Robert Gates on Ukraine crisis, 'reset' with Russia; Sen. Rand Paul lays out vision for America at CPAC

Tea Party favorite on 'Fox News Sunday'


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

CHRIS WALLACE, HOST: I'm Chris Wallace.  

The mystery deepens in the disappearance of a Malaysian airliner, including the identity of two of the passengers. And Russia tightens its grip on Crimea and keeps out international monitors.


PRESIDENT BARACK OBAMA: If this violation of international law continues, the resolve of the United States and our allies and the international community will remain firm.

WALLACE: What's the way forward on Ukraine? And has the U.S. reset with Russia failed?

We'll ask former Secretary of Defense Robert Gates. It's a "Fox News Sunday"exclusive.

But first, the nation's leading conservative voices meet in Washington.

SEN. TED CRUZ, R - TX: We can either choose to keep our head down and not rock the boat, to not stand for anything, or we can stand for principle.

GOV. CHRIS CHRISTIE, R - NJ: We have to stop letting the media define who we are and what we stand for.

SEN. RAND PAUL, R - KY: You may think I'm talking about electing Republicans, I'm not. I'm talking about electing lovers of liberty.

WALLACE: We'll discuss the future of the GOP with the winner of the CPAC presidential straw poll in an exclusive interview with Kentucky Senator Rand Paul.

Plus, Lois Lerner refuses to answer questions again on the IRS targeting scandal, setting off political fireworks on Capitol Hill.

REP. ELIJAH CUMMINGS, D - MD: For the past year, the central Republican accusations in this investigation --

REP. DARRELL ISSA, R - CA: We're adjourned. Close it down.

WALLACE: Our Sunday panel weighs in.

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


WALLACE: And hello again from Fox News in Washington.

We begin with the latest on that disappearance of that Malaysia Airlines flight over the Gulf of Thailand, and investigators are not ruling out terrorism. The Boeing 777 deported Kuala Lumpur en route to Beijing before losing contact with air traffic controllers. Two hundred thirty-nine people were on board, including three Americans. But Malaysian authorities are focusing on two people who boarded the plane using stolen passports.

Fox News correspondent Doug McKelway has the latest -- Doug.


Air traffic controllers lost contact with the Malaysia Boeing 777 about an hour after it took off. Radar records show the plane may have tried to turn back. It had reached cruising altitude, and the weather was good. There was no distress signal.

More than 40 ships and aircraft are now engaged in a search of the Gulf of Thailand. Two large oil slicks have been spotted, but there is no sign of any wreckage.

The passenger manifest included the names of two Europeans who were not on the plane. Both had their passports stolen in Thailand in the past two years. The BBC reported that the men using those passports had purchased tickets together and because they were flying on to Europe through Beijing, they did not have to apply for a Chinese visa and undergo further checks.

The lead investigative country will be determined by where the wreckage is found, but the U.S. NTSB has already dispatched a crew, Boeing and Rolls Royce who made the engines are also sending representatives.

The Boeing 777 first built in 1994 is considered extremely safe. Boeing has delivered 1,030 of them thus far. Last year, an Asiana Airlines 777 crashed short of the runway in San Francisco. Pilot error was to blame. And Egypt Air 777 suffered a cockpit fire in Cairo in 2011. And British Airways lost a 777 on landing at Heathrow in 2008, icing in the fuel line prompted that accident, prompting a redesign of the fleet.

Both Kuala Lumpur and China have been plagued by terrorist activity. A knife attack just last week by Islamic separatists killed 33 people in Kunming, China and Kuala Lumpur is where al Qaeda first planned the 9/11 attacks -- Chris.

WALLACE: We'll stay on top of all of this. Doug, thank you.

Here in Washington, top conservative leaders got together for the annual CPAC conference to lay out their vision for the GOP. And for the second straight year, Senator Rand Paul won the presidential straw poll. The senator from Kentucky took 31 percent of the vote, far ahead of Texas Senator Ted Cruz who got 11 percent. Retired neurosurgeon Ben Carson and New Jersey Governor Chris Christie finished third and fourth.

And joining us now, the winner of the straw poll, Rand Paul.

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

PAUL: Thanks, Chris. Thanks for having me.

WALLACE: What do you think your victory in the straw poll says about your viability as a candidate for president in 2016?

PAUL: Well, you know, the one thing about CPAC is it's just chockfull of young people. There's young people everywhere. And I think young people, their lives sort of rotate, and, you know, disseminate. Everything goes out through their cell phone and they are very aware of their privacy, and they don't think when the government tells them that the Fourth Amendment doesn't protect your cell phone, doesn't protect your records, they don't accept that.

And so, I think not only conservative young people from colleges and high school, I think young people across the country are fed up with the government that says, hey, the fourth amendment doesn't apply to your records, doesn't apply to your cell phone.

WALLACE: I want to pick up on this because you seem to be trying to thread the needle politically -- on the one hand, continuing to push your conservative positions on the size and scope of government and taxes, but on the other hand, also pushing a libertarian agenda at CPAC. And we ran a clip of it in the open. You talked about electing lovers of liberty.

