Lawmakers debate CBO's grim ObamaCare report; Sochi Olympic Games plagued by serious threat of terrorism

Sens. Roy Blunt and Ben Cardin on 'Fox News Sunday'


This is a rush transcript from "Fox News Sunday," February 9, 2014. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

More problems for ObamaCare. As a nonpartisan group finds, health care reform will mean 2 million fewer jobs.


REP. PAUL RYAN, R-WIS.: ObamaCare is clearly part of the problem. Your report points out some weak spots in our economy -- low invest, high unemployment, people leaving the workforce.

REP. CHRIS VAN HOLLEN, D- MD.: When one misinterpretation gets out of the box early and goes around the world, it takes the truth an awful long time to catch up.

WALLACE: We'll discuss the latest controversy over ObamaCare with two key senators, Roy Blunt of Missouri and Ben Cardin of Maryland.

Then, the Sochi Winter Olympics are under way. But the threat of a terror attack still looms.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Our intelligence community is quite focused on Sochi and we're not going to be able to comment on each reported threat. We're going to take them all seriously.

WALLACE: We'll get the latest on the Olympic security threat from Michael McCaul, chair of the House Homeland Security Committee, and Adam Schiff of the House Intelligence Committee.

Plus, our Sunday panel on the GOP's flip on immigration reform.

And our power player of the week, behind the scenes of the coolest museum you'll never see.

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


WALLACE: And hello again from Fox News in Washington.

The Congressional Budget Office, Washington's nonpartisan scorekeeper dealt a big blow to the president's health care law this week. A CBO report says ObamaCare subsidies create incentives for millions of Americans to work fewer hours or not to work at all.

Here to discuss that, immigration reform and more, are two Senate leaders, Roy Blunt, vice chairman of the Senate Republican Conference, joins us from Missouri. And from Maryland, Ben Cardin, a member of the Senate Finance Committee.

Well, the CBO says over the next decade, Senators, that will be 2 1/2 million fewer workers working full time because of ObamaCare. Here is the CBO director, Doug Elmendorf.


DOUG ELMENDORF, CBO DIRECTOR: By providing health insurance to people with very low income and then withdrawing the subsidies as income rises, the act creates the disincentive for people to work, relative to what would have been the case in the absence of that act.


WALLACE: Now, Republicans say this proves that ObamaCare is a job killer. Democrats say it means that fewer people will be locked into jobs.

Senator Blunt, what is wrong with that, the idea of fewer people locked into jobs?

SEN. ROY BLUNT, R-MO.: Well, I think any law you pass that discourages people from working can't be a good idea. Why would we want to do that? Why would we think that was a good thing? How does that allow people to prepare for the time when they don't work?

This number is about three times as big as the number that was on the table when people that voted for the president's health care bill voted for it in 2009 and '10 when the estimate was it would cost the equivalent of 800,000 full time jobs. Now, they're saying 2.3 million, and the best face can you put on that is that means people that don't want to work don't have to work. Surely, that's not what we want to encourage. And that's what this law does encourage.

And I think also that it's clear that employers themselves are going to more part time work that doesn't require benefits, that puts people on the exchange. And almost every case, the numbers that we're now looking at would risk the cost of insurance, the people that are uninsured are the people that just simply aren't working full time is a bigger number and a harder to deal with number than anybody who voted for this law thought it would be.

I didn't vote for it. I don't think that it has the capacity to work. But all the numbers as they come out exceed the bad news that had been anticipated.

WALLACE: Let me bring in Senator Cardin.

Choice on an individual level if you're 63-years-old, you don't qualify for Medicare and you've been working just to keep your health insurance, choice on an individual basis makes some sense. But, Senator Cardin, do we as a government want to have a policy that gives people a disincentive to work and then makes all of us taxpayers pay for that?

SEN. BEN CARDIN, D-MD.: Well, a significant number of these people are in job lock. They're in the employment solely because that's their only option to get health benefits. Now, individuals have other options. This is a voluntary choice as you pointed out, whether you want to work or not. And it shouldn't be because you're locked into a job because of health benefits.

Let me also point out that these jobs --


WALLACE: But again -- Senator Cardin, if I may, though, I understand if somebody doesn't want to work and they can get their health benefits and, in fact, they'll get them cheaper because the subsidy rises as their income lowers, that's fine. But why do I or you as a taxpayer, why do we have to subsidize that?

CARDIN: Well, in some cases these people may have two jobs because of the circumstances for their health benefits. One of those jobs are no longer going to work. People do work two full time jobs a day in order to be able to get their health benefits.

Now they don't have to work two full time jobs to get their health benefits. And the point I want to raise is that these jobs will be filled. It's not going to have an impact on our economy.

We have people waiting to work. So, these jobs are all filled. Our economy will move forward.

The bottom line is that now, everyone will have access to affordable health care before they didn't.

WALLACE: Well, you say that these jobs will be filled. That assumes a booming economy which we don't have. Even beyond the subsidies, there are indications that ObamaCare is cutting jobs. This is a year before the employer mandate even kicks in.

