THIS SUNDAY: Chris will sit down for an exclusive interview with Lt Gen H.R. McMaster, National Security Advisor to President Trump.
Key Republican Lawmakers on GOP Agenda for New Congress
Written by Chris Wallace / Published November 07, 2010 / Fox News Sunday
Special Guests: Rep. Eric Cantor, Rep. Paul Ryan, Rep. Darrell Issa
The following is a rush transcript of the November 7, 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 is "Fox News Sunday."
House Republicans win big Tuesday. Now, the hard part -- turning their ideas into laws. From creating jobs to cutting taxes, to shrinking government, we'll talk about the GOP agenda with Eric Cantor, who's expected to become the new majority leader; Paul Ryan, set to head the Budget Committee; and Darrell Issa, poised to take over the Oversight Committee and investigate the Obama White House -- Cantor, Ryan and Issa, only on "Fox News Sunday."
Then, President Obama looks ahead after the midterm defeat.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: We can't spend the next two years mired in gridlock.
(END VIDEO CLIP)
WALLACE: We'll ask our Sunday panel, will the White House really work with Republicans?
And we'll take a final look at the 2010 elections "On the Trail," all right now on "Fox News Sunday."
And hello again from Fox News in Washington. With their big election victory, House Republicans must now prepare to start governing.
Here to talk about their plans, we're delighted to have the man who is set to become the next House majority leader, Eric Cantor.
And, Congressman, congratulations and welcome back to "Fox News Sunday."
REP. ERIC CANTOR, R-VA.: Good to be here, Chris.
WALLACE: Nancy Pelosi announced Friday that she is going to run to stay on as the leader of Democrats in the House. Now, the Republican National Committee, which had a sign on -- outside its building here in Washington that said "Fire Pelosi" during the campaign promptly changed that to "Hire Pelosi."
Question: Why are Republicans so happy that Nancy Pelosi will likely remain as the face of the House Democrats?
CANTOR: Well, if Democratic members in the House elect Nancy Pelosi as their leader, it's almost as if they just didn't get the message from the voters this election.
I mean, the voters outright rejected the agenda that she's been about. And here they're going to put her back in charge. And in fact, Chris, over the last two years -- in fact, almost four at this point -- she has refused to even meet with Republican leadership to talk about any way forward together.
I mean this is the woman who really, I think, puts ideology first, and there have been no results for the American people. And that seems the direction they want to take again. It just doesn't make sense.
WALLACE: So what are you saying, it's a thumb in the eye to voters if she becomes the House Democratic leader?
CANTOR: Yeah, I don't think there's any question that this says to the voters, "We're not listening to you. We think we're right. We're going to continue the same path."
WALLACE: All right. Meanwhile, President Obama has been giving his analysis of the Democratic defeat. Now today in India, he said the election means that he's going to have to make some, quote, "midcourse corrections." And here is what he said in his weekend Internet address. Here it is.
(BEGIN VIDEO CLIP)
OBAMA: This week, Americans across the country cast their votes and made their voices heard. And your message was clear. You're rightly frustrated with the pace of our economic recovery. So am I. You're fed up with partisan politics and you want results. I do, too.
(END VIDEO CLIP)
WALLACE: Based on those comments, does the president get it? Does he understand what voters were trying to say on Tuesday?
CANTOR: Well, Chris, I'm worried that he doesn't, just as it's worrisome to see Nancy Pelosi will maintain leadership in the House, because what the voters said is, number one, "We're tired of the 20- month agenda that we've seen under the Obama administration," because, number one, it hasn't produced results.
But number two, it is anathema to most people. I mean, it is this expansion of government and the fact that we need to keep cranking up the spending machine of money we don't have. It is government getting into more and more aspects of our economy that the voters outright rejected.
And when you hear the president say things like, you know, "We did a poor job of explaining what we were trying to do," I think that that's indicative of his not getting it, because the voters have had enough of the Obama agenda.
WALLACE: OK. You're among the congressional leaders who has been invited to the White House to have dinner with the president on November 18th. What do you intend to say to him about how Republicans will deal with him?
CANTOR: Well, I feel, Chris, that it is going to be incumbent upon us to say, "Mr. President, we are here to talk with you to try and work out solutions. But if the message from the voters is anything, it is we need to stop the direction in which your administration has been heading. And we need to go back towards a commonsense agenda which starts with limiting government, cutting spending, so we can get jobs created again."
And that's what it's about. And we've got to demonstrate that we heed the message from the people and that he'll come along with us.
WALLACE: Do you -- are you hopeful that he will receive that and respond?
CANTOR: Well, you know, Chris, the president did say this week that he's willing to work with us. Now, listen, are we willing to work with him? I mean, first and foremost, we're not going to be willing to work with him on the expansive liberal agenda he's been about, but if he's serious about working with us on things like earmarks, for instance, which -- he said he would work with me on that -- I'm absolutely hopeful that we can do that.
I hope he calls Harry Reid the first thing to get the Senate to go along with the House position.
WALLACE: OK. Let's talk some specifics. The Bush tax cuts are going to be the big issue in the lame duck session of Congress, which is going to come in just a few days.
If the president says, "Extend the tax cuts for the middle class permanently and I'll agree to a two- or three-year extension for tax cuts for the wealthy," could you buy that?
CANTOR: First of all, Chris, let's set the record straight. No one's getting a tax cut here. One of two things is going to happen January 1. That is your rates are either going to -- either going to go up or they're going to stay the same. So this notion that somehow we are passing tax cuts is just not true.
