The following is a rush transcript of the January 1, 2012 edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.
CHRIS WALLACE, FOX NEWS HOST: I'm Chris Wallace, reporting from Des Moines.
It's game on for the Iowa Republican caucuses.
With nonstop campaigning and a barrage of TV ads, there's a charged atmosphere in the Hawkeye State. We'll talk to three candidates who have a lot riding on what happens in the first contest of the 2012 race.
Congressman Ron Paul, Governor Rick Perry and Congresswoman Michele Bachmann live, only on "Fox News Sunday."
Also, is it message or ground game that will drive Iowans to the caucus sites?
We'll ask our Sunday panel, including Iowa Governor Terry Branstad, which candidate will have a big night Tuesday.
And we'll capture the intensity of the fight for Iowa when we go on the campaign trail.
All right now on "Fox News Sunday."
Hello again and happy New Year from the Iowa state capitol in Des Moines. We are broadcasting today from the ornate house chamber inside of the capitol building.
And joining us live are three candidates who have a lot at stake in the caucuses here Tuesday, Congressman Ron Paul, Congresswoman Michele Bachmann, and Governor Rick Perry.
With just two days until we hear from the voters, the race here in Iowa is still up for grabs. Take a look at the final poll out today from the Des Moines Register. Over four days of polling, Mitt Romney leads with 24 percent, with Ron Paul close behind, and Rick Santorum in third with 15 percent. Newt Gingrich, Rick Perry and Mitchell Bachmann round up the field.
But if you look at the final two days of polling, there's a big change. Romney holds on to his lead, with Rick Santorum jumps to second with 21 percent, and Ron Paul slips to third.
For more on this final week of campaigning, let's get the latest from Fox News chief political correspondent Carl Cameron -- Carl.
CARL CAMERON, FOX NEWS CHIEF POLITICAL CORRESPONDENT: Good morning, Chris. And happy New Year.
With two and a half days of caucus campaign time left for these candidates, and up to 41 percent of the likely caucus-goers still likely to change their minds, according to the "Des Moines Register" and many other polls, it's indisputable. Once again, the Iowa caucuses are coming right down to the wire and the volatility is everywhere. Anybody could pull out a victory here.
CAMERON: After only nine trips to Iowa in all of the last year, a confident Mitt Romney's position for the Iowa caucus win he was denied four years ago. Romney's organization is well-respected and for months, he's been first and second place in dozens of Iowa and national polls.
Ron Paul has the Iowa Republican establishment rattled. He's led some polls in recent weeks and has a strong get out the vote operation. Yes, Paul has been under the withering attack from his rivals for a foreign policy they say is dangerous and out of step with the GOP mainstream.
The caucus game is one of expectations, and Rick Santorum is poised to far exceed them from a come from behind groundswell of support in the final week from religious conservatives, who make up more than half of the caucus vote.
Newt Gingrich, after millions of dollars worth of attack ads against him, could place fourth. He's already looking past Iowa and New Hampshire, and planning for his comeback in South Carolina.
Rick Perry has spent more money on TV ads than any other candidate, and a pro-Perry super PAC has spent more than any other outside group. An army of Texans arrived in recent days to organization his support in Iowa.
Michele Bachmann's final campaign week in Iowa has been rough. Her state chairman defected to Paul and then, she fired another top Iowa deputy. She could become the first Republican ever to win the big Ames, Iowa, straw poll and then come in dead last in the caucuses.
CAMERON: And on this Sunday, New Year's Day, there is likely to be a series of crucial developments all across the Hawkeye State. As we've said, about half of all Iowa likely Republican caucus-goers are self-described Christian conservatives. And today, pastors are in pulpit talking to the parishioners. And if they decide to really get loud behind any one particular candidate, it could have a profound impact the result on Tuesday night -- Chris.
WALLACE: Carl, thanks for that.
Now, the candidate who is at or near the top in most recent polls, Congressman Ron Paul who comes to us from Texas.
Congressman, happy New Year and welcome back to "Fox News Sunday."
REP. RON PAUL, R-TEXAS, PRESIDENTIAL CANDIDATE: Thank you. Same to you, Chris.
WALLACE: Four years ago, you were running for president and you got 10 percent of the vote in the Iowa caucuses. As we say, in the latest Des Moines Register poll, you are at 22 percent. Why do you think you are getting so much more traction here in Iowa this time?
PAUL: Well, it isn't because I've changed my message, Chris. My message has been the same for 30 years and it's same as four years ago. But the world has changed and the country has changed.
I've talked about economic policies for a long time, warned about financial bubbles and the correction that was coming. And that has arrived and people now are saying the economy is a big deal. Spending is a big deal. The debt is a big deal.
This is what I worked for whole my career on trying to warn people about.
But also in foreign policy, I get tremendous support on my position, which the other candidates say it is dangerous believing in the Constitution that shouldn't go to war unless you declare the war.
So, this is the kind of thing -- people come around here are tired of the wars. Seventy percent of the American people want us out of Afghanistan. It's bankrupting us. We spent $4 trillion that went into the debt in these 10 years.
And I'm deeply, you know, concerned about civil liberties.
So, these issues strike a chord with the people and I think that is a reason, more so now that even four years ago, but a lot more than maybe 20 or 30 years ago, because right now, the evidence is loud and clear that government is failing in what they pretend they are going to do for us. And that's why the people are looking for different answers.
