Will Republicans Win Back Control in November?


The following is a rush transcript of the September 26, 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: House Republicans make a pledge to America, telling what they'll do if they win back control in November. Will the plan help the country? Will it help the GOP? We'll ask House Republican leader John Boehner, Congressman Kevin McCarthy and Majority Leader Steny Hoyer. Boehner, McCarthy and Hoyer, only on "Fox News Sunday."

Also, while President Obama talks peace at the U.N., a new book details bitter struggles inside his war cabinet. We'll ask our Sunday panel about the president's foreign policy.

And our Power Player of the Week, a political wiz kid, runs the...


WALLACE: ... five-page document Thursday that lays out their legislative agenda. The plan calls for smaller and more limited government, repeal of President Obama's health care reform...


WALLACE: ... nothing more than what he calls the worn-out philosophy of President Bush. The fact is you do go back to the Bush budget. You would extend the Bush tax cuts. Congressman Boehner, how does this document show that the GOP has changed since the last election?

BOEHNER: Well, I think it's pretty clear, if you look at what's been going on here in Washington, with all the spending, all the debt, all the government...


WALLACE: ... a number of conservatives aren't buying this. Let's take a look at what Erick Erickson of the conservative Web site RedState had to say about this document.


WALLACE: "... keep making Washington fatter before we crash from the sugar high."

MCCARTHY: Well, but the National Review says it's...


MCCARTHY: ... Wall Street Journal says it will do more to strengthen the federal government. Just like when the contract came out...


MCCARTHY: ... part that will shrink government, take away the uncertainty. The number one reason out there why jobs are not being created -- uncertainty. They don't know what's going to happen with the taxes. They don't know what's going to happen from regulation. This could rein it all in. I mean, Washington is spending more time with comedians...


BOEHNER: ... we have a moratorium on earmarks. And I can tell you that if Republicans win the majority in November, it will not be business as usual here in Congress. And the earmark...

WALLACE: But let me ask you about...

BOEHNER: ... the earmark...

WALLACE: Let me ask you about that.

BOEHNER: ... earmark moratorium...

WALLACE: It's a -- it's a one-year moratorium that ends...

BOEHNER: It's in place. And why wouldn't the Democrats this year join us...


BOEHNER: ... in a one-year moratorium?

WALLACE: But it's a one-year moratorium that ends in March. A number of your top leaders, including Congressman Jerry Lewis, who likely will be the chairman of the House Appropriations Committee, wants earmarks back. Why -- are you willing to pledge right now if you take over the House, the Republicans do, earmarks will be gone forever?

BOEHNER: It will not be business as usual in Washington, D.C.

WALLACE: That's not answering my question, sir.

BOEHNER: It will not be. Listen, you know me. I've never asked for an earmark in the 20 years I've been in Congress.

WALLACE: But a lot of your colleagues have.

BOEHNER: I understand. It will not be business as usual.

WALLACE: All right. Congressman McCarthy, let's drill down into some of the spending cuts...


WALLACE: ... that you propose in this document. You talk about cutting non-defense discretionary spending which is only 16 percent of the federal budget. And you talk about cutting $100 billion from that pot next year, which would amount to a 22 percent cut in those programs.

You say you want to cut across the board. According to the White House, that means 200,000 kids would be kept out of Head Start. The FBI would cut 2,700 agents. And the government would detain thousands fewer illegal immigrants.

MCCARTHY: Look it, for a guy that served on the Head Start board in my county for 10 years, I know that's not true. What I'm saying is discretionary spending.

Now, let's look at what has happened across America for the last three years. Every household has had to cut back. What has this discretionary spending done? It has been increased by 88 percent. We're saying find eight cents out of every dollar.

Do you know what we spend money on? Take, for instance, when you go into transportation that's been increased. Every person that buys a first-class ticket on Amtrak for the sleeper car -- we subsidize that by $364. That's $1.2 billion saved if we decide that the American public shouldn't borrow 40 cents out of every dollar to subsidize someone buying a first-class ticket.

WALLACE: All right. Well, that's -- all right. That's $1 billion. How do you get the other $99 billion? I mean, the fact is if you're going to do non-defense discretionary spending, it's a 22 percent cut to cut $100 billion. It's only...

MCCARTHY: It has grown by 88 percent over the last three years. It is not that difficult to go back to pre-stimulus...

WALLACE: Why is there not any specific cuts here?

MCCARTHY: It goes specifically down to -- we give -- we give the ability...

WALLACE: Not in this, it doesn't.

MCCARTHY: We give the ability from department to department to find where. We show programs where we show votes on the floor through YouCut where we've gone more than the ability to go through it, one after the other.

What about when we laid out our pledge to that lumber company? No one there has had a raise in two years. But even Congress, when you look at the legislative branch, not the individuals, but the legislative branch has increased by 5 percent.

We're saying you go through, go back to pre-stimulus, pre-bailout numbers. We can live on that and actually find further.

WALLACE: Congressman Boehner, as Willie Sutton said about banks, entitlements are where the money is, more than 40 percent of the budget. And yet I've looked through this pledge. There is not one single proposal to cut Social Security, Medicare, Medicaid.

BOEHNER: Chris, we make it clear in there that we're going to lay out a plan to get -- to work toward a balanced budget and to deal with the entitlement crisis.

Chris, it's time for us as Americans to have an adult conversation with each other about the serious challenges our country faces. And we can't have that serious conversation until we lay out the size of the problem.

