Reps. Paul Ryan, Chris Van Hollen Talk Policy, Politics; Justice Stephen Breyer on New Book

The following is a rush transcript of the December 12, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.


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

President Obama cuts a deal with Republicans on tax cuts that infuriates Democrats.


REP. LLOYD DOGGETT, D-TEXAS: This was a take-it-or-leave-it deal. We're saying leave it.



OBAMA: In order to get stuff done, we're going to compromise.


WALLACE: We'll talk policy and politics with the leaders in the new Congress of the House Budget Committee, incoming Republican chairman Paul Ryan, and top Democrat Chris Van Hollen, who opposes the compromise. And we'll ask our Sunday panel if the dust-up with Democrats will help or hurt the president.

Also, democracy in America -- the view from the Supreme Court. We'll sit down for a rare interview with Justice Stephen Breyer. It's a "Fox News Sunday" exclusive.

And our Power Player of the Week makes beautiful jewelry she calls wearable history, all right now on "Fox News Sunday."

And hello again from Fox News in Washington. Congress is likely to vote this week on that controversial deal President Obama worked out with Republicans to extend hundreds of billions of dollars in tax cuts. The big showdown is expected in the House where Democrats are threatening to kill it.

Joining us now, two key players -- from his home state of Wisconsin, Republican Paul Ryan, who takes over as chairman of the House Budget Committee next month, and here in Washington, Chris Van Hollen, who will be the top Democrat on the committee.

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

REP. CHRIS VAN HOLLEN, D-MD.: Good to be with you.

REP. PAUL RYAN, R-WIS.: Good morning, Chris.

WALLACE: Congressman Van Hollen, this week the House Democratic Caucus voted not to even bring this compromise to the floor for a vote, but that was non-binding.

So my question is as a member of the Democratic leadership, if the Senate -- and they're going to go first -- if they pass this compromise, will Speaker Pelosi bring this to a vote on the floor or not?

VAN HOLLEN: Well, this bill will come to the floor of the House in some form. Let me just say something, Chris.

WALLACE: You say it will come to the...

VAN HOLLEN: In some form it will come to the floor of the House for a vote. You know, this is -- House Democrats are being portrayed as people who haven't adjusted to the post-election reality, that we don't want to cut any deal at all. And there are some. There are some House Democrats who will refuse to go along with any deal.

Most of -- most of us understand we gotta make some tough compromises. Most of us agree with almost all of what the president negotiated. There is one thing that just was the choking point, and that deals with the estate tax break. It doesn't go to current law.

If you go with current law, you would have -- it's essentially $68 billion that it's going to cost the taxpayer over current law for 39,000 estates. We had a better compromise than that instead of the deal that was cut that provides $25 billion to 6,600 families.

That doesn't help the economy. It hurts the deficit. And most importantly, you know, the Republicans did not insist on the estate tax being part of the central portion of this deal.

WALLACE: But here's the question, then, and let's do just a little quick -- will -- if it passes in the Senate, and everybody expects that it will, will there be an up-or-down vote on the entire package?

VAN HOLLEN: There will be an opportunity for the House to work its will. What the form the bill takes as it comes to the floor is something that will be decided. People are looking at various alternatives. Again, the main sticking point for most people -- again, some are going to reject...

WALLACE: I understand.

VAN HOLLEN: ... is this particular issue with the estate tax.

WALLACE: So what do you predict is going to happen? Will the House pass this as it's -- now stands with some changes on the estate tax, or will it simply be voted down?

VAN HOLLEN: Well, I think it's unclear. I mean, the House will have an opportunity to work its will on this measure.

I am confident that when we get to January there will be no tax increases on middle-income Americans and certainly that -- also that portion of the president's deal with respect to the top rate earners will also be part of...

WALLACE: So that...

VAN HOLLEN: ... part of the deal.

WALLACE: ... you're convinced that there will be this compromise but perhaps would -- trying to take the estate tax section of it out?

VAN HOLLEN: I don't think anyone has put this question to the test. Are Republicans willing to hold up tax relief not just for middle-income Americans but also at the top rates and the whole rest of...

WALLACE: Well...

VAN HOLLEN: ... deal in order to provide a $25 billion break to 6,600 families?

WALLACE: All right. Let's ask Congressman Ryan. He's a member of the House Republican leadership and is going to be the new chairman of the House Budget Committee.

Congressman Ryan, let's put up what the issue is on the estate taxes. The compromise would set a 35 percent tax on estates over $5 million. But some Democrats, including Chris Van Hollen, want a 45 percent tax on estates over $3.5 million.

Question: Will Republicans accept any changes to this deal, especially on the estate tax?

RYAN: And so they're willing to hold up all of the other tax breaks, all of the other tax rates on middle-class families, on small businesses, so they can get this smaller increase in the estate tax.

I don't want to get into the "who's a hostage-taker" discussion here, but what is the estate tax? It's a double tax on death. Economists will tell you that it's really not a tax that soaks the rich, but it's a tax on capital that deprives business investment and therefore job creation.

But more importantly, this current policy -- we're at zero and then we're going to go to a 35 percent tax rate. That's not enough for Chris and other House Democrats and they're willing to scuttle the entire agreement, an agreement which has bipartisan support in the Senate, an agreement with the president of the United States to get this moving and prevent tax increases from hitting our economy, which would be very destabilizing, very volatile, in January.

I think if the president actually bows to this pressure and participates in scuttling this deal, then what does that speak to our ability to have competence and bipartisanship in this new era of divided government we're finding in (sic)? How well will we be able to reach agreements that will stick if people are angry in parts of the party and then they unravel these deals?

