The following is a partial transcript of the March 4, 2007, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Wall Street just suffered through its worst week in more than four years. The Dow Jones industrial average dropped 533 points for the week, or more than 4 percent. So what does that tell us about the state of our economy?

For answers, we turn to Congressman Charlie Rangel, chairman of the powerful House Ways and Means Committee, who joins us from his home state of New York.

Congressman Rangel, how do you explain the drop in the stock market this week? Do you see it as just a blip or the start of a downward trend?

REP. CHARLES RANGEL, D-N.Y.: Well, of course, we hope it's a blip, and I feel good that there has been a recovery. But I think it really shows the vulnerability of a great nation like the United States when we owe trillions of dollars to foreign governments and how they can manipulate, if they wanted to, our own markets over here.

So it just seems to me that dismissing the monies that we owe to China and owe to other parts of the world is not a healthy thing for us to do as a nation. It makes us extremely vulnerable.

And we should not look at this thing as Republicans and Democrats, or the executive and the legislative, but try to come together and see whether we can get a handle on this. And I might currently add dismissing the trillions of dollars that we expect to spend in Iraq doesn't help the projection at all.

WALLACE: Treasury Secretary Paulson is on a trip to China right now. What should he be doing when he gets to Beijing?

RANGEL: I'm certain that the secretary already has his cue cards when he comes back. This is an ancient society. It's very difficult for them to understand our economy, that their pirating and stealing of our products is something they're working on. It's the same thing.

But the Congress, Republicans and Democrats, are going to start getting tough on China. We're going to expect our United States trade representative to enforce international law.

And the fact that they have an ancient history and that they have to learn doesn't mean that — United States consumers are paying for the research and development that we have in intellectual property. And you steal from them, you are stealing from Americans.

WALLACE: Congressman, let's talk about the state of the economy, because there has been a sharp decline in business orders for durable goods. The manufacturing sector is in a slump. The housing market is weak.

This week, earlier in the week, former Fed Chairman Alan Greenspan said that it's possible — not probable, but possible — that the economy could slip into a recession by the end of the year. Where do you see the economy going at this point?

RANGEL: Well, I don't know. On the Ways and Means Committee, we have to respond to what our economists — indeed, we have to respond to the administration and what they tell us.

But you know, when you have these economists and the chairman of the federal reserve, they tell you on one hand what could happen, and on the other hand it may not happen, so it puts us in the Congress the same place that it puts most Americans.

The thing that gets to most of us in the majority is that it doesn't seem to take into effect the number of Americans that already are on hard times, the number of middle-income people that have to have two jobs, the expansion of the poor into the ranks of poverty, and the fact that we still talk about protecting the richest people in this country.

It seems like we're living in two different worlds, one where they tell us — the secretary of the treasury — not to worry, that the economy is secure, and the other where we have 48 million people who don't know from day to day where they're going to get health insurance.

It seems like we ought to cut out the partisanship, come together as a nation. The president only has less than two years in this administration. I think we ought to stop fighting, sitting down and evaluate what would happen if the economy really does get hit hard.

WALLACE: But forgive me, sir, that seems to be more of a political answer than it is an economic answer. As the chairman of the House Ways and Means Committee — and I agree with you, there's a lot of conflicting evidence out there as to strength in some areas, weakness in others — do you have no sense of where the economy is headed, whether it is weakening?

RANGEL: Well, I don't know whether you're familiar, Chris, with the jurisdiction of the Ways and Means Committee, but it is true, as it relates to raising revenue — that is our jurisdiction — Social Security, Medicare, which is health care for the aged, and trade. These are the things that we have legislative jurisdiction over.

But we do not formulate the direction in which the economy is going. It is the president of the United States who is supposed to advise us as to what is needed legislatively, and we don't get much sound direction from the executive branch. So you share with me where you want your Congress to take you.

WALLACE: Let me ask you, though, because you do now have a Democratic control of Congress, as chairman of ways and means, do you feel it's necessary to do anything over the course of this year to try to bolster the economy?

RANGEL: Well, one thing that we do want is to have a fair and equitable tax system and see what impact that would have on the economy. One of the things that we do know is that the president's tax cuts for the wealthy increase our debt to China and other parts of the world, and we're supposed to build our way — grow our way out of that.

