Tim Pawlenty Defends His Economic Plan, Attacks 'Obamneycare'

GOP presidential hopeful on 'Fox News Sunday'


The following is a rush transcript of the June 12, 2011 edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.


A top Republican presidential candidate calls out the White House over the slumping economy.


FORMER GOV. TIM PAWLENTY, R-MINN.: The president is satisfied with a second rate American economy. I'm not.


WALLACE: And as the recovery sputters and the debt crisis loom, issue number one on the campaign trail is getting the country back to work.

We'll talk with someone who has a plan for boosting the economy. Presidential hopeful and former Minnesota Governor Tim Pawlenty in the "Fox News Sunday" 2012: One on One interview.

Then, could Newt's nightmare be a dream come true for potential candidate Rick Perry? We'll our Sunday panel who in the GOP field is up, down, in or out.

All right now on "Fox News Sunday."


WALLACE: And hello again from Fox News in Washington. We start today with some late news.

The first photos have been released of Congresswoman Gabrielle Giffords since she was shot in the head in that January rampage in Tucson. Aides say she's making a good recovery but continues to have difficulties (INAUDIBLE) together words.

And the latest on New York Congressman Anthony Weiner. He announced he is seeking professional treatment to deal with his practice of sending online sexual images to women. Weiner said he'll request a leave of absence from the House. But top Democrats, including Nancy Pelosi, called for him to resign. More on this in a few minutes.

Now, to our first guest. With Newt Gingrich's campaign in disarray, there's suddenly an opening for former Minnesota Governor Tim Pawlenty to move up in the race for the Republican presidential nomination. We continue our series of 2012: One on One interviews with Tim Pawlenty, who's in New Hampshire today.

And, Governor, welcome back to "Fox News Sunday." Governor? Governor, can you hear us?


WALLACE: Well, Governor, can you hear us?

PAWLENTY: Chris, I can hear you. I'm sorry. You were cut out there for a minute.

WALLACE: OK. Good. Well, that would have been -- that's good because we have 25 minutes budgeted to talk to you. So, that would have been a bit of a problem.

All right. Let's get going.

You unveiled a bold economic plan this week and let's run through your major proposals. Massive tax cuts -- take the top corporate rate from 35 percent all the way down to 15 percent, to individual tax rates 10 percent to the $100,000 couples make, everything above that, 25 percent. And big spending cuts from 24 percent of GDP down to 18 percent.

Governor, what would that do to the economy and what do you think it would do to our national debt?

PAWLENTY: Chris, it would unleash economic growth and job growth in this country. It would get back to the premise that we're going to grow the private economy, not the government economy. And it shows leadership and it puts specific proposals on the table.

I wish President Obama would do that, instead of leading from behind and refusing to address the real issues facing our economy, including spending reform. He basically waits for people like Congressman Ryan and others to lead and then he follows. That's not what a president should do. The president should bring forward the real challenges to this country, put out real solutions, that's what I would have done.

This plan, by the way, is one that gets back to the notion that we need to have a pro-growth economy focused on private sector job growth. And the number one path way forward for people's economic opportunity in this country is whether they have a job. This plan will unleash job growth in America big time.

WALLACE: All right. Let's drill down because it's a complex plan. As you say, it's a bold plan. It's also a controversial plan. Let's drill down first into the tax component of your proposal. The nonpartisan Tax Policy Center says if we follow your plan, that it would result in $11.6 trillion less revenue for the country over the next 10 years. Your own campaign says it would mean $2 trillion less in revenue.

Question -- doesn't your plan blow a hole in the national deficit?

PAWLENTY: Chris, it does not. First of all, those numbers, where they use the liberal think tank numbers that you cited or our numbers assume static scoring and first of all, over -- if you look at the tax cut part of it, there may be a small impact negatively on the deficit. That assumes no growth, assumes static scoring, which there will be growth because of this plan. But it forgets the other half of the plan. We are not proposing to cut taxes and raise spending -- as is happened in the past. We are proposing to cut taxes and dramatically cut spending as well. And when you do that over 10 years, this plan more than balances, has a positive impact on economic growth, has a positive impact on unleashing job growth in the country and the plan then well received by conservatives. In fact, yesterday, one of the leading economists in the country, John Taylor from Stanford, went through and said the growth targets are reasonable and achievable, and the plan holds together in that regard.

WALLACE: Well, let me just say that your campaign said that even with 5 percent growth, it still would result in $2 trillion less in revenue. But let me get this to this question of growth.

PAWLENTY: Chris, on that point, that's only half of the story. That's only if you use static scoring and it's only if you don't count back on spending cuts that we also make.

WALLACE: I know what static scoring. It assumes 5 percent growth, sir.

PAWLENTY: Yes, it does. But when we give you those numbers, it also -- that part of it doesn't take into affect the impact of the spending cuts. And when you do the spending cuts, it more than pays for that difference.

WALLACE: All right. Well, let's go through the two other parts of the equation. And that, first, is the question of economic growth and your 5 percent number. You say you can pay for the tax cuts because the economy is going to grow by 5 percent over the next decade. Let's take a look at what you said in your speech.


PAWLENTY: And the 5 percent growth target isn't some a pie in the sky number. We've done it before and with the right policies, we can do it again.


WALLACE: Governor, question: since the United States measured the GDP, basically growth of the economy in 1929, when have we had 10 consecutive years of 5 percent growth as you project in the plan?

