The following is a transcribed excerpt from 'FOX News Sunday,' September 5, 2004:

CHRIS WALLACE, FOX NEWS: Joining us now for the Democratic side is Congressman Richard Gephardt.

And welcome. Good to have you with us.

GEPHARDT: Good to be here, Chris.

WALLACE: Let's talk first about these new polls which show the president with a double-digit lead. How do you account for them?

GEPHARDT: Well, I always expected that President Bush would get a bounce out of his convention. He is, after all, president of the United States. People watched all of that, and I think he was always going to get this bounce.

I think a week from now this race is going to be right where it's been. It's going to be tied. And I believe that because people in this country want to move in a new direction. They think we're moving now in the wrong direction with President Bush, and they want to move in a new direction.

GEPHARDT: They see his policies on jobs, on education, on health care, on Medicare and on Iraq as being failed policies. And they want change. And I think you're going to see that reflected in the polls in just a few days.

WALLACE: All right. I want to get some of those specifics in a moment. But less than an hour after the president spoke at his convention, John Kerry held a midnight rally in Ohio. And here's part of what he said at that rally. Take a look.

(BEGIN VIDEO CLIP)

U.S. SENATOR JOHN KERRY (D-MA): The vice president called me unfit for office last night.

AUDIENCE: Boo!

KERRY: Well, I'm going to leave it up to the voters to decide whether five deferments makes someone more qualified than two tours of duty. We'll decide about that.

(APPLAUSE)

(END VIDEO CLIP)

WALLACE: First of all, the vice president did not call him unfit for office. I looked at the speech and he never says those words.

Secondly, why on earth would John Kerry go back to Vietnam and attack the running-mate of his opponent?

GEPHARDT: Chris, this was the most negative convention — the Republican Convention — the most negative convention I've ever seen. It was one attack after the other from speaker after speaker about John Kerry. So, sure, he's going to fight back and rebut these charges.

And it angered me that some of the speakers at the convention said Democrats, including John Kerry, including Democratic leaders, had more of a concern about beating George Bush as their motivation than in fighting against terrorism. That's a horrible charge for people to make. We were together in this war on terrorism and still are. This was the worst attack on our soil in our history.

So the attacks have been relentless against John Kerry and John Edwards in this ticket. And so it's right that he fight back and set the record straight.

But now we need to talk about exactly what the failed policies of this administration had been, and the new direction in which John Kerry and John Edwards are going to take this country.

WALLACE: All right. You said today what the Kerry camp has been saying all this last week, which is the that the Republican Convention distorted his record. Let's look at some of that record.

Vice President Cheney says that Kerry opposed Ronald Reagan's military build-up in the 1980s. What's wrong with that?

GEPHARDT: Well, I'm sure you can find votes both for weapons systems and against weapons systems.

Dick Cheney, when he was secretary of defense, was against most of the weapons systems he accused John Kerry the other night of being against.

Look, John Kerry is a military hero of this country. He was a United States senator and worked to make our defenses better. There are obviously disagreements over weapons systems as you go along. But his consistent effort through his entire time in Congress was to make this country stronger.

And he supported the president on going to Iraq. He disagreed with the way the president went to Iraq. He believes the president has made a mess of Iraq by the way he did it. But that is certainly patriotic, in my view, in setting out your views about what should be done.

WALLACE: But let's look, for instance, at the 1980s and the Reagan build-up, because I have a copy here of a press release that John Kerry, the Senate campaign in 1984, put out, in which he said he wants to cancel the MX missile, he wants to cancel the B-1 bomber, he wants to cancel Star Wars.

Now, we have a lot of more perspective now than we did then. But it turned out those were precisely the weapons that helped defeat the Soviet Union and led to the end of the Cold War.

I mean, at a critical point in the 1980s, John Kerry, wasn't he wrong on the national security and what the central issue was at the time?

GEPHARDT: Well, I don't want to back and debate what was going on in the 1980s...

WALLACE: But it does speak to his judgment, sir.

GEPHARDT: Well, the truth is the Soviets defeated themselves. Even without the MX missile, we...

WALLACE: But don't you think it was under pressure from the U.S.?

GEPHARDT: Well, it certainly was under pressure from the U.S. But their main problem was their economy fell apart because they had a bad system that decayed them from within.

I don't think you can argue that if we hadn't had the MX missile, we would not have been able to defeat the Soviets. We were way ahead of them in most of the '80s.

But the point I'm trying to make is: John Kerry has consistently, from his days in Vietnam, been a patriot, supported this country, fought for his country, has had good defense policies supporting weapons systems that would keep our people safe. And he's done the same in the fight against terrorism.

GEPHARDT: This idea that we will not pursue the terrorists if John Kerry is president is absolutely ridiculous. He will be relentless in keeping the people of this country safe.

WALLACE: I want to ask you about the domestic side, but I do have one more national security question. And it's not back in the '80s; it's much more current. And that's the question about voting for going to war in Iraq but voting against the $87 billion.

I want to show you a clip of some criticism of that vote. Here it is.

(BEGIN VIDEO CLIP)

GEPHARDT: I can't find it within myself to not vote for the money to support the troops. Our young men and women who are over there protecting us, dodging bullets in a very tough and difficult situation. And so I felt the right thing to do was to do that.

(END VIDEO CLIP)

WALLACE: You said supporting the troops was the right thing to do. I got to tell you, it's the same thing Dick Cheney said at the convention.

GEPHARDT: But John's decision, I think, was based on the fact that he could not get the president to listen, to finding room in the budget for that $87 billion. I, frankly, had trouble making the vote for the very same reason. And I'll — well, let me tell you why.

WALLACE: But you did make the vote.

GEPHARDT: I went to the president after 9/11, and I said, "Mr. President, surely we can change this budget, now that we've had terrorism on our soil. The American people will understand."

And I said to him, "I can't get everything I want. You can't get everything you want, but let's sit down and come up with a new budget, given the new world that we're in."

The president adamantly refused.

What John Kerry was saying with his vote was, "Hey, if we're going to have to spend all this money in Iraq" — and now, incidentally, it's $200 billion taxpayer dollars that we're spending in Iraq because we didn't get the help that we needed in Iraq — he was simply saying let's cancel the tax cuts for the wealthiest, not the middle class, to pay for Iraq.

I think that's a rational, sensible position.

WALLACE: I have one question I want to ask you about domestic agenda. The president talks about an ownership society. You own a piece of your medical health savings account; you own a piece of your retirement account.

What's wrong with giving people more control over their own lives?

GEPHARDT: We're for that. Democrats, John Kerry, is for doing that. We're for a savings plan above your Social Security. We think that's a good idea, always have.

Let me tell you something. What the president talked about the other night were the same promises that he made four years ago. There was nothing new in that speech. It was the same warmed-over material.

He's failed. He hasn't done any of those things. Where has he been for four years? If he believed so strongly in these, why didn't he get the Social Security reform, which I disagree with, through the Congress?

So, there was nothing new. It was more of the same old stuff. He has failed in his policies. We've lost over a million jobs. Forty-five million people in this country don't have health insurance. Gasoline prices are going through the roof.

I guess if you don't have a record, you just go back to what you promised four years ago.

WALLACE: Congressman, thank you. Always a pleasure to talk with you. I'll talk to you again during the fall. Appreciate it.

GEPHARDT: Thank you.