Let me put up a recent study which found more than 400 employers have cut workers' hours to avoid the mandate if they work less than 30 hours, they're part time. And therefore, they don't have to have health insurance.

Senator Cardin, isn't that a further drag on the economy, especially at a time, and as we saw it from the latest job report in January, when we have a weak recovery?

CARDIN: Well, let's see what happens when this law is fully implemented. What we are going to see, we think, is that, first of all, costs are much less than we ever predicted them to be. So, it's actually costing us less.

Health care costs have been driven down. There's now more health facilities available in our communities. People are using emergency rooms less. All that is going to be positive on our economy.

The big news when the Affordable Care Act is to change the way we deliver health care to keep people healthier. And we're going to see what more people having options to get their health care needs met. There's going to be less expensive care and more care given in the community keeping people healthier.

That's our goal. Our goal is to make sure everyone has access to affordable health care.

WALLACE: Senator Blunt, you can -- I'd like you to speak to that, but I'd also like to speak to another issue because Republicans keep talking about wanting to ban a government bailout of insurance companies. But the CBO in the same report that you cited says that, in fact, over the next decade, that the government will collect $8 billion more from insurance companies that they'll have to give out and there won't be any bailout. In fact, there will be a surplus.

BLUNT: Well, there's a lot of facts and figures flying around here. I'm not sure I can address all of them.

I will say, there was a report out this weekend on the argument that somehow health care costs are going down. Insurance costs aren't going down. There's a report out, a small business report, where small businesses since 2009 have seen their insurance costs go from about $500 an employee to about $590 an employee, to a little over $1,100 an employee. And many of them are deciding not to offer insurance anymore.

And on the idea that somehow people are going to have these jobs, the report actually said the American workforce is going to work 2.3 million jobs less collectively. So, these jobs are not going to be there. People are going to part time work. And on the bailout for insurance companies, if we collect more money, that means that all of these policies that employers pay on that have among other things the $63 charge for every single employee you insure, the federal government collects that.

Now, how is that a helpful thing for the economy to basically put a $63 tax on people that are insured through their union or people that are insured through their workplace and somehow we're bragging about that we're going to collect a lot more money and that's special new tax than is going to go out.

And, frankly, Chris, nobody knows how much money is going to go out yet. We'll see how the balance of young healthy workers and not so healthy people or young healthy people to be insured and not so healthy people work out the insurance companies. But this one --

WALLACE: Gentlemen --

CARDIN: But I can point out --

WALLACE: Gentlemen, we're about -- we're getting a little bit in the weeds. I want to get to another big subject. So, let me please do that.

Last week, Republicans issued a statement of principles, House Republicans, that seemed to indicate that they were all in on immigration reform. But this week, Speaker Boehner said that because they don't trust the president to enforce all parts of immigration reform, that there's a good chance that nothing will be passed this year.

Senator Cardin, how do you react to that statement about the GOP change of mind? Do you think it's because Republicans have decided now that they don't trust the president? And I guess more importantly, what are the chances for immigration reform this year?

CARDIN: Well, I think the House Republicans, it's very disappointing. Our immigration system is broken. I think Americans understand that. We need to respond to it.   We know that we have problems, as far as making sure our borders are secure, as well as making sure that we have an immigration policy that speaks to the values of America that will help in job growth in this country and make sense for this country. And the Republicans --

WALLACE: So, how do you explain the Republican split?

CARDIN: I can't. I don't understand it. I think that there is so much in fighting in the Republican Party in the House that they're just concerned that they'll show that fracturing of the party and, therefore, the immigration bill is one of the casualties.

We hope that the politics of this which I think is equivalent to the policy here to move forward will -- that the Republicans will allow a bill to move forward, that we can get into conference, that we can work out a bill, and at least move this issue forward.

WALLACE: Let me bring in Senator Blunt.

I think it's fair to say that President Obama's trustworthiness or lack of same didn't really change dramatically in the last week. I mean, isn't the real issue here that Republicans in the House and in the Senate are deeply divided on immigration reform and they didn't want to expose that division in the middle of an election year?

BLUNT: Well, I think the House reluctance has a lot of things that drive it and one is the president's constant talking about how he can use his pen and his telephone. How the president thinks that helps in any negotiation with Congress to do anything but lead the Congress to believe if you don't like what this happened as part of the negotiation and there's any way at all you can work your way around it, or even declare you're going to you're your way around, you will.

You know, I didn't vote for the Senate immigration bill because I didn't think it secured the border adequately and didn't address the workplace border, the place you really could make a difference in people who are here without documents in the best possible way at all.

What the House has said is, let's divide these problems up. Let's solve them one at a time. And as a person who for a lot of the time I was in the Congress, I was the whip in the House, the vote counter in the House --


BLUNT: -- I've always thought that you get a better solution to the three components of this problem if you let one of them be, let's secure the border at the workplace and border, let's determine the real workforce needs of the country and let's decide what to do with people who came here or stayed with that state illegally. About half came illegally and about half came legally and then just stayed.

Those are three very different questions the House would like to deal with one at a time. The Senate says, no one big bill or no bill at all. And that's a pretty hard thing to resolve particularly when the president is saying if I don't like something and I can take care of it with my pen, I'm going to take care of it by signing an executive order.