PAWLENTY: Well, this is an aspiration. It's a big goal. And it's a stretch goal. And, by the way, I actually have a plan. Barack Obama doesn't have an economic plan. He just has a campaign plan. You can't find him on what he has to say on Social Security or Medicare or Medicaid. He has run out of ideas and the ideas he does have in growing the economy are bad. We tried it his way. It doesn't work.

So, is this aggressive and bold? Absolutely. But I don't buy into the declinist view and attitude of President Obama that we're going to settle for anemic growth or average growth or that America's going to be laggard. We're going to lead the world economically and in all other respects.

We have achieved 5 percent growth twice in the recent history of this country, once under Reagan, once under Clinton. Now, was it sustained for 10 years in those circumstances? No. But keep in mind, in Reagan, those early years, we didn't have 5 percent growth, we had 7 percent growth.

So, this idea that we can't do it in American -- hogwash. I believe in the American people. I believe if you unleash the private economy in this country, we can do this. Now, we also made it such that if the numbers don't hit 5 percent and they are a little lower than that, the plan still works.

So, I don't buy this defeatist/declinist Obama attitude that America should just accept its place as anemic laggard. That's not America. That's not the America I grew up in. That's not the America I want to live in the future.

WALLACE: But, Governor, is it --

PAWLENTY: That's why we need a new president.

WALLACE: Is it a declinist to doubt the 5 percent number? Or is it just a realist to doubt the 5 percent number? You talk about the fact that for a few years in the '80s and a few years in the '90s, that we did have average 5 percent growth or close to it. It was close to it 4-point-something. But the fact is, the differences in both of those occasions, that was coming directly out of a recession and not after a year -- a year into a weak recovery. And actually, in both of those cases, it came after a tax increase, not a tax cut?

PAWLENTY: But, Chris, like -- as I said, even if, and this is an aspirational goal, and I think it's an achievable goal. And John Taylor says it's an achievable goal. Others think it's a good plan. Of course, the conservatives like the plan. And President Obama and liberals don't, that's predictable. But the point here, is, first of all --

WALLACE: Well, sir, that's not quite fair. There were a lot of conservatives, there were a lot of conservatives who doubt the number and if you don't get your 5 percent growth, which you now say is just now aspirational -- then it means an even bigger deficit?

PAWLENTY: Chris, I want to make sure you hear this point. The plan balances over 10 years. And when you talk about the $2 trillion tax cuts, that's before you factor in the impacts of the spending cuts. And when you factor those in, it not only pays for itself at 5 percent, it pays for itself at 4 percent. So, please understand, this is not what happened in the past where you cut taxes and then raise spending. This is cutting taxes and cutting spending.


PAWLENTY: And look at it from that perspective, and it would be --

WALLACE: I take your point, sir, and let's get now into the spending component of this. You say that you want to take government spending from 24 percent down of GDP where it is now, all the way down to 18 percent. According to The Wall Street Journal, that would mean $1 trillion a year in annual spending cuts. Where are you going to get $1 trillion a year?

PAWLENTY: Well, Chris, they are spending $3.5 trillion in federal outlays currently, and they're taking in $2.2 trillion. Recently, President Obama spent $800 billion in surplus and then he refuses to reform entitlement payments now or over the course of the 10 years or beyond. So, one of the things he could have done to address the deficit -- by the way, when he ran for president, when in fact he became president March of 2009, he said, "I'll cut the deficit in half during my first term." That was President Obama's words.

So, add that to the list of big promises he made to the country and broke them all. And then he went and spent ourselves into oblivion.

WALLACE: But, Governor --

PAWLENTY: So, the stimulus bill by itself was $800 billion.

WALLACE: Governor, I am trying to find out -- I'm trying to find out how you are going to make these massive cuts. In your speech, you talk about the Google test. Let's take a look at what you say.


PAWLENTY: If you can find a service or a good available on Google or the Internet, then the federal government probably doesn't need to be providing that good or service.


WALLACE: Governor, you mentioned government programs like Amtrak, like the Printing Office, like the Postal Service. And you say you can find those on Google, so the government shouldn't be providing them. But here's the problem with that, sir -- Amtrak costs taxpayers $1.5 billion this year. The Printing Office, $137 million. The Postal Service is not funded by taxpayers. It's not funded by the Treasury.

So, the question remains, where are you going to find hundreds of billions, if not $1 trillion a year in spending? Be specific.

PAWLENTY: Yes, I will. In fact, I put specifics in the table -- the most specific plans of any candidate in this race, including the president of the United States who is, quote-unquote, "leading from behind." So, here's what I've said. We need to reform the entitlement programs, when you look at total federal outlay, so for the next generation coming up. It's not the people on the program, not the people near retirement, we're going to have to gradually raise the retirement age for people entering the workforce, the next generation, over time. We'll give them fair warning, but that will help Social Security.

We're also going to have to means test parts of Social Security, Chris. So, if you are wealthy, you're not going to get under my plan, the cost of the living adjustment in the future. But if you're middle income or lower middle income, you will.

As to Medicaid -- which is another huge part of the federal budget, the state federal program for health care for the poor -- we're going to shut off the autopilot feature, force Congress to appropriate the amount of money they can afford each year on that program, and then block grant the whole thing to the state and slow down the growth, in fact, try to hold the spending in that area flat as possible going forward.