And so, no, I am not for decoupling the rates, because all that says to people looking to go back in and put capital to work and invest to create jobs is, "You're going to get taxed on any return that you can expect."
I am not for raising taxes in a recession, especially when it comes to job creators that we need so desperately to start creating jobs again.
WALLACE: OK. You talk about compromise. If he says to you, "All right, we'll extend all of the Bush tax cuts or," as you say, "keep the rates as they are now, but only for a few years," could you accept that?
CANTOR: Chris, I am not for sending any signal to small businesses in this country that they're going to have their tax rates go up. Washington -- I mean, people -- I think it's -- the election result reflected the fact that people get Washington does not have a revenue problem. It's got a spending problem.
WALLACE: But wait. Are you saying that if -- it's either permanent extension of all the Bush tax cuts or nothing?
CANTOR: No. What I'm saying, Chris, is we've got to come to grips with the fact that the money is going to be spent one way or the other. And the fundamental difference on this -- on this issue is their -- I mean, the Obama position has been "We think government ought to be spending this money, not the people who earn it."
That's what this election's been about. Government doesn't know best. People in America know they want to strive for opportunity. They're willing to take responsibility through risking their capital.
WALLACE: But I'm trying to get a specific answer. Would you accept a temporary extension of all the tax cuts or are you saying that all of it has to be permanent?
CANTOR: Chris, at this point, we -- I really want to see that we can come together and agree upon the notion that Washington doesn't need more revenues right now.
And to sit here and say, "Well, we're going to just go about halfway," or, "We're going to send a signal that is going to be uncertain for job creators and investors to put capital to work," that's exactly what we don't need right now. We need to lift the veil of uncertainty.
WALLACE: All right. House Republicans have set an ambitious goal for spending cuts and we're going to get into the details with Paul Ryan, who's going to be the head of the Budget Committee, in a moment.
But -- and I want to put this up on the screen -- you want to cut non-defense discretionary spending by $100 billion in the first year -- non-discretionary -- or non-defense discretionary is only 16 percent of the total federal budget.
So cutting $100 billion from there would amount to a 22 percent cut in those programs. Do you really think that's possible?
CANTOR: Chris, if we don't change direction in this country, we'll not see the kind of opportunity that most Americans have had in their lives. We have -- we have not gotten to where we are overnight. We're going to have to go and orient this Congress back towards a cost-cutting and a job-creating Congress.
And that's going to mean we're going to embark upon a regular diet of spending cut bills being brought to the floor weekly. That would be my hope.
WALLACE: And 22 percent from non-defense discretionary is not excessive?
CANTOR: Chris, look, these are '08 levels. I think that most Americans would agree the sun rose and set in '08. You know, you see people around their kitchen tables and small business people tightening the belt, and large business people trying to cut payrolls, trying to cut expenses so we can make it through these tough times.
We're going to have to make some tough decisions. That's what this election was about. People are disappointed that there's no results and, frankly, because the promises that were made in '08 have fallen flat and the results haven't been there.
WALLACE: All right. You say you want to make tough decisions. In your statement this week, your governing document, you said you want to see a moratorium on earmarks.
Why not make a tough decision and say, "Earmarks dead forever?"
CANTOR: Well, it is -- it is essentially a suspension for the entire Congress is what we're saying. And I believe that that is necessary because earmarks are a symptom of a culture gone bad here in Washington.
And if we're unable to make the decisions on the things like earmarks, we are certainly not going to have the credibility to make the big decisions on the kinds of cuts you're talking about or the ability for us to address entitlements.
WALLACE: You're also going to face a vote at least by May on whether or not to raise the debt ceiling for this country. And Republicans are apparently planning to demand even further spending cuts from the president in return for raising the debt ceiling.
If he refuses, does that mean that you're willing to let this country go into default?
CANTOR: Well, look, Chris, you know, a vote on either side of the issue of debt limit ceiling increase has serious consequences. OK? But before we even get to that vote, we're going to have at least three to four months to demonstrate that this is going to be a cost- cutting Congress, that we're going to get spending under control.
We cannot sit here and continue the path that we've been on over the last 20 months and beyond, continuing to spend money we don't have without any signal that we're going to get this country back onto a path of fiscal sustainability.
That's the job I'm going to hopefully be about over the next three to four months, is to make sure that we do demonstrate our commitment to fiscal discipline, which has been sorely lacking here of late.
WALLACE: Fair enough. But I think it's fair to say that the last time that the Republicans took control of Congress in 1995, the Gingrich Congress, they got in trouble by overstepping and ending up -- and you can argue who caused it, but there was -- the result was a government shutdown, and Republicans got blamed.
So let me ask you, because some people say that's -- that would be a way for the Obama White House to show that you guys are too extreme, are you willing to say right now, "We're not going to let the country go into default and we won't allow a government shutdown?"
CANTOR: Well, look, Chris, look at this, now. The chief executive, the president, is as responsible as any in terms of running this government. The president's got a responsibility as much or more so than Congress to make sure that we are continuing to function in a way that the people want. So instead of saying, Hey, this is going to be a congressional test one way or the other, I look at it to say, Look, this president certainly, as in his own words, took a shellacking by the voters. They're looking at him to try and come to the middle and set aside this extreme agenda that he's been about that has killed jobs and created the most uncertainty that businesses can even remember. It is time for him to try and come meet us and say, Fine, let's get back to the kind of things that Americans are about. It is living within our means. It is making the tough decisions so that we can see America prosper and lead again.