WALLACE: On the other hand, Congressman, in the latest Des Moines Register poll, on those final two days, it shows some evidence of a slide. And, in fact, Santorum passes you and you fall into third.
What can you do about that slide, sir?
PAUL: I think the dye has been cast. And the ups and downs of the other candidates have been characteristics. They come and they go, and they all belong to the status quo.
The one is, is the people who make a commitment to the campaign for liberty and the Constitution, limited government and going after the Feds, once they put this all together, how liberty and free markets and a sound foreign policy come together, they don't desert. So, our numbers aren't going to go down. The number of people, they're not going to leave us. As they have on the other ones, they come and they go.
So, I think our numbers will continue to grow even in these last couple of days and the caucuses are going to treat us well. But the real test is going to be on Tuesday night. So, we'll have to wait and see how it turns out.
WALLACE: Not surprisingly, Congressman, with your new strong standing in polls, has come new scrutiny, especially about some newsletters that came out under your name in the '80s and '90s, in which there were comments made that were quite frankly racist and homophobic. Now, you say that you were the publisher of those newsletters, not the editor, and so, you didn't know everything that was in them.
But I want to ask you about a book that you wrote back in 1987 called "Freedom Under Siege." And I want to ask you about some of the comments in that. In that book, you wrote this, "The individual suffering from AIDS certainly is a victim, frequently a victim of his own lifestyle, but the same individual victimizes innocent citizens by forcing them to pay for his care."
Question -- Congressman, do you still feel that same way?
PAUL: Well, I don't know how you can change science. I mean, sexually-transmitted diseases is caused by sexual activity and promiscuity it spreads diseases. That's been known, you know, about 400 or 500 years, that somehow these diseases are spread.
So, if a fault comes with people because of their personal behavior -- in a free society, people do dumb things -- but it isn't to be placed on a burden on other people, innocent people, why should they have to pay for the consequences? I'd say a sort of a nationalistic or socialistic attitude. But in a free society, people are allowed to act the way they, but they are responsible for their actions --
PAUL: They should be rewarded --
WALLACE: Congressman, do you think someone who suffers from AIDS should not be entitled to health insurance as opposed to let's say somebody who has a heterosexually transmitted disease?
PAUL: No, I never said that. I am just saying that people --
WALLACE: When you talk about that they victimize other people by making us pay for them, what do you mean, sir?
PAUL: Well, it depends on what the insurance company does that. They are the ones who determine. But there shouldn't be a law that says they're denied. There's no way. I mean, the market should handle this. You know, people who are pregnant nine months can't go in and buy insurance. Insurance is supposed to be insurance.
So, if people are smokers, don't they have to pay more? Sometimes, you get your insurance cheaper if you are a nonsmoker. That's what I'm talking about, and let the markets sort this out and insurance sort it out, but not having dictates by the government saying thou, you must do this and your behavior doesn't matter, you know?
If you drink too much, you go out and you harm to somebody, you have to suffer the consequences. Same way with health matters. You don't have the right to demand that someone else take care of you because of your habits.
WALLACE: Let me -- sir,
PAUL: That doesn't mean that, you don't have laws --
WALLACE: Let me just interrupt, I'm sorry but we have limited time and we want to get to the other two candidates as well. I want to ask you about one other thing that you wrote back in your book in 1987 about sexual harassment in the workplace.
You wrote this, "Why don't" -- this is about the victims of sexual harassment. "Why don't they quit once the so-called harassment starts? Obviously, the morals of the harasser cannot be defended, but how can the harassee escape some responsibility for the problem?"
You said that sexual harassment should not be a violation of someone's employment rights?
PAUL: Well, the whole thing is, is you have to get a better definition of sexual harassment. If it's just because somebody told the joke and somebody was offended, they don't have a right to go to the federal government and have a policeman to come in and put penalties on those individuals. I mean, they have to say, well, maybe this is not a very good environment, and they have the right to work there or not there.
But if sexual harassment involves violence as libertarians, we are very opposed to any violence. So, if there is any violence involved, you still don't need a federal law against harassment. You just need to call the policeman and say there's been an assault or there's been attempted rape or something.
So, you have to separate those two out. But because people are insulted by, you know, rude behavior, I don't think we should make a federal case out of it. I don't think we need federal laws to deal with that and people should deal with that at home.
WALLACE: Congressman, you have an ambitious -- a very ambitious agenda as what you would do as president. You say you would cut $1 trillion in spending in the first year. You say you would shut down five cabinet level departments.
But I want to look at your record of effectiveness as a member of Congress for more than 20 years. "The Washington Post" found that you have sponsored 620 measures over your years in Congress, just four made it to the House floor for a vote and only one of those 620 measures, only one was signed into law -- the sale of a Galveston custom house to a historical society.
With that record, why are you suddenly going to become so effective as a president?
PAUL: Well, you just made my point. The American people are sick and tired of Washington and the people who have been in charge have been passing all these bills and I've been voting no all of the time and vote no on these appropriation bills. So, I am the individual that has pointed out this.
And now, the people are saying the government doesn't work. The debt is too big and it doesn't work.
But the country has to change. To elect me, the country has to change. They have to go back to believing in the Constitution and personal liberty and a different foreign policy, which means that Congress will change.
But just the fact that you can elect a president like myself, the pressure then is on the current Congress, but Congress, you know, don't have strong beliefs. And as long as the pressure from the people are in the right direction, and this is where our campaign is excelling, whether it's the Tea Party movement or the disgust among the American people. They're sick and tired of all this.
