SUNDAY: Chris will sit down for an exclusive interview with OMB Director Mick Mulvaney.
Battle for the Senate on 'Fox News Sunday'
Written by Chris Wallace / Published October 17, 2010 / Fox News Sunday
Special Guests: Sen. John Cornyn, Sen. Claire MacCaskill, Carly Fiorina
The following is a rush transcript of the October 17, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.
CHRIS WALLACE, HOST: I'm Chris Wallace, and this is "Fox News Sunday."
With just 16 days till the midterm elections, control of the U.S. Senate is up for grabs. We'll get the latest from two Senate leaders, John Cornyn, the man in charge of GOP efforts to take back the majority, and Claire McCaskill, one of the president's key allies.
Then, the Senate showdown in California. Can Republicans pull off a major upset in the big blue state? We'll ask the party's candidate, Carly Fiorina.
Also, in a surprising interview, the president talks about lessons learned in office and how the next two years will be different. We'll ask our Sunday panel about Barack Obama's pre- election post-mortem.
And from contentious debates to heavy hitters working the crowds, we'll have the best moments "On the Trail," all right now on "Fox News Sunday."
And hello again from Fox News in Washington. Many political insiders are predicting a Republican takeover of the House. But what about the Senate, where Democrats are defending 19 seats, Republicans 18? And the GOP needs a net gain of 10 seats to regain control of the Senate.
For answers, we bring in two Senate leaders. From Austin, Texas, John Cornyn, chairman of the National Republican Senatorial Committee. And from St. Louis, Democrat Claire McCaskill.
Senator Cornyn, You say this is going to be a wave election. First of all, what does that mean? And will Republicans take back the Senate on November 2nd?
SEN. JOHN CORNYN, R-TEXAS: Chris, this is going to be a referendum on very unpopular policies that have been shoved through Congress on a very fast track, where the American people have wondered, "Has Congress even read the bills or do they understand the impact?"
For example, the president said today, I believe, in the New York Times Magazine, that there isn't such a thing as shovel-ready projects. He just finally discovered that after we spent $787 billion on a ill-conceived stimulus.
So this is going to be a referendum on the administration's policies, on majorities controlled by the Democrats the last two years. And it's going to be about jobs, spending and debt. Pretty much that simple.
WALLACE: OK. And let me ask you for...
CORNYN: I think there is a path...
WALLACE: If I may, sir, let me ask you to get a -- give me a simple answer to my other question, will Republicans take back the Senate on November 2nd?
CORNYN: We're going to fight for every seat we can possibly get. I'm -- we have 12 seats in play. It's a theoretical pathway there. But I'm not predicting we're going to get back the majority. It may be a two-cycle process.
WALLACE: Senator McCaskill, let's put up what the political experts are saying now about the Senate. The RealClearPolitics average of recent polls has a Republican pickup of seven seats. The Cook Political Report projects a GOP pickup of seven to nine seats. Again, Republicans need a net gain of 10 seats to take control.
Will Democrats hold on to the Senate? And even if they do, if Republicans, while still in the minority, end up with 47 seats, 48 seats, given all the gridlock we've had the last two years, will anything get done over the next two in the Senate?
SEN. CLAIRE MCCASKILL, D-MO.: Oh, I think that's hard to say, especially because some of the candidates that appear poised to win for the Republican Party are very extreme.
I'm a moderate. I hang out in the middle. I vote against my party with some regularity and try to compromise. It doesn't appear right now that the Republican Party is welcoming moderates any more.
So, I think that independent voters need to take a hard look in these elections and realize that what we may be getting to is the kind of gridlock that, frankly, is not something that's desirable in terms of good policy in this country.
WALLACE: Senator Cornyn, that brings me to what I wanted to ask you. It seems almost certain that whether they get the majority or not, Republicans are going to have more power in the next Senate than they have these last two years, even if you don't get the majority.
Is the GOP mission over the next two years to undo the Obama agenda or to work with the president and try to find areas of compromise?
CORNYN: Well, I think it depends on the president. If the president's going to maintain his ideological stance and try to jam things through to support the left in America, when we're still a center-right country, then we're going to -- we're going to say no.
But if he's willing to work with us, as Bill Clinton did after the 1994 elections to pass things like welfare reform, trade agreements and the like, we'll certainly work with him. But again, what the American people are most concerned about is jobs, spending and debt. And those are our priorities.
WALLACE: Senator McCaskill, will -- taking a leaf out of Bill Clinton in 1995 after the Democrats took a drubbing in that midterm election, will the president -- will congressional Democrats move to the center these next two years and look for areas of compromise, whether it's in energy, or immigration or cutting the deficit?
MCCASKILL: I will tell you that we have worked very hard at the center, whether it's tax breaks for small businesses, which the Republicans tried to block -- keep in mind, Chris, that we have passed a net of $300 billion in tax cuts in the last 18 months.
That stimulus that the Republicans love to put down -- almost 40 percent of that was tax cuts for middle America, for working people. We have passed tax cut after tax cut. And most of those have been over Republicans' objections.
There has been so much politics being played that the policy has been left kind of at the side. And I'm hoping that if this election produces anything, it will be the ability to come together. I'm worried because of these extreme candidates that appear to be on the verge of winning in some states.
WALLACE: Well, but...
MCCASKILL: And I'm also worried...
WALLACE: ... Senator McCaskill...
MCCASKILL: ... how serious...
WALLACE: Senator McCaskill, you're talking all about the Republicans needing to move to the center and being too extreme. There are an awful lot of Americans -- and according to the polls, most Americans -- who feel that about the Democrats.
