Dan Pfeiffer previews State of the Union, 2014 agenda; Sen. Mitch McConnell on GOP efforts to retake the Senate

Senior White House adviser on 'Fox News Sunday'


This is a rush transcript from "Fox News Sunday," January 26, 2014. This copy may not be in its final form and may be updated.


President Obama gives his State of the Union Address Tuesday, hoping to jump-start his second term.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I want to work with Congress, whenever and wherever I can. But the one thing I'm emphasizing to all my cabinet members is we're not going to wait.

WALLACE: We'll discuss the president's agenda, ObamaCare and more with White House senior adviser Dan Pfeiffer.

Then, Republicans set their sights on retaking the Senate this November, hoping to overcome the in-fighting that plagued their party.

UNIDENTIFIED MALE: We don't need more class warfare and we don't need more interference from Washington.

WALLACE: We'll talk about the GOP's plan for 2014 with a top Republican in the Senate, Mitch McConnell. It's a "Fox News Sunday" exclusive.

Plus, growing signs Hillary Clinton plans to run for president. Our Sunday panel handicaps her chances.

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


WALLACE: And hello again from Fox News in Washington.

President Obama says 2014 must be a year of action for the country. But that follows a year when his agenda went nowhere on Capitol Hill. Here to preview Tuesday's State of the Union Address is White House senior adviser Dan Pfeiffer.

Welcome back to "Fox News Sunday."

PFEIFFER: Thanks for having me, Chris.

WALLACE: All right. We hear that Tuesday night for the third straight year, the president's main theme is going to be income inequality and building ladders of opportunity.

Here's what he had to say about that last year.


OBAMA: It is our generation's task then to reignite the true engine of America's economic growth -- a rising, thriving middle class.


WALLACE: What new or different ideas will the president offer this year to achieve?

PFEIFFER: Well, I think what you're going to hear from the president on Tuesday night is a series of concrete, practical, specific proposals on how we restore opportunity, through a wide set of means -- job training, education, manufacturing, energy. These will be some legislative proposals, but also a number of actions he can take on his own.

WALLACE: All right. I want to pick up on that, because as we say, this is a familiar theme for the president. He talked about it a lot the last two years. Let's look at the Obama record, what he proposed and what happened to those ideas last year.

The president proposed raising the minimum wage to $9 an hour -- no progress. Creating a network of 15 manufacturing hubs -- no progress. Universal preschool -- nothing. Major tax reform -- nothing.

Tell us about this memo that is in the papers today that you wrote, the president has apparently accepted to basically work around Congress more and to do more through executive action.

PFEIFFER: I actually just take a quick issue with what you said there. You say nothing happened on manufacturing hubs. It is true Congress did not pass the proposal we want. But we went on our own, pulled money from (ph) federal government, and have announced two, there is one running in Youngstown, the president is in North Carolina last week.

WALLACE: But the 15 that he has --


PFEIFFER: Right. And four of them were done. Two were in place and two are in the pipeline.


PFEIFFER: Universal pre-K, we don't have the big proposal, we made some progress in the budget. So, we're working where we can with Congress and acting on our own where we can. I think the way we have to think about this year is we have a divided government. The Republican Congress is not going to rubber-stamp the president's agenda. The president is not going to sign the Republican Congress' agenda.

So, we have to find areas where we can work together. We can start by passing -- extend unemployment benefits for 1.6 million Americans. Pass the farm bill, pass immigration reform, infrastructure. So, array of things we can do together. No one is going to get everything they want. But we can do that.

But also, the president will say to the country he's not going to wait. He's going to have the pen and he's going to use those to move the ball forward to create opportunity.

WALLACE: But, you know, there have been presidents before, Ronald Reagan, a number of them, who have dealt with Congresses of the different party and have been able to get things through, a lot of serious stuff through. Why can't this president?

PFEIFFER: Well, we have made progress. We've got a budget this year. This president has the legislative record that stands up to any, Affordable Care Act, Wall Street reform, array of issues that we made progress on.

Look, we're going to -- this is -- Washington is not doing as well as they should. Everyone knows that. Last year, the American people looked at Washington with the shutdown, the near default, the problems with and they were frustrated.

And so, it's incumbent upon all of us -- and the president included -- to try to rebuild that trust with the American people and make progress. And what they want to see is progress, either in Congress or from the president on his own.

WALLACE: And how much can you do? I mean, let's face it, the big things you have to get legislation. That's the way the Constitution is written. How much can you do through executive action?

PFEIFFER: You can do a lot. I think two things from 2013 that don't get enough attention. First, the president put in place a climate action plan to reduce carbon pollution taking historic steps, something he did without Congress. He -- and then, we also worked with the FCC so we have an initiative in place that is moving forward to provider wireless access to 99 percent of school districts in this country. That is significant, something to do without Congress.

WALLACE: You talk about income inequality. Some experts say the real reason that you got such income inequality is because of the weak Obama economic recovery.

Let's take a look at some of the numbers there. Since the president took office, median household income has dropped from $55,900 to $52,100. Poverty has increased by 6.7 million to a record 46.5 million. And participation in the labor force has dropped from 65.7 percent to a 36-year low of 62.8 percent.

Wouldn't a stronger, more robust economy and recovery solve a lot of these problems the president is talking about?

