Gibbs defends administration's response to Libya attack; Gov. Walker: Romney needs to show 'fire in the belly'

Obama campaign senior adviser on 'Fox News Sunday'


This is a rush transcript from "Fox News Sunday," September 23, 2012. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

Mitt Romney tries to bounce back from that controversial video. While President Obama faces no questions about the deadly attack in Libya.

With the White House changing its story about what happened during the assault on the U.S. consulate in Benghazi, there's new criticism of the president's foreign policy. Will national security now become a campaign issue? We'll sit down with Obama campaign senior adviser Robert Gibbs.

Then, caught on tape. Mitt Romney's comments about people who don't pay federal taxes who he says will never support him. And as his campaign find a way out of this mess. We'll ask a key Romney supporter, Wisconsin Governor Scott Walker.

Gibbs and Walker only on "Fox News Sunday."

Plus, new polls in key battleground states give a boost to the president. We'll ask our Sunday group if the upcoming debates are Romney's best chance to turn things around.

And from the stop at a burger joint, to grand kids on the campaign plane, we'll go on the trail.

All right now on "Fox News Sunday."

And hello, again, from Fox News in Washington.

With anti-American violence across the Islamic world and growing questions about what really happened at the U.S. consulate in Libya, national security has finally become part of the presidential campaign

Joining us now is Obama senior campaign adviser and former White House press secretary, Robert Gibbs.

Robert, welcome back to "Fox News Sunday."


WALLACE: Last Sunday, same show, same place, same desk, Susan Rice, the U.S. ambassador to the United Nations, came on this program, and I ask her about the attack at the American consulate in Benghazi. Here's what she said.



SUSAN RICE, U.S. AMBASSADOR TO THE UNITED STATES: The best information and the best assessment we have today is that in fact this was not a preplanned, premeditated attack. That happened initially was that it was a spontaneous reaction to what had just transpired in Cairo, as a consequence of the video.


WALLACE: Why did Ambassador Rice give the American people bad information?

GIBBS: Well, I think as you heard Ambassador Rice say, the best information that we had at the point which she gave that answer is the answer that she gave. And look, Ambassador Rice, Chris, has access to far more intelligence data than I do anymore. I would say this, as we have learned more and as this investigation continues, I anticipate, we will continue to learn more facts about the awful assassination, murder of our great ambassador in Libya. You saw the White House say that this was a terror attack and nobody wants to get to the bottom this more than the president and the secretary of state so that we can protect our missions in our consulates throughout the world and remain engaged.

WALLACE: But I specifically last Sunday asked Ambassador Rice about the president of Libya, the president of Libya, who was then saying it was preplanned. I specifically asked her about al Qaeda, who had said that it was revenge for the killing of a top al Qaeda leader. Ms. Rice didn't say we don't know, I'll get back to you. She said it was a spontaneous attack that was not preplanned, that spun out of control.

She had information at that time. And the information she gave the American people was wrong.

GIBBS: Well, again, Chris, I think you look back at that answer and she says, the answer, she had -- the information and the answer based on what she knew at that point, we've learned more and we're going to continue to learn more. The most important thing is we get to the bottom of the intelligence and what happened and what may or may not have caused this incident? That the State Department review of the security of our missions and our consulates not just in Benghazi and Tripoli but throughout the world, make sure that we protect those that are there to serve our interest.

You know, Paul Ryan has got a budget that would cut diplomatic security. We don't think that's a good idea.

WALLACE: So in fact, would your sequestration cut diplomacy security?

GIBBS: Well, sequestration that the Congress can solve when and if they decide to come to the table --

WALLACE: That part of it in the Defense Department was actually cut as a demand by your administration.

GIBBS: But sequestration again was a result on the super committee involved completely of Congress of being unable to come up with --

WALLACE: But the Democrats insisted on certain cuts and the Republicans demand certain cuts and security cuts were part of the demand of the Obama White House, sir.

GIBBS: Super committee set up an incentive to come to a conclusion and Congress yet again shirk its responsibilities and failed to come up with the cuts necessary to implement the debt agreement that Speaker Boehner and President Obama had agreed to. I think --

WALLACE: Let me go back if I can, though, to the bad information that was being put -- you can say in good faith, but the bad information that was being put out by the Obama administration.

Here's what your successor as press secretary, Jay Carney, said last week. Let's listen.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: We have no information to suggest that it was a preplanned attack. The unrest we've seen around the region has been in reaction to a video that Muslims, many Muslims find offensive.


WALLACE: Again, at the time that he said, there was plenty of information that it was preplanned attack. Susan Collins, the co- chair of the Senate Homeland Security Committee, said, people don't show up to a spontaneous demonstration with RPGs, rocket-propelled grenades and machines guns.

Specific question, this was again the bottom line. Did the Obama administration play out what happened in Libya, what happened in Cairo, because it would make Obama foreign policy look better?

GIBBS: Absolutely no one intentionally or unintentionally misled anybody involved in this. Absolutely not.

Again, that's an answer that the press secretary gave on September the 14th. It's now September 23rd. We learn more information every single day about what happened. Nobody wants to get to the bottom of this more than we do.

