Sens. Graham, Durbin talk DOJ, IRS scandals; rare interview with 'America's veteran,' former Sen. Bob Dole

Key lawmakers on 'Fox News Sunday'


The following is a rush transcript of the May 26, 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, the Obama administration is still caught up in two big scandals: the targeting of conservative groups and reporters.


LOIS LERNER, IRS OFFICIAL: I have not done anything wrong. I have not broken any laws.

WALLACE: A key witness in the IRS scandal declares her innocence and clams up. As answers about what the White House knew and when keep changing.

SPEAKER OF THE HOUSE JOHN BOEHNER, R-OHIO: Drip, drip, drip. Every day, there's something new.

WALLACE: Then, the president declares a reset in the war on terror.

PRESIDENT BARACK OBAMA: Our systematic effort to dismantle terrorist organizations must continue. But this war like all wars must end.

WALLACE: We'll talk about the scandals and new limits on fighting our enemies with two key senators: Dick Durbin, and Lindsey Graham.

Also, our rare interview with America's veteran, former Senator Bob Dole. About to turn 90, this leader from the greatest generation reflects on the dysfunction in Washington, the historic figures he's dealt with for half a century, and the war that defined his life.

Bob Dole -- it's a "Fox News Sunday" exclusive.

Plus, who should investigate the investigator? We'll ask our Sunday panel about the president's charge to Attorney General Holder to review his own department's actions in going after reporters.

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


WALLACE: And hello again from "Fox News Sunday" in Washington on this Memorial Day weekend.

We'll talk with our guests in a moment, but we begin with the latest from Moore, Oklahoma, devastated by a deadly tornado and President Obama visits the town today.

Casey Stegall is on the ground for us -- Casey.

CASEY STEGALL, FOX NEWS CORRESPONDENT: Chris, it is a Memorial Day weekend filled with funerals here in Moore, Oklahoma. Twenty-four people died here last week when that monster twister hit, and 10 of those victims were children.

Today, President Obama is meeting with storm survivors and possibly family members of those who did lose their lives here last week. Mr. Obama will be getting an up close and personal look at the destruction, homes that were wiped off the map when the EF-5 tornado tore through this Oklahoma City suburb just after 3:00 p.m. last Monday. The president touches down this afternoon and plans to spend about four hours total on the ground.

Homeland Security Secretary Janet Napolitano was here meeting with state and local leaders like the Oklahoma governor. She was offering FEMA's assistance to the victims.

Meantime, the arduous task of cleaning up continues, a process that will likely take months, considering Oklahoma City mayor estimates up to 13,000 homes were damaged or destroyed. Homes like the one that belonged to James Trumbly.


JAMES TRUMBLY, TORNADO SURVIVOR: This was about the area of the living room closet and we were sitting there and the car was in the garage and the pickup was in the driveway.


STEGALL: And tonight, a memorial service will be held at 7:00 Eastern Time for this community, at the First Baptist Church of Moore, the president will not be in attendance for that -- Chris.

WALLACE: Casey Stegall, reporting from Moore, Oklahoma. Casey, thanks for that.

Well, it's been a busy week in Washington with new developments and several scandals and the president announcing a major shift in a war on terror.

Joining us to talk about it all is the number two Democrat in the Senate, Dick Durbin, who is in Springfield, Illinois, and Republican Senator Lindsey Graham from Columbia, South Carolina.

Senators, I want to start with a Justice Department targeting reporters and national security leaks.

Here is what Attorney General Holder told a congressional committee a few days ago.


ERIC HOLDER, ATTORNEY GENERAL: The focus should be on those that break their oath and put the American people at risk, not reporters who gather this information. That should not be the focus of these -- of these investigations.


WALLACE: But, it turns out that Holder signed off on an affidavit for a search warrant in one lead case. And I want to bring that up with you.

Here's what one affidavit said. "There is probable cause to believe the reporter," in this case Fox News' James Rosen, "has committed a violation of the Espionage Act, as an aider, abettor and/or conspirator."

And yet, Senator Graham, despite that clear contradiction between what Holder said what he actually did, President Obama is asking the attorney to investigative his own actions.

SEN. LINDSEY GRAHAM, R-S.C.: Well, it's a bigger time to have a special counsel to come forward or some independent group to look at it.

James Rosen is a lot of things, but a criminal conspirator here is not. We're beginning to criminalize journalism and I think that should worry us all. But having said that, when classified information is leaked into the public that can put operations or American operatives in harm's way, we've got to find a way to pursue that, too. But this is clearly an overreach.

WALLACE: Senator Durbin, how can we expect Attorney General Holder to honestly review what in effect are his own actions? Isn't that, by definition, a conflict of interest by definition?

