The following is a transcribed excerpt from 'FOX News Sunday,' October 3, 2004:

CHRIS WALLACE, FOX NEWS: Well, joining us now to discuss the state of the presidential race in the wake of the first debate is White House communications director Dan Bartlett and Tad Devine, senior adviser to the Kerry campaign.

And gentlemen, welcome. Good to have you both with us.

Let's start with these polls which show a dramatic change in the horserace, with Senator Kerry now leading by two points in both polls. Let's look at some of the internals.

After listening to all the media coverage, the Newsweek poll found that voters now say John Kerry won the debate by a margin of 61 percent to 19. According to The Los Angeles Times survey, Kerry won 54 percent to 15.

But there's some good news for the president. When asked by Newsweek who would handle terrorism better, he still leads Kerry 52 to 40. On Iraq, voters still pick Mr. Bush, but by a smaller margin, 59 to 44. And when asked by The L.A. Times who's a strong leader, 47 percent say the president while 45 percent picked Kerry.

Dan Bartlett, does the president now recognize that he lost the first debate?

DAN BARTLETT, WHITE HOUSE COMMUNICATIONS DIRECTOR: Well, I think, as you just said, in those poll numbers, it shows on the issues. And that's what matters to the American people, and that's what's going to matter on November 2nd.

President Bush still has a lead in the big issues on terrorism, on Iraq, leadership. And these are the issues which the president is going to get reelected on.

On Thursday night, the American people saw two very different visions for the war on terror. President Bush has a post-9/11 vision. He's going to go after the terrorists.

We have a comprehensive strategy. In Iraq, we are specifically targeting the terrorists on the ground, as we're seeing on our television screens for the last couple days. Iraqi security forces working with multinational coalition forces together to rout out the terrorists and bring peace and stability to that country.

WALLACE: But...

BARTLETT: So on the big issues of the day — and that's where they're going to make their decision — President Bush still has a lead over Senator Kerry, and that's going to be the difference on November 2nd.

WALLACE: But how does he account for the fact that when voters are asked who won the debate that, you know, by lopsided margins, 2-1, 3-1, almost 4-1, voters say Kerry? How does he react to that, and does he feel badly about it?

BARTLETT: Well, as we said before the debated, Senator Kerry has been preparing for this debate for his entire life. He's a very skilled debater. United States Senate for 20 years; debating skills are something that he's very polished at.

But if you look at the substance, there are some critical errors that Senator Kerry made in this debate that President Bush has pointed out and will continue to point out.

In a very telling moment where he said the new Kerry doctrine on foreign policy is that there must be a global test before we take action to protect the American people, that is a clear difference in this campaign. President Bush thinks the Bush doctrine is, is we ought to have American security interests decided by the president of the United States, not by foreign capitals.

WALLACE: I'm going to give you a chance to respond...

TAD DEVINE, KERRY-EDWARDS SENIOR ADVISER: Sure.

WALLACE: ... on the global test in a minute, but let's just talk about the polls for a second.

Does the Kerry camp now believe that you're leading the race?

DEVINE: No. I think the race is close. And I've been saying...

WALLACE: Closer?

DEVINE: It's certainly closer. And obviously John Kerry had a great night last Thursday night, and I think it's fair to say the president did not.

The race has closed. I've been saying for months — I think the Bush campaign has been saying it too — we expect a close race in November. I think that's what we're going to see.

But John Kerry had a remarkable night Thursday night. He laid out a vision for this country. He has big differences with the president on major policy on Iraq, and he also has big differences on domestic policy on the economy, on health care.

DEVINE: Those are the issues the American people want debated, and John Kerry intends to debate them directly with the president.

WALLACE: Up until the debate, I think it is fair to say that, at least according to the polls, and that's what we're talking about here, that the president and the Bush campaign had been beating you guys for the last two months.

Now, you do have two more debates, but what's going to change in this last month that, in the daily cut and thrust of the two candidates and the way they campaign, the advertising, that you're going to be able to close the deal?

DEVINE Well, a few things, Chris. I think we're going to have these presidential debates, vice presidential debate. That's a tremendous opportunity for these candidates to speak directly to the American people.

We saw the voter interest. Over 60 million people watching the first presidential debate. I think that's because the voters want a real choice in this election. They want to go in a new direction. They're not satisfied with the policies of this president.