And I understand that about a week from now you're going to speak at the University of California at Berkeley, hardly a bastion of conservatism about the NSA and spying.

PAUL: Well, yes, I believe passionately in the Bill of Rights. Fourth Amendment to me is just as important as the Second Amendment. That hasn't always been true for all Republicans, so that does distinguish me some, but it's also something that attracts new people to our cause, I think.

The president won the youth vote 3-1, but his numbers have dropped 20 percent, 30 percent among the youth. Really the public at large is less trusting of this president, but the youth in particular have lost faith in this president.

And so, I think there's a real opportunity for Republicans who do believe in the Fourth Amendment to grow our party by attracting young people and bring that energy into our party.

WALLACE: You also had lunch recently with Attorney General Eric Holder to talk with him about working together on eliminating mandatory minimum sentences for nonviolent drug offenders. Senator, I don't have to tell you while you're having lunch with Eric Holder, there are a lot of conservatives who want to see him removed from office.

PAUL: Well, the thing about it is I don't think anyone is ever going to question my ability to stand up to the president or to Eric Holder. My positions are very, very clear, and I've disagreed with them. In fact, I'm suing the president. In fact, I laughed with Attorney General Holder that I will be seeing you in court.

But the thing is, at the same time, what we need in Washington are people who believe in their principles so strongly that they are able to talk to the other side and that the public at large will know that I'm not giving up on my principles, but I am going to him on something that's an issue of fairness.

If 30 years ago you grew marijuana plants in your college dorm, you should get your right to vote back. It's ridiculous. We have people in Kentucky who can't vote after 30 years after they serve their time for a nonviolent crime.

So I don't mind saying that I agree with the president or Eric Holder on this because I think the people who know me know that I will stand up to the president when he's wrong, which I think is quite a bit of the time.

WALLACE: You are also charting your own path on foreign policy. On Wednesday, while Russia was in the process of moving to what it appears to be the annexation of Crimea, this is what you said: "Unless we are willing to go to war for Ukraine, and I believe that would be unwise, Russia without question has the military might and geographic advantage to control the Crimea and the Russian-dominated areas of Ukraine."

Senator, it sounds like you have given up on ever getting Crimea out of the clutches of the Kremlin.

PAUL: Actually, the rest of that essay went on to say that if Russia acts like a rogue nation, they will be isolated from the West. They will bear a burden with trade, with isolation from the community of civilized nations.

But also, I think there's something very interesting. If they continue to occupy Crimea, if they annex Crimea, Ukraine almost certainly will come completely within the western orbit. So, it will backfire on them because you'll be taking Russian-speaking voters that have been voting for Russian-speaking presidents of Ukraine. You'll be taking them out of the population.

That country is almost evenly split, but if you take the Russian speakers in Crimea out of Ukraine and you're left with the Ukraine, what you'll see is the Western-oriented candidates are going to win every time.

The other thing is Putin needs to be warned, and I'm perfectly willing to tell him, that if he does occupy Ukraine, it will be chaos for him and for the world. If he creates a Syria out of Ukraine, what's going to happen is 80 percent of his oil and gas is going through Ukraine. It will be a disaster for him. And so, he needs to be fully aware of that.

The other thing I've said is that I would do something differently than the president because that would immediately get every obstacle out of the way for our export of oil and gas, and I would begin drilling in every possible conceivable place within our territories in order to have production that we could supply Europe with if it's interrupted from Ukraine.

WALLACE: But, Senator, some of your Republican opponents -- as you well know -- say that you're too soft on foreign policy, and they point to comments like this that you made last month. And let's put it up on the screen.

"Though the cold war is largely over, I think we need to have a respectful sometimes adversarial but a respectful relationship with Russia."

That's how President Paul would deal with Vladimir Putin, respectfully?

PAUL: Well, you know, I see my foreign policy in the same line as what came out of probably the first George Bush. Henry Kissinger wrote something in the "Washington Post" two days ago which I agree with. I see it coming out of mainstream of the Republican position.

But the interesting thing is that I opposed with real fervor the involvement of us in Syria, and that became the dominant position in the country, both Republican and Democrat. There's not one Republican who is saying we should put military troops into Crimea or into Ukraine. So I think I'm right in the middle of that position, and I think those who would try to argue that somehow I'm different than the mainstream Republican opinion are people who want to take advantage for their own person political gain.

I'm a great believer in Ronald Reagan. I'm a great believer in a strong national defense. In fact, what Ronald Reagan said in about one sentence sums up real a lot of what I believe. He said to our potential adversary, he said, "Don't mistake our reluctance for war for a lack of resolve." People knew that with Ronald Reagan. They still need to know that with the United States.

And part of the problem is I think this president hasn't projected enough strength and hasn't shown a priority to the national defense. That is something that were I in charge I would.

