Exclusive Interview With Sen. Hillary Clinton

So here is what I would do. We've talked about this, we've never gotten it done -- certainly under the Republicans, they were not about to -- we need to change the tax code to take out any single benefit from your tax dollars that goes to any business that exports a job out of Indiana to any foreign country. It's outrageous. It's unpatriotic that is still going on. And you look at the tax code -- it makes sense. We are, you know, a free country. If people want to start jobs somewhere else, we're not going to stop them. But why should we help them? Why should we tell them, if you move those jobs and you make profits over there, you don't have to pay taxes on them, unless you bring the money back home? Well, hey, why would you ever bring the money back home?

No. 2, we need trade agreements that recognize the 21st-century economy is not the 20th or the 19th century. We've got to be much more vigorous in having a trade policy that really does enforce strong labor and environmental standards. Otherwise, we will never be competitive, because the fact is that we tried to do right for our workers and our consumers in America. You know, if you go to work in Indiana, there are certain rules that the employers have to follow to protect your safety and your health, and there are certain consumer rules.

But look what's happening with China. You know, we get lead-laced toys and contaminated pet food and polluted pharmaceuticals, sent back into our market; they get our jobs.

Thirdly, if we're going to have a half-a-trillion-dollar defense budget, then I want to see American workers do what is necessary to produce the defense materials and goods for our country.

STEPHANOPOULOS: You've been running an ad here in Indiana about that. MagnaQuench, a company here in Indiana, closed down, 200 jobs going to China. You said that President Bush could have stopped it. Yet your critics say, wait a second. This original sale to the Chinese was approved in 1995, under the Clinton administration. How do you respond?

CLINTON: Well, let me tell you the facts, because I think that's a fair question. Yes, the sale was approved, with the condition that the jobs stay in Indiana.

STEPHANOPOULOS: For 10 years, though.

CLINTON: No, it was supposed to be revisited, but the plan was that those jobs would always stay in Indiana, because those magnets were part of our precision-guided missiles.

So in 2003, when the company wanted to move the jobs to China, Senator Evan Bayh, who is my friend and my great supporter, went to the White House, went to the administration, and said you have the power -- which the president did -- to stop these jobs from leaving.

STEPHANOPOULOS: But he also ...

CLINTON: And the president ...

STEPHANOPOULOS: ... laid blame on that original sale.

CLINTON: Well, look, we've now learned a lot more than we knew then. And what we have learned is that we cannot afford even with conditions under the circumstances that we find ourselves to do anything that opens the door to losing those jobs.

STEPHANOPOULOS: Given what we've learned, do you think now, looking back on the 1990s, that the Clinton administration -- and you've come out against free trade agreements now -- but that the Clinton administration didn't do enough to address the downside of globalization, and therefore failed the workers of Indiana, the workers of the Midwest?

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