Since we are reaching the end of the question period and since inposition candidate is not held accountable for what he or she says, let me give you the chance to do that. Mr. Mondale, beginning with you, what do you think the most outrageous thing is your opponent's said in this debate tonight? Laughter

MONDALE: Inaudible. I'm going to use my time a little differently. I'm going to give the president some credit. I think the president has done some things to raise the sense of spirit, morale, good feeling in this country, and he's entitled to credit for that. What I think we need, however, is not just that but to move forward, not just congratulating ourselves but challenging ourselves to get on with the business of dealing with America's problems.

I think in education, when he lectured the country about the importance of discipline, I didn't like it at first but I think it helped a little bit. But now we need both that kind of discipline and the resources and the consistent leadership that allows this country to catch up in education and science and training. I like President Reagan and this is not personal -- these are deep differences about our future. And that's the basis of my campaign.

Follow-up in a similar vein then. What remaining question would you most like to see your opponent forced to answer?

MONDALE: Without any doubt, I have stood up and told the American people that that $263 billion deficit must come down, and I've done what no candidate for president's ever done. I told you before the election what I'd do.

Mr. Reagan, as you saw tonight, President Reagan takes the position it will disappear by magic. It was once called "voodoo economics." I wish the president would say, "Yes the CBO is right. Yes we have a $263 billion deficit. This is how I am going to get it done."

Don't talk about growth because even though we need growth, that's not helping, it's going to go in the other direction, as they've estimated. And give us a plan. What will you cut? Whose taxes will you raise? Will you finally touch that defense budget? Are you going to go after Social Security and Medicare and student assistance and the handicapped again, as you did last time? If you just tell us what you're going to do, then the American people could compare my plan for the future with your plan. And that's the way it should be. The American people would be in charge.

Mr. President, the most outrageous thing your opponent has said in the debate tonight?

REAGAN: Well, now I have to start with a smile since his kind words to me. I'll tell you what I think has been the most outrageous thing in political dialogue both in this campaign and the one in '82, and that is the continued discussion and claim that somehow I am the villain who is going to pull the Social Security checks out from those people who are dependent on them. And why I think it is outrageous -- first of all, it isn't true. But why it is outrageous is because for political advantage every time they do that they scare millions of senior citizens who are totally dependent on Social Security, have no place else to turn, and they have to live and go to bed at night thinking, "Is this true? Is someone going to take our check away from us and leave us destitute?" And I don't think that that should be a part of political dialogue. Applause

Now to, and I just have a minute here . . . ?

WALTERS: You have more time. You can keep going.

REAGAN: Oh, okay, all right. Now Social Security, let's lay it to rest once and for all. I told you never would I do such a thing. But I tell you also now, Social Security has nothing to do with the deficit. Social Security is totally funded by the payroll tax levied on employer and employe. If you reduce the outgo of Social Security, that money would not go into the general fund to reduce a deficit, it would go into the Social Security trust fund. So Social Security has nothing to do with balancing a budget or erasing or lowering the deficit.

Now again to get to whether I am depending on magic, I think I have talked in straight economic terms about a program of recovery that I was told wouldn't work, and then after it worked I was told that lowering taxes would increase inflation, and none of these things happened. It is working, and we're going to continue on that same line. As to what we might do and find in fur-ther savings cuts, no, we're not going to starve the hungry, but we have 2,478 specific recommendations from a commission of more than 2,000 business people in this country through the Grace Commission that we're studying right now, and we've already implemented 17 percent of them that are recommendations as to how to make government more efficient and more economic.

And to keep it even. What remaining question would you most like to see your opponent forced to answer?

REAGAN: Why the deficits are so much of a problem for him now but that in 1976 when the deficit was $52 billion and everyone was panicking about that, he said no, that he thought it ought to be bigger because a bigger deficit would stimulate the economy and would help do away with unemployment. In 1979 he made similar statements, the same effect, that the deficits, there was nothing wrong with having deficits. Remember there was a trillion dollars in debt before we got here. That's got to be paid by our children and grandchildren, too, if we don't do it. And I'm hoping we can start some payments on it before we get through here -- that's why I want another four years.

WALTERS: Well, we have time now if you'd like to answer the president's question or whatever rebuttal.

MONDALE: Well, we've just finished almost the whole debate and the American people don't have the slightest clue about what President Reagan will do about these deficits. Laughter And yet that's the most important single issue of our time.

I did support the '76 measure that he told about because we were in a deep recession and we needed some stimulation. But I will say as a Democrat I was a real piker, Mr. President. In 1979 we ran a $29 billion deficit all year. This administration seems to run that every morning. Laughter And the result is exactly what we see.

This economy is starting to run downhill. Housing is off. Last report on new purchases, it's the lowest since 1982. Growth is a little over 3 percent now. Many people are predicting a recession and the flow of imports into this country is swamping the American people. We've got to deal with this problem, and those of us who want to be your president should tell you now what we're going to do so you could make a judgment.

WALTERS: Thank you very much. We must stop now. I want to give you time for your closing statements. It is indeed time for that from each of you. We will begin with President Reagan. I'm sorry, Mr. Reagan. You had your rebuttal and I just cut you off because our time is . . . . You have a chance now for rebuttal before your closing statement, is that correct?

