David Plouffe, Sen. Joe Lieberman and Gen. Michael Hayden talk national security leaks

Senior adviser to President Obama on 'Fox News Sunday'


This is a rush transcript from "Fox News Sunday," June 17, 2012. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: Did officials in the Obama administration leak sensitive national secrets to help the president win re-election?

We'll find out just how damaging the leaks are and discuss who should lead the investigation -- with David Plouffe, senior adviser to President Obama, Joe Lieberman, chairman of the Senate Homeland Security Committee, and former CIA director, General Michael Hayden.

Plus, a big change in immigration policy. We'll ask our Sunday panel is it amnesty or helps the president win Hispanic voters.

And our power player of the week puts a nonpolitical price tag on congressional action.

All right now on "Fox News Sunday."


WALLACE: Hello, again and happy Father's Day from Fox News in Washington.

We are going to focus on the extraordinary series of disclosures in recent weeks of highly sensitive secrets on the U.S. war on terror. In a few minutes, we'll talk with the former head of the CIA and the chairman of the Senate Homeland Security Committee.

But, first, David Plouffe, senior adviser to the president, is here to talk about the leaks and much more.

Mr. Plouffe, welcome back to "Fox News Sunday."


WALLACE: Let's start with the disclosure of top secrets and what the president said nine days ago. Here it is.


PRESIDENT BARACK OBAMA: The notion that my White House would purposely release classified national security information is offensive.


WALLACE: But, of course, the president can declassify any information, any classified information that he wants.

Simple question, did the president or any other top official declassify any of the information that appeared in these articles?

PLOUFFE: Well, the president was very clear about this, Chris, in that interview, that he has zero tolerance for this kind of national security leak. There has now been by the attorney general, two United States attorneys appointed to investigate this, including a Bush appointee. We take this seriously, as anything can be taken. No one more than the president relies on this information to make good decisions and keep this country safe. I believe the person who wrote the book in question has said that no one in the White House provide this information. We need a thorough investigation --

WALLACE: No, he has not said that. David Sanger said that, in fact, he did talk to top White House officials. He said it wasn't leaks. That he's been investigating a -- he did not say that, he, in fact, said he did talk to people in the White House.

PLOUFFE: Well, for the book, sure. He's a prominent national security reporter, obviously, who is writing about these important issues facing the country.

But there's going to be a very thorough investigation. The attorney general spoke to us. Two United States attorneys will look under every rock here. This ought to be investigated as thoroughly as anything can, and we ought to wait for the results of that investigation.

WALLACE: But I do want to ask you, because you didn't answer my direction question. Did the president or any other top official declassify any of the information that appeared in these articles?

PLOUFFE: No, the president and his national security team -- first of all, these are the folks who waged just a relentless and effective effort against al Qaeda and its leadership. We decimated most of the top leadership including bin Laden. This national security information is so critical for the president and his administration to make the right decision. Nobody takes it more seriously than the president of the United States.

WALLACE: Forgive me, sir. It's a yes or no. Did the president declassify any of this information?

PLOUFFE: No, of course, he didn't. Of course, he didn't.

WALLACE: He did not?


WALLACE: OK. Let's go through some of the secrets that were disclosed in these articles.

The CIA had a double agent inside Al Qaeda in Yemen who foiled a new bomb plot. The president personally approved a kill list of terror suspects in drone strikes, and the U.S. and Israel launched a cyber attack against the Iran's nuclear program.

Here are some of the people quoted in the articles. I'm not saying that they gave up these secrets, but they are quoted in these articles. National Security adviser Tom Donilon, former White House chief-of-staff Bill Daley, members of the president's national security team who are in meetings with him in the Situation Room.

And the president had no idea who divulged these secrets?

PLOUFFE: Listen, leaders in our administration, of course, they are going to talk about the president's strategic approach to keeping this country safe, our foreign policy. But to suggest somehow that the people that he relies on for advice every day would leak information like this is just absolutely wrong. It's highly objectionable. And listen --

WALLACE: But they did.

PLOUFFE: Well, let's --

WALLACE: I'm not saying it was Donilon or Daley, but there are people quoted by these reporters and they say that they were members of the national security team who are in the Situation Room with the president. Those were the sources.

PLOUFFE: You are putting up pictures of Tom Donilon and Bill Daley, suggesting somehow that they did something untoward here.

WALLACE: I just said they are quoted in the articles, but specifically with the quotes about these details. It says members of the national security team.

PLOUFFE: Well, listen, I see the Capitol behind you right now.

Part of what's going on here -- the Republicans in Congress are pretty clear at the beginning of the show, what did they say one of their core strategic priorities was? Was to engage in investigations to damage this president politically. Republicans in Congress talked openly about this.

So, what you have here is a situation where an investigation has been announced by two United States attorneys, including an appointee of President Bush. We're going to let hat investigation proceed, rather than turning into this in a some game of distraction, because what we really need to focus on here is we have to fight against Al Qaeda, we have to continue the progress we made. We also have to turn our attention as forcefully as we can to the economy and creating jobs.

What you are seeing in Washington right now, by the way, there was an amazing article the other day, I believe it was in The Wall Street Journal, where Republicans in Congress are openly saying, we're not going to do anything until the election with the economy, because we want to help Mitt Romney. That's an amazing -- with an economy that needs help right now, with the middle class is struggling, it's an amazing thing.

And I think you're going to see increasingly these kinds of distractions coming from Republicans in Congress.

WALLACE: We're going to -- you think these are distractions?

