The following is a rush transcript of the January 16, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.
CHRIS WALLACE, HOST: I'm Chris Wallace and this is "Fox News Sunday."
(BEGIN VIDEO CLIP)
WALLACE (voice-over): He is making waves for his tough approach to cutting taxes and spending in his state. Now other governors are following the example of this rising political star. We'll sit down with the Republican Governor Chris Christie of New Jersey.
Then the battle for the 2012 GOP presidential nomination heats up. We'll talk with one of the most likely front-runners, Former Minnesota Governor Tim Pawlenty. Christie and Pawlenty, only on "Fox News Sunday."
Also, we'll get an update on the tragedy in Tucson and we'll ask our Sunday panel if the rhetoric from the memorial service will change the political reality here in Washington.
And my favorite power player of the week dishes up love one ladle of soup at a time. All right now on "Fox News Sunday."
(END VIDEO CLIP)
WALLACE: And hello, again, from Fox News in Washington. We'll talk with our guests in a moment, but first, the latest on the tragedy in Tucson.
The condition of Congresswoman Gabrielle Giffords continues to improve. Also, authorities discovered a video made by the alleged gunman Jared Loughner.
In a strange development, one shooting victim was taken in custody after making a death threat during a town hall meeting. For more, let's bring in Fox News Correspondent Alicia Acuna who is in Tucson -- Alicia.
ALICIA ACUNA, FOX NEWS: Chris, the team treating U.S. Representative Gabrielle Giffords says she is making remarkable progress.
Most recently, doctors say they performed a small surgery to remove the breathing tube that was going down her neck and they replaced it with a tracheotomy tube to clear her airway and free her of the ventilator. University Medical Center says Giffords is following complex commands, such as removing her husband's wedding ring and putting it back on.
In the meantime, police say on the night before the shooting, the alleged gunman had film developed at a Walgreens that showed Jared Loughner holding a Glock 19 semi-automatic pistol while wearing a G- string.
And Pima County Community College released a Youtube video it says prompted the school to suspend Loughner in September. In it, Loughner is heard rambling about students being tortured and teachers receiving illegal pay.
And in a bizarre twist, one of the shooting victims was arrested while attending a television town hall meeting and placed under mental supervision. Pima County sheriffs say James Eric Fuller, who was shot in the back and knee, didn't like something said by a Tea Party representative at the meeting, took a photo of him and said, "you're dead."
Friends and family gathered Saturday for a memorial service held for 79-year-old Phyllis Schneck, who was one of the six killed at the meet-and-greet with Giffords. Schneck moved to Tucson from New Jersey to escape East Coast winters.
Now, three patients remain here at University Medical Center. Two are in good condition, and Giffords remains in critical condition -- Chris.
WALLACE: Alicia Acuna reporting from Tucson. Alicia, thanks for that.
Now one of the most controversial figures on the political scene. States across the country face hundreds of billions of debt from overspending, the impact of the recession, and federal stimulus money running out.
But one governor stands out for cutting programs and taking on public employee unions. New Jersey Governor Chris Christie, welcome to "Fox News Sunday."
GOV. CHRIS CHRISTIE, R-N.J.: Happy to be here, Chris.
WALLACE: Let's start from the fallout from Tucson. Congress goes back to work this week, and Republicans are trying to figure out how do they carry out their mandate to oppose the Obama agenda while also being sensitive to a country that is still grieving. How do they walk that line?
CHRISTIE: Well, first of, I don't think they look at it as opposing the Obama agenda, first and foremost. They got elected on a set of things that they were promising to do. So they should come down here and now get back to work and do their job.
They set forth a whole number of things they wanted to get done for the people. People put the House in their hands. They now need to get to work.
WALLACE: Do they need to pull their punches at all because of the event of Tucson and sensitivity about discourse in this country?
CHRISTIE: I think what they need to do is to be straight and to be candid with people. Now, that doesn't mean to be nasty and vitriolic. I think that the two can be divided. Be straight. Be honest. Don't varnish it. But there is no reason to be nasty and vitriolic about it either.
WALLACE: You praised President Obama for his speech in Tucson for trying to bring the country together, but you criticized Sarah Palin for her video for focusing on the media's attacks against her. And you also criticized her for avoiding unscripted situations when she's dealing with the press. For instance, that video was eight minutes. It was simply a video she put out. You say if she doesn't open herself up, she will never be president.
CHRISTIE: Yes, listen, this is just what I feel. I mean, I think -- I think people learn the most about you during campaigns about how you might govern. And the way they learn about that is in those unscripted moments when you're not being handled or told what to say, but you have to react to situations like this.
And so really it wasn't a criticism of her. It was an observation. In that interview with The New York Times, they asked me about what I thought about the various candidates. They brought up her name.
And I said about all candidates that you really learn about them in the unscripted moments. And if you avoid the unscripted moments, I don't think that the American people will trust their instincts about whether you, in fact, would make a good president or not.
WALLACE: You say that you agree with the president that we have to be more civil. But, my guess is that a lot of people in New Jersey might be surprised to hear you say that. Let's take a look at a town hall meeting where you confront a teacher. Here it is.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: You're not compensating me for my education and you're not compensating me for my experience.
CHRISTIE: Well, you know what? Then you don't have to do it. I mean, the simple fact of the matter is --
UNIDENTIFIED FEMALE: Teachers do it because they love it.
CHRISTIE: Well, then --
UNIDENTIFIED FEMALE: That's the reason I do it.
CHRISTIE: Well, and you -- and listen, teachers go into it knowing what the pay scale is. Teachers go into it knowing all that.