SEN. DICK DURBIN, D-ILL.: Well, it's interesting that the attorney general recused himself in the development with The Associated Press, because he believed there was some conflict inherent, and it may raise the same question in this case.

But let's not forget, Chris, on Memorial Day weekend, what this is really all about. It is a question of classified information. Someone working for our government on our side violated their oath and disclosed that information to the press. And it happens with some frequency, I might add.

But having done that, what is the government to do, if, in fact, that disclosure could endanger our military forces, or those who are cooperating with us to fight terrorism? It is a constant tension between the government and our freedoms under the Bill of Rights that we see playing out both The Associated Press case and this Fox case.

WALLACE: But, you talk about Memorial Day weekend. It's also about the First Amendment and the role --

DURBIN: Yes, it is.

WALLACE: -- the very important role that the media play. Honestly, are you comfortable with the idea that the president asked the attorney general to review the attorney general's own actions?

DURBIN: Well, you've raised an important point. And I heard Senator Graham call for special counsel. I'm not ready to do this at this point. I'd like to know if Holder has any conflict in here beyond what we've heard when it comes to the Fox case.

But here is the bottom line: the media shield law, which I am prepared to support, and I know Senator Graham supports, still leaves an unanswered question which I have raised many times, what is a journalist today, 2013?

We know it's someone who works for Fox or A.P., but does it include a blogger? Does it include someone who's tweeting? Are these people journalists and entitled to constitutional protection?

We need to ask 21st century questions about a provision in our Constitution that was written over 200 years ago.

WALLACE: Gentlemen, let's turn to the IRS scandal. As I said, we've got a lot of ground to cover.

Senator Graham, you say that President Obama may not have directly ordered the IRS to target conservative groups, but that there was a culture of political manipulation that filtered down from the White House. Explain what you mean.

GRAHAM: Well, I think the president has basically told some of his supporters, you know, the best way to get back at somebody is to win, sort of talking about revenge. This, you know, take no prisoners attitude. There's clearly an organized effort within the IRS to target political opponents of the president. That's not deniable. How did such a culture come about? How vast was it? Who was involved?

This really does call for a special counsel. The DOJ guidelines about dealing with a journalist leaks or leaks of classified information goes back to the '70s. We need to review that. But my belief about the IRS scandal is that this culture of going after Tea Party groups that were, you know, on the president's case about Obamacare did just not accidentally happen. I think it comes from the top in terms of tone.

WALLACE: Senator Durbin, I want to pick up on this culture. Starting in 2010, a number of Democratic senators -- Democrat senators -- sent letters to the IRS asking them to investigate various groups that they said were seeking tax-exempt status, but were improperly involved in politics. Now, in October 2010, you sent a letter to the IRS in which you talked about going after groups.

But you only mentioned one specifically by name and I want to put this up from the October 2010 letter that you wrote to the IRS, "One organization whose activities appear to be inconsistent with the tax status is Crossroads GPS." That, of course, a group co-founded by Karl Rove.

Question, Senator -- why single out Crossroads when you did not mention one single liberal group, and there were a bunch that were applying for that exempt-status exactly that point, with the name "progress" in their names?

DURBIN: I can just tell you flat out why I did it, because that Crossroads organization was boasting about the money they were raising as a 501(c)(4).

Let's get back to the basics. Citizens United really unleashed hundreds, if not thousands, of organizations seeking tax-exempt statuses to play in political campaigns. The law we wrote as Congress said that they had to exclusively be engaged in social welfare and not politics and campaigning.

And so, here is the IRS trying to decide whether or not these organizations really comply with the law. Crossroads was exhibit A. They were boastful about how much the money they were going to raise and beat Democrats.

WALLACE: Senator Durbin, just briefly, why not, because we're now in the mess that we are in because of political targeting, why not send a letter that says, go after any group of any political persuasion? Why not refrain from mentioning a conservative group and never mentioned any liberal groups?

DURBIN: Well, I explained that once, Chris. But, you know, Karl Rove was making -- he's boasting, saying he's going to raise so much money, millions of dollars. And I knew that if they went into investigate this group, every other group would be put on notice.

I've also said from the beginning, Chris, there's no basis for targeting within the IRS, what we basically need to say is all groups need to have the law applied to them equally. And in this situation, Karl Rove was front and center and proud of it. And that's why I mentioned his organization.

WALLACE: All right. Let's talk about the president's big speech this week, in which he said that we are entering a new phase in the war on terror. Take a look at the president's comments.


OBAMA: Beyond Afghanistan, we must define our effort not as a boundless global war on terror, but rather as a series of persistent targeted efforts to dismantle specific networks of violent extremists that threaten America.


WALLACE: Senator Durbin, the president said that the wars must end. But the fact is, the Cold War lasted for 40 years. Isn't there a danger of declaring an end to this war too soon?

