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Transcript of final 2012 presidential debate

PRESIDENT BARACK OBAMA AND FORMER GOV. MITT ROMNEY, R-MASS., PARTICIPATE IN A CANDIDATES DEBATE, LYNN UNIVERSITY, BOCA RATON, FLORIDA

OCTOBER 22, 2012

SPEAKERS: FORMER GOV. MITT ROMNEY, R-MASS.,

PRESIDENT BARACK OBAMA

BOB SCHIEFFER, MODERATOR

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SCHIEFFER: Good evening from the campus of Lynn University here in Boca Raton, Florida. This is the fourth and last debate of the 2012 campaign, brought to you by the Commission on Presidential Debates.

This one's on foreign policy. I'm Bob Schieffer of CBS News. The questions are mine, and I have not shared them with the candidates or their aides.

SCHIEFFER: The audience has taken a vow of silence -- no applause, no reaction of any kind, except right now when we welcome President Barack Obama and Governor Mitt Romney.

(APPLAUSE)

Gentlemen, your campaigns have agreed to certain rules and they are simple. They've asked me to divide the evening into segments. I'll pose a question at the beginning of each segment. You will each have two minutes to respond and then we will have a general discussion until we move to the next segment.

Tonight's debate, as both of you know, comes on the 50th anniversary of the night that President Kennedy told the world that the Soviet Union had installed nuclear missiles in Cuba, perhaps the closest we've ever come to nuclear war. And it is a sobering reminder that every president faces at some point an unexpected threat to our national security from abroad.

So let's begin.

SCHIEFFER: The first segment is the challenge of a changing Middle East and the new face of terrorism. I'm going to put this into two segments so you'll have two topic questions within this one segment on the subject. The first question, and it concerns Libya. The controversy over what happened there continues. Four Americans are dead, including an American ambassador. Questions remain. What happened? What caused it? Was it spontaneous? Was it an intelligence failure? Was it a policy failure? Was there an attempt to mislead people about what really happened?

Governor Romney, you said this was an example of an American policy in the Middle East that is unraveling before our very eyes. I'd like to hear each of you give your thoughts on that.

Governor Romney, you won the toss. You go first.

ROMNEY: Thank you, Bob. And thank you for agreeing to moderate this debate this evening. Thank you to Lynn University for welcoming us here. And Mr. President, it's good to be with you again. We were together at a humorous event a little earlier, and it's nice to maybe funny this time, not on purpose. We'll see what happens.

This is obviously an area of great concern to the entire world, and to America in particular, which is to see a -- a complete change in the -- the structure and the -- the environment in the Middle East.

With the Arab Spring, came a great deal of hope that there would be a change towards more moderation, and opportunity for greater participation on the part of women in public life, and in economic life in the Middle East. But instead, we've seen in nation after nation, a number of disturbing events. Of course we see in Syria, 30,000 civilians having been killed by the military there. We see in -- in Libya, an attack apparently by, I think we know now, by terrorists of some kind against -- against our people there, four people dead.

Our hearts and -- and minds go out to them. Mali has been taken over, the northern part of Mali by al-Qaeda type individuals. We have in -- in Egypt, a Muslim Brotherhood president. And so what we're seeing is a pretty dramatic reversal in the kind of hopes we had for that region. Of course the greatest threat of all is Iran, four years closer to a nuclear weapon. And -- and we're going to have to recognize that we have to do as the president has done. I congratulate him on -- on taking out Osama bin Laden and going after the leadership in al-Qaeda.

But we can't kill our way out of this mess. We're going to have to put in place a very comprehensive and robust strategy to help the -- the world of Islam and other parts of the world, reject this radical violent extremism, which is -- it's certainly not on the run.

ROMNEY: It's certainly not hiding. This is a group that is now involved in 10 or 12 countries, and it presents an enormous threat to our friends, to the world, to America, long term, and we must have a comprehensive strategy to help reject this kind of extremism.

SCHIEFFER: Mr. President?

OBAMA: Well, my first job as commander in chief, Bob, is to keep the American people safe. And that's what we've done over the last four years.

We ended the war in Iraq, refocused our attention on those who actually killed us on 9/11. And as a consequence, Al Qaeda's core leadership has been decimated.

In addition, we're now able to transition out of Afghanistan in a responsible way, making sure that Afghans take responsibility for their own security. And that allows us also to rebuild alliances and make friends around the world to combat future threats. Now with respect to Libya, as I indicated in the last debate, when we received that phone call, I immediately made sure that, number one, that we did everything we could to secure those Americans who were still in harm's way; number two, that we would investigate exactly what happened, and number three, most importantly, that we would go after those who killed Americans and we would bring them to justice. And that's exactly what we're going to do.

