Rep. Michele Bachmann Talks Earmarks, Obamacare and Gay Marriage; Sen. Kyl on Debt Talks

GOP presidential candidate on 'Fox News Sunday'


The following is a rush transcript of the June 26, 2011 edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.


Suddenly, she's the Republican presidential candidate getting the most buzz -- and a new poll out today shows it.

A Tea Party favorite and a staunch social conservative, Congresswoman Michele Bachmann, is rising in the polls. Today, we sit down with her as we continue our series, "2012: One-on-One."

Then, with the debt deadline fast approaching, high-level talks collapsed. We'll find out what happens next when we talk with one of the Republicans who walked out, Senator Jon Kyl. It's a "Fox News Sunday" exclusive.

Also, the president lays out his plan to pull troops from Pakistan. As Congress challenges the commander-in-chief over Libya. We'll ask our Sunday group about both conflicts.


JON STEWART, "DAILY SHOW": Not because I have an ideological --


WALLACE: And our heated exchange last week with the "Daily Show's" Jon Stewart lit up the Internet. Today, we set the record straight.

All right now on "Fox News Sunday."


WALLACE: And hello again from Fox News in Washington.

Tomorrow, the rising star in Republican presidential politics Michele Bachmann officially opens her campaign in her hometown of Waterloo, Iowa. But, first, she sits down with us for a "2012: One-on-One" interview.

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


WALLACE: You have taken off since the New Hampshire debate. And the new Iowa poll out today from The Des Moines Register, it shows exactly that. Let's put it up on the screen.

In the survey of likely Republican caucus-goers, Mitt Romney is first with 23 percent. But right there with 22 percent. And all the others, as you can see, are far behind.

How do account for it? Why are you suddenly a frontrunner?

BACHMANN: Well, part of it is because I was born Iowa. In Iowa, I have a distinct advantage there, I think. And also, I think, since the debate, people have paid attention and they've recognized that I am very serious about what I want to do, because the country is on the wrong track. My goal is to turn the economy around and have jobs created. People recognize I'm serious.

WALLACE: Well, I mean, everybody would say that, both Republican and Democrat.

Let's take an example. You and Romney, according to that poll, are out front. What's the choice for Republican voters between Mitt Romney and Michele Bachmann?

BACHMANN: I think what people know about me is that I do what I say and I say what mean. I am a fighter for the cause. As long as I've been in Washington, D.C., I have taken that voice of the people who sent me here from Minnesota, from Iowa, very common sense voice. And it has finally been heard now in the halls of Congress.

My goal, Chris, is to take that voice to the White House where it hasn't been heard for a long time. And I think people recognize that I'm very sincere in what I say. And I will fight, whether it means taking on Washington, even sometimes my own party. I'm happy to do that because we have to turn things around.

WALLACE: By implication, are you suggesting that Mitt Romney not sincere?

BACHMANN: What I'm talking about is what I'm going to do as president of the United States. And in the course this campaign, I look forward to getting to know more people and explaining more about our plan.

WALLACE: All right. We're going to talk about the other candidates a little bit later.

But let me ask you about yourself. With the spotlight comes new scrutiny. The Los Angeles Times has a story out today that says for all your talk of being a fiscal hawk, that, in fact, you have gone after federal and government -- excuse me, state government money over the years, both personally and professionally. And let's it up on the screen.

A counseling clinic -- excuse me -- run by your husband got almost $30,000 in state federal funds. A farm, in which you are a partner, got almost $260,000 in federal subsidies. And over the years, you sought more than $60 million in the state earmarks and more than $3.7 million in federal earmarks.

Question -- that's a fiscal hawk?

BACHMANN: Well, let's go through them. First of all, the money that went to the clinic was actually training money for employees. The clinic did not get the money. And my husband and I did not get the money either. That's mental health training money that went to employees.

Number two, regarding the farm, the farm is my father-in-law's farm. It's not my husband and my farm. It's my father-in-law's farm. And my husband and I have never gotten a penny of money from the farm.

Regarding the earmarks, I believe the right place to build projects is in the states and the states have to build roads and bridges. And I don't apologize for building roads and bridges.

WALLACE: So, you're pro-earmark?

BACHMANN: No. During my first year -- during my first term in Congress, I signed a pledge that I will take no more earmarks and I've been faithful to that pledge.

WALLACE: In terms of the money -- and, obviously, I don't know the details nearly as well as you do about the clinic that's run by your husband. If you say money is going to employees, that -- I mean, if he runs the clinic, that would seem to be benefiting you guys.


WALLACE: And to the degree that you are a partner in a farm, federal subsidiaries would seem to benefit the farm.

BACHMANN: Actually, it did not. It actually took away from the clinic, because these were training hours where employees were not able to bring more income in. This is one-time training money that came in from the federal government. And it certainly didn't help our clinic. It was something that was additional training to help employees.

WALLACE: Perhaps your biggest issue is that your want to repeal Obamacare. And one our main reasons you say is because it would the cut Medicare, services, health care for seniors, by half a trillion dollars over next decade. Correct?

BACHMANN: What I want to do is to make sure that we fully repeal Obamacare. This will be one of the largest spending initiatives we will ever see in our country. And also, it will take away choice from the American people. It will hurt senior citizens, because Obama took away $500 billion, as you say, from Medicare and will transfer it younger people in Obamacare.

