Verbatim transcript from tape:

TERENCE McAULIFFE: Now, it is my great pleasure to introduce someone to you who I've had the pleasure of knowing over 22 years, he doesn't actually talk about it too much, folks, because he actually got his start working at the DNC, working for me, 22 years ago at the DNC. He keeps it off his resume. But Mark and I have been great friends since then.

But what is exciting about Mark Warner is what he was able to do last year in Virginia. Mark Warner went out as a Democrat and spoke the language and embraced the values of suburban and rural voters. People said the Democrats couldn't do that. We know they can, and Mark proved it more than anybody else that we could do that. And when he took office six months ago, Jim Gilmore, the former Republican, former chair of the RNC, didn't leave much for Mark to work with. But despite Virginia's largest shortfall ever, Governor Warner has delivered a balanced budget on time. He has pushed the call for public education funding, and to put education on the top burner. He's working hard to build a foundation to bring economic prosperity to all corners of Virginia, and to make government work better in this information age, something Mark knows a lot about since he was a very successful high tech entrepreneur.

Ladies and gentlemen, please join me in welcoming the great Governor of the Commonwealth of Virginia Mark Warner.

(Applause.)

GOVERNOR MARK WARNER: Thank you, Terry. Good morning. You know, if we could only bring him out of his shell.

Actually, Terry and I do go back 22 years. Terry and I were both broke together. Those stories, sometimes they said, well, Warner, did you really start living in your car, and were flat broke? Terry McAuliffe can verify every one of those stories when we worked together at the DNC, and he has been a great, great chair of our Democratic Party. Let's one more time celebrate our party Chairman Terry McAuliffe.

(Applause.)

GOVERNOR MARK WARNER: And let me tell you as someone who is the direct beneficiary of Terry's largesse last year, and I know Jim would agree with this, the DNC was there with us through thick and thin, particularly in our race early on when we were not looking like we were going to be a race that was going to be successful, Terry was there, and the DNC was there, and I am very, very grateful.

I also want to thank my good friend Al From and the DLC. This is an organization that I've been proud to be part of for a number of years. I was able to serve a head of the New Technology Project at PPI for a while, and had a chance to visit with DLC members all across the country, and to be back with you again at this national conversation.

Again, as you indicated, I understand why some people may be a little bit still trying to pound out last night after Terry's speech, remembering some of our evenings in New Orleans a few months ago, I had that same reaction the next morning. But, it is good to be with you.

And let me start and share the subject that Jim and I are going to address today is the whole question of moving the red states blue. And I want to put this in some context of not only our election, but also what's happened since that time.

I've been governor about six-and-a-half months, and it's been one of the most challenging six-and-a-half months of my life. We inherited the largest budget shortfall in Virginia history of $3.8 billion. In the first six-and-a-half months of our term, we've had to endure a major redistricting case. We had a telephone conversation that I was involved in with other Democratic legislators that the Republicans actually were eavesdropping on. We had the Speaker of our House of Representatives, the first Republican speaker in almost 100 years, resign in scandal.

If that wasn't enough, we've had a series of natural emergencies. I am the only governor in the history of the Commonwealth of Virginia that the very week that I declared a statewide drought emergency, we also had a flood. I've had to call out the National Guard for a tire fire in Roanoke, or as we say in the Roanoke Valley tire fire. We've had a devastating avian flu that is literally depopulated five million turkeys in the Shenandoah Valley. We had a Christmas tree frost. And the other day, as a matter of fact, I was in Culpeper, Virginia, and a tornado chased me out of town.

As a matter of fact, my chief of staff came to me the other day and said, Governor, with all these natural disasters, what are we going to do? We've got problems since we've killed five million turkeys, we've basically ruined Thanksgiving for every Virginian. Since there was a Christmas tree frost, we've killed Christmas now for most Virginians. His suggestion was, we take the five million dead turkeys, take them down to the tire fire, see if we can cook them down into fat, maybe we can create some candles and save Hanukkah.

(Applause.)

GOVERNOR MARK WARNER: Jim, you know what I'm talking about, the first six months.

Now, the subject this morning is blue to red. Let me tell you, there is no more red state than Virginia. Virginia, a Democratic presidential candidate hasn't carried since 1964. Virginia, until our race, Democrats had lost every statewide race in the Commonwealth in the '90s. Virginia, even in our race, the Republicans picked up 12 seats in our House of Delegates. And now control the House and the Senate. And when we launched our campaign a little over a year ago, Virginia was the home not only of the Republican National Committee Chair, my predecessor, Governor Gilmore, but was also the home of the Republican Congressional Campaign Chair Tom Davis. And Virginia, particularly post 9-11, President Bush had the highest ratings of virtually any state in the country.