(END VIDEO CLIP)
WALLACE: You say that you -- well, OK, you're saying --
CHRISTIE: Well, it's not -- listen --
WALLACE: Let me ask the question. You say that the teachers union is a bully. You talk about all the "crap" -- your word -- that you hear from the public employee unions. That is your idea of civility, Governor?
CHRISTIE: Sure, there's nothing -- there is absolutely nothing that is not civil about that at all. What I think the president was talking about was the type of things where people are getting so emotional and trying to get people to become in some cases violent.
That's -- that's not being civil. What you just saw is being straight. I mean, you know, I had a teacher there complaining that she wasn't compensated. There's a whole list of things she wasn't compensated for. And I said, well, you don't have to do it. If you think you're not being compensated fairly, then don't do it.
And I don't think there is a thing about that that is not civil. What I think we've become in this country, and this is why I make a distinction between hostility and vitriol and straight talk, is we've become so politically correct. And we have so gotten into this figuring out how not to answer a question, how to be completely neutral about things. And people have become fogged over listening to political conversation that's like that.
What I'm doing in New Jersey is when they ask me a question, I give an answer.
WALLACE: Well, OK. Let's talk about one of those. Last year, when New Jersey Democrats threatened to shut down the government because you had a disagreement with them about a tax they wanted to re-impose on the wealthy, you said fine. I'll veto the budget. I'll go back to the governor's mansion and I'll order a pizza.
WALLACE: Should Republicans in Washington take the same hard line in opposing the president about raising the debt limit and on federal spending?
CHRISTIE: Well, what I would suggest is that Republicans in Washington should do what we did in New Jersey. You very clearly articulate your position, why you think it's important for the future in this case of the country, for me and the future of the state of New Jersey, and go out and make your case.
I mean, I could say the things that I said, because I went up to the public and made my case. And the public, in poll after poll and interaction and town hall, said Governor, cut the budget. Don't raise taxes.
And that is why Democrats in New Jersey ultimately voted for the budget. Not because of my charm and good looks. So I think what Republicans in Congress have to do is go out to the public and make their case. They won the election on those arguments. Now articulate those arguments and have the guts to put up or shut up.
WALLACE: But you say "put up or shut up." I mean, it's one thing for you to close down the government of New Jersey and eat your pizza. It's another thing for the country, for the U.S. government to default on its credit and to go into debt.
CHRISTIE: Yes, but because I was clear, I didn't have to close the government, did I? And you know, this is about making the argument and trying to win the argument. And I think if you close down government, in some respects you may have lost the argument.
Now, you have to be ready to do what you need to do if you want to stand by your principles. What happened in New Jersey was we made our argument and the budget was passed two days early and we moved on with our next challenges.
WALLACE: Should the Republicans be prepared to let the country go into default?
CHRISTIE: The Republicans should be prepared to articulate their argument and win the argument, Chris. That's what they should do. In New Jersey, listen, there have been times when I compromised on things that I wanted.
But I got more than what -- more than less, so, you know, it's all about reading the situation, but the only way you get there is to be absolutely crystal clear with what your position is.
WALLACE: Let's talk about education. You want to end tenure for teachers and put them on five-year contracts, based on merit. But also, as part of your budget crunch, you had to cut aid to the localities, to schools, by $1 billion this first year.
The teachers union, let's put it up on the screen, says the result of that cut of aid to schools was 10,000 layoffs and retirements, larger class size, and local school districts had to impose sports and busing fees.
WALLACE: Question, is that the way to improve education in New Jersey?
CHRISTIE: You know why those things happened? Those things happened because the teachers union refused to take a one-year pay freeze and to contribute anything towards their health benefits. If they were to contribute 1.5 percent of their salary to their health benefits and frozen their pay for one year, none of those layoffs would have had to occur.
This is the fight we have to have, Chris. We cannot have people in the public sector getting raises. New Jersey state workers under Jon Corzine in a budget that I inherited this year got 7 percent salary increases in this economy. They pay $800 to $900 a year for health benefits that cost the state in excess of $20,000 a year per employee.
What I said to the teachers union was, join the shared sacrifice. Those cuts were made for two reasons. One, because we lost $1 billion in stimulus funding, which left a billion-dollar gaping hole. And, two, because the teachers union said we're not going to be part of the sacrifice. We want our 4 and 5 percent raises. We want our free health benefits, and to heck with the kids. That's what the teachers union said.
Now, teachers in New Jersey, when you talk to them, they would be willing to take the freeze. But their union refused to even let there be a vote, Chris. So that's not what caused those layoffs. What caused those layoffs was the teachers union's unwillingness to join the shared sacrifice.
WALLACE: So, Governor, what do you do? Let's take a look -- and we'll put it up on the screen -- at the financial situation that you face in New Jersey. You have unfunded pension liabilities to state workers supposedly of $54 billion, but some say it's really triple that. New Jersey already ranks number 48 among states in business tax climate. We just saw Illinois raise personal income tax by 67 percent, raise corporate taxes by 45 percent. You're obviously not going to do that. How do you get out of this budget crunch, this terrible debt you're in?
CHRISTIE: Last year, we cut spending by 9 percent in a year. We cut every department of state government. We were, before I became governor, 50th in business tax climate. We're now 48th. Now, I'm not taking that to the Wall Street Journal to say we're number 48, but we are making progress in the right direction. And as for the unfunded pension liability, I've said this, I put forward a proposal that says raise retirement age, eliminate COLAs both for future employees and retirees, to be able to calculate the pensions better, reduce them by 9 percent increase that was given to them years ago, and increase the employee contribution. Those are real hard reforms. But what they do is take that $54 billion and, in 30 years, it'll cut it in half.
WALLACE: And has the pension public employee union given you any indication they'll go along with these idea?