WALLACE: Gentlemen, we're going to have to leave it there. Senator Blunt, Senator Cardin -- thank you both so much for joining us today. We very much appreciate it.

CARDIN: Thank you.

BLUNT: It's good to be with you.

WALLACE: Up next, our Sunday panel joins the discussion, whether ObamaCare will discourage people from working. And be sure to tell us what you think on Facebook and share your favorite moments from today's show with other FNS fans.



REP. PAUL RYAN, R- WIS.: Not to get on the ladder of life, to begin working, getting the dignity of work, getting more opportunities, rising their income, joining the middle class -- this means fewer people will do that. That's why I'm troubled by this.

JASON FURMAN, COUNCIL OF ECONOMIC ADVISORS CHAIR: That's a better choice for that person and this is giving them that option that they didn't used to have.


WALLACE: Congressman Paul Ryan and White House economic adviser Jason Furman, continuing the debate about whether ObamaCare creates a disincentive to work.

And it's time now for our Sunday group: syndicated columnist George Will; Julie Pace who covers the White House for "The Associated Press"; radio talk show host Laura Ingraham; and FOX News political analyst Juan Williams.

So, this sounds like a GEICO commercial, George. But is giving people a cheaper way to get health insurance without working so much -- is that a good thing or a bad thing?

GEORGE WILL, FOX NEWS CONTRIBUTOR: It's a bad thing but it's an intended thing. No one should be surprised about this. Everything big government does has big consequences. When it has taxes, it changes the incentive structure for citizens. When it has payments which are 67 percent of the federal budget, it changes the incentive structure.

People forget Social Security was advocated, Chris, in the 1930s, as a way of getting people to quit working, because they thought we were confined to a permanent scarcity of jobs in this country. Second, it is the point of progressivism, is to put in front of the American people an increasingly rich menu of temptation to dependency on government. In order to change social norms and eventually national character, the president said, "I want to fundamentally change America", and these disincentives to work are part of it.

WALLACE: I understand the need and what we were originally told, the purpose of Obamacare to try to reach out and help the millions of people who are now uninsured.

But, Juan, do we want to make it a government policy? I'm picking up on the question I asked Senator Cardin -- make it government policy to offer incentives for people to work less or not at all, and taxpayers will pay for it?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, this does not offer some kind of overarching disincentive to work. What we're talking about is 1 percent to 2 percent beginning in 2017 through 2024 of the --

WALLACE: Two and a half million people.

WILLIAMS: Right -- of labor supply. So, it's not something that's going to decrease demand for labor, work in this country.

And I think the key thing here to understand is what you were discussing earlier. People will not be locked in. So, these are people who are approaching 65 before they would be covered by Medicare -- people who have existing illnesses, who feel they have to have that job in order to get the health care, a young mother cannot spend a little more time with her kids. These are good things.

And the overall point that I would say to you is that it might, in fact, decrease unemployment. It allows that kind of people who are locked into jobs who are staying there for no reason other than health insurance and sometimes two jobs -- as Senator Cardin said to you -- to move on and get younger people now have more opportunities because the demand for labor will not go away. People want workers.


LAURA INGRAHAM, RADIO TALK SHOW HOST: Well, I think President Obama should have campaigned on this argument that ObamaCare will deliver more freedom to people because they'll be free not to work. I imagine if that had been one of the main campaign arguments for the Affordable Care Act, we might have had some different outcomes in recent elections.

But the idea that not participating in the labor force should be a goal of government, then I think we should -- we should come up with some concept about how to increase that number. Why stop at 2.5 million by 2024? Let's get it up to 5 million because we're going to talk about immigration, we're going to need all these new immigrants to have jobs somewhere. So, they can take the jobs that all these -- apparently, they're enslaved in jobs that they're not going to want anymore.

I think most people listen to this across the country. And they think, this is why frankly both parties I'm sick of.    Not enough people warned this would happen beforehand. George is writing about it. But not many people about this specific fact.

And politicians in both parties, I think failed to crystallize this for the American people. I think this is one of the reasons people are tuning out of Washington.

WALLACE: When the CBO report came out earlier this week, the White House, I think it's fair to say, started spinning like crazy, saying this doesn't mean that people are going to be laid off their jobs.

WALLACE: These are people who are locked into their jobs, will have personal choice.

Julie, as somebody who was there hearing all of this spin in the White House briefing room, how worried are people in your building about the CBO report and also about other reports that are coming out, one of which we cited to Senator Cardin, that indicate that companies faced with a growing cost of ObamaCare are going to lay off workers or cut their hours?

PACE: Well, I think if you just look at the very swift way that the White House came out and responded to this CBO report, you can conclude that they're quite nervous about it. They really want to make sure that people are not taken away from this report, that 2 1/2 million people are suddenly going to just lose their jobs -- which is not what the report said, true. I think they are painting a much rosier picture than the CBO report actually said about what happens to be more than 2 million people who have a choice to not work.