Now, once Americans understand how big the problem is, then we can begin to talk about potential solutions. But I am committed to having that adult conversation with the American people because it is important for the future of our kids and our grandkids.

WALLACE: But forgive me, sir. I mean, isn't the right time to have the adult conversation now before the election when you have this document? Why not make a single proposal to cut Social Security, Medicare and Medicaid?

BOEHNER: Chris, this is what happens here in Washington. When you start down that path, you just invite all kinds of problems. I know. I've been there.

I think we need to do this in a more systemic way and have this conversation first. Let's not get to the potential solutions. Let's make sure Americans understand how big the problem is. Then we can begin to talk about possible solutions and then work ourselves into those solutions that are doable.

WALLACE: Congressman McCarthy, Speaker Pelosi says the House may or may not vote this week before they go on adjournment on taxes. I know that's one of your big issues. Why?

MCCARTHY: I think she's afraid. She's got 37 Democrats in her own party that say they want to extend -- they agree with the Republicans on the principle that you shouldn't raise taxes in a recession, that you could lose 1.2 million jobs in the future of the -- be able to grow.

The Democrats have failed to lead on this. They're going to want to leave the House without dealing with it. That uncertainty itself is keeping capital on the sidelines and stopping jobs from being created in America.

BOEHNER: Chris, the American people are asking the question:, "Where are the jobs?" And if we leave here this week and adjourn for the election without preventing these tax increases on the American people, it will be the most irresponsible thing that I have seen since I have been in Washington, D.C., and I've been here a while.

The speaker ought to promise a fair and open debate on making sure that we extend all of the current tax rates, end the uncertainty and get our economy going again, except that it sounds like they're just going to punt the ball until a lame duck session and, as a result, allow the uncertainty to continue, the economy to go slow and no jobs being created.

WALLACE: Congressman Boehner, if there is a vote this week -- you say you want a vote -- and if the choice is just whether or not to extend the middle-class tax cuts, how will you vote?

BOEHNER: I have made it clear I'm for extending all of the current tax rates. If we want to end the uncertainty and get our economy going again and create jobs in America, we have to eliminate all of this.

I also said the speaker ought to have a fair and open debate. And if she's not willing to have a fair and open debate, she should not count on our votes.

MCCARTHY: She took the pledge you'd have an open debate so you'd have all options, you'd have greater choice, and we'd have the country moving in the right direction.

WALLACE: I mean, I just want to press it again with you, Congressman Boehner. I mean -- and you understand why. It's a ticklish issue. If they bring up a vote, extend the tax cuts for the middle class or not, do you vote yea or nay?

BOEHNER: I want a fair and open debate so we can extend all of the current tax rates. And if the speaker will offer and allow a fair and open debate, I am confident that there is a bipartisan majority in the Congress today to extend all of the current tax rates.

WALLACE: What's wrong, Congressman Boehner, with the idea of, as it seems is going to happen because the Senate has already said they're not going to do this, of coming back with a lame duck session after the election?

BOEHNER: The American people are asking, "Where are the jobs?" We don't have jobs because of all the uncertainty coming out of this administration and this Congress.

The Congress has an opportunity this week to end some of the uncertainty by allowing the American people to know what the tax rates are going to be at the end of the year.

And to -- and to adjourn without dealing with this means that in their minds the elections are more important than the jobs for the American people, and it's just politics as usual.

MCCARTHY: It costs us $7 billion more because they want to wait. And how many more jobs does it cost to continue the uncertainty out of what's going to happen? How can someone plan to make the investment to create a new job if they don't know what the tax system's going to be?

BOEHNER: Chris, they've got time to bring a comedian to Washington, D.C. but they don't have time to eliminate the uncertainty by extending all of the current tax rates. I think that's irresponsible.

WALLACE: Congressman Boehner, will the GOP win back the House in November? Or, as some Republicans are now suggesting, have you peaked too early?

BOEHNER: Chris, our goal is to earn back the majority so that we can renew our efforts to drive for a smaller, less costly and more accountable government here in Washington, D.C.

WALLACE: Do you -- are you...

BOEHNER: It's an uphill -- it's an uphill climb, but it is possible. And we are working to do that.

WALLACE: You realize that the political class -- and we're a bunch of dopes, but we're going to say, if you don't win back the House, "Oh, this is a defeat," even if you pick up 30 seats.

BOEHNER: I understand that a lot of expectations have been set. There are more than 100 races going on in America that are in play. In a normal year there's 20 or 30 races. And I can tell you that all but two of those are held by incumbent Democrats around the country.

WALLACE: If you do become the next speaker, there are some younger Republicans and some tea partiers who say you're too old school, that you, John Boehner, will not shake up Washington.

BOEHNER: Listen, I come from a family of 12. My dad owned a tavern. I've got two brothers that have been laid off in this recession and two brother-in-laws. I get it. I understand what's going on in America. And I believe that I have the support of my colleagues, current and future.

WALLACE: So what would you do to shake up Washington? I mean, I understand this. But what are we to believe about Speaker Boehner? How would you run things?

BOEHNER: Chris, I've watched speakers for 20 years. I've seen the good parts and the bad parts. And I can tell you this. I think it's time for a real fair and open process in the Congress.

Today you've got about a handful of people who decide the outcome of almost any bill, even though 435 of us serve in the House, each of us representing roughly 650,000 people.