But I think it's important to step back and think about what happened in Libya. Keep in mind that I and Americans took leadership in organizing an international coalition that made sure that we were able to, without putting troops on the ground at the cost of less than what we spent in two weeks in Iraq, liberate a country that had been under the yoke of dictatorship for 40 years. Got rid of a despot who had killed Americans and as a consequence, despite this tragedy, you had tens of thousands of Libyans after the events in Benghazi marching and saying America is our friend. We stand with them.

OBAMA: Now that represents the opportunity we have to take advantage of. And, you know, Governor Romney, I'm glad that you agree that we have been successful in going after Al Qaida, but I have to tell you that, you know, your strategy previously has been one that has been all over the map and is not designed to keep Americans safe or to build on the opportunities that exist in the Middle East.

ROMNEY: Well, my strategy is pretty straightforward, which is to go after the bad guys, to make sure we do our very best to interrupt them, to -- to kill them, to take them out of the picture.

But my strategy is broader than that. That's -- that's important, of course. But the key that we're going to have to pursue is a -- is a pathway to get the Muslim world to be able to reject extremism on its own.

We don't want another Iraq, we don't want another Afghanistan. That's not the right course for us. The right course for us is to make sure that we go after the -- the people who are leaders of these various anti-American groups and these -- these jihadists, but also help the Muslim world.

And how do we do that? A group of Arab scholars came together, organized by the U.N., to look at how we can help the -- the world reject these -- these terrorists. And the answer they came up with was this:

One, more economic development. We should key our foreign aid, our direct foreign investment, and that of our friends, we should coordinate it to make sure that we -- we push back and give them more economic development.

Number two, better education.

Number three, gender equality.

Number four, the rule of law. We have to help these nations create civil societies.

But what's been happening over the last couple of years is, as we've watched this tumult in the Middle East, this rising tide of chaos occur, you see Al Qaida rushing in, you see other jihadist groups rushing in. And -- and they're throughout many nations in the Middle East. It's wonderful that Libya seems to be making some progress, despite this terrible tragedy.

But next door, of course, we have Egypt. Libya's 6 million population; Egypt, 80 million population. We want -- we want to make sure that we're seeing progress throughout the Middle East. With Mali now having North Mali taken over by Al Qaida; with Syria having Assad continuing to -- to kill, to murder his own people, this is a region in tumult.

And, of course, Iran on the path to a nuclear weapon, we've got real (inaudible).

SCHIEFFER: We'll get to that, but let's give the president a chance.

OBAMA: Governor Romney, I'm glad that you recognize that Al Qaida is a threat, because a few months ago when you were asked what's the biggest geopolitical threat facing America, you said Russia, not Al Qaida; you said Russia, in the 1980s, they're now calling to ask for their foreign policy back because, you know, the Cold War's been over for 20 years.

But Governor, when it comes to our foreign policy, you seem to want to import the foreign policies of the 1980s, just like the social policies of the 1950s and the economic policies of the 1920s.

You say that you're not interested in duplicating what happened in Iraq. But just a few weeks ago, you said you think we should have more troops in Iraq right now. And the -- the challenge we have -- I know you haven't been in a position to actually execute foreign policy -- but every time you've offered an opinion, you've been wrong. You said we should have gone into Iraq, despite that fact that there were no weapons of mass destruction.

You said that we should still have troops in Iraq to this day. You indicated that we shouldn't be passing nuclear treaties with Russia despite the fact that 71 senators, Democrats and Republicans, voted for it. You said that, first, we should not have a timeline in Afghanistan. Then you said we should. Now you say maybe or it depends, which means not only were you wrong, but you were also confusing in sending mixed messages both to our troops and our allies.

OBAMA: So, what -- what we need to do with respect to the Middle East is strong, steady leadership, not wrong and reckless leadership that is all over the map. And unfortunately, that's the kind of opinions that you've offered throughout this campaign, and it is not a recipe for American strength, or keeping America safe over the long haul.

SCHIEFFER: I'm going to add a couple of minutes here to give you a chance to respond.

ROMNEY: Well, of course I don't concur with what the president said about my own record and the things that I've said. They don't happen to be accurate. But -- but I can say this, that we're talking about the Middle East and how to help the Middle East reject the kind of terrorism we're seeing, and the rising tide of tumult and -- and confusion. And -- and attacking me is not an agenda. Attacking me is not talking about how we're going to deal with the challenges that exist in the Middle East, and take advantage of the opportunity there, and stem the tide of this violence.

