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Transcript: All-Star Panel Edition of 'FOX News Sunday'

This is a rush transcript of "FOX News Sunday" from July 6, 2008. This copy may not be in its final form and may be updated.

BRIT HUME, GUEST HOST: I'm Brit Hume in for Chris Wallace, and this is "FOX News Sunday."

Several key issues are facing America this holiday weekend — the war on terror, a just-released report shows progress in Iraq — but there are new concerns about the situation in Afghanistan and what to do about Iran.

(BEGIN VIDEO CLIP)

PRESIDENT BUSH: The first option for the United States is to solve this problem diplomatically.

(END VIDEO CLIP)

HUME: On the campaign trail, Barack Obama and John McCain spar over patriotism.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, PRESIDENTIAL CANDIDATE: I will not stand idly by when I hear others question mine.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, PRESIDENTIAL CANDIDATE: I think Americans want a leader they can trust and have confidence in.

(END VIDEO CLIP)

HUME: Will the candidates shift to the center to win over voters? And who are possible running mates?

And the economy, high gasoline prices and a bear market on Wall Street — what's the political fallout? We'll discuss it all with our all-star panel — Fred Barnes, Mara Liasson, Bill Kristol and Juan Williams, all right now on special edition of "FOX News Sunday."

And hello again on this 4th of July weekend from Fox News in Washington. For the next hour we're going to take a close look at some key issues with our panel — Fox News contributors Fred Barnes of The Weekly Standard, Mara Liasson of National Public Radio, Bill Kristol of The Weekly Standard, and Juan Williams, also from National Public Radio.

Let's begin with this from Senator Obama this week.

(BEGIN VIDEO CLIP)

OBAMA: And when I go to Iraq and I have a chance to talk to some of the commanders on the ground, I'm sure I'll have more information and we'll continue to refine my policies.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

OBAMA: Let me be as clear as I can be. I intend to end this war. My first day in office, I will bring the Joint Chiefs of Staff in, and I will give them a new mission, and that is to end this war responsibly, deliberately, but decisively.

(END VIDEO CLIP)

HUME: And he added he expected to have all the troops out of Iraq at the end of 16 months. So is Barack Obama on the verge of refining his position, as he put it, into something new or not? Let's begin with Fred.

Fred?

BARNES: Well, I think he's going to have to. At some point he's going to go to Iraq, he's going to talk to the generals, and he's going to come face to face with the fact that the surge and the new counterinsurgency strategy — actually, it's not so new anymore; it started in January 2007, which he opposed — has worked. And he's going to have to deal with that.

It's worked at the military level, reducing violence. It's worked at the political level now, where, you know, we just had — Sunnis who'd left the government have now come back and taken over ministries, and the Shia militias that have been really defeated. The Iranians have suffered a defeat. It's a completely different Iraq now, and he's going to have to deal with that.

Now, obviously, what he wants to do — and he suggested at least in one of his statements the other day — is he's trying to sort of do a fake to the center, and — which candidates do. Look, this election is about Obama and who he is. And it's a Democratic year, obviously.

And so what he needs to do is just make enough — basically, make enough Democrats comfortable with him so they'll vote for him. And he's done this not just on Iraq, he's done it on, you know, these Supreme Court rulings which he said — you know, he disagreed with one that said you couldn't apply the death penalty to child rapists, and so on.

He's done it with the pro-Israel lobby. He's done it with — on issue after issue. I don't think we've learned much about him, but we can see he is making these little shifts that may help him.

HUME: It raises an intriguing...

BARNES: Look, let me say one more thing, though, and that is that, look, a better issue for McCain and Republicans is attacking him as an unrepentant liberal. It's not as good an issue just to attack him as a flip-flopper.

HUME: All this does raise a question, Mara, whether he is making sort of the normal changes in emphasis to position himself as more of a centrist or whether what we're seeing here is a real flight from previously held positions into something completely new.

LIASSON: Well, that's the big question. And what I think is so interesting is how few people seem to know which one it is.

I mean, Paul Krugman, who's a liberal columnist, wrote this week, "Gee, is he a centrist just masquerading as someone who's a transformational progressive figure or is he really the opposite?" You know, people just don't know. He's a blank slate. Because he's so new, he is a kind of Rorschach test.

But I do think that of all these issues that Fred raised, the most important one is Iraq. I mean, yes, he's moved on the death penalty and on guns and on a whole host of other things. Iraq is the big enchilada here. And I think that's why he had two press conferences in three hours.

And I think, you know, he said, "I would be a poor commander in chief if I didn't take facts on the ground into account and of course I might change things."

I think that is the operative...

HUME: But is he on the verge of changing on his long-stated promise that says, "The mission is to get out and I'll have them all out, all the forces out, in 16 months?"

LIASSON: I think the 16 months — he is trying to get himself out of that box. Look, Samantha Power got in a lot of trouble...

HUME: Who's that?

LIASSON: His former foreign policy aide who gave interviews in Europe where she said, "Well, of course he's not going to just stick to some campaign promise of 16 months. He's going to look at the facts on the ground."

Well, that's what the American people want a commander in chief to do. That might not be what his left-wing base does. The question for Obama now is what kind of Iraq does he want to leave behind.

He said in that press conference the American people don't want to see Iraq collapse. Well, what if the commanders on the ground say, "Hey, if we do it in 16 months, Iraq is going to collapse?" He's going to have to take that into account.

KRISTOL: Yes, I think Iraq — Obama's move to the center on Iraq shows how radical the Democratic Party's position on Iraq has been for the last year and a half — really unprecedented, almost, in American history for a party to vote in Congress consistently to pull the plug on a war effort in the middle of that effort.

I mean, the Democrats turned against Vietnam, but that was late and they never could actually vote to actually cut off the — you know, support for the U.S. troops fighting in the field.

The Democrats were in a — once the surge started to work, once the way to end the war became to win the war, the Democratic Party's position was untenable. Obama sees that it's untenable, and he is not going to stick to it, I think and I hope.

I mean, I just can't believe he'll come into the office as president of the United States and seriously say, "I don't care about the facts on the ground, I don't care whether leaving 50,000 troops there with minimal casualties could help complete a devastating victory against Al Qaida, could help complete a repudiation of Iranian influence in the region, could help advance U.S. interests throughout the Middle East, all of our allies want us to stay there, but I don't care, I'm pulling out."