Even worse, the Congressional Budget Office is saying ill lose 800,000 jobs with Obamacare. When we're in a situation now where we have massive job loss, this is not what we want to do with Obamacare.

WALLACE: But I want to ask about the Medicare part of it, because as you just said, it took away -- would take away almost half a trillion dollars, $500 billion, from Medicare, for a new entitlement. But you voted for the Paul Ryan House budget, which also take away almost half a trillion dollars from Medicare.

BACHMANN: Well, what we -- what we need to do is revise and change what we're doing in Washington, D.C. We do need to have changes in the budget. We do need to have changes in spending.

But the one thing we know about Obamacare, it will be a brand new bureaucracy, larger than anything we've ever seen before in Washington. And we simply can't afford it. What seniors --

WALLACE: But if I may, I understand all that part of it. But specifically on Medicare, Obamacare would take away half a trillion dollars from Medicare. The Ryan budget which you voted for would take away half a trillion dollars for Medicare.

BACHMANN: Well, let's be clear. The Ryan budget is really the 55 and under plan. People need to recognize --

WALLACE: No, no, no. But

BACHMANN: -- no one over 55 will be touched.

WALLACE: No, no. But it would take away -- that's for the voucher plan. But it would take away --

BACHMANN: It's not a voucher plan.

WALLACE: We can talk about that. I mean, it's a premium support and a lot of people say that's the same thing.

BACHMANN: But it's not.

WALLACE: The point is, though, that it's taking half a trillion dollars away in the next decade for people over 55.

BACHMANN: For -- what the Ryan plan is trying to do is present a budget framework. It's important for people to recognize it's not legislation.

WALLACE: It's a legislation, as intended.

BACHMANN: It's a budget framework. And this is -- this is a starting point for us to have a discussion. I have put an asterisk, I voted for the plan because this is right, we need to get to our house in order with our fiscal spending. But my asterisk is, we have to make sure going forward with senior citizens, that we're focusing on a higher quality of life, dealing with cures for instance for senior citizens.

I think we can readjust the money, because one thing that I want to make it clear, my commitment is to make sure that government keeps its promises to senior citizens both on Medicare and on Social Security. But for 55 and over, we need to be able to make sure that system is kept the way that it is.

But for younger, we will need to have adjustments.

WALLACE: You are a strong opponent of same-marriage. What do you think of the law that was just passed in New York state -- making it the biggest state to recognize same-sex marriage?

BACHMANN: Well, I believe that marriage is between a man and a woman. And I also believe -- in Minnesota, for instance, this year, the legislature put on the ballot for people to vote in 2012, whether the people want to vote on the definition of marriage as one man, one woman. In New York state, they have a passed the law at the state legislative level. And under the 10th Amendment, the states have the right to set the laws that they want to set.

WALLACE: So, even though you oppose it, then it's OK from your point for New York to say that same-sex marriage is legal?

BACHMANN: That is up the people of New York. I think that it's best to allow the people to decide on this issue. I think it's best if there's an amendment that goes on the ballot where the people can weigh in. Every time this issue has gone on the ballot, the people have voted to retain the traditional definition of marriage as recently as California in 2008.

WALLACE: But you would agree if it's passed by the state legislature and signed by the governor, then that's a state's position.

BACHMANN: It's a state law. And the 10th Amendment reserves for the states that right.

WALLACE: All right. I want to follow up on that, because I'm confused by your position on this. Here's what you said in the New Hampshire debate. Let's put it on.


BACHMANN: I do support a constitutional amendment on marriage between a man and a woman, but I would not be going into the states to overturn their state law.


WALLACE: That's why I'm confused. If you support state rights, why you also support a constitutional amendment which would prevent any state from recognizing same-sex marriage?

BACHMANN: Well, because that's entirely consistent, that states have, under the 10th Amendment, the right to pass any law they like. Also, federal officials at the federal level have the right to also put forth a constitutional amendment.

One thing that we do know on marriage, this issue will ultimately end up in the courts, in the Supreme Court. I do not believe the judges should be legislating from the bench.

As president of the United States, I would not appoint judges who are activists --

WALLACE: But this has nothing to do with the judges.

BACHMANN: -- who want -- who want to legislate from the bench. Under the federal government, again, federal representative can put forward a federal constitutional amendment because ultimately, with states having various laws, the federal government --


WALLACE: My point is this, do you want to say it's a state issue and that states should be able to decide? Or would like to see a constitutional amendment so that it's banned everywhere?

BACHMANN: It is -- it is both. It is a state issue and it's a federal issue. It's important for your viewers to know that federal law will trump state law on this issue. And it's also -- this is why it's important --

WALLACE: And you would federal law to trump state law?

BACHMANN: Chris, this is why it's so important because President Obama has come out and said he will not uphold the law of the land, which is the Defense of Marriage Act. The Congress passed the Defense of Marriage Act and Bill Clinton signed it into law, to make sure that a state like New York passed a definition of marriage other one man, one woman, that other states wouldn't be forced to recognize New York's law.

WALLACE: But just real quickly --

BACHMANN: And President Obama has said --

WALLACE: Congresswoman, if I may --

BACHMANN: Let me just finish this. In opposition to what is supposed to do, he is charged with executing our laws, whether he likes them or no. That's why this is so crucial. That's why I think you may see again a rise at the federal government level for a -- a call for the federal constitutional amendment, because people want to make sure that this definition of marriage remains secure, because after all, the family is the fundamental unit of government.

