Answers sought following Benghazi revelations; ObamaCare's impact on job creation

Sen. Kelly Ayotte and Rep. Adam Schiff on push for answers


This is a rush transcript from "Fox News Sunday," May 4, 2014. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

Now, House Republicans will have a select committee investigate Benghazi, after newly released emails raised more questions about the White House response.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: This document was not about Benghazi.

REPORTER: It was her prep for the Sunday shows.

CARNEY: It wasn't here only prep.

SEN. LINDSEY GRAHAM, R- S.C.: The American people, to their credit, want to know the truth. This e-mail is proof positive they were manipulated.

WALLACE: We'll talk with Kelly Ayotte, one of the senators leading the charge for answers, and Adam Schiff, a member of the House Intelligence Committee.

Then, anemic first quarter economic growth but good jobs numbers reignite the debate over the state of our economy.

We'll sit down with FedEx CEO Fred Smith and the former head of UBS Bank Robert Wolf.

Plus, President Obama seeks a united front on Ukraine.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The Ukrainian government in Kiev has followed through on the commitment that it made in Geneva. We need Russians to do the same.

WALLACE: Our Sunday panel weighs in on growing questions about the president's foreign policy.

And our power player of the week, Brian Stokes Mitchell, who's been called Broadway's last leading man.

BRIAN STOKES MITCHELL, STAGE ACTOR (singing): To dream the impossible dream, the fight the unbeatable foe --

WALLACE: All, right now, on FOX NEWS SUNDAY.


WALLACE: And hello again from FOX News in Washington.

The scandal over how President Obama handled the Benghazi terror attack that killed four Americans got new traction this week. Under court order, the administration had to release an e-mail from a top presidential adviser that indicates the White House helped shape Susan Rice's talking points when she appeared here and on other Sunday talk shows five days after the attack.

In those interviews, Rice blamed reaction to a video and ruled out a preplanned act of terror.

Joining us now from New Hampshire is Senator Kelly Ayotte, and here in studio, California Congressman Adam Schiff.

House Speaker Boehner announced the Friday that he'll call for creation of a select committee to investigate Benghazi.

Senator Ayotte, a year and a half after the attack, is it too late?

SEN. KELLY AYOTTE, R-N.H., ARMED SERVICES COMMITTEE: Well, Chris, I don't think it's too late. We have to get to the bottom of this. I called for the creation of a select committee right after this attack. So, I'm glad that the speaker has done that. The investigation today, there's been important work done in the committee, but it's disjointed.

And the latest revelation from the White House really tells us that we need this select committee. Why is it that we're just receiving this e-mail? It really shows where the idea from the video came, because that video was not in the talking points and yet that is what Ambassador Rice pushed on your show and every Sunday show.

WALLACE: Congressman Schiff, you have said that the Benghazi and you put it conspiracy theories are a terrible distraction from the real issue which is bringing the people who killed these four Americans to justice. Is this house committee part of that distraction? And how certain are you that Democrats will participate and put since it's a select bipartisan committee, will put members on the committee?

REP. ADAM SCHIFF, D-CALIF., INTELLIGENCE COMMITTEE: Chris, I think it's a colossal waste of time. We've had four bipartisan investigations of this already. And I think it's driven by a couple things. The Republican conference is so fractured, there's only two things they agree on, they don't like ObamaCare and so, we've had 50 votes on that and they do like talking about Benghazi. So, we've had four investigations on that.

But I don't think it makes sense really for Democrats to participate. I think it's just a tremendous red herring and a waste of taxpayer resources. So, I hope the speaker will reconsider. But it looks like he has bowed again to those from the farthest right of his conference.

WALLACE: When you say you don't think it makes sense for Democrats to participate, you're saying that you think that the Democrats should not appoint anybody to the special committee and let it simply be Republicans holding this investigation?

SCHIFF: You know, that's what I recommend. I don't know whether leadership will ultimately decide. But I don't think it makes sense for us to give this select committee any more credibility than it deserves. Frankly, I don't think it deserves very much. We tread down this path so many times.

In terms of this Rhodes memo, if you look at this four-page Rhodes memo, there's only two sentences that pertain to Benghazi which track exactly what the CIA talking points were. So, it's very hard to use this memo as some kind of a justification.

WALLACE: Let me pick up on that. For months, literally months, spokesman Jay Carney flatly denied that the White House had anything to do with the Susan -- the talking points of Susan Rice used when she came here and other Sunday shows and blame the attack on a protest of anti -- the anti-Islam video that spun out of control.

Let's take a look at those denials.