So, I represent that. So, of course, why would they pass my laws? I wanted to stop this a long time ago. That's why I went to Washington for.
But the tide has changed. Now, the opportunity is there. And now, I'm a serious contender. So, this is there is optimism in our camp and so much excitement.
WALLACE: Congressman, we have about less than 30 seconds left. I want to ask you one final question. You and congresswoman Bachmann is about to be -- got into quite a flap this week when her state chair, State Senator Kent Sorenson, jumped ship from her campaign to your campaign. She alleges he said that your campaign was paying him to jump ship.
Simple question: did your campaign or anyone connected with your campaign or anyone speaking on behalf of it or any third party vendor, did any of them offer money to Kent Sorenson to come on board your campaign?
PAUL: No. And if she has the evidence, she should bring it forth. Because if she makes charges like that, she should be able defend it. But no, that did not happen.
WALLACE: Well, she's going to get an opportunity right now. Congressman Paul, we want to thank you so much for talking with us today. Happy New Year again. We'll see you back here in Iowa tomorrow. Thank you, sir.
PAUL: Thank you very much.
WALLACE: Congresswoman Michele Bachmann won the Ames straw poll here in August, and just finished campaigning in all of Iowa's 99 counties.
Congresswoman, welcome back to you.
REP. MICHELE BACHMANN, R-MINN., PRESIDENTIAL CANDIDATE: Thank you, Chris.
WALLACE: Before we get to the Ron Paul issue, I want to ask you about the Des Moines Register poll which has you, quite frankly, 7 percent, running last among the six candidates seriously contesting Iowa. Do you have any hard evidence that the poll is wrong and that you're going to do much better than that on Tuesday night?
BACHMANN: Well, the evidence that we have is the 99-county tour that we just completed. It was very ambitious. But we had huge crowds. We've had 250 to 350 people come out at a stop and we saw literally, Chris, thousands of people making conversions on the spot. It was frankly after the Fox debate in Sioux City.
People really were very grateful. I think they saw in me, someone who can take it to Barack Obama in the debate, hold him accountable, and in particular, when I was questioning Ron Paul on his dangerous policies on allowing a nuclear Iran. That turned a light switch on for a lot of voters across Iowa. And people who weren't decided, decided.
And we have a lot of people who are going to come on Tuesday night who are undecided and what they have seen in me is a champion who can stand up for them and in particular, they see that of all of the candidates in the race, I'm the only one with current national security experience.
Our next president will be tested almost immediately. Look at what's happening in the Strait of Hormuz right now with Iran. I am prepared to be able to meet that challenge. That's what our next president will have to do.
WALLACE: But don't you have a big disadvantage. Your rivals are spending millions of dollars in campaign commercials, some positives, some negatives. You have not run a single TV commercial since Iowa in Ames back in August, until today when you're going to run commercials in the last two days before the caucuses. Isn't your campaign running on fumes?
BACHMANN: Well, what we're doing is we're running on the power of meeting with Iowans directly. Iowans are very independent people, and we made a very smart decision. We put 6,900 miles on our campaign bus. And we met with people everywhere across Iowa, living rooms and including the dinky cafe in Iowa. And we have been everywhere.
And people really appreciated it. People told us no other candidate has come here. You are the only candidate. That is not reflected in the polls and I think that's what people are going to see on Tuesday night. We saw a lot of enthusiasm.
WALLACE: All right. Let's talk about something that is reflected in the polls. You and Governor Perry and former Senator Rick Santorum are all going after some of the same voters. Evangelicals and social conservatives, specifically why would you make a better nominee and better president than Rick Santorum who as we see in the Des Moines Register poll is making a big late move?
BACHMANN: Well, I have very strong support among evangelicals. I think of all of the candidates, I have more pastor endorsements than any other candidates. And we had a caravan of pastors go all across Iowa making the case of why I would be the candidate.
I have an unassailable record on standing up for protecting life, marriage, religious liberty. I have also a record when it comes to fiscal policy. I was the only person who stood up this last summer and said, no, we can't allow Barack Obama to increase the debt ceiling -- in other words, increase the amount that we're putting on the credit card of our nation.
WALLACE: Why does that make you better than Santorum, who's pretty strong on a lot of those issues, too?
BACHMANN: Well, take a look at Senator Santorum. Senator Santorum lost his last election by a wider margin than any other sitting Republican senator. He lost that race. I won four races in the last four years, in the toughest years for Republicans -- in a liberal state like Minnesota, I won.
But also, if you look at the spending issue, Senator Santorum voted for the bridge to nowhere. He's depended earmarks. He is spending -- which is the number one issue -- he has been a big spender in Washington, D.C.
That's not what the American people are looking for. They want someone who is a fiscal conservative. I'm a tax lawyer who's gone to Washington to fight the out of control spending.
My record is one of being a fiscal conservative, as opposed to -- I'm not trashing the candidates. It's just a point of clarity. Senator Santorum has stood for earmarks, stood for spending. That's not what we want. We have to look at our record.
WALLACE: Let me ask you about your record. Since you came to Congress, you've gotten almost $4 million in earmarks for your district. And when the Republicans, the Republican leadership, wanted a moratorium on earmarks, you were one of the very few who said, no, I want an exception for transportation projects.
BACHMANN: No, actually, that's not true.
WALLACE: Are your hands also a little dirty when it comes to earmarks?
