"Let Us Choose Freedom"

                                                    Steve Forbes

                                       Address to the Cato Institute Conference

                                    Introduction 

                                    Thank you, Ed [Crane], for that generous
                                    introduction. 

                                    Before I begin this afternoon, let's take stock of
                                    where we are: Do you realize that 429 days from
                                    today, Bill Clinton will no longer be President of the
                                    United States? 429 days from today, Al Gore will be
                                    President - of the Environmental Defense Fund.
                                    And beginning 429 days from today, we will turn the
                                    initials I-R-S into R-I-P - rest in peace. A Forbes
                                    Administration is sounding pretty good already, isn't
                                    it? 

                                    What an honor to have the opportunity to come here
                                    to talk about the next stage of the Reagan Revolution
                                    and how to bring about a new birth of freedom for all
                                    Americans. 

                                    I'm a big fan of the Cato Institute, and while we don't
                                    agree on every issue, I think you and your
                                    colleagues have done a remarkable job in bringing
                                    issues like fundamental tax reform and Social
                                    Security reform to the forefront of the public debate.
                                    Ed, you and your team deserve tremendous credit -
                                    you are literally changing the tides of history. 

                                    A few weeks ago, the Washington Post did a
                                    front-page profile on me. The reporter said I don't
                                    reveal enough about myself. So today, in the spirit of
                                    self-disclosure, let me make a confession: For more
                                    than two decades, starting when I was a young
                                    journalist - at a certain magazine humility prevents
                                    me from naming - but starting quite long ago, I've
                                    been stealing good ideas from free market think
                                    tanks like yours. I guess you could say when I was
                                    young and irresponsible, I was young and
                                    irresponsible. 

                                    But I've never regretted it for one moment. People
                                    are hungry for new ideas - big ideas - exciting ideas
                                    that can make their lives better-that can give them
                                    more choices and more control over their lives-that
                                    can give them the freedom to dream big dreams and
                                    reach new heights. 

                                    That's why I ran in '96. That's why we stunned the
                                    Republican establishment by winning primaries in
                                    Delaware and Arizona. That's why we landed on the
                                    covers of Time and Newsweek. That's why we've
                                    surged in Iowa from 2 or 3 percent in the polls at the
                                    beginning of this year to 20% today. That's why we
                                    came in second in the Iowa Straw Poll. That's why
                                    we're seeing such large crowds in small towns
                                    throughout the heartland - 600 in Sioux City-.700 in
                                    Davenport-.more than 4,000 on our recent bus tour
                                    through Iowa. After six years of Clinton and Gore,
                                    people are tired of spin, they want substance - and
                                    that's what our campaign is all about. 

                                    Ideas matter. That's the premise our campaign. For
                                    inspiration, we look not to pollsters and consultants,
                                    but to the great pioneers of personal freedom -
                                    Adam Smith and Fredrick Hayek, Milton and Rose
                                    Friedman, Jose Pinera and Alvin Rabushka, Ronald
                                    Reagan and Margaret Thatcher. It is upon the
                                    shoulders of these giants - men and women of big
                                    ideas and high ideals - that our campaign stands. It
                                    is humbling. It is exciting. And I believe it will lead us
                                    to victory. 

                                    Defending Reaganesque Conservatism 

                                    Several weeks ago, the frontrunner for the
                                    Republican presidential nomination came here to
                                    New York and delivered a speech that many felt was
                                    sharply critical of Reaganesque conservatism.
                                    Today, I have come to New York to do the opposite
                                    - to give a passionate defense of Reaganesque
                                    conservatism and to say in no uncertain terms: free
                                    market, limited government, Reaganesque
                                    conservatism is the right way for the country. It's the
                                    right way for the times. It's the only way the
                                    Republican Party can win back the White House and
                                    expand our Congressional majority and we dare not
                                    forget it. 