I don't believe Obama would do that as president, in all honesty, and I think he's signaling that now. And I think he's smart to, because it's his biggest vulnerability. Is he ready to be commander in chief? That's what Hillary Clinton gained ground against him on in the primaries. That was the issue she used against him.

And he's trying hard to not let McCain have that advantage in the general election.

WILLIAMS: Well, I mean, I think that he won against Hillary Clinton largely by running to the left and saying that he was firmly opposed to this war. She voted for it. He said he wasn't in the Senate but he would have, even though he later voted to fund some of the war effort.

My sense is, though, along the lines of the Wall Street Journal editorial this week that said who would have guessed that Barack Obama is legitimizing George Bush's — and the whole notion of George Bush's position on Iraq, and the whole notion of a third term for Bush, because he's picked up not just on Iraq, but on things like faith- based initiative, even on the abortion question, which I — it was befuddling to me.

He says suddenly, you know, mental distress is not a basis for a woman to have an abortion. I mean, that's going to outrage people on the left.

So what it seems to me is you could say on Iraq it's a matter of emphasis. All along he has said he would take into consideration the position of the commanders in the field.

But the heart and soul — I mean, the heart of his campaign has been to say, "This is an unpopular war. It's a war that was ill- conceived. We never should have gone in there. We have put too much money in there. We have spent too much of our precious blood there."

And suddenly he's saying, "No, no, you know what? I'm going to refine my position."

HUME: Well, what do you think he's going to do? Is he going to end up...

WILLIAMS: How do I know what he's going to do?

HUME: Is he going to end up doing what everybody else seems to think that he's going to — adjust his position to the point where he would want to stay there if everybody wanted to, and it would seem necessary to complete the mission, to win the...

WILLIAMS: That seems to be what — he says the word — the operative word now is refine, that he is going to refine his position based on what he hears from the commanders in the field.

Well, if it's truly based on what he hears from the commanders in the field, you can imagine the commanders will say, "We're in the midst of a struggle, and we want to continue that struggle, and give us the support and ammunition and the supplies and the popular support necessary to continue it."

That, it seems to me, is putting himself in a box before he even gets to Iraq.

HUME: Do you think, then, that before the election, well before, perhaps even before the conventions, we will have a new Barack Obama position on Iraq?

WILLIAMS: We already have a new...

HUME: All right.

WILLIAMS: We already have a new position.

BARNES: Look, you know, he may get from President Bush the greatest gift that President Bush could possibly give him, and that is President Bush next January leaves behind an Iraq that has changed so much, violence is down so much, the elected government is so much in charge now in a way it wasn't before, the government's no longer dysfunctional, violence is way down and so on, that he can actually pursue, Obama can, if he's elected, a withdrawal strategy.

It may not be as rapid as he's talked about, but he can begin withdrawing troops beyond those who were just there for the surge. I think he may luck out that way.

LIASSON: But how's that different from McCain? McCain wants to leave, too.

BARNES: Well, there is a difference between if your goal is ending the war and your goal is winning the war.

HUME: What you're saying is that it's possible for...

(CROSSTALK)

HUME: ... that you can align those goals.

LIASSON: Yes.

HUME: Do you believe that?

LIASSON: Definitely. Well, look. He doesn't want to — he does not want to leave an Iraq that is going to collapse — civil war, genocide. We have a certain responsibility there.

Even if you were against going in in the first place, we have a certain responsibility to Iraq. He needs to explain what he thinks the U.S. responsibility to Iraq is.

KRISTOL: Yes. I mean, what strikes me is Obama's had the month since he clinched the nomination to give all these big speeches. How many foreign policy speeches has he given? Not many.

He does not think that's his comparative advantage, and one reason is that when he really starts talking about it in any detail, he gets in a bind. Either people are going to discover that, guess what, he doesn't differ that much from the Bush administration on a lot of things.

Does he want to radically cut military spending? I don't think so. Does he want to radically...

LIASSON: Well, no, he said he wants to increase it.

KRISTOL: Right, and the size of the military. Does he radically want to change policy toward Iran and North Korea? I don't think so. Does he even radically want to change policy toward Iraq moving forward? Maybe not.

So he wants to have a debate, of course, on the economy and on people being unhappy with the Bush administration, and he does not want this foreign policy debate.

HUME: Now, everyone seems to agree, then, that a shift on Iraq is at hand, if not already made.

What about the other shifts that Mara noted that have come, at least it seems, in such volume, so quickly, at this stage? How is that going to affect him politically?

WILLIAMS: Well, the one I noticed, you know, this week big time, as Dick Cheney would say, was the one on faith-based initiative, that he's willing to invest money in having social services provided by church-based organizations.

And that is something, again, that the left has been very upset about. And you know, you see so much of this now on the blogs, less of it in the newspapers, but it's the core support.

Remember, he mastered the Internet as a way to generate support, especially among young people who saw him as delivering on a different kind of politics, a principled politics, not a politics of the kind of compromise and mealy mouth and move to the middle that people have negatively associated with Bill Clinton.

HUME: So that he (inaudible) politically.

WILLIAMS: But I think politically now it's not only that, it's the gun control one that, you know, upset me so much, because all of a sudden it's OK for the Supreme Court decision, although he said he previously had favored the D.C. position.

HUME: Right.

WILLIAMS: Then also on FISA, on the FISA court and whether or not you should have — the telecom companies should have immunity for their — for going in and providing the government with surveillance information, he suddenly said it's OK with him.

So it's a lot of flip-flopping.

BARNES: No, but most of these don't amount to...

LIASSON: He can weather that. I agree with Fred. He can weather this. The left-wing base is not going to go vote for McCain. He has a partisan resurgent party that wants to win.

I think the total effect, though, is that he's not so much a new politician anymore. He looks a lot more typical and "politics as usual." Now, in a year when the Democrats have the wind at their back, I don't know if that really hurts him that much.

BARNES: He's a clever politician. He'll say something and then he'll take it away. You know, he speaks to AIPAC and says he's for an undivided Jerusalem. The next day, well, he's not for an undivided Jerusalem.

You know, on things like the faith-based initiative, he takes it away by saying that the groups who take the money can't discriminate in hiring, even though they want to hire people of their own faith.

