The following is a partial transcript of the Jan. 29, 2006 episode of "FOX News Sunday":

CHRIS WALLACE, HOST: With President Bush set to give his state of the union speech Tuesday, we begin with the chairman of the Democratic National Committee, Howard Dean, making his first appearance here since he was elected to that job a year ago. Governor Dean joins us from Burlington, Vermont.

And, Governor, we're happy to finally see you.

DEMOCRATIC NATIONAL COMMITTEE CHAIRMAN HOWARD DEAN: Chris, thanks for having me on. We have to do this again soon, then.

WALLACE: Absolutely. As we said, the president goes up to Capitol Hill this week. What do you see as the state of the union?

DEAN: I think most Americans think the state of the union is in pretty difficult shape right now. We do need some new ideas on the economy. The Democrats have put forward a jobs plan that has to do with energy independence. We do need a health care system that works for everybody.

And frankly, I think we need a little better work on defense. We're very worried about the troops not being taken care of properly in Iraq. We're worried about a lack of direction. So I think the president is going to have a lot of explaining to do.

WALLACE: You know, let me look at it from the other side. Millions of Iraqis voted three times in elections over the last year. The unemployment rate is 4.9 percent. Economic growth last year was 3.5 percent. Are things really so bad?

DEAN: Well, I think most Americans think they are. The problem is the numbers in the economy, other than this last quarter's, have been decent. But that's not filtering down to most Americans who are really struggling very much, because the president doesn't seem to favor average Americans very much in his economic policy.

And as we've seen this week, elections in the Middle East are great, but elections themselves don't necessarily lead to a good democracy, as we just saw in Palestine.

So you know, we all want the president to succeed, but the president hasn't succeeded. And I think that's because he has a lack of vision and, frankly, he hasn't been truthful with the American people. And people, frankly, just don't believe him anymore, and that's a real problem for him.

WALLACE: I want to pick up on that in just a moment. But let me just ask you about what you were just saying about the president's pro-democracy movement. When you see what happened in the Palestinian authority with Hamas, does it make you give pause to the idea of the president's idea of pushing elections and democracy?

DEAN: No, I think that's a good idea to push elections and democracy. But the problem is elections themselves don't build democracy. You've got to do more than that.

And in Iraq, in particular, the problem is, you know, billions of American dollars have disappeared into a black hole. We don't know who took them, whether it's Iraqis or American companies. Our troops haven't been supplied with the proper body armor.

Frankly, we've focused on — we haven't focused on getting Usama bin Laden and Al Qaeda. We've focused on Iraq, which, of course, is a difference of opinion about whether we should have ever gone there in the first place.

So I think you've got to have more than just elections. You've got to build the infrastructure of democracy, and that means the rule of law. I think we're at a critical juncture here with Hamas taking over the Palestinian rule. We've got to make that work. And it's going to be a very, very difficult thing. And we can't do it simply by being doctrinaire.

We've got to bring Hamas into the realm of being a responsible government. And that's going to be very, very difficult to do. And we want to support the president in making sure that we're not giving money to a terrorist organization.

But on the other hand, we need to prod Hamas into now being a responsible government, and that's a big transition for them, because right now they are a terrorist organization. And I haven't heard anything in their rhetoric yet that indicates otherwise.

WALLACE: Governor, let's talk about the war on terror. I want to put up something that you said this last week. Let's take a look. "If we get back in power, we're going to make a real effort to go get Osama bin Laden. We're not going to let him lollygag around for four years after the September 11th attack."

Do you think that the 19,000 U.S. troops in Afghanistan are allowing bin Laden to lollygag around?

DEAN: I personally believe there are not enough troops in Afghanistan, and I have for some time. There's a report out written in part by Lawrence Korb, who's a former Reagan defense official, which calls for the redeployment of American troops. And one of the things he calls for is fewer troops in Iraq and sending some of those to Afghanistan. Those kinds of things I think are good.

I was very appreciative of the work that we did attacking the Al Qaeda in northwest Pakistan. I thought that was a good idea. We need to be really tough with these terrorists. And I think there needs to be more attempts at the Al Qaeda leadership, and that was the big problem with Iraq.

That's why I objected to going into Iraq in the first place, is because I thought it was — the president took his eye off the ball in terms of attacking terror.

