David Axelrod on 'Fox News Sunday'

Written by Chris Wallace / Published November 14, 2010 / Fox News Sunday

Special Guests: David Axelord, Sen. Jim DeMint, Jeff Bridges

The following is a rush transcript of the November 14, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, ANCHOR: I'm Chris Wallace, and this "Fox News Sunday."

Unfinished business on Capitol Hill -- from the Bush tax cuts, to cutting the deficit, to keeping the government running, we'll discuss the tough issues facing the lame duck session of Congress with White House senior adviser David Axelrod and the man known as Senator Tea Party, Republican Jim DeMint.

Then, the White House signals the U.S. may be in Afghanistan for years, and a new government takes shape in Iraq. We'll ask our Sunday panel about the latest developments in America's two wars.

And our Power Player of the Week, a "Crazy Heart" Academy Award winner makes it his mission to end childhood hunger, all right now on "Fox News Sunday."

And hello again from Fox News in Washington. Congress gets back to work this week on some key issues that were left unfinished before the election. With a new political reality here after the midterms, we want to discuss the president's agenda with White House senior adviser David Axelrod, who joins us from Chicago.

Let's start with the Bush tax cuts, which expire at the end of the year. There seems to be some confusion about where the president stands, so let's try to clear that up. Does the president rule out a permanent extension of all the tax cuts for the middle class as well as those who make more than $250,000 a year?

DAVID AXELROD, WHITE HOUSE SENIOR ADVISER: Yeah, Chris, I think the president's position has not changed at all, and he made it clear again overseas. The president believes we should extend the tax cuts for the middle class.

The middle class have taken a terrible beating over the last decade. Wages have declined. They've borne the brunt of this recession, and it's the wrong thing to do to allow these taxes to go up, as the Bush taxes were scheduled to expire on January 1st.

He also feels we have to proceed in a way that's fiscally responsible, and we just can't afford to borrow another $700 billion for tax cuts that almost entirely are going to go to millionaires and billionaires. We just don't have that money.

So his -- that has been his position. That is his position. He is eager to sit down and talk about where we go from here. But the important thing is that we get something done in the next few weeks so that on January 1st people wake up with security that their taxes are not going to go up.

WALLACE: All right. But in the interest of getting something done -- and I've noticed that the last few times the president has talked about no permanent extension of the tax cuts for the wealthy -- does he rule out a temporary extension for several years of all the tax cuts for the middle class and for the wealthy?

AXELROD: Chris, I'm not going to negotiate with you on this program. And there'll -- there are -- I've heard many different variations discussed over the last week publicly. I've heard a variety of ideas surfaced publicly by various members of Congress and others. And we're looking forward to getting together with the leaders of both parties in Congress.

But the important thing is that we move forward. Everybody has principles they want to defend, but the American people are looking for us to do that and to make progress on the things that are important to them, and this is certainly one of them -- and important to our economy.

WALLACE: Well, I just want to follow up, though. You ruled out the permanent extension. You didn't rule out the temporary extension.

AXELROD: Let me repeat what the president's position is. We have to extend these middle class tax cuts -- absolutely have to do that. We should do that permanently, give people the security of knowing that their taxes aren't going to go up. That would be important for the middle class and important for the country.

We cannot afford to go the additional step and permanently raise -- and permanently cut taxes primarily for millionaires and billionaires at a cost of $700 billion for the next 10 years alone.

WALLACE: All right. Let me ask you. You say you want to talk about things that are important to the American people.

Let's talk about earmarks, because House Republicans announced this week that they are going to vote to ban all earmarks for the next Congress, and the House Republican leaders challenged the president to promise that he will veto any spending bill that includes earmarks. Is the president willing to take that pledge?

AXELROD: First of all, as you know, Chris, the president spoke on this yesterday. We are pleased with the -- with the movement toward doing away with these earmarks. The president has been about earmark reform since he got to the United States Senate.

When the Republicans were last in charge, earmarks exploded to 16,000 in one year alone. Democrats have cut that in half. But we should go the final step here, because they've become a symbol of waste.

WALLACE: So the final...

AXELROD: Some of them are...

WALLACE: So the final...

AXELROD: ... good and some aren't. So that -- so the president supports that. Obviously, there's some discussion within the Republican ranks. Senator McConnell last week rejected this, so you can talk about that with Senator DeMint and see where they are.

In terms of -- we'll see what comes to us, Chris. Obviously, this is very late in the game in terms of budgeting and keeping the functions of government operating, so the -- you know, and one of the problems is that these things come embedded in bills that have to be signed, and that's one of the reasons why the president has asked for constitutional authority, the line-item veto. And I hope while the Republicans are talking about reforming earmarks, they'll also give the president this authority so he could excise those things and they aren't held -- and larger bills aren't held hostage to earmarks.

WALLACE: The president meets with congressional leaders of both parties for dinner this week, and I want to ask you about a statement you made this week where you said, "We have to deal with the world as we find it."

Does the president intend to pull a Clinton, to move to the center, to deal with Republicans, as Bill Clinton did after Democrats took a drubbing in their midterm in 1994?

AXELROD: Well, listen, I don't think the question is moving left, right or center. The question is whether we can work together to move this economy forward, Chris, and that's what the president wants to do.