HUME: So what effect politically from all this?

BARNES: Clever. And I think it helps him.

WILLIAMS: And also, let me just say, I don't know that they have an alternative, because — but it just strikes me that he is taking advantage of the fact that there is no left-wing alternative after he beat Hillary Clinton around the head.

HUME: We've got to take a break here. When we come back, John McCain's campaign — did he shake up his staff last week or did he just make a few adjustments for the fall campaign? We'll find out next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCAIN: We've had a very great expansion in our campaign. Obviously, we're trying to have organizations set up and working in every state.

(END VIDEO CLIP)

HUME: That was John McCain, of course, talking about changes that have been made to his campaign staff this week.

We're back with Fred, Mara, Bill and Juan.

Let's take a look at some polls to give a sense of where this race stands. The first poll will be the — this is the RealClearPolitics average of all the polls — it shows that it's tied 0-0. There you go, 49- 43 for Obama.

That is a healthy lead but not really much different from the lead that John Kerry held just four years ago, so you can see why the McCain camp feels there's hope.

But it looks a little different if you look at Ohio — battleground state, Republicans can barely win without it. Obama there on average is winning 47-43. I don't know if we can get that to the screen, but — apparently not.

Let's look at Michigan. If we can get that up, that would be exciting. Yes, there we go, 44-42 for Obama. That's another state that — those two are critical battleground states.

And now let's take one quick look, if we can, at Florida, where McCain is enjoying in Florida, if we can get to it, a very narrow lead, just 2 percentage points in the RealClearPolitics average.

So McCain this week announced that Steve Schmidt, who had been on the road with him for most of the year, veteran political operative, seasoned player, worked for the Bush administration, is going to be in command of his operation here in Washington. That was seen by some as a shake-up, others as more an evolutionary change.

Juan, which was it?

WILLIAMS: Well, I think it was a shake-up. I think that Rick Davis had been by his side. Rick Davis had been his campaign manager. Now you have Steve Schmidt come in, and Steve Schmidt has been around Vice President Cheney, Arnold Schwarzenegger.

He's seen as a young guy, up and comer, someone who has a clear — I mean, almost like a military focus of "this is what we need to do," and he's also brought in Nicolle Wallace, who used to be with President Bush, a communications expert.

And the idea is to keep a message on target. You know, you have a message of the day, a message of the week, a message of the month. The problem with John McCain is nobody's been clear what the message is.

Is he speaking to the base? Is he speaking to the middle? Is he traveling to Canada? Is he going down to Latin America? Why is he taking these trips? What are his battleground states and what is the message that he seeks to convey? How is he dealing with Iraq? How is he dealing with the economy?

I can't answer those questions as I sit here this morning. And believe me, I see all of this stuff on the campaign every day.

KRISTOL: Yes, Republicans are worried, very worried, about the McCain campaign. I mean, the clip you showed, Brit, at the beginning of this segment had Senator McCain saying, "Well, we're trying to set up — we're expanding to a national campaign. We're trying to set up organizations in all the states."

This is July, you know? He clinched the nomination in February. The fact that he is still speaking about this as, "We're trying to do this," as opposed to, "We've gotten all that done, and the blocking and tackling is in place, and now we're going to articulate key themes," isn't a good sign.

Now, they had to raise money. They had to recover from the primaries and all that. I think Rick Davis, who's been running the campaign so far, is getting a bit of a bum rap in a way. He didn't make some of the decisions that people are criticizing. But he's out. Steve Schmidt is in.

I don't think that's the end of the changes, honestly. I don't think it's enough of a change, really. The current team just has not shown an ability to really let McCain be McCain, to play off his advantages, to get an overarching narrative of reform and leadership which I think McCain can deliver, but the campaign has him flitting around from — you know, like a bee from flower to flower.

A lot of Republicans are pretty unhappy, and I don't think Steve Schmidt by himself can solve the problem.

LIASSON: Which, unfortunately, is what McCain wants to do. I mean, Charlie Black had this amazing quote this week that says, "The reason why we're doing this..."

HUME: Charlie Black?

LIASSON: Charlie Black, who's been one of his top advisors with him the whole way, a former lobbyist in Washington, which much is made of, said, "Basically, we do these things because that's what McCain wants to do on a given day. He wants to go to Colombia and Mexico," even though that sort of — kind of emphasizes trade, something that the Republican base hates.

I think that when you win a primary in an extraordinary way, which is what McCain did, with a seat-of-the-pants, kind of guerrilla operation, you think that that's a legitimate way to run. Well, he's in a whole different ball game now.

And I do agree with Bill. I think, you know, Republicans are gnashing their teeth. He's wasted a lot of time, and his campaign is less than the sum of its parts. All the pieces are there to be a reform Republican, and he hasn't put it together yet.

BARNES: Well, he sure hasn't.

And, Brit, you mentioned that in 2004, President Bush trailed John Kerry about this time, and some Republicans will remind you that Bush's father around this time in 1988 trailed Mike Dukakis. And Ronald Reagan in 1980 trailed Jimmy Carter.

But there was a difference in all those years. To one degree or another, those were years that had a Republican trend, Republican candidates. The wind was behind them. This year it's just the opposite.

So when McCain's behind now, he's still facing this incredible headwind in a Democratic year. We see that in every — almost every indicator shows that this is going to be a strong Democratic year, and he has to fight that. And that's not what earlier Republican presidential candidates had to do. That's why he's in more trouble than even the polls show.

HUME: Well, what I'm struck by is the fact that the polls only show him six back.

BARNES: Yes.

HUME: I mean, given all that we know, and given the unpopularity of the president in the polling, given the people's perceptions of the economy, which is very bleak, consumer confidence, all of this, you know, oil prices spiking, gasoline prices over the moon, all of that, one would have imagined that the incumbent party's nominee would be further behind on the average than six points.

BARNES: And that argues for — all that is true. That argues for McCain taking a very bold approach, trying to leapfrog all of that with a reform agenda that's very sweeping, I think, covering Social Security, and Medicare, and Medicaid, and taxes, and health care, and all these things, and then pick a vice presidential candidate who is — you're throwing the long ball as well, somebody who is not just your average veep.

HUME: We're going to get to that in a little bit.

Mara?

LIASSON: The problem you're talking about, though, is McCain right now is running ahead of his brand. Does that mean that that's a ceiling for him and he's only going to be dragged down by it?