BACHMANN: Actually, that is not true. I took an earmark pledge during my very first year in office, and I have been earmark-free because I saw from the very first year --
WALLACE: You haven't gotten almost $4 million in earmarks?
BACHMANN: The very first year I came in, I put the request in and then I found out what this earmark system is about. And I took a pledge in that first term, I never requested another earmark since and I won't. And the bigger issue in all of this is, are we going to continue to increase the credit card limit in Washington.
And I'm the only voice in Washington that has said no to increasing the credit card limit.
WALLACE: Several Iowa pastors appealed to you and to Governor Perry and to Rick Santorum, one or two of you to drop out so that all of the social conservative vote could coalesce around one candidate. Now, you all have your rights and you all decided, no, you wanted to pursue your campaigns.
But will it be a defeat for social conservatives and their issues on Tuesday if as a result of the splintering of this vote, a Mitt Romney or a Ron Paul ends up winning Iowa?
BACHMANN: No, I think what we're going to see actually is a coming together of people on the issues, because they want not just a single issue candidate, they want the full complement of the candidate. And of all the candidates in the race, I'm the strongest fiscal conservative. I'm a private businesswoman who created a successful company and run it to this day. And I'm a federal tax lawyer and I have a proven record in Congress on fiscal issues.
But I'm strongest candidate on social issues, unassailable; the strongest candidate on national security. I started the Tea Party caucus in Washington and led 40,000 Americans to Washington to object to Obamacare. I have the best record of any candidate on fighting illegal immigration and its effect.
I am a full compliment candidate. That's what people want -- someone with a firm resolve. And that's what I brought to Washington.
I'm proven. I'm tested. And they want someone with the legacy of Reagan and I proved that in Washington.
WALLACE: I don't mean to interrupt but I want to give Governor Perry some time and I want to ask you about the issue I talked to Congressman Paul about.
Your Iowa state chair, Kent Sorenson, a state senator here, jumped ship, went to work last Wednesday for Ron Paul. You claim that he told you it was about money. But then when your deputy campaign manager, a fellow named Wes Enos said that's not true. It wasn't money -- he was let go.
Is your campaign in disarray?
BACHMANN: Oh, absolutely not. You know, the other part that you failed to report is that there are other people outside of the campaign who said that he also told them that he's received money. So, it's pretty clear.
The bigger issue in all of this, though, Chris, is the fact that after the FOX debate, we had tremendous momentum which continues to this day, because people saw how dangerous Ron Paul's policy is. If he would allow Iran to have a nuclear weapon, that would put the United States at risk. That's why we saw literally thousands of people jump ship and come aboard of my campaign and that's what we're going to see reflected on Tuesday night.
WALLACE: Congresswoman Bachman, I want to thank you so much for coming in on this first day of 2012. Good luck to you on Tuesday night.
BACHMANN: Thank you. Happy New Year to you and all the Fox viewers.
WALLACE: Thank you.
Governor Perry has also been campaigning hard in Iowa, spending more than 30 days here, and holding over 75 events.
Governor, welcome back to "Fox News Sunday."
GOV. RICK PERRY, R-TEXAS, PRESIDENTIAL CANDIDATE: Hi, Chris. Happy New Year.
WALLACE: Thank you. Same to you.
The Des Moines Register poll, we got to keep talking about it, has you at 11 percent, basically tied with Gingrich for fourth place. How do you think you're going to do Tuesday night?
PERRY: Momentum is headed in the right direction as we've traveled across Iowa with the course of the last 30 days or so. And I think 44 cities we're hitting in a 10-day bus tour. We're seeing great crowds -- again, people who are excited about an outsider coming in to Washington D.C.
As we look at all the candidates, you are either Washington insiders or Wall Street insiders, that's your choices. And we tell them you got a choice. You got a choice of a governing executive who for 11 years operated the 13th largest economy in the world and created more jobs than any other state in the nation and America lost 2 million, we were creating a million.
So, they are very interested in having an experienced executive in the White House that is not only got foreign policy background but also has the social and fiscal conservative message.
WALLACE: But, as I say, you campaigned hard here, you have spent almost $3 million on TV ads. You have more than any other candidate, more than any other super PAC and yet as I say, you are in fourth or fifth place. Why don't you have more to show for your efforts?
PERRY: I think we got a good bit to show. As you know, we got in the race late obviously in August and some of these folks have been running for years in Iowa and multiple times in Iowa. So, I think for us to come in and over the course of the last five months to have the ground game. Nobody has got the better ground game, nobody's got the ability to go past Iowa on into these other states with a fundraising, with national fundraising ability with the message that we have as an executive who is running a major state. I think that is a powerful message.
We are going to be able to go forward when some of these other candidates. They may do OK in Iowa, but when it comes to running a national campaign, they're going to falter.
WALLACE: Reporters here in Iowa are buzzing over the story on the "Politico" Web site this weekend in which your new campaign staff hammers the group you came in with. I don't know if you have had a chance to read this, but let me put some of it up on the screen.
"There has never been a more ineptly orchestrated, just unbelievably subpar campaign for president of the United States than this one." That's what one of your senior aides said.
It sounds like they are laying the ground work to explain your defeat, sir.
PERRY: Yes. I haven't read it, but that's inside of the Beltway chatter that happens on a fairly regular basis. I'm focused on campaigning in Iowa. So, I'll let the pundits have their fun and run the story.
