Reps. Rogers, Smith spar over Benghazi; Mark Sanford talks political redemption

Key lawmakers on 'Fox News Sunday'


The following is a rush transcript of the May 12, 2013, 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.

Today, Benghazi under the microscope.


JONATHAN KARL, ABC NEWS: When you said what you said, did you know this had gone through 12 versions?

REPORTER: Why not offer that information?


REPORTER: The phrase is -- let's not put this out because we don't want to be criticized.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: This is an effort to accuse the administration of hiding something that we did not hide.

WALLACE: Amid renewed charges of a cover-up, calls for a special inquiry.

SEN. LINDSEY GRAHAM, R-S.C.: We should have a joint committee of the appropriate committee asking what really happened in Benghazi.

WALLACE: We'll talk with two congressmen at the center of the storm. The chair of the House Intelligence Committee, Mike Rogers, and the top Democrat on House Armed Services, Adam Smith.

Then, political redemption in South Carolina.

REP.-ELECT MARK SANFORD, R-S.C.: Some guy came up to me the other day and he said, you look a lot like Lazarus.

WALLACE: Politically dead after a sex scandal, now elected to Congress. We'll sit down with Mark Sanford. It's a "Fox News Sunday" exclusive.

And our Power Player of the Week -- a story of making billions and giving much of it away.

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


WALLACE: Hello again and Happy Mother's Day from Fox News in Washington.

The controversy over the Benghazi talking points, how the Obama administration explained the attack to the American people blew up again this week with new revelations about how those points were written. It turns out the original draft talked about extremists with links to Al Qaeda and noted the CIA had warned for months about threats in Benghazi.

But all that was taken out before Susan Rice went on the Sunday talk shows.

We've invited congressmen from two key House panels, Mike Rogers, the Republican chair of the Intelligence Committee, and from Seattle, Adam Smith, the top Democrat on the Armed Services Committee.

Congressman Rogers, you were on "Fox News Sunday," September 16th, right after Susan Rice came on the show, and she said it was a spontaneous reaction to a video that had been hijacked by extremists. From the very beginning, you doubted her account.

Let's watch.


REP. MIKE ROGERS, R-MICH.: I have serious questions. It seems to be a military- style, coordinated. I'd just suspect that they could come to that conclusion so assuredly that it was a spontaneous effort given the coordination of it.


WALLACE: Congressman, after what you learned this week, the fact of what the State Department officials were saying during the attack, how often and dramatically the talking points were changed, did the Obama administration mislead or even lie to the American people?

ROGERS: Well, here is what we know: we know that the intelligence was accurate leading up to the event and, very shortly thereafter, within 24 hours, the committee was notified that, in fact, it was a terrorist attack, and that's what led me to my statement on that following Sunday.

And we know that there was at least the general consensus at the time going into the 16th was, yes, it was a terrorist attack but they changed the narrative. And I think that's what the investigation needs to focus on, why did they change the narrative? Did it have a consequence?

And I think those are really important questions to be asked.

WALLACE: And what's your answer to both of those?

ROGERS: Well, I --

WALLACE: Why did they change the narrative?

ROGERS: Well, clearly some of the early indication is that they didn't want the narrative that it was a terrorist attack on their watch. Clearly, that's what it appears to be. But, again, that's what a thorough investigation should determine, and did that culture of that not wanting to be what it was actually contribute to the lowering of the security standards and other things? That is a very important question that the investigations of all the committees need to find the answer to.

WALLACE: Congressman Smith, you contradicted the administration's talking points even before Susan Rice went out on September 16th. In fact, on September 14th, here is what you said, "Mobs don't come in and attack guns blazing. I think there is a growing consensus it was preplanned."

So let me ask you the same question. After this week's revelations, did the Obama administration mislead the American people?

REP. ADAM SMITH, D-WASH.: I really don't think so. I think when you look at what was said in totality in that week, they didn't reach conclusions. The way you just presented that was that by the Sunday afterwards, that the administration said here is what happened, here is our conclusion.

Look, the day after the attack, the president called it a terrorist attack. Susan Rice, in those interviews on Sunday, described violent extremist elements who took over the attack.

So I really think that this is -- this has just become a very, very partisan-focused, scandal-focused attack by the Republicans investigating this. Instead of trying to figure out exactly what happened, the most interesting question to me is who are these violent extremist elements? I know Mike has done a ton of work on the Intel Committee -- as Al Qaeda has metastasized beyond just what was in Pakistan and Yemen.

There's a whole bunch of groups out there. We don't have as much information as we need to about which one threatened us. I think that's what led to Benghazi as much as anything.

But the president never said, no terrorism, no Al Qaeda. There was a dispute about how soon to lead to specific conclusions that now is being made into Watergate and Iran-Contra. I think the desire of the Republicans to create a scandal here has really undermined any ability to have a credible look at what actually happened.

WALLACE: Well, Congressman Smith, let me push back on you on several of those points. We now know --

SMITH: I'm not surprised, but go ahead.

WALLACE: Well, that is what I'm here for, sir. I'm not a potted plant. I'm here to ask some questions. We now know that there were 11 different versions of the talking points, 11 different versions --

SMITH: I thought (ph) it was (ph) twelve.

WALLACE: May I just please go ahead?

In the 24 hours before Ambassador Rice went on the Sunday talk shows, a dozen versions in all. We now know that Victoria Nuland, the spokesperson for the State Department demanded all references to Al Qaeda links, and all references to earlier warnings for months from the CIA be deleted.

