This is a rush transcript from "On the Record," October 8, 2013. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: Right now, there is new information tonight about those families not receiving death benefits from the government. A private organization now stepping in, offering to pay for them to get to Dover Air Force Base to meet their loved ones' remains. But what a slap in the face to our troops and their families that it has had to come to this.
Former Secretary Donald Rumsfeld joins us.
Isn't that ugly?
DONALD RUMSFELD, FORMER DEFENSE SECRETARY: It is. It's inexcusable. I just can't imagine a decision-making process that would produce those outcomes. It's so unfair to the families, to the veterans, to the soldiers.
VAN SUSTEREN: When we heard about it today, we started putting it like on Greta Wire and started making as much noise as we could, and one organization has stepped up to pay for the flights. But imagine if the government had simply notified the American people. If the government -- if our leaders can't get it together to run the government, at least they would have given the rest of us an opportunity not just like put a gun to our heads because it's tomorrow.
RUMSFELD: There would be an outpouring.
VAN SUSTEREN: Yeah, there would have been an outpouring of money because people do give a damn about this.
RUMSFELD: They sure do.
VAN SUSTEREN: But the other thing, too, is that the $100,000 death gratuity -- I hate that word -- that they pay the families, that's being delayed, too.
RUMSFELD: I'm not surprised. They're clearly picking and choosing what they want to do. And making decisions that are -- I suppose fit their political philosophy.
VAN SUSTEREN: But isn't -- I mean, I guess if I were secretary of defense, I'd be pounding on the door of the White House saying you go ahead and cut what you want but not my people. Not my soldiers who have given up their lives and their families.
RUMSFELD: And think of the World War II veterans who were denied the World War II Memorial. I think that -- that's an example of picking and choosing.
VAN SUSTEREN: We went down there a Friday and I boarded the bus with a bunch of World War II vets and I actually had quite a lot of fun with them. But they had an interesting attitude. They were laughing at it. They were laughing that they thought that our federal government could erect a two-foot fence -
RUMSFELD: And it hasn't worked.
VAN SUSTEREN: Yeah, after they scaled the cliffs at Normandy and fought in the Pacific. They made fun of the government.
RUMSFELD: You've named two or three things that are taking place in Washington. But in the broader sense, what's really taking place is that the lack of leadership is sending a signal around the world that the United States is in decline, that that we're withdrawing, that we as a country are not going to behave in a rational manner. We're managing our economy on a European model, which is a failed model. And that signal goes out around the world. We're damaging our defense budget in ways that suggest to the rest of the world that the United States will not be a factor that we've been throughout my adult life time. It is a sad thing. You can lose a great deal pretty fast and it takes years and years and years to build back up the kind of confidence and the determent effect and the respect that the United States has had for so many years.
VAN SUSTEREN: You have a unique situation. You've been in Congress, you've worked in the White House, and you've been secretary of defense. What's the problem? What is going on?
RUMSFELD: Well, you know, a businessman, a governor, a leader would sit down in the White House with the senior people, call them in, and come to a policy decision and develop an approach, a direction, a leadership position. And then you'd sit down, as Ronald Reagan did and other presidents, Gerald Ford. And the Constitution divides the marbles. They give some to the judiciary, some to the legislative branch and some to the executive. This is nothing new. It's always been thus. But a leader in the White House -- and the leader is in the House. You can't lead from the House or lead from the Senate. You have to lead from the White House. And it takes a person who understands leadership and is willing to establish priorities and make a commitment and pursue it. And this president, unfortunately, I don't think ever had any real experience as a leader. And his behavior is such -- I mean, imagine our country was downgraded in our ratings, financial ratings, under his presidency. That is an enormous slap in the face of the United States of America.
VAN SUSTEREN: We may get it downgraded again. We have this battle over the debt ceiling coming up about the 17th of October. And we don't know what's going to happen. And we want to pay our bills. But I suspect there is some point beyond which it can't just keep moving the debt ceiling up when you can't even make your interest payment.
RUMSFELD: Well, you simply cannot continue to spend the money we're spending and have the racking-up additional debts and deficits in ways that tell the American people that it's OK to do that. You can't do that. There is a limit. And unless the president's willing to face the fact that there is a limit, that it's not in-exhaustible -- the damage is already being done. The damage is the signal that's being September to the world that the United States is unwilling to behave in a responsible manner. And the leadership doesn't exist to do that. It's an indictment, it seems to me, of the President of the United States and the lack of leadership.
VAN SUSTEREN: Let me ask you another question. It has to do with this whole overseas thing we mentioned. Take the war in Afghanistan. Does this -- does this have any impact, except for the money actually flowing to sort of finance the war, just the big picture, the reputation of the United States, does that have any impact on the war on the ground?
RUMSFELD: Oh, sure. Yeah. If people conclude that the president says to them we're going to leave and then the Department of State and the White House fail to get a status of forces agreement, fail to get an arrangement with the Afghan government, as to how we're going to do what it is we're going to do, the signal is to the other side, wait them out, wait them out. I think -- I personally was not a big enthusiast of the surge that President Obama, where he added so many additional forces into the country. But I think the absence of leadership, the failure of decide diplomacy that's taking place in that country, we have behaved, in my view, terribly toward Karzai and the Karzai government.
VAN SUSTEREN: Mr. Secretary, if you can hold on one second, there is breaking news. Let's go to Shepard Smith at the FOX News desk -- Shep?
SHEPARD SMITH, FOX ANCHOR: Greta, thanks very much.
FOX News has confirmed here at the news desk that President Obama will nominate the Fed vice chairman, Janet Yellen, to replace Fed chairman, Ben Bernanke, at the central bank. We are told this will happen tomorrow. Janet Yellen would become the first woman to lead the Fed. She would take over, of course, at a pivotal time, but would likely continue steering Fed policy in the same direction as Ben Bernanke.
So how about obstacles? Certainly, her confirmation hearings could be quite an obstacle. The bigger potential hurdle would be Senate confirmation hearings. Her positions have been much more toward free money, if you will, than Ben Bernanke's have been, and certainly she is in this position because, among other things, Larry Summers dropped out of the race for this job when there was a lot of pressure on President Obama to nominate a woman.
So there we go. Janet Yellen to be nominated by the president tomorrow to replace Ben Bernanke as chairman of the central bank -- Greta?
VAN SUSTEREN: Shep, thank you.
And, of course, thank you to Mr. Secretary, Secretary Rumsfeld.
Nice to see you, sir.
RUMSFELD: Thank you, Greta.