WALLACE: Senator, you spoke at CPAC this week, along with several of the other potential Republican presidential candidates in 2016.

Ted Cruz went after three recent Republican presidential nominees. And here's what he had to say.


CRUZ: All of us remember President Dole and President McCain and President Romney. Now, look, those are good men, they're decent men. But when you don't stand and draw a clear distinction, when you don't stand for principle, Democrats celebrate.


WALLACE: Senator, do you think it was over the line for Ted Cruz to go after a war hero like Bob Dole? And generally speaking, what do you think of Ted Cruz's practice of confronting, sometimes putting Senate Republicans, his colleagues, in tough situations?

PAUL: You know, I guess I would just say that everybody has their own style. My style is that I stand for things and I don't think people question whether I stand for principle.

But I don't spend a lot of time trying to drag people down. I've been very complimentary of Mitt Romney. I met him. I think he's a great guy.

Can we do things different to get the party bigger? There's always ways we can get bigger, particularly when we don't win. But I don't spend any time sort of trying to criticize others in the party, because I realize the party has to be bigger, not smaller.

WALLACE: Finally, I want to talk to you about 2016, I guess to a certain degree we have been throughout this interview. A columnist for "The Washington Post" this week rated you as the front-runner for the Republican nomination in 2016, and in a poll of Republicans you and Jeb Bush are out front when voters are asked who they would like to see run for president.

And as well we heard this week that you are pushing a bill in the Kentucky legislature that would allow you to run both for the Senate and for president in 2016.

So I guess the question is, is it fair to say that when it comes to at least pursuing the possibility of running for president in 2016, that it's full speed ahead for you, sir?

PAUL: You know, we're definitely talking about it. My family is talking about it. We do the things that would be necessary to make sure that it can happen and will work.

But I truly haven't made my mind up and won't make my mind up until after the 2014 elections. But, you know, I haven't been shy about saying that we are thinking about it.

I think that the message that I'm trying to promote whether I do it or not of bringing our message to minority voters, to people who have been persecuted throughout history, to young people who feel like the government has grown too big. I think it's a message that can grow the party, and the party's got to grow bigger or we're not going to win again.

WALLACE: Senator Paul, to be continued. Thank you. Thanks for talking with us today, sir.

PAUL: Thank you, Chris.

WALLACE: As the presidential hopefuls tested their messages at CPAC, who got the best response? We'll bring in our Sunday panel to get their reviews.

Plus, what would you like to ask the panel about CPAC. Just go to Facebook or Twitter @FoxNewsSunday, and we may use your question on the air.



CHRISTIE: We've got to start talking about what we're for and not what we're against.

CRUZ: They say if you stand for principle, you lose election. The way to do it, the smart way, the Washington way, is don't stand against ObamaCare, don't stand against the debt ceiling, don't stand against nothing.


WALLACE: Chris Christie and Ted Cruz were the taste of the differing visions for the GOP on display at this year's CPAC conference.

And it's time now for our Sunday group.

Syndicated columnist George Will, former Democratic Congresswoman Jane Harman, former Republican Senator Rick Santorum, and Time magazine's Rana Foroohar.

Well, the two wings of the Republican Party were on full display at CPAC. On the one hand, you had Chris Christie saying we can't govern if we can't -- if we don't win. On the other hand, you had Ted Cruz and Rick Santorum, Senator, talking about sticking to conservative principles on the size and scope of government, as well as conservative principles on social issues.

George, is the GOP getting any closer to a clarifying moment here?

GEORGE WILL, SYNDICATED COLUMNIST: I certainly hope not. It's much more interesting when they are brawling with one another.

Look, the Republicans have been fighting with one another since 1912, when a former Republican ran against an incumbent Republican, Teddy Roosevelt against William Howard Taft. And the conservative movement can't win in this argument because if they are harmonious, the media says stultifying, monochrome, oppressive, no diversity. And then when they argue with each other, they say cry havoc and slip the dogs of civil war in the Republican Party. It's perfect nonsense.

WALLACE: Congresswoman Harman, as I think you would agree, a strong, committed Democrat -- do you se any sign that the Republican Party is getting its act together, especially when it comes to reaching out to women, especially single women and to minorities?

FORMER REP. JANE HARMAN, D-CA: Well, I don't think CPAC is the Republican Party. It's a piece of the Republican Party. I even see Rick nodding here.

This whole thing reminds me of a high school theater tryout. I mean, who is going to get the lead. Ted Cruz was, by the way, fabulous at the gridiron dinner last night, making fun of himself which is part --

WALLACE: We should just quickly explain, the gridiron dinner is one of those big fancy -- this is a white tie dinner that the press throws and politicians make speeches. I was not invited, but go ahead.

HARMAN: Fair and balanced, you should have been invited.

But at any rate, this isn't the Republican Party.

Free advice from someone who is in a non-partisan role at the Wilson Center to the Republican Party: start being a serious party. Start holding meetings about how to change the nomination process for president and what the party stands for, not just what it stands against.