WALLACE: So you're saying, to flip it around, if there were to be a default on the debt or a government shutdown, it's his responsibility, not yours?
CANTOR: I would say, Chris, it's as much as his responsibility. In fact, he is the one who sets the agenda as the chief executive and as the president of this country.
Congressional role is to look to and account for the expenditures that have been made, to make sure that his administration is following through on the mission and the will of the people.
And right now, what people are asking us to do is to make sure that his administration, through the bureaucracy, is not doing that which they were unable to do in the legislative body in Congress.
WALLACE: OK. I've got a minute left and I want to get into one last area. There could be as many as 90 members of the tea party in the new House. And that would be more than a third of all Republicans.
Now, Michele Bachmann, the congresswoman from Minnesota, is running for the number four position in the leadership. But you and a lot of your colleagues in the leadership are backing a member of the Republican establishment, Jeb Hensarling, instead for that.
Instead of listening to the new members and saying, Let's come in, let's listen to you, isn't this a case of the old boys' network saying to the tea party, Wait your turn?
CANTOR: First of all, Chris, we are fortunate in the Republican conference to have two good conservatives running for this position. Both Jeb and Michele have a reputation as being some of the most commonsense, committed conservative -- constitutional conservatives in our -- in our conference.
And you know, I endorse Jeff -- I mean Jeb, because I feel that we've had a history of working together, and...
WALLACE: Yeah, but that's the old boys' network.
CANTOR: You know, we've had a history of working together and Jeb is someone who can produce results. But listen...
WALLACE: Doesn't the tea party deserve something for the role they played in this election?
CANTOR: Listen, you know, the fact is, again, you've got two conservatives in this race. You have an incoming class that is probably more diverse and more reflective of a growing conservative majority in this country than I've seen since I've been here in Washington.
And these individuals will be allowed to vote for which conservative that they -- that they choose. I mean, again, these are two conservatives. Neither individual could ever be accused of being anything but a conservative.
WALLACE: But real quickly, you're not willing to guarantee that there will be, if not in that position, a member of the tea party in the leadership?
CANTOR: Well, I think if you look at the tea party, the tea party are -- you know, it's an organic movement that played a tremendously positive role in this election. I mean, certainly, it produced an outcome beneficial to our party when you're picking up at least 60-some seats.
That is something that I think that the tea party has done which is fiscal discipline, and we're going to be focused on that.
WALLACE: Congressman Cantor, we want to thank you so much for coming in after an intense campaign. Please come back, sir.
CANTOR: Thank you, Chris.
WALLACE: Up next, two congressmen ready to take control of powerful committees. And we'll be right back.
WALLACE: The Obama administration must now deal with two key Republican congressmen. Paul Ryan is set to take over the House Budget Committee, handling spending and entitlements, and he joins us from his home state of Wisconsin.
And Congressman Darrell Issa is expected to head the Committee on Oversight and Government Reform, which means he'll be issuing subpoenas to administration officials.
Congressmen, welcome back to "Fox News Sunday."
REP. DARRELL ISSA, R-CALIF.: Well, thanks for having me back and thanks for...
REP. PAUL RYAN, R-WIS.: Thanks for having us.
ISSA: ... covering election night in a fair and balanced way.
WALLACE: Well, always.
Let's start, gentlemen, with a brief overview.
And, Congressman Issa, I'll start with you. What do you see as your role on the Oversight Committee dealing with the Obama administration?
ISSA: The most important thing my committee can do is seek the truth. You know, we're the investigation committee. We're the accountability committee. But Paul can't be effective if the underlying facts and assumptions are not mutually agreed.
And it's one of the problems we had during the previous two years -- was that we couldn't agree on what the facts were, therefore the conclusions that were different -- each side blamed the other. That's got to end.
WALLACE: Okay. I'm going to get into some specifics with you in a minute. Let's turn to Congressman Ryan.
What are your plans for the Budget Committee dealing with the Obama agenda?
RYAN: Take the budget in a different direction than it's been going. This is an electoral repudiation. Bring fiscal accountability. Spending cuts. Spending reforms. Get the budget on the right glide path and prevent a huge tax increase from happening in the future so we can get job creation.
That's basically what I'm going to be doing, is get this budget going in the right direction. It's been going in the wrong direction for quite some time.
WALLACE: All right. Let's get into -- as I said I was going to with Eric Cantor, let's get into some specifics, because as I discussed with him, the pledge that Republicans have made is to cut the non-defense discretionary spending by $100 billion in the first year.
Let's put up at least what Democrats say that would mean. They say it would mean major cuts in Head Start and Pell grants for college students, a $6 billion cut in the National Institutes of Health, and the FBI will have to cut 2,700 agents.
Congressman Ryan, do you think the American people really want that?
RYAN: This is the Washington Monument strategy, which is put out the most glaring kinds of cuts and show that this is going to be how devastating it is.
This category of spending -- the base spending went up 24 percent in the last two years. When we add stimulus, it went up 84 percent. We have had spending on a gusher. And if borrowing and spending and taxing and spending actually created jobs and produced prosperity, we wouldn't have all this joblessness. We wouldn't have this lame economy we have right now.
So I think these spending cuts are actually quite modest considering the pickle we are in. And so what you'll have is we are going to try and get spending turned in the different direction, cut spending, get it controlled.