WALLACE: So, just briefly, you would support a constitutional amendment that would overturn the New York state law?

BACHMANN: Yes, I would. I would. That is not inconsistent, because the states have the right under the 10th Amendment to do what they'd like to do. But the federal government also has the right to pass the federal constitutional amendment. It's a high hurdle, as you know.

We only have 27 amendments to the federal constitution. It's very difficult. But certainly, it will either go to the courts, or the people's representatives at the federal level.

WALLACE: I want to just run through a few of your opponents and we're running out of time. So, excuse me for putting you along, if I may.

You hit Romney this week for not agreeing to sign a pledge on abortion. You said this, "This is not the time for the Republican Party to up a candidate who is weak on the pro-life issue or has a history of flip-flopping over it."

Question -- Mitt Romney is weak on pro-life?

BACHMANN: Well, President Romney -- not "President Romney."

WALLACE: Governor Romney.

BACHMANN: Governor Romney had a history of varying his position on this issue. I think, clearly, we need a candidate who is pro-life. That's reflective of our party. It's reflective of my position throughout my life.

WALLACE: And Mitt Romney is not?

BACHMANN: Mitt Romney -- Mitt Romney has to say what he is. But I will say that if he is saying now that he is pro-life, this was a tremendous opportunity for him to demonstrate that by signing the Susan B. Anthony pledge. And I think it's disappointing that he didn't.

WALLACE: Former Governor Tim Pawlenty of your sate of Minnesota says that he balanced the budget without raising taxes. Critics say he left a $5 billion deficit for the state. Who's right?

BACHMANN: Well, under Minnesota state law, like many states, we are required to balance our budget. There is a deficit that is in Minnesota that the current legislature is grappling with. And, clearly, that has to do with obligations regarding spending.

And that's why at the federal level, as president of the United States, very first and singular focus will be on turning the country around. We're on the wrong track. I want to turn the economy around. I'm a job creator. I'm a former federal tax lawyer.

I get it, what the problems are. I get what the solutions are. And I have a titanium spine to be able to do what needs to be done to turn the economy around.

WALLACE: If Texas Governor Rick Perry gets into this race, doesn't he overshadow you on Tea Party and social issues?

BACHMANN: Well, I think there's room in the race for all sorts of candidates to get in. And I think this is good for the people of the country to have as many candidates as we want to get in, as would like to.

WALLACE: Finally, let's talk about Michele Bachmann because -- and you say -- it's interesting. You say that the people saw in the debate and saw you as a serious person. I don't have to tell you that you have -- the rap on you here in Washington is that you have a history of questionable statements, some would say gaffes, ranging from -- talking about anti-America members of Congress -- on this show -- a couple of months ago, when you suggested that NATO airstrikes had killed up to 30,000 civilians.

Are you a flake?

BACHMANN: Well, I think that would be insulting, to say something like that, because I'm a serious person.

WALLACE: But you understand when I say that, that that's what the rap on you is?

BACHMANN: Well, I would say is that I am 55 years old. I've been married 33 years. I'm not only a lawyer, I have a post doctorate degree in federal tax law from William and Mary. I work in serious scholarship and work in the United States federal tax court.

My husband and I raised five kids. We've raised 23 foster children. We've applied ourselves to education reform. We started a charter school for at-risk kids.

I've also been a state senator and a member of United States Congress for five years. I've been very active in our business.

As a job creator, I understand job creation. But also I've been leading actively the movement in Washington, D.C., with those who are affiliated with fiscal reform.

WALLACE: Do you -- do you -- and I think it's important to say that. But do you recognize that now that you're in the spotlight, in a way that you weren't before, that you have to be careful and not say what some regard as flaky things?

BACHMANN: Well, of course, a person has to be careful what statements that they make. I think that's true. And I think now, there will be an opportunity to be able to speak fully on the issues. I look forward to that.

WALLACE: Congresswoman Bachmann, we want to thank you so much for coming in today. Always a pleasure to talk with you. And safe travels on the campaign trip.

BACHMANN: Thank you. Thank you.

WALLACE: Up next, the debt ceiling talks fell apart this week. We'll ask one of the negotiators who walked out what happens next.


WALLACE: Tomorrow, the president gets directly involved in talks to come up with a deal to raise the debt ceiling. Previous efforts collapse when the two Republicans involved walked out. One of them joins us now, Jon Kyl, the Senate's number two Republican.


WALLACE: And, Senator, welcome back to "Fox News Sunday."

SEN. JON KYL, R-ARIZ.: Thanks very much, Chris.

WALLACE: As we said, the president starts talks tomorrow, separate talks with Senate Democratic Leader Harry Reid, and then with Senate Republican Leader Mitch McConnell.

Given the GOP's refusal to include any new revenue, what's the basis for a deal?

KYL: Well, we have not refused any new revenue. For example, we've been discussing some fee increases and some other things that would actually generate revenue.

But what we object to is changing the tax code. We don't need new taxes right now. We need to reduce spending.

WALLACE: But the White House is talking about $3 in spending cuts for every $1 in additional revenue. Given the fact that you got a divided government, you don't control, Republicans, the whole deal, and given the fact that stakes are so enormous, danger of the country going in default -- why isn't that a $3 to $1, spending to taxes, why isn't that a fair deal?