Obama, on the other hand, is running behind his brand. In other words, generically, Democrats do better than Obama does in the head- to- heads. Does that mean he only has room to grow?

I mean, I think this is a very kind of distressing situation for McCain. I think he is on the verge of losing whatever initiative he could grab.

KRISTOL: I mean, the good news, as you — you suggest that well, it's closer than people thought it would be, and it is closer than it might be, and that shows Obama's weakness.

The great myth of this campaign for months has been Barack Obama is a strong presidential candidate. He's an impressive politician. He's an impressive man in many ways.

But the fact is Hillary Clinton beat him week after week in the late Democratic primaries when she was outspent, when the media had anointed Obama as the inevitable nominee, and he was pretty much the inevitable nominee, and Democratic voters — Democratic voters — were still resistant to anointing him.

And now some Democrats and a lot of independents are resistant to him in the general election. He is too liberal. He should not win. No one with his profile has won the presidency, period.

Clinton won as a new Democrat. Carter won as a moderately conservative Democrat. All the liberal Democratic senators who have been nominated have lost, especially if you're only a one-term Democratic senator who's consistently voted with the liberal part of the party.

Now, he's trying — the great irony of Obama is he beat Hillary Clinton but he learned a lot from Bill Clinton. And he has spent the last month in a Clintonian way trying to move to the center. But still, people have the sense that, "Gee, he's awfully liberal and awfully untested."

So it is winnable for McCain. McCain can beat Obama. But the McCain campaign as currently constituted, I think, cannot beat the Obama campaign. The McCain campaign is not as good as McCain the candidate.

WILLIAMS: Well, what you're seeing, though, is — I mean, is Senator Obama speaking just to the concern you have, which is not only changing positions, refining, however you want to put it, but also running ads that put him more toward the middle.

Now, some of these ads include things that are of question. He says that he was for welfare reform when he wasn't for welfare reform. He makes himself out to be born in Kansas, Kansas values. He's in Hawaii.

This kind of thing — I think people are going to get uneasy when they look at his record in the Senate — very liberal.

KRISTOL: Let me interrupt just one second to make a point. Bill Clinton vetoed welfare reform twice — remember this? — passed by the Republican Congress in 1996, signed it on the third go-round when Dick Morris said, "You can't afford to veto it," and then ran commercials all through the fall, "Bill Clinton brought you tough welfare reform."

WILLIAMS: Right.

KRISTOL: So Barack Obama is following in Bill Clinton's foot steps.

WILLIAMS: Absolutely.

KRISTOL: And I've got to say, it worked in 1996 for Clinton.

WILLIAMS: Right. And so what we have here, then, is John McCain needs to — and this has been a refrain, essentially, to my ear from this panel, that John McCain doesn't need to run to the base. He needs to run to the middle.

He needs to redefine himself and move the Republican brand in a new way, and in specific not necessarily focused on the war, which is what appears to be the notion inside the campaign, that that's our strength, national security — and the numbers would support that.

But what really is his strength is if he can start to speak to the economy, to gas prices, Social Security, Medicare, Medicaid, all those anxieties, those kitchen table anxieties, in such a way as to suggest to people, "You know what? You don't have to take the risk with Obama. You've got someone here in John McCain that's trustworthy and stable and appreciates the anxiety you feel at home."

HUME: Right.

And Juan raises a point I wanted to raise, which is there's a general view that this election will be about Obama, not about McCain. McCain is a relatively known quantity — people know he's not a hard right-winger, although he's conservative on some issues — as a responsible, safe alternative to the newcomer.

So the question is does it really matter if McCain runs a bang-up campaign as much as it might ordinarily matter in an election year, if the election is about Obama?

WILLIAMS: Yes, it does, because what you have to see is that people don't know exactly who is Obama. They're coming to know him. They do know who McCain is.

And so if McCain runs an effective campaign, then he can blunt some of the energy behind Obama.

BARNES: Look, McCain has to run a center-right campaign. He's paying a lot of attention to the center and, Juan, he also needs to pay attention to the right, because these are the people he needs to energize.

WILLIAMS: Where are they going to go, Fred?

BARNES: No, no, I'll tell you where they...

HUME: Hold it.

BARNES: They won't vote. And here's what he needs to do. He needs to touch on some of the social issues which energize the right — in particular, gays in the military, for one.

We know Barack Obama is for allowing gays in the military, as Bill Clinton tried to do and then backed off. This is not a popular issue. Gay marriage is another one. These are both issues that I think McCain is going to have to use. He can't ignore the right. If he does, he'll lose.

WILLIAMS: Fred, where is the right going to go?

LIASSON: Stay home.

BARNES: Not vote. They can stay home.

WILLIAMS: Oh, come on. They don't like Barack Obama.

BARNES: No, no, they did a lot of this in 2006. They'll do it again in 2008.

HUME: Last word, Bill.

KRISTOL: I think the ideological point is important, but it's also important, as one Republican put it to me this week, the trouble with the McCain campaign is that so far it's been diminishing McCain.

Obama seems more presidential, I would say, each week — gives these major speeches. He flip-flops a little bit, but he seems like he's trying to think about how you would act as president of the United States.

McCain seems, I'm worried, a little less presidential each week as he snipes at Obama, sort of flits around, and hasn't conveyed a presidential level of message.

HUME: All right, everybody. It's time for our sponsors.

But when we return, the all-important vice presidential selection. Who will be the candidates that McCain and Obama take? We'll have educated guesses on that in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TIM PAWLENTY: I don't have any designs on being vice president.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

TIM KAINE: I'm not expecting it, don't spend a lot of time thinking about it.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

TOM RIDGE: If he asks me, we'll have a private conversation and we'll decide whether or not we ought to tell you what we said.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

JOE BIDEN: Well, you know, anybody who got asked by their nominee to be their running mate — you'd have to consider it. I mean, how could you just blow it off?

(END VIDEO CLIP)

HUME: Well, thank you, Joe Biden, for a moment of candor there amid all of the demurrals by the other potential running mates in both parties. There are comments from some of those, at least, being mentioned.

Let's talk about — let's pick up where we left off with Fred, Mara, Bill and Juan on the subject of John McCain, whose campaign everyone seems to agree needs a boost.

