Transcript: Hillary Clinton on 'FOX News Sunday'

The following is a partial transcript of the Feb. 3, 2008, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: And we're back live from Fox News election headquarters in New York. Joining us now, the Democratic frontrunner as we head into Super Tuesday, Senator Hillary Clinton, who comes to us from the campaign trail in St. Louis.

And, Senator, welcome back to "FOX News Sunday."

DEMOCRATIC PRESIDENTIAL CANDIDATE HILLARY CLINTON: It's good to talk to you, Chris. Thanks for having me back.

WALLACE: Well, as Senator McCain rightly pointed out, you've both got tough nomination fights before you even face the possibility of facing each other, but there are some sharp issues there, so let's talk about them.

First of all, the economy. Why would you be better fit than Senator McCain to turn this economy around as we seem to be headed for a downturn, if not a recession?

CLINTON: Well, it is the case that the economy is becoming a greater and greater concern because, obviously, it's not working for the vast majority of Americans.

I've been out there since March talking about this mortgage crisis and urging much more aggressive action to stem the foreclosures that are beginning to cascade around the country.

That's why I called for a moratorium of 90 days to try to stop foreclosures and help people work out being able to stay in their homes, and freezing interest rates for five years, looking for ways to try to get the housing market stabilized, because I think that we've — you know, we have had the monetary side. The Fed has reduced interest. They may do some more. We don't know.

But at some point you've got to have government action to really tackle these problems. And the stimulus package is a start, but it's not nearly enough. What we have to do is have an economic policy that once again creates jobs with rising incomes.

We need to look at clean green energy. We need to have a much greater balance in our federal government spending.

Obviously, I disagree with Senator McCain and the Republicans about the tax cuts for people making more than $250,000 a year. I think we should let those expire and use that money on universal health care and other needs that people have that are really directly related to the state of the economy.

WALLACE: Let's talk about the other big issue that the two of you have identified as a difference. And that, of course, is the war in Iraq.

At a recent debate, you had an interesting exchange about the war. Let's take a look at that, Senator.

(BEGIN VIDEO CLIP)

QUESTION: In light of the new military and political progress on the ground there in Iraq, are you looking to end this war or win it?

CLINTON: I'm looking to bring our troops home starting within 60 days of my becoming president.

(END VIDEO CLIP)

WALLACE: Senator, you started calling for pulling U.S. troops out of Iraq in November of 2005. If we had followed your policy, wouldn't Al Qaeda by now be able to say that they had driven the U.S. out of Iraq?

CLINTON: You know, Chris, I think we have to look at this in the context in which it's taking place. The so-called surge was designed to give the Iraqi government the space and time to make the tough decisions that only the Iraqis can make for themselves.

It's my assessment that only now is the Iraqi government starting to grapple with problems that many of us have been pushing them to resolve for five years.

And the problem is that they have up until now believed that they didn't really have to take any tough action, that President Bush had given them basically a blank check, that the American military would be there to protect them and protect other parts of the country.

And I think that putting forward a very clear objective of beginning to withdraw our troops is the best way to get the Iraqis to take responsibility. So I think that it's clear there is no military solution.

We can stay for a day, a month, a year, 10 or 100 years, as Senator McCain has said would be fine with him, but I don't think that's the answer. I think we've got to bring our troops home and really require and put the pressure on the Iraqis to make the tough decisions that they have to make.

WALLACE: Well, let me follow up on that, if I can. Last September when General Petraeus testified before Congress about the surge working, here was your reaction. Let's take a look.

(BEGIN VIDEO CLIP)

CLINTON: I think that I — the reports that you provide to us really require the willing suspension of disbelief.

(END VIDEO CLIP)

WALLACE: Senator, since then, the violence is clearly dropping, has continued to drop. Baghdad is sharing oil revenue with the provinces. They have passed a law to allow at least some Sunnis back into the government.

Clearly, there are a lot of problems, but why are you so determined to declare defeat?

CLINTON: Well, that's not at all what I'm doing. I think there's a difference between tactical success on the ground — and I've been, you know, very positive about what our young men and women in uniform can accomplish, especially if we put them in in sufficient numbers — and strategic success.

And I think you're overstating what is happening in Iraq. There's a lot of problems getting money from the central government into the Sunni areas. The oil bill hasn't been resolved yet.

De-Baathification is tied up in their Parliament because there is such a reaction to it by many of the Shiite factions. You know, this is, obviously, a fractious and often contentious government.

And I think we would not even see the small signs of progress unless they knew that there was an election going on in the United States and one of the biggest issues was whether we would stay for up to 100 years or whether we would start bringing our troops home.

I personally believe there is no American military solution. And it is imperative that we focus our attention on the political and diplomatic side of this equation. So beginning to withdraw our troops is not only the right thing to do for our troops, but it is also the right political strategy for us to pursue.

WALLACE: Let's turn to the issue immediately at hand, and you've got an election or a series of elections in a couple of days, Senator.

None of the contests, the Democratic contests, on Super Tuesday are winner take all, so the result is that in most states, both you and Senator Obama are going to win a lot of delegates.

Doesn't that mean that this contest is going to go on for some period of time, even months after Super Tuesday?

CLINTON: Well, we'll see after Tuesday, Chris. But you're right that the rules in our party really are much more challenging.