WALLACE: And what about specifically this issue of reaching out to women and minorities?

HARMAN: Well, you know, I know there were women there. Sarah Palin closed the conference. I think part -- part of the Republican Party has reasonable views on these things. This part, by my lights, a little challenged.

WALLACE: Well, I'm going ask you about that, Senator Santorum. We asked all of you for questions, and we got one from Facebook from Tamara Hyland, and she picks up actually on what Congresswoman Harman said.

"How can the GOP win with a right-leaning platform and candidate when most of us are moderate? I care about the economy, but want the government to stay out of many social issues. I am concerned that we will get Hillary without moderation."

Senator Santorum, as a hard-liner on social issues, how do you answer Tamara and Jane Harman?

FORMER SEN. RICK SANTORUM, R-PA: I throw out a couple individuals, a guy named Tony Abbott, a hard-liner who is now the prime minister of Australia, and, you know, Australia is clearly to the left of us on most of these moral cultural issues, yet Tony Abbott is a conservative Catholic who didn't change his positions one bit but was able to go out there and connect with average voters.

One of the things that I talked about at the CPAC speech was we've done a very bad job of connecting with working Americans, and we -- we're out there in a very stressful time in American history. People are full of fear and anxiety about their future, and we're out there talking about cutting things. I'm for reducing the size of government. I'm for reducing taxes.

But when your whole answer is I'm going to cut your benefits and I'm going to cut taxes for rich people, you're not cutting it with average people, and that -- that to me is the real missing link here.

One other person I mentioned, too, Pope Francis. Pope Francis hasn't changed one doctrine of the Catholic Church and he's getting four times the crowd. Why? Because of the way he's communicating to the average person out there.    We need to learn some lessons of who is out there actually trying to reach average folks because those people, average working Americans are feeling completely disconnected to this president, but they don't think that we care about them and that's the big challenge for the Republican Party.

WALLACE: I want to ask one quick question before we move over to Rana and your reaction to the straw poll where you finished fifth. And how serious are you about running for president again?

SANTORUM: I think Rand Paul's answer is probably a good answer for me. I'm doing everything that you would be doing. I'm not going to make any decisions until after the 2014 campaign.

But, (AUDIO GAP) New Hampshire this month --


SANTORUM: As we said, Rand Paul is trying to hit a kind of sweet spot here where he pushes a conservative agenda on a lot of the traditional government, spending, taxes issues. But he also is pushing libertarian ideas when it comes to especially things like government spying and to limits on criminal penalties.

Rana, does he have the right idea, Rand Paul, about how to build a bigger tent for Republicans?

RANA FOROOHAR, ASST MANAGING EDITOR, TIME MAGAZINE: You know, I'm not sure he does. I would have liked to have heard a lot more economic talk from him and a lot more solutions on that front.

It's interesting that you mentioned the pope because we actually -- Time made the pope the man of the year this year, in part because he speaks to these issues of income inequality, of people feeling left outside the tent that I think really will be the galvanizing issues over the next few years. We are still in the weakest recovery of the post-war era. A lot of people fell left out.

I was, you know, actually very impressed by your talk, Senator, and I think that coming up with conservative economic solutions, which can't be just about cutting, is going to be what it's all about.

WALLACE: You know, I want to pick up, though, with you. You mentioned Pope Francis. When it came to some of his early statements, he said, look, we've got to start talking about all the things that we're against, in terms -- may I -- in terms of social issues, and we've got to talk about what we're for and about the ministry of the church and not all the rules, all the things that you can't do, but all the ways in which the church can serve you and help you.

And that would argue, if you were to take his lead, for a de- emphasis on social issues. Not to say that he's not abandoning them.

SANTORUM: Well, he clearly hasn't abandoned them.


WALLACE: No, but he's not emphasizing them.

SANTORUM: But the point is that he realizes when people are hurting, you have to go out and heal, and the healing that he believes in, as the church, is to preach the good news, and what I think we need to be doing is to preach the news of a good America. We need to talk about the future of (AUDIO GAP) our policies are going to help individuals.

I mean, you've seen a whole bunch of TV commercials lately talking about the importance of manufacturing. That's the -- 70 percent of people in this country are not going to get a college degree. We have to have a program that says we can get you a good job and move up in society, too.

WALLACE: All right. Final word, George?

GEORGE WILL, SYNDICATED COLUMNIST: I think you're missing the central thing about Rand Paul. He's having fun. Politics is fun for him.

I mean, I don't know if the Republican Party is ready for a candidate who quotes Pink Floyd but it's an interesting thought. Rand Paul standing in my living room said apropos of nothing to some guests. He said, you know, you want to save the bald eagle, sell them?

He was making kind of a libertarian point that is no one washes a rental car. You take care of what you own. He has fun like that.

Now, he'll get in trouble of having fund in this dour presidential politics, but don't miss the -- Jane talks about women and minorities, also young people. CPAC was young people, and they're having fun with Rand Paul.

