The following is a transcribed excerpt from 'FOX News Sunday,' August 1, 2004:

CHRIS WALLACE, FOX NEWS: The presidential ticket is now in the first days of a two- week, 3,500-mile trip across the country.

We caught up with Senators John Edwards and John Kerry as they campaigned in the important swing state of Pennsylvania. And I began by asking Kerry about a story his daughter told at the convention.

(BEGIN VIDEOTAPE)

WALLACE: Senator Kerry, let's start with health care. How do you give CPR to a hamster?

(LAUGHTER)

U.S. SENATOR JOHN KERRY, D-MA : I started out pushing very gingerly with my fingers.

WALLACE: And do you purse your lips when you're going...

KERRY: Like that.

(LAUGHTER)

Carefully.

WALLACE: I want to talk to both of you about national security and some of the things that you said at the convention.

Senator Kerry, you gave a very tough speech, even hawkish, on the war on terror. But Republicans are saying let's look at your record.

You voted against the Gulf War in 1991. During the '90s, you opposed a number of measures on defense and intelligence. And the two of you were two of only four senators to vote for going to war in Iraq but against the $87 billion.

Question: Does your rhetoric on national security match your record?

KERRY: Absolutely, absolutely.

I have voted for the biggest military budgets in the history of our country. I have voted for the most significant increases in our intelligence in the history of our country. I fought for stronger human intelligence to strengthen our intelligence in our country.

You know, what folks do is take, Chris — you've been around — they take a couple of votes here and there, throw them around and play games. The bottom line is, when it mattered, I went to defend my country as a young man, and I will defend my country as president.

KERRY: But incidentally, Dick Cheney and George Bush, president 41, bragged about having cut the military by 30 percent and having the smallest military since Pearl Harbor.

We were in a different time, right after the fall of the Soviet Union. The Cold War had ended. People saw things differently.

What is important is that I understand how to get us out of Iraq. I understand how to build our alliances and strengthen America's position in the world. I will fight a more effective war on terror, and I will make America safer than George Bush has.

WALLACE: Speaking of Iraq, in your speech you said, "I know what we have to do in Iraq." But the only thing that either of you mentioned at the convention was that you had a plan to bring in the allies to share the burden.

U.S. SENATOR JOHN EDWARDS, D-NC: That's not true. First of all, excuse me for interrupting you, but first of all, I talked about — and John can speak to his speech — I talked specifically about the need to bring other countries, particularly France, Germany, Russia and...

WALLACE: Well, that's what I just said, the allies.

EDWARDS: ... in for purposes of participating in the reconstruction so we could have debt reduction — very specific idea.

Talked about the need to make sure that countries like Syria and Iran, that we engage to make sure they don't impede this effort for Iraq to develop democracy.

WALLACE: But how much...

EDWARDS: I'm sorry, can I say one last thing?

WALLACE: Yes, sir.

EDWARDS: And then last — this goes to the heart of what you're asking — it's not some abstract discussion about what we do with our allies. We need a fresh start. We need a president who can go to NATO and, with the kind of credibility we need, bring NATO into this effort. I'm convinced that could be done.

WALLACE: But what if you can't? I mean, we've gone to NATO and they've refused...

KERRY (?): By the president (ph).

WALLACE: Right. I mean, should the American people just trust you're going to do it?

And what about the question of how you form a democracy, what happens if the Shiites want a theocracy? When are you going to get the troops out?

There are a lot of details. And, you know, there's been some criticism of this, that you haven't dealt with that stuff.

KERRY: Chris, I'm not going to negotiate publicly the hand that I have as president before I'm president. I've been around too long and I know how to do this.

I've negotiated with other countries. I've worked on these issues through the years. I'm telling you that the climate can change dramatically. Leaders in other countries know this. We have colleagues from the Senate who have traveled abroad, who have talked to them.

This administration has broken the relationships that we had, the strength of those relationships. And there's a lack of credibility and a lack of trust.

This administration has never, ever fully offered these other countries the kind of partnership, the kind of decisionmaking sharing, the kind of participation in the reconstruction, the kind of participation in other issues that matter to those countries that actually bring them to the table.

I know how to bring these countries to the table. And there are some very powerful cards we have to play. The Arab countries have a huge stake in not having a failed state in Iraq, but they're not at the table today. The European countries have a huge stake in not having a failed state in Iraq, but they're not at the table today.