In Medicare, we'll have a specific Medicare proposal out in the next few months. We've already began to talk about it. It will include choices that people will have, including staying in the current Medicare program. But we'll begin to incentivize people's health care choices and selections based on higher quality care and more efficient care, or we'll begin (ph) to pay providers --

WALLACE: Let me just follow up on that --


WALLACE: if I can with you, Governor,


WALLACE: -- about Medicare, because you talk about the idea, first of all, that it's not going to affect anybody who is close to retirement -- in the case of Paul Ryan, he's talking about 10 years from now. So, any of those changes aren't going to affect the budget for the next 10 years. You are talking about balancing budget.

If you're going to cut hundreds of billions of dollars in Medicare now, in the next 10 years, that means that seniors who currently were enjoying Medicare are going to have to do without. What kinds of programs, what kinds of sacrifices will seniors have to make in Medicare under President Pawlenty?

PAWLENTY: Well, keep in mind, President Obama's plan and Obamacare already cuts Medicare to the tune of about $500 billion and has some government board decide what part of Medicare is going to get whacked. So, he's already got scheduled under Obamacare $500 billion of Medicare cuts.

But under our Medicare proposal, you'll see features that will have providers, hospitals, doctors, clinics and the like no longer just get paid for volumes of procedures, but will look to the private sector and medical profession to define results and start to pay people, not just for how many procedures they perform, but whether people are getting healthier, whether they're getting better. We'll also incentivize, to the extent, we're going to have the government involved in this program. We're going to incentivize people to make good choices as to where they get their care and what care they get so that they go to higher quality care, more efficient care and that will help as well. And we've done these reforms and reforms like it in Minnesota and they worked.

WALLACE: Well, let me talk to you about that because one of the reasons that your economic plan came has under such scrutiny is because of your record as governor of Minnesota which you and I have wrestled with a couple of times already. Let's try it again. You say you that balanced the budget without raising taxes. But this week, we checked with the head of the Minnesota Taxpayers Association who said that you left your successor with a $5 billion deficit.

PAWLENTY: Well, Chris, that's simply not true. I was governor for eight years in Minnesota and it's not accurate to say that at anytime during I was governor, or even now in Minnesota, that there's a deficit in this regard. The budget has to be balanced under the Minnesota Constitution every two years. Every two years that I was there, it was balanced. And the last budget for which I was governor ends this summer. It's not even over yet. It ends this July 1st and it's going to end with a multi-hundred million surplus. It's going to end in the black.

Now, what people are referring to in Minnesota is the bureaucracy projects then a budget for the next two years based on hypothetical spending increases. And they are proposing 20-plus increases in state spending in the upcoming two-year period. I would never have allowed that as governor of Minnesota. It would never have happened. Every budget when I was there was balanced. It's even balanced to this day.

WALLACE: But, Governor --

PAWLENTY: And the upcoming two years they should never allow those spending increases. Chris, that would be like saying you are responsible for a car accident after somebody buys your car.

WALLACE: But, Governor, here's the problem. Here's what critics, that you relied on short term, often times one-time fixes. Let's get specific. You got $2.3 billion from the Obama stimulus plan to help you balance your budget. That money is running out. You got $4 billion because you delayed paying local school districts money that is still owed to those local school districts. And because you held up state aid, they say, local property taxes shot up. A year that you came into office, Minnesota land owners paid $5.1 billion in property taxes. The year you left, they paid more than $8 billion, Governor.

PAWLENTY: Yes. Let's go through each of those, specifically, Chris, because there's an answer to each. In Minnesota and most other states, local property taxes, of course, are set by local units of government. Just because we gave them a little less cash because of the economy and our budget doesn't mean their only choice was to raise property taxes.

WALLACE: But didn't you hold off --


WALLACE: -- to those local districts, sir?

PAWLENTY: I'm going to address that in a second. But the idea that local property taxes we forced them to go up or we raised them, that's simply not true. That's a local decision. They can decide either to cut spending or raise taxes.

WALLACE: But what wasn't part of that -- wasn't part of that, sir, because the state wasn't giving the localities and state aid you were supposed to for schools?

PAWLENTY: When you talk about locally, and I'll get to the school in just a second. So, on the second issue, using the stimulus money, the federal government is stupid enough to give it to us we're going to be smart to take it. And by the way, Minnesota is a net subsidizer of the federal government. For every dollar we spend out -- I'll send out there, we only get 73 cents back. So, we're actually paying the bill for the rest of the nation, or dramatically subsidizing it.

And as to the school payment shift, I was the one that said make it permanent. I own a lot of those school payment monies. The legislature won't them permanent --


WALLACE: -- you made that proposal to delay it and they said, no, the state legislature voted you down on that.

PAWLENTY: And then I did it through executive action and then I asked them to make it permanent, subsequently, so it would be a permanent cut or reduction or rescheduling of those payments, and legislature refuse to do it. But now, they're going to do it.


PAWLENTY: They're going to take my advice and they're going to do it even after I'm gone. So, this idea that somehow, you know, I didn't propose them permanent is not accurate.

WALLACE: Let's talk -- I mean, we go in what I suspect will be a fourth round on your Minnesota record. But let me talk some 2012 politics with you before we run out of time. What do you make by the decision of Mitt Romney and Jon Huntsman to skip the Iowa straw poll in August? Is it going to downplay the Iowa caucus?

