Transcript: Gov. Tom Vilsack on 'FOX News Sunday'

The following is a partial transcript of the Dec. 31, 2006, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Even though the first primaries and caucuses are more than a year away, there's no shortage of candidates running for president. One Democrat who's already in the race is Iowa Governor Tom Vilsack, who joins us from Idaho.

Governor, with the execution of Saddam Hussein, what should we do in Iraq and what should we press the Iraqis to do?

VILSACK: You know, Chris, I don't think we should look backward. I think the execution of Hussein basically ends a chapter in Iraq, and we need to look forward.

I sincerely hope that we don't make a big mistake even bigger by suggesting a surge of troops in some way, shape or form is going to make Iraq safer or better. I believe that the generals are right. We've got to put responsibility where it belongs, in the Iraqis.

I think we have to encourage a political settlement of the differences. I think America has to get out of the middle, and it basically has to require the Iraqis to do what only they can do, which is to determine whether or not they want a stable and secure country.

WALLACE: Governor, you say that you oppose a timeline for pulling U.S. troops out of Iraq, something that's favored by some of your potential rivals. But, on the other hand, as president, you say you would pull our troops out of places like Baghdad, out of the front lines, and put them in enclaves up in the northern part of the country.

What would that do to stop the violence, and what would that do to create a stable Iraq?

VILSACK: Well, the reality, Chris, is the violence is going to stop when the Iraqis themselves make the decision to stop it. No matter how many troops we have there, it just isn't going to work.

I was over there in March, and I was struck by the fact that there is a dependency on America. There is a transfer of responsibility to America in terms of safety and security. It is an Iraq responsibility.

The troops in the north would basically be there so that we would send a message to Iran that we do, in fact, have a military option. We'd make sure that things in the northern part of that country remain stable. And we'd be in a position, potentially, to work with the international community if things got completely out of hand.

But at the end of the day, it is about the Iraqis accepting responsibility.

There are two other issues here, Chris, and that has to do with the reconstruction plan. You know, you had an interesting conversation with Senator Lugar, and I agreed with a lot of what he had to say.

I hope that the Senate and I hope Senator Biden and the Foreign Relations Committee looks into the reconstruction plan. Where did all those billions of dollars go, and what are we going to do in the future?

We're going to see another appropriation of $100 billion. Where is that money going to go? What are we getting for that money?

And are we engaging the countries around the region in a reconstruction plan? And are we building local governing capacity? Because, at the end of the day, security is going to be assured by local governance. It's not necessarily going to be assured by an Iraqi national government.

WALLACE: Governor, all of this raises the question, do you really believe that for the first president that this country chooses after 9/11, the first new president that it chooses, that we should pick someone who has basically no foreign policy experience?

VILSACK: You know, Chris, this is not about experience. We had all the experience in the world in the White House when the decision was made to pull out of Afghanistan, for all intents and purposes, at a time when we had a mission and a job to do which was not yet finished and we had international support, and we made the mistake of going into Iraq.

This is not about experience. This is about judgment.

And Senator Lugar made a very good suggestion to President Bush, and that is to surround himself with individuals who can provide him advice and counsel different than what he's getting today. It is obvious that there have been very poor judgments made by this White House. And they're going to continue to be made because they're not listening to anybody.

Congress has a responsibility here, and I sincerely hope it steps up to the plate. I believe it will. I'm looking forward to that. They need to be an equal partner in this process, and they have not been at this point.

WALLACE: But, Governor, I mean, do you really believe that foreign policy experience isn't helpful when dealing with the foreign policy problems of a post-9/11 world?

VILSACK: Chris, I think it's about making sure that you understand America's place in the world. We are the only superpower, and, as a result, we have a unique responsibility. It is about reclaiming moral leadership. It's not about walking away from international treaties. It's about working with other nations, creating alliances and friendships and isolating enemies, precisely the opposite of what this administration has done.

Sure, I've traveled all over the world. I've been to 22 different countries. I've been to eight countries this year. It isn't just about experience. It's more about judgment.

Contrast and compare prior experiences in prior administrations. The Kennedy administration, for example, and the Cuban missile crisis — compare and contrast how they made the decision to prevent war versus how this administration made the decision to go to war.

It is about judgment, at the end of the day.

