The following is a transcribed excerpt from 'FOX News Sunday,' July 4, 2004:

CHRIS WALLACE, HOST: With just four months until the election, it's easy to get overwhelmed by all the numbers that are being put out. But George Washington University (search) is conducting the bipartisan "Battleground 2004" poll that is widely respected.

We turn now to the two top pollsters conducting the survey. From the Democratic side, Celinda Lake joins us from Rochester, New York. And here in Washington is Republican Ed Goeas.

Welcome to both of you. Thank you for coming in today. We appreciate it.

GOEAS: Thank you.

LAKE: Thank you.

WALLACE: I want to begin by getting your general comments about the race. And let me start with a few of the numbers from your poll. Let's put them up.

In the horse race, you have a dead even: Bush, 48; Kerry, 48. As for the president's job rating, your poll finds 51 percent approved of the president's job performance; 48 percent disapprove. And on another key indicator, what's called "right track, wrong track," 40 percent of voters tell you the country is going in the right direction while 55 percent say we're on the wrong track.

So, Ed, when you look at all of those numbers, what do you see?

GOEAS: Well, first of all, there's no question, not only in our poll but the majority of polls out there, this is a dead even race at this point. We had it at 48-48. If you look at the average just in the last week, Bush would be one point up, including the Fox poll that was done this week. You do see the presidential job approval rating at 51 percent being very similar to that of both Clinton and Reagan at 52 percent and 53 percent.

And you also see in terms of the right direction-wrong track. Although traditionally that has been a measurement that we've looked at, the president has been running double digits ahead of those people saying right track, which is not normally what you see. And in fact 15 percent of that 55 percent you saw there are actually Bush voters that feel the country's off on the wrong track because of moral values or the war in Iraq.

WALLACE: Celinda, as I read your poll, people seem to have a lot of doubts about President Bush, but they sure haven't been convinced that John Kerry is the alternative.

LAKE: Well, that's right. They don't know John Kerry very well yet. And I think this next period of picking a vice president and having the convention is traditionally a time when voters get to know a candidate.

Remember, at this point in time in 1992, two-thirds of Americans thought that Bill Clinton came from a wealthy background. So it's pretty common for a challenger not be very well-known at this point.

Having said that, though, the president has to be worried to have a solid majority of Americans think the country is going in the wrong direction, to have a solid majority of Americans thinking the economy is fair or poor.

And while it's very close and it's a very polarized race, as Ed said, we've never had a president re-elected whose job performance was this low. Now, it's very unique times, and we'll see what happens. But the president's camp has to be worried.

WALLACE: Alright, Celinda, let's focus on the economy. And the news here seems to be that people are finally beginning to believe that we are in a recovery. Again, let's put up your numbers. Who would do better at creating jobs? Kerry still leads the president by seven points. But as you can see in March, he led by 17. Who would do better at keeping America prosperous? The president leads by one point. Three months ago, he trailed by seven.

Celinda, is the economy now working for the president or at least no longer against him?

LAKE: Well, I think the economy's a mixed picture. And actually, when we looked at the numbers, we saw a little bit of a re- evaluation around the economy, but actually in a more negative direction, much as the experts had re-evaluated the GDP and said, you know, the recovery is slowing down.

You also have things like interest rates, jobs still going overseas, what jobs are paying that are making Americans very, very nervous about the future of the economy. Having said that, however, I think that voters are not very clear about what the Democratic alternative is.

And I would say in this last period that Bush has done a good job of trying to recapture that terrain. I think the most important thing for Democrats to do here is to lay out a clear economic alternative. And that's difficult with Iraq dominating the news.

WALLACE: Well, let's move on to Iraq, Ed.

Your poll found that terrorism is still clearly the top issue for voters and their top concern. And it still is a big plus for the president. Let's look at those numbers if we can. Who would do better handling the war in Iraq? Mr. Bush leads 51 to 42. Who would do better dealing with terrorism? The president leads even bigger here by 19 points.

Ed, has Senator Kerry made any inroads on the national security issue?

GOEAS: No, I don't believe so. But this is part of what's unique about this election cycle.

GOEAS: You have two very dominant issues. You have the economy, and you have the security issues. And Bush isn't getting necessarily traction with the voters because he's not getting consistently good news on both. But Kerry also is not getting consistently bad news on both, which is what he needs to basically get traction with the voters. And it also puts him in a position of being the pessimistic candidate, which is one of the problems that Kerry is having to deal with.