I think every member ought to have the opportunity to represent his constituents, both Democrats and Republicans. And that means a fair and open process in the House, unlike anything that I've seen in the 20 years that I've been here.

WALLACE: Would you -- and I know we're getting ahead of the course here. But on the other hand, the voters do need -- I mean, I think they probably want to know how you would run things and what kind of a House it would be with Speaker Boehner.

Would you see your role as speaker as blocking the Obama agenda or looking for areas of compromise?

BOEHNER: I think the American people want us to find a way to work together to address the concerns that face the American people every day. At the end of the day, this isn't about Democrats or Republicans. It's not about politics. It's about meeting the needs of the American people who sent us here to do their bidding.

WALLACE: And can you give me areas? I mean, obviously you have your agenda and you'd like them to adopt it. They're clearly not. You have the possibility of gridlock here. Can you see areas of possible compromise between a president at one end of Pennsylvania Avenue and a Speaker Boehner at the other end?

BOEHNER: I think with this document we make pretty clear where we're going. We -- we're going to drive for a smaller, less costly and more accountable government here in Washington, D.C. And to the extent that we can find common ground in that direction, I would welcome it.

WALLACE: Congressman Boehner, Congressman McCarthy, we want to thank you both so much for coming in today and answering...

MCCARTHY: Thanks, Chris.

WALLACE: ... our questions.

BOEHNER: Thank you.

WALLACE: Up next, House Majority Leader Steny Hoyer reacts to the GOP plan. And we'll ask him what Democrats will do about the Bush tax cuts that are about to expire.


WALLACE: Joining us now is House Democratic leader Steny Hoyer.

And, Congressman, welcome back to "Fox News Sunday."

HOYER: Good to be with you, Chris. Thanks a lot.

WALLACE: While Republicans have their pledge, and I know we're going to get into that, Democrats have their record over the last two years controlling both the White House and both houses of Congress, so let's take a look at that.

The federal deficit this year will be $1.3 trillion. Since President Obama took office, 3.2 million Americans lost their jobs. And despite Democrats adding almost $3 trillion to on the national debt the last two years, GDP growth is just 1.6 percent. Congressman, that's your record.

HOYER: That's the record, and it's better than we inherited. We inherited four quarters of declining growth, about 12 percent declining growth over the previous four quarters, including the first quarter of '09, which I think is correct to attribute to the Bush administration.

And we've brought it out, and we're gaining jobs, almost 700,000 jobs this month -- this year alone. Clearly, the deficit is a terrific problem that we've got to face. Why did we have that deficit? About 90 percent of it comes directly from the economic recession, the Bush policies that were not paid for, the two wars...


WALLACE: But unemployment's gone up since you guys came into office by 3 million people and unemployment is 9.6 percent.

HOYER: We lost 3.8 million the year before we got into office. So we were in a deep hole. And in fact, of course, jobs went -- unemployment went up 83 percent under the Bush administration and has gone up 26 percent under the Obama administration. So yes, but we've gone into positive numbers...

WALLACE: Tell that to the 15 million people that are out of work, sir.

HOYER: Absolutely, and it's a real problem, and we have to -- and we've been passing bill after bill, just passed one this last week to expand small businesses, to give small businesses a tax cut, put $30 billion on the table, which will be leveraged into $300 billion to grow jobs, to expand jobs.

And we've passed a tax bill through the House which said we're not going to outsource jobs that, unfortunately, every Republican voted against.

WALLACE: All right. Briefly, here's "A Pledge to America." I'll give you a minute and a half. What's wrong with it?

HOYER: Well, the "Pledge to America" is more spin than specifics.

And the "Pledge to America" -- I can't really say anything as harsh about the "Pledge for America," which is really no pledge at all, than the -- than the Republican opponents have said, that conservatives have said, that tea party members have said.

And a matter of fact, the Club for Growth said it was milquetoast and that the people who wrote it weren't prepared to lead.

WALLACE: Yeah, but they don't want to go in your direction. They want to go even further in the other direction.

HOYER: But the point is we are pursuing a program which is getting our country back to work, creating manufacturing jobs where we lost manufacturing jobs under the Bush administration, and has a plan to get the budget under control, re-adopted pay-go.

The reason we got in such a deep hole is because Republicans passed programs and didn't pay for them. In this document, they don't want to pay for them either.

In fact, in this document, they want to create another $4 trillion in debt. And they say the way they're going to solve that deficit problem is to cut non-defense, non-security discretionary spending.

They'd have to cut between two-thirds and 80 percent of all discretionary spending over the next 10 years. Our country would...

WALLACE: I think it's actually more like 22 percent, but...

HOYER: Oh, I don't think so.

WALLACE: Well, for the $100 billion in the first year. But let me -- let me...

HOYER: Well, the 100...

WALLACE: Let's move on to another issue, taxes.


WALLACE: Simple question: Will the House hold a vote this week before you adjourn for a month of campaigning, a vote this week on whether or not to extend the Bush tax cuts?

HOYER: I doubt that we will, and let me tell you why. The Senate has refused to move forward on that issue. As you know, we have some 400 bills pending in the Senate, 75 percent of which have gotten 50 Republican votes or more, but they can't move through the Senate, so it would be an specious act.

But Democrats have absolutely pledged and we'll make sure that before the end of this year the Republican increase in middle-income taxes will not go into effect, the Republican bill that phased out this year...