Here is what the White House spokesman Jay Carney told the media, told the country last November.


CARNEY: The White House and State Department have made clear that the single adjustment that was made to those talking points by either of these two institutions changing the word "consulate" to "diplomatic facility", because consulate was inaccurate.


WALLACE: Congressman, that's not the truth. That wasn't the only change that the White House and the State Department made.

SMITH: Well, look, there was unquestionably a dispute, as you said in the opening, between the CIA and the State Department on exactly what to put into this statement. Now, who changed what when, the dispute is clear. The dispute was how soon to leap to the conclusion about specific groups being involved in this.

WALLACE: Simple question -- if I may, sir.


WALLACE: Simple question. Was Jay Carney telling the truth on November when he said the State Department and the White House made one stylistic change? Was that the truth or not?

SMITH: I don't know specifically who Jay Carney was referring to.

WALLACE: He said the White House and the State Department. It seems pretty self-evident.

SMITH: Well, yes, but I don't know specifically which person he was talking to.

Look, clearly, there were more changes made than his statement made. What Jay Carney knew about who made those at that particular moment? But, again, we're talking about talking points. There was no question this was a terrorist attack. They didn't deny it.

I would much rather get into investigation of the groups that threatened the U.S., how we can figure out who they are, and how we can stop them instead of debating how one memo was put together in the immediate days after the attack.

WALLACE: Let's pick up on that.

Congressman Rogers, the fact is, here we are eight-plus months later, not a single person has been brought to justice -- not a single person has been brought to justice for the Benghazi attack. Has the administration done everything it could? And does the fact that these people have gone free, play a role, and the fact that we're now seeing militias running wild and U.S. personnel being pulled out of Libya?

ROGERS: I mean, the short answer is: I, as the chairman of intelligence, I'm not happy with the progress of the investigation. We have a serious problem. The more time that grew between the actual event and bringing those who were responsible to justice causes us national security troubles overseas.

One of the 9/11 Commission findings was that, in fact, because we did not react to the USS Cole bombing, that emboldened Al Qaeda, which they believe was a contributing factor leading to the 9/11 event. They believe that they have cover to do what they need to do.

When you look at the trouble in Al Qaeda in the Maghreb, all across Northern Africa, including Libya, the trouble is growing. It's not getting smaller. And we're seeing a more regional effort for these folks to move around.

The fact that we haven't taken that step I think is critically important and it's a problem, a critically important problem that we need to solve.

WALLACE: I want to get to this point, though, that Congressman Smith brings up, which is the idea this is all politics. We learned this week that former Vice President Cheney visited with House Republicans and suggested, recommended, that Hillary Clinton be subpoenaed to testify again. And two conservative groups came up this week, went up with attack ads linking Clinton to Benghazi.

Let's look.


AD NARRATOR: Secretary of State Hillary Clinton is briefed at 2:00 a.m. by the ambassador's deputy that it was, in fact, terrorism.

GREG HICKS, FORMER DEPUTY CHIEF OF MISSION IN LIBYA: I briefed her on the developments.

AD NARRATOR: Yet two days later, Secretary Clinton and others blamed protesters and --

HILLARY CLINTON, THEN-SECRETARY OF STATE: The awful Internet video that we had nothing to do with.


WALLACE: Congressman Rogers, that sure makes it look political.

ROGERS: Well, certainly, I think people are going to take advantage of every situation and make it political. I don't think you can say about the committee's investigation -- I clearly have been a part of this investigation since the beginning. I doubt anyone can say we've been partisan or political in this. I do believe you have to have a fact-based investigation. And I think that's what we're doing.

As a matter of fact, the people who testified, these are -- these are serious 20-year veterans, at least in one case, of the State Department who felt so strongly they wanted to come out and testify. And I will tell you we have had people come forward because of the testimony and say we would also like to talk. We feel a little bit intimidated by this, but we have information we think is valuable.

WALLACE: So, new whistle-blowers?

ROGERS: I do think we're going to see more whistle-blowers. I know certainly my committee has been contacted. I think other committees have as well.

WALLACE: Gentlemen, I want to turn to Syria.

Congressman Rogers, there are now reports that the Assad regime is beginning to turn the tide, is gaining ground in the civil war in Syria, and there was a terrible car bomb attack -- two bombs, that went off yesterday on the border between Syria and Turkey that killed more than 40 people.

Is Assad now winning?

ROGERS: I can't say you -- I can't say for sure he's winning. I'll tell you what's happening, is Iran has gone into full proxy mode in Syria. They believe they have a lot to lose.

So, now, that we see regular Hezbollah units, some in uniform, standing aside of the Assad forces in-fighting has bolstered the regime's capability to continue to fight.

What you're seeing is a drawing in of a regional conflict. This is dangerous and it's deteriorating rapidly. The refugee problem: some 800,000 in Turkey, over 100,000 in Jordan. Lebanon is having problems. Now is the time for U.S. leadership on this particular issue before this problem escalates.

WALLACE: Well, I want to pick up on that with you, Congressman Smith, because you say you're not sure, you're still not sure whether or not the U.S. needs to get involved militarily.

Does that mean that we stand by and watch the slaughter continue and watch the violence spread to surrounding countries like Turkey and Jordan?