PLOUFFE: Well, my point is, an investigation has been announced. So, let that proceed rather than trying to suggest --

WALLACE: Let me ask you specific questions.


WALLACE: Back in Valerie Plame investigation in 2003, President Bush ordered any and all members of the administration who knew anything about the outing of Valerie Plame to come forward.

Has President Obama made that same kind of order to all of you?

PLOUFFE: Well, everyone is obviously going to participate in the investigation. You've got, again, two United States attorneys that have been appointed by the attorney general of the United States, who are going to look thoroughly into this. They're going to talk to anybody they want to --

WALLACE: Has the president ordered his staff to come forward?

PLOUFFE: Obviously, everyone is going to participate in the investigation.

WALLACE: Let me ask you, you say everyone is going to participate in the investigation. Back in the Valerie Plame case, President Bush agreed to and sat down for thorough interrogation by federal prosecutors. Will President Obama sit down to be interrogated by the prosecutor in this case?

PLOUFFE: Listen, Chris, I'm not going to get into that right now. The question is, this investigation should be treated seriously. This is --

WALLACE: Why not say yes if he's asked?

PLOUFFE: Chris, I'm not running the investigation, OK? We've got career law enforcement professionals and prosecutors who are going to aggressively look into this. The president and administration want this investigation to be as thorough as possible.

WALLACE: But will the president cooperate including --

PLOUFFE: I'm not going to answer his particular involvement right now, Chris, OK? The point is, everyone in our administration and I think this probably goes with the agencies as well, of course, is going to cooperate with the investigation.

WALLACE: The White House says that there was no need for an independent prosecutor. You've mentioned a couple of times now that that U.S. -- two U.S. attorneys have been appointed by Attorney General Holder to look at that.

I want to ask you about this, because back in 2006, in the case of lobbyist Jack Abramoff, Senator Barack Obama sent a letter that said this, "A special counsel will insure the public's confidence in the investigation and prosecution and help to restore its faith in our government."

If an independent prosecutor was necessary in the Abramoff case, which quite frankly was not a matter of the national security, why not an independent prosecutor in the case of our top national secrets?

PLOUFFE: Well, the attorney general who is our top law enforcement officer, as you know, has made the decision about the best way to proceed here. This is a very serious investigation. Again, these are two United States attorneys, one Bush appointee, who are going to have the ability, as they should, to thoroughly look at this.

WALLACE: Why not an independent prosecutor as Senator Obama said to insure the public's confidence in the investigation?

PLOUFFE: Listen, I think most Americans would rightfully think that two United States attorneys looking into this with thoroughness, with resources.

WALLACE: Senator Obama didn't think so back in 2006.

PLOUFFE: Well, that was a different case, Chris. And by the way --

WALLACE: This is a more serious case, sir.

PLOUFFE: Well, there is an investigation proceeding, OK? So, let's let that investigation happen. Let the facts come out.

WALLACE: All right. Let's move on to something else.

The president announced a new immigration policy this week to stop deporting illegals who have been brought in the country as children and who have good records, no criminal record, law-abiding.

Here is what Mr. Obama said last year about not having the power to do exactly this. Take a look.


OBAMA: I know some people want me to bypass congress and change the laws on my own. That's not how our democracy functions. That's not how our Constitution is written.


WALLACE: Question: what's changed from last year other than the fact that the president now needs Hispanic voters to get reelected?

PLOUFFE: Nothing has changed. The president can't change the law on his own. This is not a permanent fix. This was prosecutorial discretion announced by the Department of Homeland Security, not a change in the law.

So, this is going to allow our law enforcement agencies to focus on deporting criminal that's up 80 percent, by the way. We need to focus on the real threat here, people who are endangering our communities, not people who are studying in school working hard.

So, you have people who are brought here in many cases by young ages by their parents, who are studying in our schools, working in our businesses, who want to serve in our military.

PLOUFFE: This allows them to apply just for a two-year period for work authorization. So, there's one way to fix this permanently, only one way, that's for Congress to pass the DREAM Act, which is something that unfortunately Governor Romney has said he would veto if he becomes president.

So, this is very, very important, that this is a two-year period so that people can apply. And it allows our law enforcement officials to focus on criminals who really posed a threat and ought to be the focus here. But the only permanent way to fix our immigration system, certainly to provide a permanently relief for DREAM Act eligible populations is for Congress to act.

WALLACE: You mentioned Governor Romney. I don't to get into the whole thing about the differences will get to the economy in a minute. But specifically for Hispanic voters, do you think there's a clear choice between Obama and Romney?

PLOUFFE: I think there's a clear choice for everybody.

WALLACE: Well, I'm asking about Hispanics.

PLOUFFE: Well, first of all --

WALLACE: On this issue of immigration.

PLOUFFE: Well, first of all, Hispanic voters highly support the health care bill, what we're trying to do in education. On immigration, yes, this is a president who's tried to get immigration done in a comprehensive way. We're getting close to getting the DREAM Act done.

So, this is someone who believed that we are a nation of laws, but also a nation of immigrants. And that people who want to staff our labs and start businesses and serve their country ought to be able to do that. Governor Romney has said he would veto the DREAM Act. Governor Romney essentially said the 11 million here ought to just go home. They ought to self deport.

So, this is someone you're not going to be able to trust. And this one of the important choices that the president talked about earlier this week in Ohio. President Romney if he's elected is not going to fix our immigration system. He's been very clear about that. You watch Republican debate after Republican debate, many of them on your network, where Governor Romney was very clear, he would veto the DREAM Act. He thinks these 11 million people ought to just be sent home.