This whole Super Tuesday national primary is something nobody's ever gone through before. We're kind of making it up as we go. So it's hard to sit here and predict what will happen on Tuesday or what happens the next day.

But I'm very excited and encouraged by the response I'm getting across the country. You know, I've had huge crowds. I've had a lot of people coming forward to support me. There seems to be a lot of great activity going on on the ground in all of these states. So we'll see what happens on Tuesday.

But obviously, this is a very contested race for the Democratic nomination, and as I've said many times in the last few days, I think for the country, looking at the debate the other night, seeing the two of us there was such a thrill, because we represent — we have lived the progress that has been made in America. Each of us has broken barriers.

So whoever wins the nomination will change American history. The question is who has the strength and experience to change America for the better, to put us on the right path. And I'm going to keep making that case as many times as I can between now and Tuesday.

WALLACE: Senator, let me ask you about the horse race, though. Most of the national polls indicate you're still leading but that Obama has closed the gap, has reduced your margin by a significant amount in the last couple of weeks. How do you explain that?

CLINTON: Oh, this is always going to be a close election, Chris. You know, we have two people left. Both of us have passionate supporters. I think it's exciting. You know, we're out here making our case.

Obviously, I think I have the better case to go up against the Republican nominee, particularly if it is Senator McCain. But I believe this has revitalized the Democratic Party.

Each of us is bringing hundreds of thousands of new people into politics. We've had six contests. I've won four of them. We're in a very good position. But you know, we don't count the votes until Tuesday.

And I think all of us have learned that these polls — they're maybe snapshots in a very limited period of time, so what's most important is who decides to vote. And I hope a lot of people watching will turn out and do exactly that.

WALLACE: Senator, the high profile your husband has had on the campaign trail has raised, as you no doubt know, new questions about the issue of a co-presidency.

Have you thought if you were to win how you would set up the White House to make it clear who was the boss?

CLINTON: Oh, I don't think there'll be any doubt about that, Chris, you know, just as there wasn't any doubt that he was the president and the commander in chief. And all of us, including everyone in the White House, and that was me as well, were there to support his efforts.

That's what it will be when I'm in the White House. I will be the decision-maker. Obviously, I'm going to seek advice from a wide range of people who have expertise and experience that will be helpful in making decisions, and that certainly includes him, because I think he'll play a very important role in representing our country around the world.

But at the end of the day, I know very well, having been there for eight years, that the weight of decision-making falls on the president. I'm ready to accept that responsibility. I don't believe in government by advisers.

I believe we need a president who is a hands-on manager of the government. I think that's what I offer, and that's what I intend to do.

WALLACE: Let me ask you about another aspect of your husband's role. There was a front page story this week in the New York Times reporting that in 2005, your husband flew to Kazakhstan with a Canadian businessman, and he helped the businessman, according to the report, get a huge uranium deal by praising the dictator, Nazarbayev, who runs the country there, and then a few months later, that businessman, the Canadian businessman, made a $31 million donation to the Clinton Foundation.

Now, whether it was a quid pro quo or not, are you going to tell your husband if you become president to cool it, to knock off those kinds of dealings?

CLINTON: Well, Chris, that is a very one-sided and inaccurate description of what actually occurred.

WALLACE: Well, it's basically what the New York Times said.

CLINTON: Well, let me set the record straight. He went to Kazakhstan to sign an agreement with the government to provide low- cost drugs for HIV/AIDS, a growing problem in central Asia.

While he was there, he met with opposition leaders and certainly spoke out about, you know, the hopes that we have to have a good relationship with that country.

I have been on record for many years against the anti-democratic regime, calling for changes, standing against efforts that would bring them into positions of leadership in the global community without their making changes.

So I think it is clear that I will stand on my own two feet. I will say what I believe. And I will be a president who pursues policies that I think are in the best interests of our country.

WALLACE: Well, if I may just briefly follow up, that's exactly the case. You had spoken out against Nazarbayev's policies, but President Clinton, former President Clinton, attended a dinner at which he, in fact, said he thought that Nazarbayev could lead an organization involved with regulating democracy around the world.

And the question is raised if you're president and he's the former president, and he's conducting and making statements that are out of step with your policy, isn't it going to be awfully confusing?

CLINTON: Well, Dick Cheney also went to Kazakhstan and praised the current regime. You know, you sometimes have to use both carrots and sticks to move these regimes to do what they should be doing.

But I don't think there's any doubt about where I stand and what I intend to do. Obviously, these are difficult problems that require seasoned leadership.

We have a lot of interests in that part of the world with natural resources and trying to make sure there's a bulwark against spreading extremism.

So it is important that you walk the line to try to be very firm about our support for democracy, to do everything possible to change these regimes, but recognize that these are not, you know, often easy calls, because the last thing we want is to see instability, perhaps the rise of an extremist regime, alliances with bad actors.

So you know, I think that it's something that I understand and I'll be able to navigate through as president.

WALLACE: And finally, Senator, we've got about 30 seconds left for you to give your answer to the big question — Patriots or Giants?

CLINTON: Well, Chris, we have a Super Bowl Sunday night and we have a Super Tuesday on Tuesday, and I'm hoping that the New York team wins both and wins big.

WALLACE: All right. Thank you, Senator. We want to thank you so much for talking with us, giving those double predictions, political and sports. And safe travels on the campaign trail, Senator.

CLINTON: Thanks a lot, Chris.