Sen. Lieberman, Sen. Chambliss on Petraeus testimony; GOP governors talk party's future

Inside Benghazi investigation hearings


The following is a rush transcript of the November 18, 2012, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

Israel threatens to escalate its conflict with Hamas, and former CIA Director David Petraeus tells Congress what he knows about the Benghazi attack.


WALLACE: In a series of closed-door hearings, lawmakers investigate what happened -- before, during and after the assault that killed four Americans. We'll get the latest from Saxby Chambliss, vice chair of the Senate Intelligence Committee, and Joe Lieberman, head of the Senate Homeland Security Committee.

Then, Republicans look to regroup, after a disappointing election.

Does the party need a new message or better messengers? We'll talk with two leading governors -- Bobby Jindal of Louisiana and Scott Walker of Wisconsin.

Plus, the president and congressional leaders try to pull back from the fiscal cliff.

With 44 days and counting, we'll ask our Sunday panel -- can a deal be made in time?

And our power player of the week, killing us softly with her songs.

All, right now, on "Fox News Sunday."


WALLACE: And hello, again from Fox News in Washington.

We'll talk with our guests in a moment but first an update on that tense military situation on the Israel-Gaza border.

Fox News correspondent Leland Vittert is on the scene with the latest -- Leland.

LELAND VITTERT, FOX NEWS CORRESPONDENT: Chris, Israel is very much a country on the brink of war. We have seen hundreds, if not thousands of tanks and armored personnel carriers maneuvering in these fields around us, ready to push into the Gaza Strip, in a moment's notice, because the airstrike simply have not stopped the rockets flying out of Gaza, towards Israel. And the Iron Dome intercepted a number of those rockets today. However, about 8 or 10 got through, causing a half dozen injuries inside of Southern Israel.

For the Israelis, their airstrikes continued pounding away, day five of hitting the Gaza Strip, so far the airstrikes killed 50-plus people, half of them civilians, including a number of children. The Israeli air force says they have hit almost a thousand targets, and, leveled much of Hamas' infrastructure, inside of the Gaza Strip.

As for the ground war, which certainly caused more civilian casualties, there's a major escalation. Israel has already called up 30,000 reservists and those reservists are on the borders now. Their infantry and their tanks simply waiting for the "go" order to head in.

The Israeli prime minister says he is willing to escalate this into a full ground war and that is largely seen as a warning to the peace negotiations going on, inside Cairo, to either have a ceasefire treaty signed sometime in the next 24 hours or there will be tanks rolling across these fields, into Gaza.

Chris, back to you.

WALLACE: Leland Vittert reporting live from the Israel-Gaza border -- Leland, thanks for that.

Joining us now, two leading senators on national security issues: Saxby Chambliss, vice chair of the Intelligence Committee, and Joe Lieberman, head of the Homeland Security Committee.

Senators, before we get to the Benghazi investigation, I want to ask you both about the growing conflict between Israel and the Palestinians in Gaza.

Senator Lieberman, while Israel clearly has to be able to defend itself -- do you worry about a ground war in Gaza, especially, in this changing post-Arab Spring Middle East?

LIEBERMAN: Well, obviously it is in the first instance to Hamas, I don't think the Israelis really want a ground war. They'll go into Gaza if they feel they need to, to eliminate the remainder of the missiles, and a lot of which are supplied to Hamas by Iran, that have been coming over to Israel, hundreds of them, this year. So, really, the decision is up to Hamas, as to whether there will be a ground invasion of Gaza or not.

And remember, what Hamas is. It's not the Palestinian Authority, which has recognized the right of Israel to exist and has diplomatic relations with Israel and us. It's a terrorist group sworn to the destruction of Israel. It actually seized power in a coup from the Palestinian Authority.

So these people are bad actors and no nation would put up with what Israel has up until now and they have to defend their people and their nation.

WALLACE: But, Senator Chambliss, obviously the situation, all over the Middle East has changed dramatically, in the last year. Egypt is no longer run by a pro-American dictator. It's run by leaders of the Muslim Brotherhood.

Should President Obama put more pressure on the Egyptian government, even threaten to cut off aid, to get Hamas to stop firing those rockets?  

CHAMBLISS: He needs to exert every kind of pressure he can, Chris, to try to make sure it doesn't escalate into a full-blown war between the Palestinians and the Israelis and, whatever that takes. But, you know, the problem the Israelis have is that these rockets are being fired on them, from places that they can't reach by flying over in the air. I mean, they are putting them in school yards where they are surrounded by schoolchildren and firing them from marketplaces crowded with people.

And, Israel has a right to protect itself. And, if sending ground troops in is the only way they can clean out these nests of rockets being fired at them, you know, you can't blame them for doing it.

WALLACE: All right, let's turn to Benghazi. Both of you held closed-door hearings this week with top administration officials and David Petraeus reportedly said in these closed door hearings while he always believed terrorists were behind the attack, that the administration watered down the talking points Susan Rice ends up using because they didn't want to tip off terrorists that they were on to them.

Let me start with you, Senator Chambliss, because you were in one of those closed door hearings with David Petraeus. One, did he say it? And if so, do you believe it?