Look, let's also understand this. We saw a wave of violence throughout the region. What we saw in Libya, though, was this weekend, has been very important. Thirty thousand people in the streets protesting against Islamic terrorists, against armed militias. This is a very dangerous region of the world, that has embraced democracy and is undergoing the beginnings of that Democratic action. None of this is going to be easy, Chris. It's important that we remain fully engaged in this part of the world, the president talked with the leader in Libya, talked to President Morsi, made sure that they understood their obligations in protecting our consulates and our embassies.

WALLACE: You talked about being fully engaged in that part of the world. The U.S. has now suspended all joint operations with Afghan forces because they keep trying to kill the U.S. trainers. Iran continues to build its nuclear program. The Israeli Prime Minister Netanyahu says that we don't have the, quote, "moral right" to tell them whether or not they can attack Iran.

Is that a successful foreign policy?

GIBBS: Well, let's unpack a few of these at a time. First and foremost, understand that the training of Afghan security forces a few years ago meant getting fitted for uniform, OK? We progress greatly in training of Afghan security force that's going to let us lead that country.

WALLACE: But they suspended all joint --


GIBBS: You unpack a lot, Chris, let me try to -- we're now going through and rescreening of Afghan security forces to insure that what has happened in 51 occasions this year doesn't continue to happen. Look, our commanders on the ground and our leaders here in Washington certainly want that. The Islamic Republic of Iran is suffering under the worst economic conditions because of the toughest economic sanctions ever put on them.

WALLACE: Is there been a slightest indication they're going to slow their nuclear program?

GIBBS: Again, Chris, I don't have access to the intelligence on Iran. I haven't been briefed on that in more than two years --

WALLACE: There have been no reports of it.

GIBBS: No, no, no. But let's be clear --

WALLACE: In fact, they doubled a number of centrifuges at one base near the city of Qom.

GIBBS: Let's be clear, though. They are dealing with the toughest economic sanctions because the world took a step together based on the leadership of Barack Obama, President Obama --

WALLACE: But it's not hurting --

GIBBS: Chris, I don't think you know enough about the intelligence, or I know enough about intelligence --

WALLACE: Wait a minute. Come on, Robert. You're telling me, you have any indication that our policy is working in stopping Iran from developing nuclear weapons.

GIBBS: Do I think our policy has made it far tougher for them to do that. Absolutely.

WALLACE: That's what the question I ask. I said, do you think it has had any effect in stopping them from developing nuclear material?

GIBBS: My answer is, if you listen to the defense minister of Israel, Ehud Barak, he would tell you as he's told the world that what we put in place with Israel is complicating greatly their ability to build a nuclear weapon.

WALLACE: And they're continuing to do it.

GIBBS: Well, there's people throughout that are continuing to do it, Chris. That doesn't mean we're going to stop working every single day to make sure that they don't do that. And that's what this president has said, our red line that Iran cannot have a nuclear weapon.

That's our red line. That's what the president will enforce. He's taken nothing off the table when it comes to dealing with that. But I don't think there's any doubt.

Four years ago, Chris, we couldn't get the Chinese and the Russians to even implement international sanctions, OK? Because of the leadership of Ambassador Rice and President Obama, we were able to put in place the stiffest sanctions ever put on the country of Iran. That's what's important and that has definitely slowed them down.

WALLACE: President Obama is going to the U.N. General Assembly this week.

WALLACE: But with the Islamic world in flames, the White House says he has no plans to have any private meetings with world leaders.

Why not?

GIBBS: Well, look, I think, Chris, we have -- we have schedules. Leaders have schedules. And in many cases, those schedules aren't going to overlap. But understand, Ambassador Rice will be seeing people. Secretary of State Hillary Clinton will be seeing people.

And I think it's also important that we say this, let's not brand everything that's going on as Muslims writ large. This is clearly a small, radical group of Muslims that have perverted the Muslim religion. They've killed more Muslims that any other religion because they're trying to gain power and take it away from people like those in Libya that want to see progressive democratic action and give people basic human rights.

WALLACE: I want to go back to the U.N., though, in New York this week. You say that he's got schedules, that foreign leaders have schedules. But the president has blocked out time to appear on "The View" on Tuesday. So he has time for Whoopi Goldberg, but he doesn't have time for world leaders?

GIBBS: No, Chris. Look, the president is going to be actively involved at the U.N. General Assembly.

WALLACE: He's not meeting in private leaders. He's giving a speech.

GIBBS: Chris, we -- there are telephones in the White House. Last week, he talked to the president of Egypt. He talked to the leader in Libya. We don't need a meeting in Washington just to confer with leaders.

WALLACE: But he does need a time to be on "The View."

GIBBS: We have a strong diplomatic -- I'm sure if he was doing, an interview with you on Fox News, you have no problem with that.

WALLACE: Well, he hasn't. But that's not the point.

GIBBS: I'm sure that's not the point.

Look, Chris, he's got a strong schedule. He's actively involved --

WALLACE: You don't have a problem with the fact that he's not meeting with any world leaders but he's going to appear on "The View"?

GIBBS: I have no problem with that because, Chris, you are the president of the United States every minute of every day. That's why you talk to the leader in Turkey. That's why -- a hugely important leader in country in that region as well -- that's why you pick up the phone and talk to the president of Egypt and tell them, they have to have a strong reaction to this violence in our embassy. They have to protect our consulate and our embassies and the people that work in them.

First, this isn't just about one meeting of one particular day in New York. The president is actively involved in engaging the most dangerous place in the world every single day of the week.