PFEIFFER: Well, absolutely. But I think it's important to remember this president inherited the worst economic situation through the Great Depression, a financial crisis.

WALLACE: But the recession ended four years ago.

PFEIFFER: Yes. And we have created in the last 46 months, 8 million jobs. The unemployment rate has dropped to 6.7 percent. We have -- we are producing more oil than before. We are -- American auto industry is number one in the world again.

We are making progress. There is more to do. That's what you hear the president talk about. I think it's important to remember that what we're trying to do here is restore opportunity for all Americans. Grow the economy and create jobs.

WALLACE: But you talk about restoring opportunity. Median household income is down. Labor force participation is down. Food stamps are up. Poverty rate is up.

If things are so great, how come there's (INAUDIBLE)?

PFEIFFER: I think we made tremendous progress. But there is much more work to do. The president always said that.

American businesses, American workers have doing the right thing. Washington needs to help them. And we have a series of proposal last year and additional ones this year that will -- these things have been bipartisan in the past, like raising the minimum wage, infrastructure. If Congress were to do that, we would make tremendous progress.

This can be a year of action. And we can make real progress. But we have to do it together. If Congress doesn't act, the president will.

WALLACE: One of the things that people say is a drag on the economy is ObamaCare. And I want to put up these numbers. According to a report last month, almost 400 businesses have cut workers and hours to avoid the employer mandate. And major employers like Target, Home Depot, Walgreens and Trader Joe's say they're going to drop part time workers from health insurance and direct them to the ObamaCare exchange.

Question, despite the president's promise, isn't it true that first, you had millions of people who were -- lost their policies because they were in the individual market. Now, you're going to have people that are employed, part timers or even some full timers that are going to be thrown out of their health care plans that supposedly they liked and are forced into the exchanges because of ObamaCare.

PFEIFFER: I think, I'd say, first, two things. You know, when we passed the Affordable Care Act, every Republican said it's going to be a job killer. Since it's been passed, we created eight million jobs in this country, for American business and workers.

WALLACE: Wait, wait. The plan didn't really go into effect until October.

PFEIFFER: And second, for --

WALLACE: And you also delay the employer mandate for a year.

PFEIFFER: Long before the Affordable Care Act, businesses made a decision about who they're going to -- what kind of coverage they're going to offer and who they're going to offer to. What is different now is that if your business, your employer decides to no longer offer coverage, you have guaranteed access to affordable health care. Before the Affordable Care Act, you would be out of your own. If you had a pre-existing coverage, you wouldn't have a chance of getting coverage.

WALLACE: But a lot of people are being dropped because of the Affordable Care Act. Some of these companies that were employing and giving health insurance to part-time workers are now going to drop them because of all the regulations, all the expense, and it's going to be another case of millions of people who like their plan not being able to use it.

PFEIFFER: If you go back and read the papers for the last decade, you will read stories every day of employers making the same decision. What is different now is that if your employer makes that decision, you have guaranteed access to affordable health care.

WALLACE: You're not suggesting, though, that Trader Joe's and Target and Home Depot and Walgreens who just announced they're going to throw people into the exchanges, that it has nothing to do with ObamaCare.

PFEIFFER: They can explain what their reasons are. What I'm saying is that if your employer makes decision, you have guaranteed access to affordable health care with better benefits than you had before.

WALLACE: On Friday, the Supreme Court said the Little Sisters of the Poor do not have to comply with the birth control mandate as long as they continue to pursue their legal challenge. Does the White House insist that the nuns must sign a waiver even though they say that this violates their religious beliefs?

PFEIFFER: This is a matter before the courts. The courts are going to hear the case. We believe that our rules have struck the right balance here and we'll see what the court has to say.

WALLACE: But the Little Sisters say and the court has -- feels there's enough support for it, that they have stayed the birth control mandate. They say that Little Sisters do, that even signing the certification, saying we're not going to do it but the third party, the insurance company can do it, that violates their religious beliefs.

PFEIFFER: Well, the court specifically says in the order that this should not be read as their -- to have any indication -- their view of the merits. Sol, let's see what the court has to say.

WALLACE: But you're going to continue to insist on this one. You're not backing off the insistence.

PFEIFFER: No, no, right. Exactly. There is a court -- there's a case before the court. They're going to rule. And we made our position clear and we think we struck the right balance.

WALLACE: And your position is that the Little Sisters should have to sign that certification, no change in that?



One area of possible progress this year, we talked about it is immigration reform and house Republicans, and there was a big kind of leak about it this weekend. They're currently working on a plan in which they might offer legal status to the 11 million residence, undocumented workers who are here illegally, not a path to citizenship, except perhaps for young kids, the so-called Dreamers, the one who were brought here with children, but of legal status.

Is that a compromise the president would be willing to accept?

PFEIFFER: I think what we should do is put forward the plan. The president is clear about what he wants. He's talked about it for years. He campaigned on it on 2012. He supported the Senate bill that included a path to citizenship.

We think it's progress that the Republicans are going to put something forward. We know this is not easy for them, that there is some division in the party over it. Let's see what they put forward and hopefully we can come together and make progress.

WALLACE: So you're going to give them space to work on this? This is not something -- for instance, in the State of the Union, you're not going to beat them up about?

