This is part two of the presidential candidates' answers to a series of questions put to them by the National Association of Home Builders. Part one ran yesterday ( Click Here); parts three and four will run tomorrow and the day after.

Question: Some people have suggested that the responsibility for providing housing assistance for the poor should be shifted to state and local governments? How do you feel about that suggestion?

BUSH: As the chief executive of a state, I believe strongly in federalism. And during my tenure as governor, access to affordable housing in Texas has increased and the rate of homeownership has outpaced the national growth rate. I believe that on a host of issues, from education to local law enforcement to land use regulation, states and local governments have - and should have - the principal responsibility for shaping solutions that best meet local needs and priorities. I do not support imposing rigid one-size-fits-all mandates from Washington, D.C., or forcing federal "solutions" for issues that are best resolved by states.

I do believe, however, that the federal government has a key role to play in tearing down barriers to the middle class and expanding opportunity for working Americans living on the outskirts of poverty. Wealth is not created by government, but rather by risk takers and entrepreneurs - through their creativity, enterprise and ingenuity. The federal government can and must create an environment in which hard-working Americans can thrive and flourish. To build on my plans to improve education and lower taxes for working families, my New Prosperity Initiative will expand opportunity, not government, by rewarding work, increasing access to affordable health care, expanding homeownership and promoting savings and personal wealth.

By helping many Americans buy their first home - just as President Lincoln gave immigrants fresh from Europe a piece of land - we will help Americans to own a part of the American Dream. We will do this not by forever subsidizing rental payments, but by helping them buy their own homes. These new home owners will not only be gaining property but also independence and the sense of belonging that ownership brings.

GORE: Al Gore believes we need to maintain existing partnerships between federal, state and local governments that are working to enhance housing opportunities for all Americans. He recognizes that the Low Income Housing Tax Credit (LIHTC) is a shining example of one such partnership. As President, Al Gore will encourage more partnerships like LIHTC that enable Americans to realize their dreams of owning a home. In addition, he will fight to continue efforts by NAHB, HUD and the Conference of Mayors to build one million homes in America's cities.

Al Gore believes that this ambitious undertaking provides an example of the type of powerful commitment to American families that may be achieved when federal, state and local governments work together to form partnerships.

Question:Fannie Mae, Freddie Mac and the Federal Home Loan Bank System are government sponsored enterprises (GSEs) that support the housing finance system in the U.S. The GSEs recently have been criticized on Capitol Hill, in the Administration and in the media, and proposals have been made to weaken the GSEs or limit the scope of their activities. How do you view the roles of the GSEs in the housing finance system of the future?

BUSH: The GSEs have been, and will continue to be, an important part of the American housing finance system. Recognizing the importance of the GSEs in the financial markets, it is appropriate, as Federal Reserve Board Chairman Alan Greenspan recently observed, for the GSEs to be subject to the congressional oversight process. We need to be sure that the U.S. housing finance system continues to be the envy of the world and that we make the world's best housing system even better for future generations.

When it comes to homeownership, I believe that first-time home buyers and low-income families need special attention. It is vitally important that credit and capital be accessible to those in inner-city neighborhoods and rural areas. One of government's top priorities must be to help create a climate that enables entrepreneurs to flourish and thrive, free of meddlesome government intrusion. As President, I will work to make the Community Reinvestment Act, the Equal Credit Opportunity Act and the Fair Housing Act more efficient, effective and less burdensome. I also applaud efforts to capitalize financial institutions committed to serving middle- and low-income families, both urban and rural. Economic development that aims to benefit underserved communities must be rooted in self-sufficiency, local priorities and private sector leverage.

One of my supporters, Rev. Herbert Lusk in North Philadelphia, enjoys telling the story of a bank next door to his church that once denied the struggling church a loan. "Now we own the bank!" boasts Rev. Lusk. These success stories are increasingly common and always inspiring, and they illustrate the need for unique, neighborhood-based institutions that are committed to serving low-wealth neighborhoods.

I believe that front-line organizations - financial, charitable, educational, etc. - have an - indispensable role to play in rebuilding broken and disinvested communities. Smart public policy must unleash the best of communities, the quiet heroes that live in the hearts of needy neighborhoods and accomplish daily miracles of renewal that are beyond government's know-how. Government must not just grudgingly acknowledge these irreplaceable contributions; it must champion them and aggressively take their side. As President, I will work to make the Community Reinvestment Act, the Equal Credit Opportunity Act and the Fair Housing Act more efficient, effective and less burdensome.

I also applaud efforts to capitalize financial institutions committed to serving middle- and low-income families, both urban and rural. Economic development that aims to benefit underserv ed communities must be rooted in self-sufficiency, local priorities and private sector leverage.

GORE: Al Gore believes that the private sector should always be the primary mechanism for meeting our nation's housing needs. However, he knows that the federal government's partnerships with financial institutions, via the provision of mortgage insurance and guarantees, is crucial to ensuring a stable housing market for affordable housing.

Additionally, Al Gore recognizes that government-sponsored enterprises (GSEs) that promote secondary markets and support lenders provide important links between financial markets and the housing finance system, thereby stabilizing the supply of funds available for housing. He believes that the FHA continues to play a vital role for a segment of the low-downpayment mortgage market and ensures that a stable national mortgage market is maintained. The government-sponsored secondary mortgage market (Fannie Mae and Freddie Mac) should continue to provide assistance for both home owners and renters.

Question:The federal government has been running a budget surplus for several years, and the surplus is projected to grow further in the future. How should this surplus be used? How would you compare the benefits of paying down the federal debt with tax cuts or increases in federal spending?

BUSH: Under conservative current estimates, the federal government will run a surplus of nearly $5 trillion over the next 10 years. I have proposed a balanced economic program that will use the surplus to prepare for the future: lock-boxing $2.4 trillion to save Social Security by establishing personal retirement accounts and reducing the public debt; dedicating one-quarter for fair, pro-growth tax cuts that help families keep more of what they earned; and reserving the remainder to reform education, rebuild our defense, strengthen and modernize Medicare with a prescription drug benefit and other reforms, further reduce the national debt, and other important priorities.

GORE: Under the leadership of the Clinton-Gore Administration, fiscal discipline has combined with a strong American economy to produce the first budget surplus Americans have seen in generations. As President, Al Gore would continue to follow the path of fiscal responsibility while making critical investments in our greatest resource: the American people.

He would use the surplus to pay down the national debt while strengthening crucial programs like Social Security and Medicare. He does not agree that we should squander the surplus on a massive tax-giveaway to those who need it least, a scheme that would jeopardize our prosperity and undermine our efforts to pay down the national debt. Al Gore knows that reducing the national debt will further strengthen our economy and help keep interest rates low, thus maintaining an environment that continuously creates new housing starts.

Click Here for Part Three.