But I'll respond to a couple of things that you mentioned. First of all, Russia I indicated is a geopolitical foe. Not...

(CROSSTALK)

ROMNEY: Excuse me. It's a geopolitical foe, and I said in the same -- in the same paragraph I said, and Iran is the greatest national security threat we face. Russia does continue to battle us in the U.N. time and time again. I have clear eyes on this. I'm not going to wear rose-colored glasses when it comes to Russia, or Mr. Putin. And I'm certainly not going to say to him, I'll give you more flexibility after the election. After the election, he'll get more backbone. Number two, with regards to Iraq, you and I agreed I believe that there should be a status of forces agreement.

(CROSSTALK)

ROMNEY: Oh you didn't? You didn't want a status of...

OBAMA: What I would not have had done was left 10,000 troops in Iraq that would tie us down. And that certainly would not help us in the Middle East.

ROMNEY: I'm sorry, you actually -- there was a -- there was an effort on the part of the president to have a status of forces agreement, and I concurred in that, and said that we should have some number of troops that stayed on. That was something I concurred with...

(CROSSTALK)

OBAMA: Governor...

(CROSSTALK)

ROMNEY: ...that your posture. That was my posture as well. You thought it should have been 5,000 troops...

(CROSSTALK)

OBAMA: Governor?

ROMNEY: ... I thought there should have been more troops, but you know what? The answer was we got...

(CROSSTALK)

ROMNEY: ... no troops through whatsoever.

OBAMA: This was just a few weeks ago that you indicated that we should still have troops in Iraq.

ROMNEY: No, I...

(CROSSTALK)

ROMNEY: ...I'm sorry that's a...

(CROSSTALK)

OBAMA: You -- you...

ROMNEY: ...that's a -- I indicated...

(CROSSTALK)

OBAMA: ...major speech.

(CROSSTALK)

ROMNEY: ...I indicated that you failed to put in place a status...

(CROSSTALK)

OBAMA: Governor?

(CROSSTALK)

ROMNEY: ...of forces agreement at the end of the conflict that existed.

OBAMA: Governor -- here -- here's -- here's one thing...

(CROSSTALK)

OBAMA: ...here's one thing I've learned as commander in chief.

(CROSSTALK)

SCHIEFFER: Let him answer...

OBAMA: You've got to be clear, both to our allies and our enemies, about where you stand and what you mean. You just gave a speech a few weeks ago in which you said we should still have troops in Iraq. That is not a recipe for making sure that we are taking advantage of the opportunities and meeting the challenges of the Middle East.

Now, it is absolutely true that we cannot just meet these challenges militarily. And so what I've done throughout my presidency and will continue to do is, number one, make sure that these countries are supporting our counterterrorism efforts.

Number two, make sure that they are standing by our interests in Israel's security, because it is a true friend and our greatest ally in the region.

Number three, we do have to make sure that we're protecting religious minorities and women because these countries can't develop unless all the population, not just half of it, is developing.

Number four, we do have to develop their economic -- their economic capabilities.

But number five, the other thing that we have to do is recognize that we can't continue to do nation building in these regions. Part of American leadership is making sure that we're doing nation building here at home. That will help us maintain the kind of American leadership that we need.

SCHIEFFER: Let me interject the second topic question in this segment about the Middle East and so on, and that is, you both mentioned -- alluded to this, and that is Syria.

The war in Syria has now spilled over into Lebanon. We have, what, more than 100 people that were killed there in a bomb. There were demonstrations there, eight people dead.

Mr. President, it's been more than a year since you saw -- you told Assad he had to go. Since then, 30,000 Syrians have died. We've had 300,000 refugees.

The war goes on. He's still there. Should we reassess our policy and see if we can find a better way to influence events there? Or is that even possible?

And you go first, sir.

OBAMA: What we've done is organize the international community, saying Assad has to go. We've mobilized sanctions against that government. We have made sure that they are isolated. We have provided humanitarian assistance and we are helping the opposition organize, and we're particularly interested in making sure that we're mobilizing the moderate forces inside of Syria.

But ultimately, Syrians are going to have to determine their own future. And so everything we're doing, we're doing in consultation with our partners in the region, including Israel which obviously has a huge interest in seeing what happens in Syria; coordinating with Turkey and other countries in the region that have a great interest in this.