So, Fred, for a vice presidential nomination, vice presidential selection, who do you think would give McCain a boost?

BARNES: Well, the most plausible president — and that's what you need to be — he needs to pick somebody who's a plausible president first - - I think is Mitt Romney.

On the other hand, Mitt Romney doesn't poll that well, and given McCain's position...

HUME: Where are these polls, by the way? We've heard about them again and again, the polling that...

BARNES: Yes. Well, these match-up polls, you know, of a McCain and Romney ticket against some Obama ticket...

HUME: Doesn't do well.

BARNES: Not as well as you might think.

But here's the difference this year in choosing a vice presidential running mate. The bar is lowered on being a plausible president. And why? Because of Barack Obama, a man of little experience in Washington, certainly not in foreign affairs and so on.

So you could pick somebody — and I think this would make sense — like Bobby Jindal, the governor of Louisiana, who's, what, 37, who has — whose experience in Washington and in his state is at least as extensive as Barack Obama's.

So if you pick somebody like that who would particularly excite conservatives and be a reform candidate, so I think Jindal at the moment makes the most sense.

LIASSON: I'm actually for Mitt Romney. I know McCain supposedly doesn't like him very much. However, the polling of vice presidential match-ups — I don't know if Dick Cheney would have helped George Bush very much back in 2000.

But I think Mitt Romney helps him in Michigan — he's got to blunt the Democrats somewhere — brings this great economic experience, business experience, executive experience, which McCain has been struggling with. And number two, I'd pick Tim Pawlenty, a kind of reform Republican.

HUME: Whom we saw in that sound clip at the beginning, yes.

Bill?

KRISTOL: Well, first, I think I should say that I'm not expecting to be asked, you know. It would be great. It would be a matter of humility, though, if he were to ask me, and I'd have to consider it.

HUME: Well, you'd have to consider it.

KRISTOL: I'd have to consider it.

LIASSON: Couldn't blow it off.

HUME: You couldn't blow it off.

KRISTOL: And you know, frankly, given the way Senator Obama's moving to the center, I'm thinking he might ask me, you know? I think I have as good a chance with him as with Senator McCain.

HUME: That would balance the ticket.

KRISTOL: I think so.

HUME: Like a see-saw.

KRISTOL: No, he's on board, expanding the military, winning the war in Iraq, signing the eavesdropping legislation.

Anyway, I think he needs a reform conservative. I mean, the trick is to keep conservatives happy, add some energy to the ticket, and have a genuine reformer. I think that's — two young governors stand out for me, Sarah Palin of Alaska, Bobby Jindal of Louisiana.

Jindal's had a rough couple of weeks in Louisiana. He said he would veto a pay raise, then said he wouldn't, and then ended up doing so, a legislative pay raise.

I think I've got to say Sarah Palin, whom I've only met once but I was awfully impressed by, a genuine reformer, defeated the establishment up there. It would be pretty wild to pick a young female Alaska governor, and I think, you know, McCain might as well go for it.

WILLIAMS: That would be interesting. I mean, that would energize the ticket, which I think is a great thing to do. So I haven't met her, but I just think that's an interesting choice.

I think that given that he's running against Senator Obama, that Fred loves to pick on, Bobby Jindal — Bobby Jindal is no Barack Obama. I've met Bobby Jindal. I've met Barack Obama. Let me just tell you, Barack Obama is in the U.S. Senate. Bobby Jindal is the governor of Louisiana.

BARNES: Yes. Well, that's what McCain needs, is a governor.

WILLIAMS: Well, OK. I mean, Barack Obama is a man of charm and charisma, galvanizes an audience. I mean, come on.

But I think that what would really charge up the McCain ticket is Colin Powell, but I think that neither of them really are interested in it. I don't understand why.

LIASSON: Obama?

WILLIAMS: Yes, I think — no, I think for Senator McCain. If Senator McCain chose Colin Powell as his running mate...

HUME: Do you think you could get — that way you could get Colin Powell to be for him?

WILLIAMS: Yes. Well, I think Colin Powell — look, I think Colin Powell is taken by the idea of a young African American, someone with international experience and all that.

But I think that Colin Powell and John McCain have been friends all along. I don't think they've been — and they're both military guys. And I think that Powell appeals to the middle.

HUME: You think Powell wants to be vice president?

WILLIAMS: I don't know. I mean, gee, Powell's doing great for himself. He doesn't need it. But what I'm saying is if he's appealed to it, you know...

BARNES: He clearly doesn't want to be. I mean, Bill Clinton wanted to pick him once and Powell wasn't interested. He's not going to...

WILLIAMS: Yes, but I'm saying — well, OK. But if it's not, then I would go for someone like a woman, like Kay Bailey Hutchison or...

HUME: Sarah Palin.

WILLIAMS: ... Sarah Palin. Go for it.

HUME: All right. All right.

Now, at least as interesting is the question of what Barack Obama should do in making his choice.

Let's start with you, Juan.

WILLIAMS: Well, I think that for Senator Obama, I like Joe Biden. I think Joe Biden's real interesting. I think Joe Biden is the kind of person that's got foreign policy experience, been around Washington, knows how the game is played. And I think he's interesting. It's not a safe choice.

You could go with Jim Webb, the senator from Virginia, but to me, if you were just looking at the numbers, looking at the kind of match- ups that exist right now, you'd have to say the person who brings the most to the ticket is, unbelievably, Hillary Rodham Clinton.

She's the one that's going to bring the middle, going to bring the suburban housewives along, going to bring the white working class.

HUME: So you think she's the best choice.

WILLIAMS: She is the best choice. But it's just, you know, you realize the political realities on the ground and you say, "Well, maybe not." So that's why I go to Joe Biden.

KRISTOL: She also brings Bill Clinton with her...

WILLIAMS: Well, we know the story.

KRISTOL: ... which is a bit of a problem.

Yes, I think Obama's likely to pick a pretty safe, centrist Democrat - - Evan Bayh of Indiana, who was governor and is now a senator; Joe Biden — I think one of those — someone like that, and that will be good. He'll make a boring pick. Then McCain can make an exciting pick of Sarah Palin. Sarah Palin can clobber Biden in a debate. It will be a huge story. And then McCain will be off and running.

HUME: Do you think it's more likely to be Biden than Bayh?