CHAMBLISS: Petraeus did not say that in those words, Chris. And I did not interpret anything he said to be that.

General Petraeus, number one, is obviously a great man and great leader, both from a military standpoint and with, also, the role with the CIA and what he did say is from day one, we knew it was a terrorist attack. I mean, there was no question about it. You don't bring automatic weapons and RPGs and mortars to a so-called demonstration.

There, still, are some questions that are yet to be answered about the planning of this. Whether it was done over a period of time, or, whether it was truly a spontaneous reaction. There is no indication now that it was anything other than a planned attack.

WALLACE: But do you have an understanding as to why the talking points changed over the course of that first week? The White House said yesterday they made one change in the talking points and that was to change the word consulate to "diplomatic facility".

CHAMBLISS: Well, it was kind of interesting, Chris. At the hearing we had on Thursday and Friday, we had every leader of the intelligence community there, including folks from the State Department, the FBI, everybody there was asked, do you know who made these changes? And nobody knew. The only entity that reviewed the talking points that was not there was the White House.

So, you know, I don't know whether -- what they said yesterday is exactly right or not. But, what I do know is that every member of the intelligence community says that references to al Qaeda were removed by somebody, and they don't know who. And references to attacks versus demonstrations were removed by somebody.

WALLACE: Let me ask you a question. Will your committee, the Senate Intelligence Committee, call Ambassador Susan Rice to ask her to testify?

CHAMBLISS: I don't know the answer to that question right now. Senator Feinstein and I will talk about that. We've got two more hearings scheduled where we've already got a list of witnesses --

WALLACE: Do you think she should be called?

CHAMBLISS: She's going to have to come in and testify at some point, whether it's in a closed hearing or an open hearing. We're going to have an open hearing, too. But at some point, she needs to come in and say what the president or the White House directed her to say.

WALLACE: Senator Lieberman, Dianne Feinstein -- the Democratic chair of Senator Chambliss' Senate Intelligence Committee read the unclassified talking points to reporters and she says that they showed that Susan Rice was just sticking to the talking points. Do you buy that?

LIEBERMAN: You know, I've looked at the talking points, our committee heard testimony from the intelligence community, very important to say here. That during that first week after the attack on our mission in Benghazi, the initial opinion -- and they kept saying it was initial -- of the intelligence community was that there had been a protest before the terrorist attack. Nobody could deny it as Saxby said it was a terrorist attack and that is what the talking points reflected -- whether it used names like al Qaeda, the terrorist group or Ansar al-Sharia.

So I must say, as I look at what we now know the intelligence community was saying that week -- and I look at Ambassador Rice's statements on television on the following Sunday morning, I don't find anything inconsistent between those two.

But, I must tell you that I think we are focusing on questions that are not insignificant but they are not the most significant. Of course, there was a terrorist attack. Whether or not there was a protest before it is interesting, but not that critical to me. There was a terrorist attack and the question is: who did it?

And, then, much more important for the long run -- why in the midst of a rising crescendo of intelligence that made clear that al Qaeda in the Islamic Maghreb, Ansar al-Sharia, bunch of radical groups were coming into eastern Libya, in the surrounding of Benghazi did we leave our State Department personnel there without security? And why, when they were attacked did our Defense Department not have resources in a where nearby to come to their defense? I mean, long run, those are the critical questions.

WALLACE: Well, they're going to go through those.

And I want to ask both of you a series of questions in this regard, because you do hold these closed door hearings, this week with all of the top officials. And I'm going to try to ask you to do it in a lightning round, quick questions, quick answers -- as somebody said, good luck with that.

Senator Lieberman, after meeting with top -- this isn't quite to the point but I promise we're going to get there. After meeting with top FBI officials this week, are you satisfied with their decision not to notify Congress and the White House about the investigation of General Petraeus' affair until as late as they did which was last week?

LIEBERMAN: You know, I still have questions about that. I think, first, you have to acknowledge that the FBI has developed a very important cyber security capacity, which is important to our country.

Second, they got this --

WALLACE: We're in lightning round.

LIEBERMAN: We're in the lightning round already.

I haven't answered that to my satisfaction yet. In other words, I understand why they would keep an FBI investigation confidential from everybody until they saw there was a crime but this suddenly involves two of our highest ranking generals, Petraeus and Allen. And, I think that was a different circumstance and I still have an inclination to believe that somebody should have notified the White House of that early in the investigation.

WALLACE: Senator Chambliss, are you satisfied that this personal affair involving General Petraeus did not affect either, one, the way he conducted the whole Benghazi matter, and, two, his testimony to Congress either back in September or this week?

CHAMBLISS: I see nothing to indicate that that had any impact on his decisions that he made relative to Benghazi or any other issue, for that matter.

WALLACE: And, nothing -- no impact on his testimony, there has been -- perhaps he was toeing the line in September to try to keep his job.

CHAMBLISS: No. I don't there is no indication of his testimony on Friday of that. He has always been very straightforward and he was very straightforward on Friday.

WALLACE: All right. Senator Chambliss, this is of the issues that Senator Lieberman was raising. With all the warnings beforehand, who do you to you feel is responsible for the failure to beef up security at the Benghazi consulate before the attack ever happened.