CARNEY: It's been repeatedly said by some of the critics on this issue on the hill that the White House provided talking points. That has been categorically refuted. The only edits made by anyone here at the White House are stylistic and non-substantive. They corrected the description of the building or the facility in Benghazi from consulate to diplomatic facility, and the like.


WALLACE: But then this week, under a court order, the administration had to release this memo from White House adviser Ben Rhodes, under the list goals for Rice, he wrote, "To underscore these protests are rooted in an Internet video and not a broader failure policy."

Carney may have been right. They didn't edit the CIA talking points. But it turns out Ben Rhodes and the White House had written their own talking points.

SCHIFF: They've written their talking points about what was going on in these protests in two dozen countries. And I think it's important to remember what Ambassador Rice was preparing for on your show and others when she sat on the seat that I'm sitting in right now, Benghazi was not the first question you asked or the second or third, it was the 14th question you asked.

It's not a criticism. But it's reflection of the fact that the focus of your show like many others was this conflagration, these protests going on in 20 capitals on the countries --

WALLACE: You're exactly right. But, sir, I have the Rhodes memo right here. And in it, he says, one of the goals, "That we will be resolute in bringing people who harm Americans to justice."

The only people who had been harmed, Americans, who had been harmed at that point were the four Americans who'd been killed in Benghazi.

On another page, he specifically refers to a report in a British newspaper about Benghazi.   So, to say this memo wasn't about Benghazi is just not true, sir.

SCHIFF: Well, it's true that two sentences of the four page memo are about Benghazi. But those two sentences are exactly what the CIA talking points said. And that's exactly what Susan Rice.

WALLACE: No, because the CIA had never talked about the video.

SCHIFF: Well, what the CIA said was that the protests in Benghazi, and obviously, you say I got that wrong, were based on protests -- inspired by the protests in Cairo which is what the ambassador said. Those protests in Cairo were inspired by the video.

And that's exactly what the ambassador said. That's exactly what the intelligence committee community believed at the time. That's what General Petraeus briefed us on, and Director Clapper. That's what was thought at that time.

So you can take issue with what the intelligence community did. There is nothing that contradicts that in the Rhodes memo. In fact --

WALLACE: Let me bring Senator Ayotte, because Jay Carney says the same thing you heard from Adam Schiff, Senator Ayotte, which is this memo which does mention Benghazi and talks about Americans being harmed is not about Benghazi. Take a look.


CARNEY: I can say again and again, and I know you can keep asking again and again, this document was not about Benghazi.


WALLACE: Senator Ayotte, do you buy that?

AYOTTE: Chris, it doesn't pass the laugh test.

But here's the problem, the CIA testified before the House Intel Committee, Director Morell, that, in fact, they did not put a causal connection between the attack and the video and, in fact, when that was said, that's not in the talking points anyway. The video story clearly came from the White House and why did it make a difference six weeks before an election pushing a story about a spontaneous reaction to a video which is what Ambassador Rice said on your show and other shows as a result of the attacks, as opposed to a coordinated terrorist attack, is a very different narrative when you're trying to push that this was not a failure -- a broader failure of foreign policy.

So, there really isn't an explanation of why she connected the video, why the president and others connected to the video even as late as September 20th. So, that is inexplicable.

And I would ask Congressman Schiff, do you know -- why did she connect it to the video? Also, she came on your show, Chris, and she also said that the conflict security was strong and significant.    Where was the evidence of that? Because we know that leading up to these attacks that there were whole course of history that shows there is an effect on that conflict. Yet she went on your show and said that the security was strong.

WALLACE: I want to bring -- excuse me --

AYOTTE: Look at those talking points and what it says about that.

WALLACE: Senator, I want to get to a different point. That is the fact that while the administration this first week kept saying this was not a preplanned terror attack, in fact, the people on the ground in Libya and with direct responsibility kept saying it was the CIA station chief in Libya said it was a terror attack and now, we found out this week so did the deputy intelligence director for Africom, U.S. forces in Africa.

Here was his testimony.


BRIG. GEN. ROBERT LOVELL, U.S. AIR FORCE (RET): What we did know early on is this was a hostile action. This was no demonstration going terribly awry.


WALLACE: Senator Ayotte, why do you think it is that the CIA, the State Department and the White House ignored their people and the ground when they said this was not a terror attack?

AYOTTE: Because the White House is pushing a political explanation leading up to an election. The president had been saying al Qaeda was on the run. They were trying to push a narrative of strength in foreign policy. This did not fit their narrative. This is actually a broader failure of foreign policy, the light footprint policy.