WALLACE: But, Congressman Ryan...

RYAN: So I think it's really important we stick with this agreement.

WALLACE: ... answer my question specifically.

RYAN: No. The answer is no. The answer is no. The answer is no, we are not interested in changing this deal. We're interested in passing this through.

WALLACE: Take it or leave it?

RYAN: Take it -- look, Chris, we already have an agreement with the president. We already have an agreement with some Senate Democrats. We want to go through with this. And we don't think there should be an estate tax, because it's a tax -- it's a tax that kills jobs. It kills inter-generational transfer...

WALLACE: All right.

RYAN: ... of businesses from one generation to the next.

WALLACE: I don't want to get into a debate...

RYAN: So we don't...

WALLACE: I don't want to get into a debate about...

RYAN: ... want to do this.

WALLACE: ... the legitimacy of the estate tax. But let me just ask you this. I assume, then, you're saying if the deal falls apart, Congressman Ryan, then the first order of business when Republicans take control of the new Congress...

RYAN: Yes.

WALLACE: ... after the first of the year is you will pass an extension of all the Bush tax cuts that would have...

RYAN: Yes.

WALLACE: .... gone down to defeat.

RYAN: Yes. So if the Democrats in the House scuttle this deal, we will -- that will be the first thing we do, is prevent these job- killing tax increases. And we'll do it retroactively after the first of the year.

WALLACE: Gentlemen, one of the president's main arguments in supporting this deal is that he believes that it will provide a big boost to a very weak recovery that we're undergoing now.

And in fact, he's backed up on this by respected economist Mark Zandi, who made this following projection, and let's put it up on the screen. This is for 2011. He says the compromise will increase GDP growth by 1 full percentage point and new jobs next year will jump from 1.2 million new jobs to 2.8 million.

So question for you, Congressman Ryan, because you're getting some heat from the right wing of your party, did Republicans in the end agree to give Barack Obama a second stimulus?

RYAN: Well, this is a compromise, and there are parts of this bill I do not like. I know Mark Zandi. I've looked at his models. I disagree with his conclusions. There's a lot of demand-side Keynesian spending stimulus in here that I don't think will work and produce those kinds of results.

But the worst thing we can do is hit this economy with an across- the-board tax increase on everybody in January. So I don't see this bill as a stimulus. I see this bill as preventing damage, further damage, from being done to the economy, but not as injecting pro- growth into the economy.

So I don't see it as what Zandi sees it as, but if we don't pass this, then we will have damage...


WALLACE: Well, I don't understand. Why -- I mean, I understand that stimulus has become a politically loaded word, but why isn't it a stimulus? Tax cuts are a stimulus. You guys think that they're the best kind of stimulus.

RYAN: Look, only in Washington is not raising taxes considered a tax cut. Nobody's getting a tax cut here. We're not cutting taxes. We're preventing tax increases from occurring.

If we were actually cutting tax rates, then we might have a stimulus. We're not actually cutting tax rates here. We're simply preventing them from being increased. That is why we do not see this as particularly stimulative. It just prevents bad policies going forward.

WALLACE: Congressman Van Hollen, are Democrats really going to even consider blocking -- and because you're talking about continuing to fight over the estate tax -- are you going to consider blocking an $858 (sic) -- call it what you will, but I'll call it a stimulus -- because of a difference over the estate tax of less, we say, than $7 billion, according to CBO, between your plan and the Republican plan?

White House advisor Larry Summers says if you don't pass this there's a good chance we'll get a double-dip recession.

VAN HOLLEN: Chris, we're not talking about blocking the whole thing for that purpose. What we're saying is we need to put this question to the test. Are the Republicans and others willing to say no to exactly what you're talking about, $800 billion-plus in tax relief and stimulus, or at least, as Paul says, making sure things don't get worse with respect to the economy, in order to provide 6,600 families with a $25 billion tax break?

Now, what Paul didn't mention was that the way they set up the estate tax, while it...

WALLACE: But -- but -- but -- I understand...

VAN HOLLEN: ... while it was eliminated this year...

WALLACE: ... but I understand -- let me just say...


WALLACE: I understand that you want to say, "Well, it's them blocking it," but the president has made a deal with Republicans. You're the odd man out -- you, the House Democrats.

VAN HOLLEN: Well, the president made a deal with the Senate Republicans.


VAN HOLLEN: There's no doubt about that. As somebody who was involved in the official talks, not the back-channel discussions, I know -- and to the credit of the Republicans, they did not say that this better deal on the estate tax was essential to the core deal.

If you follow the back and forth of the administration...

WALLACE: But it's in the deal now.

VAN HOLLEN: Well, the fact of the matter is it was not central to the deal, and so -- and there's a simple question. We're not going to hold this thing up at the end of the day, but we do think that simple question should be put to the test. Nobody can argue that that $25 billion ...

WALLACE: And the simple question is the estate tax.

VAN HOLLEN: The simple question is...

WALLACE: But you're saying -- I want to key into what you said.


WALLACE: You said we're not going to hold this up at the end of the day. So you're saying at the end of the day -- you may want to vote on this, but at the end of the day you're not going to hold this deal up over the difference in the estate tax.

VAN HOLLEN: Well, we're going to make sure that question is put to the test. We're going to ask...

RYAN: Right.

VAN HOLLEN: ... the Republicans and others...

RYAN: Hey, Chris?

VAN HOLLEN: ... are they going to block this entire deal in order to protect, you know, $25 billion for 6,600 people.

WALLACE: Congressman Ryan, go ahead.

