and many other Democrats have proposed?

SHAHEEN: No, I wouldn't. And the fact is that I've been very fiscally responsible as governor of New Hampshire for the last six years. We still have the lowest tax burden in the country, just as we did when I got elected. And that's just a partisan attack that Sununu and the Republicans are going to try and use throughout this campaign.

NOVAK: Governor, since we are, the United States is running a large deficit, and you would not roll back the tax cuts, would you then adhere to President Bush's strictures on spending, limiting spending, or would you go along with the Democratic leadership and increase the level of appropriations above what the president has proposed?

SHAHEEN: You know, I think we have to look at each program and project one at a time and see what we need to do. That's the kind of priorities I've tried to set as governor where I had to balance spending with revenues, and that's what I would do in the United States Senate.

The fact is, it's important for us to set priorities in some areas like health care, where we do need to provide some additional help to people, but cut back in other places.

HUNT: Governor, both you and your opponent say you're for a prescription drug benefit for seniors. Is it better to deliver that benefit through Medicare or through HMOs and private insurers?

SHAHEEN: Well, I think it's better to deliver it through Medicare. But where my opponent and I differ on that issue is, I think we have to start by lowering the cost of prescription drugs. One of the reasons we can't do this is because the costs of medications have skyrocketed.

So there are some things that we should do now. We should close the loopholes that keep lower-cost generic drugs off the market. If we do that, the average savings is about 50 percent. There's a huge cost to the system because we're allowing those patents to be extended when they don't need to be.

We need to allow re-importation of FDA-approved drugs from Canada. We need to address the cost of advertising that's going on in the industry right now that's driving up the cost of medications. If we do those things, then we can begin to address the real health care needs that we have.

HUNT: Governor, even if you do all of that, if you have a prescription drug benefit delivered through Medicare, as the Democrats in Congress have proposed, it's going to cost about $500 billion over the next 10 years and even more thereafter. That's just when the baby boomers will be retiring. You're not going to be willing to revisit the tax cut. How are you going to pay for it?

SHAHEEN: Well, I disagree with your numbers. I think there are ways to do a prescription drug benefit through Medicare that are not going to cost that amount. And again, I think the way we begin this discussion is by lowering the cost of prescription drugs.

Because until we do that, we're going to continue to face the biggest cost driver in the health care system. And it affects not just whether we can provide a prescription drug benefit for Medicare, it affects the entire cost of health care for everyone.

NOVAK: Governor, President Bush this week asked Congress to give him a virtual blank check on attacking Iraq to remove Saddam Hussein from power. If you were, at the present time, a member of the Senate, would you vote for that proposal? SHAHEEN: Well, we have to see what the final wording is that comes out. But the fact is, I support the president in his desire to remove Saddam Hussein. I think Hussein is a danger to the Middle East and he's a danger to us. I think we ought to leave all options on the table, including military force to do that.

NOVAK: Governor, the president has, starting back in June, made a major change in U.S. policy. No longer is the U.S. following a policy of deterrence, but it is going toward preemption -- a preemptive attack against nations that are perceived to be a threat to the security of this country. Do you favor the replacement of deterrence by preemption?

SHAHEEN: You know, I think we have to move very carefully on this. But I do think the president, in going to the United Nations and trying to build support among our allies for action against Iraq and conferring with our congressional leadership in making the case to the country, is doing that. And I think we need to look at what the situation is and what the threat to this country and to the rest of the world is.

HUNT: Governor Shaheen, the rationale for invading Iraq is that, A, Saddam has weapons of mass destruction; and, B, he has supported terrorism. If that's the case, it certainly applies as much to Iran also. Would you be receptive to an American military invasion in Iran, regime change there too?

SHAHEEN: You know, I think we have to take these issues one at a time, and we need to begin with Iraq. I think, as I've said, and as the president has said, the issue with Iraq is there. They have the technology, they have the materiel to develop nuclear weapons. We don't know what the timetable is for that, but we know that once he gets those nuclear weapons, he is a threat to the Middle East, he's a threat to the rest of the world.