WALLACE: That was a quote from your campaign.
PERRY: Well, but did it quote an individual or was it --
WALLACE: A senior aide.
PERRY: A senior aide. Again, name names and then we'll have a conversation. But this concept of this pitching out a story and expecting people to believe it and get any attraction I think is kind of a waste of time.
WALLACE: But is there some truth in it? Did you and did your staff get into this race back in August -- you say you got in late -- without sufficient planning? Without sufficient thought about what it would take to run for president? Quite frankly, without sufficient preparations for debates?
PERRY: No, not at all. I think we had bumps and grinds, but most campaigns have bumps and grinds. But the issue, the campaign is smooth and Iowa is a great ground game for us and I feel very comfortable that we are going to do good on Tuesday. Wednesday morning, we'll find out whether or not who was right.
WALLACE: We will indeed.
As I discussed with Congresswoman Bachmann, you and she and Rick Santorum are all going for the same base of socially conservative voters. I'm going to ask the same question I asked her: why should those voters caucus for you Tuesday night and not for Rick Santorum who at least according to the polls is making a big late move?
PERRY: Right. I'm not just focused on that set of voters. We are reaching out to everyone who wants to see America back working again. And I got a track record of doing it. A lot of folks who are running here, we got 63 years of collective United States Congress time and a Wall Street insider.
And we basically are saying, listen, you got a choice, and it's not just the evangelical vote which obviously I have got as good of pro-life message as anybody. And I don't just talk about it. I signed bills -- parental notification, parental consent, we require a sonogram before a woman can get an abortion and I defunded Planned Parenthood this last session of the legislature, and 12 abortion clinics are closed now in our state because of the signing of that.
That's not talking about what you're going to do. That is a track record of getting things done.
WALLACE: So, is that your pitch against Santorum. You talk. I mean, he talks and you do?
PERRY: Well, there is a lot of differences between myself and Rick Santorum. As Michele talked about, he's got a spending problem. He's got an earmark problem.
I mean, why he voted eight times to raise the debt ceiling while he was in the United States Senate. I'm going to let him explain to people, why did you vote to raise the debt ceiling, and why was it important for you to vote for the bridge to nowhere? Why was it important to vote for a Montana Sheep Institute?
I mean, those are questions that people in Iowa are going to look at and go, wait a minute, you are telling us you are a fiscal conservative? People are scratching their head when they hear him say that and then look at his record.
WALLACE: But Senator Santorum, because you've been making those charges this week, accuses you of, quote, "hypocrisy." He notes that you have a paid lobbyist for the state of Texas in Washington to try to get earmarks. And he notes that back in 2006, that your state government bragged about getting more than $600 million in highway earmarks and $500 million in transit projects.
So, again, aren't your hands unclean here, too?
PERRY: That is the process that they put in place in Washington, D.C. And I will tell you that the reason that states have to go up there and play that game is because Washington is broken. We've got a $15 trillion debt because both political parties have been involved in the obvious "let me scratch your back, and you scratch my back" on the earmarks. And all they are doing is fleecing Americans.
WALLACE: Finally, we have less than a minute left. Let's be honest. One of your problems from your rise in August until now were the performance to the debates. What do you say to the voter out there who says, gee, I like him, I like what he stands for, but, boy, I can't get past oops?
PERRY: I'd tell them to take a look at the debates that we've had in the last three contests in Sioux City and what have you. And I think our debate performance has been not only excellent but I look forward to debating Barack Obama. As I said in the debate, I'll come early. I'm ready to debate. I want to talk about this president and his absolute failure economically, foreign policy-wise, and we will take it to Barack Obama.
WALLACE: Governor Perry, we want to thank.
We want to thank all of you candidates for making time with us. Happy New Year to all of you. Thanks so much.
PERRY: Thank you.
WALLACE: Up next, we'll get some independent analysis of what's going to happen in the caucuses and what it means for the race for president. Our special Iowa edition of the Sunday panel, including Governor Terry Branstad. We'll break it down as we continue from the state capitol in Des Moines.
(BEGIN VIDEO CLIPS)
MITT ROMNEY, PRESIDENTIAL CANDIDATE: I need your help, you guys. This is a real battle. It's a battle for America. It's a battle for the future course of America.
NEWT GINGRICH, PRESIDENTIAL CANDIDATE: We have a country this big, in this much trouble, it takes a fair number of ideas to be able to fix it and get it back in shape.
RICK SANTORUM, PRESIDENTIAL CANDIDATE: Make sure that when you're voting for this candidate, that you vote for someone that you know can do the job, that makes the fundamental changes that are necessary.
(END VIDEO CLIPS)
WALLACE: Some of the other candidates running in Iowa, trying to rally their supporters for Tuesday night's caucuses. And we're back here in the House chamber, in the State Capitol in Des Moines, and it's time now for our "Sunday Groove."
Bret Baier, anchor of "Special Report." Jennifer Jacobs, senior political reporter for The Des Moines Register. We're honored to have Iowa Governor Terry Branstad. And Jeff Zeleny, national political correspondent of The New York Times. Not so honored to have Jeff, but that's (INAUDIBLE).
Happy New Year, first of all, to all of you.
GOV. TERRY BRANSTAD, R-IOWA: Welcome to Iowa.
WALLACE: Thank you, sir.
Governor, you've watched the campaign. Now you've seen the final Des Moines Register polls. Simple question, what's going to happen on Tuesday?
