Karl Rove, Bill Burton on Economy's Impact on 2012 Race; Rick Santorum Talks Presidential Politics

Written by Bret Baier / Published August 21, 2011 / Fox News Sunday

Special Guests: Karl Rove, Bill Burton, Rick Santorum

The following is a rush transcript of the August 21, 2011, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

BRET BAIER, GUEST ANCHOR: I'm Bret Baier, in for Chris Wallace.

Wall Street takes investors on a rollercoaster ride while along the campaign trail, it's game on.

As the economic recovery stumbles and remains jobs challenged, presidential candidates crisscrossed key early states. We'll look at the intersection and politics and the economy with Fox Business anchor Stuart Varney and two former top White House aides who are working to get members of their parties elected, Republican Karl Rove and Democrat Bill Burton.

Then how does a candidate turned a solid debate out into cash and better poll numbers? We'll continue our 2012 one-on-one series in an exclusive, with former Pennsylvania Senator Rick Santorum.

Then America pressures Syrian President Assad to step down and U.S. involvement in Libya continues for a (INAUDIBLE). We'll ask our Sunday panel about both foreign hot spots and what should be done next.

All right now on "Fox News Sunday."

And hello, again, from Fox News in Washington. We'll talk some politics with our guests in just a moment.

But, first, the economy -- shaken by fears of recession at home and the debt crisis in Europe, the stock market had a rocky week, the fourth in a row. Let's take a look.

On Thursday and Friday, the Dow dropped 5.2 percent after beginning the week on an upbeat note. This month, it is off 11 percent. And for the year, the drop is 6.6 percent.

To get some perspective now on where we are and what might happen when the markets reopen, we turn to Stuart Varney from the Fox Business Network in New York.

Stuart, thanks for being with us. Is the U.S. on the brink of a double dip recession?

STUART VARNEY, FOX BUSINESS NETWORK: Very good question, Bret. We are certainly in a nail- biting time, are we not? The possibility of a double dip recession is creating high anxiety throughout America. Now, there is a consensus emerging that we are in a very low growth environment or no growth at all tipping on the edge of recession.

Meanwhile in Europe, there is a definitely a recession ongoing there and the banks are looking shaky because of all of this. Now, there's a three high anxiety factors affecting the markets. It doesn't look like there's going to be any relief for those three high anxiety factors coming up this week.

We know a little bit about the president's jobs plan. We'll know the rest of it after Labor Day. So far, what we have heard is not being taken as very encouraging, more spending and probably more debt. Meanwhile, Ben Bernanke, he's fresh out of policy options to get the economy moving from the Federal Reserve's point of view, and we have the Germans still refusing to bail out the rest of Europe.

So, Bret, to sum it up, this is a high anxiety week that we're going into. I would advice watching the price of gold. It's already up $220 an ounce in alone. That's a pretty good barometer of what I'm calling high anxiety.

BAIER: And, Stuart, how Europe deals with that crisis affects the U.S. directly.

VARNEY: Yes, it does.

Number one, the banks. Many of the America's banks are owed money by European sovereign nations. If they are looking shaky, so do too the banks. Meanwhile on the positive side of the ledger, hot European running away from all this anxiety in Europe comes straight over here invests oddly enough in our downgraded debt, pushing our interest rates down to historical lows.

Bret, I think you are going to see 3.5 percent, 30-year fixed rate mortgages within a couple of weeks.

BAIER: Interesting to watch. Stuart Varney from the FOX Business Network, thank you very much for your insight.

Now to politics, and the number one issue out on the campaign trail, the struggling economy.

Joining us from Austin, Texas, former Bush senior adviser, Karl Rove. He founded the group American Crossroads, whose goal it is to elect as many as Republicans in 2012 as possible.

And here with us in studio, former Obama deputy press secretary, Bill Burton. He heads up Priorities USA Action, a similar group designed to put Democrats in office.

Gentlemen, welcome back to "Fox News Sunday."

Bill, let's start with you. Economist Jeffrey Sachs, who has been a supporter of the president, said this week this.

Quote, "We're almost three years into this administration. There's been a plan and that's what everybody feels. The president didn't lead. He waited. We have no agreements and no leadership.

And frankly, I do think it's pretty odd the president is on vacation right now. Normally, I wouldn't care about such things, but the world markets are in deep crisis. It's no joke. This isn't just an August up and down little blip. This is a very serious situation."

Now, this wasn't a Republican candidate or Republican lawmaker. This was an economist who supported President Obama. Is this a problem for the president now on vacation?

BILL BURTON, FORMER DEPUTY PRESS SECRETARY TO PRESIDENT OBAMA: Well, this is obviously a very difficult time for the country. And you don't need to be an economist to understand that middle class families right now are really struggling. But it is not exactly like the moment that the president inherited from President George W. Bush. At a time when he came to office, 700,000 jobs a month were just being shed from the economy.

Right now in this recovery, we've seen 2.3 million jobs added to the recovery. The president has done things to help the economy to grow as opposed of shrink. But he'd be the first to tell you that he's not satisfied with the progress. But I'll tell you what? He's not had a lot of willing partners in the Republican Party to actually move forward on important jobs legislation.

BAIER: Why not put out this plan before the 10-day vacation?

BURTON: Well, for starters, I don't know that there's a fair- minded person in this country who doesn't think that the president shouldn't go with his family to spend a couple of days before his girls go back to school.

Secondly, I would say that most Americans don't need to see a bunch of bickering in Washington right now. What they need to see is lawmakers going back home to their voters and getting the sense of the urgency that these voters feel and coming back and getting to work. Now, what the president is going to do is he's going to lay out a plan for jobs. He's going to lay out his plan to cut the deficit.

And Republicans will have a choice. They can either work with him or they can continue to stop progress. And if they continue to stop progress, then that is the fight that we'll have in November and the American people can decide in November which direction they want this country to go in.