Are Democrats -- are the -- is the president -- are the White House -- are they going to move more to the center?
MCCASKILL: I think that there has always been a willingness to compromise. I was in the room with, you know, more than a dozen Republicans trying to negotiate the stimulus. Most of them decided the politics of the situation meant they should walk away, even if it wasn't responsible in terms of what our country needed right then.
We're in an economic morass. This is a long hangover from some bad economic policies of the past, from a lack of regulation of the financial sector.
And Senator Cornyn has said that he wants to repeal the financial regulation bill. Now, keep in mind, this bill stops taxpayer bailouts. Now, I can't imagine -- I have not had any average Missourians come up to me and say "Boy, you really need to repeal that -- making that financial sector accountable." That is not something that the people of this country want.
WALLACE: Senator Cornyn, do you see any...
MCCASKILL: They want to us have commonsense regulations.
WALLACE: Senator Cornyn, do you see any area for compromise with what Senator McCaskill was just talking about?
CORNYN: Sure. Senator McCaskill and Senator Sessions have introduced legislation that would have put a cap on discretionary spending, which doesn't go far enough but which is good start, that only 17 Democrats but all 41 Republicans supported.
So I hope that Senator McCaskill's more successful at getting some of the Democrats to join Republicans and to join her in putting a cap on spending.
And I would just point out, it's not just the stimulus. It's the health care bill that 71 percent of primary voters in Missouri said they would want to repeal the individual mandate portion of it.
So there is a -- I think, a fatigue on the part of the American people with the aggressive agenda that, frankly, they don't agree with, but they haven't been listened to. They've been lectured to, and they're tired of it. They're going to speak up on November 2nd.
WALLACE: Senators, let's talk about one issue that must get solved, because if nothing is done by the end of the year, all of the Bush era tax cuts will expire, which means every American is going to get a tax increase.
Let me start first with you, Senator Cornyn. Where's the compromise?
CORNYN: Well, I was shocked that Harry Reid, who controls the agenda on the Senate floor, and Nancy Pelosi in the House did not tee this issue up before the election.
So by the end of this year, the American people are looking at the single largest tax increase in American history, including on a lot of small businesses that declare their business income on an individual tax return.
There couldn't be a worse message for the job creators in America during a time when unemployment is so high than the uncertainty over what future taxes are going to be. So I think, unfortunately, there's been a -- it's really been a mishandling of the agenda.
We need to deal with this in a way that I think keeps taxes low. The last thing we need to do is to raise taxes on small businesses and job creators during a recovery, a fragile recovery like we're experiencing now.
WALLACE: Senator McCaskill, the compromise that seems to be out there is a temporary extension of all the tax cuts for not -- for a year or two, particularly until this economy begins to really reverse itself. Is that something that you could support?
MCCASKILL: I -- I'm always open to compromise, Chris. I will go to the mat for the middle class. No one wants any tax increases for the middle class. As I said earlier, we've cut taxes by over $300 billion in the last 18 months.
And everyone understands that we've got to be very careful in this economy to not stymie any job growth. That's why we've worked so hard for small businesses. And I'm open to compromise for the top 3 percent. It's not 50 percent of the taxpayers. It's 3 percent of the taxpayers that would be impacted by the very top bracket. But I will say this, Chris, we've got to look at spending, we've got to look at entitlements, and we've got to look at all of the corporate welfare that's out there as we address our deficit problem.
And I'm not sure how serious these guys are about the deficit. Some of the proposals they're talking about -- it goes back to what happened, frankly, during Ronald Reagan when we didn't balance the budget and George Bush when we didn't balance the budget.
We've got to be honest with the American people. And I don't know how serious you can be about cutting down spending if you're still asking for -- I mean, I think Senator Cornyn...
WALLACE: But -- well, wait a minute.
MCCASKILL: ... was part of asking for over...
WALLACE: Senator McCaskill, I...
MCCASKILL: ... $300 million in earmarks.
WALLACE: Senator McCaskill, I can't let this go. I mean, we just heard that the country had $1.3 trillion deficit in the last year. And I mean, should Democrats be preaching about being serious about the deficit?
MCCASKILL: I can't speak for all Democrats. I can speak for this one who has worked, as Senator Cornyn said, with Senator Sessions to try to bring down spending, as a senator who doesn't earmark.
They won't even pledge that they'll quit earmarking, the Republicans. Now, how serious -- I mean, independent voters need to take a hard look at that. If they won't even say they'll stop earmarking in this kind of spending problem that we're facing, I just think there's a lot of politics being played, Chris.
WALLACE: Senator Cornyn?
CORNYN: Chris, our Democratic -- our Democratic colleagues need to look in the mirror. They need to accept responsibility for the fact that Democrats have been in charge in Congress since 2007. And by the way, the deficit as a percentage of gross domestic product was 1.2 percent.
Last year it was 9.9 percent because of the spending juggernaut that we've seen over the last two years. So we do need to work together. We need to be serious. But this has got to be about putting America back to work, cutting unnecessary Washington spending, and not burdening the future generations with unsustainable debt.
WALLACE: Let's talk in the couple of minutes that we have left about some specific Senate races coming up in just 16 days. The one that seems to be getting the most attention is in Nevada, where Senate majority leader Harry Reid is in a flat-footed tie with tea party favorite Sharron Angle. Senator McCaskill, I just look back -- and the RealClearPolitics all the way back, all year -- isn't at it problem that Harry Reid, the majority leader, 24 years in the Senate, has never been able to get over 50 percent in any poll?