I think it's very clear the American people elected us and elected this Congress to try and work together on the problems of this country. I was dismayed when Senator McConnell said that the most important thing that he has in front of him in the next two years as the leader of the caucus is to defeat the president.

There'll be plenty of time for elections later. This ought to be a season for cooperation in terms of pushing our economy forward, job creation, steadying the middle class, and laying the groundwork for a better future. And that's what we want to work on with Republicans and Democrats.

WALLACE: Well, you know, there is this debate about what voters were actually saying on election day. As I understand it, the president's explanation is that the voters were saying two things -- one, that the economy didn't turn around fast enough, and two, that he and all of you didn't do a good enough job explaining his policies.

But that's not what the exit polls said, and I want to put a couple of them up on the screen. Fifty-two percent said Mr. Obama's policies will hurt the country. Forty-three percent said they will help. And 56 percent said government is doing too many things better left to businesses and individuals. Thirty-eight percent said government should do more.

Mr. Axelrod, this was not a failure of communication. This was a repudiation of the president's policies.

AXELROD: Chris, there is a volume of research, and I can make a variety of points off of exit poll and other research. But the bottom line is this. The American people have gone through a very difficult time.

We walked into the greatest recession since the Great Depression. People have taken a terrible beating out there. There are millions of people still looking for work. And even though we stopped the free fall and we've had 10 straight months of positive job growth, and even though our economy is growing, we need to accelerate that growth. And I think that is fundamentally what the American people want us to work on.

WALLACE: You don't think they were saying that there's been too many...

AXELROD: And they want us -- and they want to us work together to do it.

WALLACE: If I may -- if I may, David, you don't think that they're -- the country was saying -- voters were saying there's been too much big government, too many 2,000-page bills, too much spending, too much intrusion?

AXELROD: Well, I have no doubt that people are concerned about spending. But they're fundamentally concerned about their jobs, Chris, and they want to see robust job creation, and they want to see this country strengthen its economy and grow. And that's what we want as well.

So I think that's fundamentally the message, and that's what the president is going to be focused on.

WALLACE: There are so many issues. I want to do a lightning round of quick questions and quick answers to go over some of them. I'll do my part. I hope you...

AXELROD: OK.

WALLACE: ... do your part. The co-chairs of...

AXELROD: Well, no promises, but go ahead.

WALLACE: All right. I'll try. The co-chairs of the deficit commission, Erskine Bowles and Alan Simpson, both of whom the president appointed, came out with a plan this week to cut our debt by $4 trillion over the next decade.

Will the president include some of those proposals in his budget in February?

AXELROD: Well, we're obviously very, very interested. The president empaneled this commission for purposes of looking at this very difficult problem, and we're eager to look at all the recommendations once the commission reports. And his commitment to the chairman was to not -- was to refrain from commenting on their work until after December 1st.

But obviously, we're looking for all good ideas to help deal with our long-term debt problem. This is something that is going to affect our economy. It affects our kids. And we need to deal with it.

WALLACE: You say refrain from commenting. Nancy Pelosi didn't refrain from commenting. She immediately rejected the package as, quote, "simply unacceptable." Does the president agree or disagree that this package is simply unacceptable?

AXELROD: Well, I've seen comments from the left and the right on this, Chris, in fairness.

(CROSSTALK)

WALLACE: Well, I'm asking about Nancy Pelosi.

AXELROD: ... on the -- on the -- I understand. But I'm telling you that there were comments on both sides about this. And of course, this is something that we have to confront as we move forward.

One thing I know, Nancy Pelosi had concerns that -- and I understand those concerns and I respect those concerns. The truth is that as we move forward, if one side says we can't raise any taxes on anybody or any interest, and the other side says we can't cut anything, we're obviously not going to make progress on this. And our interest is in making progress on this.

Within that, we're going to protect important equities, for sure. I mean, we shouldn't cut without sensitivity to the impact of those cuts, and certainly Social Security, which is something she's concerned about, is a great concern to us.

But we should move forward in the spirit of cooperation, because we're not going to solve this, one party or the other, alone. We have to...

WALLACE: All right.

AXELROD: ... do it together.

WALLACE: All right. I want...

AXELROD: And that's what we want to do.

WALLACE: You're failing miserably at the lightning round rules, so let me -- let me remind you of...

AXELROD: I was afraid of that.

WALLACE: Yeah, OK. There's a report that the mastermind of 9/11, Khalid Sheikh Mohammed, will likely remain in military detention without trial past the 2012 election. Why not try him, either in a military court or a civilian court?

AXELROD: Well, look. The attorney general is working through those issues. We are working through those issues as an administration. They will make a decision and we will -- and we will proceed.

Obviously, it's a complicated issue because of the sensitivities that localities and Congress have expressed, and we have to work through all those issues and come to the right conclusion, and we will.

WALLACE: In 2008, your campaign expanded the electoral map, turning red states like Indiana and Virginia and North Carolina blue. But if you look at the House tracker of how people voted this election night, in the midterms, you're now looking at roughly the same map that Al Gore and John Kerry faced.

How do you win back those states that have turned red again?