                                    Let me be candid: Governor Bush and I profoundly
                                    disagree on the central issues of this campaign. He
                                    places his faith in federal bureaucrats to improve our
                                    lives; I place my faith in the American people to take
                                    us to new heights. Today, I would like to specifically
                                    address four key issues where we disagree -
                                    education, government spending, Social Security
                                    and taxes. But I do think the public and the party
                                    would be better served if he debated me on these
                                    and other issues directly - out in the open. 

                                    Freedom And The New Economy 

                                    One thing is now crystal clear: this campaign has
                                    become a choice between the failed politics of the
                                    past and an exciting new vision of the future. 

                                    The Cold War is over. A new economic era is
                                    dawning. America is now the world's only economic
                                    superpower. And we need a leader ready for the
                                    challenges of the new millennium. From the
                                    emergence of personal computers, wireless phones
                                    and fiber optic networks to the rise of the Internet
                                    and the explosion of e-commerce, the New
                                    Economy of the Information Age is giving Americans
                                    more opportunities and more control over their lives
                                    than ever before. 

                                    The challenge now is to remove the big government
                                    barriers that stand in our way so that every American
                                    is free to take full advantage of the New Economy -
                                    free to get a world-class education for their kids, get
                                    the IRS out of their way, choose their own doctors,
                                    own their own home, start their own business, and
                                    save and invest for a secure retirement. 

                                    The genius of America is that for the first time in
                                    history a nation was founded on the principle of the
                                    dignity of the individual human being. Throughout
                                    history, and throughout the world, individuals had
                                    been treated as serfs, cannon fodder for the state,
                                    cogs in some grand design of the ruling class. Now
                                    was created a nation that rejected statism and
                                    despotism in all its forms. Civil society, not political
                                    society, was to be the organizing premise of
                                    America. 

                                    The Founders made that brilliantly clear in the
                                    Declaration of Independence: "We hold these truths
                                    to be self-evident, that all men are created equal,
                                    that they are endowed by their Creator with certain
                                    unalienable rights, that among these are life, liberty,
                                    and the pursuit of happiness -- that to secure these
                                    rights, governments are instituted among men,
                                    deriving their just powers from the consent of the
                                    governed." 

                                    Two things stand out in that remarkable statement.
                                    First, the Founders staked the future of our country
                                    on the principle that human beings are created by
                                    God, and therefore have certain intrinsic, absolute,
                                    non-negotiable rights - life, liberty and the pursuit of
                                    happiness, in that order. Second, government's role
                                    in society is to "secure these rights," not create or
                                    dispense them arbitrarily. Indeed, unlike in the past,
                                    it is "we the people" who grant government the
                                    powers necessary to protect these liberties. This, by
                                    the way, is an extremely important point in the
                                    context of this presidential campaign, because not
                                    all the candidates in this race seem to fully grasp it. 

                                    Which is precisely why I'm running for President -- to
                                    preserve our heritage of liberty because, believe
                                    me, it is being eroded, bit-by-bit through a kind of
                                    unprincipled, focus group, sound-bite politics that is,
                                    at best, indifferent to the profound principles on
                                    which this nation was founded. The great champion
                                    of a free society, Nobel laureate Milton Friedman, a
                                    friend of many of you in this audience, likes to tell the
                                    parable of the frog and the kettle. If you put a frog in
                                    a kettle of boiling water, it will immediately jump out.
                                    Put it in a kettle of cool water and gradually bring the
                                    heat up to boiling, the frog stays put and gets
                                    cooked. 

                                    I'm afraid that's what's been happening to America
                                    over the past decade, as our political leaders
                                    gradually forget the wisdom of our Founders and
                                    look increasingly to the federal government as the
                                    solution to problems that should best be dealt with at
                                    the state and local level, if not by civil society, itself. 

                                    The Battle For Education Freedom 

                                    As bad as President Clinton's shameless personal
                                    behavior has been - and "shameless" is a generous
                                    description - even worse for America has been his
                                    relentless efforts to reach the tendrils of the federal
                                    government into virtually every corner of civil society.
                                    Just look at what the President wants to do in
                                    education - expand federal control in dozens of
                                    different ways. Keep in mind that this is a federal
                                    government that already runs more than 760
                                    education programs-at a cost of some $100 billion a
                                    year-.forcing local and state school officials to do
                                    more than 48 million hours worth paperwork every
                                    year just to administer federal education funds. 