You know, to Juan's point -- sure, you could say that people will leave jobs that they've been locked into or maybe they're going to take an opportunity to start a new business. But there's no guarantee that those employers are then going to hire new people.

As we saw after the recession when people were getting laid off, companies often looked at their workforce and said, maybe we actually didn't need that many people. Maybe we can be more efficient without hiring people back. So, there is no way to know the economic impact.

And the timing for the White House is really pretty bad. They just got to a point where people were not talking about the Web site problems, where enrollment numbers look to be up. And now, they're faced with a new problem.

WALLACE: Julie, I want to pick up on something else, because there was a very interesting report. It was that the administration is considering, not that they decided but that they are considering the idea of extending remember back in October when millions of people lost their individual insurance, health insurance policies, putting the lie to the president's comment about if you like your police, you can keep your policy, and the president said, well, OK, you can keep it for another year. Now, there's a story out that the administration is considering extending that for three more years.

I guess what I don't understand is the whole point was supposed to be to get rid of these substandard policies that don't need the mandates of Obamacare. Now, they're saying maybe we could continue it, some skeptics would say, past the 2016 election.

PACE: Right. There's a complete contradiction in this. A few smart colleagues of mine who picked up on this idea that they're considering extending the -- if you like your plan, you can keep it exception, the whole idea as you said was to take these junk policies that the administration said are bad for America. You shouldn't have an opportunity to have these plans. The insurance companies that are selling you a bad bill of goods, now they're going to say possibly --


WALLACE: How serious, you think, that this is under consideration?

PACE: I think they are -- I think they are seriously considering it.

WILL: I mean, the political fallout --

INGRAHAM: It's a certainty. It's a certainty they're going to do this. It's going to kill them in Arkansas, Alaska, Louisiana. I mean, they're going to get wiped out in November, most likely -- unless the Republicans screw it up, which is possible.

They're going to get wiped out. And they know it. And they've got to do something fast to staunch the bleeding.

And all the faces Juan makes should be directed toward the White House --


WALLACE: Let me quickly explain what's going to happen because the policies were extended for a year. That means that they would be canceled in October, a year after they were extended, which is, of course, just days before the election.

Juan -- are we just being terribly cynical here?

WILLIAMS: No. I just think this is a little wrongheaded or hyperbolic thinking taking place here. One, I think that there was such criticism in people in the individual markets that President Obama lied or deceived me about whether or not I'd be able to keep my policy. The president has since apologized.

This fix would be something of a concession to say, OK, we'll allow you to hold on to this policy for three more years. It's an inferior policy by ObamaCare standards, but if that's your complaint -- and remember, conservatives say, oh, this is terrible. That he didn't proper inform people.

WALLACE: And you don't think there's any politics involved here?

WILLIAMS: Of course, there's all politics involved. But I don't think it's the case that health care, believe me, Republicans are betting on health care to devastate Democrats in the midterm, I don't think that's going to pay off for them because I think people will move on.

WALLACE: All right. Well, we have to move on. Panel, we'd take a break. But we will see you later in the program.

Up next, the Olympics in Sochi, Russia, are now under way, but with athletes and spectators still on high alert. Two key lawmakers discuss the security threat, next.


WALLACE: The Winter Olympics are under way now in Sochi, Russia, but along with the competition is a serious threat of terrorism.

For more, we turn to key lawmakers, Michael McCaul, chair of the House Homeland Security Committee, who's in Austin, Texas. And from Los Angeles, Congressman Adam Schiff, member of the House Intelligence Committee.

Well, the director of our National Counterterrorism Center talked this week and gave a threat assessment of the situation in Sochi. Let's listen.


MATTHEW OLSEN, NATIONAL COUNTERTERRORISM CENTER: The greater danger from a terrorist perspective is in potential for attacks to occur outside of the actual venues for the games themselves, in the area surrounding Sochi or outside of Sochi in the region.


WALLACE: And TSA banned all aerosols, gels and powders from carry-ons on flights between the U.S. and Russia.

Chairman McCaul, you're just back from Sochi. And you say that the threat there is very specific and credible.

REP. MICHAEL MCCAUL, R-TEXAS: Well, it is specific and credible. But let me, first, I was watching the Olympics last night. We're rooting for Team USA to bring home the gold. But we also want them to be safe and secure while they're over there.

My experience was that this "Ring of Steel" as Putin calls it, the perimeter, very fortified, hundred thousand security officers, military special forces. So, there's a lot going on there including our FBI, our Homeland Security people over there, diplomatic security.

But, Chris, there are two major threat vectors as I see it. One is to the aviation sector externally into Russia, into Sochi, and at that airport, which isn't in the "Ring of Steel". And the second threat as I see it is the threat of suicide bombers, these so-called "black widows" who are widows of Chechen rebels who have been killed by the Russians.

MCCAUL: As we saw, you know, "the most wanted" pictures down there. Potentially blowing themselves up or detonating explosives in transportation modes. And so that's what we have to be very concerned with. The Russians so far I think have been cooperative when it comes to external operations outside of Russia, when it comes to internal operations, I think less so. That's what we would like to work more closely with them.