AXELROD: Well, Chris, as you know, two years is an eternity. Two years before the last election you nor anyone else would have predicted that Barack Obama was going to get elected president of the United States.

I think the American people are looking to see that we make progress on the fundamental issues that are impacting on their lives, on jobs and economic growth, and on laying a foundation for a strong future, making America competitive in the world, keeping America's leadership in the world.

That's what the president is going to do. And I think that, you know, we're going to have a whole different situation come 2012. But in between, the important thing is that we work on the problems that people are most concerned about and that concern the future of this country.

If we fail to do that, if we fail or the Republicans in Congress fail to do that, then I think each of us will pay a price for that.

WALLACE: All right. Finally, 30 seconds left, let me ask you, David Axelrod, question, when are you going to leave the White House and begin working on the president's re-election campaign?

If I were to call you six months from now, will you be working in the White House or will you be working back in Chicago on the campaign?

AXELROD: Well, that -- you're right on the line there, I think, Chris. Sometime in the spring, late winter, early spring, I'll be going back -- coming back here to Chicago and beginning to work on that -- on that project.

WALLACE: Well, wherever you are, I hope you'll take my phone calls, sir.

AXELROD: I'll always take your calls, Chris.

WALLACE: All right.

AXELROD: But I might not be brief -- I might not be as brief as you like, but I'll take your call.

WALLACE: When we're off the air, I don't care. David Axelrod, thank you so much for coming in.

AXELROD: OK.

WALLACE: Always good to talk with you, sir.

AXELROD: Thank you. Thank you.

WALLACE: Up next, reaction from the man known as Senator Tea Party, Jim DeMint, right after the break.

(COMMERCIAL BREAK)

WALLACE: Joining us with a very different perspective on the upcoming lame duck session of Congress is Republican senator Jim DeMint, one of the leading advocates for the tea party movement, and he's in his home state of South Carolina.

Senator, you just heard David Axelrod talk about this issue of the Bush tax cuts, and I want to explore the question of where there may be room for a possible compromise. Would you accept a temporary extension of all the Bush tax cut for the middle class as well as those making more than $250,000 a year?

SEN. JIM DEMINT, R-S.C.: Well, good morning, Chris. And we need to remind everyone that we're not talking about cutting taxes. We're talking about keeping current tax rates the same. And I don't think there's any room to negotiate on raising taxes, particularly on smaller businesses.

I hope we can get a permanent extension. But if the president wants to compromise on a two- or three-year extension, what's important here, Chris, is that businesses know what their tax rates are going to be over the next few years so they can plan growth and plan to add people.

If we keep things in a state of flux, I'm afraid we're going to continue to have a jobs problem.

WALLACE: But two- or three-year extension of all the tax cuts -- you'd be on board for it?

DEMINT: Well, if that's all we could get out of the president -- and he is the president, so we'll work with him on that. But I hope he doesn't come back with the idea that, "Oh, we're going to raise taxes on 750,000 small businesses," as he's been talking about.

I think if he can work on our side of the ledger, I think we might -- can work together.

WALLACE: All right. Let me talk about something in which you're dealing with your fellow Republicans. You plan to bring up a resolution to the House Republican conference on Tuesday in which your party would agree to seek no earmarks in the next Congress, over the next two years.

One, do you have the votes to pass that ban? And two, is that going to be a first test as to whether or not the Republican establishment here in Washington gets what the tea party movement was all about?

DEMINT: Well, Chris, this is not just the tea party movement. This is a 70 percent issue with the American people. Right now we've got over 500 congressmen and senators who are in Washington who think it's their job to bring home the bacon. And that takes your eye off the ball.

I mean, we're not working on important national issues when we're trying to pave a local parking lot. John Boehner, Eric Cantor, the House leadership and, really, I think, everyone in the House has gotten the message. They're going to push for an earmark ban. Just about every new Republican freshman is pushing for the earmark ban.

I think we'll win the vote because I think most of the Republicans in the Senate have gotten the very clear message from the American people that we need to stop wasteful spending.

WALLACE: Well, you say that most people have gotten the message -- apparently not all of the top Republicans in the Senate, because a lot of them think that banning earmarks is a mistake. Here is what the Senate Republican leader Mitch McConnell said just this week.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, R-KY.: You could eliminate every congressional earmark and you would save no money. It's really an argument about discretion.

(END VIDEO CLIP)

WALLACE: Senator, their argument is that Congress is going to appropriate whatever it's going to appropriate. When he says it's a matter of discretion, the discretion is who gets to decide where to spend some of that money, an administration bureaucrat or a senator from the state of South Carolina who wants to spend some of that money in his home state and knows better, according to Senator McConnell, where that money should be spent.

DEMINT: Well, Mitch is a good friend. On this issue we disagree. You would see spending come down dramatically if you took out all the self-interest that earmarks represent.

So I've seen for years, Chris, that you put a little bit of bacon in for all the congressmen and senators. They'll vote for a big bill they would otherwise not vote for. So it is a problem with spending.

We can, as a Congress, restrict the president in how he spends money, make it competitive grants or block grants to states. We don't have to give the administration a blank check. And I think everyone in the Senate knows that.

