This is a partial transcript from "The Beltway Boys," on August 26, 2006, that has been edited for clarity.

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MORT KONDRACKE, CO-HOST: Well, Fred, the "Hot Story" is "A Tale of Two
Elections."

It's only 73 days 'til Election Day, and both parties are in attack mode. The Republican strategy, as I'm sure you're going to explain, is that this is a choice between the Republicans and the Democrats at each level.

What the Democrats want to do is make the campaign a referendum — national referendum on President Bush. And the theme is that up and down the line, domestic and foreign, the Bush administration has mucked things up royally, and that the Republican Congress has been the enabler of all this stuff.

The number one case, example is Iraq, which we'll get to in a second. But upcoming is the anniversary of Katrina, on August 29. And so Harry Reid, the Senate Democratic leader, was down in New Orleans, and he had a little briefing this week on the telephone actually with reporters. And he said that, "These people (in New Orleans) were not hit by a natural disaster, but by a manmade disaster of the incompetence of this administration."

Well, it was a very big natural disaster.

FRED BARNES, CO-HOST: It sure was. Yes.

KONDRACKE: They're emphasizing the incompetence. And incompetence, of course, is the word that they keep using.

Reid also has been talking about mistakes in Iraq. And there was a session that Harry Reid had with Jack Reed of Rhode Island and Carl Levin of Michigan that I actually listened to — radio.

BARNES: I didn't.

KONDRACKE: On the telephone. And this is what Jack Reed had to say in that session.

(BEGIN AUDIO CLIP)

SEN. JACK REED, D-R.I.: This open-ended commitment by the president, saying, We're not changing anything — a policy that over the last three years has — has seen further deterioration in Iraq, is not the direction. I think we have to signal strongly to the Iraq leadership that we are beginning a redeployment.

(END AUDIO CLIP)

KONDRACKE: And in coordination with that conference call, the Senate
Democrats also put out quote-unquote, "report," the first paragraph of which was, "1,805 [days] have passed since September 11, 2001, and Usama bin Laden has remained un-captured. 1,365 [days] passed between the bombing of Pearl Harbor and Japan's surrender to U.S. forces."

BARNES: Well, I didn't quite follow the reasoning there.

(CROSSTALK)

KONDRACKE: It's taken longer.

BARNES: I know.

(CROSSTALK)

KONDRACKE: OK.

BARNES: One thousands and 85 days… that means since there's been a terrorist attack on America. That's a pretty good record for the Bush administration. There have been attacks in England and Spain and all over the world. But not here again.

Look, Democrats go into this election with an advantage, Mort. There's no question about that. The public's in a crappy mood. They're all disagreeable and mad and angry about this or that and so on. But I don't think they're mad the competence of the Bush administration. Remember the last time you heard that? That was the big issue? 1988, Mike Dukakis? President Dukakis. Didn't help him.

What happened to the "culture of corruption"? That was the big issue that was going to sweep Republicans out of Washington. It made no headway at all, so Democrats dropped it.

Now, I don't think Katrina's going to help them. I mean, look, after a year, everybody knows that while Bush administration did not perform heroically — that's for sure — the main problem was with the mayor of New Orleans who didn't get the buses to take the people out. We know that. Now the federal government, the Bush administration's pumping in money, and it's up to local and state officials to handle it.

On the other hand, Iraq is a problem for the Bush administration, no question about it. Contrary to Jack Reed, who's a smart senator and a
West Point graduate, by the way — they have changed their tactics. That's why they've gone into Baghdad with more troops to try to clean out the terrorists. But Iraq remains a problem.

And you shouldn't assume that just because it's a problem that all the people who are mad about the war and register negatively against it in polls, are going to vote for Democrats. Because many of them are Republicans who are made that we're not winning there.

The Republicans, of course, will try to flip the Iraq issue and make Democrats desire for redeployment, which means withdrawal. Make that
the issue. Listen to Bush talking about this at his press conference a
few days ago:

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There's a lot of people — good, decent people — saying, We're drawing out. They're absolutely wrong. It would be a huge mistake for this country. If you think problems are tough now, imagine what it would be like if the United States leaves before this government has a chance to — to defend herself, govern herself, and listen to the — and — and — and answer to the will of the people.