CHAMBLISS: I think that's a question yet to be answered, Chris. We've got to get State Department officials into really explain why you send an ambassador, basically unguarded with a few Libyan guards and the CIA was not there to guard him. That's not their function.   WALLACE: But didn't you have Patrick Kennedy, one of the top State Department people --

CHAMBLISS: He did. And he -- that's not his function to determine security, though. But we've got the right person coming in, for our next hearing, to talk about that. And I'm sure that Joe and Susan will do likewise. But we've got to find out from the State Department about why decisions were made relative to the diplomatic security and they were obviously inadequate -- woefully, inadequate.

WALLACE: Let me just ask you, both of you in this regard. Secretary of State Clinton has not testified. Is that someone you need to hear from on this subject?


CHAMBLISS: I think she's agreed to come testify and she needs to.

LIEBERMAN: No, it's very important. Look, with -- what we know now about the intelligence of the terrorists who were in the vicinity of Benghazi, in my opinion, it was irresponsible to have our State Department personnel there, with only three security guards, they were easily overrun in the attack of September 11th. Either we should have given them the protection they deserved, or should have closed that mission in Benghazi, as the British government had done a short while before.

The second point is really an important one -- we are cutting back in supporting our defense, we -- during the war in Libya against Gadhafi, we had ships offshore. If those ships were still there, they could have some sent resources to knock out the second round of terrorist attacks --

WALLACE: Let me interrupt because I want to ask you that.


WALLACE: During the seven hours --


WALLACE: -- between the first attack on the consulate and the second on the annex, given the forces we had on the ground, could U.S. forces have done more realistically to protect the U.S. forces and protect -- to U.S. personnel, and, prevented the last two folks from dying?

LIEBERMAN: That's the key and it goes to preventing the last two, the former SEALs, from being killed. The answer is we didn't have resource in range. Secretary Panetta and General Dempsey acted quickly, but they had to get somebody from Spain, somebody from Croatia and some -- a group of Special Operation forces from the East Coast to the U.S. who arrived much too late.

If he had -- they sent a drone, but it was an unarmed drone. If we had an armed drone in that dangerous part of the world, it probably could have knocked out the people who are firing those mortars that killed the two SEALs.

WALLACE: But given what we had there, you are saying --

LIEBERMAN: There was no capacity to defend our personnel, in a timely way. Once the attacks occurred and we can't let that happen again. And, part of what we have to do to make sure it doesn't happen again is we adequately support our defense budget.


CHAMBLISS: And the one question there, too -- was it DOD's fault or was that State's fault? And we don't know the answer.

WALLACE: OK. And, finally, we've got about a minute left.

Senators John McCain and Graham this week called for a special congressional committee to investigate Benghazi. Let's look at what Senator Graham said.


SEN. LINDSEY GRAHAM, R - SC, ARMED SERVICES COMMITTEE: Watergate investigation benefited from a joint select committee. Iran-Contra benefitted from a select committee.


WALLACE: I want to ask you both briefly, do you think that we need -- let me start first with you, Senator Chambliss.

Do we need a special committee or can your standing committees do it?

CHAMBLISS: Well, first of all, these two guys are two of my best friends and two of Joe's best friends, and we travel a lot together to some very dangerous places. But the committees within the United States Senate are very capable of investigating this in the right way. And this is one time I have a slight disagreement with my good friends.
LIEBERMAN: Yes, I respectfully separate from my two amigos on this one and agree with Saxby. This was a tragedy but doesn't rise to the level of 9/11/01. Our committees can handle this and come up with the answers. And if for some reason our colleagues think when we're done we haven't done a good job -- well, let them think about a special committee.

WALLACE: And I can't let you go, Senator Lieberman, you are retiring from Congress at the end of the year, 24 years, and there's been some speculation and I know you're not even been that close to this president, but there has been some speculation, have there been any talks with the administration about taking over the top spot at State, at Defense, at CIA -- any talks about it and do you have any interest?   

LIEBERMAN: The answer is -- no. There have been no talks.

Second, it's not what I'm planning for the next chapter of my life. But, really, as I've always said before when it has come up, when a President of the United States, asks to you serve your country that I love, and, believe in so deeply, you've got to give it serious consideration.

But, I'm not waiting by the phone. I don't expect the call.


CHAMBLISS: He's got my vote for confirmation, on any of the above. We're going to miss this guy, Chris.

WALLACE: Well, let me just say, Senator Lieberman, no more -- but you may be back here in a few months as Secretary Lieberman.

LIEBERMAN: That would surprise me. But it would always be good to be with you on the fair and balanced Fox Sunday show.

WALLACE: There you go! Senator, I wasn't -- I wasn't --


WALLACE: Senator Lieberman, Senator Chambliss -- thank you both and we'll stay on top of Benghazi and, of course, the conflict in Gaza. Thank you both, gentlemen.

LIEBERMAN: Thank you.

CHAMBLISS: Thank you.

WALLACE: Up next, two leading Republican governors take a hard look at what their party needs to do before it faces voters again.


WALLACE: After a disappointing Election Day, it's no surprise Republicans would do some soul-searching. But, what is a surprise is how quickly it's begun and how serious it's gotten.