WALLACE: Wait a minute. You're calling the Republican -- you're calling the Bush tax cuts an increase in taxes on the middle class?

HOYER: The budget ended in 2010. That's why we have this confronting us. Why did they do that? Because they played budget games for scoring purposes. And yes, it's the Republican plan to eliminate those tax... (CROSSTALK)

WALLACE: But you've got a big majority.

HOYER: I understand.

WALLACE: Why not pass the extension of the middle-class tax cuts before you go home to campaign for a month?

HOYER: I just told you. The Senate has decided they wouldn't do it because of the...

WALLACE: Well, that's the Senate. You're the House.

HOYER: The obstruction is in the Senate. Well, it would be a specious act for us.

But what we have -- what is not a specious act, Chris, is we have absolutely guaranteed that there will be no increase in middle-income taxes. The president's that. The speaker and I have said that. Harry Reid and Dick Durbin have said that. There will be no increase...

WALLACE: All right.

HOYER: ... in middle-income taxes.

WALLACE: But here's the -- here's the point, Congressman. The Democrats have held a big majority in both the House and the Senate for almost two years now, since January of 2009. You've had it for almost two years.

Isn't it a serious failure by Democrats in both the House and the Senate that you haven't told the American people what's going to happen to their taxes on income, on dividends, on capital gains, on inheritance, and it's coming up now just three months away? Is that any way to add certainty and confidence to the economy during tough times?

HOYER: It is not. And that's largely due to the obstructionism in the United States Senate by the Republicans who have just enough to stop any action.


WALLACE: ... majority for more than a year. Add the fact is that the Democrats in the Senate -- I'm not asking you to defend the Senate -- they haven't even written a bill. You haven't written a bill in the House.

HOYER: Well, now, hold it. We passed a capital gains bill more than a year ago.

WALLACE: I'm talking about extending the Bush tax cuts.

HOYER: I understand what you're -- they are part of the Bush tax cuts. We are extending the capital gains tax -- excuse me -- the estate tax at what it had been. That would have given certainty.

It's unfortunate that we weren't able to get that bill through the Senate. We weren't able to get it through the Senate because of Republican obstructionism. Why? Because they want to eliminate the capital gains, because they're focused on the 1 or 2 percent of the richest people in America. That's what we've been confronted with on taxes.

They want to raise -- they want to cut taxes on the wealthiest in America. We want to make sure that middle-income America, working Americans, don't have a tax increase. And the obstructionism in the Senate has not allowed us to move forward. It's unfortunate...

WALLACE: If your...

HOYER: ... Because we need certainty.

WALLACE: if your party loses control of the House, will you promise not to hold a lame duck session after the (inaudible)?

HOYER: Of course I'm not going to promise that, Chris. That would be an irrational promise to make, because we're not going to complete the appropriations process, again, because of the difficulty of the obstructionism in the United States Senate...


WALLACE: Well, you're the House. You could have passed all these things. But -- but here's...

HOYER: We certainly could have.

WALLACE: But here's the -- here's the question.

HOYER: But we need to come back to make sure we completed that process as, frankly, Republicans did when they were in charge.

WALLACE: Do you think it's right to have members of Congress who have just lost -- I'm talking now about a scenario where the House goes to the Republicans -- to have members of Congress who have just lost come back and decide taxes and spending against the will of the Americans who have just voted?

HOYER: I don't think we're going to make any decisions against the will of the American public. Frankly, Chris, that's your assumption.

WALLACE: No, I'm...

HOYER: I think -- I think... (CROSSTALK)

WALLACE: ... I'm presenting a scenario.

HOYER: I think it is absolutely correct -- and under both parties' leadership we have done that -- that members of Congress are elected for 24 months, not for 21 months, not for 22 months, for 24 months. And they will continue their responsibilities...

WALLACE: So even...

HOYER: ... to the end of their term.

WALLACE: So even if, let's say -- I'm just -- suppose -- even if Republicans gain control of the House, and one of the clear messages is we don't want to raise taxes on anyone, it's OK for the Democrats to come back in a lame duck session and vote to let the tax cuts for the wealthy lapse?

HOYER: I certainly think it's OK. They'll make a policy judgment. As a matter of fact, Chris, there's no -- there's no confusion where the Democrats stand on this issue. The president's made it very clear. I've made it very clear. The leadership's made it very clear.

We are for making sure that the middle-class Americans do not get a tax increase. And we're going to make sure that happens. We've also made it clear that cutting taxes on the wealthiest in America will simply exacerbate the deficit without any assistance to the economy.

WALLACE: I've got less than two minutes left and I want to ask you two questions, if I may, sir. When Nancy Pelosi became speaker, she promised to drain the swamp of ethics abuses in the House.

Two top Democrats, Charlie Rangel and Maxine Waters, have both been charged with breaking House rules and both have demanded trials before the election. Question, sir: Will the Ethics Committee hold those trial before the election or not?

HOYER: Well, that's up to Jo Bonner, the Republican, and Zoe Lofgren, the Democrat. But let me...

WALLACE: But so far they haven't scheduled them.

HOYER: I understand that. That's because of their own scheduling problems. But let me say this, Charlie.

WALLACE: I'm Chris.

HOYER: Chris, excuse me.

WALLACE: Charlie Rangel.