They don't believe the president has done a good job in respect to Iraq. They don't believe that over a thousand American lives lost, $200 billion being spent there, is the right course for our future. And they have big differences with the president in terms of the economy and health care. So they want to hear from them.

Second, we made a decision back in the summer to save our resources to the end of the campaign. We've saved those resources, and now we're spending them. We have a massive paid media campaign through the battleground. We're going to go toe to toe with the president. He's not going to beat us in resources at the end, and we're going to communicate and win.

WALLACE: All right. Let's talk about some of the issues that have come out of the debate, and let's talk about this global test issue, because it is one of the key moments.

Senator Kerry was asked his position on launching another preemptive attack after Iraq, and here's what he had to say. Let's watch.

(BEGIN VIDEO CLIP)

KERRY: We've got to do it in a way that passes the test, that passes the global test, where your countrymen, your people understand fully why you're doing what you're doing and you can prove to the world that did you it for legitimate reasons.

BUSH: I'm not exactly sure what you mean, "passes the global test." You take preemptive action if you pass a global test?

(END VIDEO CLIP)

WALLACE: Now, as you know, Tad, and you heard it here, but the president since the debate has been pouncing on that, saying this global test means that a President Kerry would, in effect, give veto power over any U.S. action to France or the United Nations. Your response?

DEVINE: My response is, before saying what he said in the same answer, Senator Kerry made it clear that, as president of the United States, he will not hesitate to use preemptive force to defend the nation. Made it crystal clear.

Now, what he will not do is what the president of the United States did in Iraq and what the front page of today's New York Times, in a stunning revelation, says the president did: disregard all of his intelligence and rush to war, even though he and his administration members, the leading members of his administration knew that much of the evidence they were relying on to rush to war was wrong.

WALLACE: I have to say, I have reviewed the transcript, Dan, and the fact is, in that answer, before he talked about the global test, he did say, "I will never cede authority to another country."

BARTLETT: Well, the problem is, is what statements he makes during a presidential debate — and we've seen a lot of conversions by Senator Kerry over the course of the last 17 months — doesn't stack up against his record.

Take, for example, the 1991 Gulf War. Here is a situation where he says was a model for a coalition and for going in to remove Saddam Hussein from Kuwait. Yet Senator Kerry voted against that, as well.

We don't know what the standard is. It's a pretty high standard. It's apparently one in which foreign capitals have veto power over the American president's decision to go to war.

Senator Kerry looked at the same intelligence that President Bush looked at. He came to the same conclusion. And he seems to be for the war when times are good. But when times get tough, and when he falls behind in the polls like he did in the Democrat primary, where Howard Dean took the lead, he becomes the anti-war candidate.

You can't change core convictions and lead this war on terror. And that was a point that I think President Bush drove home effectively on Thursday night.

WALLACE: All right. I want to turn around and talk about another controversy that has come out of the debate involving your man, Dan Bartlett.

The president hammered Senator Kerry about saying that he wanted direct talks with the North Koreans, as well as multilateral talks. Let's watch that.

(BEGIN VIDEO CLIP)

BUSH: It's precisely what Kim Jong Il wants. It will cause the six-party talks to evaporate. It means that China no longer is involved in convincing, along with us, for Kim Jong Il to get rid of his weapons. It's a big mistake to do that.

(END VIDEO CLIP)

WALLACE: But, Dan, all the other countries in the six-party talks are holding direct talks with the North Koreans, and the record is that the Chinese have repeatedly asked the Bush administration to hold direct talks. So what's he talking about?

BARTLETT: He's talking exactly about what failed in the 1990s during the Clinton administration. They made a deal in good faith and Kim Jong Il didn't live up to that deal. He was reneging on that deal.

So what Kim Jong Il wants now is to have the same sort of formula in which we do a bilateral negotiation with them, which will crowd out and undermine any of the other countries that are involved.

BARTLETT: What President Bush decided was that we needed a new approach for North Korea. He now has China at the table, he now has Japan at the table, he now has South Korea at the table, he now has Russia is he table — multilateral talks.

And it's interesting to see the candidate who always calls the president unilateralist and always calling for multilateral coalitions is now denigrating the cooperation and the effort being made.

But as soon as we drop those multilateral talks and directly negotiate with Kim Jong Il, it'll completely undermine the pressure we've been putting on him through China, South Korea, Russia and Japan.