WALLACE: All right. We have to take a break here, but we will see all of you later on the program.

Up next, our exclusive interview with former Defense Secretary Robert Gates on President Obama's handling of the crisis in Ukraine.

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


WALLACE: We turn now to the crisis in the Ukraine.

There are reports Russia is tightening its grip on Crimea, sending in thousands of reinforcement. And once again, they kept international monitors out of the region.

Earlier, I discuss Ukraine's uncertain future and the escalating tension between the U.S. and Russia with former Defense Secretary Robert Gates. He is the author of "Duty: Memoirs of a Secretary at War." Secretary Gates, welcome back to "Fox News Sunday."   

GATES: Thank you, Chris.

WALLACE: I see that you still have that neck brace on from your fall on New Year's Day. When are you going to finally get that off?

GATES: With any luck in two to three weeks.

WALLACE: Terrific. Let's get to the issue at hand. The Crimean parliament has scheduled a referendum for next Sunday on whether or not to split off from Ukraine, and Russian leaders say they welcome the annexation of Crimea against the will of the government in Kiev. Secretary Gates, this would be the first time this has happened in Europe since World War II. How serious a development?

GATES: Well, Chris, I think it's part of a long-term strategy on Putin's part to recreate a Russian sphere of influence and a Russian bloc where Russia has economic, political and security relationships with these countries that make them all lean toward or do the bidding of Moscow. And we saw it first in Georgia in 2008. We've seen it in him breaking off the E.U. discussions with Armenia. We've seen him do the same thing in Belarus, so, you know, he'll -- he may retreat tactically from time to time, but this is part of a longer term effort to -- to stop the expansion of NATO, but more importantly, bring the states of the former Soviet Union back under the influence of Moscow, and frankly I don't think that he will stop in Ukraine until there is a government in Ukraine, in Kiev that is essentially pro-Russians.

WALLACE: But, of course, this is more than just that and more than what he's done in other countries because here they are talking about actually taking part of Ukraine and making it part of Russia. Former Prime Minister, Ukrainian Prime Minister Tymoshenko calls this a referendum under Kalashnikov and she notes that the U.S. and Britain agreed to protect Ukraine's sovereignty back in 1994. What is our responsibility here?

GATES: Well, I think that, first of all, we have to look at the reality of the options. There really aren't any direct military options that we have. I think that some of the sanctions that are being discussed and the actions being taken, whether it's limitations on visas or travel, on potentially freezing assets of specific individuals, frankly I don't believe are going to be any deterrent for Putin. I think -- I think our greatest response is to have our own strategy for countering this long-term strategy of Putin's to gather the states back under Moscow's control. I worry a lot about the Baltics. I applaud the dispatch of additional fire aircraft for the air patrols in the Baltic States, Lithuania, Latvia, Estonia. I think that's the right thing to do and we ought to be exploring doing more militarily with Poland. I think the Europeans, with our support, should now press ahead very aggressively with the southern pipeline that would get gas to Europe outside of Russian and Ukrainian territorial space. What we need to do is to show Russia that there are long-term consequences to this aggressive behavior on their part. Our tactical options are pretty limited.

WALLACE: Earlier this week, and I want to focus on this possible annexation of Crimea, because earlier this week you said you did not think that Putin wanted to take part of Ukraine with all of its economic problems. As you said today you thought that he wanted a Ukraine that looks toward Russia giving the possible annexation. Have you underestimated Putin's ambitions here, and is Crimea already gone?

GATES: Well, first of all, I don't -- I don't think I've underestimated his ambitions. I think the strategy, is as I have described, I don't think that he wants to recreate the Soviet Union precisely because he doesn't want to have responsibility for economic basket cases like Ukraine is at the president time. What he wants is for those governments to look to Moscow and basically subject to whatever Moscow wants without having responsibility for them. And -- and so I think a pro-Russian government like Yanukovych, the ousted president meets Putin's needs in terms of what he's after, whether something like that can happen in the near or medium term, I don't know. But there's no question that the seizure of Crimea is an aggressive and an illegitimate act. And I think what you're seeing here is a tactic where, you know, the history of Crimea and the relationship with Russia and Ukraine is a complicated one in the sense that Crimea was part of Russia until Khrushchev gave it to Ukraine in the early 1950's.

Basically it didn't make any difference then, and so I think the Russians see this as taking back territory that belonged to them or that's the way they will portray it, territory where the population is significantly Russian, very pro-Russian, and I think Crimea has strategic importance for Russia because of the Soviet or the Russian naval base, and it's also their only warm water port. So no question it's an aggressive, illegitimate act. The question is whether anybody can do anything about it. I think he does not want to send troops into eastern Ukraine. I think that he would prefer to achieve his goals without that kind of blatant use of military force outside of Crimea and frankly I'd be surprised if he did do that.

WALLACE: Secretary Gates.

GATES: But I do not believe -- I do not believe - we're going (INAUDIBLE) that Crimea will slip out of Russia's hands.

