BILL O'REILLY, FOX NEWS HOST: How do you assess President Bush's falling poll numbers? He's at the lowest level of his presidency now. Why do you think that's happening?

CONDOLEEZZA RICE, SECRETARY OF STATE: Well, Bill, I'm not one who can assess poll numbers in American politics. I know that this is a president who has had to do a lot of very difficult things. He's had to deal with the largest terrorist attack on American soil, now the largest natural disaster in the United States. And he's had to make some very difficult decisions. I do know that he is not someone who reads the polls. And he will tell you that he's going to do what he thinks is right. But I'm really not competent to ...

O'REILLY: Are you guys worry about it? Because you're a close adviser in addition to being secretary of State. And you see poll numbers fall that quickly, is it a concern?

RICE: I think what will be a concern is where is this administration viewed in a few years in terms of what it's achieved.

O'REILLY: All right. So you're going to tough it out and hope that history proves you correct.

RICE: I think that's all an American president can do, because the American president can't read the daily poll numbers. The American president can't read the daily headlines when he's in the midst of historic changing events.

O'REILLY: It's going to be fascinating to see how history unfolds on this. Now, 60 percent of black Americans, according to a new poll out today, say that race had something to do with the rescue effort in New Orleans, all right? Now you don't believe that...

RICE: No, I don't believe that.

O'REILLY: Right, obviously you don't. And I don't believe that either. But you know who Damon Wayans is?

RICE: I do.

O'REILLY: A very popular black actor and comedian. Comes out and blasts Bush. Kills him. All right. About Iraq and about a whole bunch of other things. I think that influences popular opinion in the African-American community against the president. Am I wrong?

RICE: Well, I do think that there is a lot being said out there that is being said without people questioning the assumptions. I think there is a lot being said out there that is just patently not true, particularly if you know this president. But it's also an emotional time and people say all kinds of things.

I happen to know this president. And I know how much he cares about equality in America. I know how much he cares that minority kids get a fair shake in the educational system. Many years ago I heard him say that he was concerned about the soft bigotry of low expectations and that he was going to do something about the fact that minority kids were in third grade not yet even reading at a third grade level. That's what he cares about. Because the president knows that we have had a history in which race has been sometimes a barrier to opportunity.

O'REILLY: But he doesn't directly address remarks to the African- American community. For example, last night on "Talking Points Memo" here on this program, I laid out on the screen how much more the Bush administration has spent on poverty entitlements, which directly influence poor African- Americans, than the Clinton administration. We had it on the screen. And it's indisputable.

But you don't hear Mr. Bush go out into Harlem or South Central and say here's what we're doing for you. Why don't we hear that?

RICE: This is a president who is going to do what he thinks is right.

O'REILLY: But why don't we hear that?

RICE: Well, he does talk about the need for minority home ownership. He has put enormous amounts of money into community colleges and historically black colleges.

I would hope, Bill, that people who report on issues would...

O'REILLY: You know they're going to hose you.

RICE: I would hope so.

O'REILLY: You know this is the most anti — the press is the most anti Bush press I've ever seen in any administration, perhaps with the exception of Nixon.

RICE: Well let me have my hopes that people are going to report this fairly. But let me just say right here that this is a president who has not only cared about minority empowerment, not only cared about equal opportunity for minorities, but he's done more than any president I can think of in recent years.

O'REILLY: He's certainly spent more money. I don't know if it's done...

RICE: For instance, standards for — so that school children are actually reading at the grade levels they're supposed to be at.

O'REILLY: No Child Left Behind.

RICE: No Child Left Behind. And I was asked a couple days ago, "Well, what do you say to foreigners who say, well, you have a race problem?" And I say, "Well, yes, indeed. We have long had a race problem. Everybody knows that."

But you can not lecture about race when you look at the United States. It has the most diverse cabinet in the world, the most diverse foreign service in the world, the most diverse business community in the world, the most diverse journalistic community in the world. This country has made enormous strides in race relations, and we've done it the right way.

O'REILLY: One more question on this. Does it hurt your feelings that most black Americans don't like the president?

RICE: No.