KRISTOL: I think Bayh is the — no, I think Bayh is a slighter better pick. He's been governor as well as senator. He's from Indiana, which will be a tough state to take, but it borders, obviously, Ohio and Michigan.

He's familiar with those kinds of — middle America. You know, he can speak to, you know, unemployed auto workers up in Indiana as well as in Michigan, and I think he'd be pretty effective as a conventional pick.

LIASSON: I'm for Al Gore. Al Gore would be an electric pick. He is the Dick Cheney Democrat. In other words, if you want somebody who has been there, done that, gravitas, foreign policy, here's a man who many people believe has already been elected president.

The big question, of course, is does Al Gore want to do this. No one knows. Of course, what does he have to look forward to? He can't win another Nobel prize, I don't think.

But he's certainly ready to go. He complements Obama on all of the areas that he's weak. He could be the climate czar. He would have to be careful...

HUME: There goes your car, Mara.

LIASSON: There goes my car, my old clunker.

I think that they'd have to be careful that Al Gore wouldn't overshadow him, but I think they'd make it pretty clear that there's only one commander in chief. But Al Gore would be, I think, an electric pick for Obama.

BARNES: Electric. That's not the adjective I think of when I think of Al Gore.

LIASSON: Fluorescent. Fluorescent.

HUME: And eclectic.

LIASSON: Eclectic.

BARNES: I thought for a long time that Ed Rendell, the governor of Pennsylvania, made sense because, obviously, Obama has to win Pennsylvania. Any Democratic presidential candidate does. But he seems to be way ahead there.

But he doesn't have to decide now, and he can wait and see where he is when the — the convention's not until late August, what, six weeks away, seven weeks away. So he doesn't have to decide right away. If he needs Rendell, he can pick him.

But other than that, that's why I think one of the governors would help. Tim Kaine — he'd win Virginia. He doesn't need to pick Jim Webb, who I don't think would help as much. Tim Kaine is a very popular Democratic governor.

But particularly the one that increasingly makes sense to me is Kathleen Sebelius, the governor of Kansas, for this reason. If he brings in front of the convention that's about half Hillary voters and feminists - - if he brings Ed Rendell and introduces him as his veep, that's not going to look so great.

If he brings a woman, but not Hillary Clinton, who he clearly doesn't want to be in the West Wing of his White House, then I think that would help.

KRISTOL: You know, one point on Sebelius. Her maiden name is Gilligan. She's the daughter of a former governor of Ohio, John Gilligan, grew up in Ohio. And if you think Ohio is a key state to win, she is as close to being an Ohio politician as anyone can be who's governor of another state.

HUME: You're not telling me she has a base there.

KRISTOL: Well, she grew up there. She went to school there. She can toss around, you know, fond reminisces of her girlhood in Ohio. I think she'd be — and Gilligan was a very popular governor back in the day.

WILLIAMS: And she has a Republican pedigree there. And don't forget that...

HUME: Republican?

KRISTOL: No, he was a Democrat.

WILLIAMS: No, no, but I'm saying in Kansas...

KRISTOL: She's won in a Republican state.

WILLIAMS: A very red state, and she has managed to get the legislature to work with her. So she represents post-that partisan divide.

LIASSON: Don't you think, though, those Hillary Clinton people would be pretty mad if it was another woman?

BARNES: No, I think they'd be happy that it wasn't a man.

HUME: You think they'd be unhappy?

LIASSON: If you're going to pick a woman, you'd have to really explain why you're not picking Hillary.

BARNES: It's easy to explain.

HUME: Well, explain it, then.

LIASSON: Hard to explain to her supporters.

BARNES: You'd have a dysfunctional White House. One word. One word. Bill.

KRISTOL: Obama said privately to someone, I'm told, about a month ago when — the height of the Hillary speculation, just at the end of the primaries — he said he wasn't going to — he wasn't going to, did not want to take her and didn't expect to take her.

He said three presidents is two too many, or three co-presidents is two too many, he said to someone. And I think that shows — that pretty much confirms that she has a claim. She got an awful lot of votes. But I don't think he wants her as vice president.

HUME: We don't know who it will be, but we think we know that it won't be she.

It's time for another break. When we come back, the war on terror. There's a new report out, mostly ignored, that real political process is being made in Iraq. We'll discuss that and other things when we come back.

(COMMERCIAL BREAK)

HUME: On this day in 1976, the United States Naval Academy at Annapolis, Maryland admitted women into the ranks for the first time. Today women compose about 14 percent of each freshman class.

Stay tuned for more from our panel.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: It has been a tough month in Afghanistan, but it's also been a tough month for the Taliban.

(END VIDEO CLIP)

HUME: President Bush there talking about increased U.S. casualties in Afghanistan, the worst in this past month since the beginning of the war there.

In the meantime, a new report on Iraq showed a somewhat brighter picture.

We continue with Fred, Mara, Bill and Juan.

That new report on Iraq was on political progress. Requested by a member of Congress, it compares with a similar report sent to Congress by the administration a year ago in which of the 18 political benchmarks established by the president and Congress, accepted by the Iraqis a year ago, satisfactory progress was seen to be made on eight of them, now satisfactory progress on 15.

That would appear to be a major change and a major advance. Let's talk first about Iraq. We'll get to Afghanistan in a moment.

The report — the administration didn't do much to emphasize it. It kind of fell out, and the coverage of it, with notable exceptions, was minimal. What about it?

BARNES: They're not very good on this, you know. I mean, the benchmark — when earlier benchmark reports were not this good but were actually pretty good, they weren't able to publicize these either.

The truth is, look, the Democratic argument has been — now their new argument is, "OK, the surge has worked militarily, but where's the political reconciliation?"

Well, the truth is there's an enormous amount of it. Not only do you have Prime Minister Maliki crushing the Shia militias, and he's a Shia, not only have you had the Sunnis who had withdrawn from his government, now he's negotiated with them — they've come back and taken over ministries — not only have you had the famous Sunni "Awakening," not only have you had progress on 15 of these 18 benchmarks, not only are you going to have provincial elections in the fall, I think some time after our election, where a lot of Sunnis — I mean, look, political reconciliation is happening rapidly in Iraq in ways that obviously, I think, Democrats are going to have to come to terms with, because otherwise — they have to face the reality on the ground, and it's been remarkable.

