Updated

The following is a partial transcript of the Aug. 26, 2007, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Joining us now, two central figures in the September debate over what's next for the U.S. in Iraq. We'll talk with Democratic war critic Senator Jack Reed in a moment, but first the Senate's Republican leader, Mitch McConnell of Kentucky, who is in his home state today.

Senator McConnell, let's start with comments you made last May. Here they are.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, R-KY.: The handwriting is on the wall that we are going in a different direction in the fall, and I expect the president to lead it.

(END VIDEO CLIP)

WALLACE: Senator McConnell, the fall is almost here. A national intelligence report out this week indicated some military progress but continued political stalemate.

It seems pretty clear that General Petraeus is going to give us the same kind of mixed report when he comes up to Congress in mid- September.

Do you feel that we still need to go in a different direction?

MCCONNELL: Well, I think we're going to find out what General Petraeus has to say, in fact, in September rather than trying to prejudge what he may recommend, but I do think there's a good chance that in September we'll go in a different direction.

I don't think that means an arbitrary surrender date, but I think it's entirely possible that the president will lay out a strategy that takes us into a different place, which hopefully, at the end of the day, ends up with some American troops forward deployed in the Middle East at the end of this draw down that many of us are anticipating over a period of time.

It leaves us forward deployed in the Middle East to still be in a position to go after Al Qaida and, of course, to provide some kind of check mate against Iran down the road.

WALLACE: So are you suggesting that the president may at least lead the way or give some indications of beginning to draw down and change our mission in Iraq in September or sometime this fall?

MCCONNELL: Well, I don't know what the president's going to say in September, but I wouldn't be surprised if he led us in a different direction, as I predicted last May, and I think that's still a good prediction in August.

WALLACE: At least seven Senate Republicans have, to varying degrees, backed away from the president's strategy.

With reports from Iraq, these mixed reports, of military progress but political deadlock, do you think that there's a chance that even more Republicans will move against the president now?

As they're back home — and you're talking to them, I'm sure — while they're on August break, is there any chance that Senate Republicans might stampede the president and force him to change his policy in Iraq?

MCCONNELL: Look, I think the big news in August, frankly, is that the critics of the surge are now going to Iraq over this past month and admitting that the surge is working. So we've had military progress. There's no question about that.

The political side — the Iraqi government is still pretty much a disaster. I mean, they haven't done any of the things at the central government level that we had anticipated.

There is some evidence of reconciliation at the local level in various parts of the country. So I think, clearly, progress has been made.

I think Republican senators, my members, are interested in what the facts are. They didn't prejudge, most of them — prejudge the surge before it was under way and I think are actually interested in what the facts are.

And I think the best time to determine the factual situation is when we get the official report from General Petraeus and from Ambassador Crocker in September.

WALLACE: Well, Senator, one of your colleagues who didn't wait for that was Senator John Warner, who this week, after coming back from Iraq, made a very public statement saying that he believes the president should pull a token amount of forces, perhaps 5,000, out by Christmas.

Let's take a look at what he had to say.

(BEGIN VIDEO CLIP)

SEN. JOHN W. WARNER, R-VA.: Take 5,000, could begin to redeploy and be home to their families and loved ones no later than Christmas of this year. That's the first step.

(END VIDEO CLIP)

WALLACE: Senator Warner was saying that this would send a message to the Iraqi government.

One, is that premature to make that kind of a call before General Petraeus has a chance to report? And does that make it easier for other Republicans to jump ship?

MCCONNELL: Well, Senator Warner called me Friday afternoon to underscore that he still supports the president, that he is not in favor of a surrender date.

And even though he made a recommendation that we begin to draw down some level of troops, frankly, I think a lot of my members would be surprised if there was not some level of draw down over the next coming months. So I didn't find that all that newsworthy.

I thought much more newsworthy in August were Democratic critics of the war going to Iraq and coming back admitting that the surge, which they said would be a failure, is actually working.

WALLACE: Well, we're going to get into that a little bit later with Senator Reed after we finish with you, but you said a couple of moments ago that Prime Minister Maliki has been pretty much a disaster.

MCCONNELL: Yeah.

WALLACE: Would Iraq and would the United States be better off with a new government and a new prime minister?

MCCONNELL: Well, we might, but it's a democratically elected government, and I don't think we can dictate to them who they choose.