And you're going to have these kinds of tactics being played, which will show you that they're really not serious about getting our spending under control. And instead, they're going to put the spending line on a glide path that's unsustainable in order to have big tax increases.
We are at a fork in the road.
WALLACE: Well, all right. but give me -- Congressman Ryan, we'll get to that in a second. Give me -- you're going to -- you're the head of the Budget Committee and you know this budget backwards and forwards. Give me a couple of specific examples of big-ticket items that you can cut to try to get closer to that $100 billion without gutting programs that people want.
RYAN: Chris, when you add stimulus -- the Environmental Protection Agency got a 124 percent increase in its budget in this last session of Congress. There have been so many massive spending increases, 24 percent in the base budget, 84 percent when you add stimulus.
We need to take all these spending increases back so that we can get this deficit in the right direction and take the pressure off tax increases.
WALLACE: All right. Why -- I'm going to get back to Darrell Issa in a minute, but I want to ask you two more questions, if I can, about the budget.
While House Republicans -- and you are talking about cutting $100 billion. This week the Federal Reserve announced that it's going to create another $600 billion and pump that into the banking system. What's that going to do to the economy?
RYAN: It's a big mistake, in my opinion. Look, we have Congress doing tax and spend, borrow and spend. Now we have the Federal Reserve doing print and spend. If this quantitative easing, which is basically monetizing your debt -- I think the upsides are very low.
We already have very loose monetary policy, very, very low interest rates. This is going to give us an inflation problem in the future. It's going to give us an interest rate problem in the future. It is destabilizing investment horizons.
The Federal Reserve should be focused on sound and honest money, not on trying to micromanage the economy in a comedy (ph) that's really bad fiscal policy.
What the Fed is basically doing is they're trying to bail out the fact that our fiscal policy is so bad. The Fed should focus on keeping our money sound and honest, not on doing this, which I think is going to give us a big inflation problem down the road.
WALLACE: All right. One last area. Given the fact that for all the talk about repealing health care reform, you're not going to be able to do it as long as Barack Obama is in the White House, Republicans are talking a lot about defunding health care reform.
But the biggest federal subsidies don't kick in until 2014. And I read a report this week that Health and Human Services Secretary Kathleen Sebelius says that even if her budget is cut, she's still going to have enough money to continue implementing health care reform.
So the question is, how much can you really do to defund health care reform, especially over the next two years?
RYAN: Well, three things. Number one, we can do a lot of oversight, through Budget, Ways and Means, Commerce, and Darrell's committee as well, and bring -- shed light to all the problems they're going to be bringing in with this.
Second thing is we can defund specific actual roll-outs of this law, but then again, the president has to sign those bills, so that is a challenge.
Third thing is these attorneys generals and their court challenge. That is also an avenue we're going to pursue. Bad things happen between now and 2013 -- Medicare cuts that put Medicare providers out of business, that dump people off of Medicare Advantage, premium increases, and people losing their employer-sponsored health insurance. All these things happen before the subsidies kick in in 2014.
But to answer your original question, I think you're right. You can't fully repeal and replace this law until you have a new president and a better Senate. And that's probably in 2013, but that's before the law fully kicks in in 2014.
In the meantime, we really -- this bill is such a fiscal and economic train wreck for our country and for the health care system itself. We're going to do everything we can to try and repeal and replace this thing. And ultimately, I think 2013 is when it will be done the right way.
Congressman Issa, as Congressman Ryan mentioned, there's been a lot of talk about congressional oversight of health care reform. How much can you slow down the actual plan through committee hearings?
ISSA: Well, first of all -- and I want to answer that, but first of all, it's arrogance by a cabinet officer to say they have enough money to do something. They don't have any money after this continued resolution runs out. Congress gives that money, and Congress can start giving money in the proper way -- specific authorization and appropriation for specific projects.
So you know, can we hold hearings on, for example, the bending up of the health care curve? You know, even AARP is finding out they have a double-digit increase in the cost of their health care for their employees. What a surprise. That's one of the things we can do.
The other thing we can do -- and you asked Paul, and I think you asked Eric, something about how do we cut the $100 billion. We keep talking about earmarks. Congressional earmarks has become a buzz word.
Administration earmarks -- they call them competitive grants. That's where we give a slush fund, just like the stimulus, to the president. And then they come up with who they like and where they like them and they issue the money.
Congress has to start saying no. You figure out who wins the competitive grant. You come back to us and say, "I'd like to award this amount of money for this," instead of a budget that has blank checks. If you do that, there will be less money awarded, and it will be awarded for more meritorious projects.
WALLACE: OK. Over the last two years you talked a number of times about how you would like to investigate certain things but as the ranking minority member you couldn't.
Now you're going to be the chairman. Now you're going to wield the gavel. So let's, in sort of a lightning round, go through a series of issues and you tell me whether you're going to pursue them as chairman of the Oversight Committee.
ISSA: Fair enough.
WALLACE: Will you investigate the Justice Department's handling of the New Black Panther voter intimidation case?
ISSA: I believe that will be handled by Judiciary and Lamar Smith. Certainly, I will help get the facts for them, but it really is a judiciary function and he's going to lead that, I believe.
WALLACE: Is that something that you think should be investigated?
ISSA: I think it should be investigated. All voter intimidation, all distortion of democracy, is a first priority in a democracy. That's why Acorn continues to be one of those where -- they're gone, but we have to make sure that the voter registration process is sound everywhere in the country by whoever is participating in doing it.