WALLACE: You've also been very critical of the president's NSA surveillance program, and you talked about that this week. Let's take a look at that, if we can. "This is not simply listening in to Al Qaida. It's poking around into people's private lives in order to see if they're doing anything wrong."

Governor, what evidence do you have that the NSA is poking around into people's private lives?

DEAN: I think it's been widely reported that you can't — you have to poke around if you're going to spy on Al Qaeda. When you dial up a number or tap into a number, you don't know that's an Al Qaeda number until you hear what's going on on the other end of the phone.

Look, I support spying on Al Qaeda, and I think every Democrat in America thinks that we ought to attack Al Qaeda, and spy on them, and do whatever we have to do to beat them. The problem is we ought to do it within the law.

We need a country that will lead the nation, but we also need a president that will — I mean, excuse me, we need a president that will lead the nation, but we also need a president that will follow the law. The law says that if the president thinks that Al Qaeda is an imminent threat and he wants to spy on them, he can do that immediately, but he's got to go get a warrant after the fact.

In 2002, there was a memo from the Justice Department that suggested changing the law, and the White House said no, we didn't need to do it. We are not asking the president not to spy on Al Qaeda. We are asking the president to follow the law when he does so. No one should be above the law, not even the president of the united states.

WALLACE: But, Governor, I want to go back to this issue of the NSA poking around in people's lives. It's not like they're just, you know, picking up the phone and taking any phone call that's out there. I mean, they say that every phone call that they're intercepting they have reason to believe has an Al Qaeda connection.

In fact, General Michael Hayden, who used to be head of the NSA and is now the deputy director of national intelligence, talked about that this week. Let's watch.


HAYDEN: These are communications that we have reason to believe are Al Qaeda communications — a judgment made by American intelligence professionals, not folks like me or political appointees.


WALLACE: Governor, do you have any reason to believe that General Hayden isn't telling the truth?

DEAN: I don't know General Hayden in any way. But I can tell you that it's been, again, widely reported that not only is the NSA, of course, listing to Al Qaeda, which is their job, but they tap into the main trunk lines just to see what kind of patterns emerge and what chatter is going on. That sounds like pretty random exploration of what's going on.

Look, this is easy. The current law has existed since 1967. And the law is very plain. You don't get to do whatever you want if you're the president. You know, the courts — 19,000 times in the past the president has used the law — this president and previous presidents have used the law. Only five times have they been rejected.

But that rejection is a safeguard against the rights of ordinary Americans not to be intruded on by their government. So, look. Again, we support the idea of supplying — spying on Al Qaeda, but we want the president to follow the law.

WALLACE: Again — and I don't want to argue the legal point, but, again, you've got General Hayden here saying these are conversations that we have reason to believe involved Al Qaeda. Do you have any reason to disbelieve that?

DEAN: No, I think that's probably true. But I don't think all the conversations they have reason to believe, because why would they tap the conversations in the first place? I don't think they know in advance who the Al Qaeda people are and who the American citizens are. That's the only point I'm trying to make.

Again, this is not a matter of a disagreement between the Democrats and Republicans on security. We favor spying on Al Qaeda. What we don't favor is spying on Americans without any kind of court oversight.

WALLACE: Let's talk about lobbying reform. Why do you think it is that the White House is refusing to release all of its contacts with lobbyist Jack Abramoff?

DEAN: I think they're embarrassed. I think, again, the president shaded the truth. He claimed that he didn't hardly know Jack Abramoff, and now we've got pictures, apparently, with the president and Jack Abramoff smiling and laughing and so forth and so on.

WALLACE: But you know, Governor, you know that people take pictures. I'm sure that you've taken pictures with tens of thousands of people you didn't know who they were.

DEAN: Yeah, you can — that's true, and if there's one picture or two pictures, maybe it doesn't make much of a difference in a rope line with a ton of people. But if it's a repeated series of pictures, 10 or 12 of them at different events, you can tell if there's a close relationship or not.

Look, I think the president should release the information about when Jack Abramoff was at the White House. We know that he met now — I think we believe — I believe it's been confirmed that he's met with Karl Rove in the past in the White House.

We need to know who Jack Abramoff met with in the White House and did he meet with the president in the White House. That's public information, and we're putting in a FOIA request to make sure that the American people know the extent of this lobbying scandal. Does it reach into the White House in addition just to the Republicans in Congress?

WALLACE: You and other top Democrats are going after what you call a Republican culture of corruption, but you deny any Democrats are involved. And let me take a look at an exchange of that.