KYL: First of all, the key here is to get economic growth going again. In the last quarter, our economic growth was less than 2 percent. I think it was 1.8 percent or 1.9 percent. We need to put people back to work.

Most economists agree that in times of economic downturn like this, the last thing you want to do is to add more taxes on to the economy. So, it would be inimical to economic growth and job creation, which is what we all ought to be urging here. When our economy grows and people are making more money, at the same income tax rates, they would pay more a lot more in taxes and the government will have more revenues.

But you don't want to pile taxes on at a time when companies don't have the ability to invest and hire people. That's the primary reason we are opposed to raising taxes right now. There's also a very practical problem in the House of Representatives. It's not going to pass when you have big tax increases.

WALLACE: We're going to get to the economic growth aspect in a minute. But let's just go through the taxes because the White House says -- and let's just make it clear what we're talking about here -- the White House says they've given up on the idea of raising tax rates for individuals, even those over $250,000. They understand the politics, as you say, the House, it's just a nonstarter.

But let's go through some of the things, Senator, that they are proposing. Let's put them on the screen.

Limit deductions -- tax deductions for households making more than $500,000 a year to 10 percent of gross adjusted income. They said that would bring in $210 billion over the next decade.

And here's the argument the White House is going to make. I want you to respond to it. They say, do you really want to be protecting mortgage deductions for millionaires at the same time that you are cutting Medicare for seniors?

KYL: Well, let's be clear. What they are talking about is charitable giving, mortgage deductions, that sort of thing. And it always happens -- they aim at the millionaires and billionaires.

But there's not enough money for those folks to run the government for very long. So, they end up affecting everybody. That's what the alternative minimum tax did. And I think that's what actually happened here.

We have always been willing to consider so-called tax expenditures -- but as the president originally proposed, in the context of overall tax reform. He has said, for example, let's eliminate some of these - they're called tax expenditures even though you don't think of deduction for charitable giving as a tax expenditure. But if we could reduce --

WALLACE: That's money that the Treasury is giving us.

KYL: It's foregoing. And so, if you could reduce some of those, you could also then reduce overall tax rates. And if you look at the United States as a worldwide competitor, for example, the president himself has proposed eliminating some of those things for business so that we could reduce the overall corporate tax rate.

So, what we've said is we're perfectly willing to consider those kinds of issues in the context of tax reform, which we would very much like to do. But we're not going to have the time to do it or be able to do it in order just to raise revenue as part of the exercise which should be about reducing spending.

WALLACE: All right. Let's put up another White House proposal that doesn't involve individual taxes. It involves tax breaks for specific businesses. Put it on the screen.

Eliminate oil and gas subsidies for companies making more than -- have more than $1 billion in annual profits. They say that would raise $21 billion. And again, this is at a time when Republicans are demanding big cuts in government programs and services.

KYL: Yes. There are several answers here.

First of all, if you want gas prices to rise, if you want to pay more than 4 bucks at the pump, then go ahead and do this. That's not what we should be about right now. That kind of tax increase is going to flow right to the consumer. Everybody knows that.

Secondly, what you're doing is picking out one industry in the United States, an industry that employs almost 10 million people, represents about 7.5 percent of our gross domestic product. And you're saying to them, you are not going to get the same kind of tax treatment that all other manufacturing corporations get in the United States. So, we're going to -- we're going to punish you, because you make a lot of money.

It's also true that with those big profits, they have enormous costs of investment. You've, of course, covered the issue of how much it costs to put one of those platforms out in the middle of Gulf of Mexico. It's billions of dollars. So, it's big money all the way around. But you're going to hurt the American consumer if you impose more taxes on them.

WALLACE: I want to get back to the argument you made that raising taxes is going to hurt the economy, because that's certainly a seriously argument, particularly with such a weak recovery. If taxes is the wrong solution, what about these spending cuts? Does that conceivably hurt the economy?

Fed Chairman Ben Bernanke this week said, look, I support long- term debt reduction, but I'm not convinced -- in fact, he opposed the idea of big cuts right now.

Let's watch.


BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: In light of the weakness of the recovery, it would be best not to have sudden and sharp fiscal consolidation in the very near term.


WALLACE: Isn't that, Senator, an argument for serious debt reduction, serious spending cuts, over the long-term, but not right away when you got 1.8 percent growth, and even perhaps some targeted spending increases?

KYL: I'm not sure what you can read into that very obtuse statement. But, the reality is --

WALLACE: Well, it's Fed speak, it was clear as that one.


KYL: Right. But just take the Ryan budget. That's supposed to be the most radical thing.

OK. Over 10 years, the Ryan budget adds $5 trillion to our national debt. We would have 10 straight years of roughly $500 billion in increased debt.

So, the radical cuts that some people are talking about, and that the chairman warns again are simply not part of the Republican plan. Now, once you begin to turn down the long-term spending, which is what the Ryan budget does, then you get back to a point we're only spending 20 percent of our economy, of the GDP. Today, we're spending 25 percent.

The Obama budget never gets below 23 percent. But that's what the Ryan budget does. Obama would add $12 billion over the same period of time to our debt.

WALLACE: Let's talk about the stakes here. Fed Chairman Bernanke says that any default, that's what we're talking about, the possibility of a default on August 2nd, could cause severe disruptions in financial markets. Some Republicans are saying, well, all right, we're not going to default. We're going to take the money that we have without raising the debt ceiling. We'll pay off our Chinese creditors first and we'll cut government services.