BAIER: Karl, you wrote in your Wall Street Journal column in June, quote, "failing to offer a well thought out vision and defended against White House demagoguery would set Republicans for a loss in 2012."

If, right now, voters were trying to see the Republican plan for creating jobs and increasing growth, where is that? Where do they turn? What is that plan?

KARL ROVE, FORMER SENIOR ADVISER TO PRESIDENT BUSH: Well, you turn to each of the candidates and that process will roll as we go to the primaries.

I'd like to go back to something that Bill said. Look, the president has had a Democrat Congress for over two-thirds of the time that he's been in office, and a Republican Congress and a Democrat Senate for less than a third of the time. He did have -- he got what wanted. He passed the stimulus bill in 2001 (ph). He increased spending during that year. He got Affordable Care Act.

When the president passed the stimulus bill, he said that unemployment by this time would be 6 percent. That 5 million more people would be working, nearly 5 million more people working today than are working.

The president's approval rating this week at Gallup on economy is 26 percent. There is a reason why. His policies have utterly failed. This is the seventh or eighth or ninth time that we've heard the president talked about producing a plan. And each time that he sort of gotten around or tossing an idea on the table, it is included only more spending, more deficit, more debt, and the American people are fed up with it.

BAIER: Bill?

BURTON: Well, I would say that the stimulus, for starters, did actually create jobs and any economists would say that it helped our economy grow as opposed to shrink.

What Republicans would have wanted to do, which was to do nothing, they fought the stimulus. They fought all the different things that the president has been trying to do. They fight the payroll tax cut. They fight the infrastructure bank idea -- things that we could do right now to put people back to work, Republicans are fighting.

What the American people want is progress, not more intransigence.

BAIER: As deputy press secretary for President Obama -- hold on, Karl -- you were the briefer for President Obama this time last year when they were on their vacation on Martha's Vineyard. In one briefing, you were asked what the difference was between the 2009 trip at Martha's Vineyard and 2010 trip.

And you said this, "Well, I would say the difference between last year's vacation and this year's is that since his vacation, the automotive industry is back on its feet, health care reform has passed, and the economy is now moving in a different direction than it was moving before."

You heard Karl mention the poll out, Gallup, 26 percent of Americans approving of the president's handling of the economy. What's the difference between last year's trip and this year's trip?

BURTON: I would say a big difference is that Republicans won the House and took the wrong lesson from that election. They won the House, and since that time, they have done nothing to actually produce jobs.They put nothing forward that would actually partner with the president to create jobs and move this economy in the right direction.

Are the poll numbers low right now? Sure. But when you a strong leader, sometimes, you have to make tough decisions that make people unhappy on both sides. But the president isn't sitting there poring over the polls every single day. What he's doing is he's trying to make the right decisions for the American people.

BAIER: Hey, Karl, at the GOP debate in Iowa, I asked all the candidates the question, whether they would accept this deal in which Democrats agreed to $10 in real spending cuts for $1 in tax increases. Every single hand on the stage went up, saying they would walk away from that deal, opposing any tax increases. Now, I was expecting some of them to push back and to ask for time for a nuanced answer. They didn't. There was no push back.

So, when Democrats complain about ideological rigidity or stubbornness in the modern Republican Party, do they have a point?

ROVE: Well, look, first, with due respect to your question, that was a question that had a predictable answer to it, and that kind of a thing when you're asking people to raise their hand and not offering them a chance to get a nuance answer, you're going to get raising hands.

Let me go back to what Bill said --

BAIER: Wait a second. Hold on. I mean, we gave them the opportunity, Karl. You know, so I mean --

ROVE: With all due respect -- Bret, with all due respect, that was lousy question for a debate. And if you wanted a better answer, ask that question to candidates individually.

BURTON: These guys wanted to be president of the United States. They can't talk to Bret Baier about what their vision is, or how to deal with the economy?

ROVE: Let's set the record -- let's set the record straight about what Bill said earlier about rigidity. Yes, there's rigidity in our political system and it starts with the president of the United States. Republicans had ideas to try and make stimulus bill better. And in a meeting in the White House, maybe Bill was even in the room. President Obama dismissed Eric Cantors' suggestions about how to make the bill better by saying, "I won."

This president had a Democrat Congress, I repeat, by overwhelming margin for two years and got everything he wanted.

Now, what have the Republicans done this year? The Republicans have insisted that -- the president set up political battle. He had the votes in November and December of last year to get his, quote, "clean debt" ceiling. But instead, he said he wanted the Republicans to, quote, "have ownership" in the deficit.

So, he waited until there is a Republican House and then tried to jam them, insisting on a clean debt ceiling. The Republicans said we want to have deficit reduction before we vote for an increase in the debt ceiling. They got it. The president applauded that bill and signed it.

So, you know, I love it. The Republicans passed a budget. The Democrats in the Senate haven't. The Republicans have passed a slew of job creating measures and the Democrats in the Senate haven't.

And the president now sits here and lectures us about how we need to take action. Well, what is his action? He has yet put pen to paper and issue a jobs plan or a deficit reduction plan in the last nine months.

BURTON: You know, Karl --ROVE: So, please, don't talk (ph) to me about ideological rigidity. It came from your White House.

(CROSSTALK)

BURTON: -- but as someone who is a leader in the White House that turned a record surplus into a deficit that got us involved in a war that we never shouldn't have been in and turned the floor of the New York Stock Exchange into a casino, I don't think the American people are quite ready to hear a lecture from you on good governance.

BAIER: Hold on, Bill.

ROVE: You know, Bill --

BAIER: Hold on, Karl.

ROVE: I appreciate the insults, Bill --

(CROSSTALK)

ROVE: The fact of the matter is, is you talk about the financial difficulties we had in 2008, I remember your boss coming to the United States Senate in 2005 and blocking the bill that attempted to rein in Fanny and Freddie before -- while we still had in time to stop disaster from coming and your man joined in a filibuster by every Democrat of the reform bill and then turned around in October of 2008 and finally belatedly voted for it.