CHRISTIE: They haven't, but you know what? The Democratic state legislature has said they're willing to work with me on it and negotiate. And they promised me, as part of property tax relief that we passed last year, that in the first quarter of this year, we'll pass real pension and healthcare benefit reform. So that'll be my push for the first quarter.
WALLACE: You also talked a moment ago about one of the reasons you had to cut aid to education, was the fact that stimulus money ran out. Having said that, you recently advised the Republican leaders here in the House, "When governors like me come and ask for more aid, don't give it to us. That's the worst thing you can do."
CHRISTIE: Yes, because it's time to make the tough decisions. Look at what's happening with Medicaid. I urged, during the campaign in 2009, not to accept the Medicaid stimulus, because of the strings attached and the maintenance of effort that's being imposed by ARA (ph) and the maintenance of effort that's being imposed by the Obama healthcare plan.
What's happening now is we're losing $900 million in Medicaid funding from the feds this year, creating a $1.4 billion hole in my Medicaid program for fiscal year '12. The federal government cannot continue to paper over these problems for the states. We have got to belly up to the bar and make the decisions.
What I said to Congress also, though, was take the strings off the states. Let us make our decisions about the level of benefit that we give in some of these programs, rather than impose it from Washington, D.C.
WALLACE: So, for instance, in Medicaid, you say, what, give us a block grant and let us decide how to spend it?
CHRISTIE: That would be one idea. Or at a minimum, take the strings off so we can decide the level of benefit. Because they are going to put us in an awful position. And this is what I mean. You send this money to us on a temporary basis to paper over the problem. Eventually, the day of reckoning comes, Chris. And the day of reckoning in the states is coming. You see Jerry Brown calling for 8 to 10 percent reductions in state worker pay --
WALLACE: In California.
CHRISTIE: In California. Andrew Cuomo, another Democrat, calling for a pay freeze in New York for state workers. And it's not just a Republican idea anymore. All the governors are facing these same problems. We have got to face them head up.
WALLACE: You have repeatedly rejected calls to run for president in 2012. In fact, you said, short of suicide, you don't know what you could do to convince people that you're not running.
But I want to put up -- because I'm still not convinced, I want to put up a poll, a new poll of all the potential GOP candidates. And the only one who currently beats President Obama is a fellow named Chris Christie, 43 percent to 40 percent. Don't you think you're up to being president?
CHRISTIE: Listen, the president, rather, can rest easy, because the only guy who is beating him in that poll isn't running.
I have a state to run. I love New Jersey.
WALLACE: But why not? You obviously feel strongly about this. You think you have got a better way to do it and that everybody else is messing it up. Why not go for it?
CHRISTIE: Listen, two reasons. One, I have a commitment to my state. I have been governor for a year. New Jersey's problems are not fixed. We have a lot of hard work to do.
WALLACE: You don't think you could help more in the White House than in the state house?
CHRISTIE: No, I don't think I can help New Jersey more in the White House than I can help it in the state house. And secondly, you have got to believe in your heart that you're personally ready to be president, and I'm not there.
WALLACE: Why not? I mean, seriously. You say you answer the questions. In what way are you not ready to be president?
CHRISTIE: Listen, I think every year you have as a governor in an executive position in a big state like New Jersey would make you better prepared to be president. And after one year as governor, I am not arrogant enough to believe that after one year as governor of New Jersey and seven years as the United States attorney that I'm ready to be president of the United States, so I'm not going to run.
WALLACE: Yes, but you know, and I heard you say it might make more sense somewhere down the line, 2016, 2020, whatever. But one of the things that Obama learned and showed us all in 2007, when it's your moment, you have got to move.
CHRISTIE: Listen, that is a decision that he made. And he's obviously was successful in winning the presidency. My view is I want to, if I ever would have run for the presidency, if I was ever to do it, I want to make sure in my heart I feel ready. And I don't think you run just because political opportunity is there. That's how we wind up with politicians who aren't ready for their jobs.
WALLACE: Governor Christie, we want to thank you so much for coming in. And please come back, sir. It's a pleasure to talk to you.
CHRISTIE: I will. Thanks, Chris.
WALLACE: Up next, 2012 GOP presidential politics. We'll talk with one of the likely front-runners for the presidential nomination, Tim Pawlenty.
WALLACE: Joining us now to discuss his political future is the former Republican governor of Minnesota, likely presidential candidate, and author of a new book, "Courage to Stand." Tim Pawlenty. And Governor, welcome back to Fox News Sunday.
FORMER GOV. TIM PAWLENTY, R-MINN.: Great to be with you, Chris.
WALLACE: Back in 2005, you allowed the government of Minnesota to shut down for nine days because of a disagreement with the Democratic legislature about taxes and spending.
WALLACE: Should congressional Republicans take the same tough stance when it comes to raising the debt limit and federal spending?
PAWLENTY: Well, what I've learned, Chris, after eight years of doing in a very liberal place -- I love my state, but it's liberal in terms of spending and government -- is you've got to draw some lines in the sands.
Chris Christie was just talking about it here a minute ago. It doesn't mean you always have to go do -- you know, have ultimate battle, but you've got to be willing to stand up to a culture, to a history, to a pattern -- in this case, 21 percent spending in my state for 40 years -- and say we're not doing that anymore. And I'm glad we had that showdown in Minnesota.
And as to the federal government, they should not raise the debt ceiling. I believe they should pass legislation, allow them to sequence the spending as the revenues come in to make sure they don't default, and then have the debate about what other spending can be reduced.
WALLACE: But you would say to the Republicans up in that building behind me do not raise the debt limit?
PAWLENTY: That's right. And, in fact, to avoid the default, I would take it one step further, send the president a piece of legislation that authorizes the federal government to sequence the pain of its bills so that we don't default on the debt obligation and then have the debate about how we reduce the other spending.