WALLACE: Mitt Romney released his tax returns Friday and here's what they show:

He paid a tax rate of 14.1 percent in 2011. And then a summary but with no returns over the last 20 years, he paid an average of 20.2 percent and never less than 13.7 percent.

Just maybe the single dumbest question I've ever asked in my time here at "Fox News Sunday". Does that end the Romney tax return issue for the Obama campaign?

GIBBS: Well, I think you cleared on the screen. He gave his accountant 20 years and he gave the American people two. Chris, what's he hiding? Why does he have corporations in Bermuda, investments in the Caymans, why is somebody who says they're going to get tough on China investing in the Chinese state oil company and banks in China?

I think the American people deserve to know a lot more about Mitt Romney's finances because he hasn't been straight with the American people about those finances and he hasn't been straight with the American people about their, what's going to happen with their taxes. Middle class families as the result of the promises that Mitt Romney's made are going to see their taxes go up while he's going to cut taxes for people just like him.

And I do think it is rich and special in many ways that Mitt Romney had to manipulate his tax rate by not taking all the deductions he was eligible for, something that he said a while ago would disqualify him from being president, he had to manipulate those deductions in order to raise his rate to meet his rhetoric by saying he's paid at least 13 percent every year. Deductions, by the way, if he loses this race he can go back and get.

So, this is somebody who's -- he's not been straight with the American people about his taxes, he's not been straight with the middle class families in this country about what's going to happen to their taxes.

WALLACE: OK. We got a little time left. I wanted to get quick answers from you.

GIBBS: Sure.

WALLACE: This week, we all saw the Romney 47 percent video. I promised you I'm going to ask Governor Walker about that. But I do want to ask you a policy question.

Let's put this up on the screen: 49 percent of Americans now live in a household where someone gets a government benefit. That's up from 30 percent in the 1980s. Forty-six percent of Americans don't pay any federal income taxes. That's not up from 27 percent in 1992.

Beyond the politics and I know at this point, there's nothing but politics. But beyond the politics, is it good policy for so many Americans not to have any skin in the game?

GIBBS: Well, I think it's crazy that Americans don't have skin in the game. I mean, first of all, the payroll tax hits lower and middle class families, quite frankly harder than it does. It hits somebody like Mitt Romney. They got skin in the game.

In that so-called 47 percent, you know, Mitt Romney includes those that are living solely on Medicare and Social Security right now, those are people that paid in to the system and now they're giving what their benefits that are due.

Look, Chris, I thought the most devastating thing about this video. It's not just the video itself but the reaction from candidate Romney which is to say that he was inelegant in what he said.

Chris, what's the elegant of saying that 47 percent of people in this country are moochers who don't care enough about themselves and their place in life, to take responsibility?

WALLACE: Finally --

GIBBS: I'd love to hear the elegant phrasing of that.

WALLACE: Finally, we have a minute. Maybe we'll hear it from Scott Walker.

Finally, the president and Governor Romney meet for their first debate 10 days from today. How big a moment in the campaign and who has the advantage?

GIBBS: Well, I think it will be a very big moment. I think it's always a big moment when two candidates get to sit side by side and answering the same question. I think the American people will get a chance to get real sense of what President Obama has been talking about in terms of middle class security and they'll have a chance to contrast that with Mitt Romney's vision for America.

Mitt Romney I think has an advantage because he's been through 20 of these debates in the primaries over the last year. He even bragged that he was declared a winner in 16 of those debates. So, I think, in that sense, having been through this much more recently than President Obama, I think he starts with an advantage.

WALLACE: Robert, thank you. Thanks for coming in today. Always good to talk with you, sir.

GIBBS: Thank you.

WALLACE: Up next, Mitt Romney comes under fire for controversial remarks on that secretly recorded videotape. We'll talk with Romney supporter, Governor Scott Walker of Wisconsin, next.


WALLACE: Mitt Romney has had a tough week trying to explain secretly recorded remarks he made at a fundraiser last May, in which he said 47 percent of Americans don't pay federal income taxes and think of themselves as victims.

For more on this and other campaign issues, we're joined now by Romney supporter and Wisconsin Governor Scott Walker, who's in Milwaukee.

Governor, welcome back to "Fox News Sunday".

GOV. SCOTT WALKER, R-WIS.: Good to be back, Chris. Thanks for having me.

WALLACE: You said Friday that you're bewildered by the Romney campaign since he picked Wisconsin Congressman Paul Ryan as his running. You said that you expected Romney to start running a bolder, reform agenda campaign and so far he hasn't. Why not?

WALKER: Well, I think part of it is dealing with some of these tough issues on the side. I think if they get - continue to be more aggressive, just as they were days after Mitt Romney picked Paul Ryan - what I loved about the pick of Paul Ryan wasn't just that he was from Wisconsin, or even about Paul Ryan himself, it was the fact that before that, we knew that Mitt Romney was qualified. I mean, his time in the private sector saving jobs, his time turning the Olympics around, his time as governor helping balance the budget without raising taxes in a way that helped create jobs. But when he picked Paul Ryan, what it said to us was he's not just qualified, he's got the courage and the passion to be an exceptional president. I want to see more of that on the campaign trail. I particularly want to see that in the debates. And I think that's what people are hungry for. They want that in states like Wisconsin and others across the country.