HUNT: Doesn't that apply to Iran also?

SHAHEEN: Well, at this point, we don't have the same kind of intelligence about Iran. And again, I think we need to be taking these threats as they come. Right now Iraq is the most significant threat that we're facing.

HUNT: Final question on Iraq. If and when we overthrow Saddam, would you be supportive of an open-ended and expensive commitment to try to build a model of democracy in that country?

SHAHEEN: Look, if we're going to go into Iraq -- and again, I think we've got to keep all the options on the table -- we need to know what we're getting into and we need to be prepared to stay there for as long as it takes to make sure that the successor to Saddam Hussein, whatever that regime turns out to be, is going to be one that can build democratic institutions and provide stability in the country.

So we need to be looking at this through the long-term and recognizing, as we're beginning to in Afghanistan, that we've got to make the commitment not just to remove the government in power, but to help put a stabilized government in its place.

HUNT: OK. We're going to have to take a break now, but when we come back, we'll have the Big Question for Governor Jeanne Shaheen.

(COMMERCIAL BREAK)

HUNT: And now the Big Question for Jeanne Shaheen.

Governor, could you tell us one position that you've taken in this campaign that would require Americans, New Hampshire voters to make a real sacrifice?

SHAHEEN: Well, I think if we go into Iraq, that it will require sacrifice from people in this country. I think it does mean that we need to consider a long-term commitment there. It will require the dedication of resources. And that would mean that people in this country would have to support the effort and be willing to help sacrifice to make that happen. So I think that is something. That's why we need to have the support of the American people in doing that.

NOVAK: Governor, your supporters have described you as a person who is not a very partisan person. Can you think of any issue in the U.S. Senate where you would be apt to vote differently from the Democratic leadership?

SHAHEEN: Well, I can tell you that when Bill Clinton was president, that one of the things I did as governor was to disagree with him on his policy around the use of our national forests. I thought he was bypassing the local involvement in the forests. I thought that was wrong. I let him know that.

And my goal, whether it's governor or the United States Senate, would be to do what's in the best interests of the people of New Hampshire. That's what I've tried to do. That's what I would do in the Senate. I think that's the kind of representation we need, not somebody who's going to do what partisan politics dictate, but do what's right for the people of New Hampshire.

NOVAK: Thank you very much, Governor Jeanne Shaheen.

SHAHEEN: Thank you.

NOVAK: We have to take a break. But when we come back, we'll interview the Republican candidate for the U.S. Senate seat from New Hampshire, Congressman John Sununu.

(COMMERCIAL BREAK)

NOVAK: We continue with the U.S. Senate race in New Hampshire by interviewing the Republican candidate.

(BEGIN VIDEOTAPE)

NOVAK (voice-over): John E. Sununu, the son of former New Hampshire governor and White House Chief of Staff John H. Sununu, was an engineer/businessman, when at age 32 he was elected to Congress in 1996. This year he defeated incumbent Senator Bob Smith in the Republican primary. He runs as a conservative and accuses Governor Shaheen of supporting higher taxes.

JOHN E. SUNUNU (R), U.S. SENATE CANDIDATE: I'm running for senator because it's time for a change. I'll be a clear, consistent voice in Washington, committed to conservative Republican principles and New Hampshire priorities. And I'll beat Jeanne Shaheen.

(END VIDEOTAPE)

NOVAK: Governor Shaheen has characterized you as being in the lap of the special interests. In order to improve the economy, do you think that President Bush should come up with some new tax incentives for investment, such as improving taxation of dividend income or capital gains?

SUNUNU: Well, I've always supported cutting capital gains taxes, because they do discourage investment and economic growth. But I think where the tax code is concerned, the most important thing we could do right now is simplify it, reform it.

I think we should save up our momentum in debating taxes for the coming term, talk about real reform, simplifying, whether it's capital gains, depreciation, simplifying the rate structure. Fundamental tax reform will put more money into people's pockets, but also end the cost of compliance, the complexity, and all the distrust that comes from having really two different tax systems, one for those that itemize and one for those that don't.