And, in fact, we know also that Secretary Dempsey -- excuse me, Secretary Panetta and Chairman Dempsey also said the same thing. They knew right away it was a terrorist attack. Yet that, was not pushed by the administration. They were trying to push this video that it was some kind of spontaneous reaction that was out of their control.

That's significant. This should matter.

WALLACE: We're running out of time, Senator Ayotte. And I want to give -- before we move to Ukraine -- I want to give Congressman Schiff a chance to answer.

The politics of this, one argument is what the White House was doing here is trying to protect Obama's re-election effort. Another question, which I know some Democrats have raised, is that this now is an effort to hurt Hillary Clinton before she runs for president, if she does, in 2016.  

SCHIFF: Well, I think that is clearly the case. Let me address what the CIA station chief said, because we heard in Director Morell's testimony that the station chief of the CIA thought this didn't begin as a protest for a couple reasons which the analysts didn't agree with. First was that he cited press reports that said there was no protest but, in fact, there were press reports that said there was a protest.

He also said that he didn't this Signals Intelligence. And this is an important point that gets lost when everyone cites the station chief in Tripoli. The station chief said that one of the possible motivations he had to concede was the video.

Now, no one wants to mention that. That was also the belief of the station chief. So I think what the deputy director said was that there was no interference by the White House. It was their best assessment, Morell's, General Petraeus and others, that it was the protest.

WALLACE: Let's talk -- I hate to rush you along. I want to ask you about Ukraine. It's very important. This week President Obama and German Chancellor Merkel said they would impose tough sanctions on the Russian economy not only if Russia invades Ukraine but also if Russia disrupts the May 25th presidential election.

Senator Ayotte, you've introduced legislation to impose those sanctions not later but right now.

AYOTTE: They need to be imposed now, Chris. The bottom line is if we wait until the elections, it will be too late at that point. We already see the playbook of what happened in Crimea happening in eastern Ukraine. And it's time to impose tougher sectoral sanctions, provide support for the Ukrainian military.

And at this point, Russia is not get is the message. They're violating the so-called "Geneva agreement". You got Russian agents in Ukraine fomenting unrest, causing all the violence - 


AYOTTE: And really creating a situation right now that warrants tougher sanctions by this administration.

WALLACE: Briefly, Congressman Schiff, have the Obama sanctions up to this point been too weak?

SCHIFF: Well, look, I think we're going to ultimately need stronger sanctions. The challenge is not getting administration to go along with stronger sanctions. The challenge is getting our European allies to do exactly that. It's going to affect our economy much more than ours. And any sectoral sanctions that we administer without the Europeans that they back fill aren't going to be effective.

So, yes, I agree with the senator. I like to see stronger sanctions, but I want to see them done in concert with our allies. And our job is really to get them onboard. Regrettably, I think they're going to be necessary. We've got to inflict a heavy penalty on Russia for this kind of violation of its neighbor's sovereignty.

WALLACE: Congressman Schiff, Senator Ayotte, thank you both. Thanks for coming in today.

SCHIFF: Thanks.

AYOTTE: Thanks.

WALLACE: How big are this week's Benghazi developments, and is creation of a House select committee a good idea? Our Sunday group will join that conversation.

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



JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The e-mail and the talking points were not about Benghazi. They were about the general situation in the Muslim world where you saw, as you may recall, protests --

REPORTER: To prepare Susan rice.

CARNEY: Correct. They misstated it. In fact, this was -- it was explicitly not about Benghazi.


WALLACE: Well, things got a bit testy this week when the White House press corps challenged Jay Carney's claim that Ben Rhodes' memo was not about Benghazi.

And it's time now for our Sunday group: Brit Hume, FOX News senior political analyst, Elise Viebeck of "The Hill" newspaper, syndicated columnist, George Will, author of the new book "A Nice Little Place on the North Side", about Wrigley Field at 100, and former Democratic Congresswoman Jane Harman.

What we asked you for questions for the panel. We got this one on Facebook from Jeff Goldstein who asks, "Why have Republicans handled the investigation so badly? Why wasn't a special committee appointed over a year ago?"

Brit, how do you answer, Jeff? And more than a year and a half after this attack, is appointing a select committee now a good idea?

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: Well, I think it's probably worth a try, even though it's pretty late in the game. It's not at all clear that there will be any buy in from the Democrats and bipartisanship has always been a characteristic of these effective select committees. So, we'll see.   As for why it's gone so badly, it's because it was scattered over several committees. There's been some ineptitude. There'd been some poor decisions taken. For example, the decision to have the committees of jurisdiction do I think was a principal one.

