The following is a partial transcript of the Dec. 24, 2006, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: At this time of year, many of us reflect on the spiritual side of life. For more on that, we turn to the archbishop of Washington, Donald Wuerl, and from Raleigh, North Carolina, Anne Graham Lotz, the daughter of Billy Graham and founder of AnGeL Ministries.

And merry Christmas and happy holidays to both of you.

ANNE GRAHAM LOTZ: Merry Christmas.

ARCHBISHOP DONALD WUERL: Well, thank you very much and the same to you.

WALLACE: Let's start with the big picture.

Ms. Lotz, as you look across America, what is the spiritual health of this country?

LOTZ: I think Americans are very caught up, for the most part, in spirituality. The concern that I would have is that it's a spirituality many times devoid of God; and maybe involving a god they make up, but devoid of the one, true living god.

And I think, you know, this is Christmas Eve, the day before Christmas, and it's a wonderful time to celebrate the fact that God loves us and has sent us his son, Jesus, as a baby in the manger at Bethlehem.

And I find that Christians, we talk a lot about things, and Americans, we are very spiritual and have a lot of faith, but it's the object of our faith that concerns me, because, you know, I can have a lot of faith in this chair. I sit down in this chair and it collapse under me. And nothing wrong with my faith, but what's wrong is the object of my faith.

And I think Americans — you know, we're a people of faith, but my concern is on what our faith is placed and the object of our faith. And it's very important to examine the object of your faith, because, you know, when the pressure comes on and when we go through national crises or personal crises, it's not our faith that carries us through so much as the object of our faith and our trust in, I believe, the person of Jesus Christ.

WALLACE: Archbishop Wuerl, we see a coarsening of society. We see, quite frankly, especially at Christmas, a great deal of materialism.

What is the state of our spiritual union at the end of 2006?

WUERL: I think where we are is where, probably, we have always been. There's a struggle between the spirit and the world in which we live.

The constant challenge is not to allow the spirit, not to allow that spark of the divine within us to get overwhelmed by all of the life and all of the activities and all of the energy that are a part of simply living today. But it's always been that way.

Christmas provides us a time to reflect, not just individually but as a society, a culture on how important is it to have relationship with God.

And Christmas simply says to all of us, even in the midst of all of the commercial aspect of it, at the heart of Christmas is the recognition that God has come into our lives, into our world, and that God has offered us a relationship — a living, personal relationship.

Out of that can come a whole new way of looking at life. We can transform this world. We can transform it by the spiritual energy, by the power that is the gift of God's spirit.

I think that's what Christmas is all about.

WALLACE: Even on Christmas Eve this is still a Sunday morning talk show, so let's discuss some political issues that have a heavy moral component.

One of the subjects that's been discussed a lot this year is the best way to treat immigrants who come into our country illegally.

Archbishop Wuerl should we send them home? Should we build fences to keep more from coming into this country? Should we create a legal path to citizenship? How do we treat these 11 million immigrants who've come into this country illegally?

WUERL: There are two things that I think have to be looked at when we address a problem of this magnitude that already has a long history in our culture.

I think we want to make sure that we respect and follow the law, because we're a nation of laws.

But, secondly, when we're dealing with a concrete situation that already exists, don't we have to look at people with a full awareness of their human dignity? Don't we have to address the human dimension of the situation today?

Whatever we come up with, whatever solution we have politically, whatever solution we come up with socially has to take into consideration the human quality, the dignity of all of the people who are now in our country.

We, obviously, have to devise a better way of regulating who and how people come into the country. But when we're dealing with people who are already here, we have to treat them with that human respect and dignity to which every one of us has a claim.

WALLACE: Ms. Lotz, let me ask you the same question, because I'm sure a lot of people are going to say, "Well, yes, we want to treat them with dignity, but they did break the law and they didn't wait in line as the law would have it. They crossed our borders."

What is the moral way to deal with the 11 million people who are in this country illegally, and the millions more who would like to come?

LOTZ: You know, Chris, if you don't mind, I'm going to address it more as a religious leader.

And one of the things I try to do when I go to the polls to vote, I vote for people that I believe have character, who have moral values based in the Scripture. And then I just pray for them and pray that they will have God's wisdom to know how to handle some of these incredible problems.

So for me, if you don't mind, I'd rather not come down on a political side.

But I would say that for myself each one of these people that comes into this country, I don't know where they've come from, whether it's Central America or someplace in Africa, but I wonder if while they're here, if God would allow them the opportunity to hear what we call the good news of Jesus Christ.

And so as a religious leader, I'm more concerned with their souls and that while they're here they have the opportunity to hear about what sometimes they describe as America's god, and they think of Jesus identified with America, which to me is a privilege and a blessing.

And so, I want to tell them that God loves them — every single one of them. It doesn't matter if you live in the White House or if you live in some immigrant's shack next to some tobacco field, that God loves you. And he loves you so much that he sent his own son, Jesus Christ, to die on the cross to take away your sin; that if you placed your faith in Jesus, you would not perish but have everlasting life.

And that's a message that I would be concerned that I would get across to everyone that I come into contact with, whether the person is an illegal immigrant or a legal immigrant or an American born and bred. And it's a message that I want to try to keep my focus on.