VAN HOLLEN: That is the question.

WALLACE: Go ahead, Congressman.

RYAN: Well, so I think Chris just made some news. That's fairly noteworthy because as of just a day or two ago, we were thinking they were going to do a take-it-or-leave-it thing on their perspective and scuttle this entire agreement.

If what Chris Van Hollen is saying is they're going to let this agreement come to a vote and they're not going to play any -- they're not going to rig the rules with the amendment process, then we might be able to move forward here. So that's interesting to me.

I would simply say this. Look, class warfare might make for good politics, but it makes for rotten economics. And at the end of the day we have to ask yourselves questions in this country.

Are we interested in treating the symptoms of poverty and economic stagnation through income redistribution and class warfare, or do we want to go at the root causes of poverty and economic stagnation by promoting pro-growth policies that promote prosperity?

WALLACE: Gentlemen...


WALLACE: Wait, wait, wait, wait.

RYAN: But if Chris is saying...

WALLACE: Wait. I'm going to -- I'm going to give you a chance to respond. But, gentlemen, we've got three minutes left and I've got a Supreme Court justice in the wings here. So let me proceed a little bit.

Congressman Ryan, you are taking over, as we mentioned, as the new chairman of the House Budget Committee. But the fact is for all the talk about cutting the deficit, this plan will increase the deficit, according to the CBO, by $858 billion, almost a trillion dollars.

So let me ask you, even -- if you pass this, what do you plan to do to cut the deficit in your first three months in power with the new Republican majority in the House? What do you plan to do to cut the deficit? And will you move to bring down the tax deductions, a trillion dollars in tax deductions, and dramatically decrease the tax rates?

RYAN: So number one, what we're going to do is what the Democrats didn't do. We're going to cut spending. I mean, I find it sort of interesting that after this massive spending spree that took place over the last two years, the creation of two new health care entitlements, now there's concern about deficits when they have a chance of raising taxes.

We are not interested in raising taxes. $544 billion of that package you're talking about are simply keeping taxes where they are. The other $313 billion of this package is some of the spending stuff that you're talking about. So we don't want to see spending. We're going to come out of the gates going after spending, Chris, spending cuts, spending controls, reforms of the structure of spending. And if we get to the point of doing tax reform, which I think is an important way to go, we should go with broader based lower rates for economic growth.

Erskine Bowles, Alice Rivlin, centrist Democrats, agree with that premise. And I would love to see the chance of getting a compromise so we can have good pro-growth tax reform, which is not tax increases but lowering tax rates so we can have economic growth in America.

WALLACE: I've got a minute left.

RYAN: That to me is a step in the right direction. We'll see.

WALLACE: I've got a minute left. I want to talk to Congressman Van Hollen.

In the House Democratic Caucus this week, members were chanting "Just say no." You said the White House, quote, "got taken to the cleaners." And I want to put up what the president said about you guys. Here it is.


OBAMA: People will have the satisfaction of having a purist position and no victories for the American people. And we will be able to feel good about ourselves and sanctimonious about how pure our intentions are and how tough we are.


WALLACE: Congressman Van Hollen, how much anger is there among liberals with President Obama at this point -- House liberals? And do you anticipate the possibility of a primary challenge from the left against President Obama in 2012?

VAN HOLLEN: The short answer is no to that last question.

WALLACE: No challenge.

VAN HOLLEN: No. There's no challenge. Look, everybody's on the same page. Everyone supports the same agenda. And there are some in the Democratic Caucus that would never go along with any compromise.

I think most people, however, just believe that on this issue the administration did get out-negotiated. We know for a fact that they gave this up in order to get about $36 billion of refundable tax credits when, in fact, the estate tax -- if it goes to current law in January, it's $68 billion. It's just not -- not a bad trade.

WALLACE: But you see a continuing problem.

VAN HOLLEN: You know, Paul -- we're going to have to -- this rhetoric about class warfare -- we're not going to be able to advance a discussion in this country if we always get into that. The fact of the matter is it's very reasonable to ask the wealthiest estates to pay their share. We did that since Teddy Roosevelt, a Republican president.

Number two, I want to make something clear. What I said was that the bill will -- the House will have an opportunity to work its will. What form the bill comes to the floor in is something that's being discussed right now.

I think there are areas of common ground. I think tax reform next year, where you remove a lot of these deductions and reduce the rates, is something I hope we could find common ground on going forward.

WALLACE: Congressman Van Hollen, Congressman Ryan, we want to thank you both so much for coming in and previewing a very big week for us in Washington. Gentlemen, you're going to be the chair and the ranking Democrat on the House Budget Committee. Both of you, please come back.

VAN HOLLEN: Thank you.

RYAN: Thanks, Chris.

WALLACE: Up next, a rare and exclusive live interview with a sitting justice on the Supreme Court, Stephen Breyer, next.


WALLACE: We are delighted to be joined by our next guest, Supreme Court justice Stephen Breyer, who's just written a controversial new book about the role of the court in American life called "Making Our Democracy Work."

And, Justice Breyer, welcome back to "Fox News Sunday."


WALLACE: In your book you explain your judicial philosophy, and I think it's fair to say it's going to make some conservatives break out in hives, because you say that the Supreme Court should take a pragmatic approach to interpreting the law, and you write this. "The court should regard the Constitution as containing unwavering values that must be applied flexibly to ever-changing circumstances."

What ever happened to just applying the law as written?

BREYER: Ah, the law as written. That is what is applying the law as written. Look, as you read this document...

WALLACE: The Constitution. Why don't we widen out to show...