NOVAK: Congressman, you are in favor of an option in the Social Security system of personal accounts for young taxpayers. Now, the House Republican leadership has advised candidates not to talk about anything touching on privatization of Social Security, such as you talk about. Do you think that they have made a mistake in telling Republicans not to talk about that issue?

SUNUNU: Well, look, people in New Hampshire know that I'll talk thoughtfully, substantively about any issue. There's a lot of Democrat rhetoric going back years, scare tactics, trying to scare seniors about Social Security.

The fact is, I would oppose any changes to any benefit structure or payment structure for current retirees, for anyone retiring in the next 20 years. But we all know there's a large unfunded liability. We're going to have fewer workers in 30 or 35 years to support the existing retirees.

And for my children, it makes sense to talk about modernizing Social Security, letting them create stronger personal accounts, letting them get a higher rate of return over the long run, not to get rid of any guaranteed minimum benefit for Social Security. We're always going to have that part of the system.

But let's look at ways to modernize this, let individuals create real wealth, empower them, create something that they can leave for their children. These all have to be on the table if we're going to talk realistically about the future of Social Security, retirement security and Medicare.

HUNT: Congressman, you both say you favor a prescription drug benefit for seniors. Would it be better to deliver that benefit through Medicare, or through HMOs and private insurers?

SUNUNU: Well, we both say that we support a prescription drug benefit for Medicare, but of course, I'm the only one that's actually voted for a real plan -- a plan that passed the House. I voted for it twice. It's a plan that cuts costs for out-of-pocket for the average retiree by 40 percent. It brings in competition.

HUNT: Medicare or HMO?

SUNUNU: I know you're not for competition. But it's good to give seniors more choices and more options, let them choose a plan that's best for them and target assistance to the lowest income people. I think we focus on those of 150 percent of poverty or less, paying their premiums, paying their deductibles. It makes good sense. And it was a good, sound plan that would have significantly improved the situation for millions of seniors.

HUNT: Congressman, I'm going to try to ask that question once again, because I haven't heard an answer yet. Do you favor through Medicare or through HMOs, which one?

SUNUNU: We already are providing Medicare coverage through managed care companies, it's called Medicare+Choice. In fact, that's the only part of Medicare that has a prescription drug benefit right now.

HUNT: So you would do this through Medicare, not through HMOs.

SUNUNU: Medicare would manage the program. Medicare+Choice already has managed care companies providing prescription drug coverage. We should expand that, strengthen that and also create incentives for other providers to come in and offer a prescription drug benefit.

NOVAK: Congressman Sununu, President Bush this week asked Congress to give him a virtual blank check in a military action against Iraq to remove Saddam Hussein. Will you vote for that?

SUNUNU: I intend to support the resolution. I don't think it's a blank check. It's not a declaration of war, but it does give him military flexibility, diplomatic flexibility, not just to disarm Iraq, but to make sure they comply with all their commitments that they've made in the close of the Gulf War and all of the objectives of U.N. resolutions that have been passed.

They are a threat to the United States, to our allies and, of course, to security in the region.

NOVAK: Starting in June, the president began developing a new policy for the United States, a preemption, making a preemptive strike against people that threat -- other nations that threaten the security of this country rather than the traditional practice of deterrence. Do you favor substituting preemption for deterrence?

SUNUNU: Well, I think when we're talking about technology that involves weapons of mass destruction, nuclear, chemical or biological weapons, there has to be an element of preemption. If you wait until those weapons pose a direct, clear, present danger to the United States, you've probably waited too long.

This is technology that will not go away. And to risk it moving into the hands of a terrorist group like al Qaeda or to other enemies, focused enemies of the United States, would have tragic consequences. The administration understands that and that's exactly what they're focused on in trying to deal with Iraq today.

Don't let that weapon technology proliferate. Don't let Saddam Hussein get capability for nuclear or chemical weapons, because he's already shown a willingness to use any weapon at his disposal.