WALLACE: But Governor, it's been a long time. It's been over a month since he picked Paul Ryan. He had the Republican Convention, he had the week of the Democratic Convention, we've had a couple of weeks since then. Are they wasting Paul Ryan, and are they wasting the opportunity to present a reform agenda?

WALKER: Well, I think it's not just about Paul Ryan being on. I've talked to Paul a lot here. I was just in Florida the other day. I think he's doing an effective job out on the campaign trail. I'd just like to see more of the enthusiasm that I saw when the two of them were together early on. I think that's what Mitt Romney believes in. I think that's what will draw people to Mitt Romney not only in my state but in states across the country, particularly battleground states, and I think that's really what's at stake here. We talk a lot about this comment that was talked about this week. I think that takes away from the larger issue, which is pretty simple. This president and his allies largely define success, they measure success in government by how many people are dependent on the government, particularly on unemployment benefits. I think Mitt Romney, I and others, I think the majority of the people in this country, we define success in government as just the opposite, by how many people are not dependent on the government. Not because we've kicked them out into the streets, but rather because we've empowered small businesses and the private sector to create more jobs. That leads to greater prosperity and freedom for all of our people, and I think that's the focus we've got to have. The more we get off on these side issues, whether it's individual taxes or this video comment, that really distracts from the larger debate that is at stake here, one which we've seen the last four years had (ph) failed. I think we need to move towards one that will have a vision of us moving forward again.

WALLACE: Well, let's talk - you say it's a distraction, but it is big news, and we can't ignore it. The video that was released this week, because a lot of voters are receiving this information, in which Romney told big donors last night in Florida at a fund-raiser about the 47 percent he said -- actually 46 percent of Americans - who don't pay federal income taxes. Let's watch what he said.


MITT ROMNEY, REPUBLICAN PRESIDENTIAL NOMINEE: There are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe that a government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it.


WALLACE: Governor, what do you think of that? Particularly Romney saying that 47 percent of Americans think of themselves as victims.

WALKER: Well, I don't know about the specifics of that or what he meant, but I can tell you in the larger context, most people I talk to, including people who are unemployed today here in the state of Wisconsin, don't want to be. They'd like to be able to go out and grab a job in the private sector. They'd like to be able to put food on the table and clothes on the backs of their kids and live a better life out there. The vast majority of people who are somewhat dependent, particularly when it comes to unemployment benefits, in this state and across the country, don't want to be. They want to live the American dream, and that's the contrast here. We've got a president who I think has largely taken an attack at the American dream, at the American spirit, at the American free enterprise system, and in President Romney we have someone who would embrace that and lift that up, so that all people could better themselves and improve their livelihood. And I think that is the message. That is the aspirational message that we need to hear. And certainly what drew people like me many, many years ago to someone like President Reagan, who shared the same beliefs and did so in a very optimistic way. I believe that's what Governor Mitt Romney believes in. I believe the more we get him out on the stump, particularly in states like Wisconsin, and hear that, the better off he's going to be in this election.

WALLACE: You know, Governor, that's a great statement, and if he'd said that, there wouldn't have been any problem. Of course, he didn't say that, and this is the last I'm going to ask you about it and move on, but you know, he seemed to write off. He didn't say, well, you know, these are people who are on hard times but they want to get our of hard times. He was basically saying, there are 47 percent, they're victims, they feel entitled, and they are never going to vote for me anyway, so I'm not going to worry about them. You know, he didn't say what you just said.

WALKER: Well, I think that's the (inaudible). We hear on the campaign trail, we hear the other side, in fact, you heard a little bit of that even from Mr. Gibbs earlier, this mind-set that somehow, even after four years, this president isn't responsible for this economy, the 43 months of unemployment above 8 percent, the 23 million of our fellow Americans who are looking for work today, that even in the foreign policy, even in the budget discussions, he said, well, that's not our fault, that's the Congress' fault. That's a failure to lead. We need Mitt Romney out there making the case about how his leadership is not only going to ultimately win this election, but more importantly, how his leadership is going to put many of the people today who are dependent on the government for unemployment back to work, not because of the government, because we've got government out of the way and put people to work in the private sector. That's the message I hope resonates at the first debate, and will continue between now and November 6th.

WALLACE: OK, so in the radio interview Friday, you said that you felt that too many people are restraining Romney from giving his vision. I guess the question becomes, let's say that you suddenly were appointed campaign chairman. What would you say to Romney? What does he need to do this week during the bus tour in Ohio? What does he need to do when he's face to face, man to man with Barack Obama at that first debate?

WALKER: I think he's got to get off the heels and got to get out and charge forward. I think Americans want a fighter. They want someone who's not going to fight over politics, but rather who shows that this guy, Mitt Romney, is going to fight for the American people when he gets into office. He's not going to be on his heels. He's going to move forward, and I think he's got a great plan. He just needs more of an opportunity to get beyond some of these sidebar issues, that I think are distracting from the incredibly positive plan he's got to help the middle class, to help the hard-working taxpayers of this country move forward. And I want to see more passion. Certainly in part, it is a referendum on this president. There is no doubt about it. But I think for most Americans, particularly in my state, where there's an awful lot of swing independent voters, they want to know more than what's wrong with this president. They want to know what's right, and what's going to move this country forward, and I think Mitt Romney has got that plan. I want to see fire in the belly. I want to see him move forward.