DURBIN: You know, James Madison was quoted by the president and he said, if you want to preserve freedom, it's difficult to do if you have if you have a continuous war. What the president is saying to us --


WALLACE: -- would you have said that during the Cold War, sir?

DURBIN: Well, I can tell you that we had to stop and think many times during the Cold War -- can I go back to the McCarthy era and talk about the witch hunts for those how were thought to be communist?

You just find in a war-like atmosphere, does she end up compromising basic some values and basic freedoms and liberties. That's what the president reminded us.

Now, I'm not going to take lightly the terrorism threat against the United States. But if we constantly thinking of this in the context of war, we stand at risk of doing things which compromise our values and freedoms.

Senator what is your practical worry, about the president saying that we are in a new phase and in some sense laying out an exit strategy for the global war on terror?

GRAHAM: At a time we need resolved the most, we are sounding retreat. Our enemies are emboldened all over the planet. Al Qaeda in Iraq is coming back with vengeance, in Libya together. Our friends are uncertain. Syria is falling apart. We are talking about helping the rebels but doing nothing about it. Iran is marching toward a nuclear weapon.

The challenge of our time is to keep weapons of mass destruction out of the hands of radical Islamists and we are failing in my view. Syria is about to fall apart. The chemical weapons there are enough to kill thousands if not millions of Americans can be compromised. Israel is very threatened about what's happening in Syria. Iran is marching toward a nuclear weapon. And we show this lack of resolve, talking about that war being over. What do you think Iranians are thinking?

At the end of the day, this is the most tone deaf president I've ever -- could imagine and making such a speech at a time when our homeland is trying to be -- attacked literally every day. Changing the standards of when you can go after somebody with a drone, it has to be a continuing imminent threat to the American people with no chance of civilian casualties and virtually no chance of civilian casualties.

I think we're diminishing our national security infrastructure. Sequestration is dismantling the military at a time we need it most. I've never seen -- I've never been more worried about our national security than I am right now. And the speech did not help.

WALLACE: Gentlemen, we've got about a minute left. I'm going to ask you to play well with others as they say in kindergarten and share the time equally. The president and Defense Secretary Hagel both this week went to service academies, Annapolis and West Point, and spoke talked about the really serious problem of sexual assault inside the military. And a Pentagon study that just out estimates that 26,000 members of the armed forces faced sexual assault last year -- 26,000 members, specifically.

Each of you 30 seconds. Start with you, Senator Durbin, what can and should Congress do to try to get a handle on it and stop this problem?   DURBIN: Well, there are several things we need to do. But I want to salute the women of the Senate, both Democrats and Republicans, who are stepping up in this issue in a determined effort to stop what is truly a scourge on the military.

We need to make certain that those who are victims step forward, knowing they will be protected and have a chance to have their day in court, a court that they can trust.

We need to make a new culture when it comes to the command structure within the military, so that this is unacceptable, intolerable, and those who were engaged in it will pay a price.

I think we understand, the future of the military is a military with both men and women in leadership.

WALLACE: Senator Graham?

GRAHAM: I want to salute the women who served and are putting with way too much crap. This needs to end.

When a victim comes forward, they should have an advocate, (INAUDIBLE) the military justice system, and commanders who allow this to continue to flourish, quite frankly, should be fired. And the president spoke well of this problem. It's a disgrace to the United States military and the women in our military are needed now more than ever and they are putting up with way too much and it needs to end.

WALLACE: Senator Graham, Senator Durbin, we want to thank you both for coming in and joining us on this Memorial Day weekend. Thank you, gentlemen.

DURBIN: Thank you.

GRAHAM: Thank you.

WALLACE: Up next, a rare interview with a man who some call America's veteran, former Senator Bob Dole.


WALLACE: Was World War II the defining event in your life?

FORMER SEN. BOB DOLE, R-KAN.: No doubt about it. It has changed my life.




DOLE: I always thought the differences were a healthy thing and that's why we're also healthy, because we have a lot of differences in the chamber. I have never seen a healthier group in my life.



WALLACE: That was Bob Dole in 1996, when he was master of the Senate and the favorite guest on Sunday talk shows. He's been out of office now for 17 years but when we sat down with him last week for a rare interview, we found some things have not changed. He is as perceptive and as bitingly funny as ever.


DOLE: We will send the president, bill after bill, returning power and programs to the states to the people.

WALLACE (voice-over): Bob Dole was a man in full in the U.S. Congress. From 1961 to 1996, he represented Kansas on Capitol Hill, but he served the nation. He helped to save Social Security, expand food stamps and passed the American's with Disabilities Act.

DOLE: There was once a time I doubted the future. But I have learned, as many of you have learned, that obstacles can be overcome.

