Following is a transcribed excerpt from FOX News Sunday, Jan. 12, 2003.

TONY SNOW, FOX NEWS: Good morning from Fox News headquarters in Washington.

In the news this morning, tensions with North Korea, a potential war with Iraq, and a pitched battle on Capitol Hill over how best to rev up the economy.

Joining me now to discuss these topics and more, Senate Majority Leader Bill Frist of Tennessee in his first Sunday morning interview as majority leader.

Six days in, congratulations.

SEN. BILL FRIST, R-Tenn.: Good to be with you.

SNOW: Let's talk first about the economy. The president has a $674 billion stimulus package, and already it's meeting some opposition from members of your own party.

Let me just read a quote from George Voinovich, a former governor of Ohio, now a senator. He thinks there are problems with the deficit. Here's what he says: "It's heavy, it's big. I don't think it will give us the shot in the arm or rev us up like I think we need to be revved up. As far as the eye can see, I see red."

Is he wrong?

FRIST: The economy needs really one thing. It needs a stimulus, yes, but what it really needs to do is attention to growth and jobs.

Right now we're in the middle of a soft recovery, an economy where interest rates are very low. Home mortgages are up because mortgage rates are low. Productivity is very good, but as we saw last Friday, joblessness, unemployment, is way, way too high.

So what I would argue is that the president's plan actually really goes right where the problem is. Grow that economy, and by growing the economy over time, yes, starting now, but over the midterm and long term, we'll be able to create jobs and make this a true recovery, including lowering that unemployment rate.

SNOW: So when Democrats talk about a short-term stimulus, and targeted tax cuts that expire, your contention is, what? That that doesn't help the long-term economic growth?

FRIST: I think you need a balanced plan, and to me the attractive thing about the president's plan is that it looks at accelerated tax cuts. It looks at business investment incentives and child tax credits and marriage penalty tax, the dividends income, and addresses the unemployment issue.

It's balanced in terms of short term and long term, with the ultimate goal not just a sort of shot in the arm, a short-term stimulus, but that promotion of growth, which can be both short-term, midterm and long-term, which means more jobs.

SNOW: So, again, you don't think a short-term stimulus ultimately helps the economy in the long run?

FRIST: Well, if you look at the president's plan, which is about $670 billion, there is a stimulus of about $60 billion which is right now. But the real beauty, to me, is that coupled with that stimulus is this larger stimulus for growth which takes place not just this year, but the year after that and the year after that, and growth of the economy, and thus creation of jobs.

SNOW: You mentioned before low interest rates and everybody buying homes. We saw a stock market bubble in recent years where a lot of people invested because things looked attractive, and everything collapsed. Are you worried about a housing bubble?

FRIST: No, I'm not, because it is the one place that today the consumer does save and does invest.

One of the real problems that we have today, I think, is the credit cards getting higher and higher and higher in terms of the debt that individuals own.

With these homes out there, we allow individuals to save and to invest on a steady, a progressive way, over time.

So I don't think we'll see a housing bubble, and I think the housing market in many ways has saved us through the initial recession, and made our recovery actually more strong, stronger than it would have been otherwise.

SNOW: Now, I mentioned before Senator George Voinovich. He is hardly the only Republican to express skepticism. You have John McCain. You've got Lincoln Chafee whose already said that he's not going to get involved. You've got Chuck Grassley, whose committee is going to be handling a tax bill. All of these people -- Kay Bailey Hutchison, Olympia Snowe -- others are saying we're not sure this is going to work.

Do you think you're going to have the votes to get the president's plan through?

FRIST: I do think we will. I think that the plan, which was presented just seven days ago, or six days ago now, will be looked at, will be debated on the floor of the United States Senate, and yes, at the end of the day it will probably even be amended to some extent.

But recognition by the American people, by the representatives in the United States Senate that a jobless recovery today is one that just can't be tolerated means we need to act, and that there are things that government can do.

And remember, with the president's last tax plan, in 2000, when it was delivered, we heard the same sort of questioning, the same sort of lack of support.

So yes, the president will have to sell it. Yes, the United States Senate will have to debate it and look at it, each and every one of those components. But at the end of the day, I am confident that in a bipartisan way, just like in 2001, when we passed this last tax plan, that we will have support to pass it, to implement it and ultimately reap the benefits of it.

SNOW: In 2001, the tax plan was actually larger than the original proposal.

Tom DeLay, who is the House majority leader, says the president's tax plan, that he regards it -- here it is: "I see the president's package as a floor, not a ceiling." He thinks there may be even further tax cuts. Is that a possibility?