BRANSTAD: It is a wide open race and, as you can see, it's very fluid. Any of the candidates potentially could win here. I mean, I think everybody's had the lead at some point or another.
I predicted all along, Rick Santorum was in it the old fashioned way, go to all 99 counties, worked hard, spent a lot of time in the state, built a good organization. He's coming on strong.
Romney got a late start, but he's come - come back. You know, I think Governor Perry's going to do better than some people think. And, obviously, Congressman Paul has a strong organization, a lot of people committed to him here.
So I think it's a wide open race. It all depends upon who turns out, but I think we're going to have a good turnout. I think people are unhappy with the direction of this country under Obama. The national debt's going up, $1 trillion every year, and the president's attacking the very people that we need to invest and create jobs and revitalize the American economy.
So Americans want a leader that's going to bring America together and somebody that's going to - we don't want to be the next Europe. We don't want to have this debt crisis become out of the control, and it is going that direction.
WALLACE: Jennifer is the senior political reporter for The Des Moines Register, and that all-important poll that came out this morning. What do you want to add to that?
And especially you've got Romney who's been real steady, at about 24 or 25 percent; you've got Santorum, who you guys obviously were struck by how well he did in the last two days with the poll. If you had to pick one of them, who would you pick?
JENNIFER JACOBS, THE DES MOINES REGISTER: Well, it's not a question of whether Rick Santorum is going to do well in the caucuses, it's how much he's going to grow in the next 72 hours. But Iowans are a little bit vague about what they like about him.
You know, they think he's personable, they think he's a nice man. They think he has leadership qualities, but he doesn't lead on any of our, you know, positive attributes. They're not sure exactly what his strengths are. He's a little bit of an unknown.
You know, typically in Iowa, a surge comes on the back of another candidate's collapse, and that's what we're seeing here. It's Newt Gingrich and it's Michele Bachmann, and that's - that's who Rick Santorum is picking up voters from.
WALLACE: Bret, looking at this from a national perspective, the Romney camp -- and I know you -- you know this as well -- feels that -- that if they win or Ron Paul wins, or basically almost anybody wins, except for Rick Perry and Newt Gingrich, who they worry about being able to run a national campaign, sustain a national campaign, they think they do pretty well on Tuesday night. Does it look like a good night for them, one way or the other?
BRET BAIER, ANCHOR, FOX NEWS SPECIAL REPORT: Sure. One way or another, you know, if you look at top three -- Mitt Romney, Rick Santorum, Ron Paul -- right now you see a -- paint a picture that the Romney campaign could come out and say this is good for us in the long term because they, as the governor has said, want to fight the battle long term down the road.
Internals in this poll are just really interesting. The fact that 41 percent still say they could change their mind; the fact that you have a surge in the back end of the polling for Rick Santorum, where he's basically second; and the fact that you have so many people out there that are now first time caucus goers, according to this poll 27 percent.
Now, how does that play? Perhaps it's a benefit for Ron Paul. Perhaps, though, it's a benefit because there's a bigger caucus turnout, and it's a benefit for Mitt Romney.
WALLACE: Let me ask you about that, Jeff. Are you surprised, because, you know, Romney has had this very tentative relationship with Iowa. He - first he wasn't going to be involved, then he was going to be a little bit involved. Now, in the last two weeks, he's campaigning hard and, you know, sort of the tell, as they say in poker, he's going to be here on Tuesday night.
Are you surprised that the Romney people finally decided in the end to commit so heavily to Iowa?
JEFF ZELENY, THE NEW YORK TIMES: Not surprised at all, and I think the history of this will show that the Romney campaign was engaged from the very beginning in Iowa. They had the biggest organization. He - he won second place four years ago. We often think that he lost, but he won 25,000 votes. So he started with his biggest organization.
But, at the end, they definitely saw this opening here. But the Romney campaign is surprised by what's happening on Santorum. You're hearing some of their advisors say, well, it wouldn't be the worst thing if he would win in Iowa. You know, at least we sort of got rid of Newt Gingrich and Rick Perry, but they I think we're very surprised by Jennifer's headline this morning because they have been very confident over the last couple of days.
But, look, as Bret said, the long term thing here is that of the poll 48 percent of people say that Mitt Romney is the most electable. So him staying here on Wednesday morning is a sign that if he's the nominee that he'll try and run strong in Iowa in the general elections.
So it's hard to slice it (INAUDIBLE) for - for Governor Romney. I mean, he's in a position to do pretty well, regardless of what happens.
WALLACE: Governor Branstad is an old political police (ph). So how many people get tickets out of Iowa, your best guess? And you can use names or not use names. How many of the six candidates actively contesting Iowa so you think - I mean, they can all decide to keep running, but how many of them do you think come out of it in a viable fashion?
BRANSTAD: Well, historically we've always said there's three tickets out of Iowa. We winnow the field to about three. I don't think more than three. But it's going to be really interesting. It's been such a volatile situation to see what's going to happen.
But also, I think Iowa voters, and I think Americans generally, are really watching and they have participated, watched the debates, are take - are following this very closely. I'm encouraged by the - what I think will be a big turnout.
And I think people know that we cannot afford to continue the direction we're going, that Obama has failed, this $1 trillion increase in the national debt every year, the fact that instead of being a president who brought people together he has been very divisive and he spends his time - he thinks the only way he can win is attacking the very people that we need to rely on to create the jobs -
WALLACE: But, let me ask you - we've only got a minute left, that I want to ask you, you say three tickets out. Assuming - assuming that The Des Moines Register poll is right, are you saying that basically Gingrich, Perry and Bachmann would be mortally wounded?