WALLACE: That was his life's call. A strapping young man, from Russell, Kansas, he enlisted to fight in World War II when he was just 19. Grievously wounded in Italy, he spent three years in the hospital and came out without a kidney or a functioning right arm.

Bob Dole today continues to be a portrait of courage, he is wheel chair-bound and losing his sight. But there is no self pity. Not a bit.

You turn 90 in July. And my father used to say, growing old isn't for sissies, is it?

DOLE: No, it's not for sissies, but there are a lot of benefits. You think about your past and what you have been able to accomplish, if anything.

WALLACE: When you see what is happening in Washington today, the chronic failure to be able to solve our problems --

DOLE: Yes.

WALLACE: -- how frustrating is it for a legislator like you?

DOLE: It seems to be almost unreal that we can't get together on a budget or legislation. I mean, we weren't perfect by a long shot, but at least we got our work done.

WALLACE: So what's the problem? Why can't the president and Congress, why can't Republicans and Democrats get together and make deals?

DOLE: I'm not a critic of the president, but I think one mistake he's made was not getting together more with Congress earlier on, in his first administration. There's nothing like knowing the person you're talking to on the telephone if you've had an opportunity to sit down with that person and visit, not about anything, but just visit.

I was on a Social Security commission.

WALLACE: Let me ask you about that.

You were on the Greenspan Commission in the '80s. And you made a deal. You said nobody got everything, everyone gave something.

DOLE: That's the way it has to work.

WALLACE: But it doesn't work that way anymore.

DOLE: I know, but it's going to have to work or the country is going to suffer. And the American people, I think, are partly at fault. You take a survey and they say cut spending, 83 percent, maybe, or whatever. But if you cut something they have an interest in, they're over you like a wet blanket.

They surely don't want to cut Medicare or Social Security --

WALLACE: They want to cut somebody else's program?

DOLE: Yes. If you leave me -- exempt me, I'm -- I'm all for you.

WALLACE: Is the Senate broken?

DOLE: Well, it's bent really badly. As Howard Baker said, running the Senate is like herding cats. But it takes leadership. Somebody has to stand up and say, we're going to do this.

And I used to -- we'd get the group together responsible for that area and we'd work together and then I'd get up and leave. And I said, call me when you've reached an agreement.

And most of the time it worked, because they knew that I was willing to take the step with them.

WALLACE: You'd take the political heat with them?

DOLE: Yes, I'd take -- the leader takes the heat. I mean there's a penalty for leadership and one is you take a lot of heat.

WALLACE: In your first two years as a senator -- there were seven motions filed, cloture motions to end debate. In the last two years, there were 115 cloture motions.

Is the filibuster being abused wherever it now takes 60 votes to pass anything?

DOLE: No doubt about it. There are some cases we can probably justify it, but not many.

WALLACE: What do you think of your party, of the Republicans, today?   DOLE: I think they ought to put a sign on the national committee doors that says closed for repairs until New Year's Day next year and spend that time going over ideas and positive agendas.

WALLACE: You describe the GOP of your generation as Eisenhower Republicans, moderate Republicans.

Could people like Bob Dole, even Ronald Reagan, could you make it in today's Republican Party?

DOLE: I doubt it. And I -- Reagan wouldn't have made it. Certainly Nixon couldn't have made it, because he had ideas and, we might have made it, but I doubt it. I mean --

WALLACE: Too moderate? Too willing to compromise?

DOLE: I just consider myself a Republican, none of this hyphenated stuff. I was a mainstream conservative Republican, and most people are in that category.

WALLACE (voice-over): I asked Dole for a quick reaction to some of the people and events he was involved in over the years. Including his 1988 contest with George H.W. Bush for the Republican presidential nomination and his battle with Newt Gingrich in the '90s when they led the House and Senate.

(on camera): What do you think of Barack Obama?

DOLE: He's a great golfer.


DOLE: Very articulate.

WALLACE: As a president?

DOLE: I think, as a president, he lacks communication skills with his own party, let alone the Republican Party. And he's on the road too much.

WALLACE: Richard Nixon.

DOLE: Brilliant, criminal. He could have been a great president. He just threw it away.

WALLACE: As long as we're talking about controversies, when you were running for president in 1988 and you told Bush 41 --


WALLACE: You know what I'm going to say.

DOLE: That I was lying about my record.

WALLACE: Exactly.


WALLACE: Yes, he said you'd flip-flopped on taxes, I think.

DOLE: Yes. I guess the point is, I made a -- I made a mistake. And I knew I had made a mistake.

WALLACE: New Gingrich.

DOLE: Newt is a brilliant in many respects. He's the kind of a guy that can lead the revolution, but he can't lead after he succeeds. It was always what he did, what Newt did.

