The following is a transcribed excerpt from FOX News Sunday, Dec. 7, 2003.

CHRIS WALLACE, FOX NEWS: In just six weeks, voters in Iowa begin the process of choosing the Democratic presidential nominee. For some pundits, the outcome seems almost certain already.

One candidate has raised the most money, is leading in Iowa, running away with the race in New Hampshire, and in our latest Fox News/Opinion Dynamics poll he's given the best chance of beating President Bush next November.

That, of course, is the former governor of Vermont, Howard Dean, who joins us this morning from his campaign headquarters in Columbia, South Carolina.

And, Governor, good morning. Welcome to Fox News Sunday.

U.S. DEMOCRATIC PRESIDENTIAL CANDIDATE HOWARD DEAN: Chris, thank you very much for having me on. I really appreciate being the first Democrat on the show.

WALLACE: A newspaper columnist this week called you the first Teflon-coated Democrat. You've hit some rough patches recently -- the comments about the Confederate flag, keeping your records as governor secret. But why do you think you're able to defy, so far, the laws of political gravity?

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DEAN: Well, I think a lot of people are throwing everything but the kitchen sink at us, which is what they do at this time of year if they think you're the front-runner.

Now, I kind of have some objections to the front-runner stuff. I think the people of Iowa, the people of New Hampshire and South Carolina are going to make those kinds of decisions, not the pundits.

But, you know, this is a heavy sledding. It's six weeks to go before the Iowa caucuses, and we're going to get everything thrown at us but the kitchen sink.

I think the American people have a pretty good idea of what's accurate and what's not. And interestingly, my theory is that, because there's been so much invective thrown around since 1994 in the political process, people have gotten pretty good at sorting out what's really true and what's mostly fluff.

WALLACE: All right. Well, let's throw some things at you which we hope are not fluff or invective. And let's begin with foreign policy and some of your recent statements.

If you look at the television set, we're going to put on one statement you made last week in New Hampshire. You said at one stop, "Mr. President, if you'll pardon me, I'll teach you a little about defense." At another stop, you said, about Mr. Bush, "He doesn't understand what it takes to defend this country, that you have to have high moral purpose."

Governor, do you really not see a moral purpose to the president's foreign policy?

DEAN: Well, let me say two things. First, about the first remark, about teaching the president something about defense, what I'm really talking about is teaching the president something about human beings. He sends our troops to Iraq. He doubles their tour of duty because he underestimates the resistance of the Iraqis. And then, at the end of last summer, he says he's going to cut combat pay, or dangerous pay, for the veterans. Now, the Congress -- for our people over in Iraq.

Now, the Congress reversed him and added a little money. But imagine the president sending people over, doubling their tour of duty and then trying to cut their pay.

He goes to a Veterans Administration hospital and says how great the veterans are and they deserve good health care, and then he cuts 164,000 off their VA benefits.

That is not a president who understands that it's people that defend the United States of America, and not the folks in his office deciding to go into Iraq.

WALLACE: Let's talk about...

DEAN: What I'm talking...

WALLACE: ... on the high moral purpose. Do you not really see -- I mean, you may disagree with the choices he made, but do you really not see a moral purpose to the president's policies?

DEAN: I think -- here is what the president did. He has forfeited our moral leadership in the world.

If you go any -- when the Berlin Wall came down and the Soviet Union collapsed, it came down for two reasons, other than internal stuff in the Soviet Union. One is that we have a strong military, and I think a strong military is important. The other is that most people behind the Iron Curtain wanted to be like us. And today there are not very many countries, after three years of George W. Bush's presidency, where people want to be like us anymore.

That is what I mean by the loss of high moral purpose. Most people in this world think that America has forfeited its moral leadership. That's a terrible thing, because our moral leadership is part of our defense, not just having a strong military.

WALLACE: But, Governor, don't you think that getting rid of Saddam Hussein and trying to set up a democracy in the Middle East, whether you agree with the way he went about it or not, shows moral purpose?

DEAN: I think getting rid of Saddam Hussein is a wonderful thing. But the question is, is it a good idea to send 135,000 troops unilaterally to do it?

Let me -- can I just take one second and read something George Bush's father wrote in his book? This is about the first Gulf War. "To occupy Iraq would instantly shatter our coalition, turning the whole Arab world against us, and make a broken tyrant into a latter- day Arab hero. It would have taken us way beyond the imprimatur of the international law bestowed by the resolutions of the Security Council, assigning young soldiers to a fruitless hunt for a securely entrenched dictator, and condemning them to fight in what would be an unwinnable urban guerrilla war."

George Bush's father had it right. We could have contained Saddam Hussein indefinitely. We were flying over his country. He had no air force. We were bombing him when we needed to, in response to anti-aircraft fire.