The truth is, this president has failed in his conduct of diplomacy. And I believe we need a fresh start so we can change the equation to the leaders of those other countries who, today, pay too high a price for being involved with the Bush administration.

WALLACE: Senator Kerry, in your speech you said that you would restore trust and credibility to the White House.

KERRY: Yes.

WALLACE: You also said you will never mislead us into war and you will make sure that intelligence isn't distorted by politics.

That's getting awfully close to saying the president lied about Iraq.

KERRY: I've said many times that the president misled America.

WALLACE: Intentionally?

KERRY: He misled us in what he said he would do in terms of how he would use the authority that we voted for in Congress. I voted for that authority.

And you go back and look at my speech — and I ask you to — I made it very clear what I was voting for.

 

KERRY: And within the context of the president's promise, promise, to build an international coalition, not to go it alone, to exhaust the remedies of the United Nations, and to go to war as a last resort, Chris, we did not go to war as a last resort.

I know the difference, and so do most Americans. And we're now paying — we went to war without a plan to win the peace.

WALLACE: But when you say...

KERRY: We're paying a huge price for that.

WALLACE: But when you say intelligence distorted by politics...

KERRY: Yes.

WALLACE: ... are you saying that he intentionally misled us, he knew better?

KERRY: I'm saying the administration made comments that they were warned and knew better in the making, and that's been now documented, about the nuclear materials that came from Africa.

There were statements made about the connections to Al Qaida. Many speeches were made about the war on terror and linking it to Saddam Hussein. At the time, the CIA themselves said there was no connection to September 11th of Iraq.

So what they did was they transferred the legitimate war against terror in Afghanistan and against Al Qaida to Iraq, and I think we're paying a very high price for it.

WALLACE: Were those lies?

KERRY: Chris, you're fighting to get me to say a word I have not used and I'm not going to use. They misled America. Whether it was intentional or not is up to Americans to decide.

But I know how I voted, and I know precisely the reasons I laid out and the expectations that we had.

WALLACE: Senator Edwards, let's talk about the 9/11 Commission. You say, the two of you, that you would implement all of the recommendations of the 9/11 Commission.

Now, White House officials, some senior congressional leaders are saying maybe you shouldn't put the intelligence czar in the white house, it might compromise the independence of intelligence.

Don't they have a point?

EDWARDS: No, I think, actually, number one, we need somebody who's in charge of this entire intelligence operation.

As you know, for many years, John served on the Intelligence Committee. I'm on the Intelligence Committee now. And it's clear there are multiple problems with efforts to share information.

We need one human being who is responsible for making sure all that information is shared and one person who can report directly to the president about it. So, number one, I think it's critical that that person exists.

The second thing is because of the strengthening of congressional oversight, which is part of the recommendation of the 9/11 Commission, I think this thing will work. I really believe that. And in addition to that, they've also made a recommendation about making sure we put an oversight body in charge of civil liberties.

WALLACE: We hear the president may issue executive orders to do a lot of this as early as next week. Won't that preempt you?

KERRY: Chris...

EDWARDS: We're not worried about it.

KERRY: ... it's about two and a half years too late.

EDWARDS: Yes.

KERRY: I mean, where have they been? The president's going around saying he's a war president. When you're running a war, you do everything possible to make America safe.

John and I, over a year ago or more, have been talking about having one head of intelligence. We've been talking about changes we need to do for port security.

Ninety-five percent of our containers are still not inspected. Nuclear and chemical plants in America still don't have the kind of protection they need. We have training and preparation with respect to disasters that hasn't been done.

I think this administration has dropped the ball on homeland security. I think they are now moving to catch up.

KERRY: But what America wants is leadership that's ahead of the curve, that doesn't have to be told by an independent commission — which they, incidentally, fought to prevent.

They didn't want this commission. They tried to slow-walk this commission. Now, they've slow-walked even adopting the commission's recommendations.

WALLACE: Senator Edwards, the president is back on the campaign trail. He says that the two of you will raise taxes. He says Dick Cheney is not the prettiest man in the race, but that he knows national security. Your reaction?

EDWARDS: Two reactions. One is I think that the American people are tired of this. I think what they expect from their leaders is leadership. They want to know what it is the two of us, with him as president, will do for this country, what our vision is, what we're going to do domestically here for the middle class that's struggling so badly, what are we going to do about health care, what are we going to do about jobs, what are we going to do about making sure parents can send their kids to college. And they want to know what we're going to do abroad, how we're going to engage the rest of the world. That's what they want to know from us.