                                    Ladies and gentlemen, the federalization of
                                    education is a very dangerous trend in America. It's
                                    not helping children prepare to compete and
                                    succeed in the Information Age economy. Quite the
                                    opposite. And here is one critical issue where
                                    Governor Bush and I profoundly disagree. 

                                    Governor Bush envisions a considerably more
                                    expansive role for government than I do. And he has
                                    been openly hostile to the Reagan wing of the GOP
                                    and our free market, limited government base that he
                                    disdainfully refers to as the "leave us alone"
                                    coalition. 

                                    According to Democrats like Robert Reich and
                                    George Stephanopolous and Chris Matthews,
                                    Governor Bush has taken a "New Democrat"
                                    approach towards education. He wants a bigger
                                    federal role in education. He wants to triple funding
                                    for President's Clinton's "character education"
                                    programs, as though Washington really has anything
                                    helpful to tell children about character. He speaks
                                    the language of school choice but didn't really fight
                                    for it in Texas like his brother did in Florida. And he
                                    would actually require children trapped in dangerous,
                                    failing inner city schools to wait for at least three
                                    more years of federal studies before they might
                                    have a chance to go to a school that works. 

                                    I think that's a terrible mistake. Our kids don't have
                                    three more years to wait. We're losing a generation
                                    as it is. That's why as President, I will immediately
                                    block grant federal education money back to states
                                    and local communities with this directive: Give
                                    parents the freedom to choose schools that work. I
                                    want parents and teachers in charge of education. I
                                    want local not federal control. And I have long fought
                                    for genuine school choice for one simple reason: No
                                    mother should be forced to send her child to a failing
                                    school - period. 

                                    So, yes, I do have serious philosophical differences
                                    with Governor Bush on education. But I also have a
                                    political disagreement. If Republicans don't offer
                                    voters a clear conservative alternative to the policies
                                    of Clinton, Gore and Bradley next year, then why
                                    should people vote for us at all? I suggest they
                                    won't, and we'll lose the White House again, and our
                                    Congressional majority as well. 

                                    The Battle To Cut Government Waste 

                                    Another area where Governor Bush and I profoundly
                                    disagree is in the area of cutting wasteful
                                    government spending. 

                                    It's been said that Calvin Coolidge - also known as
                                    "silent Cal" and "cool Cal Coolidge" - visited a
                                    church one Sunday and was later asked by a friend
                                    whether he enjoyed the service. Calvin said, "Yep."
                                    And the friend asked, "Did the preacher give a good
                                    sermon?" And Calvin said, "Yep." And the friend
                                    asked, "What did the preacher preach about?" And
                                    Calvin said, "Sin." Exasperated now, the friend
                                    asked him, "Calvin, what did the preacher say about
                                    sin." And Calvin replied: "He was against it." 

                                    That's how I feel about government waste: I'm
                                    against it. 

                                    I believe government is too big and costs too much.
                                    Governor Bush doesn't. Since taking office, the
                                    Clinton-Gore Administration has increased federal
                                    spending by some 21%. How much has government
                                    spending increased under Governor Bush? A
                                    whopping 36% -- nearly twice as fast as the
                                    Clinton-Gore Administration. 

                                    Or take the recent budget fight down in Washington.
                                    To keep from the White House from raiding the
                                    Social Security Trust Fund, Republicans made a
                                    very sensible proposal: Let's cut government
                                    spending by about one percent across the board.
                                    There's plenty of waste to get rid of. In 1998, our
                                    government made $19 billion in "improper
                                    payments" through nine different federal agencies.
                                    We gave $64 million in loans to help private
                                    companies build luxury resorts in Jamaica and
                                    Botswana. And just this year, Senator Kennedy
                                    helped secure a $400,000 federal grant to build a
                                    Dr. Seuss museum in his home state of
                                    Massachusetts. 