SMITH: Well, your question and Congressman Rogers' comment implies there's some specific military option. And I'm wide open to it, if Mike has one that's going to make the situation better. But I have met with DOD officials, I have looked what the options, at the way the civil war is going, at how fractured the opposition is, how Al Qaeda is a huge part of that opposition.

And it's not that I'm not sure. Right now, my position is, if we were to go in there and try to arm rebel groups, it would make the situation worse and there would be enormous risk of us getting dragged into a war that we don't know the first thing about how it would come out. And, second, that we would wind up arming groups and individuals that would wind up threatening us.

Look, this is a terrible humanitarian crisis. I agree with that. What's been absent from a lot of the criticism is what is the specific U.S. military plan that makes this better --

WALLACE: OK, really quickly, because I want to get to the --


WALLACE: I want to get to the IRS.

Congressman Rogers, briefly.

ROGERS: Nobody is calling for military action in Syria. No one.

SMITH: Then, what are we calling for?

ROGERS: There are some great options. And, Adam, I think you know those, and we shouldn't even debate. This is not something we should be arguing about.

The Arab League partners have lost confidence in the United States. They're asking us not to be on the ground. They don't want our boots on the ground, but they need help coordinating the effort between the Arab League partners who are, in fact, already giving weapons to the opposition. The problem is, they're getting to places that we don't want them to go.

WALLACE: Gentlemen --


SMITH: I'm sorry. I just have got to say --

WALLACE: Real quick.

SMITH: We -- the administration is absolutely doing that. They are coordinating with the Arab League.

ROGERS: No, that's just not true, Adam.

SMITH: You and I met with King Abdullah and others and he said, look, we're working with the White House. They are involved in those discussions. They are in fact --


WALLACE: Gentlemen, we can continue this conversation but I really want to get you on the record about the IRS. Dramatic developments this week. We only have limited time.

The IRS admits that it targeted Tea Party and other conservative patriot groups that had that in their name for extra scrutiny. And it now turns out today new reports that some officials within the IRS knew about this as early as 2011, not 2012. And the then-IRS commissioner flatly denied it in the spring of 2012.

Congressman Smith, you first. Your reaction?

SMITH: It's really the first I'm hearing of it and as with many of these things, I'm not going to lead to conclusions based on initial reports. We need to look at exactly what happened before we can lead to conclusions and start accusing people of things.

I think it definitely is worth looking into. But, right now, the information is far, far too preliminary to reach any conclusions.

WALLACE: Congressman Rogers?

ROGERS: Well, the conclusion that the IRS came to is that they did have agents who were engaged in intimidation of political groups. As dangerous a problem the government can have and I don't care if you're a conservative, a liberal, a Democrat or a Republican, this should send a chill up your spine. This is something that we cannot let stand. It needs to have a full investigation.

I don't know where it stops or who is involved, whoever is involved, through a fact-based investigation, and it has to be external. It's clearly shown they can't do it themselves. And I think Congress needs to have that oversight.

And I also want to invite Adam, my good friend, by the way, down to the intelligence base so that we can talk about the real capabilities we have that does not include military action that our Arab League partners are asking for in Syria and we have not been able to deliver. I think we can all get to this.

WALLACE: Can we come with our FOX News cameras?

ROGERS: Well, Adam -- neither Adam nor I look good in orange jumpsuits with the numbers on the back. And (INAUDIBLE) --

WALLACE: All right. Congressman Rogers, Congressman Smith, I want to thank you both so much for coming in today. We'll stay on top of all these stories, a lot of news today. Thank you.

SMITH: Thanks for the chance.

ROGERS: Thanks, Adam.

WALLACE: Up next, former South Carolina Governor Mark Sanford has come a long way from his apology over a sex scandal many predicted would sink his political future.


SANFORD: I let them down, and in every instance, I would ask for their forgiveness.


WALLACE: It seems South Carolina voters are the forgiving kind. Mark Sanford on his political comeback, next.



SANFORD: I am one imperfect man saved by God's grace, the one who has a conviction on the importance of doing something about spending in Washington, D.C.


WALLACE: Former South Carolina Governor Mark Sanford thanking voters Tuesday night for sending him to Congress after an extramarital affair with all the twists of a TV soap opera.

Joining us now from Seabrook, South Carolina, to talk about his comeback is congressman-elect, former governor, Mark Sanford.

And I guess I'm going to call governor because that's what I'm used to. Welcome back to "Fox News Sunday," sir.

SANFORD: Pleasure to be with you.

WALLACE: You have never been a stand-in-line politician. You weren't when you were in Congress in the '90s. You weren't during your eight years as governor,

How do you intend to make your mark as a new congressman here in Washington?

SANFORD: Well, I mean, I think the same way that I tried to fashion those things when I was in Congress before, when I was in the eight years of the governorship, which is to stand up for ideas that I believe in, the ideas I talked about in this campaign or once past, and ideas I think are ultimately relevant to where people are coming from when they think about pocketbook or wallet issues.

WALLACE: The House Republican Campaign Committee stopped backing you in the middle of the campaign when there were reports that you had violated your divorce agreement by going to your ex-wife's home and watching the Super Bowl with your son. They dropped you as a candidate then -- which has raised the question, now that you're back and that you won without their help, what's your relationship going to be with the House Republican leadership? 

WALLACE: Are you going to be part of the team or are you going to be more of an independent?