And then, at the same time, pray for our leaders who handle some of these incredible problems that there's just no easy solution to this.

And you would say, "Send them back because they haven't, you know, obeyed the law." At the same time, you see their individual history and their individual family situation, and I don't know how we can tear up people's lives like that.

So I really can't give you a clear answer. I just know that God loves every single one of them.

WALLACE: Ms. Lotz, I want to ask you about another political question with a lot of moral implications. And before I do, how are your mom and dad, who so many Americans have such admiration for?

LOTZ: Chris, thank you for asking.

And I think my daddy's doing well. He's just returned from Mayo Clinic, where he's had some procedures for macular degeneration. And my understanding is that they've arrested the progression of it. So we're rejoicing over that.

I believe in few days he may once again be able to read a large- print Bible, which he's not been able to read for a while.

My mother has not been doing so well. She's very weak, but actually very feisty and her mind is sharp and clear. And they're both looking forward to celebrating Christmas — all of us looking forward to once again — as Archbishop Wuerl said, that we just need to keep our focus at Christmas and not allow some of these other things to distract us, and keep our focus on Jesus.

WALLACE: Well, let me ask you about that — to pick up on that. Because I know one of the diseases that your dad suffers from is Parkinson's disease. If we — and I want to talk to you about stem cell research.

If we could take some of these embryos that are just thrown away and use them to help your remarkable father and so many others who suffer from these terrible diseases, why wouldn't that be a wonderful outcome?

LOTZ: Actually, because an embryo is a tiny human life.

And, actually, my husband has diabetes and now he's in kidney failure. He has diabetic retinopathy, so he's going blind. My son has cancer. My mother has degenerative arthritis. My daddy has Parkinson's.

And so if I made a decision like that based on my personal feelings, I can tell you, I'd be all for it.

But I can't, because I can't get away from the fact that embryos are tiny, little human beings. They're tiny little people. And so it doesn't matter if an embryo — whether you've collected it for some other reason or whether it's still in someone's body, an embryo is a tiny human person. And you cannot take human life to make somebody else's human life improved.

It's just — to me, morally that's not right.

And I would — I'm for stem cell research, not embryonic stem cell research.

WALLACE: Let me bring Archbishop Wuerl into this as well.

As you know, this was a big issue in the campaign. And I think many people find it hard to understand why it's wrong to take frozen embryos, which are in many cases — thousands of cases — are simply going to be thrown away, and not to use them to try to cure people from pain and illness.

WUERL: Well, I think Ms. Lotz framed this very, very well.

What's at the heart of the issue is are we ever going to so disregard the intrinsic integrity of the human life and come to the position that we would want to use one life for the benefit of another.

We have to — we have to start with the recognition human life is a gift from God. We — we're the stewards of that great gift. It's a wonderful gift. And what a great time, at Christmas, to reflect on that, the great gift of Jesus, God come among us, was to reinforce how important it is that we would recognize we have a soul; we have a relationship with God; we're different than any other form of life.

Every human life has this wonderful value because it has the possibility, the potential of living forever with God.

So we never want to get to the point where we say, "Well, let's weigh what would be a value to me if I destroy that human life; what would be a value to the culture if we were able to eliminate certain lives, even if they have some sort of commercial value?" No, the life is a gift, and it's that life we want to always — we want to always lift up for everyone to recognize its worth and value.

WALLACE: We have about a minute left, and I'm going to ask both of you to engage in a Christmas miracle, because I know it's hard for preachers to say things quickly when they have a microphone.

(LAUGHTER)

Can you talk, about 30 seconds.

Let's start with you, Archbishop Wuerl: What is the good news? What's the message of the Christmas season?

WUERL: The message of Christmas is God loves us. And God has sent his son, his word, to be with us. And that word is a transforming word. And it says, "Take my love, and with that love, re-create this whole world. You can transform this world into a kingdom of grace and peace and love and justice and compassion and understanding."

This is the great Christmas gift. It's in the Lord Jesus. And the Lord Jesus has been given to us as one of us. And he says to us, "Bring peace and love to the whole world."

WALLACE: And, Ms. Lotz?

LOTZ: I just would say amen to that, Chris.

And I would also say that Bethlehem and the Christmas story is not just about a baby. It's about the incarnation of God. And when you look at the little face of the baby in the manger, you're looking into the face of God. Jesus is God made flesh.

So if you want to know what God is like, you just look at Jesus, because he's exactly like Jesus.

And he has come to express God's love for you and God's love for me that, through God, it's not just our whole big world, but my personal, private world can be transformed through my faith in Jesus, because God loves me and when I invite Jesus to come into my heart to take away my sin, I have peace; not just on Earth, peace in my heart with God, peace with my fellow man, I have a purpose to live for.

And that's wonderful good news in our world of uncertainty.

And I have hope for the future; I know where I'm going when I die.

WALLACE: Ms. Lotz, Archbishop Wuerl, we want to thank you both so much for sharing part of your holiday with us. And merry Christmas to both of you.

WUERL: Merry Christmas.

LOTZ: Merry Christmas. Thank you.

WALLACE: Thank you both for being here.

Coming up: On the debate within the