DEVINE: The president's policies in North Korea are another stunning failure. When he became president, that country was being — the nuclear proliferation of that country was under control. There were cameras in facilities that could have produced weapons-grade plutonium.

And now what happened? Because this president turns his back on it, a dangerous nuclear menace has been created.

And what is the president's plan? Let's unilaterally withdraw U.S. troops from the Korean peninsula, and then have multiparty negotiations.

This president is all over the place on foreign policy, and this nation is at danger and great risk because of it.

WALLACE: All right. For all the talk about issues, an awful lot of the talk after the debate has been about style, has been about performance.

And a lot of it, frankly, Dan, has been about the president's performance. Let's take a look at some moments from Thursday night.

(BEGIN VIDEO CLIPS)

BUSH: Because we achieved such a rapid victory, more of the Saddam loyalists — actually we've increased funding for dealing with nuclear proliferation.

Yeah, I — I understand what it means to be the commander in chief.

(END VIDEO CLIP)

WALLACE: What was Mr. Bush's problem Thursday night?

BARTLETT: I don't think he had a problem at all. President Bush has never been called a — you know, somebody who would have a master's and Ph.D. in English. He knows that. He's a plainspoken person. He wanted to bring seriousness to the issue at hand.

And while sometimes he may stumble over a word or may not say it — mispronounce a word, you always know where he stands. He always knows what he believes. And that's very important and the clear difference in this campaign.

And I know a lot of people are talking about facial expressions and this and that. And as any good team does, you go back and review the tapes and look at it. And what I found is that, at the times where President Bush was — he was struck by or even offended by —

WALLACE: Let's play that. We have the reaction shots...

BARTLETT: Good.

WALLACE: ... and you can talk about it as we're looking at it.

BARTLETT: Great.

Well, what you see here is somebody who's listening to Senator Kerry, who is a complete walking contradiction when it comes to Iraq. And when he hears Senator Kerry, for example, say that the war in Iraq was a mistake, and then, when Jim Lehrer asks the obvious follow-up question, did the soldiers die for a mistake, he said no. You can't have it both ways.

When he says, on one hand, that his vote — when he said I voted for it before we voted against it, on the $87 billion, that he just misspoke, no, in fact, he voted wrong.

And that's the key differences. And I think those are the types of debates we'll have for the next 30 days.

We know that there'll be a lot of stylists and a lot of people grading how fluent they said this or how they parried on this issue. But at the end of the day, it's going to be the mistakes that Senator Kerry made in that speech, or in that debate that night, that is going to stand the test of time.

We have a global test now. We have reversing positions on the key issues in Iraq. We have him denigrating the coalition, calling them not a genuine coalition. I don't think that's what the Brits want to hear or the Poles or others who are by our side.

So, those are the key issues that are going to be the difference in this election.

WALLACE: Let me let Tad Devine get in here.

DEVINE: You know, to say the president didn't have a problem the other night is like saying the mission is accomplished in Iraq. OK? I mean, it's just not credible. Let's face it.

Listen, I expect the president to do well. We've seen him before Thursday night. This man, George Bush, had won every single debate he had ever participated in for governor and for president. And listen, I expect he's going to do much better.

But, you know, the American people want a real debate on the issues. That's what John Kerry offered Thursday night, and that's what he'll offer again in the next two debates.

WALLACE: All right. We have two more presidential debates, one more vice presidential.

I'll start with you, Tad Devine. What should we look for?

DEVINE: We should look for a candidate who's engaged on the issues.

John Kerry has big differences with George Bush on the economy, where we have a completely different economic plan; on health care, a major issue, where the president has done nothing while 5 million Americans just lost their health insurance during the tenure of his presidency; on other issues, like energy independence, where this president has done nothing while gas prices have gone through the roof.

So we're looking for a real debate on the real issues. And the American people will get that from John Kerry.

WALLACE: And, Dan Bartlett, you get the last word.

BARTLETT: Well, I agree with Tad, there are clear differences in this campaign. And they will continue to be talked about both in Tuesday, in the vice presidential debate, and on the two remaining presidential debates.

He's right. There are clear differences in how we ought to protect America. We're going to talk about that.

And there's clear differences in approach when it comes to our economy. President Bush took action, 1.7 million jobs created in the last 12 months. Senator Kerry, his proposals, his domestic agenda, result in three things: more litigation, more taxes and more regulation.

We look forward to the debate.

WALLACE: Gentlemen, thank you both for coming in today. You both represented your sides well.