And you have you -- want to criticize the Iraq War, you got a secretary of state in your administration who voted for it.

BAIER: OK. Let me just ask the question that he posed originally and that is the plan. That is a lot of people asking, are asking where is the plan? Waiting on the speech. The Senate Democrats have not passed budget in x number of days, almost two years.

What about answering that part of Karl's charges?

BURTON: OK. So, that piece of a question. What has the president done to create jobs? There are things that he could sign into law right now if Congress would move forward on it. The payroll tax, the infrastructure banks, trade deals.

BAIER: Well, the trade deals are still in the White House according to Republicans on Capitol Hill, that they haven't sent them over from the White House to Senator McConnell.

BURTON: OK.

BAIER: So, that's thing that's not over.

BURTON: The point is that there are things that Congress could do right now that could help to create jobs. And you're going to hear from the president very soon, on more ideas that he has about this. And just back to one thing that Karl said -- Karl, yes, I was in that meeting where the president made that point to Eric Cantor. And the point was, yes, elections have consequences and what president needs in Washington are partners who will work with him to actually make progress in this country, not just people like Eric Cantor and John Boehner and Mitch McConnell who would much rather see the economy do poorly so that they can score political points than see America succeed.

ROVE: Bill, with all due respect -- do not question motivations and the integrity of the people on the other side. It's a really bad way to try and get partners. I don't --

(CROSSTALK)

ROVE: We can't have -- we can't have a predictive -- we can't have a political disagreement without me questioning your motivations. That's not a way to get partners.

(CROSSTALK)

BAIER: One at a time.

ROVE: You mentioned a series of ideas, the Democrats a hoping that

(CROSSTALK)

BAIER: Everybody has got to stop.

ROVE: And the president has yet to lay out -- the president has yet to lay out a plan. You mentioned the infrastructure bank -- Democrats have opposed infrastructure bank saying we don't have more money that the government can to lend to bailout certain businesses.

BURTON: Karl, the president --

(CROSSTALK)

BURTON: There's a difference between whether or not there's a plan or whether or not Karl Rove endorses it.

ROVE: The president has talked about -- yes, there is no the plan. The president has talked briefly, sort of raised a little bit of the curtain to suggest that he's going to ask for an extension to payroll tax holiday, temporary tax cuts don't encourage economic growth. We've had payroll tax cut this year and had we gotten robust economic growth as a result? No.

BAIER: OK. I'm trying to be the traffic cop here. And there's a little delay, Karl, so I know you can't hear right now when I try to jump in -- and I'm sure that's why haven't stopped when I have.

ROVE: Not really, Bret.

BAIER: Let me ask you some politics. If you had to money on the fact that -- or whether Sarah Palin gets into this race or not, what would you say?

ROVE: Well, I'm not much of a gambler but I'd put a little more money that she gets in than if she doesn't, because of the schedule she's got next week in Iowa, it looks like that of candidate, not celebrity. Her difficulty is, if she doesn't get in shortly after next week, then I think people are going to basically say she's not in, she won't be in, if she gets in, I'm not going to be for her. You can only tease so many times in the political process, and I think she is getting to the end of that.

But next week, she's got a robust schedule. And this video on Friday that was released by her campaign strikes me -- or by her PAC, strikes me as pre-presidential campaign.

BAIER: And, Karl, the Weekly Standard reported this week that you have been talking to Paul Ryan about his potential presidential bid. How serious is he?

ROVE: Well, I don't know. That's up to Paul to decide. All I know is that from talking to people around the country who picked up the phone and called him and told him what they think, that there are a lot of serious of people he is getting a lot of pressure, as is Governor Christie of New Jersey. And my suspicion is that both of them are going to have to give at least some consideration to the kind of encouragement they are getting.

BAIER: Bill, who do Democrats fear most?

BURTON: You know, there's legend in the Democratic Party that back in 1980, Jimmy Carter's folks are really hoping to run against Ronald Reagan. So, I don't want to sit here and say that there's one candidate that we want or don't want. But what we do from the field is that no matter who it is, he or she is going to want to essentially gut and end Medicare. They all want to end the EPA, and they'll want to put radical conservative on the Supreme Court.

BAIER: Bill, Reuters reported this week that Governor Perry is, quote, "seen by Obama's top election fundraisers, supporters and senior Democrats close to the campaign as easier to beat."

"'I was praying Perry would get in the race,' said a former White House aide closely linked to Obama's campaign."

There are only few people who fit that title. You're one of them.

Why would Perry be so easy to beat?

BURTON: Well, I don't know that Perry would necessarily be easy to beat. No matter who the Republican is, there's going to be a lot of money. Karl Rove can raise a lot of cash for the outside to help then get elected. But here's what you should know about Rick Perry, that when the health care debate got hot, he said that Texas should secede. He said that the Fed chair was guilty of treason. And he's got a job record that's a lot more spotty than people would suggest. He took a state that was a 4.2 percent unemployment, got it to a 8.2 percent. The job percent that we've seen there is 40 percent minimum wage jobs and the rest of them are fueled by stimulus dollars.

So, I think that there is a case to be made against Rick Perry. But who ever the Republican nominee is, I'm certain that it's going to be close and contested race?

BAIER: Karl, your response to that? There is a -- the conventional wisdom is that there are some feud between the Bush folks and the Perry folks. But your response to Bill here?

ROVE: But, Bill is going to -- I want you to keep drumming those lines, Bill, because if Perry is the nominee, Texas has led the country in job creation over this past decade.

BURTON: With the help of the federal government.

ROVE: We've been -- we've been in a 30-year period in which we have been growing rapidly in jobs and we're now the 10th fastest growing in terms of personal income. This state has got a robust dynamic economy that's caused 3 million people to move here.

And go ahead and attack it all you like. But people are voting with their feet and moving to Texas from all across the country because of robust economy.