This -- what we're seeing taking place in Syria is heartbreaking, and that's why we are going to do everything we can to make sure that we are helping the opposition. But we also have to recognize that, you know, for us to get more entangled militarily in Syria is a serious step, and we have to do so making absolutely certain that we know who we are helping; that we're not putting arms in the hands of folks who eventually could turn them against us or allies in the region.

And I am confident that Assad's days are numbered. But what we can't do is to simply suggest that, as Governor Romney at times has suggested, that giving heavy weapons, for example, to the Syrian opposition is a simple proposition that would lead us to be safer over the long term.

SCHIEFFER: Governor?

ROMNEY: Well, let's step back and talk about what's happening in Syria and how important it is. First of all, 30,000 people being killed by their government is a humanitarian disaster. Secondly, Syria is an opportunity for us because Syria plays an important role in the Middle East, particularly right now.

Syria is Iran's only ally in the Arab world. It's their route to the sea. It's the route for them to arm Hezbollah in Lebanon, which threatens, of course, our ally, Israel. And so seeing Syria remove Assad is a very high priority for us. Number two, seeing a -- a replacement government being responsible people is critical for us. And finally, we don't want to have military involvement there. We don't want to get drawn into a military conflict.

And so the right course for us, is working through our partners and with our own resources, to identify responsible parties within Syria, organize them, bring them together in a -- in a form of -- if not government, a form of -- of -- of council that can take the lead in Syria. And then make sure they have the arms necessary to defend themselves. We do need to make sure that they don't have arms that get into the -- the wrong hands. Those arms could be used to hurt us down the road. We need to make sure as well that we coordinate this effort with our allies, and particularly with -- with Israel.

But the Saudi's and the Qatari, and -- and the Turks are all very concerned about this. They're willing to work with us. We need to have a very effective leadership effort in Syria, making sure that the -- the insurgent there are armed and that the insurgents that become armed, are people who will be the responsible parties. Recognize -- I believe that Assad must go. I believe he will go. But I believe -- we want to make sure that we have the relationships of friendship with the people that take his place, steps that in the years to come we see Syria as a -- as a friend, and Syria as a responsible party in the Middle East.

This -- this is a critical opportunity for America. And what I'm afraid of is we've watched over the past year or so, first the president saying, well we'll let the U.N. deal with it. And Assad -- excuse me, Kofi Annan came in and said we're going to try to have a ceasefire. That didn't work. Then it went to the Russians and said, let's see if you can do something. We should be playing the leadership role there, not on the ground with military.

SCHIEFFER: All right.

ROMNEY: ...by the leadership role.

OBAMA: We are playing the leadership role. We organized the Friends of Syria. We are mobilizing humanitarian support, and support for the opposition. And we are making sure that those we help are those who will be friends of ours in the long term and friends of our allies in the region over the long term. But going back to Libya -- because this is an example of how we make choices. When we went in to Libya, and we were able to immediately stop the massacre there, because of the unique circumstances and the coalition that we had helped to organize. We also had to make sure that Moammar Gadhafi didn't stay there.

And to the governor's credit, you supported us going into Libya and the coalition that we organized. But when it came time to making sure that Gadhafi did not stay in power, that he was captured, Governor, your suggestion was that this was mission creep, that this was mission muddle.

Imagine if we had pulled out at that point. You know, Moammar Gadhafi had more American blood on his hands than any individual other than Osama bin Laden. And so we were going to make sure that we finished the job. That's part of the reason why the Libyans stand with us.

But we did so in a careful, thoughtful way, making certain that we knew who we were dealing with, that those forces of moderation on the ground were ones that we could work with, and we have to take the same kind of steady, thoughtful leadership when it comes to Syria. That's exactly what we're doing.

SCHIEFFER: Governor, can I just ask you, would you go beyond what the administration would do, like for example, would you put in no-fly zones over Syria?

ROMNEY: I don't want to have our military involved in Syria. I don't think there is a necessity to put our military in Syria at this stage. I don't anticipate that in the future.

As I indicated, our objectives are to replace Assad and to have in place a new government which is friendly to us, a responsible government, if possible. And I want to make sure they get armed and they have the arms necessary to defend themselves, but also to remove -- to remove Assad.

But I do not want to see a military involvement on the part of our -- of our troops.

SCHIEFFER: Well --

ROMNEY: And this isn't -- this isn't going to be necessary.

We -- we have, with our partners in the region, we have sufficient resources to support those groups. But look, this has been going on for a year. This is a time -- this should have been a time for American leadership. We should have taken a leading role, not militarily, but a leading role organizationally, governmentally to bring together the parties; to find responsible parties.