PFEIFFER: No. I mean, the president is very consistent, that he wants to see what they put forward and try to get -- he doesn't want an issue, he wants a solution. And that's what you're going to see (ph) in the State of the Union.

WALLACE: But -- I mean you're the senior adviser to the president. You're sitting here today. You're not saying we insist there has to be a path to citizenship for those 11 million?

PFEIFFER: We've been very clear about what we want, right? The president is very clear. The American people sport the president's position. Let's let the House put the proposal forward and see what it actually says and not just what the leak says, and then we'll go from there.

WALLACE: Finally, Congress did reach an agreement, as you point out, in December, to keep the government from shutting down a bipartisan budget agreement. But the next big perils of default (ph) crisis may be over the debt limit. And Treasury Secretary Lew says that the debt limit has to be raised by late February. You go into default.

Republicans are talking about attaching something to it, maybe a banning of any kind of a bailout of the insurance companies or maybe repealing the medical device tax.

Would the president accept any policy tied to raising the debt ceiling or does it have to be absolutely clean as a whistle?

PFEIFFER: Our position on this is the same as it was in October and the same as it has been for a year, which is the American people shouldn't have to pay their partisan (ph) Congress ransom for doing their most basic function, which is paying the bills. They have passed what is essentially a debt limit free of ideological writers the last two times. They should do it again and spare the country the drama and economic damage of repeating the move no one wants to see from October.

WALLACE: So, is the president -- I mean, are you saying, speaking for the president, we'll veto it if the bill has any conditions attached, it has to be clean?

PFEIFFER: I'm saying that we're doing it the exact same way we've done this one before, which is, we were not going to pay them ransom. Nothing has changed in our position. I hope Republicans follow the lead of your next guest, Senator McConnell, who said right afterwards that they would not go down this path again.

WALLACE: Well, I'm sure he'll appreciate that endorsement.

Dan Pfeiffer, thank you so much for coming in today. And we'll be watching what the president has to say Tuesday night. Thank you, sir.

PFEIFFER: Thank you, Chris.

WALLACE: Now that we've heard the White House agenda, time to hear from the GOP. The top Republican in the Senate, Mitch McConnell, joins us here live, next.

Plus, what would you ask to minority leader? Just go to Facebook or Twitter @FoxNewsSunday, and we may use your question on the air.


WALLACE: President Obama has had a rough start to his second term but congressional Republicans are held in even lower esteem by the public.

Joining us to talk about the GOP plan for country is the Senate's top Republican, Mitch McConnell of Kentucky.

Senator, welcome back to "Fox News Sunday"."

MCCONNELL: Glad to be here, Chris.

WALLACE: You just heard the president's senior adviser Dan Pfeiffer talk about the president's agenda, what he wants to accomplish through Congress or as he says increasingly, through executive order, working around Congress. Your reaction?

MCCONNELL: Well, we're in the sixth year of the Obama economy -- more spending, more borrowing, more debt, more regulation.

As was pointed out in your first segment, median household income down $2,300 a year during this period, family poverty statistics at the highest level since the statistics have been kept. I think it's time to go in a different direction. And there are some job creating steps that he could take right now, he could approve the Keystone pipeline. He could work with us on trade agreements.

Our party is much more interested in global trade than the Democrats are. If he would convince his own members, we can do some business on trade. He ought to stop things like the war on coal in my state which have cost us 5,000 jobs during his administration.

WALLACE: What do you think about this idea well this Congress is just impossible, I'm going to do more through executive action?

MCCONNELL: You know, Ronald Reagan didn't think that and Bill Clinton didn't think that. Frequently, times of divided government are quite good times in term of achieving things for the American people.

This president, it seems to me, after the 2010 election when the American public issued a -- shall we say -- restraining order, the president has sort of hung out on the left and tried to get what he wants through the bureaucracy as opposed to moving to the political center. The kinds of things that I just outlined, Chris, were things we could do with it.

We're anxious to help him create jobs. But we're not going to go over and endorse more spending, more debt, more taxes and more regulation.

WALLACE: Let's talk about two issues directly related to the president's theme of income inequality. One of them is unemployment benefits. More than a million Americans have lost their unemployment benefits since they ran out in December. Senate Republicans are saying, one -- not unreasonably -- you have to pay for it if you're going to spend the money. You ought to find a way to pay for it. You also want to offer a bunch of amendments.

Isn't that precisely the kind of thing that makes your party look hard-hearted and uncaring?

MCCONNELL: I don't think so. I mean, you know how many Republican roll call votes we've had since last July? Four. The majority leader is using a device only occasionally used by previous majority leaders of both parties to prevent us from even offering our ideas. That's why the Senate has been so dysfunctional over the last six months and even actually prior to that.

Look, it's not inappropriate to have amendments. That's what we come to the Senate to do. To offer amendments and suggestions.

With regard to unemployment, we're open to discussing that. We do think, as you suggested in your question, that we ought not to add it to the national debt which is now as big as our economy, which makes it look a lot like a Western European country. Surely in a $3 trillion annual expenditure, we can find a place to pay for extended unemployment insurance. This is something we ought to be able to work out. WALLACE: The president also wants and I'm sure he'll call for it on Tuesday, to raise the minimum wage $10.10 an hour over three years.