WALLACE: Well, another one of your Republican colleagues, Senator Jim Inhofe, says -- I don't know how -- he basically says you're being hypocritical because he says over the years you have put in for earmarks for multi-million-dollar road projects in the state of South Carolina.

DEMINT: Well, I am a recovering earmarker. And thankfully, there are support groups now all over the country. We call them tea parties. People realize, as I did, Chris, that if you try to play the system and reform it at the same time, it doesn't work.

And four years ago I decided to go cold turkey on this because I saw it was destroying our country. We can't spend all our time trying to rob the federal treasury to get money for our states and congressional districts and still be serious about the big issues like reforming our tax code and fixing Social Security and Medicare.

We've got to focus on the interests of the nation, not on our parochial interest.

WALLACE: Well, let's talk about a big issue. As I discussed with David Axelrod, the president's debt commission -- the co-chairmen came out with a plan this week to cut the national debt by $4 trillion over the next decade. And it was a mix of spending cuts to tax increases of three to one.

Now, your fellow deficit hawk, Senator Tom Coburn, said he'd be willing to accept a mix and he understood that he couldn't get everything that he wanted, there had to be a compromise. Would you be willing to accept a mix of spending cuts and tax increases if you could get, let's say, $4 trillion out of the national debt?

DEMINT: Well, I want to see the whole report once it's done. As you know, Chris, this is just a recommendation from the chairmen to the commissioners.

Like Tom Coburn, I want to get back to Washington and talk to Tom and Paul Ryan and others on the commission to see what they're actually going to recommend.

I think the important thing right now is to realize, Chris, there's -- the last four years, we've increased the debt of our nation by over $5 trillion. It's not very credible to come back right now, after adding hundreds of new programs, entitlements, adding all of these new government agencies, things like "cash for clunkers" and bailouts, and now all of a sudden say, "We've got debt. We've got to cut Social Security and raise taxes."

If we need to cut spending, we don't have a taxing problem in this country. We already have one of the highest corporate tax rates in the world. We need to cut spending. Chris, what we need to do is go back to 2008 spending levels immediately.

We need to repeal the trillion-dollar "Obamacare," take back the bailout money and what stimulus money hasn't been spent. And then we need to look at the big picture of ways to devolve the federal role in areas like education and transportation...

WALLACE: Well, let me ask you...

DEMINT: ... back to the state.

WALLACE: Senator, let me ask you about one...

DEMINT: Go ahead.

WALLACE: ... very big area, because last week you were asked about entitlements, and I want to put up on the screen what you said. "We're not talking about cuts in Social Security. If we can just cut the administrative waste, we can cut hundreds of billions of dollars a year at the federal level. Cutting benefits to seniors is not on the table."

Now, here's the question I have. Are you saying no cuts to seniors who are currently in the program, or are you ruling out cuts in Social Security benefits to people who are 10 or 20 years away from going on the program?

DEMINT: Chris, first of all, we need to remind everyone that Social Security has not added a penny to our debt at this point. As a matter of fact, our country would show a lot more debt if we reported how much the government has borrowed from Social Security, which is trillions of dollars right now.

I've probably done more work on Social Security reform than anyone in the Senate, and I've put out proposals along with people like Paul Ryan in the House. We don't change anything on anyone who's in retirement or over 55.

But we restructure the program to give younger workers more choices, allow them to take more of the savings onto themselves. And we can actually reduce the cost of Social Security without reducing benefits. And that's what we need to get people to look at, rather than just raising taxes and cutting benefits to seniors.

We need to look at ways that we restructure Social Security so we give younger workers better choices and cut the debt over the long term.

WALLACE: But if I may, briefly, sir, the two co-chairs of the debt commission say you can't make enough in savings, and they're talking about -- again, we're always talking here about people who are 10 or 20 or even more years away.

They talk about raising the retirement age. They talk about cutting benefits for people who are better off. They talk about reducing cost of living increases. Are you talking about ruling out all of those things?

DEMINT: Well, again, I've introduced legislation that shows we can cut the cost of Social Security without all of these cuts that they're talking about.

This is what we've done for years, Chris, is we've cut benefits and raised taxes on Social Security without changing it from a political slush fund, which is what it's been for the last two decades, to a real savings program. So we need to look at real reform before we go straight to Social Security, which people have paid for, and start cutting things. There are other things that they did not consider, like repealing "Obamacare" and taking back money that -- from -- you know, privatizing Fannie Mae, privatizing General Motors. All of these things need to be on the table before we start cutting programs like Social Security that people have paid for.

WALLACE: Senator, I got less than two minutes left and I want to get in two more questions to you, if I can. First of all, how do you feel about Michael Steele serving another term as chairman of the Republican National Committee? Do you think that would be good or bad for the party?

DEMINT: Well, Chris, I want to look at the choices. Frankly, I think where we lost a few Senate seats, our ground game was not as strong as it could have been. We were actually outmanned on the ground.

And going into 2012, we need a really strong leader for the Republican Party to match the get out the vote that we saw from the Obama machine last time. And so I appreciate Michael Steele's service, but I'm looking for some alternatives right now. I haven't decided who I would support.

But we need a strong national Republican organization to help organize the energy of the tea parties and the other citizen activism that we are seeing out there right now. We need to make sure we have a lot of boots on the ground.