WALLACE: One area where you have had experience — in fact, it's been one of the centerpieces of your term as governor and one of the platforms that you're using in running for president — is this issue of energy independence, reducing our reliance on foreign oil. And one of your mottoes of your campaign is "Courage to change."

Question: Do you have the courage to take on the Democratic interest groups when it comes to this area of energy independence?

VILSACK: I think this is the central issue of this campaign and of this time in America. If we truly want to be a safe and secure nation, we have to stop funding both sides of the global insurgency we face. We want to reclaim moral leadership in discussions of climate change. We want healthier communities. And we want a more stable and secure economy which really expands the middle class.

All of that can be done through a very massive and comprehensive energy policy.

We need to be energy-secure. We need to conserve more energy. We need to rely more on renewable fuel. And we need to challenge ourselves to figure out what barriers exist to the traditional materials to create power in this country and reduce and remove those barriers.

This is the issue, Chris.

WALLACE: But with respect, sir, you're not answering my question, which is, would you take on the Democratic interest groups?

I talked to a blue-ribbon panel, including Fred Smith of FedEx and former Marine commandant P.X. Kelley. And they said, "Look, you've got to do some things that the Republicans won't like; you've got to do some things that the Democrats won't like." And specifically on the Democratic side, they talked about greater drilling, domestic oil production from the Outer Continental Shelf, from the ANWR, Alaska Natural Wildlife Refuge.

Would you be willing to take on some of the Democratic orthodoxy in this area as part of this, what you say is the central issue?

VILSACK: To be honest with you, Chris, I'm not sure that necessarily drilling is the answer. And it's not because of special interests. It's because of the situation involving oil today.

Ninety-five percent of the oil that we know of in the world today is going to be extracted at very high cost. We're going to have competition for oil from India and China and other expanding economies. Twenty-three nations produce oil. Fifteen have basically peaked in their production.

We should not be relying on oil. We should be looking for alternative sources. We should be aggressively promoting alternative sources.

The courage to create change comes in embracing new ways of producing fuel, in changing the way in which we use our fuel and power in this country.

We have done this in Iowa. We've begun the process of becoming a renewable fuel leader. We've seen our economy expand.

I have no doubt that America can do this. But doing it the traditional way is not going to get the job done. It's not going to put us in a competitive circumstance, in my view.

WALLACE: Governor, in the time we have left, let's talk about the 2008 campaign. The Iowa caucus is the first contest. You, of course, are a two-term governor of that state.

Let's take a look at the polls in Iowa. Here they are. The Research 2000 poll shows you trailing Edwards and Obama. You're in third place in your own state. Another poll by the American Research Group also shows you in third place, behind Hillary Clinton and John Edwards.

Now, Governor, these are the people who know you best, and yet most of them are saying they don't want to vote for you for president.

VILSACK: Well, you know, Chris, those same polls also show that if you include individuals who may become Democrats for purposes of going to the caucus, reaching out and expanding the base of the Democratic Party, that I actually will win Iowa. And I expect to win Iowa.

I, obviously, have to do a job of convincing Iowans that I have a vision for this country. They're not going to give me a free pass, and they shouldn't give me a free pass. I should earn this.

So I've got work to do. But I am convinced and confident that I will win Iowa.

WALLACE: Where do you fit — well, let me ask you very briefly, do you have to win Iowa? I mean, as the two-term governor of a state, if you can't win your own state, wouldn't that finish you?

VILSACK: Well, you know, Chris, I'll leave the judgment up to all of you folks. I just know this: I'm going to work hard. I'm going to make my case to the people of my state and the people of a number of other states. And I'm going to be very, very successful in Iowa.

WALLACE: All right. We have about a minute left.

Where do you think you fit in a Democratic field with Hillary Clinton and Barack Obama and John Edwards? Do you see yourself as being the most moderate candidate in that race?

VILSACK: Well, I see myself with the most executive experience and the person that I think has the greatest chance of reaching across and expanding the base of the Democratic Party in order to be victorious in 2008. That's where I see myself.

I think I can reach out to rural states, to states where the party has not done as well. And I think that's important and key to winning the election in 2008. We've got to expand the base. I believe I can do that.

I believe I have more executive experience than anyone else who's considering this race at this point in time.

WALLACE: Governor, we're going to have to leave it there. We want to thank you so much for joining us today. We'll see you along the campaign trail. And Happy New Year to you, sir.

VILSACK: Happy New Year, as well, Chris.

WALLACE: Thanks a lot.