HUNT: Congressman, if the rationale for invading Iraq is that, A, Saddam has weapons of mass destruction and, B, he supported terrorism, that would certainly apply also to Iran. Would you be receptive to a regime change forced by United States military in Iran?

SUNUNU: Well, that is not the rationale for invading Iraq. That's the rationale for passing a resolution that gives the president flexibility as commander in chief to do what he thinks is appropriate to eliminate the risk, to force Iraq to come into compliance with commitments that it's made, with U.N. sanctions.

There's no question that there are other countries around the world that the president identified as posing a potential threat to the U.S. -- North Korea, Iran, which you just mentioned. And I think the administration has already begun to try to address those concerns. It is not going to be the same approach, the same recipe, the same diplomacy, or the same use of military force in every case.

HUNT: Quick follow-up to the earlier question. You cited Medicare+, which in the last four years HMOs have knocked 2.2 million seniors off of that coverage. Does that worry you about prescription drugs in your plan?

SUNUNU: No. It worries me about our unwillingness to really address reforms and modernization in Medicare. This thing was designed 37 years ago. It has not evolved to keep pace with current medical technology, delivery systems, health care systems. Ask any nurse, any physician. They're frustrated with the system.

And in New Hampshire especially, because we haven't funded the Medicare Choice part of the program, you have those managed care companies leaving. It's wrong. That's why reforms, modernization along the lines that we passed in the House are so important.

HUNT: We're going to have to take a break now. But when we come back, we'll have the Big Question for Congressman John Sununu.

(COMMERCIAL BREAK)

HUNT: And now the Big Question for John Sununu.

Congressman, could you give us just one example of a position you've taken during this campaign that would ask Americans, ask New Hampshire voters to make a real sacrifice?

SUNUNU: To make a sacrifice?

HUNT: Yes, sir.

SUNUNU: Well, look, I think anytime we ask them to put national security ahead of a lot of domestic issues, we're asking them to step up and make a sacrifice. Issues that they may think are important here in Washington, and we talked about some of them, I think all of them have to take a slight back seat to the importance of investing in homeland security, waging the war against terrorism overseas, and of course, ensuring that we strengthen aviation security and give the men and women in the armed services what they need to do the job. That's never easy, it's never an easy political sell, but it's important to the country.

NOVAK: Congressman Sununu, can you envision one issue that as a United States senator you would not be with the Republican majority on? The Republican party line on?

SUNUNU: Sure. Look, I've consistently opposed the party, unfortunately, the party leadership on agriculture subsidies to begin with. I was a conferee to that committee, I refused to sign the conference report. I've supported tougher restrictions for air standards that deal with ozone transport from the Midwest. It's an issue that affects, not just the Northeast part of the United States, but air pollution standards around the country as well. I think both of those are important.

And of course, I have supported, because of the importance to personal freedom, allowing people to travel to Cuba, even though our House leadership has been resolute in their opposition to that. I think it's a question of personal freedom, and I'm willing to take that stand.

NOVAK: John Sununu, thank you for joining us.

I'm Robert Novak.

HUNT: And I'm Al Hunt.

NOVAK: Coming up at 7 p.m. Eastern on "CAPITAL GANG," the president asked for a blank check from Congress on Iraq, the Capitol Hill investigation into the 9/11 attacks, and looking ahead to the hot Missouri Senate race.

HUNT: That's all for now, thanks for joining us.

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Aired September 21, 2002 - 17:30   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
AL HUNT, CO-HOST: I'm Al Hunt. Robert Novak and I will question two candidates for the United States Senate seat in New Hampshire.
ROBERT NOVAK, CO-HOST: They are Governor Jeanne Shaheen, Democrat, and Congressman John E. Sununu, Republican. We will question Congressman Sununu later, but first we will interview Governor Shaheen.

(BEGIN VIDEOTAPE)

NOVAK (voice-over): Jeanne Shaheen, a former schoolteacher and businesswoman, first made her political mark as Jimmy Carter's New Hampshire campaign manager in 1976. After three terms in the State Senate, she was elected governor in 1996, and reelected in 1998 and 2000.