Question, "In the last couple of weeks, but through various Abramoff-related organizations and outfits, a bunch of Democrats did take money that presumably originated with Jack Abramoff." Dean, "That's not true either. There's no evidence for that either."

Governor, it is certainly true that Republicans got twice as much money from Abramoff-related contributions than Democrats did, but Democrats aren't clean in this area either, are they?

DEAN: Yeah, they are pretty clean, Chris, and I'll tell you why. First of all, every dime of Jack Abramoff's money went to Republicans. Not one dime went to any Democrat or any Democratic organization — his personal money.

Secondly, he did direct contributions to mostly Republicans, but a few Democrats. But the Democrats, A, didn't know that he directed that — his clients to give them money and, B, they never produced anything for Abramoff.

The problem the Republicans have with this is that they actually did things. Senator Burns did a number of things for Jack Abramoff in exchange for a contribution. And the proximity of those contributions to the actual act of doing something for the lobbyist — that's what's illegal, and that's what's going to get them in trouble.

There's not one shred of evidence that any Democrat, A, knew that he was getting a contribution from Jack Abramoff and, B, did anything in exchange for it. And that's why this is a Republican finance scandal and not some sort of bipartisan scandal.

Look, historically, we know that both Democrats and Republicans have done things they ought not to do. What we're saying in the Democratic Party is let's put a final stop to that. We're going to get rid of all corporate jet travel, get rid of all lobbying expenses, and golf trips and lunches.

One thing we're going to do that the Republicans haven't even talked about is we're going to stop people putting things in conference committee reports in the dead of night when nobody knows about it.

Here's the cost of this. It's not just dishonesty in government. The real cost is a couple weeks ago the Republicans stuck in a $22 billion tax money giveaway to HMOs. Nobody knew anything about it. That's the problem with corruption. It's not just dishonesty. It costs the American taxpayers billions and billions of dollars. And that is the shame of this scandal.

WALLACE: Governor, we're running out of money. But I just want to press this issue of...

DEAN: Yes, we are, rapidly. So we need a new party controlling Washington.

WALLACE: I just want to ask you about this question of the Democratic involvement. I want to put up something from the non-partisan Center for Responsive Politics. This comes directly from their Web page, and it says, "Here is a detailed look at Abramoff's lobbying and political contributions from Abramoff, the tribes that hired him, and SunCruz Casinos, which is a company that Abramoff owned since 1999."

It lists recipients by the amount of money they received. Well, the top two are the Republican campaign committees. The third and fourth biggest recipients were Democratic campaign committees. And if you go down the list, Democrats received more than $1 million from Abramoff-related interests.

DEAN: There's two points to this. First of all, actually, we — the DNC actually got $100,000-some odd. Now, I can assure you Jack Abramoff never directed that money. It is possible that some of Jack Abramoff's clients may have decided on their own to give Democrats money. The key is...

WALLACE: I'm sorry, did you say, I'm sorry. Did you say that you're sure that Abramoff didn't direct them to give that money?

DEAN: No, what I said was that it is possible that some Democrats got money from some of the — yeah. No, what I'm saying is that Abramoff may not have directed some of this money toward the Democrats.

WALLACE: In fact, he did, sir. We've got evidence of that.

DEAN: But the point is that not one Democrat either knew it or acted on it. Nobody got anything out of the Democrats from Jack Abramoff. No Democrat delivered anything, and there's no accusation and no investigation that any Democrat ever delivered anything to Jack Abramoff. And that's not true of the Republicans.

WALLACE: So if we find — and I just want to — we have to wrap this up. But if we find that there were some Democrats who wrote letters on behalf of some of the Indian tribes that Abramoff represented, then what do you say, sir?

DEAN: That's a big problem, and those Democrats are in trouble, and they should be in trouble. And our party, if the American people will put us back in power in '06, we will have on the president's desk things that outlaw all those kinds of behaviors. Right now it's a Republican scandal. Maybe they'll find that some Democrats did something wrong, too. That hasn't been the case yet.

But our reforms in the Democratic Party are going to be aimed at both Democrats and Republicans. We want to clean up Congress, and we will within 100 days of the new Congress in 2007.

WALLACE: Chairman Dean, we're going to follow up on that. Thank you. Thanks so much for joining us. And don't be a stranger. You're always welcome here.

DEAN: We'll see you soon. Thanks, Chris.