WALLACE: Congressman Schiff from the intelligence that you have received as a member of your committee, how dangerous is the situation in Sochi?

REP. ADAM SCHIFF, D-CALIF.: Well, there certainly are a lot of risks. But I think they're manageable risks. If people stay where they're supposed to. They don't very often are in charge of areas, minimize the time that they spend in train stations and minimize the degree to which they demonstrate where they come from. It wouldn't be wise, I think, to be broadcasting that you're from the United States. I think the risk can be contained. As Mike pointed out, those risks are probably greatest in the soft targets outside of Sochi. And I think that to the degree that people are mindful of their surroundings, I would go if I had tickets and enjoy the games. We aren't getting the kind of cooperation that we would like from the Russians in terms of their internal threats. I think as a matter of Russian pride they don't want to share that. As a matter of not disclosing their sources and methods to us, they don't want to share that. But it means that we're less effective in protecting of our people. And that's a frustration. But all things considered, I think that it's relatively manageably safe to be at the games.

WALLACE: Chairman McCaul, let me ask you a bigger question. Because after your tour of Sochi, you said that the Olympic village, and this was your quote, "is very well fortified." Is that what we've come to that what was originally designed to be an exhibition of international unity now needs to be very well fortified? And if that's the case, what's the point?

MCCAUL: Well, I think any Olympics is going to have a certain risk to it. I think this particular Olympics I've never seen a greater threat. Certainly in my lifetime. We had the 1972 Olympics when the Israeli team was taken hostage. We didn't have the threats, warnings in advance. Remember, we've already had two suicide bombers that have gone off outside the Olympic village in recent -- in December. You had the train station and the bus blown up. And I think as Adam pointed out, it's the soft targets outside the perimeter. I would caution people to stay in the village if they're there.

I think what really poses the greatest damage or threat, if you will, Chris, in my judgment is the proximity and the location of where these games are being held. They're being held right dead center in the middle of what has been a historic battleground between Russia and the Chechen rebels that have now spun off into an Islamic or radical militant group. And so you have the leader of the Chechen rebels Umarov calling for attacks on the Olympics, calling for attacks on civilians including women and children and then Zawahiri, the al Qaeda leader, who was (INAUDIBLE) to bin Laden, you know, reinforcing that threat. And so that's a whole new ball game that makes I think these Olympics very, very different.

I think there is a higher degree probability that something is going to -- something will detonate. Something will go off. But I do think it's probably most likely to happen outside of the ring of steel and the Olympic village.

WALLACE: I've got to pick you up on this. You're saying as the chairman of the House Homeland Security Committee, you think that there is a high probability that there will be some explosion outside the ring of steel?

MCCAUL: Well, I hope I'm wrong in this assessment. But you're talking about an area of the world where suicide bombers go off all the time. And the fact is right now, Chris, the eyes of the world are upon these Olympics. And the Chechen extremists know this. And they want to make a global statement. They want to make a jihad statement. And what better time to do it than right now? And that is I think the biggest threat to these Olympics. They don't have to hit in the ring of steel at the Olympic village as long as they hit somewhere in Russia. To them, that's a victory.

WALLACE: Let me switch subjects on you, because a lot of us found out this week about an attack on a substation, a power substation in San Jose, California, last April, in which snipers knocked out 17 giant transformers. Congressman Schiff, this happened in your state of California. How sophisticated was the attack? What does it say about the vulnerability of our electrical grid and what can we do about it?

SCHIFF: Well, it was a sophisticated attack. There's abundant evidence of preplanning. The people that went in knew exactly what they were doing. They knew what they were going to shoot at to try to disable these transformers without blowing them up and attracting attention. They cut fiber optic cables in advance to prevent telecommunications. So it was sophisticated. We're hoping that this was not a dry run. But that is obviously a great concern. And one other thing I think -- that I think it highlights is we put a lot of our focus on cyber security, on the ability of terrorists to use cyber networks to try to bring down our grid. And perhaps we have taken our eye a bit off the ball on less sophisticated attacks that can be equally brutal or even more damaging. These -- a lot of these substations are in remote areas. They have nothing, but a chain link fence and maybe a remote camera. And I think what we can do about it is prioritize those transformers, those substations that would bring the greatest threat to the grid, protect those first. I think it's a limited number, probably less than 100. And then branch out from there. But plainly a lot needs to be done. And some finger pointing already going on between the various agencies as to who's responsible for security here.

WALLACE: We're beginning to run out of time. And I want to get to one more subject. But very briefly, congressman, how concerned are you about this attack?

MCCAUL: Well, any time you have a power station under attack, both physical or by cyberattack we just passed a cyber bill on my committee last week, very, very grave concern. Because if the power grid is shut down, it takes a long time to restore that capability. And that would mean turning off power to large regions of the United States. So -- and we have to be better fortified from a physical attack, but also just my bill demonstrates from a cybersecurity attack, which could take down due far greater damage than Sandy did, for instance, in the northeast shutting down power grids over regions of the United States. So this is -- I don't want to, you know, engage in hyperbole, but this is a very -- the critical infrastructures in the United States, both power, both oil and gas, both financial sectors are all under attack in the cyber world and there are physical attacks like you saw in California that we need to do a better job protecting the nation.

