Interview with George Stephanopoulos on ABC News' "This Week"

STEPHANOPOULOS: Good morning and welcome to Indianapolis. We are here in the Conrad Hotel with about 200 voters, armed with questions for Sen. Clinton. It is a diverse group. We pulled it together with the help of local colleges, civic and political organizations. It's a mix of Obama supporters, Clinton supporters and undecided voters, including independents and Republicans. We're also joined by a similar, somewhat smaller group in North Carolina, who have gathered at ABC's affiliate in Raleigh, Durham, WTVD.

We asked everyone to bring a question. I've gone through all of the questions. I have a lot of questions of my own as well. And for any who don't know, I worked for President [Bill] Clinton, from 1991 to 1996.

And with that, let me welcome Sen. Clinton.

CLINTON: How are you, George?

STEPHANOPOULOS: I am doing well. Thanks for being here.

CLINTON: Welcome to Indianapolis.

STEPHANOPOULOS: Good to be here.

Gas tax has become the defining issue in this primary and in North Carolina. You and Sen. John McCain called for suspending the 18.4 cent federal gas tax. Sen. [Barack] Obama calls it a gimmick. He says it's pandering. He says it won't really bring any help to consumers, and he also said this. ... What's your response? He says you're not being truthful.

CLINTON: Well, No. 1, my proposal is very different from Sen. McCain. Sen. McCain has said take off the gas tax, don't pay for it, throw us further into deficit and debt. That is not what I've proposed. What I've proposed is that the oil companies pay the gas tax instead of consumers and drivers this summer.

Now, why am I proposing this? Well, No. 1, I am absolutely convinced that these record profits of the oil companies are a result of a number of factors beyond supply and demand. I think there has been market manipulation. In fact, Exxon Mobil official testifying under oath before the House of Representatives committee said that if it were just market factors, then the price of oil would be like $50 or $55 a barrel.

We know that there's market manipulation going on. So I would launch an investigation if I were president right now by the Department of Justice and the Federal Trade Commission. I would also quit buying oil for the Strategic Petroleum Reserve. We're 97 percent full. We don't need to keep buying it at these prices, and I would release some.

I would begin to go directly at OPEC. I think it's been 25 years where we've, you know, largely just been at the mercy of the OPEC countries.

But this gas tax issue to me is very real, because I am meeting people across Indiana and North Carolina who drive for a living, who commute long distances, who would save money if the oil companies paid this $8 billion this summer, instead of it coming out of the pockets of consumers.

STEPHANOPOULOS: Economists say that's not going to happen. They say this is going to go straight into the profits of the oil companies. They're not going to actually lower their prices. And the two top leaders in the House are against it. Nearly every editorial board and economist in the country has come out against it. Even a supporter of yours, Paul Krugman of The New York Times, calls it pointless and disappointing.

Can you name one economist, a credible economist who supports the suspension?

CLINTON: Well, you know, George, I think we've been for the last seven years seeing a tremendous amount of government power and elite opinion basically behind policies that haven't worked well for the middle class and hard-working Americans. From the moment I started this campaign, I've said that I am absolutely determined that we're going to reverse the trends that have been going on in our government and in our political system, because what I have seen is that the rich have gotten richer. A vast majority -- I think something like 90 percent -- of the wealth gains over the last seven years have gone to the top 10 percent of wage earners in America.

STEPHANOPOULOS: But can you name an economist who thinks this makes sense?

CLINTON: Well, I'll tell you what, I'm not going to put my lot in with economists, because I know if we get it right, if we actually did it right, if we had a president who used all the tools of the presidency, we would design it in such a way that it would be implemented effectively.

Now, look, I have long-term plans too. I mean, it's a misnomer to say this is all that I'm doing. It's not. I have a comprehensive long-term energy plan that would go right at dependence on foreign oil. We've got to undermine this incredible addiction that we have. We use more foreign oil today than we did on 9/11. That is a disaster for America.

Also that we've got to move toward more alternative and renewable fuels, and get out gas mileage up. You know, increase those standards.

STEPHANOPOULOS: But that's one of the problems here. You've already spent, according to our research, the windfall profits tax on this strategic energy fund for renewable energies and alternative energies.

CLINTON: No, the tax subsidies -- the tax subsidies will go right into that.

I'm talking about something temporary this summer. My longer-term plan is, yes, to put an excess profits tax on the oil companies above a certain level of profit that would go in to help us make the transition.