Now, our challenge was how we could build coalitions that would go past the traditional Democratic family, yet not lose our Democratic base. As someone who has been blessed, as Terry indicated, as a successful business person, I knew it was important to go back to my personal strength, which was business, and returning fiscal integrity of the Commonwealth of Virginia. As someone who had been active in preceding running in creating rural venture capital funds, or active in healthcare, promoting particularly technology education, I could weave those themes into the whole concept of how we would return fiscal integrity to the Commonwealth of Virginia.

And I believe, particularly as we go through these challenging economic times right now, it is critical that Democratic candidates, whether they are in New Jersey, or Virginia, or anywhere, emphasize the fact that we can be trusted, and can bring fiscal integrity to our state, local, and national government.

Now, from a practical standpoint, what does that mean? It meant in the campaign we had to not lose any one of our traditional Democratic family, yet if we only relied on Democrats in Virginia, we end up somewhere between 44 and 46 percent of the vote. We had to reach across dramatic lines. And let me tell you a little bit about how we did that.

First, we started with making sure that we held our Democratic base. African-American vote in Virginia is about 20 percent, 20 percent of the electorate, and the vote is about 15 percent of the population. We carried over 90 percent of the African-American vote, the highest percentage for a Democratic candidate since Doug Wilder's historic win in 1989.

We did that by focusing on economic empowerment. Not necessarily traditional issues, but making sure that the African-American community, particularly bringing in younger members of the African-American community, the business community, on the question of economic empowerment.

We had, as Terry already outlined, some of the most extensive outreach to the Asian community and the Hispanic community. You don't normally think of Virginia as a state with a large Asian and Hispanic community, but our fastest growing populations by far are both the Asian and Hispanic community. The first time ever, where a gubernatorial candidate for either party actually campaigned in Spanish on Spanish radio and Spanish TV.

We reached out and continued to hold our labor community, while not a large percentage of the vote, labor was very, very supportive of our efforts in terms of fundraising, and particularly in terms of organizing.

On questions of women, Terry talked about talking about women's issues, we did that but with a slightly different approach. My opponent last year was someone who had built his base, and built his whole political life on his opposition to abortion. Now, I'm a pro choice Democrat but is opposed to making abortion one of the defining issues, which previous candidates had in Virginia. We chose not to. We brought out those distinctions, but instead in terms of the women's vote focused on children's health, and focused on education. Rather than the more socially divisive and culture issue like abortion.

Now, there's been a lot of talk and a lot of commentary on our rural outreach strategy. I believe very strongly that one of the opportunities that comes about in this 21st Century economy is that a young person in a rural community shouldn't have to move away and leave their home to find a good quality job. So, rural economic development with a particular focus on vocational and technical education was a critical part of our campaign.

It's remarkable how much people respond to the idea that we ought to place vocational and technical education, the value of training someone to be a plumber or an electrician, at the same way that we train someone to be a doctor and a lawyer, and how much people respond to that message, not only in rural Virginia, but all across the state.

We talked about the fact that rural communities, Democrats in Virginia had not been successful in rural communities for more than a decade, almost two decades. We, like most Southern states, had seen the constant erosion of Democratic voters, particularly white Democratic voters in rural communities. I think one of the most incredible parts, and most important parts of our whole approach to rural communities was talking about rural issues not just in rural Virginia, but in our cities and our suburban communities. The fact that they're inexorably linked. That the child in Southside, Virginia, should have the same opportunities as the child in Fairfax County. And I talked about it in every part of the state.

Now, we did some other unusual things. We actually sponsored a NASCAR race. We had billboards at racetracks all across Virginia. Something that had not been done before and actually Sports Illustrated indicated it was a sign of the coming Armageddon if politicians were starting to advertise at NASCAR races.

We had a country song, a bluegrass song that somebody in our campaign had kind of thought, and actually it started getting played, it literally started getting played on radio stations, not as a campaign song, but as a regular song. It was that good a song. And I knew it had finally hit when one woman, I was campaigning in rural Virginia, I got into this little country store about 9:00-10:00 in the morning, I was visiting folks. And they came up to me, and one guy said to me, Mr. Warner, Mr. Warner, would you do me a favor? I said, yeah. He said, would you please not play that TV ad at 7:00 in the morning? And I thought he was all offended at my ad, and I said, well, what's wrong with that ad? He said, I get that darned song in my head in the morning, and I can't get it out all day long.

Later that day, I was in one of the airports in the executive terminal, and I walked in, and the lady behind the desk started singing, Warner for public education, and I knew we had finally arrived, they were singing it at both ends.

I also did things, particularly on the issue of guns that some in our party attacked me on. But I reached out to sportsmen. Yes, I believe in responsible gun laws. But understood that the question of guns, frankly, goes beyond just the issue, and goes to the heart, particularly in many rural constituencies, about the fact that Democrats just don't understand sometimes the cultural differences in rural America. So, I visited gun stores. I had blaze orange Sportsmen for Warner campaign signs all over Western Virginia. And while I didn't retreat on any of the issues on guns, we built a base so that when the Republican opponent launched their kind of normal cultural attacks late in the campaign, we managed to withstand that.