BREYER: ... it shows -- I mean, turn to any page. It uses words like liberty. It uses words like interstate commerce. It uses words like the freedom of speech. They stand for values. They don't tell you how to apply those words to the world of the Internet.

The founders didn't know that commerce included airplanes. They didn't know about the Internet or even television. And so the difficult job in open cases where there is no clear answer is to take those values in this document, which all Americans hold, which do not change, and to apply them to a world that is ever changing.

WALLACE: OK. But I'm going to take an example which you mention in your book which would seem to a lot of people not to be an open case of an unforeseen possibility, but to speak directly to the words in that booklet, gun control.

Let's put up the Second Amendment to the Constitution, which says this. "A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms" -- the right of the people to keep and bear arms -- "shall not be infringed." Now, Justice, I understand why, as a matter of policy, in a world with a lot of urban violence and big cities, that some people would say we need gun control, particularly in a big city like Washington, as they have here, and in Chicago.

You ruled in both of those cases. And in both cases the court voted twice over your dissent that the founders meant what they said, people have a right to bear arms.

BREYER: Yes. Yes. That's a wonderful example because, of course, it's not a matter of policy. It is a matter of what those framers intended. And you saw that first phrase, "A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed."

What does that mean, the militia? Historians told us, and the dissenters thought they were right, that what that meant was that James Madison, thinking, "I've got to get this document ratified," was worried about opponents who would think Congress would call up state militias and nationalize them. "That can't happen," said Madison.

And therefore, he wrote the Second Amendment to prove it. Now, if that was his motive historically, the dissenters were right. And I think more of the historians were with us.

WALLACE: But -- well, the may -- more of the historians may have been with you...


WALLACE: ... but not most of the justices.

BREYER: Ah. But if you're interested in history, and in this one history was important, then I think you do have to pay attention...

WALLACE: But -- but when...

BREYER: ... to the story.

WALLACE: ... it says in the Constitution -- when it says the right -- not for militia -- it says the right of the people to keep and bear arms, when you start talking, as you do in your book, about changing circumstances and real-world consequences, aren't you acting as a politician or a policy maker and not as a judge?

BREYER: No. We're acting as judges. If we're going to decide everything on the basis of history -- by the way, what is the scope of the right to keep and bear arms? Machine guns? Torpedoes?

WALLACE: Well, in the case...

BREYER: Handguns?

WALLACE: Well...

BREYER: Because I'm just pointing out...


WALLACE: I understand. But it certainly didn't provide for a ban, at least that's what the court's decision was, your court's -- it didn't provide for a ban on all handguns as they have here in Washington, D.C.

BREYER: Are you a sportsman? Do you like to shoot pistols at targets? Well, get on the subway and go to Maryland. There is no problem, I don't think, for anyone who really wants to have...

WALLACE: But -- but it's...

BREYER: ... a gun.

WALLACE: ... but that's a policy issue. That's not a constitutional issue.

BREYER: Ah, the freedom of speech. Liberty. How do those words apply? How do they apply to the Internet? How do they apply to this program if you were to decide to put on the program a document that showed how to make a bomb?

How do they apply to the Internet in recent cases that we have seen being discussed? What a difficult question. And I'll tell you we can find the answer to this question in large part by looking at the values that Madison, Hamilton and the others wrote in this document.

And it's very hard to find the answer to those questions by looking at the word, because the word is liberty. And it's very hard to find the answer to this question by just thinking, "I'm going to see what Madison thought about the Internet..."

WALLACE: Now, I'm going to ask...

BREYER: ... because he didn't -- I'll tell you right now, he didn't -- honestly, he did not think about the Internet.

WALLACE: I suspect we would agree on that.

I'm going to ask you a question and I want you to -- because I know you're going to -- you're going to break out in hives here. A federal judge in Virginia is expected to rule tomorrow on whether the individual mandate to health care reform is constitutional.

I'm not asking you, because it will almost certainly come up before the court, what your opinion is. But in your book, you talk about the court needing to maintain public confidence. So my question is how is that possible to maintain...

BREYER: Oh, what a -- what a good question. What a good question.

WALLACE: How is -- how is it possible -- when the country is so sharply divided, has been debating an issue for year, all of the politicians, and at some point over the next few years the nine of you in your robes are going to come from behind that red curtain and you're going to declare it's -- the individual mandate is legal, is constitutional or not constitutional, how do you maintain public confidence there?

BREYER: Well, the main point is I can tell you how not to do it. The way not to do it -- hold your finger up to the political winds. That's not the job of the judge. The judges are not politicians. They're not junior league politicians and not senior league politicians.

And what I want to get across here is how difficult it is to maintain public confidence over a long period of time. Did you know Andrew Jackson, after the court said the Cherokee Indians are entitled to northern Georgia -- that he sent troops to drive them out of northern Georgia? You see? So when you want a positive answer, I will tell you what we do is we look to the text, the history, the traditions, the precedent, the values that underlie the particular constitutional phrase, and consequences that if you decide this way, does it further the values or does it undermine the values.

WALLACE: And is there a right or wrong answer, I mean, to whether or not the individual -- I'm not asking you what your answer is. Is there a right answer to whether or not the individual mandate is constitutional?

BREYER: Many, many years ago, a rabbi told me that people differ on what is right and wrong but that there is a right and that there is a wrong. They cannot differ.

And so the judges, of course, may differ because the questions are difficult. But in the mind of each judge, he has decided the way that the Constitution requires that decision to go.

And to help others who are not judges, we write opinions. And those opinions are truthful. Those opinions are truthful in that they express the true reasons of the judge. And to get to those opinions we sit around a table like this. And I have never heard a voice raised in anger around that table. Never. Never.