WALLACE: OK. I want to go back to 2005, though, because this is your -- your time in the crucible, if you will. Back then, you ended the shutdown by agreeing to a 75-cent per pack cigarette tax. You called it a -- a health impact fee. Governor, didn't you blink?
PAWLENTY: Well, if you look at what I've done in Minnesota, all this stuff that the country's talking about, that the Republican --
WALLACE: No, but I'm asking you about that specific stuff.
PAWLENTY: Well, we had a compromise, and I picked the one that -- one thing that was least harmful to economic growth of the options that we had in front of with us a Democrat legislature. You know, I never had a Republican legislature in my state.
And so, yes, we had a 75 percent -- a 75-cent pack increase on cigarette fees. But you look at my record overall, it was transformational in terms of reducing spending, reducing taxes, performance pay for teachers, not just talking about the other cuts for example and pension reform but actually doing it, the leading example in the country on the reforming public employee pensions and much more.
WALLACE: Well, let me -- let me pick up on that because the fact is, you -- I mean, I've looked at your record. You were a budget hawk. As governor, you reduced the annual increase in spending from 21 percent a year to two percent a year. You issued 299 vetoes.
But, as you left office this year, your successor as governor of Minnesota faced a $6 billion deficit, which is a third more than you inherited.
PAWLENTY: Well, a couple of things. Forty-eight or 49 of the 50 states have an upcoming deficit, so this is not unique to Minnesota. And, number two, that deficit, projected for the upcoming two years, Chris, assumes a 27 percent increase in state spending. That is preposterous. It is irresponsible. It is reckless.
And so, I don't buy the notion, the premise underneath that that spending should or can go up 27 percent.
WALLACE: But -- but, I mean, is it -- what does it say about it, that you were -- went all out to try to cut spending, issued the vetoes and the deficit -- I mean, you can talk about the projections, but it certainly hasn't gone down, and may go up.
PAWLENTY: Well, what it does say is in Minnesota and many other states, you got to have a budgeting process that doesn't have spending on autopilot. So that's why we have the deficit in our state, there's a bunch of spending that's on autopilot. That autopilot feature has to be shut off, and the idea that they're going to have a 27 percent increase in state spending, I would say, is a flawed premise to begin with. And that's why we called for budgeting reform in our state as well.
But I want to leave you with this point, or make this point. All of the things that the country is facing that -- that you talk about on this show and many others, on spending, on taxes, on pensions, on school reform, we did in Minnesota.
There's only four governors in the country that got an "A" from the tough grading Cato Institute, and I'm one of them. I'm the only one in the north half of the country, by the way.
WALLACE: OK.I want to ask you about -- and you'll probably contest this -- some apparent flip-flops in your positions. In your book "Courage to Stand," you opposed the TARP bailout.
Here's what you write, "When the rain started to fall on America's picnic, Washington hung up a big old plastic TARP to protect us from the deluge. Ever wonder why they call some of these things 'TARP funds'? Good intentions, maybe, but a bad decision. "But, Governor, in 2008, on this program, you defended John McCain's plan during the campaign for a huge bailout, as long as some of the billions of dollars would go to Main Street as well as Wall Street. Let's take a look at what you said back then.
(BEGIN VIDEO CLIP)
PAWLENTY: And if we don't do something to get at the root of this cause, which is declining home values, he believes that the problem is going to continue to spiral downward. So he's trying to get at the root cause, which is home values and bad mortgages.
(END VIDEO CLIP)
WALLACE: Governor, isn't that a flip on -- on bailouts?
PAWLENTY: Well no, it's not, Chris. I was in the role of speaking for Senator McCain and his views in 2008, as a --
WALLACE: You -- you didn't believe what you were saying back then?
PAWLENTY: Well, you -- we'll play the tape, it says "he believes," and I was speaking as a spokesperson for Senator McCain. But I don't -- didn't support and don't support bailing out places like Wall Street, General Motors and the like with respect to federal and government --
WALLACE: I don't want to belabor it, but -- but when you were saying then and what the idea was that -- that McCain had was that the government would -- would basically take all the bad debt on all these mortgages. They would renegotiate. The predatory lenders would get off the hook. When you were defending that back in 2008, you didn't believe it?
PAWLENTY: I don't think the government should bailout Wall Street or the mortgage industry or for that matter any other industry.
WALLACE: Back in 2007, you also signed a bill to begin a plan to reduce greenhouse gas emissions. Have you flipped on that?
PAWLENTY: I didn't -- I signed a bill in Minnesota on dealing with greenhouse gas emissions, only to the extent of taking steps on renewable energy. We never did sign a bill relating to cap and trade or putting that into Minnesota or regional.
We studied it. I looked at it. I've subsequently decided and wrote to the Congress two years ago. Don't do this. It's a bad idea. It will be burdensome on the economy. And I've opposed cap and trade.
WALLACE: You support -- let's turn to healthcare. You support market solutions to healthcare. What do you think of the sweeping overhaul including a big role for government that Mitt Romney brought to Massachusetts?
PAWLENTY: Well, you know, in Minnesota, we've taken a different approach than some other states and the federal government. I believe you've got to have market forces, give consumers or purchasers price transparency about quality and the outcomes of their healthcare. Give purchasers incentives to make good decisions in that regard.
WALLACE: I'm not going to let you off the hook -
PAWLENTY: Yes. I'm not -
WALLACE: -- what do you think of Romney Care?
PAWLENTY: I'm not going to get sucked in to criticizing Mitt Romney. That is just a plan.
WALLACE: Well, I mean, that's going to be an issue in the campaign.
