CHRIS WALLACE, FOX NEWS: Well, with just over two weeks to go until Election Day, we want to look ahead to the final push with former Governor Marc Racicot, chairman of the Bush-Cheney team, and Joe Lockhart, senior adviser to the Kerry-Edwards campaign.

And welcome to both of you. Thanks for coming in today.

RACICOT: Good to be here, Chris.

WALLACE: Let's take a look at those latest polls. Newsweek has the president up six. The Washington Post has Mr. Bush up three. And Time magazine has him up two. All of those in three-way races among likely voters.

Joe Lockhart, it looks like John Kerry's rise and the president's slide after the first debate have both stopped. True?

LOCKHART: I don't think so. I think there's been a steady building of support for John Kerry since the first debate. In all, there are something like 15 or 16 public polls that showed John Kerry winning all three debates. So doing that is, I think, a remarkable achievement for a challenger.

Listen, you can go and take any one of these polls. The Newsweek poll shows us losing among women by six points and winning among men by two. That's just not where the race is. I think we're winning among women and it's tight among men.

So I think — we trust our own polls. We're doing well...

WALLACE: In your polls where do you have you?

LOCKHART: You know, we have this as a very close race. I think we have a little bit of an edge.

But more importantly, when you go into the battleground states, where this will be decided, I think those have been breaking for us over the last few weeks since the start of the first debate. So we feel good where we are.

WALLACE: OK.

Governor Racicot, if you look at the internal numbers, even in these polls, it seems that since the first debate, on September 30th, that John Kerry has made this a much closer race.

RACICOT: Well, I think we believed from the very beginning it was going to be very close.

But if you take a look at the average of all of the numbers since the last debate, you'll see some separation there. It's certainly not outside the boundaries of the margin of error. And I think it confirms the fact that we've believed all along this was going to be very, very close.

We're encouraged, however, by that separation even though it's not as large as we would like it to be.

WALLACE: Let's talk about one of the hot issues that came up this week, and that is John Kerry's remarks in the last debate about the vice president's daughter Mary.

According to The Washington Post poll that is out today, Joe, two-thirds of voters — and that's both Republicans and Democrats — thought Kerry's comments were inappropriate.

Here is what both John Edwards and John Kerry had to say about Mary Cheney in their debate comments. Let's take a look.

(BEGIN VIDEO CLIPS)

U.S. SENATOR JOHN EDWARDS (D-NC): You can't have anything but respect for the fact that they're willing to talk about the fact that they have a gay daughter, the fact that they embrace her. It's a wonderful thing.

KERRY: I think if you were to talk to Dick Cheney's daughter, who is a lesbian, she would tell you that she's being who she was, being who she was born as.

(END VIDEO CLIPS)

WALLACE: Joe, is Mary Cheney the only gay person that Kerry and Edwards know? Why bring her up and why not bring up, for instance, New Jersey Governor Jim McGreevey?

LOCKHART: Well, because, listen, you know, I've been in politics a long time and you can tell when something's political, when it isn't.

You stopped the clip at a very important point, because if you let the clip go a little longer in the Edwards debate you would've had the Vice President Cheney thanking John Edwards.

WALLACE: You'll be happy to know we're going to show that in a moment.

LOCKHART: Well, good.

And, you know, I will take Lynne Cheney at her word when she says that she was offended. And that's unfortunate. But I think anyone watching that would know the intent of John Kerry and the intent of John Edwards, which is to celebrate the wonderful job they've done as parents and to highlight tolerance.

What's intolerant is — I saw a remark yesterday from a Bush- Cheney campaign spokesman who said that John Kerry had launched a personal negative attack on Mary Cheney by calling her a lesbian. That's absurd.

And I think what is also intolerant is Lynne Cheney saying that John Kerry is not a good man. John Kerry fought for this country, has devoted his life to public service, and I think George Bush has said that he honors his service and he thinks he is a good man. So I think that's intolerant.

WALLACE: But the question is, was this a calculated effort to remind religious conservatives, hey, the vice president has a gay daughter?

LOCKHART: That is a legitimate question, and I can give you an answer, having someone who sat in on dozens of hours of debate prep. And the answer is no. It was not a — it was a personal moment that John Edwards picked up, and I think he was celebrating Dick Cheney's tolerance and his abilities as a parent, and John Kerry was just seconding that. And that's all there is to it.