But Bernanke says that won't work either. Put this up on the screen.

He says, "The Treasury would soon find it necessary to prioritize among and withhold critical disbursements such as Social Security and Medicare payments and funds for the military."

And, Senator, he says that also would scare the markets.

KYL: It probably would. And the question is, how do you get the kind of reform in spending and in long-term debt relief without scaring the markets here?

We have proposed, I think, very sensible ways to do that. As I said, the Ryan budget actually gets to primary balance in the year 2014. So, I think the markets would like that a lot. They would also like if it we did something serious on entitlement reform.

WALLACE: But if I may because we're running out of time -- I mean, what -- I think what Bernanke is basically saying is, if you don't get a deal or even if you don get a deal and you decide, well, we'll pay the creditors but we'll cut from government, this is going to scare the markets. So, how do you see this playing out? What are the chances you get a deal that both sides can sign on to by August 2nd?

KYL: We have to do that. We have to try to do that. That's what I've been involved in in these the negotiations.

But when the president says there's one condition, you have to raise taxes -- no, you don't have to re taxes. Our problem is not that we paid too little in taxes. The problem is --

WALLACE: Aren't you putting your own condition on it? No taxes.

KYL: Yes. If you want to kill the economy, raise taxes. Are we going to vote to absolutely put another anchor around the neck of the economy which is struggling to try to recover here? Absolutely not. It's terrible policy.

WALLACE: So, in 30 seconds, if he says you got to have taxes, even if it's $1 for $3 in spending cuts that you say no, how does that get resolved in the next month?

KYL: I think the president has to make a decision. Which is more important to him: solving this problem, reducing spending somewhat, or making sure that we raise taxes on American economy? If that's his ideological bench here and under all circumstances that's what he's going to insists on, we got a big problem.

I think at the end of the day, he'll recognize that simply getting a handle on spending and making sure that we cannot hurt the economy is going to be the way to derive revenues in the future when the economy begins to recover.

WALLACE: So, basically, you're saying he is going to agree to your terms?

KYL: Well, I hope so. I hope he'll -- he's got to make that choice, let's put it that way. And the obvious, best choice, I think, is not doing anything to harm the economy at this point.

WALLACE: Senator Kyl, we want to thank you.

KYL: Thank you, Chris.

WALLACE: Always a pleasure to talk to you, sir.

Up next, Congress pushes back on the president's plan in Libya. And is a U.S. troop drawdown the right policy for Afghanistan?

Our Sunday panel weighs in when we come right back.



SPEAKER OF THE HOUSE JOHN BOEHNER, R-OHIO: The commander-in-chief has the authority to take actions necessary to protect our national security, but it does not free the president from accountability to the American people, to this Congress, or to the rule of law.

HOUSE MINORITY WHIP STENY HOYER, D-MD.: The message will go to every nation of the world that America does not keep faith with its allies.


WALLACE: Strong words on the House floor Friday about the U.S. role in Libya from Republican Speaker John Boehner and the number two Democrat, Steny Hoyer.

And it's time now for our Sunday group: Brit Hume, Fox News senior political analyst; New York Post columnist Kirsten Powers; Bill Kristol of The Weekly Standard, and Fox News political analyst Juan Williams.

So, the House, I think it's fair to say, set a mixed message this week. On the one hand, refusing to authorize the U.S. operation in Libya, but on the other hand, refusing to cut off some offensive funds for offensive operations in Libya.

Brit, what's the message to the president?

BRIT HUME, FOX NEWS SR. POLITICAL ANALYST: The message to the president is that he can keep on doing what he's doing, and that the most conservative body of Congress, that being the House, is not going to stop him in the way that would be most effective, which would be by cutting off the money. The other vote is kind of a resolution of disapproval, and it doesn't really carry much force.

Now, it certainly should be a warning to the president that what he is doing in Libya is unpopular and that there's no real constituency for it. And there are all kinds of reasons for that, which we can discuss or not.

WALLACE: Kirsten, I mean, it would seem to me one of the messages to the president is, you better get out of there soon, because patience is wearing thin.

KIRSTEN POWERS, NEW YORK POST: Yes. Well, and public approval has dropped. It's dropped quite a bit, actually, and more people are against it. I think 47 percent are now against it, which is reversed from about a few months ago.

Look, he is in violation of the War Powers Act. They've made it very clear. There has been a vote against this, saying we're not authorizing it.

And what's happening with the funding, because they didn't cut off funding, they will come back and say that they got implicit approval for this war the same way it happened with Kosovo, where there was a vote against authorizing it and then they didn't cut off the funding. And so I think that's what the administration is going to continue to do.

WALLACE: Bill, as someone who is a strong supporter of executive power when it comes to national security issues, how do you feel about Republicans -- Republicans invoking the War Powers Act and introducing a resolution -- which failed with Republican votes, incidentally -- introducing a resolution to cut off funding in the middle of a military operation?

BILL KRISTOL, THE WEEKLY STANDARD: Well, I would have voted with the eight Republicans who voted for the authorization for the use of force. I think the Obama administration has done a terrible job of making its case on the Hill, but they are engaged in the operation, they should do more to get rid of Qaddafi. They should stay to it.