SANFORD: Well, I'm a Republican who has always had an independent streak. I guess that would be the best way to define it.

And, you know, I think always past is past and I look forward to working with the entire Republican team. You know, I think you look at the competition of power in Washington, D.C., right now, with the Senate and the executive branch and the Congress.

Congress is a holdout and I would very much look forward to working with Republicans as they try to advance conservative ideas that I think are important and reflective where taxpayers are coming from across this country.

WALLACE: All right. Let's talk about conservative ideas and taxpayer ideas, because your big issue in the house as governor has always been government spending. In fact, in one memorable scene, you once brought two pigs named "Pork" and "Barrel" to the House floor, the statehouse floor, in Columbia, to protest pork barrel spending.

Question -- do you come with any new ideas or particular ideas about how to help the federal government?

SANFORD: Well, one that it's important and a real conviction on that front. You know, Milton Friedman once said that the ultimate measure of government is what it spends, because as a result of spending, you have borrowing, you have taxes, you have a whole host of things that follow. But that spending is what begins the problem that so many conservatives struggle with and, frankly, so many taxpayers struggle with.

Yes, I think that, you know, as I begin to get up in Washington, really begin to dig into the numbers as I did back when I was governor. I look at the budget numbers in South Carolina that led to the pigs, in that case there was, you know, more than $100 million unconstitutional deficit that had months of deliberation on. When the deliberations didn't work, we finally resorted to something else to capture people's attention and it worked because we ultimately closed off that unconstitutional deficit.

And what I'm going to do is, in essence, look under the hood at a whole host of things. I think you got to deal with the big rocks. The big rocks in Washington, D.C., are certainly entitlements. You got to look at Medicare, Medicaid, Social Security.   But there's a lot of inefficiency out there. In all areas of government that people are, with warrant, concerned about. And I'm going to be focusing there as well.

And I would also say this, another part of shrinking the deficit is not just tied to cutting government spending, it's tied to growing the economy. You look at the number of unemployed in this country right now, that's a real drag on the economy.

So, as the economy grows relative of that, that's another part of shrinking that monster, if you will.

WALLACE: Governor, let's address your personal scandal. What did you learn from it?

SANFORD: You learned a lot. I would say that you probably learn more in the valleys of life than you do in the mountain tops. I learned whole new things that I'd never comprehended before with regard to God's grace, with regard to the reflective grace that comes through other human that you walk with on a daily basis.

I have to say that I learned a lot about judgment. I learned a lot about forgiveness.

I could go down the litany of different things. But I boil it down this way: you know, our minister gave a great sermon a number of months back, and his point was, do the events of your life refine or define your life?

I think in politics, you know, people want to take an event and make it definitional to your life. I think that any of these valleys or any of these bumps that we hit in the road of life either by circumstance or by own action, can be refining points, where ultimately you grow as a result of the soul-searching that comes in the wake of loss and failure.

WALLACE: You are now engaged to the woman with whom you had the affair, Maria Belen Chapur. She made a brief appearance, and we have a picture of it up on your screen at your victory party which raised some eyebrows.

Question -- what did your boys think of that? And -- your four boys, and have they accepted her?

SANFORD: I'm not going to go into inner family conversations, but I would just say it is what it is, and I'm, right now, at a weekend with one of my boys who has a whole host of different college friends here scattered across this house that I'm sitting in right now.

WALLACE: Do you have a date for your wedding and will your fiancee -- will she come to Washington to live with you? I feel like I'm "The National Enquirer"" here.

SANFORD: Exactly. Is this FOX News or "National Enquirer"? So, I'm not going to make news on that front tonight -- or this morning --    WALLACE: All right.


SANFORD: -- with these college kids.

WALLACE: Let me ask you another question because people wonder about you. I mean, there was some question -- you know, your race attracted unusual attention, I think it's fair to say, for a special election in one congressional House district and people wonder about you. One of the things is, is it true that back late last year, December, that you went to your ex-wife, Jenny, and asked her, as she had been during your political career, to once again run your campaign?

SANFORD: Well, what's true is I with went there to visit with her because I think that, you know, one of the first things you have to determine was whether she was going to run. She at that time was talking about running. I don't think there would have been anything more harmful to our four boys than having a former, you know -- I mean, a mom and a dad -- still a mom and a dad but former husband and wife, run against each other.

So we had a conversation on that and other things. And I think it was important to clear the air on that front. She decided not to run. At that point, ultimately, after crossing a number of T's and dot a number of other I's, having a conversation, indeed, with our boys, decided to go ahead and run.

And it's been a really, really interesting journey here over the last five months, not just in the conversation with them, but a conversation ultimately with voters across the first congressional district of South Carolina about things that they'd like to see in Washington, D.C., a greater adherence to taxpayer issues that they would like to see in Washington, D.C. And, frankly, they are concerned about the direction of this country and the piling on of debt and deficit that I think will ultimately impact the very voice that you're alluding to.

WALLACE: Well, let's pick on that, because back in 2009, before all this personal stuff, you were exploring the ability of running for president in 2012. You've been exploring the idea of setting up a national -- a nationwide organization. So, the question is, does your political comeback now end as the congressman from the first congressional district of South Carolina, or is there the possibility of higher office?

SANFORD: What I'd say is, one, people will begin to look at that for me. That's a big gulf between them looking at it for me and saying, "You ought to do this, you ought to do this, you ought to look at this," and me doing it. So, I hadn't pulled the trip wire on that front.