FRIST: Well, I think, as you point out, you just named several people who said $674 billion as a growth and economics package and jobs package is too much, and you hear others, Tom DeLay, basically saying no, that's not enough.

FRIST: Given the fact that our economy is sluggish, the fact that unemployment -- as I said last Friday, we see what those challenges are. It may take an even greater investment, and that's the sort of debate that will be carried out on the floor of the United States Senate.

SNOW: Democrats again have said that there's not enough short- term stimulus. Would your response to them, therefore, be OK, you want more stimulus, we'll give you bigger tax cuts?

FRIST: Well, it could be, but no. Because I think the plan, as presented, is a balanced plan. It's sort of like the same rhetoric that they put out, tax cuts for the rich. You know, the same old rhetoric as before.

You can always take one part of those six different planks, one of those planks, and say well, that benefits a certain population. What's important is that you look at the overall plan itself. When you say that there are 92 million people who are going to be handed a check for $1,000 this year, your viewers right now, is that a tax cut for the rich? Depends on who you are. Is that an immediate stimulus? It depends on what you do with that $1,000.

The family of four, the mother and the father and the two kids, who are going to have a 96 percent tax cut, tax cut, this year because of the president's plan, again, that's money in their pocket to spend that they can, as consumers, stimulate the economy.

SNOW: Tom Daschle, the former Senate majority leader, has said -- he's called it, quote, "obscene." Your reaction?

FRIST: Well, you know, you can call it obscene. Tax cut for the rich will be the same sort of rhetoric.

I'll debate anybody on the substance itself. When you look at acceleration of everybody's tax cuts, accelerated forward, that benefits the poor, the middle income and the rich and the affluent.

Child tax credits. If you have a child, instead of getting $600 this year, you'll get $1,000 this year.

SNOW: Now, before the president presented his plan, the press was saying $300 billion. All of the sudden we wake up one day and it's more than twice as large as expected. Is this the president's way of saying "in your face" to Democrats?

FRIST: Well, I don't know. I don't think the president is going to be playing politics with this in terms of...

SNOW: Well, of course he is. I mean, don't you think this is a good political issue as well as a good economic issue?

FRIST: Well, you know, again, I don't think he'd be playing politics with it. I think he's going to put the very best policy, which will help hard-working Americans out there, or Americans not working who have lost their jobs, addressing the range of issues that we've talked about, part of it being tax cuts, but also the re- employment accounts that give somebody $3,000 to go out and get a job, and if you get that job, you can keep what's left over. What -- you know, what a great, new innovative idea to help people who have suffered by this economy.

SNOW: Now, Democrats also are complaining about the fact that the president has renominated Charles Pickering for the 5th U.S. Circuit Court of Appeals. Charles Schumer has been sort of a lead man on the attack. Let's listen to what he has to say about Judge Pickering and the president's decision to nominate him.

(BEGIN VIDEO CLIP)

U.S. SENATOR CHARLES SCHUMER (D-NY): To renominate Judge Pickering, who has not built a distinguished record, and is probably best known for intervening on behalf of a convicted cross-burner, shows, unfortunately, that Richard Nixon's Southern strategy is still alive and well in the White House.

(END VIDEO CLIP)

SNOW: So, is the Southern strategy alive and well?

FRIST: No. Again, I think this, unfortunately, is trying to use race and racial issues to play politics.

We have a lot of unfinished business that's left over from the last Congress, some of which I hope we address this week -- the appropriation bills, the 11 spending bills. We had to address the unemployment insurance from last week, and I would add to that unfinished business from last year the 31 nominations that the president sent over about three to four days ago.

Judge Pickering is a well-qualified judge. The American Bar Association said -- used those words as well-qualified. There are many people who think he did not get a fair hearing before, so I receive his nomination gladly, and I hope that the Judiciary Committee will have a fair hearing and be brought to the floor, and the various issues that Senator Schumer mentioned can be discussed both in the hearing itself as well as on the floor and debated.

SNOW: You support Pickering?

FRIST: I do support Pickering, of what I know. Remember, he has never been presented to the floor of the United States Senate, and I...

SNOW: And you're saying on what you know, you have an open mind -- you might vote against him?

FRIST: No, I plan on supporting Pickering. I'm saying that he -- I've never met him, I've not seen his credentials. It's never been presented to me as a United States senator. And once it is, if it's as billed in terms of a qualified judge, somebody who has been involved in racial reconciliation aggressively in Mississippi, who has the endorsement of the American Bar Association, the overwhelming support of Mississippians, the support of the president of the United States, of course I'll support him.

