The following is an excerpt from FOX News Sunday, Jan. 4, 2004.

CHRIS WALLACE, HOST, FOX NEWS SUNDAY: Just two weeks from tomorrow, Democrats in Iowa get together for caucuses that begin the process of choosing their nominee for president. To look at the election year ahead, we invited the chairmen of the Republican and Democratic parties. We'll hear from the RNC leader, Ed Gillespie, in a few minutes. His counterpart, DNC leader Terry McAuliffe, declined our invitation.

So while the Democratic race is far from settled, we decided to focus on the front-runner at this early stage, who, by the way, is this week's cover boy on both Time and Newsweek. From Boston, we welcome a national chairman of Howard Dean's campaign and a former Democratic National Committee chairman, Steve Grossman.

And, Mr. Grossman, good to have you. Thanks for being with us today.

STEVE GROSSMAN, CHAIRMAN, DEAN FOR AMERICA : Good morning, Chris. Thanks for having me.

WALLACE: Before we look at how a Bush-Dean race would shape up, let's begin with the obvious. Why is your guy making so many mistakes, saying so many things that he has to clarify?

GROSSMAN: I think Howard is a direct, blunt candidate who looks the American people straight in the eye and tells them exactly what he thinks. And frankly, I think one of the reasons Howard has done so well in this race is that people don't see in him the kind of doublespeak that you get so often out of Washington.

He's talking directly to people about their concerns, and he's come from way back in the field to being the leader because he's talked to people straight about issues of national security, about health care, about education, about the things that really matter in their lives.

And I think they want somebody who's plain-speaking and direct, and not somebody who is going to speak around the issues and give them two stories for every question.

WALLACE: But, Mr. Grossman, you say he's plain-speaking. We counted up the questionable statements that Governor Dean has made in just the last month, and we found at least a dozen of them, which we're listing now.

Without getting into the details, doesn't this say something about Governor Dean's discipline as a candidate and perhaps his readiness to be president?

GROSSMAN: I think Howard Dean is eminently qualified to be president. Remember, he served as governor for five consecutive terms in the state of Vermont. Delivered health care for every child under 18 in the state of Vermont, prescription-drug coverage for one-third of the seniors...

WALLACE: But, Mr. Grossman, on these statements -- I mean, James Carville, hardly a Republican, said that your candidate may have come down with "mad mouth disease." And the fact is that the governor has had to call Terry McAuliffe to clarify what he said about him. He's had to call Bill Clinton to clarify what he said about him. I mean, these are mistakes.

GROSSMAN: Look, in the heat of the moment, a variety of things are said, and a candidate who is direct and blunt and straightforward and credible to the American people is occasionally going to say something that he corrects a little bit later on.

But I think we look at the record of Howard Dean in the last year, and looking at the American people straight in the eye, and wondering what in the world Democrats were doing supporting President Bush's preemptive strike on Iraq, which, clearly, I believe most people view as the wrong policy -- certainly most Democrats do -- was clearly the moment at which Howard Dean began to rise.

So I'll take a guy who's going to occasionally make a statement and have to correct it and acknowledge that he may have made a mistake and go on from there, versus candidates who are speaking out of both sides of their mouths and appealing to no one and being credible to no one.

Howard Dean's built his credibility on directness and honesty and integrity, both as governor and as candidate. I think that's why he's doing as well. I think that's why he's going to win the Iowa caucuses and go on to be the nominee of the Democratic Party.

WALLACE: All right. Let's turn to foreign policy, which clearly drove the Dean campaign in the beginning, his opposition to the war in Iraq.

But now you have, with Saddam Hussein's capture, the number of attacks on U.S. soldiers is going down. You have Libya and Iran agreeing to inspections of their weapons programs, perhaps fearing that they're going to be next after Saddam Hussein.

Isn't the Bush foreign policy working?

GROSSMAN: You know, I think what Howard Dean believes and what Howard Dean has said right along is that he believes in a strong, muscular American foreign policy. When we need to go to war, we'll go to war, as we should have done in 1991 in the first Iraq war, as we should have done when thousands of our fellow citizens were murdered on 9/11 in the war in Afghanistan.

But the war in Iraq was not the right policy for this country. There was no clear and present danger to America, and I think Howard Dean has pointed that out.