But you are exactly right. A number of people were suggesting those kinds of things.   As to my focus -- my focus to be the absolutely best congressman that I can be for the first congressional district of South Carolina. You know, I'm right now here on a family farm which I grew up in. It's in the southern end of the district.

My professional life began in the northern end of the district, up in Charleston, and this is the traditional low country of South Carolina. There's not a prettier, I think, or more wonderful part of the world -- nothing against other congressional districts in this country.

And so, you know, what I want to do is well-represent the people of the first congressional district of South Carolina, period, and I'm going to be very focused on doing so as I get sworn in come this week on Wednesday.

WALLACE: All right. And, briefly, we're about to run out of time, that incidentally, if I was "The National Enquirer," you were the Chamber of Commerce for the low country there.

What do you think the Republican, National Republican Party, needs to do to start winning national elections again?

SANFORD: Well, I don't think it's prescriptive in terms of any one thing. I think it is, indeed, a whole host of things. But I would liken a party to a brand and I think when brands -- Caterpillar, John Deere, they produce tractors or bulldozers -- you know, I guess it was Peters, years ago, that wrote a book entitled "In Search of Excellence".

And one of the things they said about great brands or great companies, as they go back, they stick to the knitting when there's difficulty. So, what that means is Caterpillar doesn't try and produce an airplane or a boat. They go back to producing that better bulldozer.

And so, I think with regards to the Republican brand, if you will, which is all about conservative philosophy, it's very important that they go back to the knitting that brought their very existence -- you know, brought back their very existence in the first place. So, I think you actually have to -- there's been real brand disillusion as at times Republicans have been, in essence, squishy on spending, or squishy on the whole notion of taxes.

And I think that one of the things that will ultimately, I think, receive the most support is, again, a very clear vision, a picture, as to what the party is about rather than at times diluted messages or convoluted messages.

WALLACE: Governor Sanford, we're going to leave it there. Thank you so much for coming in today and talking with us. Have a good weekend with your sons, and we'll look for you here in Washington next week.

SANFORD: Look forward to it. Be well.

WALLACE: Next, a Republican super PAC takes aim at Hillary Clinton over Benghazi.


HILLARY CLINTON, FORMER SECRETARY OF STATE: What difference, at this point, does it make?

AD NARRATOR: The difference is a cover-up and four American lives.


WALLACE: Well ask our Sunday panel whether the Benghazi investigation is all about national security or politics.



UNIDENTIFIED MALE: We are concerned about how Congress would react, a factor and what went into those talking points?

CARNEY: Again, if you look at the development of the talking points, the answer to that is, no.


WALLACE: White House spokesman Jay Carney under fire Friday as the Benghazi scandal finally hit the mainstream media with a vengeance. And it's time now for our Sunday group, Bill Kristol of The Weekly Standard, former Democratic Congressman Dennis Kucinich, Kimberley Strassel from The Wall Street Journal and Fox News political analyst Juan Williams.

Well, Bill, Carney kept insisting that the White House never changed, kept insisting the White House, despite all this new information, never changed the Benghazi talking points in any substantive way. As you can see, the White House press corps wasn't buying it. Where does this stand right now?

BILL KRISTOL, THE WEEKLY STANDARD: I think Jay Carney's credibility is shot. But he's the spokesman for the president of the United States. The question is, is the Obama administration's credibility shot? And the bigger question really is, I mean Benghazi is not just an aberration in my view or even really a scandal. Benghazi is Obama's foreign policy. Intervene, but then don't do anything. Lead from behind, so passivity that actually in Libya, which allowed the situation to build up, led to the attack on 9/11. Then the president's absent the whole night of the crisis. Then they evade responsibility and deceive the American people and that pattern is not limited to that one instance in Benghazi.

WALLACE: Congressman Kucinich, I think it's fair to say you're a liberal Democrat. But I want to ask you, does it bother you that the CIA, as we now know, originally wrote about links to Al Qaeda, originally wrote about having warned the State Department for months about threats in Benghazi and that all of that was taken out and let's put this up on the screen. State Department official Victoria Nuland wrote in pushing back against what the CIA had written, that information "could be abused by members of Congress to beat up the State Department for not paying attention to warnings, so why would we want to feed that either? Concerned." This, Congressman, from the transparent administration of Barack Obama.

FORMER REP. DENNIS KUCINICH, D-OHIO: Well, I didn't need those memos to know that it was wrong for us to intervene in Libya. This is one liberal Democrat who said the intervention was wrong. And what the attack on the consulate brings up, Chris, is the failure of the Benghazi policy from the beginning. And that's why they had to call it a street demonstration instead of an attack because on the eve of an election that brought in a whole new narrative about foreign policy, about dealing with terrorism, and about the consequences that led to four deaths of people who served the United States.

WALLACE: So do you think those talking points were politically scrubbed?

KUCINICH: Of course they were. Come on, are you kidding? You know, this is one of those things that you have to realize, we're in the circumference of an election, and when you get on the eve of an election, everything becomes political. Unfortunately, Americans died and people who believe in America who put their lives on the line, they weren't provided with protection. They weren't provided with a response. They and their families had a right to make sure that they were defended. Look, we went into Benghazi with under the assumption that somehow there was going to be a massacre in Benghazi. So we went there to protect the Libyan people. We couldn't go into Benghazi to protect our own Americans who were serving there? I'm offended by this, and there has to be real answers to the questions that are being raised.