SNOW: OK. Ronnie White, Missouri Supreme Court justice who was defeated on the floor of the Senate seven years ago. A number of Missourians now, including Richard Gephardt, the former House minority leader, say the president ought to renominate Ronnie White. Should he?

FRIST: Well, Ronnie White came forward with a little bit different record, where 80 percent of the law enforcement -- 80 percent of the sheriffs in his home state, Missouri, said absolutely not. Wrote letters to all of us as United States senators. So I think, we once again, could look at his qualifications if he happens to be nominated.

SNOW: But you don't think that's going to happen?

FRIST: I don't think that's going to happen, and if it does happen, I think he'd be defeated again based on his qualifications.

As a United States senator, as the majority leader of the United States Senate, all these judicial nominees deserve a fair and equitable hearing based upon the facts, based upon the qualifications, and then through a vote, up or down, which Ronnie White had by the way, and Judge Pickering never did have, before the United States Senate, we will consider it, and at the end of the day I would hope that the American people would support that decision.

SNOW: The Bush administration is trying to figure out whether to file a brief in the University of Michigan case, that involves what opponents call quotas, what supporters call affirmative action. No White House has ever not expressed an opinion in a case of this nature. Should this White House get involved?

FRIST: I think that it should. You know, we've been through a very difficult time in the last six weeks, difficult in the sense that issues have arisen unexpectedly. I'm glad they had arisen broadly, because -- and even in our caucus the other day, issues surrounding race and race renewal, affirmative action legislation as it relates to race, are going to be addressed, and they'll be addressed again and again.

And what I am hopeful for and will fight hard for is that that dialogue on race, race relations, race renewal, race reconciliation, can be carried out in a more visible, a more open way, a less politically charged way.

And if we can do that, I think, as a society, we can make great headway in moral and civil progress.

SNOW: If the White House says that the Michigan plan is improper, that in fact it turns racial justice on its head, you know the reaction is going to be, there they are, they're against affirmative action, they're against diversity, they're against opportunities for black Americans.

FRIST: Well, and the White House -- I'm not sure what they're going to do. I have not talked to anybody at the White House about whether or not they're going to get involved.

Affirmative action means many different things to many different people, as we know from recent discussions. That interpretation to some people means strict racial quotas, which in the minds of I'd say even most people today, strict racial quotas mean that you're going to be discriminating against the party you did not discriminate in the past, trying to overcompensate.

And I think that debate is one that is probably worth having somewhere, whether it's in this particular case or not, I'm not sure where, but I think by elevation of that dialogue, by listening very carefully, people such as myself, leadership in Congress, my fellow members throughout the United States Senate, I think you're going to see a very positive dialogue on race, on racial issues, in all sorts of capacities that none of us would have predicted even six months ago.

SNOW: You were in the campaign, the reelection campaign for the Senate this year. Do you as a senator, Republican, want to recruit black party switchers? We saw one in Alabama this week, in the south. Do you think you have an opportunity to get some black party switchers to go Democrat to Republican?

FRIST: Well, I can tell you that the idea that all blacks are Democrats, that by definition if you're African-American, you're a Democrat, is something that offends me.

If you look at basic principles, whether it is values, whether it's respect for the spiritual beliefs, whether it is education and empowerment, whether it's the issues surrounding health, I would argue, and would continue to argue, that the Republican Party is more in sync, more in sync with the African-American population today...

SNOW: OK...

FRIST: Thus, thus yes, I aggressively will go out and recruit young African-Americans to run for public office, to serve for public office, as Republicans, and of course I would encourage people whose values are the same as ours to switch party, if the opportunity arises.

SNOW: So in your opinion, Democratic Party orthodox is out of touch with black America?

FRIST: Well, they take it for granted. There is absolutely -- I have no question in my mind, having been in politics aggressively the last two years as chairman of the National Republican Senatorial Committee, the Democratic party takes African-Americans for granted. And I'll guarantee the Republicans don't.

I wish you could have been at my Republican caucus just three days ago, when Sam Brownback stood up and gave a passionate speech about the outreach to minorities, African-Americans, when Ben Lighthorse Campbell stood up and talked about the outreach to Hispanics.

I hate using the word outreach, because it makes it sound like we have such a long way to go. But the discussion and the dialogue -- or (inaudible) or Kay Bailey Hutchison -- the excitement that is engendered by improved relationships based on common values is something that I hope that we can capture over the next several years.

SNOW: All right, Senator Frist, stand by. We're going to have more with the doctor turned senator turned majority leader when we return.

(COMMERCIAL BREAK)

SNOW: And we're back with Senate Majority Leader Bill Frist.