PAWLENTY: Yes. But I -- I will abide by Ronald Reagan's 11th commandment. You know, I'll tell you what I believe. I'm not going to criticize Mitt Romney. But the Massachusetts plan speaks for itself. We took a different approach in Minnesota and it's working.
WALLACE: Let's talk about President Obama. I assume that since he's not a Republican, you'll feel free to criticize him. You want to repeal Obamacare. But it would, despite all the problems, it would cover 30 million people who are now uninsured. Minnesota currently has half a million of those folks, roughly 10 percent of the population.
Using the market forces that you talked about, how would you bring care to those 500,000 Minnesotans who are uncovered?
PAWLENTY: Well, all healthcare reform needs to focus not just on expanding access but also cost containment. President Obama said that he was going to contain cost and make this more affordable. He did not do that. Obamacare heads in a different direction. It may well expand access, but it's not going to reduce cost and it's not going to improve quality.
WALLACE: But I'm asking you specifically.
PAWLENTY: As expanding that -
WALLACE: What's (INAUDIBLE)?
PAWLENTY: Here's what you do. You get the money directly to the people who need the help and let them make the decisions for them and their family. You don't run it through a big bureaucracy in Washington, D.C. or State Capitol. You empower consumers to the extent that government can afford it. You give them the help directly in form of a voucher, a credit, a stipend and let them be in charge of the decision making in a market.
WALLACE: I -- I want to talk 2012, we've got a couple of minutes left. You've been relatively honest about whether or not you're going to run for president. You say and you're seriously considering it. You'll decide in a few months. But the fact is that you've been to Iowa seven times. You've been to New Hampshire five times. You've hired a bunch of D.C. operatives to help staff up your committee.
Why wouldn't you run at this point?
PAWLENTY: Well, I'm seriously considering it. I'm going to make that decision and announcement final sometimes in the next few months.
Two things. One is what does the country need and what do I bring to it? I think I've got a lot of experiences in those eight years as governor in Minnesota in a transformational way. And number two, it's a deeply personal decision. It has a lot of impact on not just me but my family. I want to make sure that they're understanding that burden and willing to shoulder some of that as well.
WALLACE: There's a new poll out of -- and I know it's early for pulse, but it's still is instructive of possible Republican contenders. And they polled Republican caucus goers in Iowa. Let's put that up on the screen.
It shows Huckabee -- Mike Huckabee, former Governor of Arkansas, leading at 24 percent, followed by Romney, Palin, Gingrich and back in fifth place at four percent is Tim Pawlenty.
As the eighth year governor of the neighboring state of Minnesota as a deficit hawk, as an evangelical, don't you have to win Iowa if you're going to have a chance?
PAWLENTY: For somebody like me, you have to do very well, win or do very well in Iowa. I think that's right, Chris.
WALLACE: And -- and how do you explain the fact they've known you for -- for eight years and, I mean, you -- I look at the map just to make sure I was right. They're right next to each other.
PAWLENTY: Yes. Well, my name may be outside of Minnesota is not very high. I think it was 15 percent about a year ago amongst Republicans and not particularly high outside of Northern Iowa.
So, if you look back at the history of these races, looking at these polls early on, even for neighboring or, you know, closely related people geographically to Iowa, they're not a good predictor of how the -- the result is. Look at Mike Huckabee last time. He started out at two percent, ended up winning it.
WALLACE: Governor Pawlenty, we want to thank you so much for coming in. And I know you're not ready to announce today, but chances are we'll see you on the campaign trail.
PAWLENTY: All right, Chris. Thank you.
WALLACE: Always a pleasure to talk with you, sir.
PAWLENTY: A pleasure to talk to you.
PAWLENTY: Up next, Congress prepares to go back to work in the wake of the tragedy in Tucson. Will things change here in Washington? Our Sunday panel offers their thoughts when we come right back.
(BEGIN VIDEO CLIP)
OBAMA: As business resumes, I look forward to working together in that same spirit of common cause with members of Congress from both parties, because before we are Democrats or Republicans, we are Americans.
(END VIDEO CLIP)
WALLACE: President Obama in his weekly address, setting the stage for Washington to get back to work after the tragedy in Tucson.
And it's time now for our Sunday group: Brit Hume, Fox News senior political analyst; Mara Liasson of National Public Radio; Bill Kristol of The Weekly Standard and Fox News political analyst, Juan Williams.
Brit, there's a lot of talk -- talk, at least -- about a new civility in the way that Washington does business, about damping down the partisan rhetoric. Does that create any challenges for the new Republican majority in the House as they go back to work this week and begin the work of trying to block and dismantle the Obama agenda?
BRIT HUME, FOX NEWS SR. POLITICAL ANALYST: Well, substantively, I don't think it makes any difference, but it's all a matter of tone and form. So, for example, Republicans and Democrats may all sit commingled during the State of the Union Address. I suspect that people will be careful about their language in the next few weeks, until the aftermath of this hideous event last weekend has passed. But I don't think it makes any substantive difference.
There is a very significant disagreement between the two parties on some of these major issues. And there is going to be a huge fight. And it's going to be rough, and maybe the language will be toned down. That won't hurt anything.
WALLACE: Let me ask you one thing, Mara, about the language. The bill that they're going to work on this week is -- and it says it in the title -- is to repeal the job-killing Obama health care reform plan.And some Democrats are objecting to that.
And I noticed that it says "job-killing." In his statement after the Republican retreat in Baltimore this weekend, Speaker Boehner said "job-destroying." I mean, are we going to get into that now?
MARA LIASSON, NATIONAL PUBLIC RADIO: Well, you know, we've heard two different things, that the name might be changed, and then the name will not be changed. But every piece of rhetoric like that is going to be put under a microscope now. That's one of the things that's changed.