WALLACE: Kim, let's assume that Congressman Kucinich is right and that the talking points were politically scrubbed to protect Hillary Clinton, to protect Barack Obama running for re-election, is that where the scandal ends? What evidence is there -- there certainly were misjudgments, but what evidence is there that the administration did anything wrong, wrong, either before or during the attack?

KIMBERLEY STRASSEL, THE WALL STREET JOURNAL: Well, the thing is we don't know. And this is what we found out this week, that the official record that is out there on all kinds of things, is simply not correct. OK, so, you know, apparently the White House was not involved in the talking points. That's not true. Apparently Hillary Clinton was just a footnote in all of this. That was not true. Apparently and supposedly their requests for aid were never denied. We've heard this week that that was not true. And so the White House faces an issue here, which is where do we go -- where do we get these answers? And that's why you are now hearing calls for a bipartisan select committee. The Democrats keep claiming that this is partisan, this is a partisan exercise. The only way you're going to get these answers is if you actually put a committee, put both sides on it, give them the power of deposition, give them the power of subpoena, finally get the emails, finally talk to all the witnesses in public, and if the White House really claims it has nothing to hide, then it shouldn't fear such an exercise. But that's the only way that you're going to start getting any answers on this. Otherwise it's going to drip, drip, drip on like this week after week.


JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, let me just say that for all the media attention that is has deservedly got this week after this gripping testimony that we saw from Gregory Hicks in Congress, there's nothing new. There's nothing new in terms of the details that we've seen in the e-mails about what happened before ...

WALLACE: Wait, wait, wait, did you know prior to this week that there had been a dozen versions of the emails?

WILLIAMS: I don't know how many versions.

WALLACE: But you didn't knew that?

WILLIAMS: No, it doesn't surprise me. Are you kidding? Bureaucratic infighting in Washington a new (inaudible)

WALLACE: Did you know that Victoria Nuland had said, I want the fact that the CIA had written about this ...

WILLIAMS: I did not know.

WALLACE: ... that they've been warning for a month. Did you know about that because I didn't.

WILLIAMS: Warning?

WALLACE: Had been warning the State Department for months about threats ...

WILLIAMS: Oh, no. That came out in the ARB report, which said this is the Admiral Mullen and Ambassador Pickering. They said that the security lapses had occurred, and that's why people at state got fired. That the State Department ...

WALLACE: They didn't say that the CIA had put it in the talking points and the State Department wanted it out?

WILLIAMS: Clearly what they said, was there was a lack of proper security there and the state had not responded adequately and, of course, state had been blaming Congress ...

WALLACE: I didn't. We didn't know that Victoria Nuland had said that my -- my building (ph) of leadership is going to get hard first.

WILLIAMS:  No. Let me just say that the key point here is not Victoria Nuland -- who, by the way, has worked for Republicans and Democrats and Vice President Cheney. The key point here is, did we learn anything about what happened before Benghazi or during Benghazi that would implicate the president or the secretary of state? Answer, no.

STRASSEL: Well, we learned -- what we learned is that the story of (inaudible) is not true.

WALLACE: What do you mean?

STRASSEL: Again, everything they have said up until now, that they weren't involved in the talking points, that politics was not involved.


STRASSEL: ... was not much involved.

WALLACE: The White House only made one stylistic change.

WILLIAMS: This is all bureaucratic infighting. You know what?

KRISTOL: Who is supposed to resolve bureaucratic infighting in the United States government?  The president of the United States. I have to agree with Juan that nothing wildly -- some of us have been very concerned about this for eight months. I mean that's why we were concerned because this was a horrible failure, it was a failure by the State Department, which last I looked was headed by Secretary of State Hillary Clinton up until then, not by a bunch of assistant secretaries and deputy assistant secretaries. And it was a terrible failure by the Obama administration. And this week has shed more light on their failures.

WALLACE: Wait, wait, excuse me, I just want to get to one last subject. We're running out of time.  And Congressman Kucinich, I want to ask you, as I discussed with the two congressmen at the beginning of the -- a couple of conservative groups this week came up with, I think you have to call them attack ads against Hillary Clinton and Benghazi linking her to that. We're talking about Victoria Nuland not being important. How damaging, do you think, this week's revelations and the whole affair are to Hillary Clinton?

KUCINICH: That's going to remain to be seen. I mean the fact of the matter is that we first have to know that this had an impact on 2012 election, because the truth didn't come out before the election and now in 2016, I don't know. I mean you can't predict. But one thing for sure, Secretary Clinton has to be accountable here and she has more questions to answer. That's just a fact. How she answers them, we'll see.

WALLACE: And, Kim, forget about the politics of it for a minute. Forget 2016. I know, it's amazing.


WALLACE: What about the fact that Hillary Clinton on the day that those caskets were brought back to Andrews Air Force Base from Libya, what about the fact that she talked to the families of the victims and she said at that time that this was all about the video when she had every reason to know that that was not the case?

STRASSEL: Because this is what's important that came out this week, as we find out that she was briefed, the State Department, Pentagon, all of them briefed by people on the ground that this was a terrorist organization with links to al-Qaeda, so she knew. She knew and she said that story regardless. And there are other aspects of this, too. She's been pulled in. Cheryl Mills, chief of staff, longtime Clinton ally has also (inaudible) involved in this a great deal, so she is part of this story.

