CHRIS MATTHEWS, MSNBC ANCHOR: ...But first we‘re joined by the chairman of the Democratic National Committee, Howard Dean.

Governor Dean, is your party holding all the cards tonight?

HOWARD DEAN, DNC CHAIRMAN: Well, we hold a lot of them because the American people have given those cards to the Democrats. The president had his opportunity. He misled the American people in Iraq. It‘s really been a president that‘s helped folks at the top but not much in the middle or at the bottom. And I think you‘re going to see more of that tonight.

I‘m particularly offended by the healthcare plan, which essentially imposes a tax on middle-class Americans and a big tax break, again, for the folks at the top. And that‘s been a recurring pattern in this presidency.

MATTHEWS: Let me ask you about what‘s going on on the Republican side. You must be enjoying this today. The word in the press is that—there‘s a story that John McCain, who is the frontrunner, according to the polls, along with Giuliani for the nomination. In fact, the betting money, which I‘ve been watching since I‘m heading to Vegas soon, the betting money is on McCain. He just took a big shot at the vice president, saying that Dick Cheney gave the president lousy advice in getting us in the war the way he did, fighting the war the way he did. And then you see Scooter Libby saying that—his lawyers saying that Karl Rove‘s people and all those were trying to set him up.

It seems like there is a division of fire on the Republican side with everybody, the usual suspects all not being supportive of each other these days.

DEAN: Chris, this is the same thing we saw in Watergate when things started to implode. The question is not did the president—vice president give the president lousy advice. The question is did he withhold information from him and cause a war that had no reason to be executed?

MATTHEWS: What‘s the answer? Did he?

DEAN: Well, nobody‘s going to know that right now until we find out what‘s in those papers and what‘s gone on and at the Congress—one of the reasons the Democrats are in the majority right now is Congress didn‘t perform their oversight function for six years and now we‘re going to do that.

MATTHEWS: Is George Bush an honest man?

DEAN: Most of the American think the answer to that is now.

MATTHEWS: How about the veep, is he an honest man?

DEAN: I think most of the American public believes the answer to that is also no.

MATTHEWS: How about you, governor? Do you think the vice president‘s an honest man? Or is that being considered in this trial right now?

DEAN: You know, I don‘t want to get involved in the trial because that‘s up to the jury. But I do not think that the president was truthful with the American people when we got into Iraq. Nor do I think the vice president has been truthful with the American people.

MATTHEWS: Why did we go to war in Iraq if it wasn‘t for the reasons given?

DEAN: I have absolutely no idea. And I‘d like to know an honest accounting of that for the 3,000 American families who have lost their loved ones.

MATTHEWS: Let me ask you about the Democratic position. There seems to be an emerging bipartisan feeling, a general consensus that putting more troops into the streets of Baghdad is a dangerous move. John Warner, the much-respected ranking Republican on Armed Services from Virginia, is putting out his own resolution along those lines. Do you think that‘s the American consensus, at least don‘t make this war worse, as a doctor would say, don‘t do any more harm?

DEAN: Well, I think that there is a broad consensus among the American people and also in the military that additional troops is not going to work. We know—or we believe now that President—Prime Minister Maliki also told the president he didn‘t want any more troops.

So, you know, this is—the president got us into a disaster and it‘s unfortunately getting worse, not better. Democrats have said that we ought to have a strategic redeployment of our troops, that we ought to be out by 2008. And I think that hasn‘t changed any.

MATTHEWS: Let‘s talk about healthcare because you‘re a doctor, an M.D. Let me ask you about this. It seems to me that healthcare is no longer the topic of choice for people like Ted Kennedy and Hillary Clinton. The Republicans—you‘ve got Mitt Romney, the—who just left as governor of Massachusetts, who had a plan. You‘ve got Arnold Schwarzenegger, who gets a lot more publicity. He‘s got a plan. Is there a bipartisan opportunity to give all Americans a healthcare plan? Is there an opportunity out there for both parties to get together?

DEAN: There is, Chris. There is an opportunity. Unfortunately, the president is once again going in the wrong direction and going in the direction that the American people don‘t want. What the president has proposed is tax deductions, which of course help people at the upper end of the income scale. And the people without insurance are at the lower end of the scale.

MATTHEWS: I thought he would tax people‘s better premium—higher premium benefit programs.

DEAN: Yes, you know, that hits union members and middle-class people. The one thing that a lot of middle-class people still have is a decent healthcare plan. Now the president wants to tax that...

MATTHEWS: As income.

DEAN: That doesn‘t make any sense whatsoever. I mean...

MATTHEWS: Is he going to say that it‘s income? If you get your teeth fixed, that‘s income?

DEAN: That is what has been leaked about the speech, is that he‘s going to say a good healthcare plan above the average is income and it ought that will be taxed. You know, the problem is, if this is going to be fixed—and I hope it will be—it‘ll be because...

MATTHEWS: The trouble with that, won‘t it be the healthy young people, a you guy who‘s 25 and believes he can take on the world, you know, our kids, for example, will say, “I don‘t want a healthcare package if I have to pay taxes on it.” And you will defeat the purpose of collective risk?

