The following is a partial transcript of the Nov. 12, 2006, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: And we're back now with the White House view of what can be accomplished with Democrats in control of Congress. Joining us is counselor to the president Dan Bartlett.

And welcome back to "FOX News Sunday".

PRESIDENTIAL COUNSELOR DAN BARTLETT: Thanks for having me, Chris.

WALLACE: With Democrats, as we say, in charge of Congress for the final two years of his term, is the president now a lame duck?

BARTLETT: No, absolutely not. There's a lot of time for this president and this Congress to work together to address the big issues our country face.

And I think that's the real lesson from this election this past Tuesday, is that the American people want to see their political parties in Washington work together to achieve the great goals our country faces right now, whether it be in the war on terror, whether it be keeping the strong economy growing, whether it be addressing issues such as energy independence, issues such as education.

These are the areas where the American people want this president, a Republican, and the Congress, who are now under Democratic control, to work together to achieve, you know, success on their behalf.

WALLACE: So if you say that's the message from this election, that the American people want the president and Congress to work together, is this president — and this is not something he's been known for especially in his six years here — is he willing to compromise?

BARTLETT: Oh, absolutely. And in the conversation President Bush had with Nancy Pelosi, he made the point, and I believe she wholeheartedly agrees, that you don't expect a president or a political leader to compromise on principle. But that doesn't mean you can't find common ground.

President Bush has a strong record as governor of Texas of working with Republicans and Democrats. We passed bipartisan legislation in his first term. whether it be on education reform — the early tax relief had bipartisan support.

There is a way to cut through the partisan rhetoric, put this election behind us and have an opportunity to have a real dialogue without the partisan rhetoric and get some things done.

WALLACE: Let me ask you about a couple of specific questions. Is he willing to consider reform of Social Security without his private accounts?

BARTLETT: Well, the president has made clear that this has to be a bipartisan solution, that Republicans and Democrats have to come together to get something done.

Obviously, the president put forward a proposal he thinks would do just that. The Congress was not prepared to act on that, although I think we did raise the level of awareness amongst the American people about the concerns we face when it comes to entitlement reform.

But what President Bush wants to happen now — and he's tasked his new treasury secretary, Hank Paulson, to begin dialogues with Capitol Hill to see if there's any common ground. Now, President Bush has put his ideas on the table. He wants other people to put their ideas on the table. Then we'll see if there's any common ground.

But I don't think we're in the place where people ought to be ruling things in or out. Everybody ought to put everything on the table.

WALLACE: Is he willing to allow Medicare to negotiate lower drug prices?

BARTLETT: Well, we had this debate during the prescription drug debate when the Medicare reforms went in place two years ago. And the interesting thing about it is we now have some experience.

And what happened was all the estimates saying that prices wouldn't come down were proven wrong. And when Democrats made their point about having a price control system where the government dictated prices, they turned out — the estimates they were making were far higher in costs for the American seniors than what is actually happening today out in America.

WALLACE: So you're saying you don't need to have Medicare negotiate lower drug prices. It's already happened.

BARTLETT: The marketplace is working. We're more than happy to have that debate with Republicans and Democrats, whoever want to talk about it. But the proof is in the pudding. And it's been working. It's been benefiting America's seniors.

WALLACE: Let's talk about the lame duck Congress that starts this week.

BARTLETT: Right.

WALLACE: The president wants John Bolton to be confirmed as his U.N. ambassador. He would also like authorization of his NSA warrantless wiretap program.

Does the president regard whether — how Democrats react on those two issues as a test of their willingness to be bipartisan and to cooperate?

BARTLETT: Well, we'll see. Take both of those issues. One, John Bolton, who's done a remarkable job under the controversy of not being confirmed, but putting in there as a recess appointment. He's proven the critics wrong.

One of his most vocal critics was a Republican senator, Voinovich, from Ohio who completely changed his position after seeing John Bolton work at the United Nations. He's helped pass strong resolutions on North Korea and Iran. He's done a good job.

We believe that both senators from the Republican Party and the Democratic Party ought to give this man the opportunity to continue in that appointment.

WALLACE: But...

BARTLETT: Terrorist surveillance program...

WALLACE: Well, let me just ask you...

BARTLETT: Sure.

WALLACE: ... follow up on Bolton. So to ask the question, if Democrats block him, what message does that send?

BARTLETT: Well, I'm not prepared to say that they are going to block — I know that they have strong rhetoric. Let's have these conversations.

WALLACE: Joe Biden, the new chairman of Senate Foreign Relations, says he's dead.

BARTLETT: Well, it's unfortunate, because as Senator Voinovich has shown — is that if you take a look at his record since he's been in office, he's proven the critics wrong on all the charges they've leveled against him. So let's have a conversation about it. We'll see. And I'm not going to prejudge the outcome of this lame duck.

On terrorist surveillance program, the president came to an agreement with key members of the United States Senate and House. There's judicial oversight. There are safeguards in place.

But it's absolutely critical for the American people to have this tool — for our intelligence officials to have this tool to listen in on enemy conversations with Al Qaeda-affiliated groups.

So we're going to continue to dialogue with both Republicans and Democrats, and we hope that the Democrats would see the utility in having this critical tool in the war on terror.

WALLACE: Former House Speaker Newt Gingrich blistered the president this week for the decision he made to get rid of Don Rumsfeld the day after the election.

Let's take a look at what Gingrich had to say. "If the president had decided to replace Secretary Rumsfeld, he should have told us two weeks ago. I think we would today control the Senate and probably have 10 to 15 more House seats."