While stressing her nonpartisanship in a predominantly Republican state, Governor Shaheen has attacked Congressman Sununu on the issue of corporate governance.

(BEGIN VIDEO CLIP, "SHAHEEN POLITICAL AD")

NARRATOR: She has the courage to stand up to both political parties, to champion mainstream New Hampshire values, always has.

GOV. JEANNE SHAHEEN (D), NEW HAMPSHIRE: We can't be driven by partisan politics. We can't be driven by the special interests.

(END VIDEO CLIP)

(END VIDEOTAPE)

NOVAK: Governor Shaheen, Congressman Sununu has accused you of being a big taxer. If you are elected to the Senate, would you vote to roll back President Bush's tax cuts as Senator Kennedy and many other Democrats have proposed?

SHAHEEN: No, I wouldn't. And the fact is that I've been very fiscally responsible as governor of New Hampshire for the last six years. We still have the lowest tax burden in the country, just as we did when I got elected. And that's just a partisan attack that Sununu and the Republicans are going to try and use throughout this campaign.

NOVAK: Governor, since we are, the United States is running a large deficit, and you would not roll back the tax cuts, would you then adhere to President Bush's strictures on spending, limiting spending, or would you go along with the Democratic leadership and increase the level of appropriations above what the president has proposed?

SHAHEEN: You know, I think we have to look at each program and project one at a time and see what we need to do. That's the kind of priorities I've tried to set as governor where I had to balance spending with revenues, and that's what I would do in the United States Senate.

The fact is, it's important for us to set priorities in some areas like health care, where we do need to provide some additional help to people, but cut back in other places.

HUNT: Governor, both you and your opponent say you're for a prescription drug benefit for seniors. Is it better to deliver that benefit through Medicare or through HMOs and private insurers?

SHAHEEN: Well, I think it's better to deliver it through Medicare. But where my opponent and I differ on that issue is, I think we have to start by lowering the cost of prescription drugs. One of the reasons we can't do this is because the costs of medications have skyrocketed.

So there are some things that we should do now. We should close the loopholes that keep lower-cost generic drugs off the market. If we do that, the average savings is about 50 percent. There's a huge cost to the system because we're allowing those patents to be extended when they don't need to be.

We need to allow re-importation of FDA-approved drugs from Canada. We need to address the cost of advertising that's going on in the industry right now that's driving up the cost of medications. If we do those things, then we can begin to address the real health care needs that we have.

HUNT: Governor, even if you do all of that, if you have a prescription drug benefit delivered through Medicare, as the Democrats in Congress have proposed, it's going to cost about $500 billion over the next 10 years and even more thereafter. That's just when the baby boomers will be retiring. You're not going to be willing to revisit the tax cut. How are you going to pay for it?

SHAHEEN: Well, I disagree with your numbers. I think there are ways to do a prescription drug benefit through Medicare that are not going to cost that amount. And again, I think the way we begin this discussion is by lowering the cost of prescription drugs.

Because until we do that, we're going to continue to face the biggest cost driver in the health care system. And it affects not just whether we can provide a prescription drug benefit for Medicare, it affects the entire cost of health care for everyone.

NOVAK: Governor, President Bush this week asked Congress to give him a virtual blank check on attacking Iraq to remove Saddam Hussein from power. If you were, at the present time, a member of the Senate, would you vote for that proposal? SHAHEEN: Well, we have to see what the final wording is that comes out. But the fact is, I support the president in his desire to remove Saddam Hussein. I think Hussein is a danger to the Middle East and he's a danger to us. I think we ought to leave all options on the table, including military force to do that.

NOVAK: Governor, the president has, starting back in June, made a major change in U.S. policy. No longer is the U.S. following a policy of deterrence, but it is going toward preemption -- a preemptive attack against nations that are perceived to be a threat to the security of this country. Do you favor the replacement of deterrence by preemption?

SHAHEEN: You know, I think we have to move very carefully on this. But I do think the president, in going to the United Nations and trying to build support among our allies for action against Iraq and conferring with our congressional leadership in making the case to the country, is doing that. And I think we need to look at what the situation is and what the threat to this country and to the rest of the world is.