WALLACE: All right. We have to take a break here. But when we come back, the other big story this week, outrage as the IRS admits to targeting conservative groups.



STEPHEN SCHWARZMAN: I like to make change. I like to create things.

WALLACE: He wrote a check for $100 million and is raising $200 million more.

UNIDENTIFIED MALE: I like to influence situations as opposed to just giving money.

WALLACE: Stay tuned. We'll be right back.




LOIS LERNER, SENIOR IRS OFFICIAL FRIDAY We, I think, the IRS, would like to apologize for that. It was not intentional. As soon as we found out what was going on, we took steps to make it better. And I don't expect those things to reoccur.

JENNY BETH MARTIN, CO-FOUNDER, TEA PARTY PATRIOTS: This was a complete and total abuse of power by bureaucrats and they're abusing the power that they have in the IRS. It's completely unacceptable.


WALLACE: An IRS official acknowledging Friday it gave extra scrutiny to some conservative groups seeking tax exempt status. But a Tea Party official dismissed the agency's apology as not enough. And we're back now with the panel. So, there are some new developments, big, new developments today in the IRS story. An inspector general's report due out in the next few days will report the following. IRS officials knew as early as 2011, not 2012, as previously reported, the agency was targeting conservative groups for extra scrutiny and they singled out groups with "Tea Party" or "Patriot" or "9/12" project in their name. Kim, how big a deal?

STRASSEL: This is a very big deal, not only because of what you just said in this inspector general report is going to go against things that the IRS itself said. You know, last year we had the commissioner of the IRS come and testify under oath before Congress that nobody was being targeted. So, one thing will be whether or not this ID report does say who knew what and when and what actions were taken and that's a very important thing. But I also think that this is interesting in the bigger context. Remember, this is not an isolated incident. We also had in the middle of the campaign, for instance, the IRS sending out letters to donors, to 501Cs saying, you know, you could be subject to retroactive taxation. This also caused a big brouhaha (ph), again, IRS blamed it on lower level employees. But some of the things are beginning to add up and paint a very fishy picture.

WALLACE: You know, what's interesting here, is that conservative groups started complaining early last year, 2012, about the fact that they were getting these really intrusive demands for information, including information about donors, which they're not supposed to have to give to the IRS, and -- but it now turns out that this practice was going on at least six, eight, nine months before as early as June of 2011. As Kim points out, last year the then-IRS commissioner flatly denied it. Take a look.


DOUGLAS SHULMAN, IRS COMMISSIONER: There's absolutely no targeting. This is the kind of back and forth that happens when people apply for 501C4.


WALLACE: Congressman Kucinich, now they admit there was target.

KUCINICH: Well, you know, some of these aren't passing the straight face test. You have to look at the irony here, Chris. Some of the letters -- some of the words that we use for profiling, the political affiliation, Bill of Rights, U.S. Constitution, patriot, these are all things that Americans celebrate, and now they're being turned into a negative where IRS goes after people based on their commitment to those things. Look, you know, I am a liberal Democrat. I don't -- I'm not someone who has celebrated Tea Party politics, but we cannot -- this is not tolerable. We cannot have a condition in America where people's politics are the basis for IRS attacks.

WALLACE: Do you believe the IRS statements by that level manager so far, and that's the only thing we've really seen, that this was just a bureaucratic foul-up by a bunch of people in the tax exempt -- you know, the organizations apply for tax exempt status in Cincinnati that this didn't go up any higher?

KUCINICH: The tone is set from the top. That's the problem. We have to look at here. The tone is set. We are in a hyper-partisan, intensely partisan condition in Washington, the polarization is damaging to our country. And we're seeing another symptom of it here.

WALLACE: So, you think this was political targeting?

KUCINICH: How could it not be?

WALLACE: Bill, the outrage -- and it's interesting because it crosses the party line. Let me put up a couple of editorials for major American newspapers over the last -- two -- day. A Washington Post editorial, not a (inaudible) conservative newspaper, asked if it was not partisanship, was it incompetence, stupidity on a breathtaking scale? The Wall Street Journal declared "It's a very big and bad deal." Your reaction?

KRISTOL: I'm still recovering from agreeing with everything Dennis Kucinich has said this morning.


KUCINICH: Sorry, I know. I shouldn't say that.

KRISTOL: Which one of us that could hurt more? I don't know. No, but on both of these scandals, that we've just had, with Benghazi and the IRS, it should be -- not be a partisan reaction. I want to say, I do not like these conservative Republican groups putting ads out about Hillary Clinton. What is the point of that? That is just fund-raising like American Crossroads and these other groups. It's ridiculous. There's no campaign going on. Let's have -- let's pull the partisanship back, and it's a genuine outrage, what happened in Benghazi. It's a genuine outrage what the IRS did. There should be bipartisan committees, as Kim said, investigating both from Congress. So I wish the Republicans would just be quiet for a while, I mean the partisan Republican groups that are fund-raising obviously would be quiet on both issues for a while and let's find out what really happened.


WILLIAMS: I think unlike Benghazi, this is not scandal mongering. This is a real problem. And you cannot politicize and politically intimidate your opponents by using the IRS. I mean for those of us who have been around, this is Nixon. This is going back to Johnson. There have been allegations throughout American history but, you know, this is the most pernicious kind of tool that could be used against a political opponent and it should not be. Now, let me say I don't think there's any evidence that it goes beyond those low- level people thus far. Well, we all will have to see within the Inspector General's report. But the fact is that there are some questions to be raised in this era about these 501'c D3 (ph) groups. You look at them very likely ...