WALLACE: Doesn't it make sense, isn't it reasonable that somebody who's working full time, 40 hours a week, should be able to live above the poverty line?

MCCONNELL: Yes. But, of course, the minimum wage is mostly an entry level wage for young people. We have a crisis in employment among young people right now, and generation 18 to 30, people that got out of college, are finding there are no jobs for them. The last thing we want to do is have even fewer jobs for younger people.

MCCONNELL: There's no question that the minimum wage increase, if not done in conjunction with some kind of incentives for the businesses not to lay off employees are going to dramatically increase unemployment. I don't think in this jobless recovery, we ought to be doing things that creates fewer jobs. We ought to be doing things that create more jobs.

WALLACE: You heard, as you were coming in, my discussion with Dan Pfeiffer about raising the debt limit. After the government shutdown in October, which Republicans took the hit for, you were quoted as saying, "We are not going to threaten default again by attaching conditions." But more recently, you said you don't think there's any chance that a clean, without any condition debt bill could get through the Senate.

So, which is it?

MCCONNELL: Well, those statements are not inconsistent. I mean, some of the most significant legislation passed in the last 50 years have been in conjunction with the debt ceiling, Congressional Review Act, the Clinton and Republican Congress deficit reduction package in the late '90s that led to three years in a row of balanced budgets, the Budget Control Act we just did in 2011.

I think for the president to ask for a clean debt ceiling when we have the debt the size of our economy is irresponsible.

So, we ought to discuss adding something to his request to raise the debt ceiling that does something about the debt or produces at least something positive for our country.

WALLACE: But you just heard Dan Pfeiffer say the president is where he is and he's not going to bargain. He's not going to put something on the debt limit. The fact is, and, you know, they talk about the definition of insanity of doing the same thing over and over again --


WALLACE: -- and expecting different result. When you get in these crises, whether it's a government shutdown or a possible default, the public tends to side with the president at a time when the president's numbers are low and you've got ObamaCare creating a lot of concerns about this president, you really want to get in a fight over the debt limit? MCCONNELL: What we want to do is try to accomplish something for the country and I think the president -- any president's request to raise the debt ceiling, whether this one or previous presidents, is a good opportunity to try to do something about the debt. I think the president is taking an unreasonable position to suggest that we ought to treat his request to raise the debt ceiling like some kind of motherhood resolution that everybody says aye and we don't do anything, when we have the stagnant economy and this massive debt created under his administration.

WALLACE: So, are you saying right here, we are going to attach something to the debt ceiling? And if so, what?

MCCONNELL: What I'm saying is we ought to attach something significant for the country to his request to increase the debt ceiling. That's been the pattern for 50 years going back to the Eisenhower administration.

I think it's the responsible thing to do for the country. I think he's the one being irresponsible by saying oh, just raise the debt ceiling. We're not going to do anything about the debt or anything else that's important to the country.

WALLACE: Any specific idea?

MCCONNELL: Keystone Pipeline, a good example of something that would create jobs for the American people. The House of Representatives will initiate the discussion on the debt ceiling increase. They probably will have other ideas.

WALLACE: How about banning any bailout, this -- affecting the risk corridors on ObamaCare?

MCCONNELL: All of those would be important steps in the right direction. We need not have a default -- we're never going to default. The speaker and I made that clear. We've never done that.

But it's irresponsible not to use the discussion, the request of the president to raise the debt ceiling, to try to accomplish something for the country.

WALLACE: I know you like being Senate minority leader. I know you would even prefer to be Senate majority leader. So, let's talk about the playing field for the November election in 2014.

Democrats now have a 55-45 seat advantage. But the Democrats must defend 21 seats in November, while Republicans defend 15.

How do you pick up a net of six seats which is what you're going to need? A net of six seats, when you -- there are a number of Tea Party challengers who could win primaries, even unseat incumbents, but then be too conservative, and too unelectable when it comes to November?

MCCONNELL: Well, you touch on an important point. In order to win in November, you have to have an electable candidate. I'm very confident in every single place where we have an opportunity for a pickup, we're going to have a very electable candidate, not just in the primary but in the general as well, in West Virginia, in North Carolina, Louisiana, Arkansas, South Dakota, Alaska, Montana, Michigan -- all of those states we have very good candidates who can win elections.

And, Chris, the atmosphere for us is so good that we're also stretching the playing field. We expect to be competitive in places like Minnesota and New Hampshire and Colorado.

So, I think it could be a very good year. Historically, the six year of a two-term presidency is not very good to the party of the president. And we believe that coupled with the fact that locations of the races are very red states, seven of those states that I mentioned, Mitt Romney carried six of the seven and carried by double digits.

WALLACE: OK, let's talk message. We've got a question on Facebook from a fellow named David Imgrund, and here it is. "Democratic bashing only appeals to your base. What is the docket to reach out to the undecideds and across the aisle?"

Tell David briefly the positives GOP agenda.

MCCONNELL: Look, we believe that the American people will understand by this fall that we are the party of the private sector. You know, we tried big government now for six years in a row. We know that doesn't work. We've had a tutorial, an experiment with spending and borrowing and taxing and regulating.

I think the American people are now, surveys indicate, very skeptical of all of the government solutions the president continues to offer. And we're going to make the point that let's try the private sector for a while. Let's make it easy to create jobs and opportunities for our people. The government is not going to get that job done. We've seen that.