WALLACE: Will you investigate the White House effort to get Joe Sestak out of the Democratic Senate primary in Pennsylvania?
ISSA: Chris, I'm going to do what President Eisenhower suggested. I'm going to take a complicated problem and expand it in order to solve it. People in the Bush administration, W. Bush, said they did the same thing. That means that we have a endemic problem, an epidemic, if you will, of administrations thinking it's OK to save their party money by clearing a primary with a government job.
I think we have to bring that to an end, and I'm going to look for ways to expose it and then bring it to an end for this president and every president to come afterwards.
WALLACE: What's the first thing -- what's the big investigation you're looking to hold?
ISSA: Well, I'm going to go after a lot of things, and I'm going to do a lot of investigating. But I think finishing off the Angelo Mozilo, friends of Angelo program, where...
WALLACE: This was Countrywide.
ISSA: Countrywide -- where it created the financial meltdown, in no small part, because Freddie and Fannie took huge amounts of bad loans and are continuing to have losses.
I think we have to bring that to a successful conclusion and make sure it doesn't happen again, because again, that probably (ph) distorted the process of law-making and regulation-making with money that shouldn't have been -- discounts, if you will, that shouldn't have gone not just to politicians but to all kinds of bureaucrats that made bad decisions.
WALLACE: How do you reconcile -- because some of these things are -- you're going to be putting White House officials on the hot seat and making them take the oath, and tell the truth and nothing but the truth, how do you reconcile that with what you said -- and I've put it up on the screen here -- in "USA Today" last month? "Oversight is not and should not be used as a political weapon against the occupant of the Oval Office."
ISSA: And that's very true. If you can go down-ticket to the bureaucrat and take care of the problem, you shouldn't bring in the politician or the political appointee. And I think that's going to be a change. We're going to look for the person most knowledgeable of a problem and have them before our committee.
And in many cases we're going to do it outside the public glare, through depositions, with Republicans and Democrats both sitting there, because I think we need to do investigations in a less partisan way.
Congressman Ryan, we've got a couple of minutes left. I want to ask you about another one of the hats you wear. You're a member of the President's Deficit Commission, which has a December 1st deadline -- seemed a long time in the -- in the future, but now it's really coming up -- for issuing some recommendations to Congress.
First of all, do you believe that you will be able to get the supermajority of 14 of the 18 members to propose anything? And what are the chances that there will be some kind of grand bargain when it comes to entitlements?
RYAN: I don't think you'll see a grand bargain when it comes to entitlements, because I don't think there's a majority to redo this health care law on the commission.
When it comes to entitlements, the big problem, about 85 percent of it, is health care. So my hope is that we can make a dent on spending going forward, on some spending reforms and discretionary caps, maybe, and some other categories.
We haven't met for a while. We meet next Tuesday. And then we start deliberating henceforth after that. So it's unclear where we're going to go. But I don't think you're going to see some big grand bargain.
My personal hope is a big dent on spending in some categories where we can get some common ground on. And we'll find out. Look, Erskine Bowles is a very talented Democrat who's really good at bringing people together.
But we're not interested in growing government and raising taxes. We're interested in getting spending going down. We don't want the revenue line to go up to meet the spending line. We want it to go the other way. And hopefully we can make a dent in that process.
WALLACE: And let me ask you, in less than 30 seconds, Bowles has talked about deficit reduction -- two-thirds spending cuts, one-third revenue increases. Could you accept that formula?
RYAN: I'll give you a shorter answer. We do not have a revenue problem. We have a spending problem. Let's focus on the problem.
WALLACE: Congressman Ryan, Congressman Issa, we want to thank you both so much for coming in and talking with us. And, gentleman, we'll be following both of you on Capitol Hill.
WALLACE: Up next, we bring in our Sunday regulars. We'll get their take on what President Obama will do after the Democratic shellacking, and we'll discuss Nancy Pelosi's surprising decision to run for House minority leader.
(BEGIN VIDEO CLIP)
OBAMA: People worked to death and they said, boy, this feels as if there is a huge expansion of government.
UNIDENTIFIED MALE: Well, it was a huge expansion of government.
OBAMA: We were taking the steps not because of some theory that we wanted to expand government. It was because we had an emergency situation and we wanted to make sure the economy didn't go off the cliff.
(END VIDEO CLIP)
WALLACE: President Obama on "60 Minutes" tonight, refusing to concede his party's big losses were a repudiation of his agenda.
And it's time now for our Sunday group: Brit Hume, Fox News senior political analyst; and contributors Mara Liasson of National Public Radio; Bill Kristol of "The Weekly Standard"; and Juan Williams.
I understand that President Obama couldn't say this week, hey, you know what? I messed up. And the fact is that India, today, he did talk about a mid-course correction. But, Brit, are you a little surprised that he didn't at least give a little more of a bow to the idea of moving to the center, that what we had basically was the "Cool Hand Luke" argument, what we have here is a failure to communicate?
BRIT HUME, FOX NEWS SR. POLITICAL ANALYST: I am a little bit surprised, but I'm not shocked. The president had plenty of warning this was coming. The Scott Brown election should have given him a sense maybe the best thing to do was not to ram the health care bill through, but went ahead and did that anyway.
There is a deep belief in the agenda that it is the right thing for the country. The country doesn't think so, and therefore it's a failure to communicate. I guess he doesn't want to call the voters idiots, so he'll blame himself for not explaining fully to them what's good for them.