And I was a tax collector for the welfare state. Well, I don't have any quarrel with him now.

WALLACE: But you haven't forgotten either.

DOLE: I haven't forgotten.


DOLE: And I'm glad he wasn't our nominee.

WALLACE: One last person, the guy who beat you in 1996, Bill Clinton.

DOLE: He's a good guy. I remember getting a handwritten seven- page letter from Nixon telling me all about the race. And the last paragraph was: if the economy is good, you can't beat Clinton. That's probably not the only reason I didn't beat Clinton, but it was a factor.

WALLACE: Was World War II the defining event in your life?

DOLE: Well, no doubt about it. It was a -- it changed -- it changed my life.

WALLACE: When you think back to that terrible injury, you were 21 years old. It put you in the hospital for three years.

What do you think about that now, that experience?

DOLE: I think I learned a lot about patience, some things take a long time and you've got to be patient. And I like to get things done yesterday. But I learned in the hospital it's not possible.

WALLACE: Do you think you became Bob Dole in spite of your injury, or, in a funny way, because of our injury, because it made you the man who you were?

DOLE: I think the second --

WALLACE: Because of it?

DOLE: -- description.   I've never tried to use my disability, but I can't hide it. You know, I've gone through the bitter stage where you kind of feel sorry for yourself. But then you look around and find somebody who's in real trouble and it changes your perspective about who's disabled and who's not.

WALLACE: You still go out to greet veterans of World War II when they come to D.C. on these honor flights. How come?

DOLE: The veterans really like to see me. I don't know -- for what reason. But I'm, in their eyes, I've sort of become America's veteran. And I think I've met groups from different states 161 times.


DOLE: And I'll be there this Saturday. I met a retired general who was in a wheelchair. He wanted to get a picture. But he said I don't want to get a picture in this wheelchair, I want to stand up.

And with a little help, he stood up and very proud. It made you -- it made me feel good.

WALLACE: The greatest generation.

DOLE: These guys don't give up.

WALLACE: Finally, how would you like to be remembered? What do you want them to put on your tombstone?

DOLE: Veteran. Who gave his most for his country. Which I think is true. And I tried to make the most of it. And I think I did.

WALLACE: Let me just speak for everyone when I say ...

DOLE: Thank you.

WALLACE: Thank you for your service, sir.

DOLE: Thank you.

WALLACE: Thank you for your service.


WALLACE: What a great American.

Bob Dole still goes to the office each day to push a number of causes, but always at the top of his list, anything to remember and help our nation's veterans.

Up next a challenge to freedom of the press as the president asks Attorney General Holder to review Holder's own actions in targeting reporters.



HOLDER: With regard to potential prosecution of the press for the disclosure of material, that is not something that I have never been involved in or heard of or would think would be a wise policy.


WALLACE: Attorney General Eric Holder telling Congress he opposes the potential prosecution of reporters for national security leaks, which seems to directly contradict his actions in the case of Fox News reporter James Rosen. And it's time now for our Sunday group. Brit Hume, Fox News senior political analyst. Charles Lane of The Washington Post, Nina Easton from Fortune magazine and Fox News political analyst Juan Williams. Well, this all started back in 2009, when James Rosen, our colleague here at Fox News reported a North Korea's nuclear ambitions, so to find out how leaked the story, the Justice Department sought a search warrant, and their affidavit they said this, I'm going to put it up on the screen again.

"There's probable cause to believe the reporter has committed a violation of the Espionage Act either as an aider, abettor and/or co- conspirator."

Brit, how do you reconcile Holder's testimony to Congress with the fact that he signed off on that affidavit naming Rosen as a potential violator and as a possible co-conspirator and how do you reconcile the fact that the president is asking Holder to review Holder's actions?

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: Chris, neither of these things can be reconciled. That affidavit plainly asserts for the purposes of obtaining a search warrant that James Rosen is a suspected criminal. That is to say, a suspected to be involved in the conspiracy illegally to disclose classified information. That is treating him for that purpose as a criminal. That does not square with what Holder told Congress. And not only about the standards he would use, but also about his own involvement. It's going to be argued by a lot of people he was lying. At a minimum, I would say, it's another example of his being untrustworthy and I would say also bumbling. And it can't be reconciled, and the president's decision to have him review it, because it encompasses the Rosen case, obviously, means that he is in effect making inquiry into himself, which is a howling conflict of interest, not merely a potential one, but a clear one. So I don't even know how anybody could take him seriously for five minutes.