I've seen it when he's been in Wisconsin. I saw it in Janesville, I saw it in Waukesha, I've seen it elsewhere. I want to see him lit up and ready to go, because that's the Mitt Romney I know, and I want to see most Americans see that. And if he does, I think he'll win this election.

WALLACE: Well, let's talk about Wisconsin, which has not gone Republican since Ronald Reagan in 1984. But Mr. Obama was campaigning in Milwaukee yesterday for the first time since February. Having said that, the RealClearPolitics average of recent polls shows Obama with a 7-point lead now in your state, and one poll shows that the president now leads Romney on who's better at handling the economy. Question, Governor, is Wisconsin really in play this year?

WALKER: I really think it is. I mean, in my recall election, we won in June by more votes than were cast two years ago, by a larger percentage than two years ago, and many of the polls show that it would be tight. In fact, some of the exit polls that night showed it was a split decision, right down the middle. I ended up winning by a larger margin than I had two years prior, so I think there's a lot of things moving here. Certainly there's a very clear political division that had been for years between Republican and Democrats. In 2000 and 2004, we were the closest blue state in America. Only a couple of thousand votes out of 2.5 million made the difference.

I think, though, the fact the president was here yesterday, Mitt Romney's son was here yesterday, Mitt Romney's wife Ann was here a couple of days ago. Both Joe Biden and Paul Ryan were here last week. I think you're going to see plenty more attention to Wisconsin, as well as Iowa and other Midwestern states between now and the election. I do think it is competitive, but again, I have said all along to Mitt Romney, if he wants to win Wisconsin, he's got to show people that the R next to his name doesn't just stand for Republican, it stands for reformer, and that leads to greater recovery. If he shows that in Wisconsin, those swing voters are going to swing his way, and he can win the election.

WALLACE: Let's talk about your issue, your big reform issue. You made national news over the last two years with your law that you pushed very hard and over great opposition, effectively ending collective bargaining for most public workers. Now, nine days ago, and it didn't get a lot of attention, but a Wisconsin county judge overturned part of that law as unconstitutional, when it comes to school, workers, and local government workers. How big a setback is that for you, Governor?

WALKER: Well, it is a problem in the short term just because a lot of our local governments have already set their tax levies and areas (ph) of their budgets in place. It's a real concern in the short term. In fact, Moody's, one of the national bond rating agencies, even put out notice of a negative outlook for local government's bond ratings because of that decision. Now, last year, we had another activist liberal judge from Dane County, the capital base of the state, make a decision that ultimately was overturned. The law was upheld by the state supreme court. I am confident that that will happen again. But in the short term, it is a problem. In our state, we've had legal action, we've had an election, a recall election, the first in the country, where a governor was elected, in this case by a larger margin than before.

I think for most of us in Wisconsin, we've moved on over the last several months. We're ready to move forward, and it's good, because the reforms have saved money. More than $1 billion worth of savings, property taxes went down for the first time in 12 years on a median value home. A major budget deficit turned into a surplus. We're heading down the right track and we're moving the state forward, and this is just a temporary setback until the upper court upholds that.

WALLACE: Governor, we have less than a minute left. I want to ask you about another labor issue. As you know, I'm sure, they just ended a messy and angry school strike in Chicago. First of all, how did you think that Rahm Emanuel, the mayor of Chicago, handle it? And secondly, are you beginning to see a split even between Democratic office holders and public employee unions?

WALKER: Well, I really do. And I mentioned this even before this strike that in places like Chicago, where Rahm Emanuel, or even some of the other states, you look at Massachusetts, New York, others out there, when you're the chief executive, be it a mayor or governor, the buck stops with you.

You've ultimately got to make decisions that make things work. And in this case, what we did with our reforms, much like they tried to do in Chicago, wasn't just about taxpayer savings, it was about making the government work. And that's effecting what we have in place.

Think about it, Mayor Rahm Emanuel was just talking about -- in particular about having accountability and having measures in which you can hold people accountable and hire and fire based on merit.

That's what we did in Wisconsin. And when you do that. When you pay based on performance, you can put the best and the brightest in your classrooms, and you can keep them there.

It's good for the taxpayers. It's good for the students. It's good for great teachers.

WALLACE: Governor, going to have to leave it there. Governor Walker, thank you so much for talking with us today. And we'll be watching what happens in Wisconsin, sir.

WALKER: Thank you, Chris.

WALLACE: Up next, where does the presidential race stand 10 days before the first debate? We'll ask our Sunday group for their assessment when we come right back.



ROMNEY: My job is not to worry about those people -- I'll never convince them that they should take personal responsibility and care for their lives. What I have to do is convince the five to 10 percent in the center.

PRESIDENT BARACK OBAMA: I don't believe we can get very far with leaders who write-off half the nation as a bunch of victims. Who think that they're not interested in talking responsibility for their own lives. I don't see a lot of victims in this crowd today.


WALLACE: President Obama jumping on what has now become Mitt Romney's infamous 47 percent video. And it's time now for our Sunday group: Brit Hume, FOX News senior political analyst; Kasie Hunt of The Associated Press; Bill Kristol from The Weekly Standard; and Fox News political analyst Juan Williams.