At least it's remarkable, and perhaps more remarkable, is the decision of Nancy Pelosi to try to remain as the leader of this much smaller group of Democrats in the House of Representatives. These people need to make peace with reality.
And the reality is that the voters really have rejected much of their agenda, as well as the results of that agenda. And until they do that, it seems to me that they are in the hole and they're still digging.
WALLACE: Well, we'll get to Nancy Pelosi in a minute.
But, Mara, I mean, on the other hand, the president did make it clear he's willing to compromise on tax cuts. He basically declared cap-and-trade dead. So, even if he is not acknowledging it, is he, in a substantive sense, moving to the center?
MARA LIASSON, NATIONAL PUBLIC RADIO: I think the lyrics are there, the music might not be. I mean, he's not going to ever do what the Republicans want to do, which is kind of beat himself with a stick and say he was wrong, but there is going to be a mid-course correction. I think he has to find a way to communicate that it's actually a change, a change in the agenda.
And I think that's possible to do without saying that he was wrong. I mean, the issues are going to be different.
I think the big question now is, what kind of a president is he going to be now that he is un-tethered to the Democratic base, he's no longer -- he's liberated from the need to accommodate and be deferential to this big Democratic majority in order to pass these huge pieces of legislation. What is he going to be like? And I think you are seeing the seas of him moving to the center on a lot of issues -- trade, energy -- I think you're certainly going to see that on the deficit and tax cuts.
WALLACE: Let me ask you two questions, Bill.
First of all, how much trouble is this president in politically? And secondly, if he were to follow the conventional wisdom, and pull a Clinton, like that president did after the '94 defeat at the hands of Newt Gingrich, what would that mean? What would he have to do?
BILL KRISTOL, "THE WEEKLY STANDARD": I'll take the second question first. I think that's the right -- that is a good question.
People talk as if he can just decide to pivot, and he pivots, and magically he is moderate and popular again. It's not quite that easy. There's a bunch of legislation that's been passed that he's not going to repudiate. And most strikingly, health care.
Bill Clinton benefited a lot from the fact that his health care bill failed in his first two years. That meant by January of 1996, he could say the year of the government is over, implicitly saying you can re-elect me and you don't have to worry about me proposing this health care thing again.
Obama's health care plan is law. 2011 is going to be -- Republicans will repeal of it in the House, that probably won't make it through the Senate. They'll delay funding for parts of it. It's going to be a big issue in 2012.
The president has tethered this health care piece of legislation to himself, and it's going to be -- if you want to repeal Obamacare, you're going to have to defeat President Obama in 2012. That's just a fact.
WALLACE: So what can he do?
KRISTOL: So what he can do is, I suppose, hope that Obama cares get more popular, and maybe accepts some modifications to it that would actually make it less onerous. And he can go to the center on taxes and on deficit spending. He can prosecute the war in Afghanistan and fight the left wing of his own party on that.
And I certainly wouldn't rule him out. He's not in great shape, but I do think health care -- I mean, people talk as if, why isn't he pulling a Clinton? But again, the irony is, the fact that Clinton's health care plan was defeated gave him the kind of freedom that President Obama doesn't have.
JUAN WILLIAMS, FOX NEWS CONTRIBUTOR: Well, I mean, think this is a total misreading of this election. I mean, I think that when you ask the voters what happened here, they say it's about the economy, it's not about ideology. And when it comes to the economy, the blame Wall Street --
WALLACE: Wait, wait, wait. Do you really believe that?
WILLIAMS: I wouldn't say it if I didn't believe it, yes.
WALLACE: Well, I mean, when you have Independents swinging by 23 points, when you have three-quarters of the country, 74 percent, saying they are either angry or dissatisfied with the federal government?
WILLIAMS: The federal government, Republicans and Democrats. Not ideology, Chris.
And as I was saying, when they say the economy is the big issue, they blame Wall Street, they still blame President Bush, and then they blame President Obama. So he's down the way. And all this talk about we need to focus, focus, focus leads to the question, so, what will you do? And how do you get the economy stirred again?
And I think what the American people want is some greater sense of expression of their anxiety over everything from losing a job, to not having a job, to pensions and the rest. That is the heart and soul of it, and I think that agenda is as much on the backs of Republicans as it is on the back of Democrats. And for Brit to suggest, oh, this is all about ideology and health care, boy, if that's the message Republicans got --
WALLACE: Because I want to take this into Nancy Pelosi and the very surprising decision she made this week that she is going to try to stay on. And it look like she will be the House Democratic leader for the next two years.
No problem with that? Do you think that's just fine for the Democrats?
WILLIAMS: No, I think it's problematic in this sense -- the Independents who were lost to President Obama and the Democrats in this election, specifically women and, even more particularly, White women, are people who want to see some expression of bipartisanship, they want to see something get done in Washington.
Nancy Pelosi has played hardball with the Republicans, and sort of payback for the fact Republicans excluded Democrats previously. It's a losing ticket. But Nancy Pelosi is an effective leader, she has been able to wrangle all the Democrats to keep them in line to produce results on tough votes like health care, and even cap and trade, that came back to bite her.
But you can't say she's not an effective leader. And let me tell you, in terms of fund-raising for Democrats, only Barack Obama exceeds Nancy Pelosi's ability to --
KRISTOL: She has been very effective at diminishing the number of Democrats in an historic way in the House of Representatives.