WALLACE: The big development -- just to make it clear to folks -- the big development in the Rosen case is not that the Justice Department sought his e-mails, his phone records, they tracked him in the State Department. That's troubling, but that's happened before. The big development is that for the first time they raised the serious possibility that they were going to prosecute him as a criminal. Let me just say, Chuck, that in today's Washington Post your former editor, Len Downie, wrote an op-ed piece, and I want to put some of that up on the screen. He wrote this: "The Obama administration's steadily escalating war on leaks, the most militant I have seen since the Nixon administration has disregarded the First Amendment, disregarded the First Amendment and intimidated a growing number of government sources of information -- most of which would not be classified. That is vital for journalists to hold leaders accountable." And here's Len Downie who was the editor of The Washington Post, right (ph), 17 years, very concerned about this.

CHARLES LANE, THE WASHINGTON POST: And famously, a nonpartisan figure in journalism, he didn't even vote in elections. And another point in that same article, he compares the Obama administration unfavorably to the Bush administration in this respect. So, I think the Obama administration be wise to pay heed to some of those words particularly coming from the authoritative source they come from. I would add that this whole Espionage Act has to be looked at. There's a role for Congress in this. We can talk about shield laws all we want. But the Espionage Act, which is what they are using in these prosecutions is a highly elastic, over broad, easy to abuse statute dating from sort of hysteria of World War I and I think Congress needs to step up and talk about maybe repealing or substantially amending that law.

WALLACE: You talked about big figures, respected figures speaking out about this. But chairman and CEO of Fox News Roger Ailes also spoke out about this. Here's what he wrote, we will not allow a climate of press intimidation unseen since the McCarthy era to frighten any of us away from the truth. The combination of the Rosen case and also the AP case where the Justice Department sought and got the records to 20 phone lines being used by AP reporters, this has united and alarmed media executives, media titans quite frankly from across the spectrum.

NINA EASTON, FORTUNE MAGAZINE: It added up to something like 100 AP reporters' records being part of this. And, you know, subpoenas against journalists happens, it's supposed to be rare. And when you go in looking for information under this Espionage Act, it's supposed to be surgical and you're supposed to give advanced notice, and in both of these cases that was not the case. This is an administration, I think, both -- the president as well is trying have it both ways to say, we are an open, transparent administration. We don't want to -- even this week, saying we don't want to chill journalists, when in fact the actions behind the scenes and what we saw -- in Len Downie saying, is a very serious crack down on leaks that is having a chilling effect on reporters and news gathering operations.

WALLACE: I think it's fair to say, Juan Williams, (inaudible) critic of the president on this panel, you're most often the person who at least defends his actions. Can you defend his decision to ask Eric Holder to investigate and review Eric Holder's actions?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, I think the first thing to say is that Republicans have been hammering Eric Holder and I think that hammer is Eric Holder's language, his own, to go after the leaks. That they have wanted him to pursue leaks that had to do with how bin Laden was killed to secret prisons to the attack on the cyber network in Iran that the U.S. had launched. Why is all this information flowing from the Obama White House? Is Obama trying to glamorize himself? All that. That came from Republicans, and it has been something that the Bush administration started and it has been continued with a vengeance, so everyone is surprised by this administration. In the direct response to your question, Chris, Eric Holder did not conduct the probe that led people to somehow come to the madhouse conclusion that James Rosen is somehow a co-conspirator. Is somehow ...

WALLACE: But wait a minute, was that not in the FBI affidavit seeking--

WILLIAMS: He signed the affidavit as Attorney General of the United States, he did not conduct the probe. So the question is, how can you go and ...


WILLIAMS: You would come to the conclusion that a working reporter with a long-standing, excellent career in Washington is somehow now involved in espionage. That is the question.

WALLACE: Well, he is ...

HUME: The problem is, it went to Holder and he OK'd it.

WILLIAMS: He OK'd the work of his investigators, and so now as the attorney general--

HUME: You are saying he is not ultimately responsible as the head man of the Justice Department ...

WILLIAMS: Well, that's why ....

HUME: ... who personally signed off on this?


WILLIAMS: That's -- he signed off on -- the question ...

HUME: He signed off...

WILLIAMS: ... to go back and look at the work of the investigators ...

HUME: I understand that, but how he -- if he signed off on it, how can he investigate it?

WILLIAMS: Because now is an opportunity, and he is the exact right person as attorney general of the United States to see what prosecutors did and how they came to this conclusion.

HUME: Well, he is ...

WILLIAMS: We've seen this ...


HUME: Wasn't he supposed to see all of that before he signed off on the affidavit?

WILLIAMS: You cannot see everything. I mean you -- what he did was to say, these are good people, he trusts his people. Now it's time for someone including ...

HUME: I don't --


HUME: I don't know whether he said anything like that or not.

WILLIAMS: I understand--

HUME: What you do know is, and what we all know is that when that affidavit came to him, rife with assertions that this reporter doing his job, was acting in a criminal way, he OK'd it.