WALLACE: You think Crimea is gone?

GATES: I do.

WALLACE: You've defended President Obama's handling of the situation this week, but in January you said you thought that President Obama made a big mistake when he set the red line for the use of chemical weapons in Syria. Here's what you warn. "If you cock the pistol you've got to be willing to fire it." By "cocking the pistol" whether it's on the red line in Syria or giving asylum to Edward Snowden or other issues. You're really -- and then not firing it, you really don't think that President Obama has emboldened Putin at all.

GATES: Well, all I would say is - what I was saying earlier in the week was simply that I thought in the middle of a major international crisis, that some of the criticism, domestic criticism of the president ought to be toned down, while he's trying to handle this crisis. My own view is, after all, Putin invaded Georgia when George W. Bush was president. Nobody ever accused George W. Bush of being weak or unwilling to use military force, so I think Putin is very opportunistic in these arenas. I think that even if -- even if we had launched attacks in Syria, even if we weren't cutting our defense budget, I think Putin saw an opportunity here in Crimea, and he has seized it. You know, the ouster of Yanukovych was a big strategic setback for Putin, and -- and I think it's -- it's testimony to how skillful he is or how agile he is that he's tried to offset that by the seizure of Crimea and throwing this whole situation into a very different -- into a very different light, and I think that --

WALLACE: Well, I know -- excuse me, sir. I was just going to say you talk about Putin being opportunistic, and obviously he's got a big strategy here, but just in terms of optics, do you think it's helpful for President Obama to take the weekend off in the middle of what you call a crisis to be playing golf in Florida?

GATES: Well, you know, I've -- I've seen this happen year after year, president after president, president takes a day or two off and plays golf. It doesn't matter whether it's President Obama or ...

WALLACE: Would you have advised him to do it, sir?

GATES: The first President Bush going fishing. I think you've got to give these guys a little time off. You know, mostly they are working 20 hours a day.

WALLACE: Would you have advised him to do it this weekend, sir?

GATES: Well, I was never in the position to advice presidents on what they did on weekends.

WALLACE: That's a very diplomatic answer. Finally, Defense Secretary Hagel announced the Pentagon budget for 2015 this week, and I want to lay out some of it. It is $495 billion. That is $113 billion less than what was targeted in last year's budget, and Hagel says the Army will be cut to fewer than 450,000 troops, the smallest Army since 1940. Here is how Hagel defended these cuts.


CHUCK HAGEL, DEFENSE SECRETARY: This is not the military the president nor I want. It isn't the military that this committee or this Congress wants for America's future, but it is the path we are on unless Congress does something to change the law.


WALLACE: Secretary, would you have resigned as Defense Secretary rather than preside over those cuts, and do you think they do damage to the nation's security?

GATES: Well, I don't know the answer to the first question. I think that -- that the cutting the defense budget in significant ways right now is -- is a serious mistake. You know, when we've got the budget before at the end of the Cold War, at the end of Vietnam and at other times, it's been because we thought the world was going to be a safer place, at least we thought so temporarily at the time. No one can make that case right now. You look at the situation in Ukraine and our relationships with Russia. You look at the tensions between China and Japan and in the South China Sea. You look at Iran and North Korea. These -- these guys are operating on the 20th century model of nation states, boundaries matter, strategic interests matter, zero sum game, I win, you lose. This is the way these countries look at the world. It's different than the way the West Europeans and we look at it, and frankly the -- the pace, at which both the Europeans and the United States is cutting their defenses, regardless of what the facts on the ground in terms of the number of ships and number of planes, it certainly sends a signal that we are not interested in protecting our global interests.

WALLACE: Secretary Gates, thank you so much, sir.

GATES: My pleasure, Chris. Good to talk to you again.

WALLACE: Up next, is the president and Congress threaten to increase the cost to Russia for its intervention, the Kremlin warns that sanctions will come back at the U.S. like a boomerang. Our Sunday panel will be right back.



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JOHN KERRY, SECRETARY OF STATE: This is the 21st century, and we should not see nations step backwards to behave in 19th or 20th century fashion.


WALLACE: Secretary of State John Kerry who along with President Obama has been calling out Russia for an outdated mentality towards Ukraine, and we're back now with our panel. Well, we are another week into the crisis in Ukraine. Russia has solidified its hold on Crimea, and, in fact, now appears to be headed for annexation. Meanwhile, the U.S. and the European leaders, Western European leaders, seem engaged in a slowly escalating series of sanctions. George, what's your big takeaway from this week?

GEORGE WILL, SYNDICATED COLUMNIST: The administration have two theories. The first of which has already been refuted and we just heard it, which was that this sort of thing just can't happen in the 21st century. The second theory is this, that Russia today, unlike the Soviet Union, is enmeshed in the world trading system, in the world financial system in a way that binds it down like Gulliver among the Lilliputians. That it's got so many webs on it that it can't behave the way it unfortunately is behaving and what we are going to see is whether or not Russia's economic ties with the West immobilized Russia or immobilized the West and that the Europe becomes incapable of collective action because they are so hooked on trade with Russia.