HUNT: Governor Shaheen, the rationale for invading Iraq is that, A, Saddam has weapons of mass destruction; and, B, he has supported terrorism. If that's the case, it certainly applies as much to Iran also. Would you be receptive to an American military invasion in Iran, regime change there too?

SHAHEEN: You know, I think we have to take these issues one at a time, and we need to begin with Iraq. I think, as I've said, and as the president has said, the issue with Iraq is there. They have the technology, they have the materiel to develop nuclear weapons. We don't know what the timetable is for that, but we know that once he gets those nuclear weapons, he is a threat to the Middle East, he's a threat to the rest of the world.

HUNT: Doesn't that apply to Iran also?

SHAHEEN: Well, at this point, we don't have the same kind of intelligence about Iran. And again, I think we need to be taking these threats as they come. Right now Iraq is the most significant threat that we're facing.

HUNT: Final question on Iraq. If and when we overthrow Saddam, would you be supportive of an open-ended and expensive commitment to try to build a model of democracy in that country?

SHAHEEN: Look, if we're going to go into Iraq -- and again, I think we've got to keep all the options on the table -- we need to know what we're getting into and we need to be prepared to stay there for as long as it takes to make sure that the successor to Saddam Hussein, whatever that regime turns out to be, is going to be one that can build democratic institutions and provide stability in the country.

So we need to be looking at this through the long-term and recognizing, as we're beginning to in Afghanistan, that we've got to make the commitment not just to remove the government in power, but to help put a stabilized government in its place.

HUNT: OK. We're going to have to take a break now, but when we come back, we'll have the Big Question for Governor Jeanne Shaheen.

(COMMERCIAL BREAK)

HUNT: And now the Big Question for Jeanne Shaheen.

Governor, could you tell us one position that you've taken in this campaign that would require Americans, New Hampshire voters to make a real sacrifice?

SHAHEEN: Well, I think if we go into Iraq, that it will require sacrifice from people in this country. I think it does mean that we need to consider a long-term commitment there. It will require the dedication of resources. And that would mean that people in this country would have to support the effort and be willing to help sacrifice to make that happen. So I think that is something. That's why we need to have the support of the American people in doing that.

NOVAK: Governor, your supporters have described you as a person who is not a very partisan person. Can you think of any issue in the U.S. Senate where you would be apt to vote differently from the Democratic leadership?

SHAHEEN: Well, I can tell you that when Bill Clinton was president, that one of the things I did as governor was to disagree with him on his policy around the use of our national forests. I thought he was bypassing the local involvement in the forests. I thought that was wrong. I let him know that.

And my goal, whether it's governor or the United States Senate, would be to do what's in the best interests of the people of New Hampshire. That's what I've tried to do. That's what I would do in the Senate. I think that's the kind of representation we need, not somebody who's going to do what partisan politics dictate, but do what's right for the people of New Hampshire.

NOVAK: Thank you very much, Governor Jeanne Shaheen.

SHAHEEN: Thank you.

NOVAK: We have to take a break. But when we come back, we'll interview the Republican candidate for the U.S. Senate seat from New Hampshire, Congressman John Sununu.

(COMMERCIAL BREAK)

NOVAK: We continue with the U.S. Senate race in New Hampshire by interviewing the Republican candidate.

(BEGIN VIDEOTAPE)

NOVAK (voice-over): John E. Sununu, the son of former New Hampshire governor and White House Chief of Staff John H. Sununu, was an engineer/businessman, when at age 32 he was elected to Congress in 1996. This year he defeated incumbent Senator Bob Smith in the Republican primary. He runs as a conservative and accuses Governor Shaheen of supporting higher taxes.

JOHN E. SUNUNU (R), U.S. SENATE CANDIDATE: I'm running for senator because it's time for a change. I'll be a clear, consistent voice in Washington, committed to conservative Republican principles and New Hampshire priorities. And I'll beat Jeanne Shaheen.