WALLACE: All right. The reason I ask is, I want to show you a clip of what Mary Beth Cahill said to me just after the last debate. Take a look.

(BEGIN VIDEO CLIP)

MARY BETH CAHILL, SENIOR ADVISER TO KERRY CAMPAIGN: She is someone who's a major figure in the campaign. I think that it's fair game, and I think she's been treated very respectfully.

(END VIDEO CLIP)

WALLACE: Mary Cheney is fair game?

LOCKHART: Well, listen, where did this story first begin? Who talked about this first? In the 2000 campaign, Dick Cheney talked about his daughter very lovingly and very openly, and we celebrated that.

WALLACE: "Fair game" sounds like...

LOCKHART: No, there is no political strategy here. There is one side, John Edwards and John Kerry, who have tried to reach out and talk about how their opponent in this race are good parents.

And it's just really unfortunate. And, you know, what's — let's focus on what really happened here. We won the debate. There was a sense of growing momentum. The Republicans needed to change the subject somehow and try to slow down that momentum. That's what happened. It's politics.

WALLACE: All right.

Let's look about the other side of it, Governor Racicot, because let's look at what — and this is something that Joe Lockhart brought up — let's look at what the vice president himself self unbidden on the campaign trail about his daughter and also what he said in response to John Edwards when he made his remark that we just showed. Take a look.

(BEGIN VIDEO CLIPS)

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: Lynne and I have a gay daughter. So it's an issue that our family's very familiar with. We've had two daughters, and we have enormous pride in both of them.

CHENEY: Let me simply thank the senator for the kind words he said my family and our daughter. I appreciate that very much.

(END VIDEO CLIPS)

WALLACE: I guess the question is, Governor, what are the vice president and Mrs. Cheney so upset about? They brought it up themselves in the campaign trail. And isn't this just an effort on their part to create an issue in the final days of the campaign?

RACICOT: You know, look, every once in a while there's a reflection into the character of a candidate, and this is one of those instances where there was a reflection into the candor and the character of John Kerry. It was just wrong, absolutely wrong, and it was raw opportunism, and it reflects the inclination to say anything or take advantage of any moment in order to win.

I mean, the fact of the matter is, that is how the American people see it. That's how we believe it occurred. We responded to questions. It's not us that's employed this as a tactic.

WALLACE: All right. Let me switch, if I can, to another issue, and that is the draft, because I want to show you both something that Senator Kerry told the Des Moines Register this week and what he's been saying repeatedly on the campaign trail. And then let's talk about the president's response to it.

This is Kerry first, to the Des Moines Register this week: "With George Bush, the plan for Iraq is more of the same and the great potential of a draft."

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Let me restate that: We will not have a draft.

(END VIDEO CLIP)

WALLACE: Joe, the president has repeatedly said he's not going to have a draft. In any case, Congress would have to impose it, and they had a test vote this last week and it failed, 402-2.

Isn't John Kerry continuing to bring up the threat of a draft because the fact is the polls show that the president is doing pretty well with 18- to 29-year-olds?

LOCKHART: Well, I don't know what you mean by "continually." He was asked a question in an editorial board of the Des Moines Register, and he answered it.

And what he has said is we've already got what amounts to a back- door draft, with the National Guard being deployed the way they are and people being compelled to serve longer than they signed up for.

But I think he made a valid point, which is if we're going to continue this go-it-alone policy where we push our allies away and say we can do everything unilaterally, and we have commitments and we're overstretched, then we have to figure out where the troops are going to come from.

LOCKHART: But the idea that he's out there continually talking about the draft just isn't the case.

WALLACE: But the senator himself talks about increasing the size of the military by 40,000 troops.

LOCKHART: Sure.

WALLACE: The fact is, the military now is at 1.4 million overall. Back in the '80s, it was at 2.1 million.

So couldn't you, in fact, have an all-volunteer army, an increase, and never have to have a draft?

LOCKHART: I think that that is certainly possible. It is also certainly possible, as this president has said, we'll go anywhere and do anything, that if you take the view that you don't need the allies, that we might need more troops than we have.

WALLACE: Governor Racicot, let me ask you about this, because I think what the Kerry campaign is doing — and perhaps they're making an issue of it, but they're extrapolating, saying here are these set of facts, and this is the worst-case scenario of what they could bring.

Why is what they're doing any different than what the president does when he constantly adds up all of John Kerry's budget numbers and says he's going to raise taxes on the middle class, when in fact John Kerry has promised he's not going to raise taxes on the middle class?