WALLACE: And in 30 seconds, do you think that you could get elected president in 2012, or do you think you're too far to the right?

DEMINT: I don't think I'm far to the right at all. I think this election shows that my views of balancing the checkbook are not radical at all. Americans want us to cut spending and debt. And I think they want us to return the role of the federal government back to more of a limited constitutional role.

Right now, I have no plans to run for president. I'm looking for someone who will have the courage and leadership abilities to come out and make the hard decisions that we need to turn this country away from a cliff.

WALLACE: Senator DeMint, we want to thank you, as always, for talking with us, and please come back, sir.

DEMINT: Thanks, Chris.

WALLACE: Up next, our Sunday panel on the upcoming battle over tax cuts, earmarks and that controversial plan to slash the federal debt.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: It would be fiscally irresponsible for us to permanently extend the high-income tax cuts. I think that would be a mistake.

(END VIDEO CLIP)

(BEGIN AUDIO CLIP)

SPEAKER OF THE HOUSE NANCY PELOSI, D-CALIF.: We support the tax cuts for everyone, but not an additional tax cut at the high end. It's too costly.

(END AUDIO CLIP)

WALLACE: The president and House Speaker Nancy Pelosi with two different views about whether even a temporary extension of the tax cut for the wealthy is on the table.

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 Fox News Political Analyst Juan Williams.

So, Brit, after a confusing week, where do you think Democrats are on this question of extending the Bush tax cuts? And what do you make of this apparent split about whether a temporary extension is on or off the table between the president and Nancy Pelosi?

HUME: I think that a temporary extension is on the table, and the only question is how long it will be. It doesn't really matter at this point.

I don't know whether Nancy Pelosi can hold her Democrats if the president and the Republicans want to extend the upper-income tax cuts for two more years. I'm not sure she can do that. And my guess is that the Republicans and the president will make a deal, and the deal will hold.

WALLACE: Mara, is this where we're headed, where you have the president and Nancy Pelosi, the House Democrats, and that there is some distance between the two?

LIASSON: Well, there definitely is some distance in a big sense, but on the narrow issue of these tax cuts, the question about Nancy Pelosi holding her Democrats, if she could have held them, she would have had the votes before they went home to campaign. I mean, that was the big kind of surprise for everybody, that this seemed to be the position that the Democrats settled on.

The tax cuts for the middle class were popular. For the rich, they weren't. It was a good issue for them, and they were going to vote. And they didn't vote because they didn't have the votes.

This time, I think the question is, although in the end, I agree, a temporary extension is probably where we're going to get, but the question is, does Nancy Pelosi bring this up in the lame duck so that at least her caucus can vote on the middle class tax cuts alone being extended and challenge the Republicans to vote against them? She probably doesn't have the votes now if she didn't have them before, but it might be a useful exercise for the Democrats.

WALLACE: Bill, there is also a split among Republicans on this question of earmarks. And late Friday, House Republicans announced that they are going to vote this week, and clearly they have the votes, to have a total ban on earmarks in the Republican conference for the next two years. But as we just saw between DeMint and McConnell, there's a disagreement in the Senate.

What's going to happen?

KRISTOL: I think the earmark banners are going to win in the Senate, at least for a couple of years. I mean, Mitch McConnell can make all the theoretical arguments he wants, that earmarks aren't that important. But what's the argument against trying life without earmarks for a year or two?

If it's disaster, if the Obama administration is spending money in an irresponsible way, using that discretion that McConnell is so worried about -- and most of the money isn't at the discretion of the Obama administration, it's formula (ph) grants and the like. But I don't think his defense of earmarks (INAUDIBLE). But if things go wrong, they can reinstate earmarks in a year or two, they can make their case to the public.

So I think Senator DeMint will win in the Republican conference this week. Republicans will be against earmarks, President Obama will be against earmarks. And we're going to have a wonderful moment of blessed bipartisan bliss.

We're going to have an agreement on extending current tax rates for three or four years, I think. We're going to have an agreement that we shouldn't have earmarks. There'll be an agreement on some spending cuts. There'll be an agreement on prosecuting the war in Afghanistan.

We're going to have the Obama-Boehner-DeMint agenda for the next three or four months, and it's going to be good for the country, actually.

WILLIAMS: Well, in keeping with the spirit of bipartisanship --

KRISTOL: And Nancy Pelosi -- and the one person who's going to be the most fervent opponent to Barack Obama, Nancy Pelosi.

WALLACE: Which wouldn't be bad for Barack Obama.

WILLIAMS: Obama, exactly.

KRISTOL: Right. It wouldn't be bad for the country either, if President Obama signs on to a lot of the Republican agenda. And I encourage him to do it.

WILLIAMS: Well, in the spirit of bipartisanship, I think you're right on most of that. But I will say that it's just the flavor of the moment, this earmarks thing, to my mind.

You know, I don't see that it's going to make any huge difference. It's a small percentage of the actual federal budget. And, in fact, I find myself agreeing with Mitch McConnell, who says, you know what, is this really going to make a difference, or is this simply playing to the crowd, grandstanding in a way that doesn't actually change anything?

It allows people to say they're conservative, but does it really change anything in the way that Washington works? Does it make a difference?

