MATTHEWS: Welcome back to HARDBALL.

What will Congress do to stop President Bush‘s escalation in Iraq, if they choose do? Can Democrats shame Bush into a change?

Howard Dean is chairman of the Democratic National Committee.

Governor Dean, first question is Iraq; the second question is Iran.

What do you think? Where are we headed?

HOWARD DEAN, CHAIRMAN, DNC: I think the American people made it really clear where we‘re headed in the midterm elections. And the Democrats, and actually now a fair number of Republicans are now saying, “No, we should not add more troops to Iraq. And we need to find a way out of Iraq and not add more troops.”

So I think it‘s pretty clear where we‘re headed in terms of Iraq. I think the president‘s going to resist that. He wants to go in a different direction.

But, you know, staying the course is what the American people voted against, and I think in the House and the Senate, members of both parties led by the Democrats are clearly going in a different direction than the president. I think that‘s a good thing.

MATTHEWS: Will your party stand up against a war with Iran? It looks like the president‘s sort of edging towards military action against Iran.

DEAN: You know, the great shame among many shames of going into Iraq was we picked the wrong enemy. Iran is a danger. We‘ve got our troops pinned down in the wrong place. Saddam Hussein is a terrible person but not a danger to the United States. Iran is a danger.

Obviously, I don‘t think there‘s much stomach among the American people for a war with Iran, given what‘s going on for the last three and a half years in Iraq, but we are clearly going to have to stand up to Iran.

MATTHEWS: Does that mean attack them? Are we going to have a war against Iran?

DEAN: I think there‘s absolutely no stomach for that whatsoever, either in the Congress or among the American people after what‘s gone on in the last three and a half years.

MATTHEWS: So therefore, what do we do if they do develop and continue to move towards a nuclear weapon?

DEAN: Well, I think the administration did something very good. I rarely have the opportunity to say that. The other day when they cut of some of the major banks in Iraq (he may mean Iran) from any financing using American dollars. That‘s the kind of thing that has begun to turn North Korea around, and I think that those kinds of approaches are far better than having 135,000 troops on the ground without knowing what you‘re getting into.

MATTHEWS: What happened with your labor negotiations in the mile-high city of Denver? How did you finally get them to do the right thing to allow the Democrats to meet there for your next convention in 2008?

DEAN: Well, we still have plenty of negotiations to do. Look, I‘m very sympathetic with the labor movement on this issue. We‘re going to an arena that‘s nonunion, although we‘ll be union when we go there. But it will be union when we go there because we require that.

MATTHEWS: How many hotels do you have to unionize to make it legit for you guys?

DEAN: Well, more than we have now. I‘d like to get some more unionized. Because look, a quarter of our delegates are union. Many of the people who are not delegates are very sympathetic. We believe that unions have created the largest middle class in the world and that the labor movement is a good thing for America.

So many of our folks are much more comfortable staying in union hotels because we know they pay good wages. We know they pay good benefits, and we know that the people who are working there are being treated well by the management.

So of course, we prefer to go to union hotels and union arenas and so forth. I think this is an opportunity for us. The west has not traditionally been as friendly to unions as other parts of the country, but the west is changing and America is changing.

Under this—under this president, the average middle class person has lost $2,000 in income in the past six years. So we‘ve got to figure out a way to get that back, and I see the labor movement as historically a good thing for ordinary working people.

MATTHEWS: My colleague, Tim Russert, have a theory that the Democrats in 2008, looking ahead, have a better shot at perhaps winning states like Colorado, New Mexico, and Arizona, Nevada included, than they may have in some other parts of the country. In other words to make up the margin of difference and win the general election.

DEAN: I believe that‘s true, Chris. I think that—that the battleground is going to be in the west. We—look, Bill Clinton at one time or another, won virtually all those states that you just mentioned. I think he won New Mexico, Arizona, Montana, Colorado once, I think Nevada once. I can‘t remember all the...

MATTHEWS: He won Arizona the second time, I know, in ‘96. That‘s for sure.

DEAN: Right. Right, and so we can win in the west. Now we‘ve had some—we have some great governors, including the governor of Colorado, Governor Ritter, who was just elected. Mayor Hickenlooper, Senator Salazar, who—all of whom have really worked hard to get this thing on track and have done everything they can to make it—make it clear that they‘re going to make sure that this convention works well. It‘s a great team, and it‘s a new day in the west.

And really, frankly, it fits in with the 50-state strategy. We everywhere. We want to be in the west and the south and in areas the Democrats haven‘t gone before. Because we know we can win in the west and the south, and we shouldn‘t shy away from going to those parts of the country.

MATTHEWS: Can Hillary Clinton win in the middle of the country? Michigan, Pennsylvania, Ohio, states that are gun toting states? Can she sell, a senator from New York, the woman who‘s had a pro- -- anti-gun position, can she take on the gun-toting center of the country and win there?

DEAN: The—the answer to that is, first of all, I don‘t discus the ‘08 election, because if I say anything good about one candidate, everybody‘s going to wonder why I didn‘t say anything about them.

MATTHEWS: No, if you say something good about Hillary, people will be happy, I think.

DEAN: Well, let me just say this. I don‘t think there‘s any candidate that can‘t win the presidency. We have a really strong slate, and I believe that. It‘s true. Some of them ran last time. I know them. They‘re good people.

There‘s not—- I don‘t think there‘s one person who‘s a serious candidate on the Democratic side that can‘t win, particularly with what‘s going on, on the Republican side and what....

MATTHEWS: I‘m going to call Dennis Kucinich the minute you‘re done and tell him the good news. Can I do that?

DEAN: Thank you, Chris.

MATTHEWS: OK, thank you, Governor Howard Dean, chairman of the Democratic National Committee.

Original transcript from MSNBC Transcripts.