WALLACE: Is that advocacy groups?


WALLACE: ... applying for tax exempt status?

WILLIAMS: Right. And it seems to me, these are -- they are applying for tax exempt status as nonprofits. Well, they're highly politicized groups. I mean, you know, I've personally been attacked by likes of Media Matters. How are they a 501c's? That's craziness. American Crossroads, that Bill said, that's running the ad on Hillary Clinton. I think, by the way, that hurts the idea that this is not being simply a politicized attack on the Democrats, Obama and Clinton. But again, how are they not a highly political group and why are they suddenly, you know, eligible for this tax exemption? And much of the Tea Party's efforts stand from direct mail efforts and, again, that could be why they said if you have Tea Party in your title, Patriot in your title, but it just comes too close to the nerve of political intimidation and it cannot be tolerated.

WALLACE: Kim, one more thing that's striking about this, the IRS did not officially announce this. The president of the United States did not officially apologize. The Treasury Secretary did not officially apologize. This all came out because a mid-level manager, the person at the IRS in charge of reviewing these tax exempt organizations, was having a Q&A session with a bunch of tax lawyers and they asked a question and she answered the question off camera, which is why all we have is the audio, that's how this whole story came out and, perhaps not so coincidentally, it came out just days before the Treasury's inspector general was about to issue a report slamming them on that.

STRASSEL: Well, that's what really ties it together. Is that this is just sort of thrown out there and shuffled under the table, but, of course, the timing is very notable, because it sounds as though from what we have heard that has been leaked that this I.D report is going to be incredibly damning. And I think that this is really interesting what Juan is talking about, these groups, though, because the reality is looking forward, and I think this is a really important aspect of this, you have an entire campaign finance community who wants more reforms in this area, and what are they talking about? The big proposal they've been pushing for the last year has been that, yeah, we need more oversight of these groups, and we ought to give the IRS authority over there and we ought to make them -- you know, put the donors out and so this is something that I think can't be tolerated at this point.

WALLACE: All right. We're going to have to leave it there. Thank you all. Panel, see you next week and don't forget to check out Panel Plus where our group picks right up with the discussion on our Website, and make sure to follow us on twitter @foxnewssunday. Up next, our power player of the week: making billions and giving much of it away.


WALLACE: A Rhodes scholarship has long been one of the prestigious honors the student can achieve. Now one of America's top businessman is spending millions to send the next generation of scholars to China. Here is our Power Player of the Week.


STEPHEN SCHWARZMAN, CHAIRMAN & CEO, BLACKSTONE: This is exceptionally rewarding to help other people and give them the kind of shot in life that we'd all like to have.

WALLACE: Steve Schwarzman is head of the Blackstone Group, the world's largest private equity firm. According to estimates, he's worth $6.5 billion. But this story isn't about how he makes money. It's about how he gives it away.

SCHWARZMAN: A 21st century program to develop leaders specifically for the world we live in today and need in the future.

WALLACE: Last month he was in Beijing, where announced the Schwarzman Scholars program to send 200 students a year to one of China's top universities.

SCHWARZMAN: China growing at double and triple the rate of the developed world. And if left alone, that could create problems of tensions of all type.

WALLACE: Schwarzman has modeled his program on the Rhodes Scholarships, started a century ago in Britain. He wrote a check for $100 million and is raising $200 million more.

SCHWARZMAN: You can see that a relatively small group of very well trained, excellent people taking their place in society can have a very big impact on the future course of the world.

PRESIDENT BARACK OBAMA: Hiring our veterans and military spouses is not just the patriotic thing to do, it's the smart thing to do.

WALLACE: Two weeks ago Schwarzman was at the White House on a different mission, pledging Blackstone, which owns 80 companies that employ 730,000 people will hire 50,000 military veterans over the next five years.

SCHWARZMAN: I think it's good business, but it's also an essential part of who we are as Americans that we really need to help the people who help us.

WALLACE: Schwarzman has sharply criticized Obama economic policies. But when we talked, he focused on dysfunction across Washington.

SCHWARZMAN: If we got things in line in the right way, had a more positive spin, my view has always been that we'd have another 1.5 to 2 percent of GDP. It ends up creating millions and millions of more jobs.

WALLACE (on camera): Do you think that Obama care is keeping a lot of businessmen from hiring people?

SCHWARZMAN: I think there's uncertainty about the introduction of the new health care regulations. You end up making people more cautious in terms of hiring.

WALLACE (voice over): But, again, this isn't about how you get rich. It's about the $100 million Schwarzman donated to the New York Public Library.

(on camera): Which is harder, making all that money or giving some of it away?

SCHWARZMAN: Well, actually I enjoy both. I like impacting people, giving them the kind of shot I think they deserve in the society we live in, not everybody gets a boost. Not everybody gets a mentor. And those of us who are fortunate need to reach out to people and impact them.


WALLACE: Schwarzman said he was never in the running to be a Rhodes scholar when he was in school. He says that was part of the reason he wanted to set up his own scholarship program.

And that's it for today. To all the moms who are watching, especially mine, have a great Mother's Day and we'll see you next "Fox News Sunday."

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