And I have always heard an effort among people who are professionals and who like each other personally well to try to bridge differences and decide according to reason and these values.

Now, I right this book in part because we are at a time when people do, in fact, have problems of trust in institutions. And I want to show how my institution, the court, has gradually earned the trust of Americans.

WALLACE: I want -- I want to ask you about that, because you were at last year's State of the Union address where President Obama went after the justices, with you sitting right beneath his podium, for the ruling that they had made in the case of Citizens United, which was basically that private corporations can contribute money in candidate elections. And let's watch that moment.


OBAMA: Last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests, including foreign corporations...

(APPLAUSE) spend without limit in our elections.


WALLACE: Now, you were on Mr. Obama's side in that case, but do you see anything wrong with a president calling out the justices and having members of his party stand up, surrounding them and jeering them?

BREYER: My job, Chris, is to write opinions. The job of 307 million Americans is to criticize those opinions. And what they say is up to them. And the words I write are carrying out my job under the law as best I see it.

WALLACE: But do you...

BREYER: That's true of my colleagues.

WALLACE: But do you have any problems participating in an event like that?

BREYER: Oh, going to the State of the Union?


BREYER: I'll go next year. I've gone every year. I think it's very, very, very important -- very important -- for us to show up at that State of the Union, because people today, as you know, are more and more visual. I'd like them to read, but they are visual.

And what they see in front of them in that State of the Union is the federal government, every part -- the president, the Congress, the cabinet, the military, and I would like them to see the judges, too, because federal judges are also part of that government.

WALLACE: But -- but -- but...

BREYER: And I want to be there.

WALLACE: ... respectfully, sir, Chief Justice Roberts disagrees with you about that event. Let's listen to what he had to say.


CHIEF JUSTICE OF THE SUPREME COURT JOHN ROBERTS: The image of having the members of one branch of government standing up, literally surrounding the Supreme Court, cheering and hollering, while the court, according to the requirements of protocol, has to sit there expressionless I think is very troubling.


WALLACE: Is Chief Justice Roberts wrong, sir?

BREYER: He -- that's his opinion. He says what he thinks. And I say what I think. And what I think is what I said. I'll be there next year.

WALLACE: Let me just present sort of a law school hypothetical -- I love the fact that I'm going...


BREYER: ... freedom of speech.

WALLACE: No, I understand -- I understand that. But let's say this was 1954, and the court had just decided Brown versus Board of Education, and you had a segregationist president who was very much opposed to it, and he's calling out the justices there at his feet for having decided that you can desegregate -- or you must desegregate schools, and a segregationist Congress is jeering them. Is that good for democracy?

BREYER: Do you want to know the best thing about my job, which is a direct response? The best thing about it emotionally is I sit in my chair every day and I see people of every race, every religion, and every point of view.

And my mother used to say there is no point of view so odd there isn't somebody who doesn't hold it in this country. And all those people, 307 million, who have so many different points of view, who are of so many different backgrounds -- they come in to their -- that court -- they come into the courts to decide differences under law, differences that in the other countries might drive them into the streets and kill each other.

I'll tell you, it is a privilege to sit there and see that happen.So I'm used to people thinking different things. It doesn't bother me and part of me says, "Good."

WALLACE: And you'll be at the next State of the Union...


WALLACE: ... even if you're the only one there.

BREYER: Absolutely.

WALLACE: Justice Breyer, it's a -- it's an honor to talk to you again, sir. Very interesting book. And as you said -- let me just quickly give a little plug here -- there are a number of stories about the Cherokees, about the Dred Scott decision.

Guys, look at me. Right here. Bob? Thank you.

There are a lot of good stories about the Cherokees and Dred Scott and the Little Rock school desegregation well worth reading.

Justice Breyer, thank you so much for coming in today.

BREYER: Thank you.

WALLACE: I very much appreciate it. Stay there. Wait a moment.

Coming up, our Sunday panel on the tax cut compromise and the very public fight between the president and his own party.



PRESIDENT BARACK OBAMA: I think it's tempting not to negotiate with hostage- takers, unless the hostage gets harmed. Then people will question the wisdom of that strategy.


WALLACE: President Obama describing the choice he faced in compromising with Senate Republicans to extend all the Bush tax cuts.

And it's time now for our Sunday group: Bill Kristol of The Weekly Standard; Mara Liasson of National Public Radio; Fox News digital politics editor, Chris Stirewalt; and Fox News political analyst, Juan Williams.

So, President Obama, we just showed that clip, but he fired at all sides at that news conference earlier this week. He compared Republicans to hostage-takers for insisting if they didn't get the tax cut extension for the wealthy, they were going to fight and kill the tax cut extension for the middle class. And as we mentioned earlier, he attacked liberals as purists and sanctimonious for criticizing the deal.

But before we get to the politics, Bill, let's talk about the substance. Is this deal good for the economy? And what about the question of adding basically adding another $1 trillion to our debt?

BILL KRISTOL, THE WEEKLY STANDARD: Yes, it's good for the economy. Some of us have been arguing for a year that keeping current tax rates where they are is much better than allowing them to rise.

A cut in the payroll tax has been something conservatives have always thought was one of the best taxes you could cut on labor, especially a tax cut on labor at a time of high unemployment. The estate tax is what Jon Kyl, a leading Senate conservative, has been for. The estate tax compromise is what he has been arguing for, for years.