I think lawmakers do know more about their state than anybody else. And if they know there is a worthy project, they should be able to support it. But that's not what this is about.

It seems to me that the Zeitgeists, if you will, or whatever they are capturing that DeMint is about here, is about the idea that somehow they're going to lessen federal spending. That's what people think they're doing. But I don't think it accomplishes that.

HUME: Well, one theory of it is -- and I don't think it make sense -- is that earmarks are an instrument of logrolling. You get some great, big, whopper bill that has got all kinds of stuff in it that you might be able to rally people against because it's so excessive, but if individual members have got their little project that they've promised in their home district or state, in the bill, even though it isn't adding to the overall amount, they are going to be more inclined to support it. And that is a lot about the whole appropriation process -- you scratch my back, I'll scratch yours, you'll get your earmarks, I get -- and pretty soon you can pass anything.

WALLACE: I want to break in here for a minute because there is a subject I've been wanting to talk to you, Brit, about all week. And that is that the co-chairmen -- you have been talking about the national debt for a lot of months now, and it obviously is a big concern of yours.

We had the co-chairs of the debt commission, the president's debt commission, come out with their plan this week. And I want to put out a brief outline of what it would do.

Deep cuts in domestic and defense spending. Raise the gas tax by 15 cents a gallon. Cut benefits and raise taxes for Social Security. And through a 3-1 mix -- 3-1 mix of spending cuts to new taxes, reduce deficit by $4 trillion over the next 10 years.

Brit, you have been asking for stiff medicine. Is this the right --

HUME: This is strong medicine, and I think it's a tremendous start. Now, mind you, it was only the two co-chairs. The rest of the commission hasn't signed on to this or anything like this.

But this is, just in terms of its overall dimensions, is the kind of thing it's going to take. And I was especially pleased to see that one of the changes they want to make is they want to eliminate all these individual tax deductions. And in exchange for that, bring down individual tax rates.

Lower individual tax rates have considerable history. Economists have analyzed this of spurring economic growth. So this is not simply some green eye shade deal where it's all agony and no reward. Those individual tax rates will come down, people will pay less.

Now, look, they're talking also about eliminating the home mortgage interest deduction. I'm not sure that's a bad idea, but I do know one thing, it's not going to be easy to pass.

WALLACE: Eliminate it over $500,000.

LIASSON: No, there were different -- they gave different options on that.

WALLACE: Juan, your thought?

WILLIAMS: You know, my thought is, where are the Republicans cheerleading this? This is really good news.

I hear Dick Durbin on the Democratic side saying he hates this like the devil hates holy water. But, OK, I can understand why liberals would say we want to protect the interest of the poorest in society, make sure that this doesn't somehow disproportionately benefit the rich.

Remember, business tax rates go down markedly here. This is a good deal for Republicans. I would think Republicans would be standing up at the top of the Capitol and saying, "Go, team, go!"

(CROSSTALK)

LIASSON: Republicans aren't saying anything. That's actually good. In other words, the people who are shooting at this from the sidelines so far have been preponderantly liberal --

WALLACE: Right. And as you thought, that the Republicans are figuring if they embrace it, that kills it?

LIASSON: Well, the point is the Republicans, except for very, very few groups, are saying we don't want even the elimination of one single tax break. But I think that what we haven't seen yet and what is going to be a really important step in this process, which is an incredible education process for the American people, you want the debt and deficit cut? OK. If you don't like this plan, what would you prefer?

We haven't seen the income distribution tables, and those are the charts that say, how will people at different incomes be affected by these changes? And I suspect it will come out a lot better for the middle class to lower middle class than these liberal groups think.

WALLACE: All right.

We have to take a break here. But when we come back, the timeline for U.S. troops in Afghanistan suddenly gets a lot longer. And will the mastermind of 9/11 ever face trial?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ROBERT GATES, DEFENSE SECRETARY: We will drawn down our troops over a period of time, but we have every intention of being active and aggressively involved.

(END VIDEO CLIP)

WALLACE: Secretary of Defense Robert Gates explaining this week the U.S. will be fighting the Taliban in Afghanistan for at least four more years.

And we're back now with our panel.

It didn't get much attention this week between all the focus on politics and the president's trip to Asia, but Secretary Gates, Secretary of State Clinton, and the chairman of the Joint Chiefs, Mike Mullen, attended a security conference in Australia, where they all said 2014 is now the key date for handing over the war to the Afghans.

Bill Kristol, how big a shift is that?

KRISTOL: It's a pretty big shift. The president foolishly announced this July, 2011 date to begin withdrawing for domestic political reasons a few months ago. They've been quietly backing away from it. They're going to back away further at the NATO summit next week, where they're going to move to this 2014 date, which is so far off, it's hard to know really what it means.

I still think he'll try to drawn down a little bit in the summer of 2011, but I think what Bob Gates said is we're taking the war to the Taliban and we're doing a lot of damage. We're taking some casualties ourselves, unfortunately, but we are -- we have a strategy now under General Petraeus to succeed, not a strategy to exit.

I think Barack Obama has crossed the bridge in his own mind. He is not interested in an exit strategy during his first term from Afghanistan, he's interested in a success strategy.