So, I think that's a clear choice just not for the Latino community, but for the American electorate at large.

WALLACE: All right. Let's turn to the economy. The president gave a major economic speech this week in Ohio in which he called for targeted investments for things like energy and education and state workers, first responders and teachers, and tax hikes for the wealthy. But there was -- forgive me -- nothing new.

Is that the president's agenda for the next four years -- pass the jobs plan that I have been pushing for over the last 12 months and that will fix the economy?

PLOUFFE: What the president laid out is a clear choice facing the American people. And the contrast could not be clear. This is a president who believes we need to grow the economy by putting the middle class first, creating middle class jobs, by reducing the deficit in a fair or balanced way, and making sure we can invest in things like innovation and infrastructure and science and research.

The congressional Republican approach, Governor Romney's approach -- by the way, it's fitting, he's with John Boehner today -- because Governor Romney is going to rubber stamp the Republican agenda, which basically gives huge tax cuts for the wealthy. They believe the economy works best from the top down. That's failed.

By the way, Governor Romney wouldn't reduce the deficit. Every independent economists who's looked at this plan says he would add to the deficit, he would starve investment in education, he would allow infrastructure to deteriorate even more. This is not a recipe for growing the economy, reducing the deficit or helping the middle class. So, that's the stark choice --

WALLACE: Does the president's agenda -- because I did not hear anything new in Ohio -- is the president's agenda for the next four years more of the same?

PLOUFFE: Well, what it is, is what this country needs to do, which is reduce the deficit in a right way, fair and balanced way.

WALLACE: I like the fact that you keep saying fair and balanced.

PLOUFFE: Well, it's the right way, which is we need to cut more spending. This president has already signed into law, by the way, over -- almost $2 trillion on spending cuts. We have to focus on what is going to grow this economy for the middle class. And that's going to be continuing to focus on our manufacturing --

WALLACE: But you would agree, there is no new agenda beyond what he is pushing for the last year?

PLOUFFE: This is the direction he thinks that the country needs to go.

Now, let's look at the other direction, it failed miserably. When Governor Romney led Massachusetts, number one debt in the country -- think about that. Added debt. For all of this talk about government, for every private sector job created in Massachusetts by Governor Romney, six public sector jobs.

This is someone who -- his state was 47 in job creation. And he wants to return to the same policies that led to the great recession that, you know, caused a huge harm to our businesses, our economy and people in this country.

So, the choice is clear here.


PLOUFFE: The choice is clear.

WALLACE: I have a couple of minutes left and I want to get to these campaign questions. You were the Obama campaign manager in 2008. I ask about whether there's anything new, because you are taking hits right now -- you, the campaign -- from some notable Democrats like James Carville and Bill Clinton, who are saying that you need to stop talking about the progress we've made and start talking about a new agenda, how things in the next four years are going to be different than they were in the last one.

Are they wrong?

PLOUFFE: First of all, President Clinton, he's appeared with President Obama. He said very clearly that we are beginning to grow again. We're beginning to make progress. We can't return to the same policy.

President Clinton is someone knows something about reducing the deficit, about creating jobs, and he's been very clear -- he thinks Mitt Romney would be a disaster for this country.

So, listen, those other Democrats aren't paying attention to what the president said, which is everyday, not just on what he said, but what he does -- he understands our economy is not strong as it needs to be, that this didn't happen overnight, it's going to take us a long time to recover, there's a lot of people out there hurting.

So, we are making progress. We need to make a lot of more. That's very clear.

WALLACE: But you said, just a few months ago, that trajectory in the economy is going well. We had fewer and fewer jobs, each of the last four months. GDP growth is 1.9 percent, 69,000 jobs, the lowest in the year created. The trajectory is not going like this anymore, sir. It's going like this.

PLOUFFE: Well, compared to where we were in recession we had over 4 million jobs created over the last 26 months. We had that private sector jobs --

WALLACE: But you've got three and a half years to fix it. PLOUFFE: Well, listen, this is a deep hole caused by the same policies Mitt Romney wants to go back to. This is what folks need to focus on. We just went through recession.

Remarkably, what Mitt Romney and the congressional Republicans want to do is, hey, I guess that worked out well. Let's go back to the same rules. Let Wall Street writes its own rules, make it easier to polluters to foul our air more, huge tax cuts to people like Mitt Romney and basically paid for by raising taxes on working Americans, and making it harder for people to get education, not believing in the new energy future, not rebuilding this country.

So, listen, this is a tough recession we are recovering from. We are making slow and steady progress. Nobody is satisfied. The president most of all knows we have to recover more quickly, create jobs more quickly. But the choice is, are we going to continue and move forward -- are we going to go back to the same policies that caused the recession?

WALLACE: I got it. One last question --

PLOUFFE: It's important. Nothing is more important than this, Chris.

WALLACE: One more question real quickly, any chance you'll leave the White House, go back to Chicago and run this campaign.

PLOUFFE: No. Listen, the campaign is being run brilliantly by Jim Messina, by David Axelrod. And most importantly, our campaign is at its core, 2.5 million Americans have already contributed, millions volunteer to elect this president -- teachers, retirees, students.

Compare that to Mitt Romney whose entire campaign right now seemed to be on the backs on these big super PACs and billionaires trying to purchase the White House. It's a terrible thing for our country.

WALLACE: Why -- I can't let that go. He raised $16 million more than in the last month than you did.