PAWLENTY: Well, each candidate and campaign has to make their own strategic and tactical decisions in that regard. I can just tell you what I think. I think if you're going to be a leading candidate for president of the United States, you got to compete in these early states, all of them, and compete well. And that's what we intend to do. We're committed to competing in Iowa, in New Hampshire, in South Carolina, and we plan to do well in those early states.

WALLACE: You'll be debating Mitt Romney tomorrow for the first time in the -- you're up in New Hampshire, preparing for this debate tomorrow in New Hampshire. What do you make of Romney's argument that there's a fundamental difference between an individual mandate at the federal level, that everyone must get health insurance, and individual mandate at the state level? Do you see a difference in principle between -- on that point between Obamacare and Romneycare?

PAWLENTY: Well, you don't have to take my word for it. You can take President Obama's word for it. President Obama said that he designed Obamacare after Romneycare and basically made it Obamneycare. And so, we now have the same features -- essentially the same features. The president's own words is that he patterned in large measure Obamacare after what happened in Massachusetts. And what I don't understand is they both continue to defend it.

I took a different approach in Minnesota. We did market-based health care reforms, trying to encourage consumers with good information to make good decisions and financial incentives in a market place. But I strongly oppose the individual mandate at any level. I'm one of the parties in the lawsuit in Florida trying to get it declared unconstitutional. I think it's a dramatic overreach by government, forcing a consumer to buy a good or service because of a government edict or mandate. I think it's a dramatic overreach. And I don't like that approach under Obamacare and I've been a strong critic of it. And I think we should repeal Obamacare in its entirety.

WALLACE: And you think -- and you also don't like it under Romneycare?

PAWLENTY: You know, we -- I was asked to consider the individual mandate when I was governor in several occasions and I rejected it every time. And so, you know, we looked at all of the health care options in Minnesota, studied it, I had study groups. I said, study everything -- study everything that you want. And when push came to shove and they made the recommendations to go with the individual mandate at the state level, I strongly rejected it in Minnesota.

WALLACE: Let me ask you about that because you say and I'm sure you're going to be asked about this on the campaign trail. You say that the individual mandate is unconstitutional and it's quite right. You are one of the people trying to have it declared invalid and throw it out as part of Obamacare in the federal lawsuit.

Why then in 2006, did you say that you thought mandated health care is potentially helpful? And I want to put the quote up on the screen. Here's what you said in 2006, "If you are going to require insurance and that is a worthy goal and one we're intrigued by and I think at least open to, how then do you enable people to access the insurance?" You said "worthy goal," "intrigued by," "open to" -- it sure doesn't sound then like you thought it was unconstitutional.

PAWLENTY: Yes. But I can't see that clip, but if it's the right one that the DNC has been circulating, Chris. If you read the whole speech and look at the rest of the speech, you'll see in that very same speech, I said I didn't think the individual mandate was a good idea and, in fact, later after that speech and before that speech when various study commissions in Minnesota officially and formally recommend individual mandate, including, by the way, one of my study commissions, I rejected that recommendation formally.

WALLACE: OK. A couple of final questions. You dismissed the fact that you are lagging in a lot of these early polls, is the fact that you lack name recognition as compared to some of the other candidates like Mitt Romney who, of course, ran in 2008. But in the last six weeks, businessman Herman Cain has passed you not only in the national polls, but even -- and we're putting it up here -- a poll in Iowa where he's now at 15 percent, and you are at 10 percent. How do you explain that, sir?

PAWLENTY: Well, I just started my campaign for president a few weeks ago, Chris, and we are making good progress in early states. We like our position. We think we're going to do well. There's going to be a lot of bouncing around in these polls. But as you know, they are not good predictors of who's going to actually win. If they were, we'd have President Hillary Clinton or President Rudy Giuliani.

We like our momentum. We're picking up a good steam. Just this week by the way, we got Newt Gingrich's former national campaign chair, the great former governor of Georgia, Sonny Perdue, to join us. Congressman Joe Wilson in South Carolina endorsed our campaign. We got additional leaders coming on board, the person who is likely going to be the chair of Mitch Daniels possible presidential campaign, Al Hubbard, come on board as our policy chair. We're in here in New Hampshire this weekend getting good momentum.

And I'm the one candidate in this race, Chris, who can do this -- unite the whole Republican Party, not just excite or appeal the one chunk of it and then actually go on and win not just the nomination but the election. And so, I think when Republicans and conservatives look at the real challenge ahead of us, which is staying true to our values but also winning the election and beating Barack Obama, I'm the one candidate in the race who can do that.

WALLACE: Well, let me just ask you about that, finally, sir, because the knock on you is -- only a politician would this be a problem -- is that you are too nice. You are too bland and that Republicans want somebody who can take the fight to Barack Obama. Bill O'Reilly talked about this on Friday night in his typical understated fashion. Here it is.


BILL O'REILLY, HOST: You got to get a little Trump in him. He can't be going out he as -- look, Haagen-Dazs can put his picture on vanilla. Do we get that? Are we all hearing that? The guy is invisible.


WALLACE: Vanilla, invisible -- how do play it, Governor?

PAWLENTY: Did, Chris -- did Bill O'Reilly use the word vanilla?

WALLACE: He did.

PAWLENTY: Is he playing the race card on me?

WALLACE: I don't think so, sir. I think he was talking about the taste, not the color.