I thought it was a mistake to go into Iraq. If we had gone in, we should have gone in with a real coalition, the way that his father did, and not do it unilaterally.

WALLACE: Governor, there is this continuing question, even in your own party, about whether you're fit, whether you're up to being commander in chief. And I want to ask you about a radio interview that you did earlier this week. You were asked about the president suppressing information about what he knew pre-9/11, and here's what you said.

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DEAN: The most interesting theory that I have heard so far, which is nothing more than a theory, I can't think -- it can't be proved, is that he was warned ahead of time by the Saudis. Now who knows what the real situation is.

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WALLACE: The most interesting theory is that the president was warned ahead of time by the Saudis. Why would you say that, Go who believe that. We don't know what happened in 9/11. Tom Kean is trying to get some information from the president...

WALLACE: Do you believe that?

DEAN: ... which doesn't -- no, I don't believe that. I can't imagine the president of the United States doing that. But we don't know, and it'd be a nice thing to know.

WALLACE: I'm just curious why you would call that the most interesting theory.

DEAN: Because it's a pretty odd theory.

What we do believe is that there was a lot of chatter that somehow was missed by the CIA and the FBI about this, and that for some reason we were unable to decide and get clear indications of what the attacks what were going to be. Because the president...

WALLACE: I guess...

DEAN: Because the president won't give the information to the Kean commission we really don't know what the explanation is.

WALLACE: Let's move on to this question of giving information out. Why have you sealed, for 10 years, about half of your records as governor of Vermont?

DEAN: Well, we gave 60 percent of them out to the public, which is fine. Vermont, like many other states, has a doctrine of protecting people who advise you for a period of time. We took advantage of that doctrine because that's the law, that's the way it's been done.

And, you know, there is not much interesting stuff except for advice that people gave me, which they thought was going to be confidential, and probably some private papers. What we're trying to do is figure out how to get a third party to review those records so that we can make some of those records public.

WALLACE: I want to take you through this because -- and I know that you're somewhat frustrated that people keep asking about it. But just as you talked about President Bush, people are concerned when public officials decide not to make records public.

In January, you gave Vermont Public Radio a very different reason. Here is what you said: "There are future political considerations. We didn't want anything embarrassing appearing in the papers at a critical time in any future endeavors."

Governor, was it politics?

DEAN: If you actually listen to the tape, which CNN played this week, you will find that I was laughing about that and teasing the press about it.

No, it's not politics. Every governor has done this. Some governors have sealed their records for their lifetime. Some governors take the records with them, they're not the property of the...

WALLACE: But, in fact, the previous governors of Vermont had only sealed them for six years. You wanted to do it for 24, and they finally made an agreement on 10.

DEAN: That really is more of a reflection of the negotiating ferocity of my legal counsel.

Look, if the issue were -- if tomorrow this issue would disappear -- look, this is to our advantage to get this off the political screen. We do keep getting asked about it all the time. If we could say, hey, look, we'll be happy to settle for six years -- first of all, I am not sure we have the power to do that, but if we did, this issue would not go away.

WALLACE: Well, why not just open them up, Governor? I can't believe that anybody in Vermont is going to prevent you. Why not just say, they're open, reporters...

DEAN: Well, actually, it's a very complicated legal question. And what we're going to do, I suspect, is let the judge take a look at all these documents. We're being -- there is a lawsuit over this from Judicial Watch. And what we think the best thing to do is to let the judge go through every single document and decide for himself what ought to be revealed and what not to be revealed. And I think that's a fair way to do it.

Clearly our campaign can't review the documents, because nobody would believe that we weren't doing something political. So let an independent third party -- and I think the Judicial Watch suit gives us the opportunity to let a judge go through every single document.

WALLACE: But let's make it clear, Governor, Judicial Watch wants you to open the records. They're not -- is anybody asking you to keep them closed?

DEAN: Well, I think it's very clear that there are some things in there that are really not fair to reveal -- privacy concerns, people writing letters in to me that are private. I mean, everybody admits that if somebody writes a letter to me saying, you know, "Dear Governor, my wife has AIDS" or something like that, that should not be revealed.

Now, apparently some of those kinds of letters were actually in the...

WALLACE: But, Governor, the Boston Herald -- if I may, the Boston Herald this week looked at what is already open, and they found a lot of letters exactly like that that are already open, personal letters about medical conditions.

DEAN: Right.

WALLACE: So it doesn't seem that that's what's being protected here.

DEAN: Well, that is, actually. Those letters shouldn't have been opened, and I think that's a reason that it is a good thing to have a judge go through all that, all those letters. We were sued once before, and the judge did go through all the papers and decide what should go out and what shouldn't. And I think that's a very good process.