So, there are a few things in the deal that most of the conservatives won't like, but this is a very good deal from a conservative point of view. Jim DeMint is against the deal, because he's against sort of any deal, I think, honestly. Jim DeMint said that Senator McConnell had gotten the best deal we could get, he said. I agree with that.

WALLACE: Mara, we mentioned that a number of economists say that this is going to be very stimulative to on the economy -- I know that's a dirty word, "stimulative" -- but that it will increase GDP by at least one percentage point, that it will increase the number of jobs by more than a million new jobs. But given the fact that so much of this deal, as Paul Ryan rightly pointed out, is not new tax cuts, but keeping tax rates where they are, does the White House really feel it's going to create that much of an economic boost?

MARA LIASSON, NATIONAL PUBLIC RADIO: Well, their own economists say that it will. And more importantly, Larry Summers said if it isn't passed, we could face a double-dip recession. So, it's not so much whether continuing the existing tax cuts are, in and of themselves, going to be this huge boost. It's what happens if you raise everybody's taxes in the peak of a recession. That's not so good.

And as far as increasing the deficit, what this does in the short term, that's really different. We're starting this big debate in Washington about the deficit -- debate about the long-term deficit -- and I think people get confused between the two. It does seem ironic that the first act of the new Tea Party-fueled Republican Congress is going to be to add almost $1 trillion to the deficit, but this is only a two-year deal.

WALLACE: Chris, our friend and dear colleague Charles Krauthammer wrote a column at the end of the week called "Swindle of the Year: How Obama Snookered the GOP Into a Second Stimulus." So he's using the S-word.

Question: Did the president hook one over on the Republicans?

CHRIS STIREWALT, DIGITAL POLITICS EDITOR, FOX NEWS: Well, I want to say Charles really took the bark off of him. I mean, he really laid the wood to the Republicans. And I think they're smarting from it.

I think he shifted the discussion. So, all credit to Charles on that one.

This is probably the stimulus package that we would have seen if John McCain had won the election in 2008. We would have seen this --

WALLACE: The first stimulus package?

STIREWALT: The first Obama stimulus. Instead of that, you would have seen a package almost exactly like this, probably a little more generous, that you would have seen in 2009.

So, Republicans can complain, and the deficit stuff is unpalatable. But when I talk to the people on the Hill in the Senate, who are from very Republican offices, very conservative Republican offices, in the end, they have to say, are we willing to blow up everything and see the economy get shattered over this? And I don't think they are.


JUAN WILLIAMS, FOX NEWS CONTRIBUTOR: Well, I think if you look at just the hard facts -- Goldman Sachs, Wells Fargo -- even liberal economists say this is a good package, that this is going to boost the economy. So, when you stop and think about it in that sense, it puts everybody in a position of saying, are you for us keeping a trajectory that leads us out of the recession, or are you willing to take the risk of allowing the country to sink backwards? It's just too big a risk, and it's why politically, I think, the president was in the right posture.

Now, the difficulty is the tax cuts from the perspective of the left. It's not the case that the country needs more tax cuts, and especially not for the very rich in this country. If you look at tax cuts as a percentage of GDP, I read this week, it's -- you know, we're at a low for the last 60 years. But you would never know that listening to the Republicans in this country.

WALLACE: You're talking about the total amount of revenue we're getting as a percentage of GDP.

WILLIAMS: Right. And so -- I mean, people complain about taxes, but it's taxes on the very rich. And so the question is, well, why aren't the rich making sacrifices? And that's why you see people saying, well, wait a second, is President Obama giving everything away?

And even conservatives, the Wall Street Journal, The National Review, they all say President Obama capitulates, that he, instead of focusing on increased spending at the stimulus method, is now saying yes to spending cuts -- to tax cuts, I should say. And so the tax cuts, this is what Chris was talking about. If this had been John McCain, it would have been the focus on tax cuts.

WALLACE: Bill, I want to look at this from a slightly different angle though. Republicans have all the leverage here because they didn't have to agree to extend the unemployment benefits. They didn't have to agree to extend a lot of the goodies, the tax credits, the clean energy grants from the stimulus bill. They could have just said look, if you don't want to pass the extension of the cuts, we'll wait until the end of the year, and the first order of the business, when the Republicans come in, as Paul Ryan said, we'll pass extension of the tax cuts.

So why did they give Obama so much?

KRISTOL: Because they don't have all the leverage, because Barack Obama is still president of the United States. And as we learned in the fight in 1995, '96, when Republicans had both houses of Congress, remember, against a very weakened Bill Clinton, being president counts for a lot.

And do Republicans really want to begin the new Congress -- which they don't control the Senate, incidentally -- by saying, forget about unemployment insurance? People have been out of work 95 weeks. Most of them, this data shows, want jobs. Most of them aren't sitting around enjoying those unemployed benefits.

I mea, I think unemployment insurance is problematic from an economic point of view, but most of those people who are unemployed would like work. The Republican position at the beginning of a new Republican House is going to be, we insist on -- entirely on the purist version of extending current tax rates. None of these tax extenders, which a lot of Republicans have voted for over the years, incidentally -- a lot of these tax extenders were passed in a Republican Congress. No unemployment insurance, it's an untenable position.

My friend Charles Krauthammer, I think he can be pure, but an actual Republican senator or congressman should take this deal now. Then you can begin the Republican Congress by repealing Obamacare and cutting discretionary spending.

The great thing about this deal is it takes taxes off the table. We now have -- I mean, this is why Juan doesn't like it -- tax cuts. There will be no hike in taxes for the next two years, and now we can debate cuts in discretionary spending for the next two years.