But the investigations have not been terribly effective and have left us with this continuing mystery unresolved to this day, it's where did Susan Rice get the idea to go on the Sunday shows and blame the whole thing on a video? We certainly believe now that it didn't come from the CIA. Jay Carney says it didn't come from the White House. Apparently has no responsibility for anything.

And we think we may have gotten a hint of it from this -- from this e-mail. But it's still not clear.

So, there are still things to investigate.

WALLACE: For months, I think it's fair to say that John Boehner, the speaker of the House, resisted calls for a special committee. He just wouldn't -- didn't want to do this for a variety of reasons. It might look too political. It might seem to promise more than the committee could absolutely -- actually deliver.

And I think there was also a concern that the committee would be seen as investigating Benghazi instead of talking about jobs and education and health care and things that directly affect people's lives.

Elise, what changed?

ELISE VIEBECK, THE HILL: Well, I think that this reflects actually of frustration on Speaker Boehner's part with how the investigation has been handled by some of his deputies, including Darrell Issa of California. I think that the special committee --

WALLACE: Who's the chairman, we should say, of the House Oversight Committee.

VIEBECK: Of the House Oversight Committee. Who has been the one basically in charge in doing the most work on the Benghazi investigation, and I believe that by now, establishing a select committee, Boehner can exercise more control over the process and be able to move forward with what Republicans see as this revelation in the Rhodes e-mail.

WALLACE: What do you make -- maybe you've done reporting on this, I thought it was very interesting -- that Adam Schiff said that Democrats may not participate in this? Which really is going to change it if this is just a Republican committee and not a bipartisan committee.

VIEBECK: That's right. Well, there are politics on all sides of this. I think Democrats see an opportunity here to make the committee look as political as they believe it is inherently. By not participating, that makes Republicans look bad and so Democrats may in fact do that. We'll find out probably this week.    WALLACE: The big development this week was the forced release of this Ben Rhodes e-mail that seems to contradict White House claims they had absolutely nothing to do with Susan Rice coming on FOX NEWS SUNDAY and the other shows and talking about a video. It's been called the smoking gun. Our colleague Charles Krauthammer compared it to the discovery of the Nixon tapes during Watergate.

George, how significant is it?

WILL: Rather less than the Watergate tapes, which showed a president at the heart of the crime wave, suborning perjury and raising hash money and all the rest.

This is a memo pushing a narrative that we now know to be false. That he should have known to be false at the time, that he probably did know was false and therefore the memo is false. That all said, that's only one of the subjects this committee, if there is to be a committee and I'll come to that in a moment, should be investigating.

First, why were we deeply embroiled in Libya's civil war in the first place? Illegally in my judgment.

Second, was there adequate security in Benghazi? Obviously not.

Third, should the military been able to respond when the attack is under way? That's an intramural argument within the military that General Lovell by his testimony poured kerosene on, and that's fine.


WALLACE: We should just quickly point out -- he was the deputy intelligence chief of Africom, who said that he thought that we should have responded.

WILL: Which now comes to the video, which strikes as not the most important of those topics and the committee. We certainly made news this morning with talking to Mr. Schiff. I do not know why at all any Democrat would want to participate in this. By boycotting it, it just becomes a redundant and obviously partisan Republican exercise.

It's only a matter of time before Democrats raise the following question, would there be a select committee if it didn't want to have the power to subpoena the former Secretary of State Hillary Clinton for obviously reasons pertaining to presidential politics?

WALLACE: Congresswoman Harman?

HARMAN: Well, Chris, a little additional fact, which is I believe a couple days ago, Darrell Issa subpoenaed John Kerry who during the Benghazi time was a member of the United States Senate. They subpoenaed him to appear and testify on May 21st when he is scheduled to be in Mexico doing some serious work.

This is a circus --   

WALLACE: Wait. Wait. But, excuse me, the reason they asked him to testify is because of the fact that last August, the Issa committee subpoenaed the State Department to come up with all the Benghazi documents and they didn't come up with the Ben Rhodes document. You can argue whether or not John Kerry should be subpoenaed. But it wasn't about the attack, it was about something he was in control of.

HARMAN: But I'm arguing that he shouldn't be subpoenaed. And I don't know whether this all leads to Hillary Clinton or some way to embarrass her during the election season.


WALLACE: Could you explain -- wait, wait, since you brought it up, can you explain why it was that when the House committee subpoenas all the Benghazi document they didn't turn over the Rhodes memo, but when a court judge orders them to do it, they turn over the Ben Rhodes document?

HARMAN: No, I can't explain it. There may be some claim of executive privilege --


WALLACE: Did they get a problem?

HARMAN: I think it's posed a political opportunity right at the moment.

