CHRIS WALLACE, FOX NEWS: The 109th Congress begins work soon on the president's ambitious second-term domestic agenda. So, how will his plans to reform Social Security and taxes, to name just two issues, be received on Capitol Hill?

For answers, we turn to Senator Rick Santorum, chairman of the Republican Conference, and from Chicago, Senator Dick Durbin, the number-two man in the Democratic leadership.

Welcome to both of you. Thanks for joining us to you.

U.S. SENATOR RICK SANTORUM, R-PA: Thank you, Chris.

U.S. SENATOR RICHARD DURBIN, D-IL: Good to be with you.

WALLACE: There was an article in The Washington Post this week that I want to ask you both about. Take a look at the headline, if you will, first: "Democrats are united in plans to block top Bush initiatives."

And it goes on to say, "Democrats in Washington and around the country are organizing for a year of confrontation and resistance."

Senator Durbin, is that true?

DURBIN: Well, I can say this: We've ended the last session on a high note, a bipartisan effort to pass intelligence reform. We could start this session on a high note: bipartisan effort on the federal transportation bill.

But when it comes down to the Social Security issue, our diverse Democratic caucus believes that at least the proposals as we've heard them from the president could endanger Social Security.

And he's going to have to prove to us not only that he has a good positive proposal but that it won't be at the expense of a Social Security system which has served our nation well for over 60 years.

WALLACE: I understand, though, it goes beyond just Social Security. You're not going to give way on his appointments, the people he's going to renominate to the court, are you?

DURBIN: Well, unfortunately, that was a stick to the eye by the administration to resubmit the names of judicial nominees already rejected.

Harry Reid, our new leader on the Democratic side, sent a letter to the president and said, "Let's start anew. Let's have a fresh relationship."

The White House said, "No deal. We're going to send you the names you rejected. Now let's have a fight."

I think that's a bad way to start the session.

WALLACE: Senator Santorum, if the Democrats are determined to be obstructionist on a lot of these issues — we've just talked about Social Security reform, judicial nominations — what can you do about it? And will it stop you, the Republican majority in the Senate, from enacting the president's agenda?

SANTORUM: Well, a couple of things we're going to do is we're going to try start out on what I call "old business," things that we did not accomplish in the last session of Congress where there is bipartisan support.

We're going to start out with class action liability reform, which I think will have very strong bipartisan support. Dick mentioned the transportation bill will be another early bill. Bankruptcy reform, which has overwhelming support in both Democrats and Republicans.

So, we're going to try build some momentum up to try to see if we can build relationships and move forward.

And I think what you're seeing is, I believe that the Senate Democratic leadership is going to try to block things. But there are a lot of Democrats who look at this last election, last several elections, and they see that this obstructionist agenda that was led by Tom Daschle has not been beneficial to them politically and it certainly hasn't been beneficial to the country. They continue to lose seats. They continue to be seen as just the "no party," instead of the party of ideas and moving forward.

And I think there will be at least a core group of Democrats who will understand that they're here to try to get something done, and they're going to work with those who want to work with them to accomplish good things for America.

WALLACE: Ted Kennedy made a major speech this week, and I'd like to play a clip of it. Let's take a look.

(BEGIN VIDEO CLIP)

U.S. SENATOR EDWARD KENNEDY (D-MA): I categorically reject the deceptive and dangerous claim that the outcome last November was somehow a sweeping or even a modest or even a miniature mandate.

(END VIDEO CLIP)

WALLACE: Senator Durbin, do you agree with Senator Kennedy that the president got no mandate on Social Security, on his tax plan and on nominating judges to the courts?

DURBIN: When you ask the voters why they voted, virtually all of them disagreed with the president on every major social issue but for the question of the war on terrorism.

No American president has ever lost in an effort to be re-elected in the midst of a war. President Bush was re-elected by virtue of one state, Ohio, a plurality of 118,000 votes. Otherwise, we'd be swearing in President Kerry this week.

So, to suggest there is this broad mandate and the Democrats should slink away and reconsider all their values is just plain wrong. Our party is strong. Our values are strong, shared by many of the people across America, maybe even a majority.

And I think we have to carefully try to find common ground with this president. Where we can't find it, we're going to stand our ground.

WALLACE: Senator Santorum, no mandate at all on these issues?

SANTORUM: Well, I mean, it's the same old thing. I mean, I don't think the Democrats were over the 2000 election, much less the 2004 election.

And what's really been happening here is that you have a small group of folks who are very, very definitely committed to the left- wing strategy of trying to get government more and more in your life, higher taxes, more regulation, the whole nine yards, and they're holding a grip on the Democratic Party.