MCCASKILL: Well, I certainly think that that's a tough race. I mean, when you're the leader of the party in power during very tough economic times, you pay a high price for that.
But on the other hand, when you've got Republicans in Nevada, you know, that hold office saying, "We cannot be for Sharron Angle," Republicans endorsing Harry Reid, I've never seen anything like it, where the Republicans that know Sharron Angle in Nevada are saying, "No, no, we can't send that to Washington. We can't send her to Washington."
So I think that's a -- that's going to be a fight to the end. I think Harry is the kind of guy that if you really spend time with him, you realize he's a nice guy who's had a really tough job. And I'm hoping the people of Nevada realize that he has always kept their interests foremost in his mind.
WALLACE: Senator Cornyn, very briefly, I mean, this is a race that everybody thinks could have been an easy pickup for the Republicans. Didn't the tea party by nominating -- helping to nominate Sharron Angle make it a toss-up?
CORNYN: Sharron Angle's going to win that race. I'll make that prediction here right now. And if you like 14.4 percent unemployment, if you like the fact that 70 percent of home mortgages in Nevada are underwater, then stay the course. Vote for Harry Reid.
But if you believe that we can do better, then Sharron Angle, I think, is a very good alternative. She raised $14 million last quarter from Americans who are not extreme. These are grassroots Americans concerned about the direction of that state and our country.
And I think she's going to win because of the huge enthusiasm gap between Republicans and Democrats on one hand and -- excuse me, Republicans and independents on one hand and Democrats on the other.
WALLACE: Finally, Senators -- and we've got -- I'm going to give you each 30 seconds. Give me an upset special. Give me one race, Senate race, that you think will be a "wow," a big surprise for us on election night.
Senator Cornyn, you start.
CORNYN: I think Connecticut is the one I would pick. I would have said West Virginia, but that looks like it's moving now more into the mainstream for a Republican pickup. So I think Linda McMahon has run a very good race against the attorney general in Connecticut. And I think that continues to close, and I'm predicting that as an upset.
WALLACE: That would be an upset. I'll give you that one, Senator Cornyn, if that's the way the world -- the world turns. Senator McCaskill, your upset special for election night?
MCCASKILL: Well, I obviously think that Missouri is not over like some people have been saying that hang out in Washington. I'm here on the ground. And I think independent voters know that Roy Blunt is part of the Washington establishment. He's not part of the solution.
WALLACE: Is that your upset special?
MCCASKILL: But there's also both -- and I think Kentucky is really a state where, in spite Senator McConnell doing his very best to get the non-extreme candidate nominated, the extreme candidate won. And I think that the people of Kentucky know that Jack Conway is commonsense and he's a moderate. And I look forward to him being part of our moderate caucus in the Democratic Party.
WALLACE: All right.
Senator McCaskill, Senator Cornyn, we want to thank you both for coming in, talking to us and playing along. And we'll see how the world turns in just 16 days. Thank you both, Senators.
MCCASKILL: Thank you.
CORNYN: Thank you.
WALLACE: One of the big races we'll be watching election night is the Senate contest in California. Can Republicans take a Democratic seat in a very blue state? We'll talk with Carly Fiorina, the GOP nominee, right after the break.
WALLACE: Now to one of the midterm's most hotly contested Senate races. Democrat Barbara Boxer, who's been in the Senate the last 18 years, is in a fight for her political life with former Hewlett-Packard CEO Carly Fiorina, who's the Republican nominee.
According to the latest RealClearPolitics average, Senator Boxer holds a slim 2.3-point advantage.
Joining us now from Mountain View, California is Carly Fiorina. We should note we also invited Senator Boxer, but she declined.
Ms. Fiorina, as we say, it's an -- a toss-up, but having said that, in every poll this year except one, Barbara Boxer has maintained a small but steady lead. So the question I have for you is how tough is it to run for the Senate as a conservative in such a blue Democratic state?
CARLY FIORINA, REPUBLICAN SENATE NOMINEE, CALIFORNIA: Well, it's also true, Chris -- and good morning. Thank you so much for having me on the show.
It's also true that in every single poll Barbara Boxer can't get above 45 percent of the vote. And that's because she actually is too extreme for California. She is an extreme liberal. She is hyper partisan. It is why her hometown newspaper refused to endorse her, describing her as so bitterly partisan that she's ineffective.
Look, this is a state with huge problems. We have 2.2...
WALLACE: In fairness, I've got to say that paper also said -- didn't like you very much and didn't endorse you either, Ms. Fiorina.
FIORINA: Well, that's true. It's one -- San Francisco Chronicle could not bring itself to endorse me. I am a conservative and proud of it. But they did say that I was formidable and likely to be effective.
California has 2.2 million people out of work. We have our cities that are bankrupt. We have people looking eastward 3,000 miles to Washington where the water has been turned off on our Central Valley, where spending is completely out of control.
And remember that California has about 25 percent of its electorate that's considered swing voters, independents, decline-to- states. These are people, in addition to a...
FIORINA: ... very motivated Republican base, that are going to make the difference in this election.
WALLACE: OK. You're campaigning, and you just kind of alluded to it, to your record as a tough, bottom-line former business executive. But you want to extend all -- all -- the Bush tax cuts, which would add $4 trillion to the deficit.
You say balance the budget by cutting spending. Question: As a bottom-line businesswoman, where are you going to find $4 trillion to cut?
FIORINA: Well, let's just start with the fact that, as you pointed out in your last interview, spending has skyrocketed out of control in the last two years.