WILLIAMS: No, what we know is in the A.P case, for example, he recused himself ...


WALLACE: We're running out of time.

WILLIAMS: Let me finish. He recused himself in that case because he had -- was a potential leaker.

HUME: I understand that. We are not talking about that case.

WILLIAMS: In this case, in the Rosen case, he had nothing to do with it. All he was doing was signing an affidavit sent to him by his underlings.

WALLACE: All right, we have to take a break here. I'm going to give an early tease and say Panel Plus, we will continue this discussion, because we obviously are not done with it. When we come back, the president redefines the battlefield and tactics in the war on terror.



UNIDENTIFIED MALE: We are going to be the brand that comes into the business of barbecue.

WALLACE: The walls are filled with memorabilia, uniforms, posters and patches.

UNIDENTIFIED MALE: At the same time, too, for what we think is right, which made our country great, which (inaudible) our heroes.

WALLACE: Stay tuned, we will be right back.




OBAMA: America is at a crossroads. We must define the nature and scope of this struggle or else it will define us.


WALLACE: President Obama laying out the beginning of an exit strategy from the global war on terror this country has been fighting since 9/11, and we are back now with the panel, well, the president said that the scale of the threat we face now is more like what we saw before 9/11 than what we saw in the years immediately thereafter. Brit, is that sensible thinking or dangerous?

HUME: Well, it's interesting, what I'd say about is that I hope this does not return us to the mindset toward terrorism that existed pre-9/11, which was that it was -- it was a law enforcement matter principally and that we should pursue it in that way and we should not treat it as a worldwide blend of military intelligence and in some cases police work. What I think we have to say about the war on terror is that by and large, fighting it the way we fought it for all this time has been fairly effective. The episodes that we have had however, illustrate that it's not over. He seemed very close to declaring it over. And, you know, it's kind of rule one of the wars that if one side can't cause it to be over, it's not by declaring it over if the other side is still waging war. It seems to me in this case the other side is still waging war.

WALLACE: What the president said specifically is that we must define our effort not as a boundless war on terror, but as defined efforts to target specific groups. It's interesting rhetoric. And it's an interesting sort of concept, what practical effect do you think it has?

LANE: I'm still wondering that very thing, Chris, I wondered it when he said it. I'm wondering it today because that could be a global mission. These networks pop up in, say, Mali, they pop in Somali and Yemen, Pakistan, all over the place, in fact, it seems more of a global effort than the original thing, which was focused on Afghanistan. I think it's worth pointing out, that this is happening not too long after Rand Paul stood up in the Senate and did his thing about drones. Tapped into a lot of sort of unfocused, but real concern in the public that we kind of don't know what the president is up to with drones, that's a sort of scary thing. And he dials back drones in his speech. And I think he is responding in some sense to the same thing that Rand Paul had to do, which is a sort of a (inaudible) sense in the public, this is all kind of going on too far and with too little restraint. The problem, of course, is just what Brit said, the other side has a say in this too. It takes two sides to have a war. And so, although, I think this is both a rational impulse of the president and likely be a popular one. It's not one that ultimately he has open -- the situation that he has full control of.

WALLACE: Nina, is it time for new guidelines on drones, on the use of force? He talks about repealing eventually the authorization for the use of force that was passed by Congress after the 9/11 on interrogation in Guantanamo, is it time for new guidelines or is it still too soon?

EASTON: I think it's wise to bring in Congress as a buy-in to a legal framework, both on drones and on Guantanamo. And I think it's a mistake that the Bush administration made not bringing Congress in s a buy on early enough. But I have to say, listening to that speech, my great theory was this -- was his mission accomplished moment. Where this we could look back and that this would be just as bad as George Bush standing in front of that sign. The mission hasn't been accomplished. Because when you looked at the speech, he led with, al Qaeda is on a path to decline. He said no large scale terrorists have attacked the -- it happened on American soil, just weeks after the Boston marathon attacks happened. In fact, he linked that attack with -- attack -- pre-911 attacks, like the Oklahoma City bombing.

EASTON: I would be more -- I think that the real argument to be made is what the U.K Prime Minister, David Cameron, the case he made after the Algerian attack, where he said this is a long struggle against murderers, terrorists who are filled by a poisonous ideology. And I think that's still the case, and whatever the president said in terms of reframing the entire war and where we are going, I think that's still the case.