WALLACE: Juan, the White House tried to play down the shift, saying, no, no, we still plan to begin the drawdown in July of 2011, as the president said in his West Point speech. But they acknowledge that now it's going to be a very gradual drawdown, and that we're at least to 2014 before we turn things over to the Afghans.

How big of a deal do you think that is?

WILLIAMS: I think it's a big deal in this sense -- the way the White House would portray this is, it's a shift in strategy, that what we're talking about is a post-2011 strategy for Afghanistan. And here are the diplomatic, economic efforts that we're going to be making post-2011. But I think that's all semantic.

I think the reality is, as Bill described, that there has been a shift here. I don't think that I would agree that it's about winning. I think if you start thinking that you're going to win in Afghanistan, that's the sure road to defeat, because that's not possible.

And I think the big news this morning, actually, is that "Washington Post" interview with the Afghan president, Hamid Karzai, in which he says it's time for the U.S. to get out right now. He thinks the U.S., especially our nighttime operations by Special Ops, which I think have been tremendously successful and a tribute to General Petraeus -- are too intrusive on Afghans, and that this is disrupting their lives and creating enmity.

Well, you know, I don't understand. If he's not about winning, then why should we be about sacrificing American lives? That's why this war is so unpopular here at home.

And President Obama is making a tremendous sacrifice. He put the additional troops in, and he should get additional support.

WALLACE: Brit, I want to hit a couple of subjects here.

The big story in "The Washington Post" this weekend, that report that Khalid Sheikh Mohammed, the self-proclaimed mastermind of 9/11, will likely remain in military detention and not face trial either in a civilian court or a military court until after the 2012 election.

What do you make of that?

HUME: Well, it's a further sign that the policy outline for dealing with these terror suspects doesn't work. They want to try him in federal court. After all the political howling was over with, they couldn't pull it off. It was a failure.

Well, so where are they going to try him? There is no place in the continental United States where anybody would accept it.

So what are they going to do, try him in Guantanamo? Oh, my God. That would be a complete political confession of the utter foolishness of their whole policy.

So they're just going to kick the can down the road and put the thing on hold. I think it's blow to the whole idea that these terror suspects can be treated like -- not ordinary, but in a similar way of ordinary criminals through the normal processes of justice.

WALLACE: Mara, the way The Post portrayed it is there was a lot of politics in this. On the one hand, that the local officials in New York said no way are we going to have this trial in downtown Manhattan, but they don't want to have the trial in Guantanamo, which is where they already had begun the trial before Obama took over, because that says to liberals we haven't done what we said we were going to do

LIASSON: Sure. That's right. And that was one of his most prominent promises, and, of course, it was one of the very first things he did when he came into office, on the first day, or the second day, that he was going to close it in a year, and it hasn't happened.

So you have got the right now in power in Congress, which would defund any trial going forward in the United States. It's not just the local official howling about it. It's that it will not happen. Republicans have a veto over that.

And you can't do it in Guantanamo because that would be a betrayal of your base. And he's stuck. And so, he's got the third option, which is not necessarily a great one, which is this indefinite detention.

HUME: Which means nothing.

LIASSON: Well, it shows you how difficult a kind of Gordian knot this is to cut, because what do you do with these terror suspects? And he hasn't been able to figure that out.

WALLACE: I want to go to one more subject, and that is Iraq, because, Bill, after eight months of haggling after the national elections back last spring, the Iraqis have apparently agreed on a new government with Nouri al-Maliki, the prime minister, but a significant role for the Sunni faction, including Ayad Allawi, who actually got the most votes.

Your reaction to this government? And can it bring -- this coalition, will it stand, will it bring stability to Iraq?

KRISTOL: Well, it's obviously good news. I wouldn't count on stability, but it's a step on the path to stability. The next step on the path to stability will be negotiating a new status of force agreements with the Iraqi government once it's in place at its request to leave some American forces this to ensure basic security and stability. And I think that's the next --

WALLACE: Well, wait. I thought we were getting out.

KRISTOL: Well, the plan right now is to get out at the end of 2011. That is risky and foolish, and we've sacrificed an awful lot in Iraq. And the idea of leaving 20,000 or 30,000 or 40,000 troops now there who are not taking casualties now as a safeguard for the political process and a safeguard against more Iranian meddling than they're already doing is a good idea.

I think if the president signals that he's willing to accept such an invitation from the Iraqi government, I think he will get it, and then we'll have a reasonable path, I think, forward in Iraq, and we'll have a reasonable path forward in Afghanistan. And all the president has to do is stop Iran from getting nuclear weapons and --

LIASSON: And he'll be re-elected.

KRISTOL: -- he'll be re-elected and he'll have a successful foreign policy. And he can do all those things with Republican support.

WALLACE: Does it worry you that Bill Kristol seems so happy with the direction that President Obama administration is going?

WILLIAMS: Well, on foreign policy, no. I mean, I think the president, with the drone attacks, the commitment of additional troops to Afghanistan, and the fact that there are troops on the ground -- he's announced the end of combat missions in Iraq, but that's not real. I mean, we still have troops there and they're still fighting, although casualties are down.

But I think the important thing here, when I look at Iraq is, it took eight months to get to this point. It's not a stable deal. I don't know that this deal will even hold.