I've got to tell you, I talked this week to Republicans who lost around the country, and they're seething about this. They say if the president decided that he needed a fresh look at Iraq, he should have gotten rid of Rumsfeld this summer, not the day after the election — we carried a lot of water, we were defending Rumsfeld all fall, and we ended up losing seats.

BARTLETT: Well, I don't necessarily buy the calculation that he was the difference in the election. But more importantly, I think the president in his press conference this past week made very clear why he made the decision and when he made the decision.

And most importantly, it was because he was not going to inject the leadership of our military during a time of war into the final weeks or throes of a presidential or a midterm congressional campaign. It would send the wrong signal.

WALLACE: But it didn't have to be the final weeks. It could have been August.

BARTLETT: Well, that's still very much in the campaign season. The president and Secretary Rumsfeld hadn't come to the mutual understanding that a new leadership was necessary at that time.

The American people expect their president to make decisions about war and peace based on the national security interests of our country, not the short-term political interests of any political party. That's why the president made the decision when he did. It was the right decision.

WALLACE: So what do you say to Republicans and what do you say to Newt Gingrich who say look, part of the national security of the country — that was certainly the argument you made — depended on having a Republican House and a Republican Senate...

BARTLETT: Sure.

WALLACE: ... and this decision ended up contributing — I think everybody would agree it contributed to the fact that you lost both the House and the Senate.

BARTLETT: Think about the signal it would have sent two weeks before the election if President Bush, desperate to change political polls, would have jettisoned his secretary of defense. It would have looked desperate.

It would have looked like it was made based on political motivations, not on the security interests of our country. And I think that would have weakened the president and Republican support going down the stretch of this campaign.

WALLACE: What about the argument that with James Baker, who's the head of this Iraq Study Group the president's going to hear from tomorrow, and with Bob Gates, the new defense secretary named to replace Don Rumsfeld, that the president is turning to his father — Bush 41's foreign policy team to bail him out of Iraq?

BARTLETT: I think it's not looking at the facts. Everybody keeps saying about Bush 41, 43 and that, and they forget the fact that Vice President Cheney worked in the 41 administration. Steve Hadley, the national security adviser, worked in the 41 administration. Secretary of State Rice, Condoleezza Rice, worked in the 41 administration.

What President Bush has done is pulled together experienced people from Republican ranks, national security credentials that are unquestioned, to help him make important decisions on behalf of the American people during a time of war.

And the president has picked somebody such as Bob Gates because of his credentials and qualifications and experience more so than whether he comes from his father's camp or this camp. He doesn't pay attention to those type of Washington parlor games.

What he is doing is putting people in positions of power that can help us prevail in the war on terror.

WALLACE: As I said, the president meets this week with Secretary Baker and the Iraq Study Group, and I want to ask you about some of the ideas that are coming out that the ISG may propose, because you guys have previously ruled some of these out — some form of partition of Iraq into three autonomous regions.

Is that, as the White House said fairly recently, still a non- starter?

BARTLETT: Well, I think I'd be careful to suggest that that is a recommendation that the group is going to make.

WALLACE: No, I understand. But it's...

BARTLETT: I think it's pure speculation. And I think many observers and experts watching the political process in Iraq would say that that would be a mistake to go that route.

Most importantly, the sovereign government of Iraq believes that that would be the wrong way to go. To partition the country would only increase sectarian violence and strife, not call for reconciliation.

But make no mistake about it, Chris. The president is clear that he is assessing his strategy in Iraq, that we're constantly looking at how we can adapt to achieve it. The Baker-Hamilton Commission will provide important information.

He has also chaired — required his chairman of the Joint Chiefs of Staff, Pete Pace, to do a review. The military leadership in our government is doing an assessment of the strategy in Iraq.

All these things are pushing toward one thing, and that is victory in Iraq, and if there are good suggestions coming from either the Baker-Hamilton Commission or elsewhere — members of Congress, both Republican and Democrat — we want to listen to them.

WALLACE: One other idea — a regional conference involving Syria and Iran. Now, up to this point, the U.S. has not been willing to involve and speak directly to Syria or Iran.

BARTLETT: There's been plenty of conversations with Syria and Iran about their responsibilities in the region, and Prime Minister Maliki, the leader of the Iraqi government, has traveled to Tehran. There are plenty of opportunities...

WALLACE: But the U.S. has not had direct one-on-one talks.

BARTLETT: ... and there are regional conferences that are planned in the future...

WALLACE: Pardon me?

BARTLETT: There are regional conferences already planned to take place, I believe, in Jordan later this year in which there will be all kinds of conversations. including the future of Iraq.

WALLACE: Is the U.S. willing to talk — the U.S. willing to talk directly to Syria and Iran about trying to find some regional solution to Iraq?

BARTLETT: We have spoken to Syria directly. Former Deputy Secretary of State Richard Armitage on our behalf went and spoke about the responsibilities they have in Iraq, so...

WALLACE: And Iran?

BARTLETT: But, Chris, we've sent very clear signals. Iran knows its responsibilities. I'm not going to today prejudge any of the recommendations that will come.

But what's important more than anything else is that the political parties within that country in Iraq to reconcile their differences, which is really becoming the steam behind the sectarian violence we're seeing.

The American military is there to continue to go after terrorists, to help them secure that country. We are welcoming all ideas to the table.

And one thing that's important now that Democrats are the majority party in the House and the Senate is they now are no longer the party of opposition. They are now a party with greater responsibility.

And it's a moment of testing for the Democrats to come forward with common-sense solutions to America's problems. And that will be the early test we'll see of the Democratic Party.

WALLACE: Mr. Bartlett, we're going to have to leave it there. Thank you so much for coming in and sharing part of your Sunday with us.

BARTLETT: You're welcome.