They will get rid of Qaddafi, I think, and they will be vindicated, just as in Kosovo, to use that example. Clinton stuck with it and got rid of Milosevic finally. So I hope the president shows strength here, more strength than he is showing in Afghanistan, I might add.

WALLACE: We'll get to that in a minute. But are you concerned about Republicans taking this tact?

KRISTOL: Yes, I'm unhappy about it. On the other hand, I think Libya is such an odd situation in the way in which the president went in, his failure to get congressional approval when he could have gotten it right at the beginning, or even to consult with Congress, that I don't think it's easy to generalize it from that to a general statement about where Republicans are.

And I was heartened by the fact that Republicans, in response to the president's Afghanistan speech, criticized him, in my view correctly, for the precipitous pullout in September of 2012. They didn't criticize him with one or two exceptions. They didn't criticize him that he wasn't pulling out fast enough.

So I think Republicans will remain the hawkish party.

WALLACE: Juan, before we get to Afghanistan, your thought about Libya debate?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: I think Bill's right. I think you don't want the situation to become in which -- I don't care if you are a liberal or conservative. If the United States does not prevail in that conflict -- I think everybody has an interest in seeing Qaddafi out.

We clearly have made an investment now. For us to stop now, I think, would be calamitous for our foreign policy, for the sense of commitment that we demonstrated, lack of resolve.

So I think it has got to be now seen through the end, but it's also clear that we're in violation of -- the administration is violation of the War Powers Act. It's 60 days. It's pretty clear they want to play around with the word "hostilities." How is it not hostilities for us to be raining bombs on Libya?

WALLACE: Let's turn to the president's speech and his new policy in Afghanistan, Brit. Ten thousand troops out by the end of this year, the rest of the surge force, another 20,000 troops, out by September of 2012.

Question -- is this a sensible pullout, or does it undercut our objectives and really the national security needs in Afghanistan?

HUME: Well, let's hope it's not the latter. Let's hope it turns out to be a sensible pullout.

Look, every president waging war has good reason to keep a wary eye on public sentiment. However, the reason is that war, particularly long wars, are politically very corrosive. And a president can end up utterly lacking the political support you need to wage a war.

But the sure antidote to that, the solution to that problem, is victory. And if this president, because he's worried about public sentiment and he's worried about 2012, did this and made a big speech about it, which I think was gratuitous, to try to shore up his public support and keep his party's left wing from deserting him on this issue completely, then I think it was a mistake.

And we can all hope that the American troops, fewer in number than the generals wanted, will be able to get this job done. But what one fears is that the president did this because of politics and not because of the desire to end the war to end it, but ending it ahead of winning.

WALLACE: Kirsten?

POWERS: Well, I think it was sort of transparently a political move. It pleased nobody.

I don't think anybody on the left is happy about it. Let's remember, there's still going to be almost 70,000 troops in there until what, 2014?

So, this is not -- this doesn't even come close to what liberals would want, which would be everybody out of there as soon as possible. It doesn't come close to what conservatives would want, as Bill has alluded to.

So, from my perspective, I think it's not where the fight with al Qaeda is anymore. We aren't being successful there. We have been there for 10 years. I don't think anyone would have ever agreed to go there for 10 years.

Nobody wants to lose. Nobody wants to lead that country in bad straits, but it's time to go.

WALLACE: Bill, I mean, the question is -- and Brit talked about victory -- how long do you keep the full complement of 100,000 troops there? And what guarantee is there if you keep them there for another year or two years that you end up with the situation you want in Afghanistan once you leave, a stable, secure country?

KRISTOL: Well, there is no guarantee. It seems to me, if you're president of United States, unless you have an awfully good reason, you don't overrule your military commandeers who are on board with the drawdown.

Everyone understood the president committed to beginning a drawdown in July, 2011. They recommended a drawdown at a certain pace, only doing 5,000 this year, and especially taking all of 2012 before drawing down after the fighting season so they could finish the job in Kandahar in Helmand, where they've done very, very well for the last year, and move to the east, where they need to clean up the situation, have a good chance of something being sustained in 2014.

That was the campaign plan. Everyone had signed off on that. Our NATO allies had signed off on it.

The president - the key of the speech was the end of summer, September, 2012. There is no military, diplomatic, economic, any rationale for advancing the withdrawal to September, 2012, except it allows him to stand up in the presidential debates in October, 2012 and say see, I finished the withdrawal. That is a kind of political move that is indefensible.


WILLIAMS: I don't think it's a political move. And I disagree with Brit. I think that this is not -- if we keep casting this in terms of winning, it's not about winning.

Winning is allowing to us say al Qaeda is defeated, bin Laden is dead, the Taliban is not going to act as a host of terrorists that would come and attack the United States. So that is the key. And I think it's key, also, Bill, that public opinion is overwhelming. More than 1,600 people dead, 52 percent --


KRISTOL: Why September of 2012 instead of January, 2013, which is the militarily responsible thing to do?

WILLIAMS: Because this gets back to what Chris Wallace was saying. You would have us there interminably. We would just be there and there and there.

HUME: But he said January.

WILLIAMS: We should not be involved in nation-building anywhere but here at home in these economic times.

WALLACE: All right. Guys, we'll talk about it again. We're not going to be able to settle that here, and we have other things to talk about in the next segment. You know, you are just stealing from yourselves.


WALLACE: All right. OK. We have to take a break here. But when we come back, the Biden debt talks collapse and the Obama negotiations begin.