WALLACE: Gentlemen, I want to get to one last subject and that is Syria. Because there were reports this week that thousands of foreigners including as many as 70 Americans have gone over to Syria to fight alongside the extremists, against the Assad regime and may now pose a threat to the U.S. homeland. Here was a comment from the new secretary of Homeland Security Jeh Johnson.

JEH JOHNSON, HOMELAND SECURITY SECRETARY: Extremists are actively trying to recruit westerners, indoctrinate them and see them return to their home countries with an extremist mission.

WALLACE: Chairman McCaul, how big a threat Americans and other Westerners being trained in Syria and coming home to carry out jihad?

MCCAUL: You know, I had this conversation with the Secretary Jeh Johnson just last week before this speech. And we both agreed that Syria is probably the largest and most significant threat to the homeland security of the United States today. And the reason being is that we have so many jihadists pouring into Syria every day training. They have training camps, military training camps. This is far surpassing the FATA in Pakistan. This is becoming the worldwide training ground for terrorists. So concerned about Westerners, European, but also Americans. If you travel there with legitimate travel documents, you can come back into the United States or in Western Europe with this kind of expertise, with this kind of training and pull off, you know, a terrorist attack and let's not forget the external operations they have. Right now their goal is Syria. But after Syria, externally they want to hit the West and the United States of America.

WALLACE: Let me bring in Congressman Schiff. We've got about a minute left, Congressman. There's a growing sense that the Obama administration's international conference in Geneva isn't working, isn't going to solve the problem of Syria. Does the -- do we need a reset in the administration policy, one to oppose the Assad regime, two, to make sure that they live up to their commitments, which they are at this point on turning over chemical weapons and third, to address this growing extremist threat inside Syria, and especially the idea of them coming home for the U.S.

SCHIFF: First of all, that growing extremist threat that you mentioned and Mike was talking about, it's probably going to be the most pernicious threat to the country for the next ten years. So it is a very serious problem. We're already seeing it in Egypt where some of the jihadists trained in Syria are now attacking Egyptian government. And, of course, they are trying to train people to attack us here on our homeland. In terms of the Geneva talks, they haven't been successful. In fact, no one has been successful here. Our policy hasn't. The Russians haven't been successful. The regime hasn't. The opposition hasn't. It's a bloody stalemate with horrific humanitarian proportions, of horrible proportions. Do we need to reset? It's hard to see what the reset will be. I'm not sure that the United States getting deeply military involved is going to contribute to an end in this conflict. I think we have to try to keep the pressure on with both the bottom up strategy like we're seeing in Geneva and more importantly, probably, is what will happen outside of Geneva and that is we need to talk to the nations that are fighting by proxy in Syria to the Iranians, to the Russians, to the Saudis, to the Turks, to the Qataris, and try to reach a resolution here. And I think the resolution is a Syria without Assad. He's not indispensable to any of us. There are goals we all want to see in Syria after the conflict and they're not necessarily the same. But we don't need Assad in power.

WALLACE: Of course, there's no indication that Assad plans to go anywhere. Congressman Schiff, Congressman McCaul, I want to thank you both so much for coming in today.

SCHIFF: Thank you.

MCCAUL: Thank you.

WALLACE: Next up, our panel is back to weigh in on the GOP's flip on immigration reform. Plus, what would you like to ask the panel? Just go to Facebook or Twitter at Fox News Sunday, and we may use your question on the air.



REP. JOHN BOEHNER (R ), SPEAKER OF THE HOUSE: There's widespread doubt about whether this administration can be trusted to enforce our laws. And it's going to be difficult to move any immigration legislation until of that change.

(END VIDEO CLIP)   WALLACE: Speaker John Boehner explaining this week why the House GOP leadership suddenly reversed course on passing immigration reform this year. And we're back now with the panel. Well, House Republican leaders a little over a week ago seemed all in on comprehensive immigration reform. Releasing a statement of principles after a caucus they held. But as you just heard by late this last week, Speaker Boehner was saying it's going to be very hard to pass anything this year out of the House. George, what happened?

GEORGE WILL, SYNDICATED COLUMNIST: Well, there are five reasons, one of them is that with the split -- that's one reason for (INAUDIBLE). The other four are as the speaker said, Republicans are convinced that the president will not do his constitutional duty to see that the laws are faithfully executed. Therefore, any law they write will be written in smoke and disappear. Second, they're convinced that the Democrats are most interested in getting as many new voters possible on voting rolls. That's not in their interest. They also think they can run on ObamaCare right through November. There I think they're probably mistaken. But that's what they think. The problem is here Republican political imperatives are pretty clear and in my judgment, this will horrify Laura, diametrically opposed to the national interest, which is in considerable more immigration.

WALLACE: Juan? What happened?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, if you want to put it in simple terms, Heritage Action, Tea Party and talk radio said no to Speaker Boehner and Speaker Boehner could not say no to his Tea Party caucus in the House. And what happened is he came forward with these proposals, these principles on the concept that you know what, it's time to do something that we really do have a consensus, not only in terms of the national audience that George was referring to, but in terms of the Republican Party that we can do this piecemeal specifically and avoid the tag of amnesty giving a pathway to legal citizenship. Instead, just simply saying we're not going to deport these people. They'll have some kind of cards or legal status.