As you hear from intelligence sources even today, the -- the insurgents are highly disparate. They haven't come together. They haven't formed a unity group, a council of some kind. That needs to happen. America can help that happen. And we need to make sure they have the arms they need to carry out the very important role which is getting rid of Assad.

SCHIEFFER: Can we get a quick response, Mr. President, because I want to...

(CROSSTALK)

OBAMA: Well, I'll -- I'll be very quick. What you just heard Governor Romney said is he doesn't have different ideas. And that's because we're doing exactly what we should be doing to try to promote a moderate Syrian leadership and a -- an effective transition so that we get Assad out. That's the kind of leadership we've shown. That's the kind of leadership we'll continue to show.

SCHIEFFER: May I ask you, you know, during the Egyptian turmoil, there came a point when you said it was time for President Mubarak to go.

OBAMA: Right.

SCHIEFFER: Some in your administration thought perhaps we should have waited a while on that. Do you have any regrets about that?

OBAMA: No, I don't, because I think that America has to stand with democracy. The notion that we would have tanks run over those young people who were in Tahrir Square, that is not the kind of American leadership that John F. Kennedy talked about 50 years ago.

But what I've also said is that now that you have a democratically elected government in Egypt, that they have to make sure that they take responsibility for protecting religious minorities. And we have put significant pressure on them to make sure they're doing that; to recognize the rights of women, which is critical throughout the region. These countries can't develop if young women are not given the kind of education that they need.

They have to abide by their treaty with Israel. That is a red line for us, because not only is Israel's security at stake, but our security is at stake if that unravels.

They have to make sure that they're cooperating with us when it comes to counterterrorism.

And we will help them with respect to developing their own economy, because ultimately what's going to make the Egyptian revolution successful for the people of Egypt, but also for the world, is if those young people who gathered there are seeing opportunities.

Their aspirations are similar to young people's here. They want jobs, they want to be able to make sure their kids are going to a good school. They want to make sure that they have a roof over their heads and that they have the prospects of a better life in the future.

And so one of the things that we've been doing is, is, for example, organizing entrepreneurship conferences with these Egyptians to give them a sense of how they can start rebuilding their economy in a way that's noncorrupt, that's transparent. But what is also important for us to understand is, is that for America to be successful in this region there's some things that we're going to have to do here at home as well.

You know, one of the challenges over the last decade is we've done experiments in nation building in places like Iraq and Afghanistan and we've neglected, for example, developing our own economy, our own energy sectors, our own education system. And it's very hard for us to project leadership around the world when we're not doing what we need to do...

SCHIEFFER: Governor Romney, I want to hear your response to that, but I would just ask you, would you have stuck with Mubarak?

ROMNEY: No. I believe, as the president indicated, and said at the time that I supported his -- his action there. I felt that -- I wish we'd have had a better vision of the future.

I wish that, looking back at the beginning of the president's term and even further back than that, that we'd have recognized that there was a growing energy and passion for freedom in that part of the world, and that we would have worked more aggressively with our friend and with other friends in the region to have them make the transition towards a more representative form of government, such that it didn't explode in the way that it did.

But once it exploded, I felt the same as the president did, which is these freedom voices and the streets of Egypt, where the people who were speaking of our principles and the President Mubarak had done things which were unimaginable and the idea of him crushing his people was not something that we could possibly support.

Let me step back and talk about what I think our mission has to be in the Middle East and even more broadly, because our purpose is to make sure the world is more -- is peaceful. We want a peaceful planet. We want people to be able to enjoy their lives and know they're going to have a bright and prosperous future, not be at war. That's our purpose.

And the mantle of leadership for the -- promoting the principles of peace has fallen to America. We didn't ask for it. But it's an honor that we have it.

But for us to be able to promote those principles of peace requires us to be strong. And that begins with a strong economy here at home. Unfortunately, the economy is not stronger. When the -- when the president of Iraq -- excuse me, of Iran, Ahmadinejad, says that our debt makes us not a great country, that's a frightening thing.

Former chief of the -- Joint Chiefs of Staff said that -- Admiral Mullen said that our debt is the biggest national security threat we face. This -- we have weakened our economy. We need a strong economy.

We need to have as well a strong military. Our military is second to none in the world. We're blessed with terrific soldiers, and extraordinary technology and intelligence. But the idea of a trillion dollar in cuts through sequestration and budget cuts to the military would change that. We need to have strong allies. Our association and connection with our allies is essential to America's strength. We're the great nation that has allies, 42 allies and friends around the world.