WALLACE: All right. Final question, you face, we talk about Tea Party challenges. You face your own Tea Party challenge in Kentucky this spring. A fellow businessman named Matt Bevin who has a web ad up, here it is.


WALLACE: I like the music.

What do you make of him?

MCCONNELL: Look, I don't own the nomination of my party or the seat that the people of Kentucky have given me, and I fully intend to win my primary. I mean, he's making the argument that I'm somehow an Obama enabler. I'm sure the White House is snickering at that and Republican voters in Kentucky don't believe that for a minute.

WALLACE: Let me ask you specifically about that, because he and conservative groups say, look, you have voted repeatedly to raise the debt ceiling. You voted for the Wall Street bailout. So, you are not a true conservative.

MCCONNELL: I was one of five U.S. senators last year that got a perfect rating from the American Conservative Union. The argument that I'm some kind of liberal is absurd and that will be rejected by the Republican primary voters in Kentucky on May the 20th.

WALLACE: Senator McConnell, thank you.. Thanks for coming in today. Always a pleasure to talk with you, sir.

MCCONNELL: Thank you.

WALLACE: Up next, our Sunday panel on what they'll be watching for in President Obama's State of the Union Address.

And be sure to tell us what you think on Facebook and share your favorite moments from today's show with other FNS fans.


ROY BLUNT (R), MISSOURI SENATOR: This administration's agenda to create more government, more spending, more taxes and more debt has created an inequality crisis of opportunity in our country. Those policies have been disproportionately hurtful to the poorest among us for the past five years.


WALLACE: Missouri Senator Roy Blunt laying out the GOP response to President Obama's State of the Union address even before it's delivered. And it's time now for our Sunday group. Brit Hume, Fox News senior political analyst, Julie Pace who covers the White House for the Associated Press, syndicated columnist George Will and former Democratic Senator Evan Bayh. Well, I went back this week and read President Obama's State of the Union speech from last year and a couple of points. First of all, it sounded almost identical to what we hear is going to be in the speech this year and then secondly, as I discussed with Dan Pfeiffer, almost none of the items, the agenda items the president proposed got through. So the question is, Brit, what does the president hope to accomplish in his statement (ph)?

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: I've covered well in excess of 30 of these, State of the Union addresses. I can remember very little ...

WALLACE: I hope there was an interesting one I thought.

HUME: Exactly.


HUME: I can remember very little about any of them. There are a few moments. Some of them had nothing to do with the speech itself. And one of them was an outburst in the audience. One of them was a (inaudible) comment from Samuel Alito. Another one was a guest in the gallery that Ronald Reagan had that started this whole guest in the gallery business. Now, it treats upon (ph) where Louie Gohmert is going to have his own guest list this time. I don't expect this one to be particularly memorable. His agenda has basically been frozen since the Republicans took control of Congress in 2010. There's not a lot he can do. That's why you hear him talking about pens and telephones because he can't get anything through Congress. So, I expect it to be a minimal consequence and perhaps similar to what he's gone for in the past because he hasn't gotten any of that. WALLACE: And by the way, Fox News will be covering the president's speech -- that's not a preview on the speech. It's going to be exciting. We're going to want to see it, and the Republican response. Julie, how much of an agenda does the president really think that he can get through either Congress or through Dan Pfeiffer has now talked about doing it through executive actions?

JULIE PACE, THE ASSOCIATED PRESS: I think the White House is pretty realistic then when it comes to their agenda with Congress, it's going to be very limited. They may have a chance on immigration reform. You're starting to see some pieces move on the Republican side there. If anything big gets done this year the Hill, it's going to be immigration. They'll make a run at minimum wage. That is something that he announced last year in the State of the Union that went nowhere. So then, you have to look at executive actions, and as I heard you say in the interview with Dan, that the problem with executive actions is that they're inherently limited. So they can come out every week and say we're signing an executive order on this or we're convening college presidents or business leaders to take action on job training or the long term unemployed. And that's a way to show momentum. But the actual result is going to be far smaller than what you can do on Capitol Hill.

WALLACE: So, George, how much of this exercise on Tuesday night is just about the president trying to change the subject and change the American people's attention from ObamaCare and all the problems with that to the subject that works so well for them in 2012, which is the middle class and supporting these building these ladders of opportunity?

GEORGE WILL, SYNDICATED COLUMNIST: Yes. It's a lot of changing the subject. But what kind of a ladder is he going to build? You know, in baseball, you play what's called small ball, stealing bases, bunting, when you can't do anything else. This is the miniaturization of the president's agenda. A 23rd increase in the minimum wage since 1938? That may be a good thing or bad thing. It's a marginal importance to the economy and of no importance to the middle class. Universal preschool, which is, as you say, he endorsed last year. We've had almost 50 years of experience with Head Start. And the government's own study showed that the benefits from universal preschool are A, small, and B, evanescent. So if you'll fall back on, as you say, these executive orders, they're not just limited, they're often as the Supreme Court is going to say several times this spring, unconstitutional. So the shrinkage of the Obama presidency will be on display, I think, Tuesday night.