Will they make a deal? We'll ask our panel.



PRESIDENT BARACK OBAMA: I'm committed to working with members of both parties to cut our deficits and debt. But we can't simply cut our way to prosperity.

SENATE MINORITY LEADER MITCH MCCONNELL, R-KY.: It's mystifying, really, that at the 11th hour, some would now propose tax hikes as the condition to any agreement.


WALLACE: President Obama and Senate Republican Leader Mitch McConnell staking out their positions as they begin a new round of debt talks tomorrow.

And we're back now with the panel.

So let's start with a question, Brit, that I asked Senator Kyl a little bit earlier. Given where Republicans stand on spending and where Democrats stand on taxes, what is the basis for a deal?

HUME: Well, these kinds of impasses were inevitable on this issue. And this is another stage in the negotiations.

I think that the Democrats have brought up this tax question to give them a bargaining chip in the discussions about what spending to cut. The truth of the matter is, if it were left to the Democrats, they would do it all with taxes, there would be no spending cuts of any consequence. It wouldn't work, it wouldn't help the economy, and the debt would continue to balloon, which is now, I think, become politically untenable and even economically untenable.

So, my sense about this is that you can't get a tax increase through the House. But in the end, it's conceivable that there might be some loophole closures and so on that would constitute a form of tax reform that you could incorporate into a deal on this that would give the Democrats the ability to say they got something in exchange for spending cuts that they plainly do not want to make.

WALLACE: Kirsten, with the Democrats saying we're not going to about tax rates, we give up on that, we're talking about $3 in spending cuts for every $1 in tax increase, isn't that going to make it hard for Republicans to say no?

POWERS: Well, see, I think because they're focusing on things that most Americans are not going to have a lot of sympathy for if the Republicans oppose, so they are saying let's cut these tax loopholes for corporate jets. You know, the oil and gas industry, people who aren't particularly sympathetic.

And so, that's what they are putting out instead of raising taxes. And I think what could end up happening is that they're going to have to do some sort of deal where they get some votes from Democrats and they get some votes from Republicans.

They are not going to get something that the Republican Party is going to go for, because the Democrats are saying you've got to give us something on closing these loopholes. And they're going to have to find a way to meet in the middle.

WALLACE: How do they meet in the middle then?

KRISTOL: I don't know. And I have just personally been radicalized on this in the last couple of months. And maybe you can call me a flake if you want.


WALLACE: I simply asked the question.

KRISTOL: No, that's OK.

WALLACE: It's a perfectly sensible answer.

KRISTOL: She gave a good answer. I'll associate myself with her, on this issue at least, as a flake, because I don't really know why the Republicans should negotiate.

President Obama is the president of the United States. They raised the debt ceiling three times when they had a Democratic majority in Congress. Nothing -- no conditions, just $3 trillion more debt. Now they want $2 trillion more debt for the next 16, 17, 18 months. Most of the American public thinks, really, we're $14 trillion in debt and you're supposed to spend $2 trillion more? He the president. Let him explain what cuts he wants and what tax increases he wants. And let him go first, and let him lay it out, and then we can have a debate, Republican can propose an alternative.

All this negotiating and hinting and leaks, I'm not sure that's the right way to do it. And if they don't come to a deal, just extend it for a month and take some cuts right off right then, and tell the president we are doing the responsible thing here. We want to cut out a whole bunch of federal programs.

WALLACE: In the international market, if they say, well, we're going to just extend the debt ceiling for a month, that's not going to have some blowback?


WILLIAMS: Well, I don't know what economist he's talking to, but let me just you --


WILLIAMS: You know what? I just hate to mention it, but the bond ratings will be tremendously impacted. Interest rates will -- the value of the dollar would go down. Right?

These are bad things for the U.S. economy. The fact is that there might be a -- it might precipitate a global economic recession, a double-dip recession. Is that good for Republicans or Democrats? It's not good for anybody.

KRISTOL: We've had a global economic recession --

WALLACE: Go ahead, Bill.

KRISTOL: That's OK. I'm just saying, if you think increasing debt is a recipe for avoiding a global recession --

WILLIAMS: Let me ask you something. Did Ronald Reagan raise the debt limit? Did George W. Bush, George H. W. Bush? They all raised the debt limit.


HUME: Juan, we were not nearly as deep in debt as we are now. The public had not raised the alarm the way the public has now on this issue.

All this talk about markets going -- being roiled and going crazy and it triggering a recession is based on the idea that we would somehow default on our debt obligations, our loan repayments. But there will always be a stream of tax revenue from withholding coming in that would easily enable to us cover those obligations. But there is a problem that relates to government programs, not government debt.


HUME: Government programs.


HUME: And if there was no extension of the debt limit, the tax revenues would not be sufficient to cover all of those government programs. And this gives the White House and the Treasury Department some leverage, political leverage, to pick and choose which programs to shut down, and then send out warning letters to the people affected by it and saying because, you know, the Republicans refuse to extend the debt ceiling the payments to this -- or this and that program will stop..

WILLIAMS: Wait a second. This is hype.

HUME: Juan, I'm not hyping anything.

WILLIAMS: I was going to give you some hype. The hype is this -- you're going to send a letter to our soldiers saying you're not going to get paid? You're going to send a letter to Social Security recipients and say, I'm sorry, you're not getting paid this month?