HOYER: Chris, let me say this. The fact of the matter is the ethics process is working. The fact of the matter is, unlike under Republicans, we haven't fired the chairman of the Ethics Committee because they went after somebody in the Democratic Party, and we haven't removed any members from the Ethics Committee. The ethics process is working.

WALLACE: But you're not -- you're not committing that they will have the trials that they have sought... (CROSSTALK)

WALLACE: ... before voters have to vote on Waters and Rangel in November.

HOYER: I think that needs to be resolved as quickly as possible. Obviously, the members of the Ethics Committee are going to have to make that determination. And they have their own issues to deal with in their own elections.

WALLACE: And finally, 30 seconds left. On Friday, comedian Stephen Colbert testified before a congressional committee in his fake comedic character. At a time when the country faces real problems, sir, was this an embarrassment for the House?

HOYER: I think his testimony was not appropriate. I think it was an embarrassment for Mr. Colbert more than the House. He was...

WALLACE: Well, he was called by the Democratic chair...

HOYER: He was called...

WALLACE: ... of the subcommittee.

HOYER: You asked me, Chris, whether the testimony was appropriate. I think it was not appropriate.

WALLACE: And he should not have been called.

HOYER: Well, I don't know about whether he was called, but what he had to say, I think, was not the way it should have been said.

WALLACE: Why was it...

HOYER: If he had -- if he had a position on the issues, he should have given those issues. And I think -- you asked my personal opinion.

WALLACE: You regret it.

HOYER: I think it was inappropriate. Can I say something -- go back to this pledge? Because the...

WALLACE: Thirty seconds, but...

HOYER: The American public heard from these young guns. It turned out to be a pop gun. It turned out to be spin, not substance, not specifics. It turned out to be a return to the failed Bush policies which demonstrably got us into a deep hole.

The American public could compare two economic premises -- one we pursued which gave us the best economy that we've seen in yours and my lifetime in the '90s, or the worst economy we've seen in the 2000s.

WALLACE: Congressman Hoyer, we want to thank you. Thanks so much for coming in. And with 37 days left till the election, it's going to be quite a rush to the finish.

HOYER: You bet. It is.

WALLACE: Thank you, sir.

HOYER: Thanks, Chris.

WALLACE: Up next, talk of peace at the United Nations, talk of war in a new book. Our Sunday panel tackles both when we come right back.



OBAMA: The door remains open to diplomacy, should Iran choose to walk through it.

It was offensive. It was hateful. For him to make a statement like that was inexcusable.


WALLACE: President Obama at the U.N., reaching out once again to Iran, but then having to react to President Ahmadinejad's suggestion that our government was behind 9/11.

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, also from National Public Radio.

So, after Ahmadinejad's statement about 9/11 possibly being an inside job, the State Department called him delusional. We just heard the president calling his remarks hateful.

And yet, Brit, the president still talks about diplomacy with Iran. Why is it that Mr. Obama refuses to take no for an answer from the Iranians?

BRIT HUME, FOX NEWS SR. POLITICAL ANALYST: It is a little hard to imagine at this stage that he hasn't gotten the message. It's really sad and worrisome that he can't see that this guy is a crude little thug, that there is no point in having a negotiation with, because you probably can't trust anything he says or agrees to.

He's totally mercurial. He changes from one day to the next on the things he says. But he tends towards saying outrageous and yes, indeed, even delusional things.

There is no indications that the mullahs who run the country behind the scenes are dissatisfied with him and would rather have some other spokesman out there. None whatever.

The public in that country may be dissatisfied with him, but the president has done nothing to discourage that. In my view, he continues to almost legitimize the guy. I think it's very foolish behavior on the president's part.


MARA LIASSON, NATIONAL PUBLIC RADIO: I don't think he's legitimizing him. I think if you passed that description that Brit just gave through the White House, they would probably agree with you. Saying that the door is still open is not the same thing as saying, well, we're going to drop the sanctions right away and start talking to you. He's not doing that. I think it's almost like a diplomatic nicety to say eventually, if you ever wanted to change your stand on this, we'll talk to you.

In the meantime, sanctions are going forward. I don't know how much they'll accomplish, but he hasn't dropped that. And I think that the fact that so many diplomats walked out, as they should have, when Ahmadinejad kind of displays his crackpot conspiracy theories about 9/11 was correct. But I don't see any change in the administration's policy towards Iran.

WALLACE: Bill, U.S. officials seem to think that maybe this latest round of sanctions is beginning to work, is beginning to really affect Iran and its economy, and that perhaps the Iranians may finally be willing to negotiate about their nuclear program.

Do you see any sign of that?

BILL KRISTOL, "THE WEEKLY STANDARD": No, though I wouldn't be surprised if the Iranian regime does a phony face towards negotiations to try to buy some more time. I mean, that's what they're buying. They're buying time for the nuclear program to go ahead. It has been going ahead.

I think the reason the president doesn't want to talk about the real implications of having a delusional and hateful Iranian regime in power is that the real implication is, if sanctions fail, we will have to use force. And I'm not certain that the president doesn't actually know that.

I mean, I'm open to the notion that he will end up a year from now using force against Iran, and I guess he feels there is no point signaling that now. I think it's a mistake, because I think the more you put force on table, the you might encourage those within Iran to say wait a second, we're heading towards the precipice.

That's not his style, so he keeps the door open for negotiations. But I've got to say that, If you just look at the way this is playing out, it's playing out towards the use of force against Iran, I think.