REAGAN: Uh, no, I might as well just go with . . . .

WALTERS: Do you want to go with your . . . you can . . . .

REAGAN: I don't think so . . . .

WALTERS: . . . Do you want to wait . . . .

REAGAN: I'm all confused now.

WALTERS: . . . You have waived your rebuttal; you can go with your closing statement. CLOSING STATEMENTS

REAGAN: Well, I'll include it in that. Four years ago, in similar circumstances to this, I asked you, the American people, a question. I asked, "Are you better off than you were four years before?" The answer to that, obviously, was no. And as a result, I was elected to this office and promised a new beginning.

Now, maybe I'm expected to ask that same question again, I'm not going to, because I think that all of you -- or, not everyone, those people that are in those pockets of poverty and haven't caught up, they couldn't answer the way I would want them to -- but I think that most of the people in this country would say, yes, they are better off than they were four years ago. The question I think should be enlarged. Is America better off than it was four years ago? And I believe the answer to that has to also be yes.

I promised a new beginning. So far it is only a beginning. If the job were finished I might have thought twice about seeking reelection for this job. But we now have an economy that, for the first time, well, let's put it this way -- in the first half of 1980, the Gross National Product was down a minus 3.7 percent; the first half of '84, it's up 8 1/2 percent. Productivity in the first half of 1980 was down a minus 2 percent; today it is up a plus 4 percent. Personal earnings after taxes, per capita, have gone up almost $3,000 in these four years. In 1980 or 1979, a person with a fixed income of $8,000 was $500 above the poverty line -- and this maybe explains why there are the numbers still in poverty. By 1980 that same person was $500 below the poverty line. We have restored much of our economy with regard to business investment. It is higher than it has been since 1949, so there seems to be no shortage of investment capital. We have, as I said, cut the taxes. But we have reduced inflation, and for two years now it has stayed down there not at double-digit but in the range of 4 or below.

We believe that we had also promised that we would make our country more secure. Yes, we have an increase in the defense budget. But back then we had planes that couldn't fly for lack of spare parts or pilots. We had navy vessels that couldn't leave harbor because of lack of crew or, again, lack of spare parts.

Today we are well on our way to a 600-ship navy. We have 543 at present. We have . . . . our military, our morale is high. The . . . . I think the people should understand that two-thirds of the defense budget pays for pay and salary, or pay and pension. And then you add to that, food and wardrobe and all the other things, and you only have a small portion going for weapons. But I am determined that if ever our men are called, they should have the best that we can provide in the manner of tools and weapons. There has been reference to expensive spare parts -- hammers costing $500 -- well, we are the ones who found those.

I think we've given the American people back their spirit. I think there is an optimism in the land and a patriotism, and I think that we are in a position once again to heed the words of Thomas Paine, who said, "We have it in our power to begin the world over again."

WALTERS: Thank you, Mr. Reagan. Mr. Mondale, the closing words are now yours.

MONDALE: I want to thank the League of Women Voters and the City of Louisville for hosting this evening's debate. I want to thank President Reagan for agreeing to debate. He didn't have to. And he did. And we all appreciate it.

The president's favorite question is, "Are you better off?" Well, if you're wealthy, you're better off. If you're middle income, you are about where you were. And if you are of modest income, you are worse off. That's what the economists tell us.

But is that really the question that should be asked? Isn't the real question, "Will we be better off? Will our children be better off? Are we building the future that this nation needs?" I believe that if we ask those questions that bear on our future -- not just congratulate ourselves, but challenge us to solve those problems -- you'll see that we need new leadership.

Are we better off with this arms race? Will we be better off if we start this "Star Wars" escalation into the heavens? Are we better off when we deemphasize our values in human rights? Are we better off when we load our children with this fantastic debt? Would fathers and mothers feel proud of themselves if they loaded their children with debts like this nation has now, over a trillion dollars on the shoulders of our children? Can we be, really say that we will be better off when we pull away from sort of that basic American instinct of decency and fairness? I would rather lose a campaign about decency than win a campaign about self-interest. I don't think this nation is composed of people who care only for themselves. And when we sought to assault Social Security and Medicare, as the record shows we did, I think that was mean-spirited. When we terminated 400,000 desperate, hopeless, defenseless Americans who were on disability, confused and unable to defend themselves, and just laid them out on the street, as we did for four years, I don't think that's what America is all about. America is a fair society. And it is not right that Vice President Bush pays less in taxes than the janitor who helps him. I believe there is fundamental fairness crying out that needs to be achieved in our tax system.

I believe that we will be better off if we protect this environment. And contrary to what the president says, I think their record on the environment is inexcusable and often shameful. These laws are not being enforced, are not being enforced. And the public health and the air and the water are paying the price. That's not fair for our future. I think our future requires the president to lead us in an all-out search to advance our education, our learning and our science and training because this world is more complex and we're being pressed harder all the time.

I believe in opening doors. We won the Olympics in part because we've had civil rights laws and the laws that prohibit discrimination against women. I have been for those efforts all my life. The president's record is quite different. The question is our future. President Kennedy once said in response to similar arguments, "We are great, but we can be greater." We can be better if we face our future, rejoice in our strengths, face our problems, and by solving them build a better society for our children. Thank you.