But let me make a couple comments on Benghazi. I know something about this. And the day after the Susan Rice appearances, I -- or the day after the event, I was meeting with some senior intelligence committee folks, because I still advise in some capacities on boards to some of our agencies. And I think there was legitimate confusion.

I agree about the point that the video was in Egypt and nobody really knew what the facts were. I'm reading from the Ben Rhodes memo which I've never seen before and it said, "We're not aware of any actionable intelligence indicating that an attack on the U.S. mission in Benghazi was planned or imminent."

And I think that was accurate. So --

WALLACE: Because we didn't have actionable intelligence about 9/11. That doesn't mean it didn't happen.

HARMAN: No, it doesn't mean it didn't happen.

WALLACE: It doesn't mean it wasn't a terror attack.

HARMAN: I would call that an intelligence failure. And, by the way, this was an intelligence failure. But it wasn't a conspiracy. And there aren't aliens in Area 51 and Vince Foster wasn't murdered.

And it's time to move on and focus on the real problems in Libya and other problems that affect the --    


BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: You're right, there wasn't a conspiracy in the United States to mount the Benghazi attack. The question -- that's not the question. The question was whether in the aftermath of the attack, when the administration sent its U.N. ambassador out to explain it to everybody, and she did so falsely, that there wasn't a conspiracy to create the false talking points that she used?

I'm not talking about the CIA talking points. I'm talking about the talking points used on that program that day which were monumentally misleading and were -- and have since been shown to be false and based on no intelligence of any consequence that we know of.

HARMAN: All right. And my answer to that is no, there wasn't a conspiracy. They didn't turn out to be accurate.

HUME: Well, how did it happen? Well, how did it happen?

HARMAN: I think that people made at the time their best guess at the facts.

HUME: Wait a minute. But where did the idea that the video had anything to do with Benghazi come from?

HARMAN: Where did it come from?

HUME: Yes?

HARMAN: I think it came from people who weren't sure about it.

HUME: Well, can you identify anybody? Can you identify any CIA information? Can you identify any source?

WALLACE: Ben Rhodes talked about the video or the movie five times in this memo. Only five times.

HARMAN: I -- my view is, having been around at the time, that this not deliberately misleading. It turned out to be wrong but it was not deliberately misleading.

WALLACE: And on that, we're going to take a break. We'll see you all a little later. I don't think we're going to solve this now.

Incidentally, for more on the latest developments, join Bret Baier for "Fox News Reporting", "Benghazi: White House Cover-up Revealed?" It's a question mark -- tonight at 9:00 Eastern on the FOX News Channel. Don't miss it.

And what do you think about the Benghazi scandal? Join the conversation on Facebook with other FNS viewers.

When we come back, mixed news this week about the economy. We'll sit do with two top CEOs to discuss the state of the republic.


WALLACE: We got a lot of numbers about the economy this week, but not a clear picture of where we stand. To help sort -- we brought in two of America's leading business executives, from Memphis, the chairman of FedEx, Frederick W. Smith and from New York, the former head of UBS Tank and now of the firm 32 Advisors, Robert Wolf. So gentlemen, let's run through the numbers that we got this week. The economy created 288,000 jobs in April. And the unemployment rate fell to 6.3 percent, but that was largely because the workforce dropped by 806,000 people to a three decade low of 62.8 percent participation in the labor force. And in the first three months of this year, GDP growth was almost nonexistent, just one -- I mean, rather .1 percent. Mr. Smith, with all of that as prelude, where is the economy?

FRED SMITH, CHAIRMAN AND CEO, FEDEX: Well, I think the economy is getting better based on what we're seeing. The jobs number last Friday was good at 288,000 people. Added to the payrolls. But as you said, a lot of people withdrew from the labor market. Our internal forecast is about 2.5 percent GDP this year, rising to about 3.5 percent in calendar year '15.

WALLACE: Mr. Wolf, your view? What is the state of our economy right now?

ROBERT WOLF, FOUNDER & CEO, 32 ADVISORS: Well, I would say I would agree. I think it's getting better. I think you have to discount GDP significantly. The weather was the worst in 60 years other than 1976 and 1978. 288,000 was a very good number as well as the revision. And it's 50 straight months of private sector job gains. So, I would say the trend is getting better, but certainly nervous about the participation rate.

WALLACE: But you know, gentlemen, this isn't just one month or one quarter. I know people have talked about the bad winter. I'm wondering maybe whether we need to worry about global cooling now. But let's look at the record. Because average growth over the 19 quarters of this recovery of the Obama recovery is 2.2 percent per quarter. With total growth over the 19 quarters of 11.1 percent. The average for all recovery since 1960 is 4.1 percent for quarter with total growth of 21.1 percent. Basically, about double what we're seeing in this recovery. Question, Mr. Wolf, why is this recovery so weak?