The other thing that's changed is that President Obama, although this was a trend, it didn't just happen all of a sudden because of Tucson, is now a more formidable figure. He's not as weak as he was two months ago. And so the debate enters with the landscape a little bit different.
And also, I think that Republicans are going to be on notice, they are going to have to come up with, number one, specific spending cuts when they talk about spending, which they are promised to do. And also, in terms of health care, they are going to have to talk about what they plan to put in place of this law that they're about to repeal.
WALLACE: I want to go back to the challenge for Republicans, Bill.
Do you expect any change at all in the way they do business? Are there any challenges for them, for Speaker Boehner and the Republican majority in the House?
BILL KRISTOL, THE WEEKLY STANDARD: Well, they have big challenges, but I don't think they've changed much because of the events of the last week. And I think they should be polite, and they should reach out to President Obama and ask for his help in repealing the job-killing Obamacare legislation.
WALLACE: And are we really going to get --
KRISTOL: And dismantling all the bad things that the president has done for the first two years.
But, look, people are grownups, and they expect Republicans who are elected on a certain platform to carry out that platform. The worst thing you could do is say there was a terrible murder by an insane person in Tucson and we're abandoning the platform we ran on and the voters elected us on. They owe it to the voters to go ahead and be strong and really try to re-limit government in fundamental ways.
WALLACE: Juan, let me flip this around, and let's look at it. And this is something that Mara began talking about from the vantage point of the White House.
He had a very successful lame-duck session. He has been widely praised for his speech in Tucson from all parts of the political spectrum.
How does he build on this in the State of the Union speech, which is only nine days away?
JUAN WILLIAMS, FOX NEWS POLITICAL CONTRIBUTOR: Well, I think in this State of the Union, what he's got to do is emphasize, listen, we're here about the business of the American people. We're not here simply about politics. If he can persuade people that, in fact, he is willing to work with Republicans, that he is not just going to get locked into some, you know, fantasy, but actually make substantial outreach on specific issues, and put the onus back on the Republicans to work with him, that's different.
Now, you look at this health care bill, I think it's very interesting. You're going to have -- I believe it's Wednesday they're going to actually have the vote. But there's two days of debate, Democrats are really not going to be in position to participate. I think the president is right to say, well, why can't we speak about what's going on? Democrats are going to go on --
WALLACE: I don't understand. Why won't Democrats be in a position to participate?
WILLIAMS: Because of the rules that are put in place.
WALLACE: Well, they can debate.
WILLIAMS: Well, they can say something outside, I guess, but really, there is no --
WALLACE: They can debate on the floor.
WILLIAMS: Please. There is no opportunity --
KRISTOL: What do you mean, "Oh, please"? This is the Congress of the United States. The time is evenly divided between the Republicans and Democrats for a seven-hour floor debate.
Do you have a problem with that?
WILLIAMS: You might have missed this, but Republican rules on this bill do not allow for amendments. They don't really allow for Democrats to participate.
KRISTOL: They allow for Democrats to explain why Obamacare is such a wonderful plan --
WALLACE: You don't think Nancy Pelosi ever had a closed rule that prevented amendments?
WILLIAMS: Ever? What does that have to do with this? Republicans said --
WALLACE: It's a matter of consistency, Juan.
WILLIAMS: You know what? That's the kind of scar tissue John Boehner talked about that exists in this town, you know, Democrats and Republican. You did it once, so I'm going to do it now. That is what people are sick of.
HUME: You know, I think, Chris, that the Democrats may be making a mistake here on this repeal measure. They are confident that it will be blocked in the Senate, or, if by some miracle it's not, it will be shut down by a presidential veto. They know this.
Republicans promise to try to do this. Now, the more noise the Democrats make about the awfulness of it all, the more conspicuous what the Republicans have done becomes, the more it looks like they fought hard to do it.
I think it would be -- the smart thing for the Democrats to do would just be to let it roll by them. They can't stop it, and they know it's going to be stopped anyway, and not make a big deal out of it.
Besides, for this reason -- the thing is unpopular. The repeal idea is popular. So why not just let this unfold, particularly when you know that it's not ultimately going to become law any time soon?
WILLIAMS: Because there's going to be a fight, Brit. There's going to be a big fight here. With Democrats now making --
WALLACE: Wait. Let Juan -- let Juan --
WILLIAMS: Democrats will now -- because of what Republicans are doing, Democrats will now aggressively make the case for benefit of health care reform in this country and say to Republicans, what is this repeal and replace? What are you replacing it with?
HUME: Well, that's fine, but what I would say about that is Democrats aggressively made the case for this legislation for two years. The president of the United States, the man with the biggest megaphone in the country, if not the world, spoke about it ceaselessly and made innumerable speeches about it. And in the end, it was unpopular and remains unpopular. So I don't know why they want to talk about it.
LIASSON: Although it's not -- you know, the polls on this are a little bit less one-sided than you're describing. Yes, the balances tip to the law being more unpopular than popular. However, when you talk about individual pieces in the law -- and I haven't seen Republican --
LIASSON: And I haven't seen Republicans stand up to say, well, we're going to repeal it except for these individual pieces. They haven't said that.
KRISTOL: What Republicans are going to do is repeal it past the House. They're then going to propose over the next several months and bring up for debate -- and debate is the way the bill is going to be amended -- particular things that they would like to improve, to do to improve the current health care system.
But I think, look, let's have this debate. This is a fundamental difference between the two parties, it's a fundamental difference between the president and the Republicans in Congress. And I think a long and serious debate about health care, including a debate on the Republican proposals that will come forward in the next few months, will be good.
LIASSON: And you know what? If the business community and the insurance industry finds out that Republicans merely want to regulate them, without giving them the 30 million new customers that was part of the grand bargain of Obamacare, they're not going to have many allies there, too.