And it's just such a disappointment, that they can't get the politics together and continue to rely on the U.S., it seems to me, both militarily and economically, to buttress what they're doing. I think they're like freeloaders, in my mind. They should take responsibility here and they should take over.

Bill's point -- and this is one that worries me. And again, I think this has been an unpopular war with the American people -- you continue to have American forces there. You say kind of vaguely, yes, we should have forces there to buttress against this or that. I guess you're thinking of Iranian incursions and the like.

But you know what? We can't be the world's policemen. I just don't think that's our role anymore, and I don't think the American people in terms of budget or patience or American blood want the job.

WALLACE: Mara, if, as Bill suggests -- and I have not heard this mentioned -- that there's a new status of forces agreement, we'd be talking late 2011, early 2012, the beginning of presidential re- election. If he agrees to keep troops in Iraq longer, and we're going to be in Afghanistan until 2014, doesn't the president have real problems with his liberal base?

LIASSON: You know, I don't think it's as simple as that. I mean, I think that so far, there is -- yes, the liberal base of the Democratic Party is anti-war. That's what fueled their great gains in 2006 and 2008. However, there are so many other factors that I think are more important. Look how unimportant Iraq and Afghanistan were in this election. I think if the economy is on a better track, if he can kind of reclaim the post-partisan identity that he lost in the last two years over the next two years, I think that that won't matter as much.

HUME: In terms of his re-election, if he had to fight his base in the nominating process, that would probably help him. Republicans are not going to buck him on Afghanistan and Iraq. At least not very many of them. But it would be an area --

WALLACE: But look at Ted Kennedy. Look at George H. W. Bush.

LIASSON: But who is going to challenge him?

(CROSSTALK)

HUME: But it would be an area of bipartisan cooperation. It would be moment of bipartisanship.

And my sense about it is that, you know, obviously you have trouble with the anti-war left. Every president does, right or left, Democrat or Republican. That's not a big deal.

WALLACE: Thank you, panel. See you next week.

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

Up next, our "Power Player of the Week."

(COMMERCIAL BREAK)

WALLACE: Celebrities often come to Washington to push their favorite cause, but seldom are they as deeply committed as our "Power Player of the Week."

(BEGIN VIDEOTAPE)

JEFF BRIDGES, ACTOR: I just think of what it would be like to not only be that kid, but to be the parent of the kid, and how heartbreaking that is.

WALLACE (voice-over): Jeff Bridges is talking about ending childhood hunger.

BRIDGES (voice-over): Look around you. One in four kids in the U.S. faces hunger.

WALLACE: And he's been at it for almost 30 years, which is why he was in Washington this week, trying to build support for a new effort.

BRIDGES (on camera): I'm trying not to break down because it's right here.

WALLACE: Bridges is spokesman for the No Kid Hungry campaign, which has set a goal of making sure every child gets the food he needs by 2015. That will be tough, because the problem is growing.

Sixteen million children were at risk last year, up a third over the previous year. But Bridges says the resources are there.

BRIDGES: There's $1 billion available that's available to states that's not being used that's already allocated for school meals.

WALLACE (on camera): You're saying that the money is out there to feed kids?

BRIDGES: Yes. It's not being used, $1 billion.

WALLACE (voice-over): He says some parents don't sign their kids up for school meals because of the stigma -- they're too poor to feed them at home. And he says there is bureaucratic red tape that keeps children from being fed.

BRIDGES: If kids aren't getting enough calories to their brain, they are not going to be able to learn.

WALLACE: Jeff Bridges says he is trying to use his celebrity to do some good.

(on camera): Where do you feel you are in your life?

BRIDGES: I'm feeling pretty darned good. You know, this year, especially, Chris, come on, man.

WALLACE (voice-over): He has been in and around Hollywood all his life. His father Lloyd Bridges starred in "Sea Hunt." In 1971, he became the star in "The Last Picture Show."

And while he has had a distinguished career, it wasn't until this year playing the broken down country singer Bad Blake in "Crazy Heart" that he finally won the Academy Award.

(on camera): What did it mean to you to win the Oscar?

(voice-over): Bridges says he saw it as an acknowledgment of his father.

BRIDGES: I've always felt that I am sort of an extension of him. It's sort of like in a relay race, and he passes the baton. And I'm doing his work, so the baton is that gold (ph) guy.

WALLACE: He's been married for 33 years, and next month he stars in a new version of "True Grit," playing the role made famous by John Wayne.

But he says the most important thing is making sure children get fed.

BRIDGES: The programs are in place. The money is there. The food is there. We have to examine why it's not working.

(END VIDEOTAPE)

WALLACE: If you want to find out more about Jeff Bridges' campaign, go to the Web site NoKidHungry.org.

And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

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On the Show

Sunday December 28, 2014

2014 has seen a number of significant news stories, from the GOP midterm election wave, to the rise of ISIS militants in the Middle East, and a national debate over race and justice. Our Sunday panel discusses some of this year’s biggest headlines in a special “Year In Review” edition of Fox News Sunday. Plus, we’ll look ahead to 2015 and get our panelist’s predictions in politics, economics, entertainment and sports.

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