PLOUFFE: Well, first of all --

WALLACE: And those were small contributors, limited contributors, they weren't the big super PACs. Wait, wait, the Romney camp and the RNC raised $16 million more, $76 million. You raised $60 million.

PLOUFFE: Well, what I'm saying, our campaign --

WALLACE: What about that?

PLOUFFE: Well, first of all, Mitt Romney won't even release who raises his money.

WALLACE: Wait, wait, you're not answering the question, sir.

PLOUFFE: They had a good month raising money.

WALLACE: OK. But those were limited contributions. So, those weren't $10 million contribution.

PLOUFFE: If you compare our fundraising to his, we have a lot more grassroots volunteers. In Ohio, in Virginia, in North Carolina --


PLOUFFE: -- the most active entity right now on the campaign is not Governor Romney, it's these super PACs. The American panel --

WALLACE: I got to let the panel have time to talk.

It's always a pleasure to talk to you. Enjoy it. Happy Father's Day. Go watch the U.S. Open. Thanks for coming in as always.

Up next, more on those national security leaks. We'll ask the top senator on homeland security and the former director of the CIA how much damage has been done.


WALLACE: We continue our examination now of the recent disclosure of top U.S. secrets with two of the nation's leading experts on national security.

Joe Lieberman is chairman of the Senate Homeland Security Committee.

And General Michael Hayden is former director of the CIA.

Gentlemen, welcome back.


WALLACE: As you look at these extraordinary series of leaks, everything from the double agent inside al Qaeda in Yemen, to the details about the U.S. and Israeli joint cyber campaign against Iraq.

Let me start with you, Senator Lieberman. How much damage has been done to our national security?

LIEBERMAN: In my opinion, an enormous amount has been done to our national security. I mean, in the case of the cyber attack in Iraq, if the articles are true, this is the first confirmation of that. Some methods of how it was carried were telegraphed to the Iran. I think there's a danger that it may legitimize an Iranian or a terrorist counter cyber attack on us because we did it.

In the case of the underwear bomb from al Qaeda in the Arabian Peninsula -- again, these leaks jeopardized that operation. Potentially put the individual who courageously infiltrated AQ in the Arabian Peninsula in danger and his family. This will discourage people and foreign intelligence services from cooperating with us in the future.

Finally in the case of the Osama bin Laden kill, the fact that we leaked the story that a doctor was retained to carry out a vaccination program and trying to get DNA from people in bin Laden's compound led the Pakistanis to the doctor and he's now been convicted and sentenced to 333 years in jail. Who is going to cooperate with us next time as a result of that?

So, yes, these leaks compromise the security of every American.

WALLACE: General Hayden, I want to pick up on what Senator Lieberman said. Are some of these leaks giving away what's known as sources and methods, the Holy Grail of intelligence, and especially in the case of alleged U.S.-Israeli cyber attack against Iran -- does it invite retaliation by the mullahs in Tehran?

GENERAL MICHAEL HAYDEN, FORMER DIRECTOR OF THE CIA: I think so. And to reiterate the point the senator made, these don't have to be true to be harmful.

So, you take the Stuxnet story. It's almost like --

WALLACE: That's a computer virus that allegedly were used against the Iranians.

HAYDEN: Right. That's taunting the Iranians. Imagine this -- my counterpart when I was director of CIA was (INAUDIBLE). I can just picture him now going to the supreme leader Khamenei and saying, you know those things we discussed a year or two ago, Mr. Supreme Leader, and you told me to put them on the back burner. I think it's now time to resurrect those ideas.

I mean, it sort of legitimates an Iranian response, whether the story is true or false.

WALLACE: General, in the cyber warfare story that appeared on the front page of "The New York Times," you are quoted saying this, and let's put it on the screen. "This is the first attack of a major nature in which a cyber attack was used to affect physical obstruction. Somebody crossed the Rubicon."

Didn't you at least indirectly confirm the leak?

HAYDEN: No. In fact, I was quite clear. Totally agnostic as to who did this, but it is accepted knowledge and public knowledge that this happened. Whoever did it crossed a policy barrier, made a decision that in a time of peace, one could use cyber weapon to inflict physical destruction on what another nation could only describe as their own critical infrastructure.

WALLACE: But in you're in no way confirm --


WALLACE: -- that the U.S. was involved.

HAYDEN: No, not at all.

WALLACE: OK. As we discussed with David Plouffe, some of the people quoted in this article, not saying that they were the ones who gave up these specific secrets, but the national security advisor, Tom Donilon, the former White House chief-of-staff Bill Daley quoted specifically giving up some of this -- members of the president's national security team who were with him in meetings in the Situation Room.

Question for you, Senator Lieberman -- do you have thoughts about who was leaking these stories and why?

LIEBERMAN: I don't have any thoughts about who is leaking the stories. But we have to try to find out and that's what the investigation and the Justice Department ought to do.

There's nothing new here about leaks in Washington. This happened during the Clinton and Bush administration and earlier Obama administration and Bob Woodward's books for instance. But the recent series of leaks are the worst in the long time. I think run a slippery slope where people think there is no accountability if you leak and we've got to change that.

I think we've got to change the law that's applied here. The last person to be convicted of a crime for leaking to the media was more than 25 years ago. We are using a 1917 Espionage Act that requires some showing of intent and knowledge that a leak would harm the security of the United States.

But, Chris, if you -- it seems to me that the law ought to say simply: if you disclose without authority classified information, you committed a crime, because for information to be classified, there was a judgment made that its disclosure would cause damage in the case of top secret information, which a lot of these was, it would cause exceptionally grave damage to the security of the United States. So, this is something that has to be found.