It's true that government has grown steadily for 60 years. But the last two it's gotten really out of control. And one of the things I know, as someone who started at the very bottom as a secretary and ultimately ran the largest technology company in the world -- you show me a billion dollars that no one's accountable for, that no one scrutinizes, that no one has any responsibility over making sure that it's spent wisely and well, and I'll show you hundreds of millions of dollars worth of breaks.
The GAO just released a report that said 22 percent of federal programs fail to meet their objectives. The truth is we don't know how taxpayer money is spent in Washington, D.C., which is why I think we ought to put every agency budget up on the Internet for everyone to see.
I think we ought to ban earmarks. I think we ought to give citizens the opportunity to designate up to 10 percent of their federal income tax toward debt reduction. If we did that, we would reduce our debt by $95 billion a year. There...
WALLACE: But, Ms. Fiorina, I mean, the traditional ways that people talk about non-discretionary -- I mean discretionary non-defense spending is only 16 percent of the budget.
You could cut all of that out, all for education and energy, and for police support and government worker support around the country. It wouldn't be anywhere close to $4 trillion.
Where are you going to get that kind of money if you extend all of the Bush-era tax cuts? And that doesn't even deal...
FIORINA: Well, of course...
WALLACE: That only adds to the deficit. That doesn't even deal with the deficit we already have.
FIORINA: Well, of course, first, the thing that we need to do to deal with our debt and our deficit is to both cut spending and grow the economy. That's fundamentally what we have to do. Those tax cuts are central to growing the economy.
Indeed, I would argue there are some additional tax cuts we need to make. When we're dealing with a 35 percent tax on business when the world average is 18 percent, we're increasingly uncompetitive. When our R&D tax credit is 17th in the world when it should be number one, we're increasingly uncompetitive.
But back to your subject on spending. Look, the truth is that politicians, career politicians like Barbara Boxer who has been in Washington, D.C. for 28 years, somehow never get around to the business of asking the fundamental questions that voters want asked now. "How are you spending our money?" "Why is it that every agency gets more money every year regardless of their performance?"
WALLACE: Well, let me -- let me ask you...
FIORINA: ... of the EPA has increased by 37 percent in the last year.
WALLACE: Ms. Fiorina, let me ask...
FIORINA: That's crazy. We can cut spending.
WALLACE: Let me ask you a specific question, because I still haven't gotten many specifics from you on how you're going to cut $4 trillion and even more out of the budget.
Back when there was talk about a non-partisan or bipartisan deficit-debt commission, you blasted that idea in January and said, "We already know all the solutions. We don't need another commission to study it."
So now, as a non-career politician, as the anti-Barbara Boxer, you tell me specifically what are you going to do to cut the billions, the trillions, of dollars in entitlements?
FIORINA: OK. First, I didn't blast the commission saying we already had all the solutions. I blasted the commission because I believed it was a feint for tax increases. And indeed, we are now hearing coming out of Washington, D.C. that a value-added tax is going to be one of the recommendations of that commission.
A value-added tax would be incredibly destructive to this economy at a time when we need to be...
WALLACE: But forgive me, Ms. Fiorina.
FIORINA: ... growing our economy.
WALLACE: Where are you going to -- where are you going to cut -- where are you going to cut entitlements? What benefits are you going to cut? What eligibilities are you going to change?
FIORINA: See, Chris, I have to -- you know, Chris, I have to say, with all due respect, you're asking a typical political question.
The American people say, "You know what? When we have 22 percent of our federal government programs that are not meeting their objectives, when we have at least two non-partisan studies that suggest that there is up to half a trillion dollars' worth of waste in the federal government budget, let us please get after that first before we start talking about cutting entitlements."
What politicians do...
WALLACE: But that's where the money is.
FIORINA: ... in my estimation...
WALLACE: I mean, it may be a typical political question...
WALLACE: ... Ms. Fiorina, but that's where the money is. The money is in Medicare. The money is in Social Security. We've got the baby boomers coming. There is going to be a huge explosion of entitlement spending, and you call it a political question when I ask you to name one single entitlement expenditure you're willing to cut.
FIORINA: Chris, I believe that to deal with entitlement reform, which we must deal with, we ought to put every possible solution up on the table, except we should be very clear that we are not going to cut benefits to those nearing retirement or those in retirement.
But having said all of that, for years and years, career politicians, frankly, of both parties have said, "Oh, no, the only way to cut spending is to deal with entitlements. It's the political third rail." And then they never get about the business of cutting out waste and inefficiency.
They never get to the point of...
WALLACE: But we've been talking about waste and...
FIORINA: ... banning earmarks.
WALLACE: ... waste, fraud and inefficiency...
FIORINA: Exactly. Exactly.
WALLACE: ... for 30 years. I covered Ronald Reagan in 1980 when he talked about it. There isn't that kind of...
WALLACE: ... money in waste, fraud and inefficiency.
FIORINA: But you know what, Chris? The budget just keeps getting bigger and bigger and bigger. And every year as it gets bigger, particularly in the last two, there is more waste, fraud and inefficiency. And you're right, nobody ever gets around to it. It's why voters in California...
FIORINA: ... and, I believe, a lot of voters all across the country are tired of career politicians.
Honestly, Chris, every business and every family in America know that at some point you have to start looking at your spending. So let's start looking at our spending, but let's not just breeze on past the fact that we have hundreds of billions of dollars' worth of waste and inefficiency and fraud.
FIORINA: We have it in the 810...
WALLACE: I'm going to try -- I'm going to try one last time...
FIORINA: ... dollars...
WALLACE: ... and if you don't want to answer it, Ms. Fiorina, you don't have to.