But, you know, look, the president is in trouble. He has last week twice hit 39 percent in the Gallup poll. No president has hit 39 percent -- hit under 40 at this point in his presidency and been reelected since 1948. And as try as he might, I don't think Barack Obama is going to pull off Harry S. Truman.

BAIER: Karl Rove, Bill Burton, thanks so much for being with us.

BURTON: Thanks, Bret.

BAIER: Up next, presidential politics with Rick Santorum. He's trying to capitalize on his performance at our Ames debate. We'll be right back.

(COMMERCIAL BREAK)

BAIER: Joining us now as we continue our 2012 one-on-one series of interviews is presidential candidate and former Pennsylvania senator, Rick Santorum. Senator, welcome back to "Fox News Sunday."

FORMER SEN. RICK SANTORUM, REPUBLICAN PRESIDENTIAL CANDIDATE: Thank you, Bret, good to be with you.

BAIER: Let's talk the economy. Let's say it's President Santorum in office right now. What specific things would you do to create jobs, increase growth, calm the markets, but with the caveat that you could get it through this divided Congress right now?

SANTORUM: You make the assumption that Rick Santorum wins the presidency, we are probably going to control the United States Senate. We're only three votes short right now, and I feel pretty good that with 23 of the 33 seats up being Democrat-held seats, we're going to pick up a few seats.

Given that as a preference, we're going to repeal Obamacare. That's the first thing. Creating a certainty in the marketplace that we're not going to put this huge new entitlement, this huge amount of taxes and burden on the business community, I think we'll do a -- go first step No. 1 to solve the problem.

Secondly, we need to do something to revitalize what I consider to be sort of the core of America, which is our manufacturing base. I've talked about this on the road really more than anybody else. I come from a little steel town north of Pittsburgh, and we believe -- I believe that if the real middle of America that has shrunk -- is because we went from about 21 percent of jobs in this country when I was a kid being in manufacturing down to 9. That's -- we lost those jobs overseas. We need to bring them back.

One big idea that I've proposed is to cut the corporate tax for all manufacturers from 35 percent to zero. You want to get jobs back in this country, you create a tax system that allows us not only to make things here and compete here and be profitable here, but one of the big impediments to manufacturing here is our tax -- our tax system doesn't match up with other tax systems around the world. As a result, it's harder to export here.

You cut the tax rate to zero, you create a real launching pad for exports here in America, so--

BAIER: But how do you -- how do you know that those companies are going to put back into the country and create those jobs if there's not something attached to it?

SANTORUM: You only get the corporate tax rate if you are manufacturing here. So I mean, it's not like you're going to cut the corporate tax for manufacturers if they manufacture in China. No, you have to manufacture here in America to get the zero percent rate. And that to me is a very, very powerful incentive.

There is other things we're going to do. Talk about energy. That's a very big part. Pennsylvania is now having a boomlet because of the Marcellus shale and the gas industry. We are going to drill 3,000 to 4,000 wells in Pennsylvania this year, gas wells. We have enormous economic activity in the rural parts of our state.

We need to do that in other areas to do two things. Number one, create jobs in the energy sector, but number two, to create a stability for the manufacturing sector. The fact that we now have stable gas prices and probably will for quite some time is a great incentive for manufacturers to come back, because they are one of the heaviest users of natural gas.

BAIER: What makes you more qualified than anyone else in this current field to create jobs or to turn this economy around?

SANTORUM: Because I've, right behind you there, I've gotten things done. I mean that's the real difference between me and everybody else in this race, is accomplishment, in a tough environment. And to get conservative things accomplished

One of the other things we're going to have to do is we're going to have to cut the size and scale of government. We are headed toward almost 40 to 50 percent of the overall economy being government if we don't do something about these entitlement programs. That's the big problem.

There is only one person in this race who's actually worked and fought and succeeded in passing entitlement reform, welfare reform back in the mid-'90s. I was the author of it when I was in the House of Representatives on the Ways & Means Committee. And when I came to the Senate, I went toe to toe with Daniel Patrick Moynihan, Ted Kennedy, the lions of the left, who were going to defend that system. Bill Clinton, who did not want to end the federal entitlement to welfare. He vetoed it twice. But we continued to work on it and were able to end the federal entitlement, require work, and put time limits on welfare, something that we're going to have to do for Medicaid, something we're going to have to do for housing benefits, food stamps. All of these programs that are growing exponentially, that are the problem, the core problem with our deficit are things that I was able to accomplish when I was in the United States Senate. Nobody else has been able to do that in this field.

BAIER: Vice President Biden is in China. He delivered a keynote address in which, he passed some blame to the, quote, strong voice within the Republican Party that prevented an even bigger deal on deficit and debt reaction. Your reaction to that?

SANTORUM: My reaction is the biggest thing we can do to reduce the deficit is get the economy growing. And the last thing you want to do if you want the economy growing is to increase taxes on the job creators. And so we are trying to help, Joe. We're trying to help you. We are trying to get this economy going by doing some things that actually create private sector growth, and the response we get from the left time and time again is, no, we need more government, we need more spending, we need more taxes, which is the reason we are in the problem we are in today.

BAIER: Foreign policy. Senator Santorum, a few weeks ago, you called President Obama's policy in Syria quote, "slapping the back of the hand of President Assad instead of going after him." Now as you know, the administration has called for Assad to step down. But would President Santorum go after Assad with U.S. military action?

SANTORUM: Well, I wouldn't say with U.S. military action. But certainly from the very beginning, I would have called for Assad to step down. This is something that President Obama did with respect to one of our closest allies in the Middle East, Egypt. You had Hosni Mubarak, who was a friend, clearly a dictator but a friend, someone who was in a stable peace relationship with Israel and the United States. And as soon as the riots got anywhere intense, he immediately called for Mubarak's removal. He's done the opposite with Syria, which has been a thorn in the United States side, obviously a thorn in the side of the Israelis.