But by any objective standard, any objective standard, the one thing that there is broad bipartisan agreement on in the United States Senate is that the Iraqi government has been a huge disappointment — haven't passed the oil law, haven't had local elections, haven't finished the de-Baathification process.

All of the kind of political compromises that we were looking to them to make, they have not yet made. Maybe it's not too late, but it's time they get about it.

WALLACE: Well, let me ask you — he directed most of his fire at Democrats, but Prime Minister Maliki this morning in Baghdad talked about American politicians who treat Iraq as if it's one of their villages.

MCCONNELL: Well, you know, he's free to say whatever he will, but I'm — everyone knows that the United States and its incredibly effective military have given this government four years, an opportunity to get their act together, if you will, to do the kinds of things that they need to do to pull the country together.

And by any objective standard, they haven't done it yet. They deserve to be criticized.

WALLACE: I want to ask you — and I want to go back to this national intelligence estimate which, as we point out, came out this week.

And it did say that if the mission of U.S. troops is changed and diminished as Democratic critics want that the security gains made so far will erode.

On the other hand, it had this to say — and let's put it up on the screen — about what happens if the surge continues. "Iraq's security will continue to improve modestly during the next six to 12 months, but levels of insurgent and sectarian violence will remain high and the Iraqi government will continue to struggle to achieve national-level political reconciliation and improved governance."

Senator, is it worth continuing the surge if that's the most we can hope for?

MCCONNELL: Well, the surge can't go on forever. We don't have the manpower to do that. And I think the surge is going to end over a period of time.

The main thing to remember when we get into the nitty-gritty of what the status is of the war at one point or another in Iraq is the overall effort that we've made since 9/11 has protected us here at home 100 percent — not a single attack on the United States after 9/11.

They were after us before then, but they haven't been successful back here since then.

We can't maintain this level of commitment in Iraq forever. They know that. It's time for their central government to start making the kinds of decisions and give the country a chance to have the kind of political reconciliation that happens down the road.

And this level of military involvement is certainly not going to be there indefinitely.

WALLACE: Senator McConnell, we're going to have to leave it there. We want to thank you, as always, for joining us today.

MCCONNELL: Thank you.

WALLACE: We turn now to a point man for Senate Democrats, Jack Reed, who's been to Iraq 10 times, more than any other senator. And he joins us from his home state of Rhode Island.

Senator, as Senator McConnell mentioned, a number of Democratic war critics, including Senators Durbin and Levin, have come back from trips to Iraq and said the surge is making progress.

Let's watch Congressman Brian Baird of Washington, who, in fact, voted against invading Iraq in the first place. Here it is.

(BEGIN VIDEO CLIP)

REP. BRIAN BAIRD, D-WASH.: I think the additional number of troops is buying important time for not only security and stability from a military sense, but to allow the Iraqis to begin to work through some of their political difficulties, which are significant and not to be minimized.

(END VIDEO CLIP)

WALLACE: Senator Reed, we're hearing from Democratic critics of the war — why cut off the surge when it does seem to be showing results?

SEN. JACK REED, D-R.I.: Well, first, Chris, the surge will end next spring in April 2008 because we cannot simply supply additional forces at that level. That's the testimony of Admiral Mullen, the next chairman of the Joint Chiefs of Staff. So the issue is what do we do beyond the surge.

Second, our forces are doing a magnificent job. They're on the ground. They're making progress. But unfortunately, that progress is highly reversible because there's been no political buy-in by the Iraqi political leadership, no political progress.

And frankly, the whole premise of the surge when President Bush announced it was this would buy space and time for the Iraqi government to take those political steps necessary.

And as the NIE indicates, those steps haven't been taken and they're unlikely to be taken, so we have to start thinking of what we do as a nation after the surge. It will not provide, I think, a permanent solution. In fact, I think...

(CROSSTALK)

WALLACE: But, Senator Reed, let me just — on that particular point of political progress, let's hear again from Congressman Baird who just came back from Iraq. Here it is.

(BEGIN VIDEO CLIP)

BAIRD: I've come to believe that it may well be that talk of precipitous withdrawal creates a certain insecurity and instability that actually makes it more difficult, not less, for the Iraqis to resolve things politically.

(END VIDEO CLIP)

WALLACE: Congressman Baird is saying that the steady drumbeat of Democratic calls for withdrawal, ending the surge, is, in fact, making it more difficult for the Iraqis to get together and is contributing to the political stalemate.