FIORINA: It's not a question -- it's not a question...
WALLACE: But let me...
FIORINA: ... of not wanting to answer it.
WALLACE: But let me ask the question, if I may, please. You're not willing to put forward a single benefit -- I'm not even talking about the people that are 60 or, let alone, 65 or 70. I'm talking about people under 55.
You're not willing to say there's a single benefit eligibility for Medicare, Medicaid or Social Security that you're willing to say, "Yeah, I would cut that?"
FIORINA: What I think we need to do to engage the American people in a conversation about entitlement reform is to have a bipartisan group of people who come together and put every solution on the table, every alternative on the table. And then we ought to engage in a long conversation with the American people so they understand the choices.
Instead of rushing off into a closed room and having 100 senators figure it out for themselves, we need to engage people in the conversation. And I'm willing to consider any alternative. But we cannot continue to just jump over the fact that our government is bloated, wasteful, inefficient, in many cases inept and, frankly, in many cases as well corrupt. We have to deal with that.
WALLACE: Ms. Fiorina, we've got less than a minute less. I want to ask you one other question. Sarah Palin has been campaigning for Republican candidates in California this weekend. She endorsed you in the Republican Senate primary. You say you had a previously scheduled event.
I mean, isn't the real fact that you don't want to be seen with Sarah Palin because she's not very popular with independents and she, at this point, in a general election would hurt you, not help you?
FIORINA: I'm very proud of my endorsement from Sarah Palin, and I've said that over and over again. But the facts are that I had a previously scheduled commitment for months with a group of veterans and John McCain. I had a previously scheduled group of fundraisers and rallies.
Campaign schedules are complex things, as you can imagine. We got word of her trip very late in the game. And so I'm delighted she game to California. I know that she helped raise a lot of money. And we had commitments to keep as well.
WALLACE: Ms. Fiorina, we're going to have to leave it there. We want to thank you so much for joining us today. And safe travels on the campaign trail.
FIORINA: Great to be with you, Chris. Thanks for having me.
WALLACE: You bet.
Up next, President Obama makes some surprising comments about what's gone wrong during his first two years in office and what he plans to do next.
Our Sunday panel weighs in after this quick break.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: I'm pretty confident that if we work together over the next several years that the political temperature will go down, the political rhetoric will go down, because we'll actually be making progress on a lot of these issues.
(END VIDEO CLIP)
WALLACE: President Obama speaking at a forum to young voters and giving what some see as a preview of how he might govern after the midterm elections.
And it's time now for our Sunday group, Brit Hume, Fox News senior political analyst, Mara Liasson of National Public Radio, Bill Kristol of The Weekly Standard, and Elisabeth Bumiller from the New York Times.
Well, Elisabeth, your newspaper has a fascinating article in today's Sunday Times Magazine in which President Obama and his top aides make the following points.
The president is spending a lot of time talking to advisors about "2.0," as they call it, how the next two years will be different. He's reading up on the Clinton presidency. And he talks about the tactical lessons he's learned. He let himself look too much like the same old tax-and-spend liberal Democrat.
Brit, are you as surprised as I am that the White House is engaged in this kind of postmortem before the midterm election is even held?
MARA LIASSON, NATIONAL PUBLIC RADIO: Pre-postmortem.
BRIT HUME, FOX NEWS: Pre-mortem? Yeah.
WALLACE: Pre-election postmortem.
HUME: Well, no. This has been, you know, a long time coming. And this election and its outcome, broadly speaking, has been pretty clear for a long time, that major losses were going to be suffered by the Democrats.
It's hardly surprising that they're thinking about what they're going to -- they and the White House are thinking about what they're going to do afterwards.
It's interesting to hear that he's looking at President Clinton's record. President Clinton had a major reversal, of course, in 1994 and confronted an utterly changed landscape thereafter. It took him a while to adjust to it. And I think that President Obama deserves a little time to figure out how to adjust to what will be a new landscape for him.
Having said that, however, it does seem clear to me that he's -- he really hasn't gotten it yet about what happened to him and why. I mean, he talks about how, you know, there were tactical mistakes made, that they didn't -- they didn't spend enough time selling the health care program and so on. Baloney.
He made, what, 40-some speeches on it. He never -- he was -- sold it harder and worked on it more than I've seen a president on a priority in a very long time, if ever. So he needs to figure out that that's not what went wrong. And he needs to figure out some -- why some other things went wrong and go from there.
WALLACE: Mara, I just want to ask one more question about the timing, because I have to say I was shocked by it. I fully expected this, but I expected it...
WALLACE: ... afterwards.
WALLACE: And a number of Democrats around town are unhappy with it because they say it sounds as if the president...
LIASSON: He's giving up in advance.
WALLACE: ... and the White House are already writing off their chances.
LIASSON: Yes. Well, first of all, what he does say in the article is even if we lost not a single seat in the House or Senate, or kept our majorities, I still would do things differently next time. So Obama 2.0 is going to happen no matter what.
I think the big question a lot of people are asking is, is he agile enough to adapt to whatever the new landscape is going to be. Might be divided government or half divided government. And how is he going to adapt? And I think there are seeds of a plan to adapt in this article.
I mean, when he says that he got painted not as a different kind of Democrat but as the typical tax-and-spend liberal, that was interesting to me, because I don't think he spent a lot of time trying to tell people he was a different kind of Democrat. Maybe he plans to do that going forward.
The agenda that he's going to face and the Congress is going to face next year is going to be different. There are not going to be big ambitious agenda items from him.