WILLIAMS: I think Nina is right. I thin it's still the case. It is also the case that this president has wound down two large wars, Afghanistan and Iraq that were born of 9/11 and what we have seen on the home front is we have seen expansion in terms of incursions against civil liberties, we have seen the expansion of this tremendous, you know, that's almost a black hole of organizations here in Washington in various departments and hardening the homeland. And it goes on and on. And sometimes we don't even know where the money goes into these various agencies. So, I think it's appropriate that the president at this point would say, we have to look again, in exactly how we are fighting this war, but not to end this war. And with regard to drones, I think this is exactly right. That he needs to have some independent review. It could be the courts or whatever, and it has to have guidelines not to take away his independent authority as commander-in-chief to use drones when there's an imminent threat, but I think everybody wants to be assured that there are some limits and that the next president, if that's an outlaw, won't be abusing that trust, especially when it comes not to killing people at home. There's no example of ever using drones against Americans here in the homeland, but even killing Americans or anyone overseas.

WALLACE: I want to pick up on that point, Brit. Because it's been suggested that that is exactly what the president wants to do. That he wants to leave a different national security structure. A different rules of the road, different limits for the next president than what he inherited when he came in 2008.

HUME: Not only what he inherited, but what he made generous use of. For the purposes of fighting this conflict. There's an odd quality, Chris, to this whole thing and it is almost like he is saying with regard to the drone policy, we need something to stop me before I kill again. You see that in his support -- on unrelated matter, of the shield law for journalists. (inaudible). He carried out these -- these over steps in pursuing journalists who were doing their job and now he said, we need a shield law, that's to say we need a law to protect them from us. And I think it's peculiar and I'm not sure, you know -- and I agree with Chuck, though, I think it's as interesting as it sounds, it's all a little nebulous.

WALLACE: But less in 30 seconds left, Chuck, I can tell you from talking to top people in the White House, that this president is concerned and maybe it's because he has used them to such an extent at the idea that any person, even him, even the president can order the assassination, which is that's what it is, of a specific individual, even an American without guidelines, without outside review.

LANE: He needs much more buy in from Congress, as Nina said. This will work only if it's accompanied with a strong effort to get Congress to legislate on these issues in a way that everyone can live with.

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

Up next our Power Players of the Week. A couple of businessmen find an intriguing new way to honor those who serve our nation.


WALLACE: Memorial Day is a time for honoring the men and women who died while serving in the U.S. military. But we found two men who have come up with their own way to recognize all Americans who have been in uniform and they are our Power Players of the Week.


BILL KRAUS, OWNER, MISSION BBQ We want to be the first responders for the first responders here in our own communities.

WALLACE: Phil Kraus and Steve Newton are the co-owners of Mission BBQ, restaurants in Maryland that honor and serve the military, police and firefighters. They donate some of their profits to first responder groups. Folks in uniform eat free on 9/11 and two other days and they play the National Anthem at noon every day.



KRAUS: Who would have ever thought you would hear a business owner saying, the best two minutes of the day are when the registers are not ringing as much as how you are feeling?

WALLACE: The walls are filled with memorabilia, uniforms, posters and patches.

STEVE NEWTON, OWNER, MISSION BBQ: We joke that this is the safest dining room in Anne Arundel County with the police, the military, and the fire that are here dining at lunch or dinner.

WALLACE (on camera): When the first responders come in to here, what is the buzz?

NEWTON: I think it's a welcome home for them almost. It's almost like this is their clubhouse.

WALLACE (voice over): Bill and Steve started the business a year and a half ago.

KRAUS: It runs deep for me, oldest son just finished up four and half years Marine Corps, two tours of duty. Came home safe. Our youngest son is inbound (ph) in the Naval Academy this year, so we (inaudible) as a military family.

NEWTON: It's incredibly important to me to tip my hat every day to those folks that have provided those freedoms and, you know, I just feel lucky and that we have to give back.



WALLACE: They have given back more than $30,000 to the Wounded Warrior Project. And thousands more to first responder groups. But Mission is also a business. Phil was a vice president of marketing for Under Armor.

KRAUS: We are going to be the brand that comes into the businesses of barbecue and we brand around this American cuisine, but at the same time, too, for what we think is right, which made our country great, which are our heroes.

WALLACE: Steve, who was an executive at Outback, traveled the country, checking out how different regions prepare barbecue.

NEWTON: I think I (inaudible) 170 pounds when I first started here. But ...

WALLACE (on camera): And you added (ph) ...

KRAUS: 171.


KRAUS: With the one foot on the scales.


WALLACE (voice over): No question, Bill and Steve want to do well. But they also think they can do something good.

KRAUS: As VFWs close, as American Legion posts close. Where is that gathering community going to gather? The beauty of Mission BBQ, not only can the veteran community come in here and tell old war stories, it's the fact, too, that the communities that they leave with then can also come and be and around them and just very humbly thank them for what they have done for all of us.


WALLACE: Phil and Steve are opening it's three more Mission BBQ's this year. And if their idea catches on, they would love to see it go national.

And that's it for today. Have a special Memorial Day and a great week, and we will see you next "Fox News Sunday."

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