One last point: David Sanger says in the --

WALLACE: He was the fellow who wrote about the cyber warfare and he's written a book on this.

LIEBERMAN: Right. He says that his writing is based on conversations with high ranking officials in the U.S. government and other governments who don't want to be identified, because the information they shared is highly classified and relates to some ongoing operation. That's an acknowledgment of a crime in my opinion and that's why the Justice Department ought to get to the bottom of this.

WALLACE: Let me follow on this with you, General Hayden, because you have been in these meetings. You've been in the Situation Room. How closely held is this kind of information?

You know, we are talking about sources and methods. We are talking about agents that we had in those countries. We are talking about a major campaign against Iran. How closely held is the information and do people just leave the room and go out on their own and leak this kind much information?

HAYDEN: Well, they shouldn't certainly. And this is very closely held information. Again, without commenting on whether the story is true or false. If you follow the storyline that David Sanger lays out, this would have been a covert action. Covert action requires the personal involvement of the president, his personal approval. And there are a few things in the American government that are as closely protected as covert actions are. I mean, after all, the word covert has some meaning. Or at least it's supposed to.

WALLACE: Do you think this was political? Do you this is an effort to shine the president's record foreign policy?

HAYDEN: On the Stuxnet leak and the Sanger article, first of all, I'm reluctant to pass judgment. But I'll believe what David Sanger said. This wasn't in any way a press from anyone, so to speak. He picked this up in bits and pieces through very good reporting.

But that, however, doesn't indicate that some of that reporting didn't come from sources who were privy to this information.

WALLACE: Senator Lieberman, let me ask you some of the questions that I asked David Plouffe.

Do you think that the president should, as George W. Bush did, order his entire staff, anyone who knows about those leaks, come forward?

LIEBERMAN: I do. I mean, the president made very clear in the statement that you played earlier that he was outraged and anybody would think that anybody in his White House who was leaking classified information. I think the next step is ask all of them to come forward in just the way you said.

WALLACE: You think he should agree, as President Bush did, to sit down with federal prosecutors for interrogation?

LIEBERMAN: Well, that's up to him. But, look, we are in a situation where I think the administration ought to do everything it can to eliminate any appearance that people in the administration leaked this highly classified information for political or other personal purposes.

And I leave it to the president's attorneys. But If I were advising him, I'd say he should sit down and talk to the investigators.

WALLACE: Finally, back in 2003, you said that we needed a special prosecutor and independent counsel in the Valerie Plame case. Given the extent of these leaks and the fact that top administration officials, not by name but are quoted as having been the sources, does there need to be a special prosecutor?

LIEBERMAN: Chris, I've been thinking about this since these leaks came out. And I reached a conclusion, which is that we do need a special counsel and we need a special counsel because special counsel avoids any appearance of conflict of interest. Special counsels, independent counsels, were created for a situation like this, where people might reach a conclusion that investigators, U.S. attorneys even, working for the attorney general, who was appointed by the president, cannot independently and without bias investigate high officials of their own government.

WALLACE: So you are saying the U.S. attorneys that have been appointed by General Holder, Attorney General Holder, not enough special prosecutor.

LIEBERMAN: Yeah, not enough. And I have no reason to distrust or disrespect either of these U.S. attorneys. But here we got one gentleman who gave a contribution to President Obama. No matter what he concludes, people are going to say it was biased.

Here's the big difference between a regular U.S. attorney and a special counsel, the special counsel is not under the day-to-day supervision of the Attorney General, he is really much more independent. And I think that's what -- frankly I think Attorney General Holder would do the administration and himself a favor if he appointed special councils in this case because it would remove any appearance that anybody in the administration was trying to block a full scale investigation and protect anybody in the administration who may have leaked.

WALLACE: We're going to have to leave it there. Senator Lieberman, General Hayden, thank you both so much for coming in today to discuss these matters of vital national security. Thank you, gentlemen.

Up next, the president goes around congress to make a major change in immigration policy. Our Sunday group breaks it down when we come right back.



OBAMA: They are Americans in their heart and mind and every way but one: on paper.

GOV. JAM BREWER, R-ARIZ.: We wanting him to adjust the issue of securing our borders and to do this in my opinion is just back door amnesty.


WALLACE: President Obama explaining his decision to stop deporting some young, illegal immigrants brought into the country by their parents which clearly failed to convince Arizona Governor Jan Brewer. And it's time now for our Sunday Group. Bill Kristol of the Weekly Standard, Democratic strategist Joe Trippi, Karl Rove founder of the big Republican super PAC American Crossroads, and Fox News Political analyst Juan Williams.

Well, here is a quick outline of the president's policy as he announced it on Friday: the administration will stop deporting illegals between the ages of 16-30. To qualify, they must been in the U.S. at least five years, no criminal history, have gone to high school or served in the military, and they can get renewable two year work permits.

Bill, what do you think of the policy? And what do you think of the fact that the president went around congress and did this by executive action?

BILL KRISTOL, WEEKLY STANDARD: I think it's a sensible policy. I think it would be much better if that were the law of the land. And I think the president is pushing the edges of the limits of prosecutorial discretion and say we're not going to enforce a law in order to leave these people in the country, but I think it's the right thing to do actually

WALLACE: OK. We're going to talk politics in a minute, but Joe what do you think of the policy?