And I'm someone who actually has experience with this. I passed -- authored a bill, helped pass it through the United States Senate called the Syrian Accountability Act, which actually did get -- helped get Syria out of Lebanon, which was a threat to Israel on its northern border.

So I have experience in this area. I've been successful in getting things passed through the Congress to put some constraints on Syria, and we should have done the same thing in this case.

BAIER: in Libya, it appears the rebels are now surrounding Tripoli. There is a call by Muammar Qaddafi's government for a cease- fire this morning, but they are under heavy attack. How much role if any should the U.S. play in a post-Qadhafi Libya?

SANTORUM: Well, this is another strategic area -- strategic country in the area. And obviously we should be very much engaged with these rebel forces. We have now taken sides as a result of the Obama administrations's policy. Now we need to maximize our influence within this group. So hopefully, hopefully that is going on right now. Hopefully we are developing relationships, we are building bridges to that rebel regime, and when they come into power, we will have some influence and some ability to be able to work with them to establish a stable regime in Libya.

BAIER: Let's talk politics. Senator Santorum, the last time you ran for office, as an incumbent from Pennsylvania, you spent $26 million on that race, you still lost by 18 points. This year you are an underdog, relatively little money, that is fair to say. For Republicans whose main concern is to defeat President Obama in 2012, aren't there several other candidates who realistically stand a better chance of doing that than you do?

SANTORUM: Yes, I mean, what people look at is the last race I ran, which was a miserable election year for Republicans. We lost five congressmen, we lost the governor's race by other 20 points, we lost the House of Representatives by the worst margin since the Great Depression. It was a meltdown in Pennsylvania, as it was in a lot of the mid-Atlantic states, and I got swept out with everybody else.

George Bush was about 36 percent favorable on election day in Pennsylvania that day. I mean, it was a miserable year.

Go back and look at the other years where we were competitive. In 2000, George Bush lost the state of Pennsylvania by four points. I won it by five. In 1994, I defeated a Democratic incumbent to win my Senate seat, again, in a state that had over a million more registered Democrats than Republicans. And in my previous two congressional races, I defeated a Democratic incumbent to get elected and I forced another Democratic incumbent out and won in a 70 percent Democratic district.

So yes, in a horrible election year, which is unlike any election year we've seen in Pennsylvania in a long time, and nothing like the election year in 2012, I did poorly.

SANTORUM: But if you look at the track record, it's a pretty darned good one. And if you look at the polls today in Pennsylvania, I'm dead even. I'm the only person in this race other than Mitt Romney, who has been out there campaigning for a long time, who is dead even with the president in Pennsylvania.

BAIER: Here's what you said after our debate in Ames, Iowa.

(BEGIN VIDEO CLIP)

SANTORUM: Well, last night I was on Greta's show, and I said that I would get tougher questions from Anna Mosa (ph) at a town meeting than I would from Bret Baier, which I wasn't sure that I didn't get any questions from Bret Baier.

BAIER: Now, besides ripping on my questioning there, you were not happy about the timing and the number of questions. Now, let me say, the official tally had you right in the middle of the pack, getting 10 questions, talking for nine minutes, 12 seconds. That was just 55 seconds behind Governor Romney over the two hours, who used the most time.

Do you think your performance in that debate affected the straw poll and your standings in this race?

SANTORUM: There's no questions on two fronts. I mean, obviously, the questions I did get later in the debate definitely helped me. I had a lot of people that came up to me and said that the questions I answered was one of the reasons they voted for me.

The complaint I had was, in the first roughly hour of debate, I think I got one question. I got a lot of the end, and most of them were geared towards social issues. And again, it's one of those things you sort of get pigeonholed as a candidate, and I think the conversation we had today, my record on national security is better than anybody in this race, far exceeds anybody in this race. My record on moral and cultural issues far exceeds anybody in this race. And if you look at my record on entitlement reform, there's nobody that can touch my record.

And those are the things I'd love to be talking about, particularly in the area of health care reform and taxes.

BAIER: In 2008, you called Governor Romney the candidate who will "stand up for the conservative principles we hold dear." A month ago in Iowa, you suggested to Iowa voters that they should pick someone they really like, just not Romney.

SANTORUM: Right.

BAIER: But in 2008, didn't you really like Romney? I mean, what's different now?

SANTORUM: Well, yes, I endorsed Governor Romney five days -- I think six days before he dropped out of the race. I endorsed him right after the Florida primary when it looked like it was going to be a choice between Governor Romney and John McCain. And in that race, I really felt anybody but McCain was the best solution. I mean, nothing against John McCain personally, but I just didn't think he was going to be our best candidate in the fall. It turned out to be that way.

And so he was the alternative, and that's why I chose him. I had concerns. Obviously, I didn't even endorse him until five days before Super Tuesday. But my biggest concern -- and it is now -- is Romneycare and the fact that he was for a top-down government-run health care solution.

I don't care if it's the state level. I don't care if it's in the township he lives in. We should not be for government-run health care or top-down solutions to big problems.

BAIER: Last thing, Texas Governor Rick Perry is obviously getting a lot of attention in this race since he's thrown his hat in the ring. Does he have what it takes to be the GOP nominee?

SANTORUM: Look, I would be out the race if I thought he was the best candidate. I think I'm the best candidate for this who has a record of accomplishment across the board, who has been a consistent conservative.

I think if you go back and look at the records of all the candidates in this race, the one who can accomplish things, who's been a consistent conservative, and someone who can attract candidates -- I mean, Rick Perry has won in Texas. That's great. We're going to win Texas no matter who the nominee is, but we're going to have win Pennsylvania and Ohio and Florida. I've got the track record to win in those states.

BAIER: Senator Santorum, thanks for your time.

SANTORUM: Thank you, Bret.