LIASSON: Nancy Pelosi did two things for which she will go down in history. She was an incredibly effective majority leader when -- and Speaker -- when there was an opposition president. She helped make the majority. And when she was in the majority, she was the hammer that got through President Obama's agenda and sent it to the Senate.
However, that is a completely different role than what she wants to do now, for which I think she's kind of like Winston Churchill. I mean, she accomplished historic things for the Democrats, and they should be sending her off in a blaze of glory and adjusting for this new regime.
HUME: Mara, the difference between her and Winston Churchill is that Winston Churchill was turned out after he led his country to a great victory. Nancy Pelosi wants to stay on and continue to be -- head up -- banners flying.
LIASSON: That's the point that I'm making, that she should be --
HUME: But she led her party to historic losses in the House of Representatives.
LIASSON: After she did a lot of historic things.
HUME: I understand. The problem is, if you're going to do historic things, it is a good idea for the country and yourself to do historic things that people like. She failed to do that.
WALLACE: All right. We have to take a break here.
You know, I have to say when I was envisioning this panel, it never occurred to me that we would be in an argument about whether or not Nancy Pelosi was or wasn't like Winston Churchill. But who knows where it's going to go? Which is part of the fun of it.
When we come back, we turn to the Republicans. What are the opportunities and challenges for the new GOP majority in the House?
REP. JOHN BOEHNER, R-OHIO, MINORITY LEADER: Frankly, if we're successful, this will become the number one issue in the presidential election in 2012. There's a lot of tricks up our sleeve in terms of how we can dent this, kick it, slow it down to make sure it never happens.
(END VIDEO CLIP)
WALLACE: John Boehner set to become the next Speaker of the House, talking about his strategy for dealing with health care reform in the new Congress.
And we're back now with our Sunday group.
So, Brit, were you surprised that John Boehner said he expects health care reform, not the economy, not jobs, to be the number one issue in the 2012 campaign?
HUME: Well, I think he basically is thinking along the lines that we heard Bill Kristol outline in the previous panel, and those reasons will all apply. It will be a very big issue indeed.
But, look, events are always in the driver's seat. We could have a confrontation with Iran between now and then that would be a major thing, Republicans backing the president. They'll certainly back him on Afghanistan.
Foreign affairs move to the fore, as it does at some point during every presidency. So we don't really know. But certainly health care will be a big issue.
But what John Boehner seems to me to be doing, however, is not making the mistake that previous newly-elected Republican Speakers have done, particularly Newt Gingrich. Newt Gingrich was treated as prime minister of the United States of America by the media and by others, and, you know, he couldn't bring that off. You don't have that much power.
Republicans are being humble about their power, and they are smart to be, because it is a limited grant that they have gotten from the voters. It's a historic turnaround, but it is a limited grant, nonetheless, one half of one branch.
LIASSON: And also, on health care, I think the Republicans need to be careful. This was a very conservative electorate that went to the polls, and the exit polls showed they were split half and half on whether they want to repeal health care.
In this electorate you would think it would have been overwhelming. And as they go forward, I think it's very important for the Tea Party base, especially, that they gave it a good try, to repeal the whole thing, which they know they can't, which is probably the best thing they have going for them, because do they really want to get rid of all of those individual items in the health care bill that are popular? I don't think so.
WALLACE: I want to pick up on what Brit was saying, Bill, because I think the Republican response since election night has been really interesting.
One, Boehner has been humble. He said on election night, this is no time to celebrate when millions of Americans don't have jobs, and all we've been given is a second chance. The agenda that's been laid out, which is spending cuts, holding the line on taxes, and making sure regulators don't overstep his modest -- some conservatives say too modest.
KRISTOL: I think John Boehner was there in 1995 and '96 and learned the lessons of that moment. Mitch McConnell was there, too. I think they've done a good job so far.
They're going to get extension of the current tax rates for at least two years either in the lame-duck session next week, or before Thanksgiving, or as a first act in the Republican Congress. And I think that's a very good thing.
They can say, you know what? We've had our fights with President Obama, we want the economy to improve in the next two years. And we have given certainty to individuals and businesses for the next two years. That is a good first accomplishment.
Then repeal Obamacare, which is the right thing to do. Let the president veto it. Let the Senate Democrats decide if they want to pass it or not.
I'm not so sure, incidentally, this will die in the Senate. Is Joe Manchin going to vote to sustain Obamacare, the new senator from West Virginia?
WALLACE: Yes, but you need 60 votes.
KRISTOL: Well, good. Let's the Democrats who have a majority in the senator filibuster, repeal the vote.
KRISTOL: Well, fine. That's a good thing to happen early in the Congress. So I think Boehner and Cantor and the others have thought this through carefully. I think they slightly underestimate, though, still, the force of the Tea Party movement.
There is still a little bit, we'll assimilate those guys, they'll get to learn the ropes here. And I think they should be careful about that. The Tea Party movement is a big deal. It is not diminishing or going away, and it needs to be taken seriously by Republican leadership here in Washington.
WALLACE: Let me pick up on that with you, Juan, because I was a little surprised, not necessarily that Eric Cantor would say, OK, forget Jeb Hensarling, we're going to put Michele Bachmann, the leader of the Tea Party Caucus, in the number four spot. But he made no statement of, of course, there will be a member of the Tea Party in the leadership and we want to hear their voice.
WILLIAMS: Well, I think that there is a civil war of sorts that's been going on. We don't talk about it very much between the Republican establishment and Tea Party people. You can say it's sort of Sarah Palin/Karl Rove, if you wanted to personify it.