WALLACE: Julie, what struck me was how gentle the White House was in reacting to what was over the course of a week a 180-degree flip by the House Republican leaders. You know, they really didn't hammer John Boehner at all, which makes me question do they still think there is an opportunity to get immigration reform through the House?

JULIE PACE, THE ASSOCIATED PRESS: I think at this point they're holding out hope. They think that in some ways this may be some tactical positioning by Boehner. They think that there is a possibility that after the November elections and that short window between the elections and the new congress that they could get something done. And as long as that option is on the table, as long as they see a slim possibility, you're not going to see Obama coming out and hammering Republicans. I would just pick up on one thing that George said about Republicans being worried about Democrats trying to put more voters on their roles. There is no guarantee that Hispanics vote for Democrats. If immigration is taken off the table. But until that -- a lot of these Hispanic voters have said on a lot of other issues, they would side with Republicans. But until immigration has taken off ...

WALLACE: And also, we also need to point out that none of the people that would be legalized or given the path to citizenship, are going to be on the voting roles for a decade. In any case, the conservative editorial page of "The Wall Street Journal," which has been very pro-immigration said that Boehner's retreat, and that was the word they used, on immigration reform will hurt growth. I want to pick up on their editorial. "The result of doing nothing will be a de facto amnesty, in which 11 million illegal immigrants will continue to work using fake documents. Mr. Obama will look for ways to grant more of them legal status using executive power and the GOP will look even more on welcoming the minorities. We have asked all of you to send us questions and we got one on Twitter from someone named Nando Somoza. Why can't the GOP move towards the center a little bit? Let the Dems stay extreme." Laura, how do you answer that?

LAURA INGRAHAM, HOST, "THE LAURA INGRAHAM SHOW": Well, let me (INAUDIBLE) "The Wall Street Journal" first, and I'll get to that. "The Wall Street Journal" attacked in that editorial talk radio and this is kind of the people rising up against this and John Boehner cowering. Far as I can tell, "The Wall Street Journal" is on the side of Nancy Pelosi, Chuck Schumer, Barack Obama, Pat Leahy and La Raza. Talk radio, for the most part, is on the side of yes, Heritage, probably other Tea Party type groups, most Republican senators and congressmen, I think, and the lion's share of the American people. So, I'm going to frame that editorial from "The Wall Street Journal." I think they should put down the dog-eared copy of "Fountainhead" and actually live in the real world where people's wages are flat-lining. The middle ground ...

WALLACE: Strong message to follow.

INGRAHAM: The middle ground immigration, I think, is enforcement. Right now we're not really enforcing our laws uniformly. The president, as John Boehner just realized, apparently, is not trustworthy. He has the deferred action for a million and a half people who are here illegally. Just basically changing law with the stroke of a pen and allowing people to work here and stay here who are legally present. If you want to know why people don't have much trust in the rule of laws today, applying evenly, it's because of things like that. And apparently, the Republicans don't have a problem with it.

WILLIAMS: Let me get ...

WALLACE: No. No, no. Wait, Juan. Because I think this is so interesting. Because what we're seeing here is the split inside the Republican Party between two staunch conservatives. Wait. Let me finish. And I'd like you and George to explore this. George? How do you respond on this issue of whether immigration reform is good or bad for the country?

WILL: With three needs the country has, the welfare state needs its workforce replenished. As the elderly retire, 10,000 babyboomers everyday becoming eligible for Social Security and Medicare. Second, there's an intense global competition for human capital and we're losing out on that. Third, to emigrate is to make an entrepreneurial act, it's to uproot yourself and perhaps your family and take a risk. And those are the kind of people I want more of.

INGRAHAM: Do you care about American workers at all and their jobs and their wages, and their dream?

WILL: Laura, you're the one who is arguing the AFL-CIO argument, which is ...

INGRAHAM: They are for us.

WILL: But there is work with so many caveats they nullify.

INGRAHAM: So, why not ...

WILL: You're arguing ...

INGRAHAM: Well, I have borders.

WILL: You're arguing the zero sum game.


WILL: We have when -- in the lives of our children and grandchildren, there are 500 million Americans.


Will: And they're all going to be working because we're going to have economic dynamism aided by immigration.

INGRAHAM: So, the argument, though, however, leads to why have borders at all? Why have a border? If it's just about people as (inaudible) to come in and our workers without really a concern about assimilation, without concern about how it could affect people in middle America, I mean a lot of people who are in favor of this don't send their kids to public schools, are not affected by illegal immigration at all. But I would submit that there are people who are watching this show right now who are screaming at the top of their lungs going who in Washington is representing my interests? The labor shortage argument that Paul Ryan is making that we have an impending labor shortage -- I don't think is -- I think transparently, it is ridiculous to most people today. We don't have participation in the workforce as it is.

WILL: It's not a shortage, it's growth we want. We don't want to ...