PAWLENTY: All right. Well, look, I'm not running for comedian-in-chief, or entertainer-in-chief. If people want that, they should go to the ball park or Broadway play or a Las Vegas show. We got a country that's in serious trouble. It is sinking. We need people who are serious, thoughtful, seasoned leaders who are willing to address the real challenges with real specific solutions, and have a record of getting it done. And the idea that you can't be hopeful and optimistic and strong at the same time is just not true. Look at great leaders that we've had in this country and around the world. America, of course, wants strong leadership.

And anybody who looks at my record in Minnesota and concludes that it's not strong is, you know, not looking at this thing correctly. I shut down the government for the first time in 150 years in Minnesota. I set a single season record for vetoes in my state. I un-allotted more money using executive power out of my budgets in eight years as governor than the 142 years of governors combined.

So, being strong is not the same as being loud or some big, you know, comedian or entertainer-in-chief. That's not what I'm running for. The country is sinking. We need serious people, with serious ideas, real solutions, real experience and a record of getting it done. So, if you want the clown-in-chief, vote for somebody else. That's not me.

WALLACE: Governor Pawlenty, we want to thank you so much for coming in and we really appreciate your allowing us to drill down into your plan and get your answers to it. We'll see you on the campaign trail, sir.

PAWLENTY: All right. Chris, thanks a lot.

WALLACE: Up next, the latest on Congressman Anthony Weiner. And Newt's campaign staff fires him, possibly opening the door for a new presidential contender. The panel tackles both when we come right back.



NEWT GINGRICH, PRESIDENTIAL CANDIDATE: I think this is going to be the happiest, most probably even fun campaign in my lifetime. I think we have so many ideas, so many interesting people, so much fun doing things.

There's a fundamental strategic difference between the traditional consulting community and the kind of campaign I want to run. Now, we'll find over the next year who's right.


WALLACE: Well, what a difference 29 days make from when Newt Gingrich announced his candidacy that the news this week that almost his entire senior campaign staff has resigned.

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.

Before we get and we will get quickly to the GOP presidential field, I got to ask you -- what do you make of the Anthony Weiner story and this latest turn with him saying he's going to go seek treatment, get a leave of absence, but top Democrats, from Nancy Pelosi down, saying "get out"?

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: I think he's done. I mean, he's seeking treatment. I mean, for a while, it looked like he was going to be the guy who got in the little scandal and resolutely refused to do any of that, many of the familiar steps that are taking towards the exits. Well, he's made one giant step toward the exit now with this leave of absence. I don't see how that works. And by the time he gets back from that, and pronounces himself cured of his desire to send dirty picture to people, I think his political career will be basically over.

WALLACE: But it is interesting, Mara, because he apparently had a conversation with Nancy Pelosi yesterday, and he said, I want to seek treatment, and she said no, that's not enough. They issued their call, and it was very dramatic to hear in the newsroom, bang, three in a row from Debbie Wasserman Schultz, Pelosi, and Steve Israel, the head of the Democratic Campaign Committee, and he still his holding firm. He was going to get a leave of absence, he's not going to quit.

LIASSON: Well, this shows you that only somebody's constituents can get them out of office in the final analysis. However, I think in the end, Anthony Weiner will not be coming back after the 2012 election, of only because the New York State legislature is going to redistrict him out of his seat. The only Democrats who have been helped by this scandal are the New York State Democrats, who have been having a pretty tough time deciding who, in the game of musical chairs, when they lose --

WALLACE: Because they're losing, what, two seats?

LIASSON: Yes, they're losing two seats, and there's going to be a Democratic seat that's lost. Now they have a pretty easy answer. So I think the most important things for Democrats in Washington is that Weiner is not around to have this story dominate and take attention off from the message they want. But in the end, he will not be back in the next Congress.

WALLACE: Yes. But, of course, if he comes back after getting help, then it's going to start all over again.

Anyway, enough about Weiner. Bill, let's talk about the Gingrich campaign. Does he have -- well, first of all, what do you make of the staff firing the candidate? And secondly, does he have a realistic chance of pulling off what John McCain did four years ago, where he got off of the mat after a real knockdown and somehow found a way through sheer will to win the nomination?

KRISTOL: I have been dubious about Newt's chances this year, but he should keep fighting and running. I really dislike this notion that because your staff quits -- I'm a former staff guy and I have a high regard for staff. But he's the one running for president and he's entitled to do it the way he wants. He'll show up at the debate tomorrow night. Let's see how he does. And if we wants to fly around commercial and carry his own bag, and not have all these fancy consultants and staff, I say more power to him. I am for everyone running, and running the kinds of campaigns they want. And I dislike the Washington elites trying to shut down different campaigns because five staff guys quit.

WILLIAMS: Well, I don't think it's about the Washington elite. I think it tells you something when the people very closest to you abandon ship like that. I mean, some of those people had been with Newt Gingrich forever, so it was very much a surprise to me in that regard.

But in the larger picture, he just hasn't built the campaign structure that would attract the money. It seems to be the case that he believes that going over the Internet, he can raise the money, that being the visionary, the idea guy, the brilliant Newt Gingrich, he can attract support. I mean, the chance for that is so (INAUDIBLE).

And the comparison to McCain is so ridiculous. I don't know. I mean, you just have to say, you know what? You like Newt, you wish him the best. But is this really the business of American politics right now? No, it's a sideshow.

KRISTOL: I talked to (INAUDIBLE) yesterday morning, and I said, "What's going to happen in the Preakness?"