And, finally, we have to stand by our principles. And if we're strong in each of those things, American influence will grow. But unfortunately, in nowhere in the world is America's influence will grow. But unfortunately, in -- nowhere in the world is America's influence greater today than it was four years ago.

SCHIEFFER: All right.

ROMNEY: And that's because we've become weaker in each of those four...

(CROSSTALK)

SCHIEFFER: ...you're going to get a chance to respond to that, because that's a perfect segue into our next segment, and that is, what is America's role in the world? And that is the question. What do each of you see as our role in the world, and I believe, Governor Romney, it's your chance to go first.

ROMNEY: Well I -- I absolutely believe that America has a -- a responsibility, and the privilege of helping defend freedom and promote the principles that -- that make the world more peaceful. And those principles include human rights, human dignity, free enterprise, freedom of expression, elections. Because when there are elections, people tend to vote for peace. They don't vote for war. So we want to promote those principles around the world. We recognize that there are places of conflict in the world.

We want to end those conflicts to the extent humanly possible. But in order to be able to fulfill our role in the world, America must be strong. America must lead. And for that to happen, we have to strengthen our economy here at home. You can't have 23 million people struggling to get a job. You can't have an economy that over the last three years keeps slowing down its growth rate. You can't have kids coming out of college, half of them can't find a job today, or a job that's commensurate with their college degree. We have to get our economy going.

And our military, we've got to strengthen our military long-term. We don't know what the world is going to throw at us down the road. We -- we make decisions today in the military that -- that will confront challenges we can't imagine. In the 2000 debates, there was no mention of terrorism, for instance. And a year later, 9/11 happened. So, we have to make decisions based upon uncertainty, and that means a strong military. I will not cut our military budget. We have to also stand by our allies. I -- I think the tension that existed between Israel and the United States was very unfortunate.

I think also that pulling our missile defense program out of Poland in the way we did was also unfortunate in terms of, if you will, disrupting the relationship in some ways that existed between us.

And then, of course, with regards to standing for our principles, when -- when the students took to the streets in Tehran and the people there protested, the Green Revolution occurred, for the president to be silent I thought was an enormous mistake. We have to stand for our principles, stand for our allies, stand for a strong military and stand for a stronger economy.

SCHIEFFER: Mr. President?

OBAMA: America remains the one indispensable nation. And the world needs a strong America, and it is stronger now than when I came into office.

Because we ended the war in Iraq, we were able to refocus our attention on not only the terrorist threat, but also beginning a transition process in Afghanistan.

It also allowed us to refocus on alliances and relationships that had been neglected for a decade.

And Governor Romney, our alliances have never been stronger, in Asia, in Europe, in Africa, with Israel, where we have unprecedented military and intelligence cooperation, including dealing with the Iranian threat.

But what we also have been able to do is position ourselves so we can start rebuilding America, and that's what my plan does. Making sure that we're bringing manufacturing back to our shores so that we're creating jobs here, as we've done with the auto industry, not rewarding companies that are shipping jobs overseas.

Making sure that we've got the best education system in the world, including retraining our workers for the jobs of tomorrow.

Doing everything we can to control our own energy. We've cut our oil imports to the lowest level in two decades because we've developed oil and natural gas. But we also have to develop clean energy technologies that will allow us to cut our exports in half by 2020. That's the kind of leadership that we need to show.

And we've got to make sure that we reduce our deficit. Unfortunately, Governor Romney's plan doesn't do it. We've got to do it in a responsible way by cutting out spending we don't need, but also asking the wealthiest to pay a little bit more. That way we can invest in the research and technology that's always kept us at the cutting edge.

Now, Governor Romney has taken a different approach throughout this campaign. Both at home and abroad, he has proposed wrong and reckless policies. He's praised George Bush as a good economic steward and Dick Cheney as somebody who's -- who shows great wisdom and judgment. And taking us back to those kinds of strategies that got us into this mess are not the way that we are going to maintain leadership in the 21st century.

SCHIEFFER: Governor Romney, "wrong and reckless" policies?

ROMNEY: I've got a policy for the future and agenda for the future. And when it comes to our economy here at home, I know what it takes to create 12 million new jobs and rising take-home pay. And what we've seen over the last four years is something I don't want to see over the next four years.

The president said by now we'd be a 5.4 percent unemployment. We're 9 million jobs short of that. I will get America working again and see rising take-home pay again, and I'll do it with five simple steps. Number one, we are going to have North American energy independence. We're going to do it by taking full advantage of oil, coal, gas, nuclear and our renewables.