JUAN WILLIAMS, NATIONAL PUBLIC RADIO, : Well, I think that Ahmadinejad's statements at the United Nations are evidence of the trouble he's having at home. I think the mullahs, the ayatollahs are much more conservative than he is. And it's hard to imagine from our perspective as Americans, but, in fact, I think Ahmadinejad is trying to play populist politics at home. And I think the sanctions have had some effect already. I think the economic performance in Iran is troubling to that country's middle class and elites who are the heart and soul of opposition to this tyrannical government that's there. So I think there is trouble in Iran, and I think his statements feed that.

And so he plays populist politics by trying to -- you know, it's unbelievable, again, from our perspective, but if you go to a bunch of the Muslim world, Indonesia, Jordan, much of the Middle East, they believe that the U.S. had some role in 9/11.


WILLIAMS: He is playing to that emotion to try to somehow then make himself a hero to those people.

But if you also, Brit, take into account that the British said they were about to celebrate the idea that the Iranians were returning to the table, I think it gives you a suggestion that much of the world was hoping that this was a turning point, it wasn't just President Obama.

WALLACE: President Obama, on another subject, also shifted something of a focus of his foreign policy in his speech at the U.N., talking more about the importance of human rights and democracy. And for all the world, sounding more like President Bush.

Let's watch.


OBAMA: Part of the price of our own freedom is standing up for the freedom of others. That belief will guide America's leadership in this 21st century.


WALLACE: Brit, do you think that's just rhetoric, or do you see a mid-course correction and this president talking, as President George W. Bush did, more about pursuing a democracy agenda?

HUME: Yes, a freedom agenda, as President Bush called it. Well, it's something to be hoped for, but I'm not sure yet that we have seen any example of that.

I mean, one way you could stand up for freedom would be when people are seeking to be free, as in Iran, to cite a conspicuous example, they're in the streets calling for it. And he says virtually nothing as the regime moves in on him. He's got some tests to pass before anybody can seriously say that this man has now adopted a freedom of democracy agenda.

WALLACE: I wondered, in fact, why the president, in response to Ahmadinejad's comments about the possibility it was an inside job at 9/11, didn't say no, we're not the ones who slaughter our own people in the streets. It's your regime, sir, that does. HUME: There's an opening. He didn't take it.

WALLACE: There's an opening. Well, they don't take our advice.

I want to switch to one last subject during this segment, Mara. Legendary reporter Bob Woodward has a new book out this week called "Obama's Wars" in which he quotes the president as saying this: "We can absurd a terrorist attack." And he says Mr. Obama was pressing for an exit strategy at the same time that he was deciding to send 30,000 more U.S. men and women to Afghanistan. What do you make of what seems to be in this book -- and I don't know if you've read it. I've only seen the accounts of it -- the president's apparent ambivalence here?

LIASSON: Well, there is no doubt that he had ambivalence about ramping up in Afghanistan. He didn't want to be there forever. He didn't want to be stuck in a quagmire.

On the other hand, I think when he went through this long, methodical, deliberative process -- and I think he comes off as pretty thoughtful and serious in this book -- that he agreed that a surge was required. He wanted to know that it wouldn't go on indefinitely.

Now, how long it goes on I think really remains to be seen. I mean, General Petraeus in this book is quoted as saying that he believes we're going to be there for a long time. I think he says, "For the rest of our lives and probably our kids' lives."

That might end up being what it is, not at the numbers that we're in Afghanistan now, but it might be some kind of a Korea situation. I don't think the president has closed that off. But yes, all of his ambivalence, which I think is true, is reflected here.

WALLACE: We have about 30 seconds in this segment.

Bill, your thoughts?

KRISTOL: I hope he resolves his ambivalence. I mean, these are tough choices. I don't think (INAUDIBLE) being ambivalent. But when you're fighting a war, you should fight the war full out to achieve your goals. You shouldn't hamper your military by not giving them the full number of troops they requested and by putting out a sort of deadline for July, 2011, which I think does hurt.

Having said that, I think the war in Afghanistan -- I think success is certainly attainable in Afghanistan, and I hope the president decides that, you know what? He is the president of the United States, he's the commander-in-chief, and we should win the war.

WALLACE: All right. We have to take a break here. But up next, the GOP's "Pledge to America." Good policy? Good politics? Our panel weighs in.



REP. JEB HENSARLING (R), TEXAS: This president and this Congress has put this nation on the road to bankruptcy, and they're pressing down on the accelerator. It is time to press on the brake and put us back on the road to recovery and opportunity.


WALLACE: Texas Republican congressman Jeb Hensarling delivering the basic message behind the House GOP's new "Pledge to America." And we're back now with the panel.

So, Juan, House Republicans came out this week. Here I have it, the slick 45-page document, "Pledge to America." And there is a lot of disagreement, even among conservatives, about how constructive it is.

What do you make of it?

WILLIAMS: Well, I remember Bill Kristol, and I think Brit was in on this, too, saying you know what? We have to take seriously the nation's debt. And we have to add some substance to the fact that Republicans are very popular, but able to say no to President Obama. But what do Republicans believe?

They need to put some meat on the bones. So I was looking forward to this very much, but I think it's like saying to the children, you know what? Let's all take a pledge. Everybody can have lollipops for breakfast. Because there is nothing here about serious issues that we've discussed on this panel.