WILLIAMS: Oh, stop.

KRISTOL: He said that Ruler on Ice horse, that has no chance at all. Everyone in Washington wants to pick the favorites and explain why underdogs never win. They should look at the horse races and the Triple Crown race this year. What is it, 21 underdog, 24-1 underdog? That's what the Republican primaries are going to be like, I think.

WALLACE: Along with talk of Gingrich's problems and a result of the Preakness yesterday, there is now a new spotlight, Brit, on Texas governor Rick Perry. There was a very interesting editorial in The Wall Street Journal on Friday. It never mentioned Perry's name, but it highlighted the fact that since the recession ended in 2009, 37 percent of all net new jobs in the U.S. have been created in just one state -- Texas.

Question -- I have to rephrase this, because everybody else I can just say, does Perry get in the race? You will not answer that. What do you think are the chances that Perry would get in the race? And if he does, how much does he change things?

HUME: Well, I would say this about him -- this Perry idea and the prospect of his getting in the race -- and I think he could get in and I think he would make an impact, and I think the record, as presented there by "The Wall Street Journal" gives you an idea why he could be formidable -- it tells you that race, which many prognosticators and a lot of political journalists seem to think is well advanced, is not well advanced at all. This is very early.

Now, there's been enough time for some people to stumble. Witness Gingrich, a conspicuous example. But this is early days, and we don't know what the shape of this race will be. You look at these poll numbers, and we're talking about polls in which somebody has 21 percent or something like that, and we are thinking they are the front-runner. You need a majority.

I mean, this is really early, and nothing important may yet happen until people start voting somewhere. And we're a long way from that. So, it's early. Perry might well have a chance. I hope he gets in just because he would make it interesting, but we have got a long, long way to go.

WALLACE: Mara, what do you make of the Perry boomlet?

LIASSON: I think it's a sign that Republicans are still dissatisfied with the field. I think Perry is looking at the same numbers and saying, whoa, I have a great story to tell, and this is an incredible moment, and the economy is tanking, and Obama looks more vulnerable than ever. And of course he's taking a look at it.

But I think that beyond taking a look at it, he hasn't done anything you need to do to actually get a campaign going. And one thing that is true is that people who get in late don't get the gift of time to be a candidate. And most candidates in the beginning, including Barack Obama, are pretty bad, and they need some time to work the kinks out of their stump speech and get better. And people who get in late are not going to have that. That being said --

HUME: And it's late.

LIASSON: I think it's getting late. By the fall, it's going to be time to fish or cut bait. I do think we have a front-runner, Mitt Romney, who has had a nice run of it lately. The economic numbers have really bolstered his case that he's the guy who can create jobs and he's the turnaround artist, and he can beat Barack Obama, and then I think you have all these other guys who are trying to be the alternative to Romney.

WALLACE: Let me ask you about Romney though, because there was some new that he made this week, and that is that he has decided to skip the Iowa straw poll in Ames, Iowa, in August, and all the other state straw polls. But I think he was largely doing the others so that he can skip Iowa. Smart move?

KRISTOL: Risky move. I mean, it is the move of a front-runner. And if he were a real front-runner like Bob Dole or George W. Bush, in a traditional-type year, it might make sense. I am dubious about it.

There's a New Hampshire poll. That could be Romney's strongest state, presumably. He's way ahead in the Boston Globe poll. You look inside the poll a little bit, 76 percent of voters say they are actually undecided. Sixteen percent say they may change their mind. So he is way ahead among the eight percent of Republican primary voters who have made up their mind.

I think the mood this year with Republican primary voters is, go out and make the case. Go out and win the nomination. Don't huddle with your consultants for a week and say, that Iowa straw poll, I don't really like that, and then we've got to skip the Florida straw poll, as you suggested, because otherwise it looks bad for skipping the Iowa straw poll. And it's over-thinking, I would say -- would be my hunch about what Mitt Romney is doing.

WILLIAMS: Well, he saves on his resources, so in that sense, it's a wise decision. It looks like something that you'd say is the strategy of a front-runner. But he is such a vulnerable front-runner. I think that what Mara said is on target, that when you absolutely look at the polls -- I guess this reflects what Bill said about the New Hampshire poll -- Republicans are just not settled. They are not excited about this field at the moment, they don't feel there is anybody there who really is going to take it to Barack Obama.

And that's the hunger, that's the Tea Party energy that drove Republicans to victory in 2010. They want to see that fire this time around, and so far they don't see it coming from anybody. It's why Sarah Palin, the specter of Sarah Palin, is still in the atmosphere around here. Everybody is saying what is she doing, is she going to do it? How does it impact Michele Bachmann? You see someone like Herman Cain come out of nowhere. People are looking for an alternative, something else, something different.

So, right now, I disagree with Brit. I don't think it's early anymore. I think you've got to build a structure, you've got to get the money, but people seem to feel as if they can come in at the last minute, so maybe times have changed, maybe the whole political cycle has changed.

WALLACE: All right. We have to take a break here, but coming up, Defense Secretary Gates takes NATO to the woodshed, while the president prepares for a big decision on Afghanistan.

Back in a moment.



ROBERT GATES, DEFENSE SECRETARY: Despite more than 2 million troops in uniform, not counting the U.S. military, NATO has struggled, at times desperately, to sustain a deployment of 25,000 to 40,000 troops.