WOLF: Well, I would say it differently. Normally close to recovery, post-recession the recovery is 50 percent gains come from housing or construction. Which that took the first two years to really get through the slack and now you see housing recovery starting to come around. So I would say it's not a normal recovery. But I actually think 2 -- 2.5 percent is where we've been kind of chugging along. I mean obviously, GDP last year we came as high as 3.4 percent. Most economists think it's going to be up 2.5 percent. But I think we're going to need housing back. We're going to need manufacturing back. And the truth is we're in a bit of a technical revolution here. So I do think that it's taking productivity gains which actually impacts, you know, obviously employment as well.   

WALLACE: Mr. Smith, I want to ask you also for your historical perspective. I was checking out -- during the Reagan recovery in 1983 and '84, growth per quarter was 4.9 percent as compared to 2.2 percent in the Obama recovery.

SMITH: Well, I think there are a couple of things that you got to pay attention to in the Reagan years. The amount of United States GDP that was related to international trade was much smaller than it is today. It's about 30 percent today. U.S. corporations have invested a lot overseas because the returns are higher. And our tax code in the United States does not reward investment and advancement in capital equipment and software is what creates jobs. If you plot job creation and capital investment, both public and private infrastructure, they look like railroad tracks. It's about 94 percent correlation. We're not spending on infrastructure. We're down to the lowest level since 1947 in that regard. So primarily it's the lack of investment. Certainly, that would include residential recently. You've seen very bad balance of payments, deficits to buy oil and with China and Japan for many years. Some of those are now turning around a bit.

WALLACE: Let me ...

WOLF: Chris?

WALLACE: We are getting -- let me just interrupt here. Because I want to get to this question of policy and what's the best way to boost growth going forward. Because this week the Senate -- Senate Republicans filibustered and blocked an increase in the minimum wage from $7.25 an hour now to $10.10 an hour by the year 2016. President Obama says this is one more case of Republicans refusing to look out for the middle class. Take a look.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: They said no to raising the minimum wage. No to equal pay for equal work. And no to restoring the unemployment insurance they let expire for more than 2 million Americans looking for a new job.


WALLACE: Mr. Smith, are those measures as well as what the president calls investment, what other people call spending as well as higher taxes on the wealthy, are those the right ways to get this economy going and to boost growth and boost jobs?

SMITH: In my opinion, Chris, the most important thing that the Obama administration has done since the financial crisis was to put in place so-called bonus depreciation. That's the ability to write off capital investment when you make it rather than wait many years to get your money back. The Kennedy administration put in an investment tax credit. So, I think part of the problem is we talk about everything as an investment when it's really education and when it comes to people and so forth. It's investment and capital equipment and software and infrastructure that drives the jobs in the United States.   


WALLACE: Mr. Smith, like the minimum wage? Is that good or bad for the economy?

SMITH: Well, you know, the reason the Republicans, I think, voted against it was because the CBO said it would cost 500,000 jobs. There are now other studies, Harvard, MIT that said it's not so meaningful. What it will do is it will reduce employment of lower skilled people on the go forward basis.

WALLACE: Mr. Wolf, let -- I'm going to reference that with the nonpartisan Congressional Budget Office. Because I had a couple of findings. On the one hand, it said that if you increase the minimum wage to $10.10 by 2016, it would move 900,000 people above the poverty line. But it also said that it would cost 500,000 jobs. So, let me ask you the same question. Raising the minimum wage, extending unemployment benefits, more spending, higher taxes on the wealthy, are those the right or wrong ways to get this economy going faster?

WOLF: So, let me answer both. Let me answer on the growth side first. One, this president for infrastructure spent, this for free trade, both with Europe and Asia. He is for corporate tax reform. Those are all positive things to get the economy going. With respect to minimum wage, yes, I saw the CBO report. It also said that minimum wage would increase aggregate demand in this country, which would obviously help our GDP. I think the other aspect of the CBO report if you're positive in using the CBO report on the unemployment, it also said that the Affordable Care Act helps employment because it helps mobility. So, you know, there's a lot of different checks going around. It certainly, the one thing about minimum wage is it may impact up to 25 million people in a positive way. 15 million direct, 10 million indirect. Those are all good things for this country.

WALLACE: Mr. Smith, I'm going to -- since Mr. Wolf brought up ObamaCare, I did want to ask you about that as well. It's not -- you know, on the health care side or, you know, legitimate social policy side, but as a matter of the economy, is ObamaCare a drag on the economy or a boost to the economy?