But if it comes to Michele Bachmann, I think that among the Republican leadership, she is seen as grandstanding, she's seen as quite an electrifying force. But she is not someone that they see as able to govern. And govern means compromise, work with the others who you disagree with. I mean, in fact --
WALLACE: She raised a lot of money for the party.
WILLIAMS: Fine. But I'm just saying in terms of governing -- see, I'm very admiring of the response that we have heard from John Boehner and from Eric Cantor and others, which is at this very modest agenda, which is, here is where we can look for opportunities to work with President Obama, John Boehner, in that same interview on "Special Report," said, look, we can start off right now with the trade agreements with Colombia, with Panama, South Korea. It seems to me that's very reasonable.
I think cutting the deficit, that should be a priority. They should force that on the Democrats. That's all good stuff.
This business about Obamacare, health care, that's about -- that's what Mitch McConnell said, the Republican leader in the Senate said, we just want to prevent President Obama from having a second term. So they're just raising this because they know nothing is going to happen with health care, so they are going to use it to try to beat.
And you know what? What Mara said is exactly right. You look at the polls, Bill Kristol, it's half and half. Half of the American people said leave health care alone or extend it.
KRISTOL: You should look at the question, A, on Obamacare. It was phrased weirdly. And the fact is, most Americans want it radically change. Look, we conservatives believe it's bad legislation. What are we supposed to do, say, I'm sorry, now that there's a majority, we're not going to do anything about it? The Republican House has a moral obligation to pass the repeal of Obamacare if they think it's bad for the country.
LIASSON: It's like Democrats had an obligation to pass it with their majorities when they had it. This is just exactly the mirror image. If the bases care more about the --
KRISTOL: That is not true. If you look at what happened in congressional districts, districts that had voting for Obamacare was a killer for moderate Democrats. Even if the economy was better in their districts, they tended to lose. And Democrats who voted against Obamacare survived more in comparable districts than Democrats who voted for Obamacare.
But anyway, it's on the merits. They should act on merits, in my view. And they should compromise with the president where the agree with him -- on Afghanistan, on -- they're going to get a win on tax cuts. But they can't back off the fight against Obamacare.
LIASSON: That's right. And they don't have to, because they can't achieve it.
But let me say something about the other potholes ahead for Republicans. Are they going to extend unemployment benefits when they run out? What are they going to do about the AMT and the doc fix and the debt limit?
These are a lot of things that this majority is going to have to deal with, and they have to cut 22 percent -- if they're going to make good on their promise -- 22 percent on domestic discretionary spending. That's a lot. And even Paul Ryan, who I believe will push to make specific cuts, wasn't able to be specific this morning.
HUME: Watch that debt limit. It will be a vote a little bit like shutting down the government was the last time.
And you can bet that the media, as it was in the case of Newt Gingrich and the House Republicans, will be sympathetic to the idea if we have a major crisis, and the possibility of a default, it will be all about the Republicans. They need to be very deft in how they handle this.
WALLACE: And real quickly, because we have about 10 seconds left, how about Cantor's point -- hey, it's the president who is going to create this crisis, not the Republicans?
HUME: Well, that's the argument that was made when the government shut down in the latter part of the Clinton years and was a big win for Clinton. And it helped him and his party in the next election. And that has to be handled very carefully.
WALLACE: Thank you, panel. See you next week.
Now a quick program note. Tonight, at 9: 0 p.m., on Fox News Channel, our very own Brit Hume hosts the first of a six-part series of specials called "The Right, All Along: The Rise, Fall and Future of Conservatism." We hope you'll watch.
And don't forget to check out "Panel Plus," where our group here picks right up with the discussion on our Web site, FoxNewsSunday.com. And we'll post the video before noon Eastern Time.
Up next, we take a final trip "On the Trail."
WALLACE: This was the week when the politicians stopped talking and we the people finally had our say. That's when the full magnitude of the midterm elections took hold and the storyline changed "On the Trail."
JOHN KASICH, OHIO GUBERNATORIAL CANDIDATE: Guess what? I'm going to be governor of Ohio!
UNIDENTIFIED MALE: We have come to take our government back!.
SHARRON ANGLE, NEVADA SENATORIAL CANDIDATE: This was never about me. It was always about us.
SEN. HARRY REID, D-NEV., MAJORITY LEADER: Today, Nevada chose hope over fear.
BOEHNER: I've spent my whole life chasing the American dream.
OBAMA: I'm not recommending for every future president that they take a shellacking like I did last night. You know, I'm sure there are easier ways to learn these lessons.
REP. NANCY PELOSI, D-CALIF., HOUSE SPEAKER: No regrets, because we believe we did the right thing, and we worked very hard in our campaigns to convey that to the American people.
SEN. MITCH MCCONNELL, R-KY., MINORITY LEADER: The White House has a choice. They can change course or they can double down.
UNIDENTIFIED MALE: The past two years provided a frightening glimpse of what can become of our great nation if we continue down the current path.
OBAMA: We were so busy and so focused on getting a bunch of stuff done, that we stopped paying attention to the fact that leadership isn't just legislation.
BOEHNER: I suspect we're going to have a whale of a fight over taxes and spending. The American people spoke on election night.
WALLACE: And you will have a front row seat right here for everything that happens the next two years.
And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."
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THIS SUNDAY: Chris will sit down for an exclusive interview with Senate Minority Leader Chuck Schumer (D-NY).