HUME: Yes. It's exactly the possible scenario.


WILLIAMS: That's terrible. That's not the way to do business.

HUME: I agree with you about that. However, how many Republicans on Capitol Hill, faced with a blowback from warning letters of that kind from the federal government, are going to refuse then to extend the debt ceiling? That's the question.

WILLIAMS: Oh, so you're saying Republicans should extend the debt ceiling?

HUME: What I'm saying is that, in the end, if comes down to it, extend the debt ceiling or not.

WALLACE: At their own risk.

Kirsten, would you like add to the conversation?

POWERS: Well, I'm with Juan. And I think it absolutely would be horrible for the United States. We would default on our debt.

HUME: We wouldn't default on our debt.

WALLACE: Let Kirsten talk.

POWERS: We most likely would be defaulting on our debt. It would be sending a horrible message to the rest of the world that we can't be counted on to do what we say we are going to do. And I don't think -- no politician is going to be sending letters to Social Security recipients telling them that they're not going to get their benefits. I mean, it's --

HUME: The Social Security Administration would send them. But the Social Security Administration --

POWERS: But that's why the debt limit is going to be raised.

WALLACE: Let's let Mr. Kristol bring some order to this circus.

KRISTOL: Well, I guess it's great. You know, we'll just raise it by $2 trillion -- by a trillion dollars a year -- forever because, everyone is going to say the markets are going to panic, we can't cut any government programs, we're going to let whatever administration is in power demagogue by sending letters to Social Security recipients or families of soldiers.

WALLACE: Let me ask you a question, Bill. If the Hume scenario were to play out, and we get in the final week, and the Social Security Administration says --

HUME: Or some other agency.

WALLACE: Right. But says, you know, we're going to run out of money and your checks may be late, does that give Democrats the upper hand? Do the Republicans end up at the last moment at a disadvantage?

KRISTOL: Well, the House should pass legislation, then saying here is what you should pay for from the revenues that are coming in. You should pay off the debt. You should pay the military. You should pay Social Security. You should pay Medicare.

They should prioritize.

WILLIAMS: The GOP is going to get hit hard on this if they think that's the winning hand.

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

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

Up next, setting the record straight about our interview last week with Jon Stewart.


WALLACE: Now the surprising fallout from our interview last Sunday with Jon Stewart. I figured it would get some reaction, but not that it would light up the Internet.

One of Jon's arguments was that the bias of the mainstream media is not to push a liberal agenda.


JON STEWART, "THE DAILY SHOW": The bias of the mainstream media is towards sensationalism, conflict and laziness.


WALLACE: The Huffington Post seemed to prove that Sunday afternoon when it ran this headline that seemed more appropriate to a declaration of war.

Then, on Monday, Stewart led his show by complaining about the editing of our interview. True, we did cut our 24-minute conversation down to 14 minutes, but we posted the full interview on our Web site. That's the only reason you could see it.

I was more surprised by Jon's claim we left out the takeaway moment, the moment where I gave away the game.


STEWART: Do you believe that Fox News is exactly the ideological equivalent of NBC News?

WALLACE: I think we're the counterweight.

STEWART: You believe that?

WALLACE: I think that they have a liberal agenda, and I think we tell the other side of the story.


WALLACE: But I made exactly the same point in the interview we ran on the air.


WALLACE: I don't think our viewers are the least bit disappointed with us. I think our viewers think, finally, they're get somebody who tells the other side of the story.



WALLACE: Jon seemed to think that was a big deal, that I said we tell the other side of the story. While I wish I had said the full story, here is what I meant.

As we showed today, we don't go easy on Republicans. But we try to provide a fuller perspective. For instance, pointing out the strengths and some of the problems with Obamacare before anyone else did.

But let me give you a classic example of what fair and balanced means to me.

After Hurricane Katrina, the mainstream media piled on FEMA for its failure to respond to the crisis. And the federal government did a lousy job. But it was Fox News that started reporting on the failure of the first responders, the city of New Orleans and the state of Louisiana to help people. Yes, we reported FEMA's problems, but we also told the other side of the story.

And then there was that heated moment of the interview.


STEWART: Who is the most consistently misinformed media viewers? The most consistently misinformed? Fox. Fox viewers. Consistently, every poll.


WALLACE: The Pulitzer Prize-winning Web site Politifact looked into that statement, and on its Truth-o-Meter it rated Jon's claim false. But the details are even more interesting.

In a survey called "Misinformation in the 2010 Election," people were asked a series of fact questions like, "Which president signed TARP?" But the poll also asked questions like this, "As you know, the American economy had a major downturn starting in the fall of 2008. Do you think that now the American economy is A, starting to recover, or B, still getting worse?"

Starting to recover was the so-called right answer. If you said, "still getting worse," you were officially misinformed. And if you questioned whether climate change is occurring or whether Obamacare will add to deficit, you were also mistaken.

Then there was last year's Pew poll which asked four fact questions like, "What job did Eric Holder have?" It turns out Fox News scored better, not worse, than MSNBC, CNN, the network evening news, and the network morning news.

As for individual shows, 31 percent of "Hannity" viewers got all four questions correct. Twenty-nine percent for O'Reilly. And all the way down near the bottom, viewers of Jon Stewart's "Daily Show" at 22 percent.

So, folks, all that talk about you're the most consistently misinformed viewers, I guess the joke is on Jon Stewart.

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

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