WALLACE: I want to pick up, Congresswoman Harman, on the comment from Secretary Kerry, because you heard this over and over again this week that the Russians are engaged in 19th century mentality. You heard President Obama after Putin said that what they are doing is legal, say, well, he's got the wrong set of lawyers on international law. You're a Democrat, but as you like to say you're also the head of the non-partisan Wilson Center. Is this president, is this administration, sending a tough enough message to Putin?

HARMAN: I think they are sending the right message to Putin. Just demonizing Putin as Henry Kissinger said in his excellent op-ed is not a strategy. Just a couple of more comments. Vladimir Putin doesn't know the Colin Powell rule. If you break it, you own it. And if he breaks up Crimea he's going to own their pension liabilities, their tanked economy at a time when the Russian economy is stretched. And I don't think it matters if he's living in the 19th century or the 14th century, he is living in a networked world, and his stock market has tanked $13 billion. It is true, that international firms, a lot of them, U.S. based, like PepsiCo and John Deere and others, have huge economic stakes in Russia, but I bet they are having board meetings and coming up with plan "B" and let's not forget the gas exports from the United States.

If we can extract gas safely and consistent with environmental goals, we should be exporting it to Europe, and we should take out their dependence on Russia, and so I think Vladimir Putin may have a short-term strategy in the 21st century, but he sure hasn't got a medium or long-term strategy in the 21st century.

WALLACE: So, Senator Santorum, do you agree with the congresswoman that Putin is actually losing here and we're winning?

SANTORUM: No, I don't agree that he's losing. I think he can lose and I think if we do the right things that there's a good chance he will lose, but the bottom line is up until this point I -- I think what President Obama has done as far as policy is about, you know, sending our military into the Baltic and saying the tough language that he's saying, the last couple of weeks he's done a reasonably good job. The problem is there's five years before that. He has sent all the wrong signals to Putin, and whether it's with Syria or Iran or pulling the defensive miles out of Poland and the Czech Republic, from day one this has been an appeasement and trying to bring and reset the relationship with Russia, and the problem is now we've seen the result of that. He can get tough now, but it's hard to get tough when you're cutting the defense budget by half a billion dollars.

WALLACE: I just want to point out what Defense Secretary Gates said. And he said, look, in 2008, the Russians went into Georgia and invaded and took away two provinces from Georgia and nobody would have said that George W. Bush was soft on the use of military force. I mean, is it possible just the Russians do what the Russians do?   SANTORUM: I'm not suggesting that what George Bush said at that time was sufficient either, but what ...

WALLACE: But he's certainly hasn't set a policy of appeasement.

SANTORUM: He didn't set a policy of appeasement, but he certainly set ground rules that there would be a response when action was taken, and he didn't in that case. He didn't really respond in any kind of meaningful way.

WALLACE: But what can you do, I mean particularly when the Europeans are -- are as small and as slowly escalating as the U.S. sanctions are, that Europeans are even slower and more reluctant so what can he do?

SANTORUM: I think the energy issue is a big one. Jane was absolutely right about providing alternatives to Europe to gas, but we have a president who is slowing down -- you talk about slow walking. There are I think 15 or 20 terminals that are trying to be constructed to export natural gas. I think two so far have been approved. It's been years in the process. There doesn't seem to be any end in sight. That's a problem.

WALLACE: I want to bring in Rana because this is your -- right in your wheelhouse, these issues. And you have John Boehner, the House speaker with an Op-Ed piece of the "Wall Street Journal" talking about export more gas and more oil to Europe. You reduce Russia's leverage, you hurt the Russian economy. Realistically, I mean, it sounds like a good idea. Realistically is that something we could do and particularly is that something we could do in the near term?

FOROOHAR: Not quickly. My takeaway from this whole thing is I'm so glad the U.S. is becoming more and more energy independent. That's a great thing and we should speed up the sort of creation of all kinds of fuel assistance in the U.S. We only produce about 3 billion barrels a day of shale gas and oil right now. We use about 90 billion barrels a day of fossil fuels ourselves, so I don't think we're going to solve Europe's energy problem, but what this does say is that petro politics are problematic wherever you are. We need to speed up the production of shale gas. We're going to need that for our own manufacturing sector. Though, I don't see us becoming a major exporter in the near future.

WALLACE: In the time we have left, George. Where we are headed and particularly because we're going to have a vote a week from today, a referendum? Does Crimea end up being subsumed and become a part of Russia the first time that this would have happened since World War II?

WILL: Are we going to be up late at night waiting for the outlined precincts to come in in Crimea?


WILL: The Crimean parliament voted to have this referendum and voted unanimously. It gives you some sense of the diversity of opinion, and that's permitted in Crimea right now. We're approaching this in the language of Marxism that is really. We're the ones that believe in economic determinism if the stock market tanks, if the oligarchs have trouble with their wealth. I'm not sure Vladimir Putin thinks that way. He's thinking like a nationalist, not in terms of economic categories.