JOE TRIPPI, DEMOCRATIC STRATEGIST: I think the policy is the right one. It's about -- I mean, I think he articulated it the right way, this is about what -- who we are going after? They deported 400,000 people last year. So you're looking at, let's go after criminals, people who are violent in the community, people who are a threat to the American community, and not put so much focus, any focus on students, people seeking an education who are hear because their parents brought them here and who see themselves as Americans.

So I think that's what makes this a sensible policy until we can get a permanent one in place.

WALLACE: Karl, in the Bush White House you pushed comprehensive immigration reform. Given that there's a deadlock, a continuing deadlock over that, is this a good first step?

KARL ROVE, AMERICAN CROSSROADS FOUNDER: Well, first of all, I appreciate President Obama continuing the Bush policy era policies of prioritizing investigations and removals of criminals, criminal aliens. But look, we examined these questions significantly during the Bush years and concluded we had no statutory authority to offer in essence a blanket exemption from deportation without a change in the law. And this is what troubles me.

This makes -- if the president felt so keenly about this, he's had three years to get something done on it. And I don't think he has statutory authority to do this in a blanket way.

WALLACE: Even under the guise of...

ROVE: Prioritization, yes.

WALLACE: Of prosecutorial discretion?

ROVE: Well, but remember discretion was meant to be on an individual basis, that is the key. There is no ability in the law to basically say we are going to create whole groups of people, not individuals, but groups of people -- in this case, people between the ages of 16 and 13 as being exempt from the provisions of the law. And so I think he's on very shaky grounds.

I wish he had gone to the congress. He would have had -- my suspicion is a very strong positive vote by congress on this, mostly Democrats but some Republicans.

WALLACE: But wait a minute, he tried the DREAM Act...

ROVE: No, no, no. The DREAM Act is not this. The DREAM Act is significantly different than this. This is a relatively narrow -- as Bill said, a relatively narrow and compassionate policy. And look, we can argue all day long about the individual merits of it. I mean, for example, somebody who comes here at age 16 is a -- in many countries from which they might come is considered an adult who has got a thought about I'm coming to -- it's not the three-year-old dragged here by their parents with no knowledge of coming here, it is a virtual adult maybe coming here to go to work or find a job.

So -- but this is better dealt with inside a congressional environment with the congress with the president working together. And I believe he is going to have problems sustaining this, because there is no statutory authority to grant an exemption for a whole group.


JUAN WILLIAMS, FOX POLITICAL CONTRIBUTOR: I mean, you know, I remember when Karl Rove and George W. Bush tried to get immigration policies, immigration reform passed through this congress and couldn't do it? And why couldn't they do it? Because of a group of Republicans and talk show hosts made it impossible.

But I think that Republicans, you know, President Bush understood the importance of immigration reform to this country. President Obama went before the congress and tried to get it passed and he got 55 votes in the senate, Chris, 55 votes. But Republican filibuster stopped it.

So what we have seen is all the complaints about we need immigration reform from the likes of Jan Brewer, it's being stopped at the national level by a small group of Republicans who have distorted the marketplace on this idea.

And the step the president took in terms of this executive action is something I think he should have taken a long time ago.

WALLACE: All right, let's turn to the politics, because Hispanics, Joe, are a big voting block especially in key swing states like Florida, like Colorado, like Nevada. You can see the percentage of the voters that are Hispanic in those states. They were upset with President Obama because he had not enacted as much of their agenda as they had wanted. Does this action win him the support, the enthusiastic support, of Hispanic voters in November?

TRIPPI: I think he already has a big lead there but this helps solidify it. But even more, it helps -- I think this is a big step for the administration and for the campaign in the sense that it makes -- it articulates moving forward. This is a policy where the president, again, is trying to move the country forward, move immigration reform forward. And at this -- on this issue, Romney is behind George Bush. Bush was more of a reformer than Romney is on this issue. So it really starts to articulate the what the Obama campaign strategy of what moving forward, not just on this but on the economy and on other issues, versus Romney who wants to take the country in the past. That's the argument they're making I think this helps them do that.

WALLACE: All right. I want to pick up on that with you, Karl.

Romney, as David Plouffe pointed out, he opposed the DREAM Act, said he would veto it. He called for self-deportation by the 11 million people here. He hammered Rick Perry about giving in-state tuition to illegals who want to go to college.

What does Romney do now as a counter to this to try to win back Hispanic voters?

ROVE: Well, first of all, I want to thank my two more liberal colleagues here for being so complimentary of the Bush years. I wish you were that complimentary during the Bush years.


But look -- look. David Plouffe said President Obama tried to get comprehensive immigration reform done. That's simply not true. Juan blamed the failure of comprehensive immigration reform in 2007 on Republicans. I would remind Juan that Barack Obama, after saying he would support comprehensive immigration reform, voted for every union amendment to gut comprehensive immigration reform.


ROVE: Look, here's the issue. We've got a contrast between the statements that you depicted Romney as saying and a guy who said this is a big priority for me in 2008; I'm going to make this a big priority for me as soon as I get elected; and who has done nothing.

You may remember, he appeared at the "Three Amigos Summit" -- so- called "Three Amigos Summit" in August of 2009 with Harper and Calderon and had been criticized for his lack of action on this issue and said we're drafting a bill; we're lining up co-sponsors; we'll have it introduced and brought up for action by the end of the year. And he never even introduced the bill. We've had three years.

So we've got a choice between a guy who is clearly playing politics with it and a guy who has views that are not popular in some elements of the Hispanic community. But, no matter what, this is going to be overridden by jobs and the economy, which is a much bigger issue inside the Latino community.