WALLACE: One area of possible compromise was very interesting. There were leaks all over the papers this weekend is that the Republicans want to do something serious about immigration reform. It won't be comprehensive. It will be piecemeal that the idea is that there would be a path to legalization for the 11 million here illegally, not necessarily path to citizenship except for the so called Dreamers kids, people who were brought here as children. First of all, why do you think the Republicans clearly are putting this out there? And what do you think of the prospects that you'll get a deal? EVAN BAYH, FORMER U.S. SENATOR (D-IN): Two things, Chris. The Republicans are putting it out there because they did very poorly among Hispanic voters in the last election. And I think they realize that we're going to -- they are going to gain a majority in the Senate and regain the presidency eventually. They've got to get this issue off their back. So, I think they will move forward in the House with a somewhat smaller package. And then that will put the ball in the White House's court. The advocates for reform and change are going to be very unyielding. And so, the pressure is really going to be on the White House. Do they compromise and really get something done? Which, I think would be in their best interest and the country's best interest? Or do you save this issue and use it as a political stick in the midterm elections? Which, I think, (inaudible) allies on the Democratic-siding Congress will -- would favor. What are the odds? Well, you know, in this Congress betting on anything getting done, less than 50/50. But I think as both view, and other panels have noted, if anything is going to get done, it would be this. The real action will be in the executive order category.

And more than anything else, in your sixth year, it's not about what you say. It's about what you do. And so executive action and framing the election probably in populous terms to try and keep the Senate. But, of course, if the Democrats lose the Senate, it will be a very long final two years for the president.

WALLACE: Let's talk about the election. Because Brit, the Republicans won a sweeping victory in 2010 talking about ObamaCare and government overreach. The president won re-election in 2012 talking about this populous, middle class champion of these ladders of opportunity. If those are the competing narratives in 2014, ObamaCare on the one end, championing the middle class on the other, which is the stronger argument?

HUME: Well, ObamaCare is such a problem for so many people. And negative emotions tend to outweigh positive emotions in voting patterns. So when you have a large segment of the population that has either been damaged by ObamaCare or fears it will be, and that is hanging around the neck of nearly every Democrat running, particularly some of the vulnerable senators who are running for re-election. It creates a tremendous gravity that I think will be hard to overcome. Plus, the historical gravity of a president's party in that president's sixth year. So, I think the weight on this all the -- the Republicans really are running downhill. The Democrats are running uphill.

WALLACE: Briefly, Julie, you know, you can see the president talking (ph) up minimum wage, unemployment benefits, hard hearted Republicans, do they think back and work for them and be a counter to ObamaCare?

PACE: I think one of those interesting things about this inequality, ladders of opportunity argument is actually you have a lot of Republicans that are talking about that, too. The policy prescriptions for addressing the issue are different. But Republicans aren't running away from this. Minimum wage, there's a lot of people on both sides of the aisle that think that there is a chance that Republicans might jump on minimum wage. It's something that some business leaders have said might not be a problem for them. But again, I think you will see both sides talking about this. It's just how they seem to want to address the problem that will be different.

WALLACE: All right. We have to take a break here. But when we come back, two years ahead of the first primaries for 2016 growing signs Hillary Clinton will run again. Our Sunday panel handicaps her chances and reviews. Check it out. This magazine cover which places Clinton at the center of the universe. You won't want to miss it.



HILLARY CLINTON, FORMER SECRETARY OF STATE: I believe that women everywhere can be and are agents of change, drivers of progress, makers of peace. All we need is a fighting chance to show what we can do in every part of life.


WALLACE: Hillary Clinton continuing to keep the door wide open to a run for president in 2016. And we're back now with the panel. Well, as we mentioned in the tease to the last commercial, "The New York Times" has an interesting cover out today. And please check it out. Yep, "Planet Hillary," it says, with a variety of political factors and factions being held together by her gravitational pull. George, what do you make of it as art and what do you make of it as political commentary?

WILL: Is she going to run? Fish have got to swim. Birds have got to fly, and Clintons have to run for office. It's what they do. It's a metabolic urge. That's all they've done their entire life is borrow money from rich people to seek public office. And I think that will continue and "The New York Times" article is a guide (ph) to this. The problem is, a problem, nothing is more annoying to voters and infuriating to activists than a candidate that comes cloaked in the horror of inevitability. Because it says, in effect, here they are, man, and this is a four gun conclusion, and their inclination is to say well, we'll just see about that. The contest she will be running in in 2016 is first toward the end of a last decade of slow economic growth. B, in 2016, we will have had three consecutive two- term presidencies. The last time we had that, and the only other time we had that was Jefferson, Madison and Monroe before the two-party system emerged. We had a period of uncommon stability in the presidency. And that makes it even less likely that we're going to give a third term to the same party.

WALLACE: In addition, and let me ask you. I'm just thinking, was after Monroe was a Jackson?

WILL: No, John Quincy Adams.

WALLACE: John Quincy. So it was one term. There you go. So ignorant, folks, I'm sorry. In addition to the magazine article there were a number of interesting stories out in the last week, Julie. And I want to talk about it -- about big Democrats joining the Hillary Clinton band wagon. And perhaps the most interesting was the fact that Jim Messina, who was the campaign manager for Barack Obama in 2012 has now become co-chair of the big Hillary super PAC called Priorities USA. From your sources in the White House, any sense of how the president is reacting to the idea of all of these people of his team so early jumping on the Hillary band wagon and what about poor old Joe Biden? Is he feeling like he's being left out in the dust, in the cold?