LIASSON: Well, one of the ways they might come to terms with that is by saying, "Let's declare victory and get out. I mean, things are doing better, and now we can leave. It's not so dangerous."

BARNES: It's kind of hard, though, when you're the ones who said this — these things couldn't happen.

LIASSON: Yes. But you can't fly in the face of reality forever. And it does say — and Obama even in his dueling press conferences said, "Hey, first, you said it was too dangerous, we couldn't get out. Now you're saying it's going too well, we can't get out." He could easily flip that on its head and say...

HUME: Well, I know, but on the other hand, he was saying it was so dangerous we had to get out.

LIASSON: That's right.

HUME: Now he says it's so safe, we have to get out.

LIASSON: He's going to Iraq, and he said he's going to see what's happening on the ground there.

KRISTOL: People have not appreciated the significance of the victory in Iraq. I mean, it is going to be a huge deal, assuming we stay the course and finish the job, which now looks eminently finish- able.

I mean, Al Qaida's being routed in Mosul as we speak from its last redoubt in northern Iraq. As Fred said, Maliki has turned on the Shia militia. There's now a pretty good unity government. They're going to have provincial elections at the end of this year, national elections a year from now.

We are going to have a real victory in Iraq. Two years ago it looked like it could be Vietnam. It really looked like we might just have to leave — you know, flee and acknowledge a defeat to our enemies with much worse consequences in the Middle East than I think the Vietnam defeat implied.

A year ago, frankly, I thought it would be Korea, you know, an acceptable kind of stalemate that would allow us to leave with honor, and with an adequate resolution that would allow for some stability in the region.

But now I think we are just going to — we have a real chance at flat- out victory. And the key for the next president — and this is why it does matter, I think, whether it's McCain or Obama — is to capitalize on this victory, not to sort of minimize it and to say, "Oh, well, we've won. We've got to get out."

We've got to capitalize on the victory the way we capitalized on the victory in World War II and stabilized an entire — all of Western Europe and laid the groundwork for rolling back the Soviet Union.

I mean, this could be a huge moment in the history of the Middle East.

WILLIAMS: You have such an investment in Iraq, you and Fred. I mean, it's just — to me, you guys are, you know, whistling by the graveyard, ignoring the fact that...

KRISTOL: The country has a huge...

WILLIAMS: ... the tremendous mistakes that have been made, ignoring the fact that we don't have the troops necessary to go into Afghanistan and actually fight Al Qaida, ignoring the fact that Israel and Iran appear at, you know, loggerheads and potentially explosive heads that could lead us into all sorts of nightmarish scenarios.

No, no, you say, "Oh, how can you ignore the good that's going on in Iraq?" Well, if there's so much good, if there's so much — you know, if we're going to see political progress, why — we've gone through elections, taken us nowhere.

We have there on the ground more Americans now, I think, than at any time, and they are trying to hold together this fragile scenario so that you can have some political progress, but it's not that the Iraqis have made such tremendous gains that you would sit here on this Sunday morning and say, "You know what? Let's wave the flag. What a tremendous thing this has been for America."

This has been a total disaster.

KRISTOL: It has been tremendous. The last year and a half is one of the tremendous achievements in the U.S. military in the last 50 years and I would say, to give President Bush credit, a great achievement for the country as a whole.

We were losing a war that would have been a disastrous — that would have resulted in a disastrous outcome for U.S. interests, not for me, or Fred or George Bush, but U.S. interests in the Middle East, and now we're winning that war.

That's a pretty impressive achievement by this country which was allegedly afflicted by a Vietnam syndrome, couldn't tough it out, couldn't take it. Bush reversed course and strategy, put in a new commander. We're winning the war. That is a very big deal.

HUME: You raise an interesting point, though, about Afghanistan, Juan. I mean, the casualty count there has mounted. The Taliban are resurgent, to some extent, in parts of Afghanistan.

We had the chairman of the Joint Chiefs saying this week, "Well, we really don't have the flexibility to bring a lot of troops in there." That raises the question of whether that would be a good idea anyway. What about that?

WILLIAMS: Well, I think that's the one we've got to win. I mean, to me, we've got to go after Al Qaida, and we've got to diminish them, not Al Qaida in Iraq, but Al Qaida the Al Qaida that came after us on September 11th.

So to me, you know — but the thing is, it's got to be very carefully done. You know, this goes back to Obama and his, you know, reassessment. But you've got to put the troops and got to win that war in Afghanistan. I don't think there's any question about that.

BARNES: Yes, look, let's compare it. Let's compare winning in Iraq, which we're on the verge of, a country in the heart of the Middle East, one of the most important countries there, an oil- producing country, a country — a fairly well educated country that can be a stable, Democratic, pro- American country — compare that with there's a Taliban offensive in southeastern Afghanistan.

You talk about the middle of nowhere. Obviously, we have to defeat them, but compared to winning in Iraq, which is enormously important, as Bill said, I think, in the history of the world, but particularly in its impact on the Middle East, it's so much more important.

And I hope President Bush at this G-8 summit where he's at can get some of our NATO allies to send some more troops and...

WILLIAMS: And would winning be staying there forever and ever, like North Korea and Germany? Is that your version of winning, too?

BARNES: You know, one of the things that's great about having American troops in your country, as we did for years in Germany, we now have in South Korea — you know what that was? That deters enemies.

You don't think the North Koreans would have attacked if our troops weren't there? You don't think the Soviets would have moved into Western Europe if we didn't have all those American troops in Germany all those years?

I think they would have, and...

(CROSSTALK)

BARNES: Don't you think that an American — a permanent — not permanent, but...

WILLIAMS: I hope you're not advising the McCain campaign.

BARNES: ... but a small American contingent in Iraq over the years would deter the Iranians? Of course it would.

LIASSON: Americans aren't out there protesting our presence in Germany and South Korea. As long as there's no casualties, I don't think Americans have a problem with that. There certainly hasn't been any evidence of it.

I think this just gives you a sample of the incredible problems that are going to face this next president. I mean, you've got to do something about Iraq.

Barack Obama has said that Afghanistan is a bigger, more pressing problem, or a more urgent problem. He's accused George Bush of taking his eye off the ball of where the terrorists really were. He's going to have to figure out what to do there, too.