KRISTOL: If Republicans are opposed to the insurance industry and to parts of big business, that's fine with me. Republicans can speak to the public and let Obama and the big business guys who he tried to buy off, let them defend Obamacare.
WALLACE: Well, I'm glad to see the civility in Washington isn't going too far.
All right. We have to take a break here. But when we come back, Sarah Palin's controversial remarks, and the Republican Party picks a new leader.
(BEGIN VIDEO CLIP)
SARAH PALIN (R), FMR. ALASKA GOVERNOR: -- especially within hours of a tragedy unfolding. Journalists and pundits should not manufacturer a blood libel that serves only to incite the very hatred and violence that they purport to condemn. That is reprehensible.
(END VIDEO CLIP)
WALLACE: Sarah Palin's online video that started a whole new controversy this week.
And we're back now with the panel.
It's understandable that Governor Palin would react and want to respond to those critics who tried to link her language and her map with the crosshairs on it to the terrible tragedy in Tucson. But by the time she issued her video on Wednesday, that argument by the left had been largely discredited.
So, Brit, the question is, was her video a mistake?
HUME: Well, you know, she's entitled to say it. And most of what she said I think was unexceptionable.
She gave them a phrase, her critics a phrase that -- the phrase "blood libel," which as Alan Dershowitz pointed out, is in common parlance meaning something other than what it historically has referred to. My sense about it is I didn't find anything particularly wrong with her video.
What I did take away from it is if you're not running for president, and you are caught up in a controversy like this, why would you have this highly-produced video? I mean, it smelled like a presidential candidate to me. And I had my doubts about whether she is running for president. After this episode, I'm beginning to think that maybe she will indeed run.
WALLACE: Mara, the president, on Wednesday -- and this all happened in the same news cycle -- won praise for his speech, which was kind of moving past and trying to learn lessons and trying to bring the country together. And he didn't engage in finger-pointing.
So the conventional wisdom is that Palin reinforced her image as being thin-skinned and pouring gasoline on the fire, rather than putting it out.
LIASSON: Well, I don't think it helped her. I mean, the president specifically said political discourse did not cause this tragedy. And the polls showed by the time she made the video that the majority of people also thought that political discourse did not cause the shooter to do this.
And here she is saying -- when you talk about "blood libel," that is the definition of political discourse, a manufactured lie causing violence. In this case, she paints herself as the potential victim. So here she is agreeing with the left that political discourse can cause violence. I think it was jarring, it was --
LIASSON: Yes. That's exactly what blood libel is. You make up a lie about someone, you make a false accusation, and it causes violence against Jews, for instance --
HUME: And she's --
LIASSON: That's what she said, that political discourse can cause the very violence that we condemn. In other words, that saying something unfair about someone -- namely, me -- that I was responsible by my videos with the crosshairs, or the Web site. And so, in any event, I'll I'm saying is it struck the wrong tone on a whole lot of levels, and I don't think it was necessary for her to do this.
The public had already agreed with her and her defenders that her rhetoric did not cause this tragedy.
KRISTOL: I don't know. I mean, I very much sympathize with her being offended, really deeply and personally offended at the notion that within an hour of the shooting in Tucson, everyone starts to blame her. And then, of course, it turns out, as evident quite early on, that she had absolutely nothing to do with it. As far as we know, the shooter had no opinion about her, he had been planning this since 2007. He was angry in a crazy way at Gabrielle Giffords from 2007, when Sarah Palin was an obscure governor of Alaska.
So, I mean, I very much sympathize with her anger. I think she genuinely was metaphorically wounded by these charges.
Having said that, if you want to be a presidential candidate, you probably should let other people answer media critics, and you should deal with things that at a sort of presidential level. And it wasn't necessary, I think, for her to defend herself explicitly in an eight- minute video. She had plenty of people out there defending her against these unjust charges.
WALLACE: Do you think she -- to the degree that she has electoral political ambitions, do you think she hurt herself?
KRISTOL: A little bit. And I think it's part of a pattern, honestly, where she has been engaging -- I mean, I say it as a fellow person. I mean, she fights back against all her critics, but probably one of the things that you should do when you're either a governor or running for president is you should pick your fights a little more carefully.
And what is the expression, don't shoot down? She shouldn't be fighting with Chris Matthews or Keith Olbermann.
WALLACE: You can't say "shoot down," incidentally, anymore. That's completely forbidden.
KRISTOL: You're right. I hope I didn't incite anyone to shoot down anywhere around the country.
WILLIAMS: Boy, you know, I'm struck by what Brit said. It never occurred to me that this was more evidence that she might be running for president, because I think she hurt herself. And I don't say that with any satisfaction.
I just thought she didn't need to respond. And then bringing in this "blood libel" comment, which had been -- the word had been used in "The Wall Street Journal," but it just gave her opponents such an opportunity then to excoriate her, and brought in the whole business of the congresswoman being Jewish. I just thought it was just unnecessary and did not raise her stature.
HUME: What I would say about this, Chris, is that this is the dilemma with Sarah Palin. She has been subject to some of the most vicious and venomous media coverage, adverse media coverage of any public figure I have ever seen. And it amounts almost to what some would describe as a kind of derangement syndrome about her, this level of character assassination.
However, to say all that, and to condemn it, even, does not mean that it hasn't been effective, and does not mean that Sarah Palin has not been seriously damaged by it in the eyes of a broad cross-section of the public. And the Sarah Palin problem really is a problem that she has, largely, I think, through no fault of her own, become kind of radioactive. And it does mean that when she is in a situation like this, where she is the focus of national attention, she must be extremely careful about how she reacts to it.