PACE: So, I don't have a great sense of how the president himself is thinking about this, but people around him in the White House and people who are close to him outside the White House, when you do talk to them, there is some sense of maybe this is happening a little too early. Part of the reason why they think it is, it's just -- it's a money issue, priorities wants to be out there. They want to be able to start raising money now. And Hillary Clinton is the big ticket in the Democratic Party. So, if they align themselves with her, they see this as a way to start getting money into their coffer a little bit early. You know, poor Joe Biden ...


PACE: ... is sitting saying, you know, I'm sitting vice president and everyone is already looking at me as plan B. and I do think, though, that that is a concern for Democrats. Because if Hillary Clinton does decide not to run, and for all we know, she may be sitting there saying I'm not going to do it, whoever becomes the nominee, whether it's Joe Biden or anybody else, at this point is going to so clearly look like the B team, the second choice. And how Democrats try to frame that, I think that will be pretty problematic.

WALLACE: Do you get the sense that there is going to be more to follow after Jim Messina, more of the Obama team, that helped him win in 2012? Jumping on with Hillary?

PACE: It is more than Jim Messina at this point. You have people who were doing digital outreach, people who were doing analytics and targeting. Who have also (inaudible) of names, but you do have a lot of people from the Obama campaign who were good at the things that the Hillary Clinton 2008 campaign was not good at and the new technologies who are also lining up behind her.

WALLACE: Now, one of the things that Hillary Clinton is going to have this year is a new book that is supposed to come out this summer about her time as secretary of state. All of her purported triumphs. But she is also going to have to deal with another issue, Benghazi. Take a look.


HILLARY CLINTON: The fact is we have four dead Americans ...


CLINTON: Was it because of a protest or was it because of guys out for a walk one night decided they'd go kill some Americans? What difference at this point does it make? It is our job to figure out what happened and do everything we can to prevent it from ever happening again, senator.


WALLACE: Brit, how big an issue do you think Benghazi will be for Hillary Clinton?

HUME: That's a little hard to tell. But it has been remarkably persistent. It has stayed alive despite repeated efforts on the left and in the friendly media -- media so friendly to the left to declare it irrelevant and dead. The Senate report that came out was very careful not to name her. But it blamed -- the tremendous amount of blame at pretty high levels of the State Department for the security and intelligence failures that led to the death of the American ambassador and three others. So, I think it's an issue that's out there. And if it were -- if this were a case where she had a very large and long record of major diplomatic achievements, doctrines or whatever, associated with her in her tenure as secretary of state, it wouldn't matter so much. As it is, this is one of the foremost things we remember about her tenure as secretary of state, which is one reason why this needs to be a convincing book that's coming out to try to document that you really did have some kind of a record of doing something beyond setting records for travel.

WALLACE: I want to pick up on that. Because it seems to be another problem potentially for Hillary Clinton as her successor, John Kerry, who has been kind of a whirling dervish on the diplomatic scene. You could argue about the merits of him, but he's negotiated deals with Iran, with Syria, he's pushing hard for an Israeli deal with the Palestinians. Senator Bayh, could Kerry's record at the end of three or four years make Clinton's look much less impressive?

BAYH: He is showing a lot of energy, Chris. And there may be some comparisons there. But I think unless there is a dramatic change in circumstances in our country, this is going to be an election driven by economics, particularly how it affects the middle class. Jobs, the cost of health care, college affordability, retirement security, all those sorts of things. And I just don't think absent some new information of some kind, Benghazi will be all that important or, frankly, her tenure as secretary of state. I think it's going to be where she wants to lead in the future and how she's going to get there. And I think she's got some advantages when it comes to that.

WALLACE: So, do any of the four of you doubt and we know what George has said quoting, "Porgy and Bess," does -- do any of you doubt that Hillary Clinton will run?

HUME: Yeah.

WALLACE: You do?

HUME: I'm not saying that. I mean I think that the chances are she will. But I think there is a significant possibility she might not. She is -- we don't know all that much about how her health is holding up. I think she probably wants to run. But she may decide not to. You know, age, health, (inaudible) are under consideration.

WALLACE: Also, the president -- former president's health could be an issue, I suppose.

HUME: Yes, that's true.

WALLACE: And do any of you think that she will face serious, credible competition for the Democratic nomination? If she runs?

BAYH: If she'll face competition, Chris, from the left. There will be a tribune of the left. There always is. But she is a unifying force. I don't think it's important where they were serious. I don't think so. That gives her some significant advantages. But she has other advantages. The Electoral College tilts by about 30 or 32 toward the Democratic Party now or versus what it was in the '70s and '80s, and most importantly, unless the Republicans figure out this dysfunction at the heart of their party is the Democratic nominee, particularly this Hillary Clinton, a big advantage.

WALLACE: Real quickly, Julie?

PACE: George talked about inevitability at the start. That was one of Hillary's big problems in 2008. The American people just don't like somebody who is walking in as the inevitable candidate. And that will be the biggest thing for her to overcome if she does run.