REED: Well, I think the Iraqi problems are internal to Iraq. This is a sectarian conflict between Shia and Sunnis with Kurds supporting the Shia. Those problems have become intractable.

And as a result, regardless of our extended presence or our departure, those problems are not going away. The reality, too, is — and frankly, it's something that the Iraqis know — is that we cannot maintain 160,000 troops past next spring. They know that this robust presence will end.

But the real issues there are political issues, Iraqi political issues. They're not whether we have 160,000 or 120,000 or even less than 100,000 troops there.

WALLACE: On this political issue, as I mentioned with Senator McConnell, Prime Minister Maliki today specifically went after Senators Clinton and Levin, told them that they should come to their senses and stop treating Iraq as one of their villages. Your response to that, sir.

REED: Well, we have invested a huge amount of American treasure, most particularly our sons and daughters who fought so magnificently there.

I think we have a right to be critical of a government that is not doing what a government must do — protect its own people, make difficult decisions that in the long run will provide for the safety and security of the Iraqi people.

I think the criticism is fair. I think one issue, though, is we sometimes over personalize this issue. The notion that if Maliki goes and everything will be fine I think misses the point that the institutional capacity in Iraq, the ability to do simple things — make contracts, provide simple services to people — that's not present after four years.

This is a much more serious problem than just one individual.

WALLACE: Now, you keep talking about the fact that the surge is going to end — have to end by next April, but the question, of course, is under the Democratic plan, you'd have fewer than 100,000 troops in there by next April.

According to the president you'd have the 160,000 troops and then maybe begin to draw down the surge beginning at that point, not ending at that point.

As I discussed with Senator McConnell, the national intelligence estimate does not paint a rosy picture of what happens if you continue the surge.

And on the other hand, it's not very optimistic about what happens if you end the surge now. It says if you cut the number of troops and give them a smaller role, as you, in fact, are calling for — and let's put it up on the screen — here's what happened.

It says "it would erode security gains achieved so far." In other words, Senator, the bad guys would simply swarm back into those areas that our American troops have fought and in some cases given their lives to secure.

REED: Well, that's precisely what will likely happen in the months ahead as the administration recognizes the strain on our forces and by next spring begins to reduce those forces.

But the position that I've advanced, going back to 2006, with Senator Carl Levin doesn't talk about a precipitous withdrawal. It talks about initiating withdrawal. And I'm pleased to see that Senator Warner made the same comments just last week.

And it also talks about missions that are important to the United States that will continue, and that's counterterrorism, training and protecting our forces at all times.

So this notion of just simply picking up our stakes and just walking out on a certain weekend is wrong. But we do have to begin a reduction. We begin to lower our forces and, in fact, it's going to happen anyway. That's what I think — many people miss the point.

This surge cannot be maintained for another year, as suggested by the NIE. It's going to end. The question is how do we do it in a way that would be most helpful not only to the Iraqis but most particularly to our own forces.

WALLACE: Senator Reed, President Bush this week compared the idea of our pulling out of Iraq to what happened when U.S. forces pulled out of Vietnam in the 1970s and said that there was in Vietnam and would be in Iraq a blood bath.

Doesn't he have a point? If you begin to pull U.S. troops out — and I think the one difference we have to point out is you would have pulled tens of thousands of troops under your plan out by April. The president wouldn't.

If you pull those tens of thousands of troops out by next spring, aren't you going to end up with a very serious humanitarian crisis in Iraq?

REED: There's a very serious humanitarian crisis today in Iraq, two million people who are...

WALLACE: Wouldn't it be worse, sir?

REED: ... displaced. It could get much worse, frankly. But that's one of the problems, I think, of the president's strategy overall. He should have been thinking more about the Vietnam analogy before he went into Iraq than at this moment.

And I think the issue here now is given a terrible set of circumstances as a result of the failures of the administration in terms of their strategy, in terms of their operational planning, in terms of what they've done over the last several years, there aren't a lot of good options out there.

But we have to look for the best options that will protect ourselves as best as possible and give the Iraqis the best chance we can to provide for their own security and stability.

I think the Vietnam analogy was the use of history in the service of politics, not the use of history in trying to create better strategy and better policy.

WALLACE: Senator Reed, we're going to have to leave it there. We want to thank you, as always, for joining us and sharing part of your Sunday with us, sir.

REED: Thank you.