There's going to be the deficit. There's going to be maybe some trade deals. That's what they -- also was mentioned in these articles. That's a bipartisan -- potential for bipartisan compromise. Maybe immigration in a -- in smaller chunks. Maybe energy in smaller chunks. Those are all different issues where maybe he could figure out a way to move to the center and work with the Republicans.
But he's going to -- he has some very important decisions to make on November 3rd.
WALLACE: Bill, the clear subtext in this article is will Barack Obama pull a Clinton, will he in 2011, just as Bill Clinton did in 1995, really move to the center and really work to find areas that he can do business with either a very strong Republican minority or even possibly a majority in one or both houses.
Mara was saying is he agile enough. I think the -- another question is is he too ideological.
BILL KRISTOL, THE WEEKLY STANDARD: Yeah, I don't know, but the facts that Democrats around town, incidentally, are unhappy about the timing of this article, of course, cheers me up immensely. And I think it's great to see how morose and dispirited and self-pitying they are in the Obama White House right now.
But look. The key sentence is the sentence that I now realize it was a mistake to look like the same old tax-and-spend liberal Democrat. Now, it's a little farcical since he was a tax-and-spend liberal Democrat. He had chances not to be. He could have cut a deal on taxes six weeks ago, accepted the Republican proposal to extend the Bush tax rates and say, "You know what? I'm not your traditional tax- hiking Democrat."
He insisted on tax hikes. He's a huge spender. But I think that's very revealing. When a liberal says, "I can't look like a tax- and-spend liberal Democrat," he is conceding you can't govern this country as a liberal Democrat.
If I were a liberal, I'd be upset about that. It would be as if a conservative president said, "Well, I've learned I can't just look like some conservative." I mean, the whole point of Barack Obama's presidency was to be the next wave of liberalism. Isn't that why they were so excited two years ago?
That's a huge concession. I think it does mean that he will make lots of -- that he therefore will be much more pragmatic than a lot of my fellow conservatives think. And I think he is ready to throw out -- he'll justify it as saying it was all a misperception and, of course, this was always planned, it's the second stage, it's Obama 2.0.
But in practice, there's going to be a pivot away from tax-and- spend liberal -- being a tax-and-spend liberal Democrat.
WALLACE: Elisabeth, I want you to weigh in on this. But I want to add one other thing to the equation, which is the biggest concern that any incumbent president has, at least first, is is he going to face a primary challenge from his own party.
Is there a danger if he really does move to the center that he could face a challenge from his left?
ELISABETH BUMILLER, THE NEW YORK TIMES: I don't see that. I see there might be more of a challenge in the middle. You know, there's been a lot of talk about a third party, some -- a Bloomberg, perhaps. I don't see a challenge from the left, although the left, of course, is extremely unhappy with him.
As much as Bill was saying what a lefty he is, you would not -- you would not get that argument from the progressives -- you know, progressives right now.
But you are -- and the other -- the other interesting thing here in this article by my very talented colleague Peter Baker, I should say, is there is no discussion about national security, foreign policy, at all. This is the first time in a long time that that has not been on the table.
And he's got a lot of big decisions ahead on Iraq, and on Afghanistan, and Iran, and the Middle East and North Korea. Not even a factor right now.
WALLACE: Let me, Mara, because you're the one who's most in the White House, and -- a couple of times Peter Baker, the author of the article, brings up the name, maybe the most unpopular name for Democrats, Jimmy Carter.
How much of a cautionary tale is Jimmy Carter for this White House, the concern that Barack Obama could be another brilliant, well- intentioned, liberal president who serves one term?
LIASSON: Well, look. The gallows humor going around is he's going to be the most successful one-term president in history, ha ha ha. Look, I don't think you can be a successful one-term president. I don't think that that's possible.
I mean, he did accomplish amazing things in his first, significant big things. Even if you disagree with him, they were consequential pieces of legislation, and he passed a lot of them, more than Jimmy Carter and more than Bill Clinton, in his first two years in office.
But now he has to, as he said in this article, defend them, implement them, make sure they stand up correctly. And there are going to be a lot of challenges set. Don't forget, we're going to have a huge health care debate in the next two years about repealing it or not.
I think that, of course, being a one-term president is a cautionary tale. And the other thing that's going to happen in these next two years pretty soon is that he has to think about his own reelection and how he sets himself up for that. Does that mean ignoring some of these big problems that he wants to solve or not? And the -- and the Republicans are going to be doing the exact same thing.
HUME: Well, I'm just struck by this discussion about Bill Clinton. I remember that so vividly. I covered that. Let's remember who Bill Clinton was compared to who Barack Obama has been.
Bill Clinton was a -- was a governor from a southern state who had been repudiated and voted out of office at one point by the voters of Arkansas. And when he came back to power, he was a centrist. And he was deeply knowledgeable about a lot of centrist and even some conservative ideas. And it was no major shift intellectually or ideologically for him to move toward the center.
It would, in my judgment, be quite a major shift for Barack Obama, notwithstanding the objections from the left that he's not liberal enough. The fact is that the reason why he appeared to be a tax-and-spend liberal, as Bill was discussing, is that he's been a tax-and-spend liberal. And I think that's kind of what he is, what he has been. And it would -- really would be a major adjustment for him. The question is whether he'd be willing or able to make it.
WALLACE: It seemed to me in this article he was dipping his big toe in that water.
Anyway, we have to take a break here.
But when we come back, the panel tackles the week's election news, and the first lady hits the campaign trail.
WALLACE: On this day in 2000, the final debate between then- governor George W. Bush and Vice President Al Gore. The candidates sparred over taxes, education and health care during a town hall session in St. Louis.