INGRAHAM: Well, then we can talk about legal immigration.

WILL: You're talking to ...

INGRAHAM: Not illegal immigration.

WILL: You're talking about the borders. As you know, 40 percent of all the people here illegally ...   INGRAHAM: These are ...

WILL: Overstay their visas.

INGRAHAM: Why don't we crack down on that, then?

WILL: Crack down. But that is still compatible.

INGRAHAM: We don't want to crack down on it. There is no will to enforce the border. There is no faith in this administration to do it and the Republican elites and the Democrat elites agree and the people are revolving across this country.

WALLACE: Isn't deportation at a record levels?

INGRAHAM: No, last year -- last year the Obama administration I think did pass five areas of ...


INGRAHAM: Yes, they did.

WALLACE: In five years of this administration -- more people have been deported than were under George W. Bush over eight years.

INGRAHAM: The Fox News poll from a few months ago shows that.

WALLACE:  I'm not talking about a poll. I'm talking about numbers of deportation.

INGRAHAM: Yeah, over Bush's year, especially. Yes, Obama did deport more.

WILLIAMS: Right. I just want to say quickly that when Speaker Boehner comes out and says you can't trust the president, this is a man who's been enforcing ...

INGRAHAM: America apparently ...

WILLIAMS: at a risk -- and the cost ....


INGRAHAM: He deferred action against more than a million people.

WILLIAMS: No, you were there ...

INGRAHAM: Who are here illegally by the stroke of a pen.

WILLIAMS: Let me tell you. I spoke to Jorge Ramos, you know, the Hispanic newscast, and he's saying, you know, the reaction in the Hispanic community is you're deporting grandmothers and kids.

INGRAHAM: Oh, the emotional argument.

WILLIAMS: This is terrible.   INGRAHAM: OK. We're now with the emotional argument.

WILLIAMS: It's not emotional, it's a fact.

INGRAHAM: Constitution. Rule of law. Let's just do legislation by emotion.

WILLIAMS: I'd rather have George argue with her.


WALLACE: That's a good line, by the way.

INGRAHAM: Three against one.

WALLACE: Thank you, penalty, next week.

INGRAHAM: I'll take it.

WALLACE: Up next, our "Power Player" of the week, the curator of the Secret Museum outside of Washington that you've probably never seen until now.


WALLACE: They're still arguing about immigration reform.

One of the highlights of visiting Washington is going to the National Mall and the museums of the Smithsonian. But there is one museum you won't find on any tourist map. Here is our power player of the week.


TONI HILEY, CURATOR, CIA MUSEUM: It's always been called the best museum you've never seen.

WALLACE: Toni Hiley is curator of the CIA Museum. A fascinating collection of gadgets and artifacts from U.S. spycraft. It's closed to the public. But on the day a new officer is sworn in, it's one of the first stops.

HILEY: At 2:30 that afternoon, you'll be with us in the museum. That's your first introduction to the history of the agency. And the museum is where we touch that history.

WALLACE: Such as the Office of Strategic Services that employed 14,000 operatives to help fight World War II. Richard Helms, then a young OSS officer who later became CIA director, was in Hitler's bunker in Bavaria on the day that Germans surrendered.

This is a piece of Hitler's stationary that somewhere Richard Helms picks up while he's in Germany, and on DE Day, he sends this to his 3-year-old son.

HILEY: Exactly. And look at the last sentence. "The price for ridding society of bad is always high. Love, daddy."

WALLACE: There are all kinds of devices, from a fake rat used to hand off secrets in Moscow, to a catfish drone to penetrate enemy waters.

HILEY: Here we have our well-dressed spies. She may have small sub-miniature document copy cameras hidden in cigarette packs in her purse, behind her broach.

WALLACE: And this pipe is actually a receiver for secret transmissions.

HILEY: This is 1960s technology.

WALLACE: And there were the trophies from the war on terror. None bigger than the 7:1 all source intelligence scale model of the bin Laden compound in Pakistan. Exact replicas of this model were used to brief the president and the assault team.

HILEY: I think we got the best feedback we ever could have hoped to receive when every single one of the assault team returned alive, and then they said we felt like we had been there before. This worked to save lives.

WALLACE: Of course they didn't know what they were going to see inside the building, because you couldn't -- could you? You're giving me an odd look.

HILEY: That we can't talk about.

WALLACE: And now tell me about this?

But right there is the automatic rifle that was next to bin Laden when the Navy SEAL team took him out.

There are 25,000 pieces in the collection, some are still classified, and only 5 percent are on display. Toni Hiley says the purpose is to record remarkable accomplishments most of us will never know about.

HILEY: One of the officers who had made some of the history that we captured in the gallery came up to me and threw his arms around me and said, thank you for doing this for us. That's why we do what we do. It helps our officers see that their sacrifice, that their contribution to the national security of our nation is recognized.


WALLACE: There is a way to see some of the artifacts from the CIA Museum. 148 items are on display online at Others are on loan to the Reagan Presidential Library and Museum in Simi Valley, California, through early March.

And that's it for today. Have a great week. We'll see you next 'Fox News Sunday'.

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