Joining us to talk about the future of the party, Governor Bobby Jindal of Louisiana, the new chair of the Republican Governors Association, is in his state capitol of Baton Rouge, and from San Diego, Wisconsin, Governor Scott Walker, the new vice chair of the RGA.

Gentlemen, this week, Mitt Romney, in a conference call with big donors, attributed his defeat to President Obama, giving out gifts to minorities and young people. Governor Jindal, you reacted sharply to that. Let's look:


MITT ROMNEY, R - FORMER PRESIDENTIAL CANDIDATE: What the president -- president's campaign did was focus on certain members of his base coalition, give them extraordinary financial gifts from the government.

GOV. BOBBY JINDAL, R - LA: I absolutely reject that notion, that description. We've got to stop being the stupid party. You know what I mean by that. Certainly, we need to stop making stupid comments.


WALLACE: So, Governor, what was stupid about what Romney said?

JINDAL: Well, two things. First, Governor Romney is an honorable and exceptional man. And I'm proud to have campaigned for him across the country but I absolutely reject what he said. Look, we as the Republican Party have to campaign for every single vote.

If we want people to like us, we have to like them first. And, you don't start to like people by insulting them and saying their votes were bought. We are an aspirational party.

Let the Democratic Party be the party that says demography is destiny, that says we are going to divide people by race, by gender, by class. We as a Republican Party, believe our conservative principles are good for every single voter. It's not just a marketing campaign. It's not just having better PR folks. We're going to go and convince and fight for every single vote, showing them we are the party for the middle class, upward mobility. We don't start winning majorities and winning elections by insulting our voters.

WALLACE: Look, Governor Walker, I want you to take a look at this exit poll from election night. Who is more in touch with people like you? Fifty-three percent said Obama, 43 percent, said Mitt Romney.

Question, how do Republicans convince the middle class that you're looking out for them?

GOV. SCOTT WALKER, R - WISCONSIN: Well, I think you see it in the governorships. We now, in a nation that went for a Democrat for president, you now have 30 states with Republican governors and I think, the trust factor is there. I share the same belief that Bobby mentioned as well, that we need to be a party that doesn't talk about it.

We go out and actively take the message, I think, a winning message, one we won on in each of these states, with the Republican governors. But we take it and we go out to where people are. We've got a message that works for young people, that works for people who come to our country from other countries, and, basically for anyone who wants to live their piece of the American dream.

We have to show that we are serious about reaching out and helping everyone, not just a group here, not just a group there. But, everyone in the country, live their piece of the American dream. And I think that starts with our governors as great messengers.

WALLACE: But, Governor Jindal, what about the debate going on here in Washington, right now, about the fiscal cliff? President Obama says, look, let's extend the Bush tax cuts, lower tax rates for 98 percent of all taxpayers including the middle class, right now. We can -- I'll sign it today. He took out his pen at the news conference and the Republicans saying, no, no, no, we can't do that until we decide what we'll do with the top two percent of taxpayers.

Why wouldn't the middle class voter look at that and say, these guys, the GOP, are all about protecting the rich?

JINDAL: Chris, two things, one, we as a Republican Party need to make it very clear and we're going to make it very clear. We're not the party of big -- big businesses, big banks, big Wall Street, big bailouts.

When it comes to the tax code, we as the Republican Party have to make it very clear -- we are for a lower, flatter, simpler tax code. And you can maintain progressivity, for example, there have been ideas to limit deductions for the wealthy. There have been ideas to get rid of some of these carve-outs. But we need to make it very clear -- we're not the party trying to protect the rich. They can protect themselves.

We are the party that wants growth, pro-growth policies. Let the Democratic Party be the party of growing -- a government growing revenues. We want to grow the private sector and so, that starts with lower, flatter, simpler tax codes. And, again, it can still be progressive. Let's -- there are ideas to get rid of carve-outs, special treatments to limit the deductions to the wealthy.

But here's the second point, when it comes to this fiscal cliff -- I was in Congress, I guarantee, if they just put a Band-Aid on this, we'll be in another fiscal cliff in a few months. We need structural changes, and that could be a balanced budget amendment to the Constitution, super majority vote, before they raise our taxes -- a limit on the growth in government spending so it can't grow faster than the economy or population growth, limiting government spending as a percentage of GDP -- without those structural changes, we're not getting anywhere. This is just kicking the can down the road.

And let's also be clear -- this country doesn't need two liberal or Democratic parties. Yes, we need to show our policies are appealing and work for the middle class, but we don't need to abandon our principles. The country doesn't need two Democratic Parties.

WALLACE: But, Governor Walker -- I mean, look at the optics of it. When the president is holding up his pen and saying, I'll sign extending tax cuts -- lower taxes, which is supposedly a Republican mantra for 98 percent of Americans and the Republicans say not so fast.

Bill Kristol was on this show last week, and he said, you know, it wouldn't kill the Republicans to raise taxes on millionaires a little bit. Is he wrong?

WALKER: Well, I think you look at the contrast between Washington and what's happening in each of our states. The vast majority of us who are new governors two years ago inherit major budget deficits in our states. We balanced those deficits without raising taxes. In fact, the states like Wisconsin, we actually cut taxes over the past two years, and, revenues have gone up.