SMITH: Well, I think the ObamaCare effect on the economy over a period of time will be largely neutral. What it's caused people like small business people and for that matter FedEx to do for 100,000 of our employees and their families is to change the structure of our health care, so there's much more patient involvement, higher deductibles, higher co-pays. And so that will offset to some degree the increased transfers to the people that did not have health care. I think overall it will be relatively neutral in the short term. Longer term maybe more problematic.

WALLACE: Mr. Smith, Mr. Wolf, we are going to have to leave it there. Thank you so much for joining us today.

WOLF: Thank you.

WALLACE: Up next, President Obama threatens more sanctions against Russia and defends his foreign policy. Our Sunday group will take up that conversation.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: Russian leadership must know that if it continues to destabilize eastern Ukraine and disrupt this month's presidential election, we will move quickly on additional steps including further sanctions that will impose greater cost.


WALLACE: President Obama after a meeting with German Chancellor Merkel promising tougher economic sanctions if Russia does not change course in Ukraine. And we're back now with the panel. The violence, I think it's fair to say is only increasing in eastern Ukraine with dozens killed in the last couple of days and Ukrainian forces try to oust pro-Russian separatists who have seized government buildings and Russian President Putin calling that a criminal act. Brit, it seems we're headed bit by bit towards a showdown.

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: It seems we are. And it does not appear that the sanctions that have been imposed so far have deterred Vladimir Putin in any meaningful way which raises the question of, OK, what additional sanctions of the kind that president has described, will likely be imposed and how soon? What would trigger them? If you're talking about sectoral sanctions, which would hit the Russian economy as a whole, much harder than anything that has been done so far, it's not clear that he has key players in the Europe -- in Europe onboard with him to do that. And it's not clear whether he can get that to happen with only regarding Ukraine. Now, you know, the situation expands to other nations including nations like the Baltics which are members of NATO. That might change. But so far, not so good.

WALLACE: Meanwhile, "The Wall Street Journal" had a poll this week that had some interesting numbers about all of this. It showed only 37 percent approve of President Obama's handling of Ukraine while 47 percent want the U.S. to be less active on the world stage. Elise, the way I read the poll is people are saying we don't like getting pushed around by the Russians, but we don't want to be any more engaged in the world stage.

ELISE VIEBECK, THE HILL: That's true. And polls also show that the public supports sanctions including tough sectoral sanctions, but not in fact sending weapons to the Ukrainians, which is what senators like Kelly Ayotte and John McCain have called for. So, in this sense, the public is on Obama's side. But what I feel is that they do not understand his approach and that's one of the reasons why they're having trouble getting behind it.

WALLACE: During his trip to Asia, President Obama was asked about his foreign policy, which some call cautious and incremental. And he defended it quite viscerally. Here was part of his defense.

(BEGIN VIDEO CLIP)   OBAMA: That may not always be sexy. That may not always attract a lot of attention. And it doesn't make for good argument on Sunday morning shows. But it avoids errors. You hit singles, you hit doubles every once in a while. We may be able to hit a home run.


WALLACE: What we thought, it might be a good argument to have on a Sunday morning talk show. George, it was not exactly a Reaganesque call to arms, was it?

GEORGE WILL, SYNDICATED COLUMNIST: No. He says he's going to play what's called in baseball small ball. Get them on, get them over, get them in, advance one -- 90 feet increment of the time, but the point is, you advance 90 feet. The question is where is he advancing? Egypt recently sent 529 people to death for one killing. 683 people to death for another. Iran is headed for what -- status that Bibi Netanyahu called a nuclear threshold state. That is a screwdriver turn away from having nuclear weapons. In Syria, Assad who the president said must go, is gearing up to get elected to another seven year term. The Israeli-Palestinian talks have collapsed. China is rampant in the south China and East China Seas and Mr. Putin, what we just saw was, Angela Merkel and the president drew another red line. If you interfere with the March -- the May 25 presidential election there will be terrible consequences. We'll see if this red line fares better than the others have.

WALLACE: Let's do the same tour of the horizon with you, Congressman Harman. When you look at Iran and Syria and Ukraine and the breakdown it appears of the Middle East peace talks, is this president sending a message of strength and of U.S. resolve?

JANE HARMAN, FORMER U.S. CONGRESSWOMAN (D-CA): Well, American leadership is indispensable. I think we should forget about pivots, and we should lead in part to the world where our leadership is needed. I hear it all the time when I travel around. And I think with -- in the case of Ukraine, it's good that we have had talked about sectoral sanctions. I think we ought to do them. I think we ought to do them now. I think that would deter Vladimir Putin.