WALLACE: Thirty seconds left, Bill. Does this put pressure on Romney to sign on to Marco Rubio's idea of a modified DREAM Act and does it put pressure on him to name Marco Rubio as a running mate?

KRISTOL: Yes, and yes. This was the anti-Marco Rubio initiative by the administration. They were scared Rubio -- Senator Rubio was about to introduce his version of a DREAM Act that would have been close, actually, to what President Obama announced than the actual Democratic DREAM Act. I wish Rubio had introduced it, actually, over the last month or two. He got stalled. Not every Republican was on board. The Romney campaign's been cautious about it. I slightly disagree with Karl. I think this was a big problem for Romney and he needs to take the lead on this, in my view, embrace Marco Rubio's DREAM Act, if that's what he wants, and say let's pass this in Congress over the next two months; this is what I'm for.

WALLACE: All right. We have to take a break here, but when we come back, the president and Mitt Romney make big speeches on the economy, but does either have a plan to put Americans back to work?


WALLACE: Still to come, our power player of the week.

(UNKNOWN): The mantra at CBO then, as it was before then and as it is now...

WALLACE: The CBO scores every bill passed by a committee, as well as the president's budget.

(UNKNOWN): We don't care about the political implications of what we do.

WALLACE: Stay tuned.



OBAMA: This is about your jobs and your paychecks and your children's future. There is no excuse for Congress to stand by and do nothing while so many families are struggling.

FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: Last time around, as you recall, his campaign slogan was "Hope and change." Now I think he'd like to "Hoping to change the subject."


WALLACE: President Obama and Mitt Romney continuing their debate over the economy, but both are leaving a lot of questions unanswered about what they'd actually do over the next four years. And we're back now with the panel.

We heard a lot about the economy this week from both the president and fro Mitt Romney. But, frankly, and as I mentioned this to David Plouffe, not a lot of new ideas from either, Karl.

Can they both stick with this basic philosophical disagreement about the size and role of government?

Is that enough to run on between now and November?

ROVE: No, it's enough for most of that time, but you're right. President Obama's problem is he has something specific. It's embodied in this five mini-ball proposals that he laid out last September that really don't -- you know, if they were enough to change the narrative in his direction, they would have changed it long before there.

Romney has a different problem. He's actually laid out a pretty meaty agenda. There's a speech on entitlements; there's a speech on tax reform. But he needs to give more sum and substance to it. The good news for him is there's plenty of time to do that. Right now, people are looking for the general arc of the narrative. The independent voters and swing voters in particular are going to want a lot more meat before it's all over.

WALLACE: All right. Some notable Democrats like James Carville are saying that the president needs to stop talking about all the progress we made and deliver more of a forward-looking agenda. Meanwhile, it's fair to say that Mitt Romney isn't explaining what tax loopholes he'll close to pay for his lowered tax rates. He isn't saying specifically what programs he'll cut. Do they both need to put more beef on their agendas?

TRIPPI: No, I actually think they're wrong about what he's needing to do. I think he's starting to argue that...

WALLACE: That Karl's...


TRIPPI: Yeah, I think what's going on here is they're starting to articulate this is about Romney. Does Romney have really any policies that differ from the Bush -- from Bush policies, from policies that failed the country? And this is the argument they want to make in terms of there was a reason people went to Obama in the first place, the reason they wanted reform, wanted change.

WALLACE: But, Joe, in 2010, that was exactly the argument that the president made. He said they drove us into the ditch; we don't want to give them the keys to the car back; they don't know how to drive. And he took a shellacking.

TRIPPI: Right. And so now this is about the future. We've been -- we've been working on things. We've been reforming things. Are we going to have energy reform, a broad reform, or are we going to rely on fossil fuels?

Are we going to create more -- more jobs through investment in infrastructure, education, et cetera?

And -- or you going to go for this guy from Bain Capital who wants more tax cuts for the rich and do the things that got us into this mess?

And I think that's -- that's what this forward pass thing is about. And I think the president's campaign is starting to articulate that in a very powerful way. While most of the press and pundits think he's had a bad month, and he has, I think they really are getting to the message that could win them this election.


KRISTOL: I half agree with that in a sense. I think will be a debate about the two paths forward. I think President Obama actually fairly effectively began to lay that out last week. The speech was 54 minutes long. Everyone said right away there's nothing new on it -- in it. I didn't actually watch it so I didn't suffer through the 54 minutes.


But when you read it, he's got a narrative. It doesn't convince me, but it's not crazy. And you can't beat something with nothing. I think -- I do agree with Karl on this. Mitt Romney needs now to lay out his path forward more comprehensively with more detail and with more substance. I'm not sure he can wait that long.

And I do think the attack -- this is just back -- in 2010, the attack they're just going back to Bush policies didn't work because people wanted a Republican House to stop Barack Obama from doing any more damage. You can elect Mitt Romney to stop -- entirely to stop Barack Obama from doing more damage. That would be -- one good affect of electing Mitt Romney will be to stop Barack Obama from doing more damage. But I do think Mitt Romney has to have a forward looking vision, otherwise I'm nervous about this race plays out.


WILLIAMS: Well, I think that all the Romney advisers say he's got to put more meat on the bone. But I thought that this speech this week was a good speech...

WALLACE: You're talking about the president.

WILLIAMS: The president's speech in terms of framing the alternative and saying very clearly -- this picks up on what you said in introducing this, Chris, that if you ask Mitt Romney about what are your ideas for making this economy take off, Mr. Romney? He says, more tax cuts, personal tax cuts, corporate tax cuts, oil drilling and gas exploration, especially XL pipeline which produce about I think 6,000 jobs that is the not going to turn around the American job scene.