I think most Americans, not just those in politics, most Americans look at what's happening in Washington and think, they are missing the boat. The economy is a much bigger issue. Don't get me wrong -- I think they need to balance the budget. I think they need to take care of the fiscal issues. But more importantly, we need to get the economy going. We need to get people back to work and, that disproportionately affects the middle class right now and the fact they are talking about anything that might make it worse in the economy I think is a bad sign about what's happening in Washington.

WALLACE: Let's talk briefly, and I have run into a time crunch in a minute, so I'm going to ask you for quick answers on a couple of specific groups. The problems that your party had, on Election Day, with Hispanics, has been well documented -- 71 percent voted for Obama, 27 percent for Romney.    Governor Walker, does your party need to rethink where it stands on the DREAM Act and the whole issue of the 11 million illegals who are in this country?

WALKER: Oh, I think we need to find a way to move forward on this. I think we want more people who want to live the American dream. I mean, this country is based on immigrants. We've got to find a way to welcome all of our immigrants in, all those who want to live that piece of the American dream.

And I think when we do it -- before I was in governor, I was a Washington executive and historically, I won nearly every Hispanic leaning ward in Milwaukee County where I was a county executive. Why? Because I had a message that resonated with everyone. I had help with small business owners, I had help with school choice, with parents who wanted kids to prevail and get the opportunity they deserved.

Those are things we need to be talking about. If we share that message with all the voters, we're going to do better, whether it's the Hispanic voters, whether it's the young voters, whether it's any other voters out there, we'll do well because we've got a message of prosperity and freedom for all.

WALLACE: And, Governor Jindal, let's take a look at unmarried women, who backed Obama by a wide margin. Unmarried woman voted for Obama by a margin of 67 percent to 31 percent.

Governor, you say to Republicans, don't change your principles, modernize. Don't moderate. But, you've got to know during this campaign, the Democrats hammered your party when it came to freedom of choice on abortion, when it came to access to birth control, when it came to funding of Planned Parenthood.

How do you convince unmarried women that you are looking out for them?

JINDAL: Well, Chris, a couple of things. One, I think we can still be true to our principles -- I'm pro-life. I follow the teachings of my church and my faith.

But at the same time, I think we can respect of those that we disagree with us. We don't need to demonize those who disagree with us. We need to respect the fact that others have come to different conclusions based on their own sincerely held beliefs and have a civil debate.

We don't need to demonize -- and we also don't need to be saying stupid things. Look, we had candidates in Indiana and Missouri that said offensive things that only hurt themselves and lost those Senate seats, but also have hurt the Republican Party across the board. So, I think we can be true to our principles. We don't need to pander or change our principles, but at the same time, we can be respectful.

You mentioned something, look, when a majority of voters in this election think the Democratic Party is more likely to cut tax than the middle class and the Republican Party, that shows that we've got a problem not only with single women and middle class voters but voters across the country. That means we've got a serious problem about making sure that voters understand what we as a party stand for, the principles we are pursuing.

And that -- once we get back on track showing we are the party fighting for the middle class, it helps with female voters, Hispanic voters and every voter out there.

WALLACE: And, finally, Governor Walker, we've got less than a minute left. Both of you have decided not to set up state health care exchanges under ObamaCare, but rather to let the feds come in and do it. I guess the question I have, is, would you agree that at this point with the president reelected, ObamaCare is here to stay?

WALKER: Well, it is the law and we made that clear. The difference is, what we pointed out in our states, and I think Bobby feels the same in his, and other governors, including some Democrats, we don't like the options we are given to comply with the law, the state-run partnership or defer to the federal government, the state run option is really state in name only. It still provides all the same stipulations. In fact, Utah, a state that has an exchange can't even go ahead and use their exchange to qualify for the federal program.

So in the end, if it's state in name only, we'd rather have the federal government do it, as much as it pains us, believing in federalism, in the end it is better they do it and not incur the additional potential costs to our taxpayers, that a state-run exchange would expose us to.

WALLACE: Governor Walker, Governor Jindal, we are going to have to leave it there. There is obviously a lot more talk about. We'll have you back to do it. And we'll be tracking where the two of you try to take the party in the coming months.  Thank you, gentlemen.

JINDAL: Thanks, Chris.

WALKER: Thanks, Chris.

WALLACE: Up next, Israel prepares for a possible invasion of Gaza. And, congress investigates the Benghazi terror attack. We'll ask our Sunday group what is at stake for U.S. national security in both areas, when we come right back.



BENJAMIN NETANYAHU, PRIME MINISTER OF ISRAEL: We will continue to exercise with prudence and self-restraint while defending our citizens against terrorism.


WALLACE: Israeli Prime Minister Netanyahu making it clear his government will not allow Hamas to keep firing rockets into Israel.

And, it is time for our Sunday group. Bill Kristol of the Weekly Standard. Bob Woodward from the Washington Post, as well as the author of the new book "The Price of Politics," Kimberley Strassel of the Wall Street Journal, and Charles Lane also from the Washington Post.