                                    Now, my kids love Dr. Seuss. I love Dr. Seuss. But
                                    the problem with pork barrel projects like this one is
                                    that the Cat in the Hat always comes back for more,
                                    hat in hand. 

                                    That's why I've fully supported the Republican
                                    efforts to cut government waste. But unlike this
                                    Congress, as President, I would do far more. The
                                    Forbes Administration will impose and enforce tough
                                    new budget caps. That's what the veto pen is for.
                                    We will close down the Departments of Commerce
                                    and Energy. We will privatize unneeded federal
                                    assets, like the $250 billion government loan
                                    portfolio. We will end corporate welfare. And we
                                    have a plan to dramatically reduce the federal debt
                                    by 60% by 2020. That's the promise of a Forbes
                                    Administration - real fiscal discipline. 

                                    Unfortunately, Governor Bush did not support
                                    Congressional Republicans even in this meager
                                    effort to cut government waste. According to the
                                    Austin American Statesman, Governor Bush has,
                                    quote: "steered clear of taking sides on the
                                    Republican plan to cut government spending by one
                                    percent across the board." That was very
                                    disappointing - and instructive - and it's another
                                    issue upon which the Governor and I profoundly
                                    disagree. 

                                    Social Security And The "Politics Of Arrogance"

                                    A third area where Governor Bush and I profoundly
                                    disagree is over what to do with the federal budget
                                    surplus. This is a defining issue. The two Democratic
                                    candidates have already proposed new spending
                                    programs worth more than $1 trillion and it's not even
                                    Christmas yet! I've said we need to use the entire
                                    surplus to create Personal Retirement Accounts for
                                    younger workers and to cut taxes for all Americans.
                                    Which side is Governor Bush on - the Clintonites or
                                    the Reaganites? Well-.it's a little murky. 

                                    Newsweek just did a cover story on the "politics of
                                    authenticity." They should do one on the "politics of
                                    arrogance" -- what Hayek called "the fatal conceit" --
                                    the notion of so many politicians that the federal
                                    government can do no wrong. For example, in
                                    January of this year we witnessed the incredible
                                    spectacle of the President of the United States
                                    giving a speech in Buffalo in which he told the
                                    American people in reference to the budget surplus
                                    that "we could give it all back to you and hope you
                                    spend it right," but that he didn't think you would, so
                                    Washington would spend it for you. 

                                    That's clearly the operating theory behind the current
                                    Social Security system, which is why I want to reform
                                    it. It's why Ed Crane and Jose Pinera and the entire
                                    Cato team want to reform it. And let me say here
                                    what a tremendous job Cato has done to lay the
                                    intellectual groundwork for this historic debate.
                                    You've done the research. You've tested the
                                    arguments. You've created the tools to build a new
                                    future. Social Security used to be the so-called "third
                                    rail" of American politics -- touch it and you die. But
                                    in 1996, our campaign grabbed the "third rail" with
                                    both hands, and we lived to tell about it. In fact, we
                                    transformed the entire debate. 

                                    Today, politicians who avoid offering a plan to reform
                                    this bankrupt system do so at their own peril. A
                                    recent Zogby poll shows that by a margin of nearly
                                    two-to-one, Americans would prefer to invest their
                                    payroll taxes in personal retirement accounts where
                                    they would own real assets -- stocks, bonds, money
                                    market funds, even annuities. For people under the
                                    age of 50 the numbers are huge - 75 to 80 percent
                                    want out of the bankrupt pay-as-you-go Social
                                    Security system and into one where they own and
                                    control their own retirement assets. That, my friends,
                                    is a revolution. 