(END VIDEOTAPE)

NOVAK: Governor Shaheen has characterized you as being in the lap of the special interests. In order to improve the economy, do you think that President Bush should come up with some new tax incentives for investment, such as improving taxation of dividend income or capital gains?

SUNUNU: Well, I've always supported cutting capital gains taxes, because they do discourage investment and economic growth. But I think where the tax code is concerned, the most important thing we could do right now is simplify it, reform it.

I think we should save up our momentum in debating taxes for the coming term, talk about real reform, simplifying, whether it's capital gains, depreciation, simplifying the rate structure. Fundamental tax reform will put more money into people's pockets, but also end the cost of compliance, the complexity, and all the distrust that comes from having really two different tax systems, one for those that itemize and one for those that don't.

NOVAK: Congressman, you are in favor of an option in the Social Security system of personal accounts for young taxpayers. Now, the House Republican leadership has advised candidates not to talk about anything touching on privatization of Social Security, such as you talk about. Do you think that they have made a mistake in telling Republicans not to talk about that issue?

SUNUNU: Well, look, people in New Hampshire know that I'll talk thoughtfully, substantively about any issue. There's a lot of Democrat rhetoric going back years, scare tactics, trying to scare seniors about Social Security.

The fact is, I would oppose any changes to any benefit structure or payment structure for current retirees, for anyone retiring in the next 20 years. But we all know there's a large unfunded liability. We're going to have fewer workers in 30 or 35 years to support the existing retirees.

And for my children, it makes sense to talk about modernizing Social Security, letting them create stronger personal accounts, letting them get a higher rate of return over the long run, not to get rid of any guaranteed minimum benefit for Social Security. We're always going to have that part of the system.

But let's look at ways to modernize this, let individuals create real wealth, empower them, create something that they can leave for their children. These all have to be on the table if we're going to talk realistically about the future of Social Security, retirement security and Medicare.

HUNT: Congressman, you both say you favor a prescription drug benefit for seniors. Would it be better to deliver that benefit through Medicare, or through HMOs and private insurers?

SUNUNU: Well, we both say that we support a prescription drug benefit for Medicare, but of course, I'm the only one that's actually voted for a real plan -- a plan that passed the House. I voted for it twice. It's a plan that cuts costs for out-of-pocket for the average retiree by 40 percent. It brings in competition.

HUNT: Medicare or HMO?

SUNUNU: I know you're not for competition. But it's good to give seniors more choices and more options, let them choose a plan that's best for them and target assistance to the lowest income people. I think we focus on those of 150 percent of poverty or less, paying their premiums, paying their deductibles. It makes good sense. And it was a good, sound plan that would have significantly improved the situation for millions of seniors.

HUNT: Congressman, I'm going to try to ask that question once again, because I haven't heard an answer yet. Do you favor through Medicare or through HMOs, which one?

SUNUNU: We already are providing Medicare coverage through managed care companies, it's called Medicare+Choice. In fact, that's the only part of Medicare that has a prescription drug benefit right now.

HUNT: So you would do this through Medicare, not through HMOs.

SUNUNU: Medicare would manage the program. Medicare+Choice already has managed care companies providing prescription drug coverage. We should expand that, strengthen that and also create incentives for other providers to come in and offer a prescription drug benefit.

NOVAK: Congressman Sununu, President Bush this week asked Congress to give him a virtual blank check in a military action against Iraq to remove Saddam Hussein. Will you vote for that?

SUNUNU: I intend to support the resolution. I don't think it's a blank check. It's not a declaration of war, but it does give him military flexibility, diplomatic flexibility, not just to disarm Iraq, but to make sure they comply with all their commitments that they've made in the close of the Gulf War and all of the objectives of U.N. resolutions that have been passed.

They are a threat to the United States, to our allies and, of course, to security in the region.

NOVAK: Starting in June, the president began developing a new policy for the United States, a preemption, making a preemptive strike against people that threat -- other nations that threaten the security of this country rather than the traditional practice of deterrence. Do you favor substituting preemption for deterrence?