I think we would all agree when militants are raining missiles down on your country, any government is going to defend themselves. On the other hand, Bill, when Israel invaded Gaza four years ago it ended up being a lot longer, a lot messier, it three weeks, more than a thousand Palestinians were killed, how tough a call for Netanyahu to decide whether to go in on the ground into Gaza?

BILL KRISTOL, WEEKLY STANDARD: I think he'd very much prefer not to go in on the ground, as can destroy the ability to shoot these missiles, or deter the launching of these missiles. I think they would love to do it without the ground invasion.

The big difference, this time, from -- one different this time, though, is the position of the Obama administration, which began in 2009 seeking to distance itself famously from Israel and is ending its first term supporting Israel, which is an interesting evolution on the part of President Obama. And from my point of view, a hopeful one.

WALLACE: And there are a couple of other differences, too, Bob. On is that Hamas has longer range missiles than four years ago. And also the Middle East, of 2012, is very different than the middle east of 2008. We have had the Arab Spring, Egypt is no longer run by a friendly dictator, but by the Muslim Brotherhood, or leaders of the Muslim Brotherhood.

What are the challenges for Israel, and for the U.S., now?   

BOB WOODWARD, WASHINGTON POST: Well, if you look at the whole foreign policy portfolio that Obama is facing, not just the problem of Gaza but we've still got the problem of Pakistan, Iran, Egypt, Libya is still not a stable situation. I think it only amplifies the problem that this is a really dangerous world. And I think part of Obama's struggle in the coming months and year scan he get some hold on exactly what our policies are, what is the degree of toughness that we are going to employ. Because, I think that is still in doubt.

WALLACE: Kim, let's turn to Benghazi. Congressional committees held a flurry of closed-door sessions this week with top administration officials. The best that you can tell, because they were closed door, what did we learn about administration actions before, during and after the attack.

KIM STRASSEL, WALL STREET JOURNAL: Well, we are hearing a whole range of interesting excuses as to why we had these different comments in the beginning about whether or not this was the video, whether or not this was a terrorist attack. You now heard this argument that maybe it was a hybrid, that there was actually initially a protest in Cairo, but this inspired the militants to act in Benghazi. You've also heard a lot of talking about whether or not Susan Rice was talking from classified or unclassified talking points.

Another theory that they knew it was terrorism all along, but they sort of watered that down, because they wanted more time to pursue who it actually was.

The bottom line, a week after this happened, the administration sent Susan Rice out to say that this was the video, even though it is now pretty clear that they knew all along it wasn't and that question has not been answered even as a result of these hearings. And those are going to have to be the big question going forward. It may involve her testifying.


CHARLES LANE, WASHINGTON POST: We may never get to the bottom of this question of the discrepancy between the facts and the talking points.

I would just point out that the president said at the debate, memorably, I said it was a terrorist attack the next day in the Rose Garden, remember that. So, there is even a kind of "so what" quality about determining that Susan Rice didn't call it one.

The real issue that I don't think a lot of light is shed on this last week, is what were the failures that went into the vulnerability of the diplomatic installation in the first place? And that is the real -- everyone agrees that that is the real issue. And nothing that I have seen that came out of the hearing clarifies much what went wrong with the preparations. Why wasn't that place secure. And what does it tell us about the whole approach, the light footprint that the Obama administration has recommended.

WALLACE: Explain what that means? This is now - I must say I haven't heard that phrase until today, but it is in the papers.

LANE: Well, the idea that once we had Qaddafi out in Libya, that we weren't going to go in with a big new presence and huge new diplomatic installation, we were going to try and do more sort of with less as it were.

WALLACE: Not just in Libya, all over the place.

LANE: And that is being applied across the region as well.

WALLACE: You know, it is interesting, up to this point, Secretary of State Clinton has kind of avoided much fire of Libya. She said that she was taking responsibility for it, but that was in the middle of the night, at an interview down in South America. And she has been absent for these hearings. As they focus, maybe less on the timeline and more on the question of why these diplomats were so undefended, so vulnerable with all the warnings before hand, could Secretary Clinton come under fire here?

KRISTOL: Well, she'll have to answer questions, but I imagine what she'll say is that, unfortunately, they didn't realize how vulnerable they were and things didn't get reported up the chain as they should have been.

I honestly think the CIA did not want a big diplomatic footprint in Benghazi. They were running a pretty complex operation, it sounds like, out of the annex there and probably didn't want -- wanted to keep it a low profile. Ambassador Stevens maybe shouldn't have taken the risk of going to Benghazi. But I'm not sure what all that -- that part of the situation, I think, ultimately, obviously was a mistake, so I don't know quite where it goes.

Secretary Clinton will leave office. And one striking thing -- and Bob raised the question of President Obama's foreign policy challenges ahead -- he will have to deal with them with a pretty entirely new team.

Think about that. He, kind of, came in. He put Hillary Clinton as secretary of state. He inherited Bob Gates as secretary of defense and kept him. He inherited General Petraeus and put him at CENTCOM, then to CIA, sort of, impressive people of stature. Now he's got to fill all of those positions, and it will be interesting to see who he thinks can help him deal with these challenges.