O'REILLY: Do you take it personally?

RICE: I don't take anything personally, no. No. But I do like to have an opportunity to talk to people about what this president has meant for the empowerment of black Americans.

O'REILLY: Does it hurt your feelings when some anti-Bush people say that you're a shill for him and sold out your race?

RICE: Oh, come on. Why would I worry about something like that? Bill, the fact of the matter is, I've been black all my life. Nobody needs to help me how to be black.

O'REILLY: A bit later on, we'll talk with Secretary RICE about Iraq and Iran. And we hope you stick around for that. Coming next, 34 elderly people killed by Katrina flood waters while the owners of the nursing home left them, split leaving them to die. Follow up report after these messages.

O'REILLY: In part two of our conversation with Secretary of State Condoleezza RICE, we zero in on Iraq and Iran.

O'REILLY: Our military analysts, I think, are the best in the business here at FOX. And they think that this is now Vietnam in the sense that it's a war of attrition. That the al Qaida and the Sunni fanatics have said, "We're going to wear the United States of American down, OK. We're going to bomb them down." Just like Ho Chi Minh did in Vietnam. And sooner or later, probably sooner, the American public's going to turn on the action and demand they pull out.

The American public is now against the war, according to the polls. Is the war of attrition being won by the terrorists and the Sunnis?

RICE: Well, I don't see this as a war of attrition. And I think the Vietnam analogy is really faulty. You don't have, for instance, a big conventional army on the other side of the line as you did with the North Vietnamese army with lots of outside help from China and Russia, the Soviet Union and others.

And you certainly don't have a, quote, "resistance movement" that could be thought of as at least as popular. This is not a popular movement by any stretch of the imagination.

And that's why it will not take hold in Iraq. And it will eventually die.

O’REILLY: But it's been a successful movement in the sense that most Americans are now against the Iraq war. They don't feel it's going well.
RICE: I also see an American public that says, "We shouldn't leave until the job is done." They don't want to prematurely...

O'REILLY: No, they don't want to cut and run.

RICE: No. Because...

O'REILLY: They just think we're not doing well there.

RICE: But I think the reason it's hard for people to see that we're doing well is it's a lot easier to see the violence every day. And there was horrible violence today again.

O'REILLY: Is it press driven, then?

RICE: Well, it is easier to put a picture on television of a suicide bomb than to show the kind of process that's going on of where people are registering to vote and people are...

O'REILLY: But most of the press, and we talked about this earlier, in the first segment, most of the press is anti the Iraq action. You see, you have an administration that is up against a tremendous press juggernaut that doesn't like you.

RICE: Well, it's also hard...

O'REILLY: You know that.

RICE: Well, quite apart from what the press may or may not like, there is also the problem that the press reports on a daily basis — headlines every day — when in fact this is a somewhat longer term process in Iraq. And where the political process has been moving just inexorably along. That's harder to see, that's harder to report on. But you know, there are times when people see it. When 8.5 million Iraqis went out and voted...

O'REILLY: Yeah, that was big.

RICE: ...people knew that we were in Iraq for the right reasons.

O'REILLY: Yeah, but the truth of the matter is, that our correspondents here at FOX News can't go out for a cup of coffee in Baghdad.
RICE: No. But the people...

O'REILLY: That's tough — that's tough!

RICE: No, it's tough. But would they have wanted to go out for a cup of coffee in Baghdad when Saddam Hussein was in power? I don't think so.

O'REILLY: No, no. But...

RICE: So it takes time.

O'REILLY: But after three years you expect a little security in the country.

RICE: No, it takes — but there is security in 13 — 13 of the 16 provinces in that country are relatively stable. We just turned over, in Najaf in the south, control of that holy city to the Iraqi forces. You can go to most of that country, and it's fine. There is a part of the country, and unfortunately Baghdad, the capital...

O'REILLY: Yeah, Baghdad's the big one.

RICE: ...is a part of it, where there is a persistent terrorist insurgent presence that is going to have to be rooted out. But Iraqi forces are getting better, they're doing a lot of the fighting themselves.

O'REILLY: I hope so.