SUNUNU: Well, I think when we're talking about technology that involves weapons of mass destruction, nuclear, chemical or biological weapons, there has to be an element of preemption. If you wait until those weapons pose a direct, clear, present danger to the United States, you've probably waited too long.

This is technology that will not go away. And to risk it moving into the hands of a terrorist group like al Qaeda or to other enemies, focused enemies of the United States, would have tragic consequences. The administration understands that and that's exactly what they're focused on in trying to deal with Iraq today.

Don't let that weapon technology proliferate. Don't let Saddam Hussein get capability for nuclear or chemical weapons, because he's already shown a willingness to use any weapon at his disposal.

HUNT: Congressman, if the rationale for invading Iraq is that, A, Saddam has weapons of mass destruction and, B, he supported terrorism, that would certainly apply also to Iran. Would you be receptive to a regime change forced by United States military in Iran?

SUNUNU: Well, that is not the rationale for invading Iraq. That's the rationale for passing a resolution that gives the president flexibility as commander in chief to do what he thinks is appropriate to eliminate the risk, to force Iraq to come into compliance with commitments that it's made, with U.N. sanctions.

There's no question that there are other countries around the world that the president identified as posing a potential threat to the U.S. -- North Korea, Iran, which you just mentioned. And I think the administration has already begun to try to address those concerns. It is not going to be the same approach, the same recipe, the same diplomacy, or the same use of military force in every case.

HUNT: Quick follow-up to the earlier question. You cited Medicare+, which in the last four years HMOs have knocked 2.2 million seniors off of that coverage. Does that worry you about prescription drugs in your plan?

SUNUNU: No. It worries me about our unwillingness to really address reforms and modernization in Medicare. This thing was designed 37 years ago. It has not evolved to keep pace with current medical technology, delivery systems, health care systems. Ask any nurse, any physician. They're frustrated with the system.

And in New Hampshire especially, because we haven't funded the Medicare Choice part of the program, you have those managed care companies leaving. It's wrong. That's why reforms, modernization along the lines that we passed in the House are so important.

HUNT: We're going to have to take a break now. But when we come back, we'll have the Big Question for Congressman John Sununu.

(COMMERCIAL BREAK)

HUNT: And now the Big Question for John Sununu.

Congressman, could you give us just one example of a position you've taken during this campaign that would ask Americans, ask New Hampshire voters to make a real sacrifice?

SUNUNU: To make a sacrifice?

HUNT: Yes, sir.

SUNUNU: Well, look, I think anytime we ask them to put national security ahead of a lot of domestic issues, we're asking them to step up and make a sacrifice. Issues that they may think are important here in Washington, and we talked about some of them, I think all of them have to take a slight back seat to the importance of investing in homeland security, waging the war against terrorism overseas, and of course, ensuring that we strengthen aviation security and give the men and women in the armed services what they need to do the job. That's never easy, it's never an easy political sell, but it's important to the country.

NOVAK: Congressman Sununu, can you envision one issue that as a United States senator you would not be with the Republican majority on? The Republican party line on?

SUNUNU: Sure. Look, I've consistently opposed the party, unfortunately, the party leadership on agriculture subsidies to begin with. I was a conferee to that committee, I refused to sign the conference report. I've supported tougher restrictions for air standards that deal with ozone transport from the Midwest. It's an issue that affects, not just the Northeast part of the United States, but air pollution standards around the country as well. I think both of those are important.

And of course, I have supported, because of the importance to personal freedom, allowing people to travel to Cuba, even though our House leadership has been resolute in their opposition to that. I think it's a question of personal freedom, and I'm willing to take that stand.

NOVAK: John Sununu, thank you for joining us.

I'm Robert Novak.

HUNT: And I'm Al Hunt.

NOVAK: Coming up at 7 p.m. Eastern on "CAPITAL GANG," the president asked for a blank check from Congress on Iraq, the Capitol Hill investigation into the 9/11 attacks, and looking ahead to the hot Missouri Senate race.

HUNT: That's all for now, thanks for joining us.

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