WALLACE: Bob, as someone who has more than a passing acquaintance with scandals, where do you think the so-called Libya scandal is now?

WOODWARD: Well, I think there are serious unanswered questions. But the suggestion that they should have Watergate-style, independent, special committees to investigate this, I don't see that yet, because the question seems to be what did Susan Rice know and when did she know it, which falls not very high on the scale of do we really need to get to the bottom of this?

I, kind of, disagree with Chuck. I think we will find out what happened, and I think we should. And you never know what this is going to show, but the real issue is Libyan policy, you know, what are we going to do with this country that we don't know what the future is? And light footprint might be the answer; it might not be the answer. And, you know, so this is all going to be mixed up, but I don't think, you know, a new Sam Ervin is going to appear on the scene, or a Howard Baker, to investigate this. It does not, at least at this point -- you don't know what you don't know -- fall on that scale.

WALLACE: All right. We have to take a break here, but when we come back, the president and congressional leaders meet on the fiscal cliff, and, surprise, come out sounding optimistic. But are they, really?



PRESIDENT BARACK OBAMA: My hope is that this is going to be the beginning of a fruitful process where we're able to come to an agreement that will reduce our deficit.



REP. JOHN BOEHNER, R-OHIO, SPEAKER OF THE HOUSE: We're serious about cutting spending and solving our fiscal dilemma, and I believe that we can do this and avert the fiscal cliff that's right in front of us today.


WALLACE: President Obama and Speaker Boehner sounding upbeat Friday about prospects for cutting a deal to avoid the fiscal cliff. And we're back now with the panel.

So after the president and congressional leaders met at the White House on Friday, the rhetoric was reassuring. The question is, is it real?

Do you get any sense, Bob -- and this is the subject of your new book -- that they really do see, are beginning to see a path to a compromise, or are they just trying to reassure nervous consumers before the Christmas holidays and nervous investors because the stock market's been down 1,000 points?

WOODWARD: Everyone's nervous about this because this is, kind of, the last chance. The next six weeks could be six weeks that shook the United States if they don't fix this.

There clearly is a new mood, but the way they're going to solve this is, kind of, hostage exchange. In other words, the Republicans are determined not to let tax rates go up; the president is determined or is determined to get more revenue, and it's possible to do this. And the president is going along, it seems, with some idea of entitlement reform, that we're going to actually cut spending.    But this is -- you know, they're going to have to -- they're at loggerheads on this tax issue. And I'm not sure how they fix that.

WALLACE: Well...

WOODWARD: The new mood is not enough. You've got to sit down and do the numbers.

WALLACE: Well, we're going to have Kim Strassel explain that to us because she works for The Wall Street Journal.

I mean, that is at least the initial, immediate big sticking point, taxes. Republicans say -- and I was surprised that, right after the election, we're going to put more revenue on the table but we're going to do it by closing loopholes and limiting deductions. The president made it very clear, no, you've got to raise the tax rate. He didn't say all the way up to 39.6 percent, the old Clinton tax rates, but you've got to raise tax rates on the wealthy.

How do they resolve that in six weeks?

STRASSEL: Well, it all depends on whether or not the president is willing to bend. Because there is reason for optimism here. Because, for the first time, we have a framework. For years, Democrats have been saying, you have to give us some revenue; and as you said, right after the election, Boehner came out and said, OK, have some revenue. But the president has now moved the goal post and said, well, it isn't just revenue; it has to be a specific kind; my liberal base wants it to only be...

WALLACE: Well, well, wait. He did mention this once or twice during the campaign.

STRASSEL: Yeah, he did, except for the question is, are you going to stick on what you campaigned on, or are you going to find a compromise in the end?

And the reality is, if you're looking for votes in Congress, John Boehner may be able to get enough of his people to go along to actually do a deal in which you get revenue from, for instance, closing deductions and loopholes. He's not going to be able to get his people to go along on raising rates.

So there is the rhetoric the president engaged in on the campaign and then there's the reality of Washington. And he's going to have to compromise on that, to some degree, if he wants a deal.

WALLACE: So does he have to compromise or do the Republicans have to compromise?

LANE: Well, first of all, I don't understand the -- where the Republicans think they have a whole lot of leverage here. And you've seen that in the comments not just by Boehner but people elsewhere in his delegation, essentially capitulating on revenue, saying, OK, we're going to -- we're going to let there be more revenue.

What the president is doing right now, I think, makes sense. Kim may disagree, but he's got the upper hand.

STRASSEL: Taking over the cliff?

LANE: No, he's saying, "OK, Republicans, you say you're for more revenue; show me how, OK, show me some detail." It's not enough for John Boehner to say, "OK, there will be more revenue."

So I think he's squeezing them. He's -- he's trying to -- he's making them sweat a little bit. That's negotiation. That's normal. That's natural. I don't think it's irresponsible, as you say.

And, now, whether that's going to ultimately result in an agreement or not on the big picture, in the next six weeks, I doubt. But it's at least possible that they're going to get into some kind of transitional thing that will carry us over into the next year without the big...


WOODWARD: But, and, lo and behold, I mean, there's -- Boehner offered more revenue last year, made it very clear, $800 billion over 10 years. That's essentially what they're discussing now.