                                    The politics of arrogance says Americans aren't
                                    smart enough to invest their own money. In fact, a
                                    Pew Research Center poll found that more than 80
                                    percent of federal bureaucrats think that Americans
                                    aren't smart enough to make wise decisions on the
                                    great issues of our day. No wonder Al Gore and Bill
                                    Bradley oppose fundamental reform of Social
                                    Security. But they ought to look at those Zogby poll
                                    numbers, because they show that Democrats and
                                    union workers prefer switching to a system of
                                    personal accounts. 

                                    You know better than many the difference between
                                    Social Security and the miracle of the markets. The
                                    rate of return - in terms of benefits promised
                                    workers now entering the workforce - is very close
                                    to zero, and in some cases is actually negative. 

                                    Now think about that for a moment. If your
                                    investment fund manager gave you as dismal a
                                    return on your money as Washington gives you,
                                    you'd fire him in a heartbeat. Right? Well, then, what
                                    are we waiting for? I say it's time to fire Bill Clinton. I
                                    say it's time to fire Al Gore. I don't care if he did
                                    invent the Internet - he's out. 

                                    Why don't we try something different for a change?
                                    We don't we choose a President who knows
                                    something about creating real wealth? Why don't we
                                    choose someone who's got a plan to save Social
                                    Security - someone who's been leading this fight
                                    when everyone else said it was political suicide? 

                                    As President, I will begin using the entire Social
                                    Security surplus to stop raiding the Trust Fund and
                                    start phasing in a new system for young people.
                                    Under our plan, every American 55 and older is fully
                                    protected - no benefit cuts, no earnings penalty, no
                                    tax on Social Security. Promises made must be
                                    promises kept. For younger workers, you can
                                    deposit part, and eventually the bulk, of your Social
                                    Security taxes in your own account. You can choose
                                    stocks, bonds, mutual funds, bank CDs. You can
                                    choose which investment company you want to use.
                                    It's your choice. Because it's your money - not the
                                    government's. 

                                    Imagine what would happen to the American
                                    economy. Done right - done in tandem with
                                    fundamental tax reform, where, for example, we
                                    abolish the tax on capital gains - this economy would
                                    take off like a rocket. And the rate of return for
                                    working families all across this country would be
                                    phenomenal. 

                                    Under our plan, a single mother - struggling to raise
                                    her kids - working as a waitress or a teacher or a
                                    secretary - could put 8 percent of her income into
                                    her own Personal Retirement Account. She'd
                                    choose her investments. She'd get a periodic
                                    statement of her account balance - she could even
                                    look up her balance on the Internet with her own
                                    password. And she could retire with $1.2 million in
                                    her account. That's right $1.2 million. And she could
                                    draw down on it tax free. And she could pass it on to
                                    her children without Washington robbing her blind. 

                                    That is the magic of freedom. That is what I'm
                                    proposing in this campaign - the greatest family
                                    wealth creation act in American history. Margaret
                                    Thatcher did it in Great Britain. .Jose Pinera did it in
                                    Chile. Why should Americans get left behind? They
                                    won't in a Forbes Administration. Every worker will
                                    have a stake in the American Dream. We'll create an
                                    entire new generation of savers and investors that
                                    will change the face of American society and politics
                                    forever. 

                                    All this is too great an opportunity to let slip away.
                                    And that's why this election is so important. You
                                    know where I stand on saving Social Security. The
                                    question is: Where does Governor Bush stand? 

                                    The Governor told the Washington Post the other
                                    day that he - quote - "may or may not" offer a Social
                                    Security plan before the primaries. I think that's very
                                    instructive. This is one of the most important
                                    economic issues we face as a nation and Governor
                                    Bush has no plan. He has never championed the
                                    cause of Personal Retirement Accounts, and is
                                    giving mere lip service now. Which means this
                                    exciting idea has only one hope of happening - that
                                    you and I join together and rally the nation to win the
                                    White House and usher in the greatest era of
                                    economic freedom and prosperity the world has
                                    ever known. 