Number two, we're going to increase our trade. Trade grows about 12 percent year. It doubles about every -- every five or so years. We can do better than that, particularly in Latin America. The opportunities for us in Latin America we have just not taken advantage of fully. As a matter of fact, Latin America's economy is almost as big as the economy of China. We're all focused on China. Latin America is a huge opportunity for us -- time zone, language opportunities.

Number three, we're going to have to have training programs that work for our workers and schools that finally put the parents and the teachers and the kids first, and the teachers' unions going to have to go behind.

And then we're going to have to get to a balanced budget. We can't expect entrepreneurs and businesses large and small to take their life savings or their company's money and invest in America if they think we're headed to the road to Greece. And that's where we're going right now unless we finally get off this spending and borrowing binge. And I'll get us on track to a balanced budget.

And finally, number five, we've got to champion small business. Small business is where jobs come from. Two-thirds of our jobs come from small businesses. New business formation is down to the lowest level in 30 years under this administration. I want to bring it back and get back good jobs and rising take-home pay.

OBAMA: Well, let's talk about what we need to compete. First of all, Governor Romney talks about small businesses. But, Governor, when you were in Massachusetts, small businesses development ranked about 48th, I think out of 50 states in Massachusetts, because the policies that you are promoting actually don't help small businesses.

And the way you define small businesses includes folks at the very top. And they include you and me. That's not the kind of small business promotion we need. But let's take an example that we know is going to make a difference in the 21st century and that's our education policy. We didn't have a lot of chance to talk about this in the last debate.

You know, under my leadership, what we've done is reformed education, working with governors, 46 states. We've seen progress and gains in schools that were having a terrible time. And they're starting to finally make progress.

And what I now want to do is to hire more teachers, especially in math and science, because we know that we've fallen behind when it comes to math and science. And those teachers can make a difference.

Now, Governor Romney, when you were asked by teachers whether or not this would help the economy grow, you said this isn't going to help the economy grow.

OBAMA: When you were asked about reduced class sizes, you said class sizes don't make a difference.

But I tell you, if you talk to teachers, they will tell you it does make a difference. And if we've got math teachers who are able to provide the kind of support that they need for our kids, that's what's going to determine whether or not the new businesses are created here. Companies are going to locate here depending on whether we've got the most highly skilled workforce.

And the kinds of budget proposals that you've put forward, when we don't ask either you or me to pay a dime more in terms of reducing the deficit, but instead we slash support for education, that's undermining our long-term competitiveness. That is not good for America's position in the world, and the world notices.

SCHIEFFER: Let me get back to foreign policy.

(CROSSTALK)

SCHIEFFER: Can I just get back...

ROMNEY: Well -- well, I need to speak a moment...

SCHIEFFER: OK.

ROMNEY: ... if you'll let me, Bob, just about education...

SCHIEFFER: OK.

ROMNEY: ... because I'm -- I'm so proud of the state that I had the chance to be governor of.

We have every two years tests that look at how well our kids are doing. Fourth graders and eighth graders are tested in English and math. While I was governor, I was proud that our fourth graders came out number one of all 50 states in English, and then also in math. And our eighth graders number one in English and also in math. First time one state had been number one in all four measures.

How did we do that? Well, Republicans and Democrats came together on a bipartisan basis to put in place education principles that focused on having great teachers in the classroom.

OBAMA: Ten years earlier...

ROMNEY: And that was -- that was -- that was what allowed us to become the number one state in the nation.

OBAMA: But that was 10 years before you took office.

(CROSSTALK)

ROMNEY: And then you cut education spending when you came into office.

ROMNEY: The first -- the first -- the first -- and we kept our schools number one in the nation. They're still number one today.

SCHIEFFER: All right.

ROMNEY: And the principles that we put in place, we also gave kids not just a graduation exam that determined whether they were up to the skills needed to -- to be able compete, but also if they graduated the quarter of their class, they got a four-year tuition- free ride at any Massachusetts public institution of higher learning.

OBAMA: That happened before you came into office.

SCHIEFFER: Governor...

ROMNEY: That was actually mine, actually, Mr. President. You got that fact wrong.

SCHIEFFER: Let me get -- I want to try to shift it, because we have heard some of this in the other debates.

Governor, you say you want a bigger military. You want a bigger Navy. You don't want to cut defense spending. What I want to ask you -- we were talking about financial problems in this country. Where are you going to get the money?

ROMNEY: Well, let's come back and talk about the military, but all the way -- all the way through. First of all, I'm going through from the very beginning -- we're going to cut about 5 percent of the discretionary budget, excluding military. That's number one.

SCHIEFFER: But can you do this without driving deeper...