WALLACE: How, Chris -- one last thing. We've got less than a minute left. How seriously should Republicans take complaint from the Tea Partiers, hey, not that you got a lower deal than the Democrats, but you reinitiated the death tax, as they call it? Because it was at zero, and now it's going to be up at 35 percent. And you spent billions of dollars in the case of unemployment compensation without paying for it.

STIREWALT: It's unseemly. And I think Bill's right, the deals themselves aren't huge. But it's unseemly.

When you hear stuff about wind farms, when you hear ethanol credit, when you hear these buzzwords, it's very unseemly. So, this is knock to the credibility of the Republicans as they come in, and it means that they're going to have to work that much harder once you push the reset and say this is now the 112th Congress, not the 111th Congress, and we're going to do it.

WALLACE: All right.

We have to take a break here, but when we come back, we'll continue this discussion. And we'll turn to a White House briefing like none you have seen before. Two presidents, one lectern. You won't want to miss it and what our panel has to say.



OBAMA: I've been keeping the first lady waiting for about half an hour, so I'm going to take off.


OBAMA: You're in good hands. And Gibbs will call last question.

CLINTON: Yes. Help me. Thank you.

Yes. Go ahead.


WALLACE: You know, you just can't beat that. President Obama and former President Clinton at an impromptu briefing, where Mr. Obama finally gave up and let Mr. Clinton keep talking and talking.

And we're back now with the panel.

So, first, we do have to discuss this political theater.

Mara, Bill Clinton taking over the White House press room as Barack Obama slipped away. Have you ever seen anything like this?

LIASSON: No. And look, I covered Bill Clinton, I was in the press room when he was president. It was just incredible. I loved every single minute of it.

The most important words in that bite you just played was, "Please go."


LIASSON: "Please go." You know, please, go.

And he held forth, and he is the master at putting economic issues into simple, ordinary terms that people can understand. He made a great case for the package.

You know, it was interesting, in contract to President Obama's press conference earlier in the week, where he basically said -- although he said good things about the package and he gave the correct economic argument, he also said, I had to do this, they wouldn't budge, they're hostage-takers, my own guys are purists and --

WALLACE: Sanctimonious.

LIASSON: -- sanctimonious. So it was really an incredible contrast.

But I do believe if that President Obama is re-elected, the people who write the books on it will show this week as the week when things started to turn around for him. Not only with the deal itself, but also the fact that the White House seems to have gotten over its kind of Clinton phobia, where they used to askew everything and every strategy that Clinton ever did, and now they realized there is something to learn from what Bill Clinton did when he had divided government. They called him in and talked to him, and walked right down to the press conference.

Obama shows that he has no problem with that. A good sign about a leader.

WALLACE: And the more important question, at least in the short term -- let's not worry about 2012 quite yet -- is, did Clinton help the president sell this package, especially to the liberal Democrats who say that Obama gave up too much and gave up too quickly?

WILLIAMS: Well, the president is using a numbers of surrogates, including Vice President Biden. But yes, the idea that you can have Bill Clinton willing to stand there and make the case and make some phone calls and twist some arms is a big benefit.

Chuck Schumer, the senator from New York -- I guess he's like number three in the Senate, technically -- you know, he was making the case that he's not for this package, that President Obama should have really put it to Republicans. Let it expire and say that the Republicans are punishing every American who makes less than $250,000 by not allowing their taxes to be reduced starting in the new year, and then create a package of tax cuts to please Republicans that would say these are the Obama tax cuts.

So, don't negotiate on to Republican terms, negotiate on your own terms, Democratic terms. But, ultimately, I don't think that was political salable. And people like Bill Clinton are making that case, that right now, the president got a good deal and he's able to go forward in a good economy and say I got you the tax cuts, you can see it in your paycheck if you're a working American. If you're seeking an education benefit, here it is.

Those are good steps for the American people. And for Democrats, they're just good politics, despite the promise by Anthony Weiner and John Conyers and the like to stop this in the House. You watch.

What's going to happen is there's going to be so much political pressure, that the House is not going to have a choice. All the stuff Van Hollen was telling you this morning, yes, they're going to have a vote. They're going to have a vote and they're going to pass it.

WALLACE: The subtext in all of this, Bill, is that after his midterm shellacking, Bill Clinton moved to the center and won reelection. Is that what Obama began to do this week, making his deal with the Republicans to pivot to the center? And how do you think that will work for him?

KRISTOL: Yes, that's exactly what he did.

We predicted this, I think, the Sunday right after the show. Everyone's like, oh, he's such an ideologue, he'll never move to the center, he can't do what Clinton did. Remember that debate that took place for a couple of weeks after the election -- could Obama pull a Clinton?

Obama has literally pulled a Clinton. He's standing there with Bill Clinton.

And Barack Obama and Bill Clinton stood up there and defended the Bush tax rates and the Republican estate tax proposal. Let's just think about that for a minute. They weren't defending the Clinton tax rate, they weren't defending the Obama tax plan.

LIASSON: Well, they were also defending the payroll tax cut and --

KRISTOL: And the payroll tax cut, which is something Republicans have liked for a long time.

Anyway, I'm saying from a policy point of view, this is a big move to the center by President Obama, followed, incidentally, on his symbolic little freeze for government workers' pay, which is something Republicans have been for; the South Korea free trade agreement, something Republicans have been for. He's going to sustain the surge in Afghanistan.

Remember that December review where Obama was going to begin pulling out? No way, no how. David Petraeus is in charge of Afghanistan.

So, the president ahs pivoted to the center, which is good for the country. It's good for conservatives. I do think it helps his reelection prospect some because --

WILLIAMS: Tremendously. Absolutely.

