According to Zumwalt, he actually wanted to give Kerry an even higher award, the Navy Cross, but decided upon a Silver Star because he wished to make the award as expeditiously as possible.
Where did Zumwalt say this?--I am curious where Sanders is getting this from. Below is my own summary of what was on the public record on this as of the 2004 campaign, with the sources indicated. Off the top of my head I believe the Nicosia and Brinkley references are the ones relevant to the Navy Cross issue, especially Nicosia who quotes someone on it (I think he quotes either Kerry, Zumwalt, or Robert Drinan but I'm not sure without looking). I'd draw attention to my use of the word "allegedly" below--my recollection (again, off the top of my head) is that I included this qualifier because I could find no corroboration for the claim asserted by Nicosia's source in particular. I do not have a copy of Nicosia's book handy, just my 2-year-old notes, so if someone has it and wants to check what I have here against the actual text of Nicosia, page 70 that might be useful:
Forging a Paper Hero: The Mystery of Kerry’s Medals
According to Kerry’s account as reported by biographers Gerald Nicosia and Douglas Brinkley, paperwork was submitted requesting that Kerry be awarded a Navy Cross (a very rare award only given to 120 Naval personnel during the entire Vietnam War)20, but Admiral Zumwalt intercepted the paperwork and changed the request to a Silver Star in order that he could authorize the request himself and bypass the lengthy process of Congressional approval, for the sake of boosting the morale of Coastal Division 11, allegedly. But the paperwork for Kerry’s Silver Star contains puzzling discrepancies. According to the original Silver Star citation bearing Admiral Zumwalt’s signature, “Lieutenant (junior grade) KERRY leaped ashore, pursued the man behind a hootch and killed him”. The original citation was later revised twice, and the two revisions omit any mention of Kerry shooting the man behind the hootch. The third version of the citation bears the signature of Reagan administration Secretary of the Navy John Lehman, who states, “It is a total mystery to me. I never saw it. I never signed it. I never approved it. And the additional language it contains was not written by me.”21
[SOURCES for n20 and n21:]20”Navy Cross”, Department of the Navy: Naval Historical Center, http://www.history.navy.mil/medals/navcross.htm(August 5, 2004).
21 E.R. Zumwalt, Jr., “Citation”,JohnKerry.com, http://www.johnkerry.com/pdf/jkmilservice/militaryrecords_1.pdf, 7-8 (August 28, 2004); John Hyland, “Citation”, undated and John Lehman, “Citation”, undated, JohnKerry.com, http://www.johnkerry.com/pdf/jkmilservice/Silver_Star.pdf (August 28, 2004); Glen Johnson, “Kerry assails columnist who questioned war service”, New Standard, October 28, 1996, reprinted online at SouthCoastToday.com, http://www.s-t.com/daily/10-96/10-28-96/a03sr015.htm (August 5, 2004); James Carroll, "Annals of Vietnam: A Friendship that Ended the War", New Yorker, October 21, 1996, 130-156; David Warsh, “Behind the Hootch: Did Kerry Commit a War Crime?”, The Boston Globe, October 27, 1996; Nicosia, 70; Kranish, “Heroism, and growing concern about war”; Brinkley, Tour of Duty, 293-294; ”John Kerry’s Vietnam Service Timeline”; O’Neill and Corsi, 80-86; Alex Katz, “Man refutes candidate’s critics”, Alameda Times-Star, August 12, 2004, posted at Naval Air Station Alameda, http://www.nasalameda.com/temp/article-mike-medeiros-john-kerry.html (August 29, 2004); Alex Katz, “Local vet recalls time on Kerry’s swiftboat”, Tri-Valley Herald, cached at http://64.233.179.104/search?q=cache:7mmMYic6f-UJ:www.trivalleyherald.com/Stories/0,1413,86%25257E10671%25257E2334602,00.html+Local+Vet+Recalls+Time+on+Kerry%27s+Swiftboat+&hl=en, August 14, 2004 (August 29, 2004); William B. Rood, “Feb. 28, 1969: On the Dong Cung River: ’This is what I saw that day”, Chicago Tribune, August 22, 2004, reprinted at Shepherd Express, http://www.shepherd-express.com/shepherd/25/35/news_and_views/news.html, August 26, 2004 (August 29, 2004); Thomas Lipscomb, “Kerry citation a ‘total mystery’ to ex-Navy chief”, Chicago Sun-Times, http://www.suntimes.com/output/elect/cst-nws-lips28.html, August 28, 2004.
Kerry had an action-filled tour as a swift-baot commander in Vietnam, where he was severely wounded in an ambush, gaining three Purple Hearts and a Bronze Star, in addition to the hSilver Star, which by all rights should have been a Navy Cross. But Admiral Elmo "Bud" zumwalt Jr. had intercepted the paperwork for Kerry's Navy Cross and changed it to a lesser award so that he could approve it himself (the Navy Cross requires congressional approval) and pin it on Kerry a few days later, as an "impact award," to boost morale. (Home to War, pp.70)
There is no footnote for this paragraph. The bogus "severely wounded in an ambush" claim is rather a nice touch...
I recall reading that somewhere, but Zumwalt could only recommend the award. The decision would be made higher up the chain of command. I seriously doubt that a Navy Cross would have ever been awarded for the action described.