WALLACE: Secretary of Defense Robert Gates calling out the NATO alliance for its failure to support the mission in Afghanistan.

And we're back now with the panel. Well, in his final weeks as defense secretary, Bob Gates is not going to go gently into the night, Brit. He questioned the future of the NATO alliance, saying that our partners were unwilling to be serious allies, serious partners in their own defense. And it is worth noting, in the decade since 9/11, the U.S. has doubled it defense spending in the war on terror. The European countries, the rest of NATO, cut military spending by 15 percent. Do you think this speech does any good and gets NATO to pick up more of the task?

HUME: Well, it was the most eye-catching speech that I've ever heard on the subject of the force levels of NATO -- and NATO used to be kind of a joke about the -- that's a topic for a boring speech, because NATO was a perennially solid and strong alliance. Given the level of contribution in which our European partners are now capable, it is not so strong an alliance. And Gates was absolutely right to point it out. And it was the kind of blunt talk you don't often hear.

I think it will certainly stir debate. Now, whether the Europeans who border, in my opinion, in political and military terms, on decadence will respond to any meaningful way in the midst of all the budgetary problems they're having over there remains to be seen. But it was a well of a speech, and there are all kinds of interpretations about what it was supposed to do. I think what it was supposed to do was to tell these people to buck up, and they need to.

WALLACE: You know, it's interesting. One of the things that Gates pointed to, Mara, was Libya, where even though we're, by some accounts, leading from behind, the U.S. is still picking up 75 percent of the tab, and the NATO countries -- and some of them were much more gung-ho about getting into a military engagement in Libya than the U.S. was -- are running out of resources, or so they claim, and running out of money. Do you get any sense that they might pick up more of the tab there?

LIASSON: Probably not. I think this is a source of perennial frustration in the United States. I mean, Barack Obama wants to be more multilateral. He just doesn't have any multilateral help. I do think though that even though the United States has complained about this imbalance for many, many years, I think now is a little bit different. The budget pressures in the U.S. are going to force people to take a second look -- why should we subsidize the European defense structure? Which is, in a sense, what we're doing. And I think that the pressure is going to be on. I don't know if the Europeans are going to respond. They have to make a decision as to whether they want to be more equal partners. But I do think the pressure is going to be greater than ever for us not to do this anymore.


KRISTOL: I don't think Europe is going to change much. I think the world is the way the world is, and I think it's in our national interest to have a very strong presence around the world. And we can't change the nature of these European countries. We can nag them and work with them. I mean, they are doing some stuff in Afghanistan and some stuff in Libya. It could be worse, but it could be a lot better. But it doesn't change our fundamental responsibilities, I think. And the fact that NATO is weaker probably puts a little bit more of a burden on our shoulders.

WALLACE: But, you know, Juan -- and let's turn to Afghanistan, because that was what Gates was talking about in the sound bite we ran at the beginning. He says the U.S.' surge, we got 100,000 troops there, and we have to beg NATO to keep up to 40,000, and oftentimes it's considerably less than that. And he's saying there's just an untenable imbalance there, particularly, as we point out, when the Pentagon is going to come under increasing demands to cut its spending.

WILLIAMS: Without a doubt. And you know what's interesting? It's that he also pointed out that the kinds of missions that they are willing to undertake are not combat missions. They're often training missions, peacekeeping missions. They don't want to get into the fight. And when you ask the European leaderships about this, when it's actually put to them, not just in terms of a speech, it goes beyond what Donald Rumsfeld called old Europe. You know, an old attitude. It then comes down to, it's not politically sustainable that the populations, politically, don't support leaders who are dedicated to that kind of military engagement. They don't want it.

And I must say, here in the United States, we're almost at that point of war weariness, because if you ask people about the Afghan effort right now -- I think this is a lot of the pressure on President Obama in the White House, in the discussions that are ongoing right now -- it's to say how long? This is the longest war the United States has ever been involved with. Has anybody ever come out of Afghanistan with good results? Al Qaeda right now is weakened. We have killed Bin Laden. What are we doing there? You've got to make this case. And so, as he waits reports from General Petraeus and others about their recommendations, you can't ignore the political quotient. Bill says, oh, we have national interests there. Tell me, what is the national interest?


WALLACE: I love the way he's come under preemptive attack.

KRISTOL: Yes. Didn't you just say Al Qaeda has been weakened? Isn't that some success?

WILLIAMS: That's what I'm saying. So what are we doing there?

KRISTOL: What we're doing is we're weakening Al Qaeda and defending the U.S. and trying to prevent it from becoming a base for terrorism in the future.

WILLIAMS: So do we stay there forever?

KRISTOL: Bob Gates -- I would be happy to have a long-term security relationship with the Afghan government. And, in fact, the Obama administration is working on this. We were in Korea. Is that a bad or good thing 50 years later?

WILLIAMS: No, no, that's fine. But we're talking about 100,000 people.

KRISTOL: We're not going to keep 100,000 people there.

WILLIAMS: OK. All right.