We're not leaving so long as I'm the president.

(END VIDEO CLIP)

BARNES: Well, they're pretty clear on that.

But look, the Republican strategy, very simply, is one thing: As it looks right now — and that is, in addition to trying to flip the
Iraq things — but it's mainly, make the War on Terror the paramount, overriding issue in the campaign.

Now they were helped a little on this when the British broke up that plot to have airlines flying to the United States, were going to blown up by terrorists from England. And that helped. And they hoped this issue — because it's one that clearly helps President Bush. It's what won the elections for him in 2008 (sic) and 2004. They did — well, at least avert a landslide. Republicans — a Democratic landslide in which Republicans lose the House and the Senate, or both. Plus, you know, a slew of governorships.

Democrats have tried to inoculate themselves on the issue, and I think they've done it with paramount clumsiness, in which they propose the same old defensive actions. You know, Well, we have to guard our ports better. We have guard our nuclear power plants better. That stuff is history. The idea is to stay on offense, as the British plot was broken up before it was carried out. That's what you do. You don't wait for the terrorists to show up. You break up the things ahead of time.

And the Democrats' problem is simply that they have attacked the offensive tools and tried to weaken them. You know, the NSA eavesdropping thing; that SWIFT banking program, where they follow the terrorists' money, the Patriot Act itself. That's the problem for Democrats, and I think you're going to hear a ton about it during the campaign.

They had three other things Republicans have to work on: Bush: Iran's got to be tougher — diplomacy alone isn't going to do it; Iraq, more of what they're doing in Baghdad, where American troops are not spectators. And then get an issue to really attract conservatives, who may not turn out, as it stands now. The best one to do that is fight over judges and the nomination. And Mort, they love that.

(CROSSTALK)

KONDRACKE: Look, everything depends on whether we are succeeding in Iraq or not. That.

BARNES: Not everything.

KONDRACKE: Well, almost everything. And it clouds the entire picture, as most White House aides will acknowledge to you.

BARNES: It clouds the picture.

KONDRACKE: Of course it does. I mean, you know, the economy is good, but people think the economy is bad. Why? Because they are in a sour mood over Iraq. So it's good that we're finally being aggressive in Baghdad, trying to pacify the place. What we have to do is keep it pacified. And, you know, things look good at the moment, but the question is what happens over the next 73 days?

It's not a good sign politically that Chris Shays of Connecticut — who has been a stalwart supporter of the Iraq war and is in a tough race — went to Iraq for the 14th time, and now has come back and said that we need to have a timetable for withdrawal. Bush is not going to have a timetable for withdrawal. In fact, I don't even think we're going to pull out any troops — net pull out of troops — which Republicans had been hoping for.

So anyway, let's look at the way things are in the polls at the moment. Several polls this week show that President Bush's approval rating is in the low 40s, up from the low-to-high 30s. The Real Clear Politics is at 40.5, which is better for the Republicans. In the generic congressional ballot test, the Democrats continue their lead over Republicans in the polls out this week. The Real Clear Politics is 8.5 percent Democratic advantage. According to the Gallup poll, Bush continues to get high marks for terrorism: 55 percent, and 43 percent disapproving. But 61 percent disapprove of his handling of Iraq; that's the big number. And 56 percent disapprove of his handling on Hurricane Katrina.

Worse for President Bush, the recent Pew polls show that only 41 percent think that President Bush is trustworthy. That's down 21 points since September of '03. And only 42 percent think that Bush is capable of getting things done. That's down 26 points from three years ago.

Republicans lead Democrats by 8 points in the question of "Which party do you trust in the war on terrorism?" And Democrats have a slight lead of three points in the war of Iraq.

BARNES: That enough polls for you?

KONDRACKE: That's our report for this week.

BARNES: All right. OK.

Anyway, so here's the bottom line about we think the election will shake out. In the House, Democrats need 15 seats to take back control. Mort thinks Democrats will pick up those seats, and I don't. I think they'll hang on, but just barely.

In the Senate, Democrats need to pick up six seats to take over. Both Mort and I think Republicans will retain control.

And in the statehouses, Democrats need four governorships to gain a majority. We both think Democrats will achieve that, or at least come very close this November.

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