You mentioned name identification and awareness. He increased his name awareness by 4 percentage points over the last three months -- all negative, no positive. And I think it's because he's being so pessimistic both about the situation on the war on terrorism, the war in Iraq and about the economy right now.

WALLACE: Well, there's another possibility for why. As people get to know Kerry better, they're not liking him. And I want to talk about that.

You both say that character could be a decisive factor in this race. And let's look at those numbers. Who is the strong leader? Fifty-four percent of the voters say Bush; 38 percent say Kerry. And who says what he believes? Fifty-seven percent say the president; 34 percent say Kerry.

Celinda, what I wanted to lead into was the idea, are all of those Bush ads about Senator Kerry flip-flopping over the course of his career, are they having a negative effect on the senator?

LAKE: Well, they have had some effect. There is no question about it. But given the volume of them and how any challenger is not very well-known at this time, I think it's an amazing statement to the strength of the Kerry's candidacy that he's still in a dead-even race.

There are some aspects of the character, too, that we're not talking about here. The president has taken a tremendous hit on whether he's honest or trustworthy, and the two candidates are now basically even. Kerry is ahead on who cares about people like you, ahead on being for the middle class.

So there are some strengths of character that work to Kerry's advantage as well.

People do think the president stands by what he believes, but I do think they are beginning to question whether they agree with him. Do they believe the same things?

GOEAS: Actually, that's not what I saw on the data. In fact, he still leads by 3 points on: Is he honest and trustworthy? He still leads by 16 points on: Is he a strong leader, which is always a key determinant in deciding how people are going to vote for president.

But the most disconcerting for the Kerry campaign should be the increase from a 15 point lead for Bush to a 23 point lead for Bush on: Says what he believes. And we see a candidate Kerry out there today in the Midwest saying: I represent Midwest values, I represent rural values. And this is coming from the senator that was rated last year the most liberal senator in the United States Senate. Saying things like that is just going to reinforce with the voters that you have a candidate that is saying what people want to hear, not what he really believes. And that is going to undercut the credibility of his campaign.

WALLACE: All right, we have as couple of minutes left.

And I'm going to start with you, Ed. Summarize this race. Where does it stand right now? Whose hand would you rather play? And I want to ask you specifically -- I know you didn't poll on this -- but as you look at the poll, is there one running-mate who would make more sense for John Kerry to pick?

GOEAS: Well, we didn't ask that question in terms of a running mate. And I think to ask polling question on a running-mate is extremely dangerous. I noted in the news the Kerry campaign is doing that, and they may very well get a false read.

Where this race again is, it's dead even, intensity very high, very polarized, very loyal.

But if we keep having this back and forth whiplash with voters, between the economic issues and the security issues, you are going to see those character issues come into play very strongly in the presidential final vote decision.

WALLACE: And, Celinda, the same question to you. Where do you see this race? And is there a vice presidential running mate there who could shore up some possible weaknesses for John Kerry?

LAKE: Well, I think number one, that I would agree with Ed's assessment, the race is really dramatically polarized.

And frankly, Chris, we haven't seen a race like this in decades, where both camps are so intense. And that makes turnout a bit part of the equation. And so, besides trying to convince this last very small percentage point of undecided voters, what's really going to be important for both parties and they recognize it, is getting their base out to vote.

WALLACE: And do you have a vice presidential running-mate?

LAKE: Well, I think whatever vice presidential running-mate we pick, is going to do more for us than Cheney is doing for the president right now. Cheney's negatives are now as high as his positives. And among independent voters, he's rated decidedly in negatives.

So I think whoever we pick, and we have a lot of good candidates, they're going to bring a more positive feel to the ticket than Cheney is bringing to his right now.

WALLACE: Celinda, you ducked the question and still attacked at the same time. Very well done.

(LAUGHTER)

I want to thank you both for joining me today and coming in...

LAKE: Thank you.

WALLACE: ... on the Fourth of July. As we all know, politics never takes a holiday, even at this time of year.

Up next, stories you won't find on any other Sunday show, and we'll engage in Washington's hottest guessing game, with our panel Brit Hume, Mara Liasson, Bill Kristol and Ceci Connolly.

So stay tuned.