BAIER: Coming up, the economy and the presidential campaign. We'll talk with our Sunday panel right after this break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: There are things we can do right now that will mean more customers for businesses and more jobs across the country. The only thing preventing us from passing these bills is the refusal by some in Congress to put country ahead of party.

(END VIDEO CLIP)

BAIER: President Obama, blaming some in Congress -- read that to be Republicans -- for not doing more to help the struggling economy.

It's time now for our Sunday group -- Bill Kristol of The Weekly Standard; A.B. Stoddard of The Hill; Steve Hayes, also from "The Weekly Standard"; and former Democratic senator Evan Bayh.

Panel, let's start with the economy and how it plays politically.

Senator, the president obviously is taking a hit, as you see in the polls, about the Economy. Will Republicans be able to capitalize that and make this all a referendum, do you think, on President Obama and the handling of the economy?

FORMER SEN. EVAN BAYH, D-IND.: Well, that's largely up to the Republicans, Bret. And the real question here is, who can appeal to Independents? They went heavily for President Obama in 2008. They swung then decisively to Republicans in 2010. Where do they go now?

And do the Republicans nominate someone who can appeal to Independents, or do they do what they did in the Delaware Senate race, and possibly in Nevada and Colorado as well, nominating people who just can't appeal to Independents? And if you look at the results in the Iowa straw poll, some 70 percent went for Bachmann, Ron Paul, Rick Santorum, your previous guest, Herman Cain, people who might not be able to reach out to those Independents. Tim Pawlenty was run off, Governor Huntsman doesn't seem to be gathering much traction.

So, right now, it's up to the Republicans. And if they just listen to that base, they may not nominate someone who can reach out to those Independents.

BAIER: Although the president, arguably, is not doing well with Independents either.

BAYH: There are a couple of things he needs to do. And your lead-in suggests jobs, jobs, jobs. He needs to come out with an agenda, although we're getting pretty late in the game to actually materially impact things.

The other thing Independents look at -- and if you look at Senator Brown's race in Massachusetts, which was really the canary in the coal mine for Democrats last year, Independents cared about the debt and the deficit. That's one of the reasons it's the right substance. It's also smart politics for the president to try and get his big deficit and debt reduction package as he can. Independents care about that.

BAIER: Steve, so far we've heard a lot of what we've heard here from the statement of blaming Republicans and Congress for not getting things done. On the bus tour we heard that a lot from the president, running against Congress.

STEVE HAYES, THE WEEKLY STANDARD: Yes. And I think they don't really have much in the way of oxygen.

Actually, if you go back and you read The Washington Post from August 24th of a year ago, they reported that a rapidly weakening economy threatens to undermine President Obama's assertion that he has set the nation on a path to prosperity and that Democrats had few options. That was when the president was in Martha's Vineyard a year ago this week.

The president doesn't have any more options. There's nothing more he can do. So he's going to talk about an infrastructure bank. He's going to talk about small programs that mostly he's introduced before.

He's out of ideas, so I don't know how he turns with Independents so heavily against him right now. How does he do anything? How does he propose anything that could swing them back to his side? I think he's in a very tough spot.

BAIER: A.B.?

A.B. STODDARD, THE HILL: I agree. I think it's -- we're looking at a very small window of time in which the economy can turn around.

Public opinion will be formed about the president and the economy probably next June, less than a year from now. So if he is going to rely on intransigence by Republicans in the debt debate this fall, he better hope that they really blow it up and that that infuriates Independents, who are looking for a party that can govern.

At the same time, I think what he's going to do is try to make the argument, since he can't turn the economy around, that essential government programs and services are needed now than ever. And make that argument in an atmosphere of slow to no growth a year from now, that now is the time more than ever you need a safety net. The Republicans are going to decimate it. It's the only argument he has, and he's going to hope he gets a nominee from the Republican Party who has supported the Ryan plan on Medicare and who he can bring that credible criticism to.

BAIER: Bill, can you imagine any scenario where entitlement reform could be an asset to Republicans in 2012?

BILL KRISTOL, THE WEEKLY STANDARD: Sure, because people understand, I think, and certainly the right candidate can help the American public further understand, that we need to fundamentally reform entitlements. We're $1.5 trillion in debt. Where's that debt coming from? It's coming from entitlements, which are 60 percent of the federal budget and which are going up much more quickly than the rest of the federal budget.

Despite President Obama's irresponsible domestic discretionary spending, it's entitlements that are at the core of the problem. So of course Republicans are going to run on entitlement reform, as they should, and I think they can do so successfully. BAIER: Now, you have spoken out in favor of Congressman Paul Ryan getting in this race.Is there any development on that? Do you really believe that he's getting in?

KRISTOL: Well, the main development -- and maybe I can hold this up -- is I get sent this in the mail, a Ryan/Rubio 2012 button, which shows huge grassroots support for this effort. You know? People all over the country are having these buttons produced at their own expense.

BAYH: It's the alliteration ticket.

KRISTOL: Well, "RR" is good for Republicans -- Ronald Reagan, Ryan/Rubio. I think Steve's done a lot of reporting on this. Paul Ryan is thinking of running. I think it's 50/50. I think we'll know in a week.

If I had to bet, I would bet that he would run. I also think that if he doesn't run, Chris Christie may run. I don't think the current field is likely -- it could be, but I don't think it's likely to be the final field.

BAIER: Do you agree?

BAYH: It's getting a little late in the day. If they don't act within the next couple of weeks, just pragmatically it's tough.

And if I could just say one thing about Paul, he's a serious person. I admire the fact that he's focusing on entitlements, but if he's the nominee, it's going to be a referendum on Social Security and Medicare. And it doesn't help when you have serious publications out there that have said his plan would end Social Security and Medicare as we know it. People want to reform the programs, but they get a little scared when they say you're going to end something that's become such a fabric -- part of the fabric of American life.

BAIER: But doesn't that fall into the whole demagoguing that issue, even at a time when some people say that the American public is ready for this adult conversation beyond what we've heard in the past about entitlements?