All right. Iran. Now, this is America's biggest enemy, next to North Korea, I think, in the world. Would I be wrong in saying that?

RICE: Well, Iran is certainly a state, today...

O'REILLY: They're our enemies.

RICE: Yeah, I would say this is a state that is 180 degrees from the interests of the United States. That's right.

O’REILLY: They're helping the terrorists. They're infiltrating them into Iraq. They're harboring al Qaida.

RICE: They do very little for their own people, in terms of human rights and democracy.

O'REILLY: They're developing nuclear activity where they could hand it off to al Qaida if they wanted, or they could sell it to rogue states. And they're basically saying to you, the secretary of State, to the president, to the world, we don't care. They don't believe you have the military capability to hurt them, because you're bogged down in Iraq.

And it looks to me like this is just going to happen, that we're going to have to deal with these people. Do you see it the same way?

RICE: Iran is a state that is moving in the wrong direction. I would say 180 degrees in the wrong direction. But on one border they have now an Afghanistan that is a democratic state, an ally of the United States in the war on terror, a military ally of the United States.

On the other hand, they have a not-yet-finished project in Iraq, but one that, when it is, will be a non-theocratic, Shi'a-majority state that is the center, now, of a non-theocratic Islamic-related democracy.

O'REILLY: Are you positive that's going to happen?

RICE: I believe it's going to happen — I do, Bill.

O'REILLY: Really?

RICE: Yes. I do.

O'REILLY: Give me — 90 percent, 80 percent?

RICE: You know, they're going to make it. They are going to make it.

O'REILLY: I hope so.

RICE: Because — if I look at...

O'REILLY: With all, you know, the sacrifices that we've made.

RICE: If I look at where they were and I look at where they are now, they are going to make it. And I'm also enough of a student of history to know that everything is — that's a big historical change of any kind — is messy and violent and difficult.

O'REILLY: Nothing's easy.

RICE: Nothing is easy.

O'REILLY: Are we going to have to confront the Iranians militarily? Because Europe isn't going to do it, you know. I don't understand — let me get through this question, and then we'll go back to the Iran question. Why doesn't NATO help us in Iraq?

RICE: Well, NATO is doing some work in Iraq.

O'REILLY: No, no, come on!

RICE: They've got...

O'REILLY: Why don't they put in troops to help on the border, to help the pipeline security? Why don't they do it?

RICE: Well actually, actually at this point, now, we don't need more foreign forces in Iraq.

O'REILLY: Really?

RICE: No. What we need is Iraqi forces to be trained up, because they...

O'REILLY: We don't need any more boots on the ground?

RICE: We need Iraqi forces to be trained up. And that's what's happening. This fight has got to become the Iraqi's fight.

O'REILLY: Let's get back to Iran. The odds are we're going to have to confront these people, either with sanctions from the United Nations, which I never think you're going to get through. That's a corrupt body. And more militarily. Aren't the odds...

RICE: Well, I still think there is a lot of room here to have the world pressure the Iranians into doing what the Iranians need to do.

O'REILLY: Really?

RICE: They've got to live up to their obligations under the non- proliferation treaty. And where we're working pretty well with the Europeans to try to make sure that if the Iranians do not do that, that they will eventually end up in the Security Council.

O'REILLY: Last question for you. Anything you can do to OPEC to have them start — stop pRICE gouging? It costs them $4 a barrel to get the oil up and marketed, and they're charging $65 a barrel. I mean, is there anything you can do as secretary of State? Can you charm them? Can you take them out to dinner?

RICE: We — we talked to OPEC. And they have every reason not to want to sink the world's economy.

O'REILLY: But they're doing it.

RICE: That's the best force on OPEC. But Bill, as you know, we have an energy problem because we don't have diversified energy sources.

O'REILLY: Right.

RICE: And that's what we've got to concentrate on.

O'REILLY: And no more SUVs.

All right, Madam Secretary. As always, a pleasure to talk to you.

RICE: Always a pleasure to be with you.

O'REILLY: Thank you for coming into the no-spin zone. We appreciate it.
RICE: Thanks. Love being with you.