Mr. Frist -- Senator Frist, let's talk about healthcare. You're an MD, you understand the issue. Prescription drug benefit, everybody's talking about it. You going to get one passed soon?

FRIST: Yes, we will.

SNOW: And...

FRIST: I think it's a travesty that seniors who expect healthcare security as a part of Medicare today cannot depend on that. Right now, prescription drugs, outpatient prescription drugs, are not a part of the benefits package in Medicare.

I am absolutely committed that we will strengthen Medicare, improve Medicare, and in so doing will be able to offer a benefit, a prescription drug benefit to seniors.

SNOW: Now, one of the peculiarities of our system is a lot of people are uninsured and also insurance companies have no incentive right now to put together individual policies based on individual needs. They do it based on companies.

Do you think it is time to make all insurance premiums deductible, individual as well as corporate? Because right now, as you know, insurance companies are perfectly happy to write policies for GM, but not for you and me based on our needs.

FRIST: You hit the nail on the head. Much of that has to do with the inequity in the tax code itself as to what one can deduct, what a company can deduct. We need to level that playing field to get a greater incentive for insurance companies, and private insurance companies, to be able to offer policies appropriate for individuals.

On the flip side of that, we need -- on the demand side of that, not the supply side of that -- I believe we need refundable tax credits to lower that barrier, to make sure that the individuals, as many as 40 million people, although that's shifting in terms of the numbers, but still way too high, who don't have insurance, will be able to have sufficient funds to purchase one of those new policies that we just talked about.

SNOW: All right. The president, I am told, is contemplating some fairly major healthcare reforms. He's going to mention them in the state of the union. Is in fact healthcare going to be one of the central issues for Republicans in the next few years?

FRIST: I hope so. I spent 20 years in the practice of medicine, from medical school all the way to doing heart and lung transplants, and if there is one thing that I hope and pray for every single day, it's that we elevate -- and the president, I believe, is going to do that -- and now we as the United States Congress need to do that -- to elevate those healthcare needs, whether it's disparities in healthcare with minorities, whether it is the uninsured 40 million, whether it is strengthening Medicare, whether it is regional, where healthcare, like Appalachian healthcare being inferior -- that we address those head-on in this Congress. That would be a tremendous service to the American people.

SNOW: Speaking of Appalachian healthcare, in West Virginia, surgeons have walked off the job, saying they can't afford to work anymore. Malpractice insurance is making them broke.

In the past, Republicans have talked about trying to take on trial lawyers and trying to take on liability awards as a way of making it possible for doctors to practice surgery without going broke. Do you think you can succeed in doing that?

FRIST: Yes. And it's something that we fought for for the last 10 years, because we saw this crisis coming.

But now it's a crisis, and the reason why I am confident that we can do it now, with hard work and with the support of the American people, is that it's become a patient access issue. Before, it was the greedy trial lawyers versus the doctors and, you know, who cares. You know, people watching the show, who really cares about that.

Now, when it comes down -- if a trauma happens to you, you're driving home today from church, and there is no trauma surgeon there to take care of you, or if you are pregnant, you just learned it, and you go to your obstetrician and your obstetrician has to leave Florida and move out to California, because the rates are so high, or if you're in Nevada, where the trauma system actually closed down, or in West Virginia, or the other day, where a patient had to be transferred, a trauma patient, or a very ill, critically ill patient, 90 miles -- all of the sudden the American people understand that sky- rocketing premiums are hurting them.

One quick statistic: the average obstetrician in Florida delivers 150 babies. The obstetricians malpractice insurance cost $150,000. Every time he or she delivers a baby, there is $1,000 tax on that baby that is ultimately paid by the family itself.

It's unacceptable. Today physicians are leaving the field, leaving specialties, and are leaving states. We are in a crisis.

SNOW: Do you support a ban on cloning human beings?

FRIST: Absolutely. In terms of cloning itself. Cloning and stem cells are two entirely different issues. But we should not be cloning individuals.

SNOW: OK. Now, how about the so-called therapeutical research cloning. You're also opposed to that.

FRIST: I am opposed to any time that you create an embryo itself with the purpose being destruction, and that would include the so- called research cloning.

And remember, research cloning just is that, it's experimental. There's been no demonstrated benefit of that to date, so I don't think you ought to destroy life in order to...

SNOW: You're ready to move those bills?

FRIST: We'll address those at some point. I don't know exactly what the agenda will be, but they will be moving through this congress.

SNOW: Partial birth abortion -- should it be banned, and will the Senate vote on it?