So these are his ideas. And then you say, and how are you going to pay for these tax cuts? He doesn't say it. He doesn't lay it out. He doesn't say here's exactly the programs that I would cut, instead he embraces the Paul Ryan plan and that puts in place fears that many people that have that in fact he would disassemble Medicare and Medicaid.

This is dangerous stuff. And I think if the president pursues that aggressively then he has a chance to create and define Mitt Romney early and not make this a referendum on Barack Obama's performance, but make it a contest in which people say, you know what, the alternative is unacceptable.

WALLACE: Karl, I'm worried that you're shaking your head so vigorously it's going to spin right off.

ROVE: Juan needs to make up his mind. Either Romney is not laying out a plan, or he's laid out a plan that's similar to the House Republican budget that does all kinds of bad things. Make up your mind.

Romney has a plan that reduces the deficit. Romney has laid out a framework for tax reform, not tax cuts. He said I want to lower the rates and pay for it by getting rid of deductions and unnecessary preferences in the law.

WILLIAMS: He wants to make it permanent.

ROVE: You know what, no he doesn't. What he want to do is pass tax reform. Pay attention. You know you sound like Obama. I'm giving you an honest presentation of what he is proposing. And then went on and did not say a single honest word about what Romney was proposing.

WILLIAMS: And you're so honest and saying, oh he's all about deficit reduction when he doesn't say exactly...

ROVE: Wait a minute, wait a minute, Juan, make up your mind. He's endorsed that terrible House budget which reduces the deficit according to the Congressional Budget Office.

WILLIAMS: No, it doesn't.

ROVE: Yes, it does Juan.

WILLIAMS: It doesn't reduce anything. It doesn't say, Karl, where I would make cuts in order to reduce...

ROVE: Yes, it does. It says for example will slow the future growth of Medicare spending for $450 billion here to $600 billion here.

WILLIAMS: You need to read.

ROVE: I read it, my friend.

WILLIAMS: Oh, stop.

ROVE: I read it.

Be happy to send you a copy of it. I will get it autographed by Paul Ryan.

WALLACE: All right.

Thank you.

You see, this is why we invented panel plus, because we don't get it all finished on the show. So check out panel plus. We are going to pick up right where this discussion on our website, We promise we'll post the video before noon eastern time. We're going to keep this thing going. Be sure to follow us on Twitter @FoxNewsSunday.

Up next, our power player of the week.


WALLACE: A lot of people in Washington talk about being above politics, but we may have found the one man and one agency that really are. Here is our Power Player of the Week.


DOUGLAS ELMENDORF, DIRECTOR, CONGRESSIONAL BUDGET OFFICE: So like an umpire in a baseball game, we're not rooting for either team we're simply trying to call the balls and strikes.

WALLACE: Douglas Elmendorf is director of the Congressional Budget Office, the stubbornly nonpartisan agency that tells Congress the financial effects of policies it is considering. The CBO scores every bill passed by a committee as well as the president's budget. What is scoring?

ELMENDORF: To say that this piece of legislation would increase the federal deficit or reduce the federal deficit by a certain number of billions of billions.

WALLACE: So you're basically saying you pass this bill and here's what it's going to cost.


WALLACE: That may sound pretty dry. But the CBO score can have big implications.

HILLARY CLINTON: begin this discussion about the future of health care reform.

WALLACE: In 1993 when Elmendorf was a CBO staffer, they gave this analysis of Clinton health care reform.

ELMENDORF: That bill would cost more to the federal government than the administration had estimated.

WALLACE: And that ended up hurting the bill's prospects.

ELMENDORF: I think that did hurt the bill's prospects. But the mantra at CBO then as it was before then and as it is now is that we don't care about the political implications of what we do.

WALLACE: Case in point, Obamacare. The CBO says it will reduce the deficit $130 billion over 10 years. Critics say that assumes cuts in Medicare congress will never pass. Elmendorf says that doesn't matter.

ELMENDORF: It is not our place to say to congress we don't believe you actually mean this piece of legislation. Our job is to tell them what would happen with the legislation they give us.

WALLACE: We tried, not too successfully, to get Elmendorf to weigh in on current issues.

How do you feel about the fact that the senate hasn't passed a budget in three years?

ELMENDORF: I don't think it's the role of CBO to comment on the procedures in the congress. The fact that there is not a budget resolution that's passed the congress as a whole in several years is a symptom of this underlying inability to agree on what the budget path should be.

WALLACE: What about Taxmageddon, the trillions in spending cuts and tax hikes that kick in at the end of the year.

ELMENDORF: We think that situation would lead to a recession in this country again on the first half of next year.

WALLACE: Elmendorf's parents were a computer programmer and a math teacher. And he inherited their analytic approach to the world.

Is it true that when you were courting your wife that you invited her to a baseball game, because you had calculated if there was a lull in the conversation you could watch the baseball game.

ELMENDORF: I did think when I was dating that baseball games were a good opportunity because one could sit and talk with something else going on.

WALLACE: You have been called a geek with guts.

How do you play it?

ELMENDORF: I think CBO is a group of geeks with guts. And what we do at CBO is to do our analysis and let the chips fall where they may.


WALLACE: Elmendorf says the big decision Americans must make now is what to do about taxes and entitlements. The longer we put that off, he says, the further we travel down the path of Europe. And that is it for today. Dads enjoy your day. Have a great week. And we'll see you next "Fox News Sunday."

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