(CROSSTALK)

ROMNEHY: The good news is (inaudible). I'd be happy to have you take a look. Come on our website. You look at how we get to a balanced budget within eight to 10 years. We do it by getting -- by reducing spending in a whole series of programs. By the way, number one I get rid of is Obamacare.

There are a number of things that sound good, but frankly, we just can't afford them. And that one doesn't sound good and it's not affordable. So I'd get rid of that one from day one. To the extent humanly possible, we get that out. We take program after program that we don't absolutely have to have, and we get rid of them.

Number two, we take some programs that we are doing to keep, like Medicaid, which is a program for the poor; we'll take that healthcare program for the poor and we give it to the states to run because states run these programs more efficiently.

As a governor, I thought please, give me this program. I can run this more efficiently than the federal government and states, by the way, are proving it. States like Arizona, Rhode Island have taken these -- these Medicaid dollars; have shown they can run these programs more cost-effectively. I want to do those two things and get this -- get this to a balanced budget with eight -- eight to 10 years.

But the military -- let's get back to the military, though.

(CROSSTALK) SCHIEFFER: That's what I'm trying...

(CROSSTALK)

OBAMA: He should have answered the first question.

OBAMA: Look, Governor Romney's called for $5 trillion of tax cuts that he says he's going to pay for by closing deductions. Now, the math doesn't work, but he continues to claim that he's going to do it. He then wants to spend another $2 trillion on military spending that our military is not asking for.

Now, keep in mind that our military spending has gone up every single year that I've been in office. We spend more on our military than the next 10 countries combined; China, Russia, France, the United Kingdom, you name it. The next 10. And what I did was work with our joint chiefs of staff to think about, what are we going to need in the future to make sure that we are safe?

And that's the budget that we've put forward. But, what you can't do is spend $2 trillion in additional military spending that the military is not asking for, $5 trillion on tax cuts. You say that you're going to pay for it by closing loopholes and deductions, without naming what those loopholes and deductions are. And then somehow you're also going to deal with the deficit that we've already got. The math simply doesn't work. But when it comes to our military, what we have to think about is not, you know just budgets, we've got to think about capabilities.

We need to be thinking about cyber security. We need to be talking about space. That's exactly what our budget does, but it's driven by strategy. It's not driven by politics. It's not driven by members of Congress, and what they would like to see. It's driven by, what are we going to need to keep the American people safe? That's exactly what our budget does, and it also then allows us to reduce our deficit, which is a significant national security concern. Because we've got to make sure that our economy is strong at home so that we can project military power overseas.

ROMNEY: I'm pleased that I've balanced budgets. I was on the world of business for 25 years. If you didn't balance your budget, you went out of business. I went into the Olympics that was out of balance, and we got it on balance, and made a success there. I had the chance to be governor of a state. Four years in a row, Democrats and Republicans came together to balance the budget. We cut taxes 19 times and balanced our budget. The president hasn't balanced a budget yet. I expect to have the opportunity to do so myself.

SCHIEFFER: All right.

ROMNEY: I'm going to be able to balance the budget.

Let's talk about military spending, and that's this.

(CROSSTALK)

SCHIEFFER: Thirty seconds.

ROMNEY: Our Navy is old -- excuse me, our Navy is smaller now than at any time since 1917. The Navy said they needed 313 ships to carry out their mission. We're now at under 285. We're headed down to the low 200s if we go through a sequestration. That's unacceptable to me.

I want to make sure that we have the ships that are required by our Navy. Our Air Force is older and smaller than at any time since it was founded in 1947.

We've changed for the first time since FDR -- since FDR we had the -- we've always had the strategy of saying we could fight in two conflicts at once. Now we're changing to one conflict. Look, this, in my view, is the highest responsibility of the President of the United States, which is to maintain the safety of the American people.

And I will not cut our military budget by a trillion dollars, which is a combination of the budget cuts the president has, as well as the sequestration cuts. That, in my view, is making -- is making our future less certain and less secure.

OBAMA: Bob, I just need to comment on this.

First of all, the sequester is not something that I've proposed. It is something that Congress has proposed. It will not happen.

The budget that we are talking about is not reducing our military spending. It is maintaining it.

But I think Governor Romney maybe hasn't spent enough time looking at how our military works.

You mentioned the Navy, for example, and that we have fewer ships than we did in 1916. Well, Governor, we also have fewer horses and bayonets, because the nature of our military's changed. We have these things called aircraft carriers, where planes land on them. We have these ships that go underwater, nuclear submarines.

CONTINUED

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