Stay tuned for more from our panel and "On the Trail."
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FIRST LADY MICHELLE OBAMA: Many of us came into this expecting to see all the change we talked about happen all at once, right away, the minute Barack walked into the Oval Office door.
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SARAH PALIN, FORMER VICE PRESIDENTIAL CANDIDATE: You know, when I hear people say or have said during the campaign that they had never been proud of America until that time, I think, "Haven't they met anybody in uniform?"
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WALLACE: Well, the first lady and the mama grizzly in chief trading barbs as both were busy on the campaign trail this week.
And we're back now with our panel.
So let's start with the balance of power in the House, which we haven't talked about so far today. Democrats currently hold a big majority, and Republicans need a net gain of 39 seats to take back control of the House.
Bill, the conventional wisdom for weeks has been they're going to do just that. Do you see anything out there in the developments in the last few days that would indicate well, maybe not so fast?
KRISTOL: No. And I think I said two or three months ago, sitting right here, that I thought Republicans would pick up about 60 seats. And Juan Williams sitting right here almost collapsed in...
BUMILLER: I'm not Juan.
KRISTOL: ... pain and agony. No, I'm saying he was sitting here. In fact, he was so upset that he hasn't been able to -- you're here. You're here in his place.
And I still think they're heading towards, you know, winning the national vote for the House by eight or nine points. That would be -- the Democrats won the national vote in 2008 by 10.5 points adding up all the congressional district. Democrats actually ran ahead of President Obama -- it's interesting -- the House Democrats. It's a bit of a myth that Obama was such a savior for the party. He trailed the Democrats.
Anyway, I think we'll get something like a 17-, 18-point swing and the Republicans will take control of the House.
WALLACE: Elisabeth, I mean, there's an astonishing number today in the papers. The Cook Political Report, Charlie Cook, who I think is one of the really sharp guys -- I mean, he just drills down into each individual race. He now has 97 competitive races. That's basically a quarter...
WALLACE: ... of the whole House. Ninety of the 97 are Democratic held seats. So I mean, it's all offense for the Republicans, all defense for the Democrats.
BUMILLER: Right. Right. And right now the Democrats are thinning their ranks in terms of spending money. I mean, they're throwing people overboard right and left because they can only afford to save a certain number.
For instance, since there's -- they're spending $2 million on Harry Reid's race in Nevada, which is -- in a -- in a perfect world that shouldn't be happening, and you wouldn't be necessarily saving Harry Reid but, you know, he's the majority leader.
Same thing with Barbara Boxer. That's a very tight race. She's not getting a lot more money. So that's what's happening right now.
And Democrats are -- you know, already the White House is talking about how we're going to -- there -- there's -- you ask people in the West Wing, and they will tell you that it wouldn't be the worst thing in the world -- maybe it's, you know -- that there would be a Republican House, because that way the Republicans would be responsible for some action in the future and have the political stake in the next two years.
WALLACE: You know, Elisabeth touches, Brit, on a very interesting point, which is this -- the money. This is the point in the campaign where the party strategist at the campaign committees for each party, the national committee, have to make the hard decisions about where are they going to focus the resources they have left and the time they have left.
And you hear about Democrats talking about House races pulling back and basically throwing some incumbent Democrats under the bus, saying, "You know, we're just not going to spend money on those races because they're going to lose," and circling the wagon, building their firewall tighter and tighter, while Republicans are pouring money into an expanding battlefield.
HUME: That is the trajectory of the race. There's no doubt about that, Chris. And we have watched throughout this last six weeks or so to see if on a national basis the president and his party would arrive at some issue or some message that would shift the momentum of the race. Clearly, they have not done so.
This is -- the conditions of the country in a race that is as nationalized as this one is, and it certainly is, always are more important than anything else. And the public perceives the condition of the country to be pretty dismal. And the Democrats, having controlled everything, are going to be held accountable for it, and there's no way around it.
And I don't think there's a message or an idea -- they may be able to help at the margins with serious get-out-the-vote efforts. Certainly, labor is committed to doing that, and labor can make a difference in some states.
But I don't think the polls are wrong, and I don't think the prognosticators are wrong. This is the direction this is heading in.
WALLACE: Mara, I want to talk about this question of the argument, because the White House has constantly been shifting, trying to find the right closing argument for the president to make.
First he was blaming Bush. Then he was blaming House Republican leader John Boehner. The last week or so he was blaming the Chamber of Commerce and conservative groups and the money that they've raised. And none of it...
LIASSON: None of it has changed the big landscape, and it won't. But did he succeed in bringing some Democrats back with those messages? Maybe. NPR did a new poll this week, a battleground poll. We have 96 battleground districts. Eighty-six are Democratic. Ten are currently held by Republicans. So pretty similar...
WALLACE: This is a lot, if it's 96 and...
WALLACE: ... 86 are Democratic.
LIASSON: And the story of our poll was that the good news for Democrats is that in these races some of these democratically held seats, it's getting tighter. The bad news is the whole battleground is getting bigger, so they're having to defend more seats, even though in some places they're getting tighter.
I think that you do see Democrats coming home. You don't see them coming home enough in these polls yet to change the big landscape. And in terms of -- you know, we haven't talked about the Senate much, but in terms of the lessons of history, you have a lot of incumbents under 50, even though they are locked in these neck-and- neck races around the country, and...
WALLACE: You're not talking about 50 age. You're talking about 50 percent of the polls.
LIASSON: Fifty percent of the polls. And generally in wave elections, tight races tend to go to the person who's riding the wave, the party...