What they have to do in the next six weeks is come up with what they call a down payment where they're going to do some spending cuts, they're going to do something to get more revenue in a way that will be acceptable to both sides.

That is a hard plan to devise, quite frankly.

WALLACE: And let me explain what came out of the meeting on Friday, is the idea, is a two-step compromise, that there is a down payment and there's talk about $50 billion, perhaps, by the end of the year and, then a promise with triggers they would achieve a grand bargain -- heard that word before -- next year, major tax reform, major entitlement reform.

Bill Kristol, how realistic is that two step approach.

KRISTOL: I think it is pretty realistic. I think -- and I think Republicans are going -- there will be a deal by December 31, and I believe Republicans will yield a bit on top rates. I mean, President Obama ran twice on this platform and he won last I looked, both presidential elections.


WALLACE: What was the reaction - you made a lot of news last week when you said it wouldn't kill Republicans to raise the top rate. In fact, as you know, you were favorably cited not by name, by the president during his news conference. I'm sure that shot your credibility...

KRISTOL: That was bad. That was a bad moment. But you know you've got to persevere, even when these things happen.

WALLACE: What was the reaction among Republicans?

KRISTOL: The private reaction one Republican congressman was honestly, including very conservative ones, was, I don't know, do we really have to give anything - I guess maybe we do. Maybe it was good that you said that, because we need to cut a deal.

He won two elections. He didn't raise rates correctly in 2009 because we were in the midst of a horrible downturn. Republicans won a huge off year election in 2010 and were able to bargain to a status quo deal. I just don't think Republicans have the leverage, or that it's worth using all their - whatever leverage they have, to maintain rates at 35 percent instead of 37 or 38, especially if you can take it up to millionaires.

I just don't think it's economically as a matter of policy important enough.

Then the big deal has to be big tax reform with lower rates, I think.

WALLACE: 30 seconds left, Bob. And this was the subject of your book. How optimistic are you that they make a deal and avert the fiscal cliff?

WOODWARD: well, let's hope they do. But they are going to burn Bill Kristol's Tea Party card hearing him talk like this. You are off the reservation.

KRISTOL: You know, a lot of the Tea Party guys don't care that much if a few millionaires pay a couple percent more in taxes, honestly.

WALLACE: But are you optimistic.

WOODWARD: Well, you have to - because if this isn't fixed we're going to have a global catastrophe.

WALLACE: On that happy note, thank you. See you next week. Always like those global - but it would be good for "Fox News Sunday."

Don't forget to check out Panel Plus where our group picks up with the discussion on our web site, We'll post the video before noon Eastern Time and make sure to follow us on Twitter, @foxnewssunday.

Up next our Power Player of the Week.


WALLACE: She has been part of the soundtrack of our lives for more than 40 years. And her songs of love and loss reflect her own life. Here's our Power Player of the Week.


ROBERTA FLACK, SINGER: I'm still here, you know.   

WALLACE: At age 73, Roberta Flack is indeed still here, still captivating audiences with her magical voice, and music.

It started, so easily, back in 1973, she won the Grammys for Record and Song of the Year, for "First Time Ever I Saw Your Face."

What was it like to just hit it big?

FLACK: Scary, overwhelming, frightening, unbelievable. There's one. Is this me?

WALLACE: Then a year later, she won the Grammys again, for "Killing Me Softly."

Two years in a row you had the Song of the Year and the Record of the Year. Did you just think this was going to go on forever?

FLACK: Yes, you always do. But why not.

WALLACE: But Flack suddenly stopped recording and gave few concerts.

Three years, you didn't release an album. You didn't...

FLACK: What was that -- why didn't I release an album? I don't know. I think I didn't have anything to say.

WALLACE: She also had serious throat problems. But as Flak says, she is still here. Now, 40 years after her big break, she released an album of Beatles songs, inspired by living next door to John Lennon when he was writing "Imagine."

FLACK: The wall from my computer room is also the back wall of his music room. And I'm hearing...

WALLACE: It is hard to imagine Roberta Flak's journey. She grew up in a largely segregated Northern Virginia, but started piano lessons at age 9. Six years later, she had a music scholarship to Howard University.

What are you doing in college at the age of 15?

FLACK: I don't know, I could have gotten there at 14 except they said I was too short.

WALLACE: Flak was classically trained. In fact, her real ambition was to be a concert pianist which may be why six years ago, she started the Roberta Flak School of Music at her charter school in the Bronx.

FLACK: You can become the next Jay-Z, or Beyonce or whomever, Barbra Streisand, but there has to be some basic fundamentals.

WALLACE: Speaking of fundamentals, Flak still takes voice lessons.

FLACK: You keep polishing the tool. You keep warming it up, you keep shining it, making it brighter.

I want to sing until I can't sing anymore and play until I can't play anymore.

WALLACE: What is this excitement when you get on the stage?

FLACK: The song.         


WALLACE: Roberta Flack hopes to open more music schools here in Washington and in Barbados. And she intends to keep on singing.

Now this program note, next Sunday Senator John McCain joins us to discuss the Libya investigation, the fiscal cliff and more. We hope you will tune in.

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

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