KRISTOL: Secretary Gates, who has been giving a lot of very good speeches, also said Friday, "Far too much has been accomplished at far too great a cost to let the momentum slip away just as the enemy is on its back foot. I think that is a seriously considered judgment of the secretary." He was not a fan of the surge at the very beginning. I talked to him about it at the time. He believes we're making serious progress, and I very much hope the president takes his military advisers' advice, like General Petraeus, and his secretary of defense's advice, and doesn't look at some polls and say, oh, people are tired of the war. We're winning this war. It would be terrible to fritter away --


WALLACE: Juan, let me just break in, because this all comes at precisely the point when the president, this last week, started meeting with his national security team, Brit, to discuss, what's he going to do? Famously, back in December of 2009, when he announced the surge, he said we're going to begin -- he didn't say what the size will be, but we're going to begin the pullout, the drawdown in July of 2011. That's just weeks away. What do you think is going to happen?

HUME: Well, it all depends on whether there's going to be a symbolic drawdown in the interest of keeping his promise in areas where they're reasonably secure. My guess is that's what it will be. My guess is that Gates will carry the day, and we will not weaken in any meaningful way the commitment we've made there and the force we've got there. And so this progress of which Gates spoke can be continued. I don't think the president is going to precipitously pull out of there. Now, there's going to trouble on his left if he doesn't, but I think he's not going to do it.

LIASSON: Not much trouble on his left, I think. The president said he was going to start pulling out. There's going to be some number that the military will tell him will not jeopardize the success of the mission. I don't know if that's going to be 5,000, something like --

WALLACE: We heard 3,000 would be considered a token.

LIASSON: I think that would be a token -- 5,000, 6,000, 7,000, maybe as much as 8,000. He put 30,000 in there, and it's in President Obama's political interest not to have Afghanistan go south. Right now it's not an issue. That's good for him. If he takes out too many troops and it kind of all falls apart, that's a bad thing. He wants to succeed in Afghanistan. There is no point doing the surge otherwise. So there is going to have to be some number that the military says they can do without.

WALLACE: Bill, there's another interesting fact in this whole equation, and that is that General David Petraeus, the commander of U.S. forces in Afghanistan, is about to apparently give the president his recommendation. Does the president dare go against Petraeus -- and you know that recommendation will become public -- given the fact that Petraeus is widely credited with not -- if not winning the war, certainly beginning to turn it around? And also, the president has named him to be his CIA director.

KRISTOL: I suppose General Petraeus might give him two or three options and say --

WALLACE: But we always know the middle one is the one --


KRISTOL: Higher ones would assume more risk. I think any drawdown assumes some risk, incidentally. But I take the point that he will want to keep his word and do a little bit of a drawdown. The fact is the surge has succeeded in the south, it's succeeding -- it needs one more fighting season there. But we were still set on the ground. It has to go east now and clean up the Haqqani network there. Then I think there's a real chance in 2013 -- just as the president has been saying, 2014 is the real agreed-upon deadline for when we really turn over responsibility to the Afghans. I think he's on course to making that.

And it would be terrible, as I say, to take much greater risk just for the sake of appeasing a few politicians here and a few people in Congress who like popping off. He can stand course for the 2013 -- much bigger drawdown of 2013, and with a real turnover in 2014, I think.

WILLIAMS: All the wise men of Washington want him to stay. John Kerry wants him to stay, you want him to stay. But let me just say --

WALLACE: No. Supposedly, John Kerry is saying that he'd like to see -- pardon?

HUME: He's going the other way.

WALLACE: Kerry is now talking about, you know, we've accomplished a lot, maybe we need to drawn down faster.

WILLIAMS: But not at the rate that I think the American people -- the American people want it over. When you're spending --


WALLACE: How do you know what the American people want, Juan?

WILLIAMS: Well, you look at the numbers. Look at the support for this war. It's not there.

WALLACE: Actually, that's not true. The support for the war has actually increased.

LIASSON: No, no, no.

WILLIAMS: It's increased from what? It's very minimal. This is minimal support. You're fooling yourself.

WALLACE: Really? All right. so we'll take your idea about what the American people want.

WILLIAMS: I just think you should look at the numbers.

WALLACE: The polls?


WALLACE: OK. That's how we're going to run the war? Good. Thank you.

WILLIAMS: Oh, please.

WALLACE: Thanks, panel. See you next week.

WILLIAMS: You always get the last word.

WALLACE: Up next, we hear from you.

I'm the moderator.



WALLACE: Time now for some comments you posted to our blog, "Wallace Watch." And there was plenty of reaction to our interview last week with former governor Sarah Palin.

Lucy Damare (ph) from Highland, Indiana, writes, "Don't tell me that Sarah Palin did not look presidential on your show today. Go Sarah!"

Steven Banks (ph) agreed. "In an age where politicians and even presidents outright lie on camera, while doing the exact opposite in reality, a politician like Palin, who's not always perfect is refreshing."

But Steve Peterson (ph) from Haymarket, Virginia, had a different take. "Palin's responses are not anything presidential to me unless you think it's presidential to spin, stay as vague as possible, and to talk out of both sides of your mouth."

Finally, during her bus tour, Palin took some heat for her account of the midnight ride of Paul Revere. Bill Pettingill (ph) took issue with her defense in our interview. "Sarah Palin got her history wrong -- a little ridiculous and no big deal, to be sure -- but then she came on your show and lacked the courage to admit she was wrong."

Please keep your comments coming to us at Up next, a word about next week's special guests.


WALLACE: Now this program note. Next week we have an unusual pair of guests. First, the outgoing secretary of defense, Robert Gates, in one of his final interviews before he steps down at the end of the month. Then, political comedian and commentator Jon Stewart, the host of "The Daily Show." This is one Sunday you won't want to miss.

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

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