This is a partial transcript of "Special Report With Brit Hume ," Feb. 11, 2005, that has been edited for clarity.

Watch "Special Report With Brit Hume" weeknights at 6 p.m. ET

JIM ANGLE, HOST: On the eve of electing Howard Dean (search) to head the Democratic national committee, Democrats from all over the country came to Washington to examine the party’s past and debate its future. We talked to a Democratic analyst yesterday about where the party stands and what Dean’s leadership will mean. Today we turn to Matthew Dowd, former chief strategist for the Bush-Cheney campaign and now a FOX News contributor.

Welcome, Matthew.

MATTHEW DOWD, FMR. STRATEGIST, BUSH-CHENEY: Glad to be here, Jim.

ANGLE: Good to see you. Let me ask you first, what is Howard Dean’s chief task at this point? You have got a Democratic Party that has lost the last two presidential elections. What does he need to do as he comes in?

DOWD: Well, it’s bigger than a presidential election problem. Obviously they’ve lost Congress (search). They don’t have the Senate. And they’ve lost seats in state legislatures. Keep in mind, at the beginning of the 1990s they had 59 percent of the state legislative seats. They now have 49 percent of state legislative seats.

So I think there is a rebuilding of the party that needs to be done. But I think it first has to start with people have to understand what are the set of principles that the party stands for that are going to address 21-century problems? And I think that is the fundamental — fundamental problem they have. They’ve got to have a positive, principled program that addresses concerns of the 21-century.

And as of yet they keep talking about old solutions or old ideas and — or are very confrontational. Until that is addressed, I don’t care what they do. It’s going to be hard to become a majority party.

ANGLE: Senator Kerry said today that the party — or said last night that the party does not need a makeover. But you heard Howard Dean a few moments ago say that we need to change our language about issues like gay marriage and abortion. Is changing language going to do it?

DOWD: Well, speaking as a Republican, I hope they continue to believe that’s the solution to their problem because that’s going to give more success to us. Listen, they seem to think that this is a marketing problem. This isn’t a marketing problem.

It’s like a restaurant, Jim. A restaurant, people aren’t going there because they don’t like the food and the owner and manager says let’s change the name of the food on the menu, or let’s change the way the menu looks like. They don’t like the food. So they’re going to have to find out a way to deliver something that the American public wants and needs.

And I think it’s unfortunate we’re in this circumstance where all they say is don’t do this or don’t do that, and to do it the Republican’s way. This country was founded on two viable parties offering two viable alternatives. And as of right now, they think their problem is let’s just change the words we use and let’s fix the marketing situation, because once we do that then the American public won’t know exactly what we stand for. And maybe we can win some elections. The American public is smarter than that and they need to change the food, not the menu.

ANGLE: Now, Bill Clinton (search) offered a little different buffet to keep up with that analogy. In his days, he was the first Democratic president to get re-elected since FDR (search). He took over some Republican issues, such as welfare reform. And that stirred up a lot of doubts among some Democratic loyalists. And in fact, the president talked about those doubts last night. Here’s what he said.

(BEGIN VIDEO CLIP)

CLINTON: Every time I see somebody who identifies himself as a liberal say, you know, I betrayed the liberal base of the party. I want to say how.

(END VIDEO CLIP)

ANGLE: Now, obviously President Clinton still feels a little touchy about that. And I have to tell you, in ‘96 after he was re-elected, his people came around to me and said all those doubters in the Democratic Party, this is proof positive Bill Clinton knows how to get re-elected. It seems that the party hasn’t completely absorbed those lessons.

DOWD: Well, I think what Bill Clinton knew was that this country had gone through change and that the old solutions were no longer going to work. That’s why he cooperated with Republicans and pushed welfare reform. That’s why he cooperated with the Republicans to push the crime bill.

That’s why he did a number of things that he was in cooperation with the Republican Congress. And keep in mind, Bill Clinton’s highest points in his presidency were when he was pursuing more moderate or even more conservative policies. He understood that.

But I think this party today doesn’t — they want to sort of keep the old — they think we can go back to the way FDR addressed problems. And while FDR was a great president who served at an important time in this country, the solutions of the ‘30s and ‘40s are no longer applicable to the solutions that are needed in the 21-century.

ANGLE: Let me ask you something about Howard Dean. There were some Democrats quoted today as wondering, worrying really whether he would be the head of the DNC or see himself as the president of the Democrats. What do you think?

DOWD: Whether or not he wants to see himself as the head of the DNC or head of all Democrats?

ANGLE: Yes. I mean there’s obviously a different role depending on how you see your role.

DOWD: I think — well, I mean I think that Harry Reid (search) and Nancy Pelosi (search) I think are — have some misgivings about him being the head of the Democrats as a whole. I think the fundamental problem, Jim, that they have is that they need to be pursuing a path that they think the issue is more fighting or confrontation.

As a person that understands political strategy. I think exactly the opposite is what they need. They need to show more of a positive outlook that they can compromise, that they can get things done. They have new solutions for problems.

But they are choosing a path, whoever it is that is their leader, which as of right now, it’s difficult to identify one person as their leader. Howard Dean is the head of the Democratic Party but he is probably one of the most vocal and one of the most negative people on his attacks. That to me is not something the party needs right now.

ANGLE: About a minute left, Matthew. Let me ask you about a Social Security (search) issue. You heard in Major Garrett’s piece say the Democrats believe they’re unified on this issue. This is a very interesting issue because Democrats are convinced that this could change the balance of power in their favor for years, if not decades to come. Republicans are equally convinced it will do the same for them. Somebody’s wrong about this.

DOWD: Well, I mean, I think there is probably — Social Security is a program that’s been in operation that’s served many people well and continue to serve people well. The problem is the way it exists came is no longer the way it was 70 years ago.

Republicans recognize that. Republicans understand there’s a problem. Republicans understand there needs to be major changes in the program. The American public is with them on that. And they also understand, we ought to give more control over people’s lives to them. All of those things are Republican programs. And I think the Democrats are on the wrong side of the party — I mean the wrong side of the public.

ANGLE: OK. Matthew Dowd, thanks for joining us. Good to see you again.

DOWD: Great to be here, Jim.

Content and Programming Copyright 2005 Fox News Network, L.L.C. ALL RIGHTS RESERVED. Transcription Copyright 2005 eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, L.L.C.'s and eMediaMillWorks, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.