BRANSTAD: I - I think, first of all, they all have - with the exception of Perry, they have financial problems. So if you don't do well in Iowa and you're not able to raise much money, I think it's going to be very difficult because it's all going to come pretty fast.
New Hampshire is, you know, just a little over a week - a week later, and then you have South Carolina and Florida, and - and it's going to all come about really quick. So if you can do well in Iowa, follow that by doing well in New Hampshire. It gives you a lot of momentum.
WALLACE: All right. We have to take a break here, but up next we'll discuss some of the changes in politics this year that may play a big role on the caucuses, and whether Iowa deserves - dirty words here - to keep its first in the nation standing.
And we'll talk about Barack Obama's chances in Iowa.
More from the House chamber of the Iowa State Capitol in Des Moines on New Year's Day, when we come right back.
(BEGIN VIDEO CLIP)
JON HUNTSMAN, PRESIDENTIAL CANDIDATE: Nothing against the good voters in Iowa, but I believe that the Iowa caucus will be soon forgotten after a day or two. And then the bright light will be on New Hampshire.
They pick corn in Iowa. They actually pick presidents here in New Hampshire.
(END VIDEO CLIP)
WALLACE: Well, those are fighting words here in Iowa. But former Governor Jon Huntsman can afford to diss the caucuses because he's skipping them and waiting for what's left of the field to join him Wednesday in New Hampshire.
And we're back now in the House Chamber with our special Iowa panel.
Governor Branstad, you've heard that before. Iowa, our representative state, it's too small, too rural, more socially conservative, smaller minority population. And this is a good thing. You've gotten much lower on unemployment, 5.7 percent than the national average.
Should your country - or state rather continue to decide or at least begin to winnow who gets to be president?
BRANSTAD: Yes, because Iowans take the responsibility very seriously. And I believe that this is where retail politics makes a difference.
Jon Huntsman is the guy that's the loser. He chose not to participate here and he's not - no chance - he's not even going to be considered in New Hampshire. I went to Salt Lake City. I talked to him personally. I said, "You are making a huge mistake."
And here, it's going to be Romney versus whoever does well in Iowa and New Hampshire. We all know that. Huntsman is not even on the scene. He's trying to make some noise from a distance, and he's toast. And it's his own fault because I told him what he should have done. Santorum did it the right way; he did it the wrong way.
WALLACE: So take that Jon Huntsman.
Jennifer, then you've got the caucuses which are very different - and we'll be explaining that over the course of the next two - two days. But they're so much more demanding. Less than 20 percent of registered Republican voters actually participated last time. Just raising the question. I don't want to get the governor mad at me, is this any way to pick a president?
JACOBS: Well, I always - I always hear this all the time, and the only answer they can give is which state would be better. But, you know, it's all going to depend on the turnout, you know, on Tuesday night. Anyone can show up even if you're not a Republican, you can come and re-register.
And the turnout on Tuesday is definitely going to affect the outcome, because Rick Santorum does best with evangelicals. He gets 23 percent of evangelicals. But Mitt Romney also does well with evangelicals. He's tied for second and gets 18 percent of the evangelicals.
But if there's a bigger turnout, it's definitely going to go Mitt Romney's way. If there's a smaller turnout it's going to go with those social conservatives going for Rick Santorum.
WALLACE: Bret, there are also some big differences this time around, not just in Iowa, but in the campaign, especially the super PACs we're saying which can raise and spend unlimited amounts of money and they have spent almost $6 million here in Iowa much of it, almost half of it in negative ads about Newt - Newt Gingrich.
Do you see here in Iowa and going forward the super PACs playing a big role?
BAIER: Big time. I mean, it has already played a huge role here. Imagine one candidate getting a barrage of 45 percent of the ads from these super PACs being negative. The fact that Newt Gingrich is even still on the board is pretty amazing for him as a candidate.
But, too, the super PACs, every candidate except Governor Perry has been outspent by the supporting super PAC and some of them two to one. For example, Mitt Romney is two to one TV and radio ads. So it makes a huge difference and it also enables some of these candidates to not go negative while their super PACs do.
WALLACE: Jeff, looking at that, looking at everything else, as this first chapter in the primaries and then the whole 2012 election begins as Iowa wraps up, what strikes you about this campaign so far? How is it different than other cycles?
ZELENY: I think it's different from other cycles in the sense that super PACs are going to be the story out of this.
Mitt Romney would have had to do most of this dirty work himself. But he is leaving Iowa and New Hampshire without any blood on his hands. He has effectively or his allies have effectively neutralized at least they believe Newt Gingrich and Rick Perry. And that same thing is going to play out during the rest of this election process for the next 10 months.
So the biggest difference in this campaign by far is the super PACs. We're going to see that influence throughout.
But I think the other differences are that if you talk to voters, even at - at the Mitt Romney events, I saw a lot of people who are going out to see him this week and say, "No, he's not my favorite choice but we're still going to unify behind him."
So I'm really struck at the end of this process at least at his -at his perceived strength going into Tuesday. And the Tea Party which was such a big deal in the midterm elections, to me it's not as influential this time because there's one goal of defeating President Obama. And I find a lot of pragmatic thinking from Republicans that I'm speaking with here in Iowa.