                                    The Forbes Flat Tax: Setting The Terms Of
                                    Debate 

                                    Which brings us, finally, to the tax issue. You know
                                    where I stand. I believe our entire tax system is an
                                    absolute disgrace, an abomination worthy of the ash
                                    heap of history. We can't reform it. We can't tinker
                                    with it. The only thing we can do with this hideous
                                    monster is kill it, drive a stake through its heart, bury
                                    it and hope it never rises again to terrorize the
                                    American people. 

                                    The question is: Where does Governor Bush stand?
                                    He's offered no vision, no plan. First we were going
                                    to get a plan in September. It's now November, and
                                    still nothing. Does Governor Bush really believe in
                                    tax cuts? Then what's taking so long? 

                                    What most people don't realize is that Governor
                                    Bush's so-called "tax reform" plan in 1997 effectively
                                    proposed both a statewide property tax and a
                                    first-ever Texas state income tax. His "tax cuts"
                                    which he so often talks about were described by his
                                    own Republican lieutenant governor as "illusory."
                                    Many Texans have actually seen their taxes go up.
                                    That wasn't Ronald Reagan's approach to taxes and
                                    it isn't mine. 

                                    We need to end the IRS as we know it. We need an
                                    honest, simple flat tax that's a real tax cut for all
                                    Americans. Our plan provides generous personal
                                    exemptions of $13,000 for each adult and $5,000
                                    for each child so that a family of four earning
                                    $36,000 a year will pay no federal income tax -- an
                                    annual savings of $1,670. In fact, our plan takes 20
                                    million low income Americans off the income tax
                                    rolls all together. 

                                    With our plan there is no double and triple taxation.
                                    No tax on personal savings. No tax on Social
                                    Security. No tax on capital gains. No tax on
                                    dividends. No alternative minimum tax. And no
                                    "death" tax. You can leave this world unmolested by
                                    the IRS. Sort of a new principle of taxation: No
                                    taxation without respiration. 

                                    Perhaps you saw last Sunday's New York Times
                                    front-page story on the remarkable journey of the flat
                                    tax over the past four years. In 1996, every
                                    Republican candidate attacked it - and me. Today,
                                    every single candidate but one - Governor Bush -
                                    supports a single rate tax system. So education
                                    works. Imagine that. 

                                    A Clear Choice 

                                    In closing, let me say again that Governor Bush is a
                                    good man. But we profoundly disagree on the
                                    fundamental issues of this campaign. 

                                    Governor Bush is vague. I'm specific. 

                                    Governor Bush believes in the politics of style. I
                                    believe in the politics of substance. 

                                    Governor Bush has the Republican establishment. I
                                    have a conservative vision. 

                                    Governor Bush believes big government is better
                                    managed by Republicans than by Democrats. I
                                    believe we need less government and more
                                    freedom for the American people. 

                                    In sum, Governor Bush places his faith in federal
                                    bureaucrats to make our lives better. I place my faith
                                    in the American people to lead us to new heights. 

                                    Once again, America has come to a time for
                                    choosing. The choice couldn't be clearer - and that's
                                    a good thing for America. 

                                    Let us choose freedom, as we remember Ronald
                                    Reagan's farewell address to the nation in 1989. The
                                    century's greatest president said, and I quote: "Ours
                                    was the first revolution in the history of mankind that
                                    truly reversed the course of government, and with
                                    three little words: We the People. We the People tell
                                    the government what to do; it doesn't tell us. We the
                                    People are the driver, the government is the car. And
                                    we decide where it should go, and by what route,
                                    and how fast. Almost all the world's constitutions are
                                    documents in which governments tell the people
                                    what their privileges are. Our Constitution is a
                                    document in which We the People tell the
                                    government what it is allowed to do. We the people
                                    are free." 

                                    Now is the time to usher in a new birth of freedom
                                    and lead the world by our example to a new era of
                                    hope unlike anything humanity has ever known. 

                                    This is the next stage of the Reagan revolution. 

                                    This is the next challenge that lies before us. 

                                    This is the banner of freedom that I believe we
                                    should carry to our blessed nation in this campaign. 

                                    Thank you, and God bless you.