BAYH: Well, both sides are going to engage in a little demagoguery, but what people want is reform, but it done in the right sort of way. And I'm afraid when they say end Social Security or Medicare as we know it, to most people that may raise the specter going a little too far.

HAYES: I think we have different definitions of what serious publications are, perhaps, because I don't think -- look, it's explicitly --

BAYH: The Wall Street Journal.

HAYES: They said it was going to end Medicare as we know it?

BAYH: They did.

HAYES: I don't know. I think it would change Medicare and the way that Medicare is funded.

It explicitly -- the House Republican budget explicitly argues that it is meant to preserve Medicare while changing the funding mechanism that makes it solvent. If you look at what Nancy Pelosi has said, she has no plan. She has said, basically, our plan is Medicare. There's no argument there. So I think it's entirely possible that Republicans will run on structural reforms to Medicare so that they can preserve Medicare. And I think -- look, if you want to talk and take a step back and look at the way that the race is likely to unfold, there's no question that it will be, in large part, a referendum on jobs. But given the financial situation that the country is in right now, given the enormity of the problems that we have right now, it's going to be in some respect a debate about our long-term fiscal situation. And I think there are some Republicans who think that incorporating a debate about entitlement reform is actually a positive.

BAYH: Just one aside. The country faces big challenges. We need to reach a consensus on reforming entitlements, getting the debt under control, growing the economy. That's where we need to go if both sides come together.

Unfortunately, the dynamics of this election don't lend themselves to that. Each side is going to feel compelled to sort of bring the other side down. And that atmosphere is very tough to reach these sort of grand bargains that the country really needs. And ironically, Bret, that Independents are really yearning for.

BAIER: A.B., the dynamics of the GOP race shifted. Congresswoman Bachmann won the straw poll, yet it doesn't seem like she's gotten a lot of traction, even as far as coverage, in the wake of Governor Perry's sucking of the oxygen out of the media room, it seems.

Your thoughts on that and the state of the race?

STODDARD: Well, I mean, it's fascinating that so many Republican voters continue this late in the game. And it is late in the game -- the senator's right -- to yearn for the entrance of other candidates. I mean, it really shows that there's dissatisfaction in a broad sweep of the Republican primary electorate with the candidates that they have.

Michele Bachmann did a great job at the straw poll. She's done very well in the debates. She was big-footed and big-cowboy-booted by the entrance of the Texas governor into the race.

He has deep pockets. He has very good executive experience, a great jobs record in Texas, loads of money. He's charming, and he has even better hair than Mitt Romney.

(LAUGHTER)

STODDARD: And he is wiping her press off of the news pages, and he's also appealing to the same constituents that she is appealing to. The idea of people still running to Governor Christie in New Jersey and Congressman Ryan to urge them to get into the race, it really shows though that I think many Republicans don't want a choice between Mitt Romney and Rick Perry.

BAIER: Last word.

KRISTOL: It's not that late in the game. Bill Clinton got in the race in October of 1991. Bill Clinton was the last candidate to defeat an incumbent president, a one-term president. There's plenty of time -- it's September and October -- for candidates to get in the race.

BAIER: So are you saying that this field is weak as it stands now?

KRISTOL: We don't know if it's weak. And I think President Obama has done such a miserable job, that in fact Mitt Romney or Rick Perry or Michele Bachmann could all beat him.

The real disaster is not the Republican field, it's that the Democrats don't have the nerve to match a primary challenge to President Obama. Where is -- Evan Bayh is a successful governor, two- term governor and senator, from a Republican state.

You would be a better candidate in 2012 than Barack Obama.

BAYH: Well, that's kind of you to say.

UNIDENTIFIED MALE: And that ain't going to happen.

BAIER: We'll wrap that up there.

Panel, we'll take a break here.

And when we come back, the Obama administration ramps up pressure on the president of Syria to step down. And the ongoing U.S.-supported NATO mission to oust Qaddafi from power in Libya.

Back in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SECRETARY OF STATE HILLARY CLINTON: Assad is standing in their way. For the sake of the Syrian people, the time has come for him to step aside and leave this transition to the Syrians themselves.

(END VIDEO CLIP)

BAIER: Secretary of State Hillary Clinton, echoing President Obama's call for Syrian President Bashar al-Assad to step down.

We're now back with the panel. We'll start there, but also talk about Libya and the rebels surrounding, it appears, Tripoli.

Let's start in Syria, Steve.

This call for him to step down, the president, what is next? What could be next? And is there anything left for the administration to do?

HAYES: Well, it's hard to know what comes next, but it's a good thing, I think, that they finally called for him to step down. If you look back at the way that the administration has talked about Syria over the past several months, it seems totally out of touch with what was actually going on, on the ground, in Syria, calling for him to listen to his people, to engage in reforms.

Assad was never going to do this. There might have been a time five years ago when people could talk about him as at least voicing some ideas of reform, but he was not a reformer, fundamentally, he was a dictator. And we have known now for months that he has been slaughtering his own people.

So I think the problem the administration faces now is they've taken off the table any discussion of possible military action. I'm not saying they should be out there saber rattling, I'm not saying they should call for it. But at the very least, they have to stop staying we're not going to do this.

It's one thing when Hillary Clinton does it, and you sort of expect that from the State Department. It's another thing when you have a background briefer at the White House saying, no, we're not really not eager to use military right now.

But you have Mike Mullen two weeks ago saying military action is essentially off the table. One of the things that you need to leave open is the possibility that Assad could think that we are going to come in, particularly given the developments in Libya right now. If Muammar Qaddafi goes in the next week, the last thing you want to be saying is that's not going to be your fate.

BAIER: Senator Bayh?

BAYH: Well, Assad needs to go. And the question when he first came in was, was Assad, the son, going to be like Assad the father? He's now answered that in the absolute affirmative "yes." And the real question is, will the allies and the military stay with him as they continue to kill their people, or will they conclude, look, he's got to go so maybe we can cut a better deal to try and secure our future in whatever the new iteration of Syria will ultimately be?