WALLACE: Governor Branstad, you were raring to go in the first segment about Barack Obama. I'm going to give you your chance now.
Because it's interesting. People may not know this, but there's also going to be Iowa - Democratic caucuses in Iowa. They have to pick their delegates as well and it's been arranged, the White House says that President Obama will address the Democratic caucus goers on Tuesday night. He's obviously trying to mobilize his support.
Four years ago in the general election, he - just wait a moment, Governor, he won with 54 percent of the vote. If the vote were held today how would Barack Obama do in Iowa?
BRANSTAD: We launched him and we're going to sink him. And the reason for it is this. He came and campaigned in Iowa as a united, as a unifier, somebody would work with everybody and bring people together. He's been just the opposite.
He attacked Bush for the deficits and the deficits gone up a trillion dollars every year that he's been president. He attacks the business people, the entrepreneurs that we need to create jobs. He's made America less competitive.
I believe that Iowa can be a key state in the general election as well as in the primary. I think we're going to unite. There's one thing that we all agree upon is, the direction is wrong. Obama's healthcare is unaffordable and unsustainable. The deficits are going to put us in the direction of Europe.
And we need a new leader and I think - I want to do all that I can to unite Republicans behind the winner that chooses - that we choose to be the nominee and I want to see Iowa in the Republican column come November.
WALLACE: Jennifer, I want to go back to the Des Moines registered poll, because as Brett pointed out, 41 percent say that they could still change their mind. As you look into that, you get any sense of where that 41 percent is headed?
JACOBS: No. But interestingly, Rick Santorum, 76 percent of his backers say that they're definitely going to show up to caucus. They don't say that they are definitely going to vote for Rick Santorum, they just say they're definitely going to show up.
But yes, we have no idea where that 41 percent is going to go. It's still up in the air right now.
BAIER: Well, I just say one thing -- historically, the surging candidate in the "Des Moines Register" poll, which is really the gold standard here, has out-performed on caucus night, Republicans. Mike Huckabee 2.5 percent more than 2008 in the poll in the final days. Steve Forbes were surging, 10 percent more on caucus night in 2000.
Democrats, the same way. They have a different system, but that poll is really indicative usually what is happening on the ground.
WALLACE: So, are you here now ready to predict that Rick Santorum is going to win the Iowa caucuses?
BAIER: Of course not, Chris. Are you?
WALLACE: I just ask the question, because you would say on "Special Report," you want to predict it?
ZELENY: I won't predict it. But the bigger question is, if he does, it's not all that good of news for Mitt Romney because he could consolidate a lot of support behind him and he could become the anti-Romney, which he hasn't played that role yet.
WALLACE: All right. Thank you, panel -- especially, Governor Branstad, who did everything you could to go after Barack Obama. And we will some of you next week in New Hampshire.
And don't forget to check out panel plus, for our group pics right up with a discussion on our Web site, foxnewsunday.com. We promise we'll pose the video before noon Eastern Time.
Up next, we'll go on the trail in Iowa.
WALLACE: Check out foxnewssunday.com for behind the scenes features. And plus, in our special Monday preview of the week ahead. You can find it at foxnewssunday.com and be sure to let us know what you think.
And we'll be right back with your e-mails.
WALLACE: With the race here in Iowa so wide open, the campaign has been intense this week, with candidates going after each other, a key staff defection, and one key figure actually tearing up. And we followed it all on the trail.
(BEGIN VIDEO CLIPS)
PAUL: It does look like there are more cameras than there used to be.
ROMNEY: Actually, one of the people running for president thinks it's OK for Iran to have a nuclear weapon. I don't.
PERRY: I love Iowa pork, but I hate Washington pork. And Senator Santorum, he loaded up his bills with Pennsylvania pork.
He looks like he's ready for the game.
UNIDENTIFIED FEMALE: Yes.
BACHMANN: Bye, everybody. Thank you, thank you.
SANTORUM: Come on. (INAUDIBLE).
KENT SORENSON (R), IOWA STATE SENATOR: We are going to take Ron Paul all the way to the White House.
BACHMANN: He told me specifically that he was offered money, a great deal of money from the Ron Paul campaign and that's why he was leaving.
SORENSON: That conversation did not happen.
GINGRICH: It comes in directly from dealing -- from dealing with, you know, the real problems of real people in my family.
ROMNEY: It could be worse. Can you imagine hearing that from a pessimistic president? It could be worse. That goes down with Maria Antoinette, let them eat cake.
SANTORUM: The parallels between this president and Jimmy Carter just become, you know, eerily, you know, apparent.
PERRY: Coming in first in the caucus, that's our goal.
PAUL: I don't know the results will be, but I am optimistic that we are moving in the right direction.
BACHMANN: We think we're going to do very well, again based upon what we saw on the ground.
ROMNEY: I want to make sure your vote backing me is a vote that leads me to become the nominee.
(END VIDEO CLPIS)
WALLACE: And it will only get more intense in the final hours before Iowans start to vote.
Up next, a special program note.
WALLACE: Stay tuned to this station and Fox News Channel for the latest from Iowa. Special coverage of the caucus results starts at 8:00 p.m. Eastern Tuesday anchored by Bret Baier and Megyn Kelly.
And next week, we'll be back on the campaign trail, reporting from Manchester, New Hampshire, site of the first in the nation primary.
That's it for today. Have a great week, and we'll see you on the next "Fox News Sunday."
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