So, Bill, you didn't waste any time after the video came out saying that Mr. Romney was, quote -- his remarks were, I should say, let's condemn the action not the man, "stupid and arrogant." Any second thoughts?

BILL KRISTOL, THE WEEKLY STANDARD: I might have been a tad harsh, I suppose. Some people have informed me of that. The Romney campaign thought it was a little bit over the top.

But, I mean, if you've been a conservative who has been fighting for 30 years -- I came to Washington 25 years ago, and have made the case over and over to skeptical audiences on college campuses and to liberals everywhere, conservatives really do want everyone in this country to do better.

We're for tax cuts because we think it will help the economy, and especially help those who want upward mobility and economic opportunity, not just to help those who already are doing well.

If you try to make those arguments over and over, then you see the Republican presidential candidate seem to say that if you don't pay income taxes, you know, we can't really reach out -- if you don't care about the tax code then there's not much I have to say to you.

And if you're, quote, "dependent on government," which includes senior citizens getting Medicare and the like, well, then I can't really, you know, expect your vote, it just -- it was a blow, actually, honestly.

I mean, I'd hate for conservatism to be redefined in that way. And I guess that's why I reacted. And I think we're -- I'm not moving on.

WALLACE: Was it as bad as Bill Kristol says?

BRIT HUME, FOX SENIOR POLITICAL ANALYST: Well, it wasn't good. It's not fatal. But the problem with episodes like this is that they shut you down in terms of making any news at all about whatever else you might prefer to be talking about for several days.

So you get to play defense for some comments which, you know, there's a part of what -- look, the 47 percent pay no income taxes was fine. That's basically true. The rest of it, though, about people seeing themselves as victims and dependent on the government and all that, is not true, and therefore very unfortunate.

And he has been dealing with it for days now. Here we are, this came out in the middle of the week, we're still talking about here on Sunday. This is a campaign that's running out of time. It's getting late. He can't afford to lose days on end dealing with things that he doesn't want to talk about.

So this hurt.

WALLACE: Kasie, you've spent months covering the Romney campaign. From your reporting, your contacts in Boston where the headquarters, how much trouble do you think -- do they think they're in? And what's their plan to turn things around, and as Brit says, not much time, 44 days?

KASIE HUNT, THE ASSOCIATED PRESS: They do recognize just how difficult this 47 percent remark was. I mean, as Brit was saying, he's exactly right. I mean, they know that this was not good for them and that it pushed them away from -- you know, they were starting to see some stuff kind of take hold.

The polls were kind of moving in their direction. And then all of sudden they had this, you know, distraction, where we've spent the last four or five days talking about it.

To go forward, I mean, they really are looking at the next week as their chance to get back into the rhythm. You know, they're going to go with a theme that Obama -- that the country can't afford Barack Obama for four more years. That's what we're going to see from them through this bus tour in Ohio.

And they think that if they can sort of recalibrate, get things back to an even kind of keel playing field, then they'll have an opportunity at the first debates to shake things up.

WALLACE: But let me ask you about that, though, because although he was much milder than he had been in radio comments, you had heard Governor Scott Walker basically saying, we need more passion, we need much more of a reform positive agenda.

What you're talking about doesn't sound like what Walker is looking for.

HUNT: Well, they've been struggling with this all the way along, right? I mean, is this a referendum election or is this a choice election? And for many months they've felt that if we can make this a referendum on President Barack Obama, then, you know, Mitt Romney will be able to pretty much walk straight into that role, or have the opportunity to do that. And it's clear that we've seen demand, both from conservatives, as well as from voters for more from Mitt Romney on what he is going to do for the country. And he is going to have the chance to do that Tuesday at the Clinton Global Initiative.

We're going to see -- he's going to take a break from his Ohio bus tour to address that audience. And we could see some more policy specifics come out there.

WALLACE: Juan, the next big event on the calendar, of course, is the debates, which start on October 3rd, 10 days from now. You've covered a lot of debates, I've covered a lot of debates. What do you think are the chances for this being a game-changer and either before or during the debate what does Romney need to do differently?

JUAN WILLIAMS, FOX POLITICAL ANALYST: Well, obviously it has the potential to be a game-changer. I think that you'll have a large audience. I think people will be attentive. They want to see if something comes of it.

WILLIAMS: The history -- Brit and I were talking earlier and, you know, there's just not a lot of history of presidential debates in fact being so explosive and changing the game. But there's the potential there, because of the audience and the focus. There's not that many benchmark moments to come before the election, and you'd have to point to the debates as one of those.

So you asked what does he have to do?

Well, I think the polls are presenting a problem here. Because, on the economy, which has been the driving force behind his campaign, now you see more and more Americans saying we think the economy is moving in the right direction. That's a big shift, and I think that presents a problem for the Romney campaign.

So what he has to do is now, sort of, move his message beyond even saying specifically what he would do on the economy to talking about larger issues. And this is very late in the game for him to try to, you know, plow new ground, if you will, Chris, and try to get the American people to see him in this different light.

But you look at, right now, a place like Iowa, suddenly Obama's up by eight. You look at Ohio. Obama's up. You look at Florida, Virginia. It's just getting very difficult to imagine how Romney progresses and makes the case that he can win. And that's the problem you're hearing here from Republicans.