We also know that we can't control the war. Certainly, the hundreds of billions of dollars that we're spending in the Middle East at this point in time — there's nothing that the Congress is going to be able to do.

And so we don't direct the economy. We have one government, one president, and what we do is try to help to give direction if it appears as though it's off keel.

But you cannot possibly think of an area in which the House and the Senate or both, especially with the president with the right to veto, that we could take claim for what is happening to us and what could happen.

You know, we only have one country, even though we have three branches of government. We could be in the majority, but it doesn't mean that we can redirect this president.

WALLACE: I just want to make one thing clear, because you talked about the fact that we have increased our debt and the amount of money that we are now having to borrow from foreign countries because of the president's tax cuts for the rich.

RANGEL: Yes, yes.

WALLACE: You're not talking about doing anything about that, are you?

RANGEL: Well, we certainly are, in terms of talking about pay as you go, a part of our budget.

WALLACE: But are you talking about specifically, sir, rolling back the tax cuts, the Bush tax cuts?

RANGEL: No, we're not talking about that, but we are — we may be talking about redirecting those tax cuts. You know, we have 23 million people in this country that have Alternative Minimum Tax burdens, close to $1 trillion over the next 10 years, and that's not even on the president's radar screen.

And so within the system, there can be more equity without increasing the tax burden.

WALLACE: So you're suggesting that you might do something about the president's tax cuts for the wealthy before they expire in 2010?

RANGEL: Well, all I can say at this point in time — that we in the majority and the minority on the Ways and Means Committee are working very closely with the secretary of treasury, Hank Paulson, not only on taxes, but on Social Security and trade and a lot of other areas, to see whether we can find more equity within the system without having partisanship.

So taxes is one of the issues that we're looking at, yes.

WALLACE: So it's on the table.

RANGEL: Everything is on the table. How much we can accommodate each other is something else.

But I think the American people have said in the last election not only were they against the war, but they were against the partisanship that has been building up in the Congress for the last decade.

WALLACE: Congressman, we've got a couple of minutes left, and I'd like to do a lightning round with you — quick questions, quick answers — if I might.

House Republicans are demanding a vote on the House floor about appointing Congressman William Jefferson, who's the subject of a federal bribery investigation, to the Homeland Security Committee.

If Speaker Pelosi felt that Congressman Jefferson couldn't serve on ways and means, how can you put him on homeland security, where he would have access to top secrets?

RANGEL: I don't know the thinking of Nancy Pelosi. She is the speaker. She makes the decisions. And you have to realize one thing, that even in the Congress, a person is innocent until they have been proven guilty. He's not been indicted of any crime.

And so the only thing that you and I have to talk about is what we read in the newspapers, what has been leaked by the FBI. The question should be why would the FBI leak all of this information and not indict. And if they can't indict, why don't they move on?

WALLACE: Let me move to another subject. Two of New York's top African-American politicians ripped Senator Clinton this week for her attack or the camp's attack on Barack Obama.

And they suggested that may be the reason that Obama has surged ahead of Clinton among black voters in at least one poll. Congressman, are they right?

RANGEL: I read that. I can't speculate as to why there would be an increase in the support, black support, that the senator would be getting. But I think it's good. I think it's healthy.

And voters are fickle and have different reasons for supporting or not supporting candidates. I think it's exciting.

WALLACE: When you say it's exciting, as a New Yorker, are you committed to Hillary Clinton? And wouldn't it be tough for you to sit out the most serious candidacy ever by an African-American politician, and certainly the one with the most serious chance of winning? Wouldn't it be tough for you to sit that one out, sir?

RANGEL: I will not be sitting this one out, so I don't know where you got that idea.

WALLACE: Well, I meant not supporting him.

RANGEL: That's not sitting out an election. Senator Clinton probably will be the favorite daughter of New York state. I am the dean of the New York State Democratic delegation and so there's no question that we will be coordinating a campaign for Senator Clinton.

I have to admit that I did encourage Senator Barack to actually get involved in the campaign. He's young. He's dynamic. And if he doesn't succeed, he gets another opportunity to run for it. But I told him that if he didn't run, he would hate himself for not testing the waters.

WALLACE: Congressman Rangel, we want to thank you so much for coming in and talking with us. And please come back, sir.

RANGEL: Thank you so much.