KRISTOL: -- being a moderate conservative --


WALLACE: But you have this continuing fracture now between this president, who seems to be moving to the center, and a House Democratic Caucus, the defeat (ph) of retirement of so many of the Blue Dog, moderate and conservative Democrats, is more liberal than ever.

Do you think that's going to be a continuing source of tension?

STIREWALT: Barack Obama is president of the United States in large part because the Democratic base did not like Bill Clinton's triangulation. Democrats were angry in 2008 at Hillary Clinton, not just because she voted for the Iraq War, but because here husband had shifted and because he had played the Dick Morris card in 1995. So, he's got base problems.

Now, if he can effectively reach to the middle, if he can go out there and say, I am a centrist -- forget about Obamacare, forget about what we did in the first two years, I'm a centrist, I can live in the middle -- if he can successfully make that sell, he's going to be OK. But if people don't buy that, and he can't use tax cuts and deficit reduction as a way to get there, his base is going to eat him alive.

LIASSON: I so disagree with that. I so disagree with that.

He's not going to say forget about Obamacare. People forget, it's not just a simple moving to the center.

What Bill Clinton did and what Barack Obama is going to do is he's going to make some deals on some issue, but he's going to really fight on others. And one of them is going to be Obamacare and financial reform and student loan reform.

And he's going to, I think, vault above some of these old arguments by using tax reform and deficit reduction, which are kind of the next huge debates that we're going to have in Washington, to frame an argument about growth and competitiveness, where he finally can control the terms of the economic debate, where he hasn't been able to up until now.

WALLACE: Wait, wait, wait. We have a minute left, and I want to ask Juan, how do you see the president's relationship with Nancy Pelosi and the House Democrats?

WILLIAMS: I think this is the key question. But if you look at the numbers right now, his base -- you know, he's still pretty popular. I think 80 percent of Democrats approve of President Obama. And then if you think about the African-American vote as key to the Democratic base, and any potential reelection effort, there is no way that Russ Feingold, Howard Dean, Nancy Pelosi or any of those people is going to say, yes, we're going to launch a primary challenge --

WALLACE: Not a primary challenge. But why were they going after -- I mean, you heard, you know, if it's take it or leave it, we're going to leave it, the president got snookered.

WILLIAMS: Look, they want to make their case. I think that they feel that they got pushed out of the negotiations.

But I think the president and the White House were wise to do it because it was in the president and Democrats' best political interest, even as these folks feel like they have been ignored and pushed out. The case was being made that, you know what? You've got to have to have a Senate and a House to have a deal, and this was only a Senate White House deal.

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

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

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


WALLACE: Chances are you've never heard of her, but you have seen her work. If there's a big event in Washington, from a joint session of Congress, to a State Dinner, you can see what she does.

Here is our "Power Player of the Week."


ANN HAND, JEWELRY DESIGNER: I'm a designer at heart, and it just was something that seemed like an easy thing for me to do.

WALLACE (voice-over): Ann Hand is talking about the beautiful jewelry she has created over the last two decades. Celebrating American patriotic symbols like the liberty eagle and our flag, she calls it wearable history.

But what's remarkable is how often her pins and necklaces, earrings and cufflinks have been part of history.

HAND: I didn't know about a lot of these things until I actually see it on, like, your show or in the newspaper. So, of course when that happens, we're just ecstatic.

WALLACE: When Madeleine Albright was named secretary of state, she wore the eagle pin.

HILLARY CLINTON, FIRST LADY: This vast right-wing conspiracy that has been --

WALLACE: When Hillary Clinton defended her husband in the Lewinsky scandal, she wore a similar one.

But Hand crosses the partisan divide. Laura Bush wore her necklace at a White House dinner. Sarah Palin wore her pin to talk with Barbara Walters.

HAND: I started in my basement, actually, at a table right next to the washer and dryer.

WALLACE: Ann and Lloyd Hand came to Washington in the '60s. Lyndon Johnson named him chief of protocol.

HAND: It was a fairy-tale. I was 31 years old. He was 35. We had the responsibility of the diplomatic core, and I never met an ambassador.

WALLACE: They were one of Washington's golden couples until 1988, when their 27-year-old son Tommy was hit and killed by a car. She turned to making jewelry as a kind of grief therapy.

HAND: I would find myself beading, working with beads and patterns, long into the night. And I would shut out the rest of the world.

WALLACE: Friends started buying items out of her home. In 2001, she opened this store. But for all the power players who wear her creations, some are surprisingly affordable.

(on camera): How much does this cost?

HAND: The sterling silver version costs $150.

WALLACE: You can get a pin very much like what Secretary Clinton --

HAND: Oh, yes. Oh, absolutely.

WALLACE: -- or first lady Laura Bush --

HAND: Yes.

WALLACE: -- for $150?

HAND: Yes, absolutely.

WALLACE (voice-over): Hand has a special feeling for the military.

HAND: Does that please you?

UNIDENTIFIED MALE: Everything in here pleases me. That's the problem.


HAND: Thank you.

WALLACE: The day we were there, she and her granddaughter Ashley (ph) were helping a member of the Air Force.

HAND: What did you fly?


HAND: Oh, wait.

WALLACE: She has created special pins for each branch of the armed services. She says she never planned to do an American collection. It just worked out that way.

HAND: And all of a sudden I realized it was. And I thought, this is what I want to do. And so I tell the story of America in silver and gold.


WALLACE: Ann Hand says business is picking up this holiday season, and she hopes it is for other small business owners.

If you're interested in checking out what she has got for sale this Christmas, go to her Web site,

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

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