But let's step back here a minute, George. You know, it's really odd to me that arguing to give relief to the vast majority of Americans creates this incredible pushback. When the federal government, through the Fed and the Treasury, gave $30 billion in a bailout to Bear Stearns, I didn't hear anybody jump up and say, "that's not going according to the market. That's rewarding irresponsible behavior."

We've got to get out of this mindset where somehow elite opinion is always on the side of doing things that really disadvantage the vast majority of Americans, and get back at looking hard at what we're going to do to stop the housing crisis.

You know, for months now, I've been saying we need a moratorium on home foreclosures and we need to freeze interest rates. I think that would help us stem what's happening in not just the housing market, but the general decline in the economy. Well, we can't get that through the Congress either. And on health care, on so many of these issues where costs have gone up, where people are really feeling squeezed, there just doesn't seem to be an understanding about what people are going through.

STEPHANOPOULOS: Let me go to one of the voters who's feeling squeezed. Kara Glennan [phonetic spelling] is here. Kara is a Democrat. She's supporting Obama. I think you've contributed $25 to him. What's your question on the gas tax?

VOTER QUESTION: I have -- Sen. Clinton, I actually make less than $25,000 a year, so talking about gas prices is not academic for me. I really do feel pain at the pump.

However, I do feel pandered to when you talk about suspending the gas tax. I don't think that it's really a reasonable plan, and call me crazy, but I actually listen to economists, because I think that they know what they studied.

You say that you have both a short- and a long-term plan for our energy consumption. However, since the suspension of the gas tax would encourage continued overconsumption, which could possibly cancel out any price savings and also undermine our efforts to curb global warming, and your long-term plan includes trying to, say, curb global warming, don't you feel that these two plans are in conflict?

CLINTON: No. And let me stand up, because I can see you better from this angle.

You know, actually, I'm glad you asked this question, because I want to make it very clear that we're talking about short-term relief and a long-term plan. And I have a very comprehensive, long-term plan to reduce our dependence on foreign oil, increase the mileage of our automobiles, and to do it in a way that will push us forward as a leader in the world again, which we have not been, on the issue of global warming. And I invite everyone to go to my Web site, HillaryClinton.com, and read about it.

But if you are driving on average in America this summer, you'll save -- according to Department of Energy figures -- about $70. If you are a long-distance commuter, and a lot of people in Indiana and North Carolina are, if you are a truck driver who depends upon your truck for your living, you're going to save a lot more. In fact, truckers will save about $2 billion in fuel costs.

You see, I really believe we've got to start right now demonstrating a willingness to take on these oil companies. I voted against the big oil giveaway in the 2005 energy bill. My opponent voted for it. I'm on record as taking on the oil companies. And I think having a good debate, like we're having right now in this campaign, helps to lay the groundwork for what we're going to need to do.

STEPHANOPOULOS: Sen. Clinton, let me bring this back to Sen. Obama and what he said there. He said you weren't being truthful. And that seems to be going straight at the Achilles heel of your campaign. Our recent poll showed six out of 10 voters think you're dishonest. That's a heavy burden to carry into the general election. What do you say to Democrats who are worried about that?

CLINTON: Well, obviously, it's troubling that people would have that opinion, because I think most of the people who have voted for me and support me in New York -- and I was reelected with 67 percent of the vote -- believe they can count on me. And they have good reason to count on me, because I've gotten up year after year, going back many years, to stand up for controversial issues, like health care for every American, something that I feel passionately about.

So have I drawn a lot of fire from people who have come right at me and, frankly, you know, done a lot of attacking of me? Sure. But I think that goes with being a leader.

You see, I just have a fundamental disagreement about how you get change in America. I wish that we could all just get together and decide we're going to make change. I wish that were the case. But maybe I know enough about human nature and about our political system to understand, you really have to take these interests on. They do not go gently into the night.

STEPHANOPOULOS: But don't voters have to trust you as you're taking these interests on?

CLINTON: Well, the voters of New York have trusted me twice, and I think that people throughout this campaign, as I have campaigned across Texas, Ohio, Pennsylvania, Indiana, North Carolina, have seen me in person, as opposed to what they hear about me. And I know you hear a lot about me. There is a lot out there that, you know, I have no control over.

But if you really look at what I've done and where I stand, I have a consistent record of standing up for people and fighting for people and getting results for people, and that's what I would do as your president.