But Howard Dean will be a president who will use American power aggressively when appropriate and necessary, but he will also build on our relationships with our allies in a multilateral way. Because that's the only way we're going to make progress in a complex world, to bring our allies in and to build a complex, multilateral policy that is respectful of our allies and doesn't poke a finger in our allies' eye every day.

WALLACE: All right. You used these adjectives, strong and muscular, to describe the Dean foreign policy.


WALLACE: The Washington Post and ABC did a poll this last week that asked people who they trust more to handle national security, the war on terrorism. 67 percent said Bush. 21 percent said Dean.

Mr. Grossman, isn't that an awfully steep mountain that the governor's going to have to climb?

GROSSMAN: I don't think Howard Dean is well-known to all the American people yet. Remember, we are just beginning to see the first caucuses in the next two weeks, two weeks from tomorrow. So a lot of people haven't focused on this yet.

I draw a lot of -- not that I look at polls, because when people vote, that's when you really get the results. But in a recent poll, George Bush and Howard Dean were five points apart, a recent poll that was just released last Friday.

So, in a head-to-head match up, you're going to have two interesting candidates, one a former governor, sitting president, the other a very successful five-term governor.

It's not lost on me, Chris, that four of the last five presidents of this country have been governors. The American people want strong, decisive, aggressive, proven leadership. That's what they're going to get in Howard Dean.

That's what they're going to get in Howard Dean, whether it's on foreign policy, whether it's on domestic policy, whether it's on health care, education, jobs, or giving the people back their right to political power in this country.

Howard Dean is leading a movement that's going to reinvigorate participatory politics in this country. That's the unique quality this campaign has. That's why he's doing as well as he is.

WALLACE: All right. Let's talk about the economy...


WALLACE: ... because Governor Dean has been very critical of the Bush performance, especially the loss of jobs.


WALLACE: But the recovery is now in full swing. The Dow Jones is well up over 10,000, and we have manufacturing numbers this past Friday that were the best in 20 years and indicate hiring is going to improve.

How do you fight all that good news?

GROSSMAN: Well, you know, I'm a businessperson myself. I employ 125 people. I asked some of my employees that just before Christmas. And they say, we're not feeling better, we're not feeling more secure, we're paying lots more money in fees, we're paying higher public college tuitions, our property taxes are soaring, the state budget deficits have hammered us, that small tax cut we got has been overwhelmed by all kinds of other expenses, we're kind of feeling like we're behind the eight ball.

So I think economic insecurity is what most Americans are feeling these days. And while Wall Street may be doing better, you know, Main Street is having some real trouble. And I don't see that improving dramatically.

I hope it improves. I want to see the economy improve. All Americans do and should, as does Howard Dean. But I think we're still dealing with economic, health-care insecurity, problems with education -- George Bush announcing an education plan, passing one, and then not funding it.

So there's a real disconnect between the rhetoric and the reality of the Bush administration. That's what this campaign's going to be about next November.

WALLACE: Mr. Grossman, one final question I want to talk about, taxes.


WALLACE: The governor wants to repeal the Bush tax cuts for all people, including the middle class. Now, I know you say that the Republicans get you in other ways, with state taxes and other expenses. But the fact is, won't president Bush be able to campaign in the fall, if it ends up being a Bush-Dean race, saying he is the tax-cutter, Dean is the tax-raiser?

GROSSMAN: No, I think what George Bush will have to answer for is that his tax cuts have been mostly going to the wealthiest among us and also have been largely going to the special interests. I think George Bush can be properly accused of having been selling off pieces of this country to his special interests and his friends.

What Howard Dean believes in is that we should take this Bush tax cut, recognize that it's fundamentally flawed, repeal the whole thing, pay for health care for every child under 18, pay for prescription- drug coverage for every American, and then retake a look at this tax situation and come up with a plan for tax fairness for middle-class Americans.

GROSSMAN: And that's what we're going to have when we a President Dean inaugurated in January of 2005.

WALLACE: Mr. Grossman, I'm going to leave it there. We want to thank you so much for joining us this morning.

GROSSMAN: Thanks, Chris.

WALLACE: For a look at the...

GROSSMAN: Thanks for having me. I appreciate your...

WALLACE: Go ahead, sir.

GROSSMAN: I appreciate your invitation. Thanks.

WALLACE: Thank you again.