This is all made a lot more difficult by these visuals of Mubarak in a cage in Egypt. I mean, Qaddafi, Assad, all these guys look at this and go, that's not going to be me. So he --

BAIER: Right. In other words, I'm going to fight until the end because I don't want to be in the cage.

BAYH: Exactly. So the real question -- he's going to continue to kill his people as long as he has to, to stay in power. Will the military support that? Will the Alawites support that? Or will they try and cut their losses and go in a different direction?

BAIER: Bill, on to Libya, where the rebels are moving in, they now control a number of towns just outside the capital city of Tripoli, heavy fighting still being reported today, this morning the Qaddafi government calling for a cease-fire -- it's a number of times they've done that -- what about that and what the U.S. role should be now?

KRISTOL: The U.S. role should be to help with our NATO allies, to help the rebels finish the job and get rid of Qaddafi as soon as possible, and help the brave Syrians finish the job and get rid of Assad as soon as possible. And I think we really could be in a very hopeful moment in the Middle East.

Assad -- it's not just in the Syrian people's for Assad to go, it's in America's interest. This is Iran's main ally in the region. There could really begin to be a big blow to Iran, for their main ally to go, which would be a very good thing.

The thing that's worrisome, of course, is Iran knows this, and they're going to be stirring up all kinds of trouble in and around Israel and elsewhere in the region, possibly in Iraq -- well, not possibly. Certainly in Iraq, where they have been stirring up trouble.

So the whole area is in turmoil, and that could be dangerous, that could be good. I very much hope the administration focuses on this and uses all of our assets, covert and overt, in dealing with the threats, but also helping our friends. And I do think on this there could be bipartisanship. But I actually think it would be smart for the president -- and I'm sure he'll do this -- will call in Speaker Boehner and Mitch McConnell and the congressional leaders, and right when they get back after Labor Day, and sort of agree that on this issue, in terms of helping positive change in the Middle East, that's something that both parties can agree on.

BAIER: A.B., talk about stirring the pot, I mean, Muammar Qaddafi appears not ready to leave.

STODDARD: Right. But I think it actually looks at this point like he will -- the rebels will succeed in deposing him.

What will happen after that, there will be a period of maybe not chaos, but instability. It will put pressure on the administration to engage.

And then it's awkward, because I admire Bill's optimism, and he is obviously right, this is a proxy conflict with Iran, and it would be great for us to force Assad out of there. Libya was a unique experiment, and it may yet succeed. The White House has, I think, made it clear it's not going to replicate that in Syria, and I think President Assad knows that.

And so you have this dynamic where we -- he's going to have to -- can he take credit if Qaddafi is deposed? Can Obama get up and say, I'm going to take credit for this, this has been great, given the situation in Syria, which is comparable? But it doesn't appear that he'll be able to amass a coalition and also use military strength and replicate the Libya operation.

I don't think he will. I think he's made it clear that he won't. And so I think it's a very tough moment for him even if Qaddafi is deposed.

BAIER: A post-Qaddafi Libya raises question marks as well.

BAYH: It certainly does. I mean, it's been proven that there are elements of the Libyan opposition that are unsavory, to say the least. I mean, al Qaeda-affiliate -- so we don't know exactly what the U.S. position will be going forward in Libya.

Having said that, one of the things we shouldn't do is avoid trying to influence the outcome there. Just because you can't control the outcome doesn't mean you shouldn't influence. And to the extent that we can have a say and the kind of opposition, and what it looks like and how it governs, we should try to do that. We shouldn't say, as President Obama has done I think too many times, hands off, we don't want to look like America is meddling.

BAIER: We have endorsed this transitional council, and there have been meetings with U.S. government officials and at least the leadership of this rebel force, Senator. So do you see some hope in a post-Qaddafi government there?

BAYH: Well, we need to get rid of Qaddafi sooner rather than later. It's likely to be a chaotic situation where this is sorted out. And this theme is going to be replicated across the region, where you will have authoritarian regimes displaced, there will be a vacuum in societies where there aren't too many institutions for stability other than the mosques.

So one of the concerns has to be about the rise of radical Islam. The other thing, as Bill was pointing out, was the constant tension between Sunni and Shia replicated across the region.

BAIER: Senator, panel, thank you. We'll see you next week.

Don't forget to check out our "Panel Plus," where our group picks up right here with the discussion on our Web site, FoxNewsSunday.com. We'll post the video before noon Eastern Time.

We'll be right back with a special program note.

(COMMERCIAL BREAK)

BAIER: And that's it for today. I'll see you Monday on Fox News Channel for "Special Report" at 6:00 p.m. Eastern.

And please check out a special hour on the former vice president. "Fox News Reporting: Dick Cheney Revealed" airs tonight on the Fox News Channel, 9:00 p.m. Eastern Time. Have a great week. Chris Wallace will be back for the next "Fox News Sunday."

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On the Show

Sunday August 17, 2014

After a drawn out power struggle, Iraqi Prime Minister Nouri al-Maliki announced he will not seek a third term. The United States put pressure on Maliki to step down in hopes that a more inclusive government could defuse tensions that allowed Sunni militants to seize control of large portions of the country. We’ll discuss what Maliki’s resignation means for the U.S. role in Iraq with Sen Ron Johnson (R-WI), a member of the Senate Foreign Relations Committee and Rep Eliot Engel (D-NY), Ranking Member of the House Committee on Foreign Affairs.

As the 2016 presidential race begins to heat up, Texas Governor Rick Perry is making moves to launch another run for the Republican nomination. Coming off a visit to the key state of Iowa, and a center stage battle with President Obama over the crisis on our border, Governor Perry has seen a resurgence of support within the GOP. This week on Fox News Sunday we’ll discuss immigration and 2016 exclusively with Gov Rick Perry (R-TX).