And the president can continue to do what they've been doing on television for the last three or four months, which are personal, negative attacks. We're going to stay focused on what we want to do for America, because that's what people expect to hear from us.

As to the tax issue, let me be very clear about this. For 98 percent of Americans, 98 percent who are watching this broadcast, your tax cuts that you have now will stay in place.

On top of those tax cuts, we're going to give you additional targeted cuts to help you send your kids to college, to bring your health-care premiums down by up to $1,000, to help you pay for your child care. And 99 percent of businesses will have their taxes reduced under this administration.

WALLACE: Senator Kerry, in your convention speech, just on this point, you said let's be optimists, not opponents, let's take the high road. But in your speech, you said the president misled us into war. You said that he's playing...

KERRY: No, I said will never mislead us into war.

WALLACE: Well, the implication was this president did.

KERRY: Well, I said...

WALLACE: And, in fact, you said he did.

KERRY: I said he did — correct, and I have said it several times.

WALLACE: And...

KERRY: In the speech I didn't, and you're quoting my speech.

WALLACE: Right.

KERRY: I didn't say that. I said I will never mislead us.

WALLACE: But you don't disagree with the premise that you have said that he misled us?

KERRY: Well, all Americans understand what's happened now.

WALLACE: Well, that's not my question anyway. My question is, there's that. You also said you won't play politics with the Constitution, an implication this president has played politics...

KERRY: Correct.

WALLACE: ... with the Constitution.

Isn't that what John Edwards calls the negative politics of the past?

KERRY: No, those are comparisons of choices about the values that we bring to politics. You hear a lot of talk about values in America. I think the choices that you make in your policies reflect your values and the things that you try to champion.

John and I want health care for all Americans. That's a value.

John and I believe that you shouldn't talk about No Child Left Behind and then not fund the education system so millions of children are left behind. That's a value. Under our plan, we're going to fund education. We're going to respect educators, teachers. We're going to bring our schools up in a positive and affirmative way.

But if they're choosing to do one thing and we have an alternative choice, obviously we have to talk about the comparative choices. That's not name-calling. That's not petty and small.

We have a big idea for health care for all Americans. We have a big idea for helping young people afford to be able to go to college where tuitions are going up.

We have a big idea for restoring America's reputation in the world and fighting a more effective war on terror. To compare how we will fight the war on terror is the center of this campaign, and that's what Americans want to know.

WALLACE: Newsweek is out with the first post-convention poll. I don't know if you've heard about it or not.

KERRY: I've heard about it. It's actually not completely post-convention.

WALLACE: It isn't?

EDWARDS: I think it has some days, too, in the convention.

KERRY: A couple of days.

WALLACE: During the convention - any case, four point bounce, and you're now

seven points ahead of the president and vice president. I'm glad to see you're

not paying attention to the polls — reaction?

KERRY: This will go up and down. I don't react to polls - I really don't. Do you remember when I was 30 points down, and people had dismissed our campaigns, John's and mine? I've learned...

EDWARDS: We remember.

KERRY: You know, they're going to go up and down; they're going to change. Polls are not what is important. What is important is what we want to do for America. We - again, I say it - we have a plan, a real plan, to put people back to work, to have jobs created that pay more than the jobs we're losing. We're not going to ask Americans to subsidize the loss of their own jobs by rewarding the company that takes jobs overseas. We're going to reward the companies that keep jobs here. These are real choices. We have a health care plan for all Americans. It works. But we have to make some tough choices to get there, Chris, and that's what this race is about.

WALLACE: Finally, I understand that when you were vetting Sen. Edwards as a running mate that the one thing that you were surprised by, and a little concerned about, was his unhealthy obsession with diet soda. It is...

(CROSS TALK)

WALLACE: Has he gotten you on the stuff, or have you gotten him off the stuff?

KERRY: But, you know, it's really funny, I thought, because, I didn't become aware of it until we got together. I looked at him on the bus, and I said, "How many of those things have you already had?"

EDWARDS: We're not talking about this. We're not talking about this stuff...

KERRY: He's the best living advertisement in the country for diet pop.

WALLACE: Are you following his...

KERRY: Not yet - no, no.

WALLACE: I want to thank you both very much. Sen. Kerry, Sen. Edwards, safe travels on the campaign. Thank you very much.

KERRY: Thanks a lot.

EDWARDS: Good to be with you.