This is a partial transcript of "Special Report With Brit Hume," Jan. 19, 2005, that has been edited for clarity.

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BRIT HUME, HOST: This afternoon, I sat down with Vice President Cheney in his office in the White House complex to talk about the inauguration and the Bush second term. I asked him about House ways and means committee chairman Bill Thomas' comments on Social Security this week, which seemed to suggest the president's current plan is in for a major rewrite. We began, th ough, by discussing the attitudes of Democrats in Congress.


HUME: Mr. Vice President, congressional Democrats have given what seems to be clear signals that they believe that their job as the opposition party is to oppose and that Democrats who stray from that, who cooperate with the president on various of his initiatives will not be welcomed. What's your reaction to that?

DICK CHENEY, VICE PRESIDENT: Clearly the way our system is designed, we have a majority party and a minority party and you expect to have healthy debates and the loyal opposition is part of that responsibility. I think, though, when you cross over the line where you're simply opposing for the sake of opposition, when you become an obstructionist, as many people thought Tom Daschle did in the last Congress, minority leader in the Senate, then sooner or later, the voters may, in fact, repay that at the polls in a sense that they want to see two parties work together. They understand that there are differences and different approaches to problems. But in the end, I think they want to see progress and see results and I would be hopeful that that's the case.

We don't expect, obviously, to get unanimity out of the Congress. We do expect the Democrats to be tough adversaries. That's altogether fitting and proper. But in the end, on the issues the president wants to address, the big issues like Social Security, for example, and tax reform, those are big, important issues that I don't think the Democrats can get away with simply saying, well, we don't have an answer or we don't think it's a problem. I think they'll have to engage.

HUME: You don't believe they will?

CHENEY: I think they will. I think the responsible ones will.

HUME: The idea of adding private accounts to Social Security, within Social Security, registered very well in opinion polls.

CHENEY: Right.

HUME: When you start talking about other measures designed to deal with the costs that that would entail in the short-term, the results seem to be different. What about that? Obviously you have a popular idea here. Let's have a private savings account. People like the idea. But the costs are real and they're in the near term. What about that?

CHENEY: There are costs associated with it. But the biggest costs of all are if we don't do anything. If we fail to address this issue, then what we'll see over time is that we'll have a larger and larger retirement population, smaller and smaller number of workers supporting each retiree and that's when you begin to get in trouble down the road. The advantage we have now is time given the time horizons that are available to us if we act now in a timely fashion.

Go, for example, the personal accounts and then that new worker coming into the workforce in their 20s can look forward to a 35- or 40-year career and over that period of time being able to build them a personal account. They'll have a higher rate of return and give them personal control, if you will, of a retirement account and help us address some of the basic fundamental flaws in the program. If, in fact, we wait 20 or 30 years until the train wreck occurs, until we either have to go with a massive across-the-board tax increase on all workers or a massive cut in retirement benefits, that's when it gets tough.

Now we can address it and have the advantage of time to solve the problem.

HUME: Chairman Thomas seems interested in expanding the scope of reform, to take on even more and to work the tax system into the whole package as well. Are you open to that?

CHENEY: Well, we'll obviously work with the chairman on any issue he wants to serve. I think he is beginning the debate, he's participating in it.

I don't know that he has bought into those specific proposals or that anybody else has at this point. They're just ideas that are floating around. But one of Bill's capabilities as chairman of the ways and means committee, and I've seen him do it in the past, is looking for ways to put together a package that ultimately can garner the support of the majority of the members.

HUME: Were you surprised by the remarks he made?

CHENEY: Well, I thought his remarks were frankly inflated to some extent in terms of the way they were presented in the press. I thought if you look carefully at what he said, it's Bill who's beginning the process of presiding over the creation, if you will, a very important piece of legislation here and he wants to keep all of his options open and I thought it was perfectly appropriate.

HUME: Tomorrow, the speech. What does it have to do, in your judgment?

Some are saying this is a speech that needs to unite the country and indeed unite Congress. Others are saying, no, no, the president needs simply to set out his agenda and make his best case for his agenda to really his own constituency. What's your view?

CHENEY: Well, I'm — I guess I'm not sure I would define it in those words. I see it as being about leadership. This is a president who has had, I think, a remarkable four-year first term coming off a very narrow election in 2000. When you think about what we've been able to do, the problems we've had to deal with, 9/11, the war on terror, Afghanistan, Iraq as well as what we've done here at home on education, tax policy, and so forth, Medicare, it has been a very, very productive four-year period of time.

And I think it's also — the opportunity exists, which I think the president will take tomorrow, to talk about his vision for the future, not just in sort of detailed nuts and bolts legislative basis, the way you do, for example, in the State of the Union speech, but rather to paint some very broad themes here about the future of America, indeed the future of the world, what the 21st century ought to look like and what the role of the United States is in that.

HUME: Dr. Rice, in her hearing yesterday, and to some extent again today, heard her integrity challenged by one or more members of the opposition, your reaction to that approach to her.

CHENEY: I thought it was fundamentally unfair. I thought, frankly, that criticism at this level wasn't justified. I think Condi has done a superb job as the national security adviser. I think she'll make a great secretary of state. She's a very able, competent, capable woman. I've worked closely with her now for the last, oh, four-plus years going back to the campaign when I was secretary of defense, I had a standing offer to Condi Rice that she could come to the Pentagon anytime she wanted ...

HUME: And any job but one?

CHENEY: Well, any job but one because she knew more about the Soviet Union and Soviet military affairs than anybody I knew and this was back during the days of the Cold War. She is an enormously competent individual, she'll do a superb job as secretary of state and I frankly thought some of the comments by Barbara Boxer, in particular, were over the top.

HUME: She said yesterday the time for diplomacy is now. One would think that the time for diplomacy would be at any time. What exactly do you think — how do you interpret that? What does the president think about that?

CHENEY: Well, I think we've been very active diplomatically. I don't buy the rap somehow this administration spent four years dealing only with military matters and not dealing with diplomacy. We've dealt with diplomacy every step of the way. Any administration has to and certainly that's been a key part of what we've done as well, too.

HUME: It has been written of you lately that you've been involved, gasp, in domestic policy. Has there been any change there in the sense of the range of issues on which you provided advice to the president on?

CHENEY: No, there really hasn't been really any change. I spent — the first term I spent a lot of time on tax policy, a lot of time on the Congress. Not that I devised tax policy. That's not my job. But when it is time to put together a program and then promote it both from the standpoint of the public as well as with the Congress, I get involved. I got involved in the '03 tax debate, partly because it turned out to be a tie vote in the Senate and I cast the tie-breaking vote three times on major provisions in that bill.

I was asked to get involved and negotiate between the House and Senate, the final tax bill that resulted from that. So, I've always had some involvement in domestic matters when the president wants me involved and when I can help especially when it connects the Congress.

HUME: Social Security, obviously, seems to be job one domestically. When do you get to tax reform and other domestic issues?

CHENEY: Well, we want to push very hard on tort reform legislation early on. And that's been working (ph) previously. We got it through the House. We'll go back and continue to push hard on that. He's spoken about that recently. Social Security is at the top of the agenda. We have the panel appointed now to go forward and put together recommendations on tax reform. We talked about that. The president did at his convention acceptance speech. I would expect later this year we'll have the options from that panel to the treasury secretary and we'll begin, then, to be able to sit down and look specifically at various proposals for simplifying and reforming the tax code.

Those are all issues we'll work very hard in the next year.

HUME: Mr. Vice President, thank you very much.

CHENEY: Thank you, Brit.

HUME: Pleasure.

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