My sense about it is, of course, when you are going to produce a video, that that's a somewhat unusual way to go about things. And that also suggests that you took time. This wasn't an extemporaneous comment she made. So, I think, on balance, these things -- this doesn't help her because of the situation she is in, fairly or not.
WALLACE: Let's turn briefly in the time we have left to America's newest household name, Reince Priebus. Yes, Reince Priebus. The Republican National Committee elected him the new head of the party on Friday, replacing Michael Steele.
Let me ask you, Bill Kristol, who is Reince Priebus? And what does his selection say about the direction of the GOP?
KRISTOL: He was the Wisconsin State chairman in this last cycle, and Wisconsin did extremely well, winning --
WALLACE: Elected a Republican governor, a Republican senator.
KRISTOL: Governor, senator, both some -- it would have been considered an upset six months before. I think Republicans now control both houses of the state legislature. They just won all that (ph).
He's a good political mechanic. It puts -- it gives just yet another feather in Wisconsin's cap.
You know, the Packers yesterday. And Paul Ryan now at the center of things in Washington. A very impressive new governor, Scott Walker, who is going to be taking jobs (ph) from Illinois.
WALLACE: What does it say about the party and where they're headed? I mean, clearly, it seems to say we don't need a high visibility spokesman like Michael Steele. We need a nuts and bolts guy.
KRISTOL: Absolutely. And I think that's what he ran on, and I think that's what they'll do.
WILLIAMS: But, you know, he was the nuts and bolt guy for Michael Steele. So let me just kind of hit an off-note here and say, you know what? They're going to miss Michael Steele.
Michael Steele brought personality and a whole sense of a diverse, new face to the Republican Party that is important for the party to grow. And you know what? In terms of the money and the fundraising, there are a lot of long knives out for Michael Steele from people like Haley Barbour --
WALLACE: How about the -- we've got about 15 seconds left.
WILLIAMS: -- to my pal, Karl Rove.
WALLACE: How about the fact that the RNC is $20 million in debt?
WILLIAMS: They can make that up. And they're going to have a presidential candidate and a campaign against President Obama, and they will raise a ton of money. That would not have been an issue.
WALLACE: All right.
Thank you, panel. See you next week.
Don't forget to check out "Panel Plus," where our group picks right up with the discussion on our Web site, FoxNewsSunday.com. And we'll post the video before noon Eastern Time.
Up next, a "Power Player of the Week" who's close to my heart.
WALLACE: We have been introducing you to Power Players for the past seven years, and while I admire them all, this is the first one I love.
Here is our "Power Player of the Week."
LORRAINE WALLACE, AUTHOR, "MR. SUNDAY'S SOUPS: It's easy, it's quick, nutritious, and in this economic time it's really affordable.
C. WALLACE (voice-over): Lorraine Wallace -- and yes, she is my wife -- is talking about soup and how she made it into a family tradition. Now she is passing on her recipes and her thoughts about family in a new book, "Mr. Sunday's Soups." And yes, that's my nickname at work.
L. WALLACE: Like everyone out there that has a hectic schedule, soup was a simple solution for me to gather everybody around the table. And even if it was just for 20 minutes before we took off for our next activities, it was a warm and nutritious way to share our day and have a good meal.
C. WALLACE (on camera): Have a great week. And we'll see you next FOX NEWS SUNDAY.
(voice-over): It started in our family when I would come home tired and hungry late Sunday mornings. And my then-teenage son Remick would just be rolling out of bed. Lorraine would make soup -- in this case, old-fashioned tomato -- to get us all together.
L. WALLACE: You soften onions in the pan with rosemary and bay leaf. Then you add some tomato paste and two cups of plum tomatoes.
C. WALLACE (on camera): Why the bacon?
L. WALLACE: Because it's kind of nice to dip in there. You get the sweetness of the tomato and the saltiness of the bacon.
C. WALLACE (voice-over): It was Lorraine's way to create some family time before I headed upstairs for a nap and Remick headed out for baseball games.
(on camera): What's your favorite?
REMICK WALLACE, CHRIS WALLACE'S SON: Of all of her soups?
C. WALLACE: Yes.
R. WALLACE: Buffalo turkey chili. There is no doubt about it.
WALLACE (voice-over): Even Winston is part of our soup Sundays.
L. WALLACE: His nose goes in the air and he can't wait for his taste of soup after we have finished ours.
What's this, Winston? Is it your soup Sunday? Yay! Come on, Winston! There you go.
C. WALLACE: I'm clearly biased, but Lorraine is a great cook.
L. WALLACE: You always marvel at how I go out to a restaurant and taste something and come home, and within two days you're eating it again. And then I don't get to go out to restaurants anymore.
C. WALLACE (on camera): Would you say you spoil your husband?
L. WALLACE: I think you're very spoiled.
C. WALLACE (voice-over): It's more than good food. Meals are where we turned our family, Lorraine's two kids and my four, into our version of the Wallace bunch.
L. WALLACE: That's how the children and even adults learn from their children what is going on in each other's lives. I mean, you want to sit down and talk and turn off all the music in the world and just have a time to check in so you can communicate to each other.
WALLACE: Which is why her book is two-part soup recipes and one- part family album.
L. WALLACE: My kitchen is like a laboratory, because I love to cook by the season, and organic. And so I love to take all those fresh ingredients and try to create wonderful meals for my family.
It's rewarding to see everybody gather around and enjoy a meal that I've created and say, "Wow, mom! You've done it again!"
WALLACE: I'm the luckiest man on earth.
If you want to read more about Lorraine's book and check out her recipe for the soup she is cooking today, please go to our Web site, FoxNewsSunday.com, and look at the right side of the page.
By the way, black-eyed pea soup today.
And that's it for today. Have a great week, and we'll see you next "Fox News Sunday."
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