How do you deal with entitlements in this country? Nothing there. It says basically, let's not have a stimulus. We don't believe in the stimulus.

We don't believe in health care reform. Let's allow the tax cuts to take place, but even with the tax cuts, it doesn't say how are we going to pay for these tax cuts?

So, I mean, you know, that's why I think you see criticism. That's why President Obama and Speaker Pelosi says it's back to the future. Go back to the old Republican agenda. There is nothing new here.

WALLACE: Well, I must say, you've led me exactly to the question I've been waiting to ask Bill Kristol.

Which is that you kept saying they need to do something bold, they need to really get out front. They need to take tough stands, controversial stands, the country is ready for it.

Is this bold?

KRISTOL: It's a step on the way to boldness. I mean, seriously, if a power-drunk, inebriated, big-government-loving Democratic Party is driving the car off the cliff, the first responsibility is to put on the brakes. I think the Republicans are right about that.

Stop the bad policies. Go back to 2008 levels of discretionary spending. That's a pretty big cut, as you pointed out in your interview with Republican leaders. That's a pretty big cut in discretionary spending.

WALLACE: Nothing about earmarks, nothing about entitlements.

KRISTOL: No. There are not going to be earmarks next year. They can't get all their caucus to agree to it now.

But if Republicans take the House, there'll be such sentiment of a Tea Party nation, that they will not, in my view, do earmarks. They will really cut discretionary spending.

Paul Ryan will lay down the budget on April 1, 2011 as chairman of the Budget Committee that will address entitlements. They're being reasonable -- they're being bold in a reasonable way.

LIASSON: There is a reason why John Boehner didn't want to say anything about entitlements, because you can't say that in an election. It's a politically perilous stand to take.

I think a couple things strike me.

First of all, this is a political document and we're all looking at it as a governing document. And as a governing document, it comes up short.

I think they had to put it out. They have to give their candidates something to run on, so when the Democrats say they're just the "party of no," they have no ideas, they can kind of wave that in the air.

But I think what was most interesting this week is that the reception it got, and that it got such negative pushback from a lot of the Tea Party kind of blogosphere, shows you not that the Republicans have anything to worry about, I don't think, before November, because the Tea Party is well within inside the Republican tent and pushing it forward, but afterwards. Afterwards, if they don't govern in a way that they are emboldened, energized, grassroots want them to, they're going to have a lot of problems.

And I don't think we've ever seen a time when a party that's this unpopular -- and the Republican Party is still very unpopular -- is poised to make such big gains in Congress. And there's a lot of warnings in that.

WALLACE: Brit, I want to ask you a version of what I asked Bill, because you had said this country is focused and serious about debt in a way it has never been before. Do you think this "Pledge to America" is serious about debt?

HUME: I think it's serious. It's just small. It isn't really serious about -- look, this issue of this entitlement tsunami of unfunded liabilities which is staggering and would bring the economy to its knees if we went on as we are, is the great economic issue of our time.

The recession will, in the fullness of time -- the effects of it will subside. But that thing is sitting out there ready to land on us in a crushing way.

The public, I think, is more tuned to this and aware of it than ever before. Younger people, you ask them about what they think they're going to get out of Social Security, even Medicare, they say they don't expect to get a dime.

People are ready for this. People who are on Social Security are grandfathered out -- in with their benefits in any serious proposal that's been made. So the Republicans I think came up short here, and they may be behind the curve.

The Democrats are hopelessly out of step with the public. But the Republicans may be, too, to the extent that this is not a strong enough document to -- and I think that the public would absurd and accept and get behind.

WALLACE: For all the hype about the pledge, I'm not sure that it was the most interesting political moment this week.

And for that, I want to go back to the town hall meeting, the CNBC town hall meeting with President Obama, where a woman, a professional who had voted for Barack Obama two years ago, talked about her frustration.

Let's watch.


UNIDENTIFIED FEMALE: I have been told that I voted for a man who said he was going to change things in a meaningful way for the middle class. I'm one of those people. And I'm waiting, sir. I'm waiting. I don't feel it yet. (END VIDEO CLIP)

WALLACE: Juan, the president smiled, but he looked like he wanted to be anywhere in the world except on that stool hearing from that woman. WILLIAMS: He had a moment. He could have responded with energy. Now, the White House spin has been the president is not isolated, he goes out, he hears these things.

WALLACE: I bet he wish he had been a little more isolated.

WILLIAMS: Yes. But, you know, what struck me was here is a black American woman speaking from the heart. She was no plant. And that came from the left wing, oh, she was a plant.

She is no plant. Velma Hart is a real person who says she supported President Obama, still wants him to succeed, but is disappointed. That's legitimate. And here she is saying to him, you know what, man? You better get up and fight. You better stop asking other people to do your battles for you.

The Republicans dominate the narrative on the economy, even as the economy shows indications of getting better. They dominate on health care, even as most Americans say they wish, in fact, the health care package had done more to help them.

WALLACE: Well, wait. I don't think that's what she was saying at all.

WILLIAMS: I do think it.

WALLACE: I think she was saying your policies aren't affecting our lives and we're going to end up eating franks and beans.

WILLIAMS: No. I think she was saying, listen, you're not out there fighting for yourself and things aren't changing as quickly as I hoped. But you're not making the case that -- you're not telling us why things are getting better.

LIASSON: Well, you know, there's two things.

WALLACE: Go ahead.