And also, he said that he would even do unilateral action in Pakistan if he felt that the Pakistani government wasn't stepping up to the plate there.

So these are some pretty big problems and I think, you know, if John McCain can get Obama to flesh out his policy in Afghanistan, really talk about it, that could be a debate that's important to have.

HUME: Juan, let me just ask this question. Would you be willing to risk a loss in Iraq to mount a necessary effort for a win in Afghanistan?

WILLIAMS: In absolute terms, yes, but I don't think that's the choice, Brit.

HUME: OK, fair enough.

WILLIAMS: I think the choice is that you can try to stabilize things, you know, but you have to say, "What's my priority here? What's most important in terms of defending..."

HUME: And you think Afghanistan should be the priority.

WILLIAMS: From defending my house against somebody that attacked me versus someone who didn't attack me, I'd go after the guy that attacked me.

KRISTOL: You know, I was part of a small group that saw President Bush speak for about 90 minutes. As is often the case — you've been there many times — almost everything interesting was off the record.

HUME: Right.

KRISTOL: But one thing he — he conveyed the following impression, that he thought the next president's biggest challenge would not be Iraq, which he thinks he'll leave in pretty good shape, and would not be Afghanistan, which is manageable by itself.

It could be a little worse, it could be a little better. We're not going to let it be a pre-9/11 situation. It's Pakistan. The trouble with sending a lot of troops into Afghanistan is the — Al Qaida is not headquartered in Afghanistan. The Taliban is fighting Afghanistan. They're headquartered in the remote regions of Pakistan.

That is a huge challenge, because there it's very hard to simply send in U.S. troops. We have a sort of friendly government that sort of cooperates and sort of doesn't. It's really a complicated and difficult situation.

HUME: And a very dangerous place.

KRISTOL: But this is why all — and a very dangerous place with nuclear weapons.

HUME: Right.

KRISTOL: But this is why all this talk about Afghanistan sort of misses the point. I mean, Pakistan is a huge challenge.

But the best thing we can do is to — you know, we have to see what we can do about Pakistan, but it would be good in the meantime to win in Iraq and to win Afghanistan, both of which we are capable of doing and are going to do.

HUME: That's it for this segment. We'll be right back, though, with some thoughts from our panel about the life and career of the late former senator Jesse Helms.

(COMMERCIAL BREAK)

HUME: And we are back with our panel to remember former North Carolina senator Jesse Helms, who died in the early hours of July 4th. He was 86.

Senator Helms was a guy you didn't see on shows like this.

Juan, he was an enormously important figure in the Senate, but he was not a big public spokesman on issues. He was extremely controversial. Your thoughts on him.

WILLIAMS: I spent some time with Senator Helms. I remember when he was running against Harvey Gant, and it was the third time.

You know, he had run against former head of the university and others, and the races were always close because, despite what may have seemed, he always went into a race basically with 45 percent of the people in North Carolina against him, so he had to win and run aggressively, and he did.

In the Gant situation, I think he resorted to racial tactics. He used an ad in which you see white hands crumpling up a piece of paper, and they say you would have had the job but they had to give it to the minority.

Really, I came away from talking and spending time with Helms, going down to North Carolina for a piece on him thinking he represents small-town North Carolina of a certain time.

He's a guy who would come on — actually, he made his name on T.V., you know...

HUME: Originally, yes.

WILLIAMS: ... delivering commentaries and then writing editorials that appeared in like 200 papers, and really, not in any kind of racist rant or right — but just basically speaking to hard- line conservative values.

And the second thing to say is then he built up a money-raising machinery that helped to fund the conservative movement in this country, including Ronald Reagan. He was key, in fact, to Ronald Reagan's success after the defeat to Ford in '76 — key to Ronald Reagan being able to come back in '80, in large part due to Jesse Helms.

KRISTOL: I think that part of Helms' legacy is important. He helped Reagan come back in North Carolina, win his first primary after losing, what, the first 11, I think it was, to Ford in '76. Reagan won the majority, I think, of the primaries from then on, came pretty close to the convention, laid the groundwork for 1980.

Reagan would not have won North Carolina in '76 if Helms hadn't insisted that he stay in the race and, I think, raised the money for this half-hour speech on the Panama Canal they showed on North Carolina television — Reagan speech — and the Panama Canal issue took off.

So among his other achievements in the Senate, I think without Helms' being there, Reagan might not have become president.

LIASSON: Yes, I think he was kind of a major figure of the new right. He certainly was very successful. And I agree with everything — he laid the groundwork for a lot of this, but he also did use, you know, racial, racist tactics in his campaigns.

HUME: Which ones?

LIASSON: Well, I think the ad — the famous ad against Harvey Gant, the white hands crumpling a piece of paper, saying you needed that job...

HUME: Was that racial or racist?

LIASSON: I think it was racial. I guess I'd say racial. You know, it said you needed that job but it went to an unqualified minority because of a racial quota.

So I think that he'll be remembered for both those things, for being really controversial, for injecting race into campaigns, but also for being a real figure of the...

HUME: Fred, you probably knew him better than any...

BARNES: Yes. No, I knew him pretty well. And, Brit, you know the reason why he didn't do these shows on Sunday mornings? He went to church. That was a higher priority for him than being on any of these yap shows, yip-yap shows, like...

HUME: Hey. Hey.

BARNES: But look. OK. He saved Reagan. He was an unflinching conservative. But he did something that other conservatives were not willing to do, and that is to use social and cultural issues to talk about them, to oppose the obscene art that was funded by the National Endowment for the Arts and so on, and to be very strong on abortion, to talk about it, to talk about gay rights, and also to talk about racial preferences.

That's what that ad was about. It was opposition to racial preferences, which, after all, are not popular in this country because we see whenever there's a referendum on the ballot against them — there's one in Colorado this year, there had been in Michigan and so on, in California — they pass.

I thought that ad was perfectly fine. I didn't think Helms was a racist. But because he was such a conservative, other conservative Democrats, or Democrats who were otherwise more liberal, people like Sam Ervin and William Fulbright and Al Gore Senior — they got a pass on their — on racial issues.

Democrats and liberals would not give Jesse Helms a pass.

HUME: Thanks, panel. See you next week.

That's it for us today. Enjoy the end of your weekend, your holiday weekend, and we'll see you next "FOX News Sunday."

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