RACICOT: Well, he has a long history of voting for tax increases in this country. He's proposed to the American people extraordinary levels of expenditure, way beyond anything that he could raise in terms of revenue.

And, frankly, the comments about the draft are, again, another insight into the character of this guy, the deceptive urges that he's offering to the American people.

And it's not just with the draft. I mean, take a look at everything else. It opportunism, and it's deceit.

He has talked about everything from containers coming into this country being 95 percent unchecked, when they're checked at the other end before they come into this country. He's talked about Pell Grants being eliminated or reduced under the president's leadership, when they've been increased by some exponential factor. On and on and on.

So they're two remarkably different approaches to the facts.

WALLACE: I'm going to let Joe get into it, but before he does, I just want to point out that we had Senator Edwards on this show last week. We asked about him about this, and he said, "Let me tell you, the one thing that we're not going to do is raise taxes on the middle class. If we have to cut back spending" — you know, you can believe him or not believe him...

RACICOT: Well, take a look at his tax plan. I mean, the fact of the matter is, if you take a look at his plan, which says we're going to raise the levels in the last two percentages, it raises taxes on people less than $200,000. By his own terms of his own plan, it raises taxes on those people.

LOCKHART: Well, I mean, let me tell you why this is just not a credible argument. If you read The New York Times this morning, the Sunday magazine, you'll find insight into the character of this president and what he plans to do. It's the January surprise.

He was caught at a fund-raiser talking to his pioneers, and he said, in January, he wants to privatize Social Security, not just have, you know, partial. He said, "I want to privatize Social Security."

Let me tell you what that will do. If you add up every program John Kerry has talked about, it doesn't amount to that one proposal. That's a $2 trillion drain on the Treasury, to privatize Social Security, and it means a 45 percent cut in benefits.

Now, he won't say that publicly, but we know from The New York Times this morning that privately he's telling his donors that he's going to do that: privatize Social Security, cut benefits.

WALLACE: Governor Racicot?

RACICOT: Well, that's absolutely preposterous. What the president is talking about and has talked about from the moment he ran in 2000 is allowing younger people, younger workers to own a portion of their Social Security and invest it and make decisions. That is sometimes referred to in the terms that Joe is mentioning.

But everyone knows, this president is a man of his word. He's exactly what he appears to be. He knows what he believes and where he's going, contrary to the opposition.

WALLACE: All right. I want to talk about one final issue, and that is the whole question of election irregularities and what could happen on Election Day.

Governor Racicot, your campaign's top lawyer said Friday there could be days or weeks after Election Day before we know the results.

I want to look back. In 1960, a lot of people thought that Richard Nixon had the election stolen from him. Dwight Eisenhower said he should demand a recount, and he said, you know, I'm not going to do it, because it would be bad for the country.

Do either of you worry about the danger of a prolonged election litigation fight in the middle of the war on terror, or is it more important to check out any possible irregularities?

RACICOT: Well, I think you always check out if there are potential irregularities. But the fact of the matter is, we presume that this election will unfold as it should. We have to be prepared. Everybody has to be prepared for challenges along the way.

It's unfortunate that there have been suits brought against the candidacy of Ralph Nader, we believe, because that obviously may end up eliminating the possibilities for some of our people in the military to vote, with the delay in ballots and the change in ballots that might occur as a result of that.

But we're going to be vigilant. At the same moment in time, we know that secretaries of state across this country and legislatures and Congress have worked very hard to make certain that this election unfolds as it should.

WALLACE: And, Joe Lockhart, you get the last word. If it comes down to another Florida, if you see the possibility of irregularities, are you prepared to have this go days, weeks?

LOCKHART: Listen, I think that we stand for everybody should be able to vote and their vote should count. That didn't happen in 2000.

It shouldn't happen again.

I think the president missed an opportunity to take the lead, as a unique leader, given what happened in 2000. He's failed. We're in this situation now because of that lack of leadership.

And, you know, listen, the Ralph Nader thing is interesting. The governor has talked about the president being, you know, what he says is what he is. I have to disagree with that.

Ralph Nader is about as on the far left as can you be, and Republicans around the country have been funding his effort to run for president because they think it somehow hurts John Kerry.

So there's a lot of politics going on here, and we should just call it for what it is.

WALLACE: Well, I certainly agree there's a lot of politics going on here.

Thank you both very much for joining me this morning. We'll talk to you again soon.