HUME: And when the House shifts, the Senate shifts, historically.
LIASSON: Yeah. And undecideds generally break to the challenger. All those are the rules that all of us kind of grew up with watching politics. What we don't know is if this is the kind of year where the old rules don't apply yet.
LIASSON: And that's what Democrats are certainly hoping.
WALLACE: Elisabeth, meanwhile, as we mentioned at the top of the segment, First Lady Michelle Obama returned to the campaign trail for...
WALLACE: ... the first time in two years, we're told somewhat reluctantly, because she kind of liked her position as being above politics, and now she's back in the game. How much can she help Democrats?
BUMILLER: Well, she certainly can't And she's a -- she's a non- polarizing figure. It's so interesting to me that this, you know, history-making White House, the election of Barack Obama -- she has played so far a very traditional role as first lady.
She's talked about being, you know, the mother of two daughters. She has taken on nutrition. She -- you know, she works for military families. And so she warms up the candidate. And she -- she's a -- when she gives her speeches on the campaign trail, they're not partisan. She barely mentions the Republican Party. So this can only be good news.
I mean, we saw that Sarah Palin was harking back to two years ago when she made the comment about "the first time in my adult life I've been proud of my country." You know, that's a long -- that's a -- those are -- those days are long gone. She's, you know, learned a lot since then.
WALLACE: Bill, is the -- is Michelle Obama, as some of the headline writers would have it, the secret weapon who's going to save Democrats?
KRISTOL: No, I don't think so. I don't think most voters vote for their -- for or against a senator or congressman because of the first lady.
For me, the interesting event of the week was the Sharron Angle- Harry Reid debate, which was Thursday night in Las Vegas. The Senate -- the one debate that Harry Reid agreed to for the campaign -- the Senate majority leader, 24 years in Congress. He lost the debate against a woman, incidentally, a candidate who was considered a weak nominee, you know, and sort of the most problematic Republican person to emerge from the Republican field. And she beat him.
I mean, I think you can't watch that debate, regardless of whether you're a Democrat or Republican, and say that she didn't have more coherent arguments. She more than held her own against the Senate majority leader.
The Republicans just had an easier argument to make this year. And I think the key to these next two weeks, honestly, for the Republicans is they need to stay on the core message. If you have a wave election, ride the wave. Do not get into little back and forths on personal ethics. Make it about taxes and spending and the debt and the big issues facing the country.
It's interesting. The Republicans who are doing worse, actually, are the ones who were into these kind of personal ethics fights -- Illinois, for example, where Mark Kirk has been unable to open up a lead over a vulnerable Democrat, because it's all about who's more corrupt and who lied the most about his record.
The Republicans who are running the most ideological races, even in states that Obama carried -- Wisconsin, Pennsylvania -- Johnson in Wisconsin, Toomey in Pennsylvania -- they're running straightforward conservative races with conservative messages, and they're doing very well.
LIASSON: Well, they are doing very well. And it's hard to see -- you know, we talk a lot about how Republicans need 10 seats to get a majority in the Senate. Maybe they only need nine and they can start talking to Ben Nelson and Joe Lieberman. So I mean, this -- you know, we might have set the bar a little bit too high for them.
WALLACE: Thank you, all, panel. See you next week.
And don't forget to check out the latest edition of "Panel Plus" where our group here picks right up with the discussion on our Web site, foxnewssunday.com. We promise we'll post the video before noon Eastern time.
Up next, we go "On the Trail."
WALLACE: With the election only 16 days away, the parties are sending their big guns out to rally the faithful, and the candidate are facing off in final debates. The action was fast and furious "On the Trail."
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SHARRON ANGLE, REPUBLICAN SENATE NOMINEE, NEVADA: Man up, Harry Reid. You need to understand that we have a problem with Social Security.
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SENATE MAJORITY LEADER HARRY REID, D-NEV.: My job is to create jobs. What she's talking about is extreme.
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TOM BROKAW, DEBATE MODERATOR: We've heard no outrage from you about the use of that kind of language, which to many women is the same as calling an African American the "N" word.
JERRY BROWN, DEMOCRATIC GUBERNATORIAL NOMINEE, CALIFORNIA: I don't agree with that comparison, number one. Number two, this is a five-week-old private conversation picked up on a cell phone. The campaign apologized promptly. And I affirm that apology tonight.
MEG WHITMAN, REPUBLICAN GUBERNATORIAL NOMINEE, CALIFORNIA: It's not just me. It's the people of California who deserve better than slurs and personal attacks.
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CHRISTINE O'DONNELL, REPUBLICAN SENATE NOMINEE, DELAWARE: This election cycle should not be about comments I made on a comedy show over a decade and a half ago. This election cycle should be about what is important to the people of Delaware.
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CHRIS COONS, DEMOCRATIC SENATE NOMINEE, DELAWARE: Ms. O'Donnell has experience at running for office but not at really running anything, at delivering catchy slogans but at not delivering on any real solutions.
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MICHELLE OBAMA: This election isn't just about all that we've accomplished these past couple of years. This election, Wisconsin, is about all that we have left to do.
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PRESIDENT BARACK OBAMA: We've got to stop the name-calling and we've got to stop looking at the next election. We've got to be focused on figuring out what we're doing for the next generation.
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PALIN: These elections are the most important of our generation. Real America is at a tipping point. November 2nd is right around the corner. I can see it from my house. It's right there!
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WALLACE: And there's still two weeks to go.
And that's it for today. Have a great week and we'll see you next "Fox News Sunday."
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