LIASSON: Number one, she hasn't felt enough change. I think that's true of almost -- like a vast majority of voters. But one thing that you can do if there hasn't been enough change, you can convince people like her that you are trying as hard as you can so that she won't be so frustrated with you. And that's what he still can do more of.


WALLACE: I mean, forgive me, I don't think it's trying. I think it's results.

WILLIAMS: No, you've got to show that you're trying. And for 90 percent of black America, 90 percent of Black America supports him.

HUME: They're (ph) saying that the problem in this election is that Obama didn't try hard enough to enact his agenda? The problem is it was the wrong agenda.

The public wanted something done about the economy. That was job one, job two and all the way down to job 10.

What he did was allow Congress to enact this whopping stimulus bill which was completely unfocused and promiscuous in its spending, that has manifestly failed, A, to end the recession, which ended in June of 2009, and B, to get the unemployment rate down. Having passed that ineffective measure, he then moved on to this gigantic health care reform which was nobody's in America's major priority.

(CROSSTALK) HUME: And then he spent a year on that. And that's where we are.

KRISTOL: Can I just say, the one thing that Congress didn't do, it did not cut people's taxes. Rather, it did not stop the tax hike that's going into effect on January 1st. That, I think, is a huge problem for them. They have control --

WILLIAMS: Let me just respond.

KRISTOL: Leave aside the little debate between Republicans and Democrats. They have controlled Congress. They control the presidency. They knew taxes were due to go up on January 1, 2011. They are sending their members home without fixing the tax problem.

WILLIAMS: Let me just say, Brit, it has reduced what have been a 16 percent unemployment rate according to Republican economists.

WALLACE: All right. Thank you, panel. We'll see you next week.

And don't forget to check out the latest edition of "Panel Plus," where I promise this group will pick up right with this discussion at this moment. We'll get Brit's response on our Web site, We promise we'll post the video before noon Eastern Time.

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


WALLACE: While most of the attention is focused on which party will control Congress, there are 37 other races that could be even more important. And at the center of that action is our "Power Player of the Week."


NICK AYERS, EXECUTIVE DIRECTOR, REPUBLICAN GOVERNORS ASSOCIATION: It surprised me how governors in this town are so overlooked. People are so federally focused on the House and the Senate races, and always focused on the presidential race.

WALLACE (voice-over): Nick Ayers has changed all that in his four years in Washington. The 28-year-old political whiz kid is executive director of the Republican Governors Association.

AYERS: Hi. I was just reading the Executive Roundtable update.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: The motion is adopted.

WALLACE: And for all the talk about the GOP taking back Congress, he has built the RGA into the biggest political committee in town.

AYERS: It showed the American people that our party's ideas and philosophies and principles actually work. We have to begin doing that at the state level, where government is closest to families and where it can be felt the most.

WALLACE: Ayers' pitch is that federal change starts at the state level, and not just in policy. Governors will help determine congressional redistricting next year, and they will play a key role in the 2012 presidential campaign.

AYERS: David Axelrod will have a tough time drawing up a re- election scenario if we have more than 30 Republican governors, which is our plan to do in six short weeks.

WALLACE: At the ends of June, the RGA had more than $40 million cash on hand.

AYERS: A million here --

WALLACE: The Republican National Committee, which has had financial irregularities, have less than $10 million.

AYERS: We don't want to run the RGA like a political committee. We plan on running this place like a business. Our whole team began talking of things like return on investment, and really making the case to donors that this is the place in the country for you to send your contributions, because we're going to treat it like an investment, not like a donation.

WALLACE: Last November, with the RGA's support, Republicans won in New Jersey and Virginia. This fall, Ayers is targeting swing states like Michigan and Wisconsin and Florida, hoping to boost the number of GOP governors from the current 24.

(on camera): Why at age 10 were you a staunch Republican?

(voice-over): Ayers has always been in a hurry. Back in 1992, he tried to persuade his mother not to vote for Bill Clinton.

AYERS: I've just always believed in individual responsibility.

WALLACE (on camera): At age 10 you thought that?

AYERS: Yes, I really did. I always worked summer jobs, whether it was washing cars or cutting grass. I wanted to buy my own clothes, my own baseball card, my own bicycles.

WALLACE (voice-over): He quit college as a 19-year-old freshman to help elect Sonny Perdue, the first Republican governor of Georgia since reconstruction. It was Perdue who brought him to Washington.

Ayers plans to leave the RGA after November. He will be one of the hottest properties for Republican presidential candidates.

(on camera): Have any of the contenders approached you?

AYERS: Oh, look, we're all focused on 2010.

WALLACE: Have any of the contenders --

AYERS: We are focused on 2010. We're going to make a huge difference in six weeks.

More than 80 percent of the people in America are going to wake up and vote for a governor. And the idea that the RGA put ourselves in a position to impact who they're going to be deciding on Election Day is a wonderful opportunity.


WALLACE: As we said, there are now 24 Republican governors, and Ayers hopes to boost that to 30. But the record for the GOP is 33 governors. And you just get the feeling Nick Ayers has his eye on that.

Now this program note.

Next Sunday we'll be in Louisville, Kentucky, for the first Sunday show debate of the fall campaign. Our guests, Senate candidates Republican Rand Paul and Democrat Jack Conway.

And that's it for today. Have a great week. And we'll see you next FOX NEWS SUNDAY.