WALLACE: Bill, I want to turn to another subject. During a very interesting session and a tough session with Univision this week, President Obama was asked what's the big lesson from the last four years?

And he said the big lesson is you can't change Washington from the inside; you have to change it from the outside. And if he's re- elected, he's going to have more of a conversation with the American people.

Is that the right takeaway of the last four years?

KRISTOL: Well, I don't think it is, and I think the Romney campaign should explain that it isn't. And they need to focus on the next four years. I've thought this for months. If this election's just about the last four years, that's a muddy verdict. Bush was president during the financial meltdown. The Obama team has turned that around pretty well. The Clinton speech at the convention was very important in that way. How horrible was it four years ago? He's got to make it a referendum on the choice about the next four years and explain what Obama would do over the next four years that would be bad for the country and what he would do that would be different for the country?

And I was very struck by your very good interview with Robert Gibbs. And he's a very good spokesman for them. The latter third of the interview, you did the domestic policy stuff, the economy. He did fine. They've got their talking points down on that. No one's going to change his mind on that. What was the part where he was actually rattled and I think had trouble answering your questions? Foreign policy.

Foreign policy: it's in the headlines. Romney needs to make the case on national security over the next 10 days, in my view. The president's speaking at the U.N. Tuesday. Romney's going to New York also on Tuesday to speak at the Clinton Global Initiative. Voters are watching, looking, turning on the TV. Embassies are being burned and demonstrations in Pakistan. What's going on there? Why is it happening? What can the next president do about this?

Romney should answer that question. If they just go back to mindlessly reminding people for the 5,000th time that, guess what, the economy's not great, they will waste the next 10 days.

WALLACE: But the president -- we have to move on, but the president will have the opportunity to explain all that to the ladies of "The View."

KRISTOL: Yeah, exactly. Right.


WALLACE: We have to take a break here, but when we come back, President Obama also had his troubles this week with anti-American violence in the Middle East and a changing story about what happened at our consulate in Libya.



OBAMA: The natural protests that arose because of the outrage over the video were used as an excuse by extremists to see if they can also directly harm U.S. interests.

SEN. JOHN MCCAIN, R-ARIZ.: They still are blaming the video, and they have a fundamental misunderstanding. They believe it was the video. It's not the video.


WALLACE: Senator John McCain and President Obama disagreeing sharply over the attack that killed four Americans in Libya. And we're back now with a panel.

Well, slowly and grudgingly, the Obama administration finally acknowledged this week that it was a terrorist attack that took down the U.S. consulate in Libya. Brit, why do you think they have such trouble saying that?

HUME: I think the Obama administration is deeply invested in the idea that the presence of Barack Obama and his attitude toward the Muslim world and his outreach to the Muslim world had changed the fundamentals in the Muslim world in a way that was beneficial to the United States and that we were withdrawing from Iraq; we're out of Iraq; we're gradually withdrawing from Afghanistan; the president has -- has made speeches that -- of outreach and that this had changed things.

And what happened across the Muslim world in the last week or 10 days is powerful evidence that very little has changed. And I don't think the administration was prepared to face that, and they went into spin mode, and it turned out very badly for them when what seemed plain as the nose on one's face to, I think, most Americans, anniversary of 9/11, the attack on the embassy, evidently prepared, you know, rounds and rounds of ammunition present, was denied by this administration for days.

And even now, they keep going back and talking about the video. You know, this ought to have been a terrible embarrassment. I'm not sure it appeared that way to, at least in its coverage, but that's what it should be.


HUNT: You've, I think, really seen, as Romney tried to deal with this, as well as with the administration, while he jumped on it initially and took a lot of the heat in the beginning, this is an evolving situation for the Obama campaign.

I mean, he spoke before all the facts were known. And the reality is now the facts are still coming out for what happened. And that's going to be something that the administration is going to have to deal with going forward, as opposed to Romney.

And if you think about it, the fact that, you know, they're now calling it an act of terror, I mean, that's one area where Obama has been able to claim success, you know, no attacks on the U.S.; they successfully killed Osama bin Laden. I mean, that's something that they've really been pushing forward as one of the successes in this administration. And what's going on in the Middle East jeopardizes that.

WALLACE: Bill, the State Department, also, this week, spent $70,000 on -- to run public service announcement ads on Pakistani television denouncing the video, that infamous video that insults the Prophet Mohammad. Here's a clip.


SECRETARY OF STATE HILLARY RODHAM CLINTON: The United States government has absolutely nothing to do with this video. We absolutely reject its content and message.


WALLACE: As that ad was running on TV in Pakistan, in the streets we saw and you can see here some of the worst anti-American violence of the week.

I guess the question is, were the protesters elevating the importance of the video or was the Obama administration?

KRISTOL: Well, they've been elevating it for two weeks. The chairman of the Joint Chiefs of Staff called a pastor and said, "Oh, don't talk about that video."

I mean, it's utterly counterproductive as a matter of foreign policy, it's kind of pathetic in terms of the U.S. making its case for itself to the world.

And then Tommy Vietor, the national security spokesman said yesterday that President Obama is going to address the video in his speech at the UN Tuesday just to make sure in case anyone doesn't know yet that he does not approve of this video. I mean, that's just pathetic.