But I really do believe that there are, I think, 12 or 14 senators on the Democratic side from, quote, "red states." And they're going home and they're not hearing the message that maybe Senator Durbin is hearing in Illinois, maybe Senator Kennedy is hearing in Massachusetts and Senator Clinton in New York. But they're not hearing that same message when they go home. And they're going to have to be responsible and responsive to the folks they represent. And they're going to come here, I think, with a slightly different attitude than Ted Kennedy has.

WALLACE: Senator Durbin, what about that? Are you and is the Democratic leadership in this Senate out of touch with some of your rank and file, particularly those Democratic senators from red states?

DURBIN: Social Security is a good illustration. We have a unified caucus.

When they take a look at President Bush's proposal, at least the outline of this proposal, they're very concerned, both from red and blue states, about a proposal that the president won't pay for: $1 trillion to $3 trillion of additional debt for America with no explanation in sight.

DURBIN: And the idea of endangering Social Security benefits and reducing them in the out years is not popular in our caucus.

We don't believe the sky is falling when it comes to Social Security. We can make modest, common-sense changes today, which, 40 years from now when Social Security does need some new revenue, will provide that revenue.

Let's give our taxpayers and people across the country an opportunity to save for retirement, but not at the expense of the solvency of Social Security.

WALLACE: Senator Santorum, let me ask you about Social Security and specifically about a White House meeting recently in which Charlie Rangel, the Democratic congressman from New York, was quoted as saying something. Let's take a look at this, if you will.

You said, according to him, the following about Social Security: "Roosevelt created this program in the '30s, and the Democrats tried to fix it five or six times. Isn't it time for a Republican solution?"

One, did you say that?

SANTORUM: Well, I didn't say exactly that, and I think he was paraphrasing how he interpreted my comments. My comment, my...

WALLACE: More importantly, if you see this as a Republican solution, is it going to be awfully hard to get Democrats on board?

SANTORUM: It's not a Republican solution. And the bottom line is, what I said was that it was created with a tax and a benefit all run through Washington D.C.

And every other retirement system in the country and most retirement systems around the world, including Social Security systems around the world, use some element of investments, use some element where you take the growth of the economy of the country and use that to help pay future benefits.

That's what I suggested, that in the past it's always been either raise taxes or cut benefits. That's it. For over 60 years of Social Security, we've had raise taxes, cut benefits.

And what we're suggesting is, can we infuse in what we know works to fund retirement systems? And that is, the idea of people having ownership and people investing that money and having that money grow with the economy to be able to offset the long-term liability.

WALLACE: Senator...

SANTORUM: So I said we need to fuse together Republican and Democratic principles. I didn't say a Republican solution.

WALLACE: Senator Durbin, are Senate Democrats flatly opposed to any system, no matter how you pay for it, that includes private accounts?

DURBIN: No, as long as those private accounts are in addition to Social Security.

We can make modest changes in Social Security, good, common-sense changes that give it a long life. We did it in the mid-80s. We saw the baby boomers coming. We can do that again today. Play it out over 40 or 50 years, and like the miracle of compound interest, it will make Social Security strong for decades to come.

And we believe people should be given incentives to save for their retirement. The president's plan takes the money out of Social Security, reduces benefits, and says we're going to let you gamble in the stock market. You may win, you may lose.

But privatizing Social Security's not the answer.

WALLACE: All right, let me let Senator...

SANTORUM: With all due respect, Senator Durbin sort of brushes off — "Well, we did this in the '80s." What did they do in the '80s? They cut benefits. What did they do in the '80s? They raised taxes.

So the idea that we fixed this in the '80s and this other approach that the president has is somehow a dangerous approach, let me assure you, the only two ways to fix Social Security are either to raise taxes or to cut benefits.

They did it in '83. We've raised — in 1950, the tax on Social Security, if you were a millionaire, you had to pay $60. Now it's 12.4 percent of the first $90,000 you earn. We have dramatically raised taxes. We have cut benefits.

And all we're suggesting is, we need to do less of that. And the way you can do less of that is to put this money in the powerful American economy.

WALLACE: Senator Santorum, I have one last question. We've got about a minute left.

As we mentioned earlier in our interview with Dan Bartlett, the president, in the papers this morning, says that he is not going to push for a constitutional amendment on gay marriage because so many senators believe the Defense of Marriage Act does the job.

Now, Bartlett seemed to be trying to walk that back a little bit, but you talk about mandates. Are you worried about breaking faith with social conservative voters?

SANTORUM: I can tell you, I'm not going to break faith with social conservatives, and I know the president won't either.

This president has gone out and led on this issue. He understands the importance of traditional marriage, that children need mothers and fathers, and we have to have a culture that nurtures and supports that.

And I'm confident the president will go out there, and I don't think one interview is a turning point in his presidency. He's going to fight for this.

WALLACE: Senator Santorum, Senator Durbin, thank you both very much for joining us today. And please come back, both of you.

SANTORUM: Thank you.

DURBIN: Thank you.