So I think we'll -- the attorney general wants to defend the lawsuit. I think we'll defend the lawsuit and let the judge go through every single record and decide what should be public and what shouldn't. I think that's a fair and reasonable way to go through this.

WALLACE: Just a simple question -- I know you pride yourself on straight talk. Will you try to get those records released before the Iowa caucuses?

DEAN: The records will go through the process that I just outlined. The judge will go through every single record.

If we were to try to ram that through and get it out just to get the political writers off our back, that would be incredibly unfair to all the people who may have personal and private information in there.

Let the judge go through it. Let them pick whatever they want, and let it go free. That's what I think the right process is to go.

So we'll go forward. We'll defend the suit. We'll let the judge go through every document, like they did the last time we were sued. And the judge will decide what's fair to the public to let out and what's not fair because it's private information for individuals.

WALLACE: Governor, you'll be happy to know we're going to move on to another subject now. I want to ask you about a line you use in your regular stump speech. Take a listen.

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DEAN: I am tired of coming to the South and fighting elections on guns, God and gays. We're going to fight this election on our turf, which is going to be jobs, education and health care.

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WALLACE: What do you mean by that, when you say that you don't want to talk about guns, God and gays?

DEAN: What the Republicans have been doing since 1968 was actually the subject of a speech I'm about to give in a couple of hours here in South Carolina, is dividing us along racial lines by talking about quotas, dividing us about abortion or guns or other issues like that.

Well, let me tell you something about South Carolina. There's 102,000 children here with no health insurance. Most of those kids are white.

White people and black people in the South have a common interest. Their jobs are going offshore. They haven't had a raise because health-insurance premiums have eaten up all their money. They need -- $70 million was cut, got cut out of public health insurance -- public education here, because the president's economic program has been such a disaster.

Everybody deserves a break -- not just in the South, but everybody else. And working people, no matter what color they are, need to vote together, because their economic interests are not served by the Republicans. And I think that's why the election needs to be about health insurance, economic opportunity and jobs, and better educational opportunities for everybody.

WALLACE: Governor, I don't think anybody would deny that those are very important issues, but why take the others -- abortion, guns, God, gays -- off the table? I mean, it sounds like you're uncomfortable talking about values.

DEAN: I'm very comfortable talking about values, but we're never going to agree on some of these issues. I actually have a more conservative positions on guns than many Democrats, although I do support the assault-weapons ban and background checks and all that. But...

WALLACE: But aren't those legitimate issues, whether it's a woman's right to choose versus right to life, whether there should a national ban on assault weapons, gay rights?

I mean, aren't those issues -- I have to say, I remember back in 1988, because I was covering the campaign, when Michael Dukakis said that the campaign is about competence, not ideology, and the Republicans killed him on that.

Don't American voters care about values?

DEAN: They care about values. And there are a lot of different kinds of values. My attitude is, each state's going to make their own kinds of decisions about these difficult issues that we're -- you know, the social issues that divide us.

My question is, what we have in common is what we ought to look at. This president ran as a uniter, not a divider, and that was a complete falsehood. What he has done is use words like "quota" to send race-coded words to folks, talking about scaring them into thinking somebody from a minority community is going to take their jobs. On and on it goes.

What about what we have in common? What we have in common is we need better education for everybody. We need health care, health insurance for everybody. Every industrialized country in the world has health insurance except for us. We don't have to have a complicated government-run system. But we ought to have it, like we do, for the most part, in Vermont, at least for all our kids.

So why can't we talk about jobs, health care and education, which is what we all have in common, instead of allowing the Republicans to consistently divide us by talking about guns, God, gays, abortion and all this controversial social stuff that we're not going to come to an agreement on?

I really believe that states ought to have a role. My gun policy basically is let's keep the federal laws, let's enforce them with great vigor, and then let's let every state make additional laws if they want to. You're going to have states that want gun control making more, and you're going to have states like my state saying, look, we'll enforce the federal laws and leave it at that.

Why can't we take that kind of an approach to these issues and stop getting exercised about them? That's what cost this election. Why can't we look at what we have in common: economic opportunity, educational opportunity, health insurance? Those are the things that I think are value-driven.

And I think that's where this administration falls short on values. They don't seem to care about ordinary people. They'll do everything for corporations. They give $26,000 in tax cuts to the top 1 percent. The rest of the people get $304 and a big property-tax increase, big health-insurance increases and big college-tuition increases.

That's where I think that the battle about values is in this country and in this election.

WALLACE: Governor Dean, we're going to have to leave it there. But I want to thank you very much for coming on this first program. And you are always welcome on "Fox News Sunday."

DEAN: Thank you very much, Chris. I appreciate it.