And if the Romney campaign can't make the case -- he correctly said, well, it's kind of -- Brit said it's an embarrassment to the administration. And Casey said they're going to have to deal with it, what's happened over the last weeks, they're not going to have to deal with what happened over the last two weeks, really, unless the opposing presidential candidate makes them deal with it.

We can criticize and we can say it looks bad, looks bad, but if voters don't see the other presidential candidate making the case they tend to think, well, I guess the world is just a mess and it's tough and maybe the president is not doing great, but Romney doesn't seem to have anything to say about it.

Really, I think actually the next 48 hours is pretty important. The president is speaking at the UN. All this stuff going on in the world, this ridiculous video story discredited. If the Republicans -- the Republican presidential candidate can't explain to voters why Obama's foreign policy has failed and is failing and why his would be better, it would be a huge missed opportunity.

WALLACE: But that brings us to the bottom line question in a presidential campaign, Juan, will it matter? Will -- even if you buy what some of us are saying, which is that this appears to be a defeat or a failure on the part of Obama foreign policy, is it enough to make people switch from Obama to Romney. WILLIAMS: Well, first of all I don't buy that analysis, because I think what we're doing at the table is we're conflating events in Libya where there does appear to have been some action that was organized and premeditated and ammunition brought in...

WALLACE: But not so incidentally, that's exactly what Susan Rice said didn't happen a week ago.

WILLIAMS: OK, I'm just saying that seems to have happened in Libya. That is not seems to have been happening in Egypt, not happening in Yemen, not happening elsewhere in the Middle East. So I think there's a separate set of facts here.

But the second thing to say is, President Obama has come into this campaign in a unique standing -- with a unique standing for a Democrat, which is that he has a substantial advantage in the polls when it comes to the American perception of his conduct of foreign policy. The American people see him as much stronger right now than any Republican in this area.

His approval rating right now. This week, the big news was one of the 50 percent, but also on foreign policy in the Wall Street Journal poll this week, 49 percent of Americans approve of the way that he's doing business.

WALLACE: But that's actually down. It was 49 percent and now 46 percent disapprove. His approval on foreign policy has gone down.

WILLIAMS: It's substantial. If you can get the half -- about half of the American people, you're doing pretty well, Chris.

So I think that Bill is on target. If you can make the case, but I don't think the American people in the aftermath of what took place in Iraq, Afghanistan, bin Laden are going to say, oh, you know what, I really don't like what this guy is doing on foreign policy.

KRISTOL: Really. You think Afghanistan is a testament to his wisdom? What happened, this terrible attack on the base on Camp Leatherneck this week shows -- it shows the withdraw...


KRISTOL: Is endangering all the gains that we made because of a surge that who ordered? President Obama. He sent kids over there to fight and now he's undercut their sacrifice.

WILLIAMS: And let me ask a cynical question, how much coverage did that attack get in the American press? Not much. Why? The American people are excited about one thing when it comes to Afghanistan, Bill, and that is getting out.

HUME: And the press sure reflect that

WILLIAMS: The press should report the story. I said the press didn't report the story of the attack. HUME: I know they didn't. And barely -- the other night on Special Report after the -- the day after the administration witness had said on Capitol Hill that Benghazi was a terrorist attack, Bret Baier held up a copy of the New York Times to note that the New York Times had not mentioned anywhere in the paper, remarkable.

Now look, this is how it's going to be for a Republican at this stage of a general election campaign. The media is not going to help the Republican, broadly speaking -- broadly speaking, the media.

A smart Republican campaign recognizes that, plans for that, and thinks of ways to counteract it. It's -- they've done it in the past. It's not at all clear to me that the Romney campaign is doing that.

WALLACE: All right. Less than 30 seconds, though, answer my question. Is this going to make any difference in terms of the election.

HUME: Well, it could if the issue were developed and responded to effectively by, as Bill suggests, the other candidate. I don't think that's happened.

WILLIAMS: Do you think that's wishful thinking? Do you think you're reaching?

HUME: I'm just saying I don't think it's happened.

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

And make sure to follow us on Twitter @FoxNewsSunday.

Up next, we go on the trail.


WALLACE: This week we had videos from four months ago and 14 years ago. And with a candidate scrambling for every possible advantage it got rough and tumble on the trail.


ROMNEY: 47 percent of Americans pay no income tax. So our message of low taxes doesn't connect.

OBAMA: My expectation is that if you want to be president you've got to work for everybody, not just for some.

ROMNEY: This is a campaign about the 100 percent.

OBAMA: I think the trick is figuring out how do we structure government systems that pool resources and hence facilitate some redistribution because I actually believe in redistribution.

ROMNEY: Mitt Romney and I are not running to redistribute the wealth, Mitt Romney and I are running to help Americans create wealth.

OBAMA: There we go. All right. Dive in, guys.

The most important lesson I've learned is that you can't change Washington from the inside, you can only change it from the outside.

ROMNEY: He can only change it from outside. Well, we're going to give him that chance in November. He's going outside.

Grace Ann (ph) is taking...

OBAMA: We believe that here in America we're all in it together. We believe America only works when we accept responsibility for ourselves, but also certain responsibilities for each other and for our country.

ROMNEY: Of course we will always be there. We're a compassionate people. But as someone has said, we don't measure compassion by how many people are on Food Stamps, we measure compassion by how many people can get off of Food Stamps and get a good job.


WALLACE: And we still have 44 days and four debates to go until Election Day.

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

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