FRIST: Absolutely. It's an abhorrent, abhorrent procedure that offends the civil sensibilities of every, I think, just about every American.

SNOW: The last Homeland Security Bill included an exemption from liability for drug makers, principally Eli Lily for thimerosal. You supported that. Now you're going to pull it back, but you want to vote on it again. Do you think in a few months that same protection will still be law?

FRIST: The issue, we pulled it out of the Homeland Security Bill -- I didn't put it in the Homeland Security Bill.

We need to pass a comprehensive vaccine bill that recognizes today that we are unprepared, from a homeland security standpoint. If we had to develop an ebola vaccine today, which the NIH would like to do, our country is incapable of doing that. We used to have 12 countries making vaccines. Today we have two countries. Nobody is going into the business. They are exiting the business today.

We need a robust manufacturing vaccine industry. At the same time, we need strong patient protections. That's what my bill does.

Unfortunately, the provisions that had to be pulled out only had one component in it, and didn't have the strong patient protections in it. But it did have the robust -- protection of the robust manufacturing...

SNOW: So you will -- that provision will become law, if you have your way?

FRIST: It will, as part of a more comprehensive balanced bill.

SNOW: OK. Let's talk a little bit about North Korea. John McCain is arguing that this administration has made a critical mistake. Unlike the Clinton administration, George W. Bush has already taken military action off the table.

Should this administration reserve military action as a possibility for a country that says that it's going to develop nuclear weapons and might even strap them on ballistic missiles?

FRIST: First of all, I haven't heard exactly what Senator McCain has said, but I would argue just the opposite of your interpretation, that our policies of the past indeed have failed.

We know that over $1 billion in global funding has gone to North Korea with the understanding under the agreed framework of 1994, that they would not be pursuing an arsenal of nuclear weapons. $1 billion from -- including us, going to that community.

They have lied to us. They had cheated on us. So clearly, that policy has not worked in the past.

The president's current policy, as I understand it, is to focus on diplomacy, to understand that we have a long way to go in terms of diplomacy, and what's different about North Korea is that we've got huge, strong support in the region itself.

We have China onboard, we have Japan onboard, we have South Korea on board. It's not between the United States and North Korea, it's between the world and North Korea. Therefore, containment and diplomacy, I believe, is the right course at this juncture.

SNOW: A lot of people also argue that we can't -- despite protestations to the contrary not withstanding from the secretary of defense, we cannot actually fight two wars at once and we need to focus on Iraq.

FRIST: No -- I don't -- I can only say what I am told by our military and defense people, that we would be carefully capable, if necessary, of fighting two wars. I'm not even going to use war in the same words I use North Korea. But if we're looking at regions around the world, if we were forced for whatever reason, that we're perfectly capable of addressing two wars.

SNOW: Based on what you know, if Saddam Hussein does not change his behavior in the next month, would the United States be justified in going to war against him?

FRIST: I won't say within the next month. Saddam Hussein has a very, very...

SNOW: OK. If the behavior does not change, would we be...

FRIST: If his behavior does not change, and we're convinced that he did not disarm from weapons of mass destruction, we will end up in a war. The bottom line is, has Saddam Hussein disarmed from weapons of mass destruction.

SNOW: Do you think there's any doubt about that?

FRIST: At this juncture, in my own mind, I think he has not disarmed from weapons of mass destruction.

SNOW: All right. Final question, or final quick set of questions here. When you came before your colleagues at the beginning of the week, you talked about wanting to reach out and working together on common ground and so on. The first thing you had was a conflict over unemployment insurance. You had a good pitched partisan battle right off the bat. Were you a little naive?

FRIST: No, and an hour-and-a-half after their initial objection to the bill, they agreed to the exact same bill. So I don't know if it was a political ploy or, you know, we've got this new guy on the block and let's stick it to him and see.

At the end of the day, we had an agreement coming into the room that employment insurance would pass by unanimous consent. And that was the agreement coming in the room. When I made the -- what's called propounding that, they objected, and it -- I wondered therefore, a little bit, after we had all agreed that it was going to pass. But within an hour-and-a-half, it did pass, and we'll move on.

You know, part of this is politics. Part of it is the political game. Obviously, I approach this as reaching out, reaching across the aisle. I am committed to that. I'll be looking at results, action, good policy, good substance, political games that go back and forth I will tolerate as other people have.

SNOW: So they tested you?

FRIST: Well, they tested me, but it really wasn't a very big test. It was a little curve ball, and we hit it out of the park.

SNOW: All right, Senator Bill Frist, thanks for joining us.

FRIST: Thank you.