DEAN: Well, that‘s one of the problems. That certainly is a problem. The other problem is that people who don‘t have health insurance are making $30,000 and $40,000 and $20,000 a year. They can‘t benefit from a tax deduction of $7,500. So once again, the president‘s programs seem to be aimed at those who are making a lot of money and they seem to be taxing the people who aren‘t making much money in order to pay for that. I think that‘s a huge mistake.

We could have a bipartisan agreement on healthcare, but it‘s going to be done inside the Congress. The president looks now like he‘s not interested in playing a serious role in that.

MATTHEWS: If you were sitting in the Congress tonight, would you get up and applaud the president when he came in?

DEAN: Certainly, of course, I would. You employ—you applaud the office, no matter what you think of the occupant of the office. When people get up and stand, and I hope they all will, it‘s not because of President Bush, it‘s because we respect the presidency of the United States.

MATTHEWS: Let me ask you about your party and your schedule for next year. I‘ve been studying it like everybody else who‘s a political junkie. Most of the people watching the show know that the first four big primary tests are going to be, of course, the Iowa caucuses, Nevada caucuses—

Nevada caucuses, I have to say it right—New Hampshire primary and South Carolina.

I read today that California is moving up and may go to February 5 right here on the first big Tuesday, and that Florida is trying to move up and try to sneak in there maybe a week in after New Hampshire. That would seem to benefit Hillary Clinton, who has the unlimited bucks. She‘s not taking federal financing. She can blow out these other guys by going to big states early and prevent them from getting started early. It seems like bad news for John Edwards.

DEAN: I think a lot of the candidates will be well financed. So I‘m not concerned about that.

However, if Florida moves up early, any candidate who campaigns in Florida won‘t get any delegates. And their delegates will be redistributed to the rest of the field. So the Democratic rules are very clear about that. I can‘t do anything about that. Those were rules that have been adopted.

On the Republican side, if Florida moves up early, no delegates will be awarded in Florida.

MATTHEWS: So you don‘t think that‘s a factor.

(CROSSTALK)

MATTHEWS: What about California? The largest state—we only have a few minutes. If California, which—I‘ve always advocated this when I used to write for the San Francisco paper—had the Rose Bowl primary, move it up so the biggest state, the most diverse state gets to pick presidents, not just small states like New Hampshire. If they move up that early, it seems to me Hillary, who‘s a celebrity like we‘ve never seen in politics. She owns the Left Coast. It seems like you‘re giving it to her if she has an early California primary.

DEAN: Well, again, I think that there are a number of candidates who

will raise the money and have substantial status. Don‘t forget, we‘re well

almost exactly a year from the first primaries. That‘s going to give people a year to get out and do all kinds of things. When I started running four years ago, nobody ever heard of me. And, you know, I wish California had been moved up when I was running.

MATTHEWS: So you‘re you challenging my assumption or presumption that if you have big state primaries early, that doesn‘t help Hillary? You don‘t think that helps Hillary?

DEAN: I...

MATTHEWS: Who‘s the best-known person in the country politically, almost, next to Bill.

DEAN: The reason I would prefer not to have big state primaries early is I would like a level playing field for folks that—so that individual Americans could look people in the eye, shake their hands and take their measure...

MATTHEWS: I agree. Retail.

DEAN: ... That‘s why I like the retail of politics. Once you get past the first four, I would prefer California to be a little later. But if it gets to February 5, it‘s not going to skew the primary system. When people start moving before February 5, not only will it skew the primary system, but that will harm things a great deal. And frankly, we have some really tough rules...

MATTHEWS: You know, We got through—last question, governor. We got through Watergate. I was here during that. And you know all about it. And it was a bad time in politics.

And one of the good things to come out of it was some sort of public financing of campaign so that the tycoons don‘t call the shots. Hillary Clinton has apparently decided not to go to public financing but to go to unlimited campaign fundraising to win the campaign for the Democratic nomination. Is that a healthy thing, to give up on the Watergate reforms so soon?

DEAN: I can‘t complain about any candidate doing that because I was the first candidate to ever do it in the primary before the general. We had a ton of—an enormous amount of support. It was all grassroots support, small donations. We concluded we would not be able to compete with the Republicans...

MATTHEWS: So where are we? We‘ve forgotten Watergate already? Hillary was on the Watergate committee. And we‘re going to drop all the reforms because you guys can raise a ton of money now.

DEAN: That‘s totally untrue. In fact, the Senate just passed and the House just passed terrific a ethics legislation which is long overdue. Look, I‘d like to see public financing with campaigns.

MATTHEWS: OK, you can‘t have a cheeseburger from a lobbyist. OK, I‘m really happy now governor. You can‘t take a cheeseburger from a lobbyist, but you can take zillions of dollars in campaign financing if you want to be president. What‘s the bigger ethical danger here?

DEAN: In $4,000 increments. Look Chris, I already said I‘d like to have public financing of campaigns. I hope we will, but we don‘t right now. And we have a system that it doesn‘t work because somebody decided to go outside the system. Otherwise, I‘m more guilty than anybody else. Don‘t forget we had a vote among our supporters on the Internet before I did that. So look, the system is broken. I don‘t think it‘s any candidate‘s fault.

MATTHEWS: Well governor, I‘m a big fan, despite what I say. Thanks for coming on. You were the first guy to come out against this war. I think you may end up looking very prescient in the history books, even if you don‘t get to be president. Thank you for coming on.

DEAN: Thanks, Chris.

Original transcript from MSNBC Transcripts.