We also reached out in a very bipartisan way, and I say that with some trepidation with my friend Terry McAuliffe here. We reached out very firmly across party lines. We had an organization called Virginians for Warner that was made up of Republicans and Independents that literally had its own standalone operation that raised more than a million dollars on its own, and included a whole series of both current and former Republican elected officials that endorsed our candidacy with the theme of putting Virginia first.

Now, the results on election night proved out that this idea of breaking some of the traditional roles, and some of the traditional models worked. Not only were we successful, but we won in every part of Virginia. Those of you who are only somewhat remotely familiar with Virginia politics are probably aware that of Northern Virginia, which in many ways looked like parts of New Jersey, or other parts of the country. We won Virginia even when you took out Northern Virginia. We won in seven out of the eleven congressional districts. In our lowest district in the state where in the past, congressional district-wise, Democrats had been being blown out with mid-30s, our lowest percentage in any congressional district was 44 percent.

So, it showed that a candidate that was willing to reach out across some of the traditional lines could be successful. My hope is that that will be a model of turning other red states blue.

Now, since then, in the last six months and 18 days, but who is counting, we've tried to govern in the same way. Within the first 10 days of our administration, I got that leadership of both the House and the Senate, Republican and Democratic, to stand with me on the framework of a budget agreement. And we were able to close our record budget shortfall without any tax increase.

We've tried as well to take advantage of this situation, which I know every state is facing all across the country, in terms of budget shortfalls, to see that also as an opportunity, and have launched a major reexamination of state government from top to bottom focusing on areas that perhaps have not been all that sexy, but where real savings can be obtained. Technology centralization, procurement centralization, where we see the possibility of literally saving hundreds of millions of dollars by bringing best practices to those areas.

We've started a major revision and review of our department of transportation. You go through a campaign sometimes and you wail on something, and in Virginia it was particularly our department of transportation as being poorly run and poorly organized. I kind of halfway thought if I won this race that I'd get in and find that VDOT really wasn't as bad as I always said it was. I was right, it was worse. We put a whole new management team into our transportation department, and are trying to bring that department's accountability back with a renewed commitment to having road projects be actually on-time and on-budget.

We've launched a major homeland defense initiative, our Secure Virginia Initiative, as one of the three states that were struck by the September 11th terrorist attacks, we feel in Virginia that we must be as well prepared as any place in the country, particularly because of our major military presence that ranges from the Pentagon in Northern Virginia, or our ports in Hampton Roads. And we have launched the most extensive first responder state and local cooperation of any state in the country.

We've acted on our commitment in healthcare in signing up literally tens of thousands of children in our children's health initiative. And acting upon our economic development commitment, we've brought back close to 3,000 new jobs to some of those rural areas that have been so hard hit. As a matter of fact, later today, I'm going back to Southside, Virginia, for two new major job announcements. And in those particular areas, because of our rural communities, which have been based upon textiles, tobacco, furniture, that are in economies that are continuing to struggle, we've brought about crisis economic strike force teams to those regions with one-stop-shop crisis centers in communities that have been hard hit, where an individual family member can come in and not only get job placement and job training help, but can find all public and private services to help a family through a challenging economic period in that one-stop-shop.

We've also continued our commitment, even in these challenging economic times, to education. I just recently launched a major initiative called the Governors Pass Initiative, Partnership for Achieving Successful Schools, to focus on those schools that are the least performing schools in the Commonwealth of Virginia. It brings about business and community involvement, but perhaps the most dynamic part of this initiative is that we actually are bringing in academic intervention teams into our failing schools with teachers and principals that have actually walked the walk, and raised student achievement scores, and what makes this perhaps hold such great potential, at least in my mind, is we actually have superintendents cooperating across jurisdiction lines. It's easy sometimes to get Republicans and Democrats to actually cooperate together, but actually getting superintendents from adjacent jurisdictions to cooperate together, and share resources, and share personnel and share curriculum, now that is revolutionary.

And later this fall, I'll be having a Higher Education Summit, which will basically revamp Virginia's whole approach in terms of our great colleges and universities towards research and development.

(TAPE CHANGE.)

GOVERNOR MARK WARNER: (In progress) ?? and hopefully a path for success for other Democratic candidates, both here today and across the country.

Now, we need to get this message out. We need to recognize, just as Terry has done at the DNC, that sometimes you've got to shake things up. If we can win in Virginia, we can win anywhere. And my hope is that through the kind of ideas that the DLC and PPI puts out, with the kind of tools that Terry is going to give us from the DNC, the kind of candidates that I know are here this morning, and with the kind of leaders like Jim McGreevey and others in this room, that we're going to see come this fall, and then again in 2004, an awful lot of those red states turn blue, not just once, but turn permanently blue.

Thank you all very much.