WALLACE: All right. We have to step aside for a moment, but when we come back ...


ISSA: For the past year this Central Republican Accusation ...

UNIDENTIFIED MALE: In this investigation ...

ISSA: We're adjourned. Close it down.


WALLACE: An ugly scene at a House hearing on the IRS targeting of conservative group. We'll discuss the fallout and where the IRS investigation goes from here.



ISSA: Miss Lerner, why would you say Tea Party cases were very dangerous?

LOIS LERNER, FORMER IRS OFFICIAL: On the advice of my council, I respectfully exercise my Fifth Amendment right and decline to answer that question.


WALLACE: Former IRS official Lois Lerner once again pleading the Fifth rather than answer questions about her role in the IRS targeting scandal, and we're back once again with the panel. Well, before we get into the infamous dustup between the chairman and the top Democrat on the House Oversight Committee, let's get to the real issue here, George. It's been almost a year since a Treasury report confirmed the IRS targeting of conservative groups. There are six investigations going on now, four in Congress, two in the administration, one in Treasury, one in Justice. Are you surprised that we still know so little about what really happened?

WILL: No, because the congressional investigations are just starting, and I don't think the one in the Justice Department ever will start. I mean, he's appointed an employee of his who is also a donor of his to investigate him and before the thing starts, he says, oh, by the way, I already know the outcome there isn't a smidgen of a scandal involved here. So, that's kind of a sham. This takes a long time to unwind this particularly when they are stonewalling and people taking the Fifth Amendment.

WALLACE: But you say Congress is just starting, I mean they have had a year.

WILL: They have had a year to try to extract the relevant documents. They are still being pried out of them. The fact is Lois Lerner has the perfect right to take the Fifth Amendment to avoid self-incrimination and the rest of us have a perfect right to draw rational inferences for what she's done.

WALLACE: Let's turn to the ugly scene between Chairman Darrell Issa and the top Democrat on the committee Elijah Cummings. We've been playing it throughout the show. Here's just a taste of it.


ISSA: What is your question?

CUMMINGS: I'm going -- no, let me say what I have to say. I've listened to you for the last 15 or 20 minutes. Let me say what I have to say. Sir, and I have one procedural question.

ISSA: Miss Lerner, you're released.


WALLACE: Congresswoman Harman, you were in Congress for 17 years, and you can see the picture there. How -- how common is that where you see the chairman sweeping his finger across his throat and cutting off the microphone, and did he deserve the reprimand that Republican -- the Democrats unsuccessfully called for?

HARMAN: I have never seen that, and, yes, he did deserve the reprimand and yes, he did apologize. To George's point, this is a good time for Congress to investigate this. Yes, there are a lot of issues out there about what the IRS did or didn't do to conservatives and maybe to others as well, but Elijah Cummings is a trained prosecutor, and he had his right. He had his 15 minutes or whatever the time limits were under House rules to ask his questions, and he should have been able to ask them and hopefully now calmer heads will prevail and the next chapter should showcase what the House can do in terms of a thoughtful investigation. The House has had a history, not recently, of investigating major issues in this country, and let's just hope that sanity can prevail.

WALLACE: I'm not sure we all hope that sanity prevails. The Obama administration has provided the House oversight committee with plenty of targets, operation "Fast and Furious," the IRS scandal, Benghazi, the Benghazi terror attack, and yet senator Santorum, sometimes that it seems, several teams it has seemed that Darrell Issa, the chairman of the House Oversight has gotten in the way of his own investigations and made himself the focus instead of the subject at hand. Do you have any problems with what he did?

SANTORUM: Oh, yeah. He shouldn't have done it. I mean you have -- sometimes you just have to sit there and take it, and I understand what Congressman Cummings did was against the rules. So I mean he had his time. He took it, he came back and tried to impose it, but when you're in the majority, you have to sometimes just sit there and let the minority talk because they are not going to govern so you at least give them the opportunity to talk, and he made a mistake. He's admitted he made a mistake and hopefully that will be the end of it.

WALLACE: Rana, we've got less than a minute left. As you look at these particular scandals, operation "Fast and Furious, IRS and Benghazi. Do you think any of them have legs? Do you think that we'll get to the bottom of any of them, or do you think they are all going to end in a kind of political muddle?

FOROOHAR: Political muddle, I'll be quick with that. I do think what's telling is this has actually backfired on Republicans, which is unfortunate. I mean, things should be investigated and they should be investigated properly, but the idea -- I mean, as telling at CPAC. In fact, there was a vote, and for the first time, 51 percent of the participants found that they were not happy with the way Republican Congress people were conducting themselves in Congress, and, you know, I think that -- I think that's telling about this whole incident.

WALLACE: All right. Thank you all, panel. We've put you to work today. We'll stay on top of all these stories. We'll see you next week. That's it for today. Have a great week, and we'll see you next "Fox News Sunday."

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