BAYH: Been there, done that. I saw this in Indiana when she -- at the end of the primary process the last time. She started off as the inevitable candidate. She saw that crash and burn. By the time she reached our state, she was beyond that. And it was all about what can I do for people? What can I do for the middle class? I think she's learned from that and won't make that mistake again.

WALLACE: All right. We have to step aside for a moment. But when we come back, the GOP tries to come up with a winning formula to stop losing presidential elections.



REINCE PRIEBUS, RNC CHAIRMAN: Big reforms are coming to our presidential nominating process. Reforms that put Republican voters, not the liberal media in the driver's seat.



WALLACE: Republican National Committee chair Reince Priebus announcing changes to the GOP primary and convention calendar to try to help the GOP take back the White House in 2016. And we're back one more time with the panel. So Republicans are shortening their schedule, their calendar for 2016. They're going to start the primaries as late as February. And they are going to hold a convention as early as June or July. Brit, will that help them avoid a bitter primary battle that forces the eventual nominee further to the right?

HUME: I think it will help them avoid the kind of bitter primary battle that they had the last time. They may have a different kind of bitter primary battle. I mean I think that what caused the bitter primary battles are better divisions within the party represented by different candidates and what -- I don't think you're going to have to repeat what happened in 2012 where we had serial frontrunners, almost week by week as, you know, they sorted through this whole deck of minor players before Mitt Romney who was sort of there from the beginning or remained the last man standing if somebody has said and won the thing. You don't anticipate that would -- there won't be enough time for that to happen that often for so many people. But it's reasonable thing to do. But it's not going to -- they have got to get their party united. That's the main thing they've got to do.

WALLACE: Well, that's the point. It's not just mechanics. It is also message. And one of the things that the party has to find better ability to do is to reach out to women and to reach out to minorities. And some people say that the GOP stubbed its toe once again on that subject with comments by former governor Mike Huckabee this week. Take a look.


MIKE HUCKABEE, (R ) FORMER ARKANSAS GOVERNOR: If the Democrats want to insult the women of America by making them believe that they are helpless without uncle sugar coming in and providing for them a prescription each month for birth control because they cannot control their libido or their reproductive system without the help of the government. Then so be it.


WALLACE: Now, let's make it clear -- you're sitting here laughing.


WALLACE: Mike Huckabee was accusing the Democrats of doing that. But boy, this is a trick issue for Republicans, isn't it?

PACE: It is. I mean fortunately, I only have to write about candidates, I don't actually have to give them practical advice, but if I were to, I would just say the candidates on both sides of the aisle, put a list in your pocket of words you should not say. There are two or three in Mike Huckabee's comments. Just don't say them. Even if you think you have a smart point. Don't say that. And for Republicans, the thing they have to remember is this is becoming a narrative. And no matter what you actually say, the Democrats are going to jump on this and going to create an issue out of it. So maybe this is early enough that it's a lesson learned. We'll see.

WALLACE: George, how do you handicap the Republican field at this very early point? And is Chris Christie still the legitimate front-runner or have all these problems that he's facing in New Jersey -- have they knocked him off that ... WILL: Never mind his problems. And I think they will pass. But I think there is no front-runner. I think the party will turn, it usually does to a governor. We talk about the problems of the Republican Party. They have 30 governors, Chris, that's the most since the 1920s. Those 30 governors represent states with 315 electoral votes. That's 45 more than needed to win. In 25 states, there's a Republican governor and both houses of the legislature. Those states have 53 percent of the American population. The Republicans at the state level are building a record and have mastered the art of communicating. So the party is not talking about libidos all the time.

WALLACE: So if you were going to say three people that you would put up there right now as the top tier, who would they be?

WILL: Chris Christie, Mike Dempsey, the governor of Indiana, predecessor of sitting here and Scott Walker of Wisconsin.

WALLACE: And what about Rubio and Cruz and Rand Paul?

WILL: They're all in the race. But they have the defect of being senators that have never run in anything larger than the Senate office.

BAYH: And they're part of Washington, which no one likes these days.

WALLACE: What's your early morning line on the Republican field?

BAYH: Well, I agree with George. It's -- they'd be best off nominating a governor. Because governors do things. They deliver results in a time when Washington is not doing that. Washington is dysfunctional. No one likes that. The real -- the heart of the problem for Republicans, Chris, is do they want to be a governing party, a practical party? For Ronald Reagan who was a staunch conservative still said look, if I can get 80 percent of what I want, I'll pocket that and then go back to the other 20. Rather than this last time, where people were saying 100 percent or nothing or do they insist on ideological fury down the line? And that's something that's just going to have to be fought out. These mechanistic changes that they're making, all good. But as long as there are just a handful of deep pocketed individuals out there willing to support some of the extremist candidates, it may be difficult. So my bottom line is, if you look at history, if you look at the economy, it's a 51-49 election with the advantage to the Democrats right now. Assuming the Republicans nominate a centrist governor. If they go Tea Party, then Hillary has got a pretty good chance.

WALLACE: Thank you all, panel, for added duty this week. Now this program note. We'll see you next week live from Super Bowl XLVIII at MetLife Stadium in New Jersey. We'll sit down with NFL commissioner Roger Goodell along with John Elway and Archie Manning ahead of the face-off between the Broncos and the Seahawks. That will also be on Fox. And that's it for today. Have a great week and we'll see you next "Fox News Sunday."

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