WALLACE: Let me just, senator, represent it. Just so we explain. What the administration has been doing up to this point are targeted sanctions against individuals or against individual banks or institutions. Sectoral sanctions would be sanctions against the entire energy sector or the entire mining sector. So it's much broader.

HARMAN: Well, we should pick our targets carefully. Angela Merkel was here Friday. I was in a small meeting with her. She is trying to pull Europe along. Let's give a shout out to her. She is a great leader in Europe. And we do need Europe pulled along by focusing, for example, on certain financial institutions, actually, someone, a senior Russian official, speaking at the Wilson Center the other day said we ought to yank the visas of all the Duma members in Russia so they can't go to their dachas in the south of France and in Miami.   WALLACE: The Duma is the Russian parliament.

HARMAN: That would really get their attention.


HARMAN: So there are smart ways to do this. In addition to that, though ...

WALLACE: Wait. Can I interrupt for a second, though? You say you were in a meeting with Angela Merkel. Does she support -- because the perception is then that Germany, which has a lot of trade with Russia and particularly depends on energy, on oil and gas would not support sectoral sanctions at this point?

HARMAN: Well, she said she talked about how she is trying to move other countries in Europe along. I mean ...

WALLACE: Not our country.

HARMAN: Well, I think her country is -- at least she is closer to this. And she did stand in unity with President Obama talking about this. There does have to be an off ramp for Russia, though, to deescalate this. I don't think we choose to get in a war with the Russians. We have to bolster NATO. That is something they talked about, too. We have to find a way to achieve a pluralist non-corrupt government in Ukraine through these elections and we have to support trade, at least I think so. This T-tip, this trade regime ...

WALLACE: So what is the off ramp? And what makes you think Putin wants ...

HARMAN: Well, Putin personally, certainly the information everybody seems to have is that there is no advantage to Russia in having an all-out war in Ukraine. Our leverage is our economy against him. We're strong. He's a gas station as John McCain says, with a lot of corrupt oligarch surrounding him. And if we are adroit with these sanctions, we can avoid a worse outcome. And certainly, we have to bolster NATO. And we do now have some troops on the ground. Europe has to be in that game just as much as we do. They can't outsource NATO to the United States.

WALLACE: George?

WILL: We're at war now. The question is not how to prevent a war, it's how to win the war. The fact is, two helicopters get shot down. Putin says that Ukraine's use of its own army to enforce order in its own territory is a criminal act? He clearly has decided that he's at war and he's going to win it.

HARMAN: So, he's at war.

WILL: Yes.

HARMAN: We're not at war.

WILL: That's correct.

HARMAN: Right.

HUME: History is replete, you know, with cases where dictatorial leaders embarked on adventures in other countries that turned out in the end rather badly. That may be in the case here. But it's not going to turn out badly any time soon at the rate Putin is going, at least in his own mind, which is why your point is so well made about the need for presidential leadership. And you look at the polling numbers that Elise cited on -- or you mentioned about the use of infusion of arms and to the Ukrainian forces, that's reviewed negatively by the public. But one reason for that is, it is viewed negatively by the president. And I think it's a lot of his supporters here you're agreeing with. If he took a different view of this and made a case for it, I bet those poll numbers would turn around almost overnight and presidents who lead in situations like this end up as a rule with the public following them. But you have to lead. And you can't be talking about hitting small balls and singles and doubles and avoiding mistakes. That's not leadership. That is followership. And that is not working very well.

WALLACE: Elise, are you convinced that the president can lead and change public opinion on getting -- and, again, we're not talking about U.S. troops. I mean even in the most activist signal here, all we're talking about is sending something more than meals ready to eat. You know, military rations to the Ukrainian soldiers.

VIEBECK: No, I'm not entirely sure that the public's opinion is valuable on this. In fact, every political science study found that only one in six can find Ukraine on a map. And so, I think that there is a lot that they need to learn in order to get behind any sort of action.

HUME: That's what the presidents can do. That's why presidential leadership is important. He has got the biggest mega phone in the country if not the world. Who better to educate the public ...

WALLACE: Listen, if things keep going the way they're going, there may be no Ukraine to find on the map. (INAUDIBLE)

WILL: The president is leading. He just happens to be leading into a policy that in fact as Elise says, the country says, emphatically it wants. It may not want the consequences of it. But it wants the policy.

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

They held the White House correspondents dinner last night, also called the Nerd Prom where we, reporters, get to pretend we're friends with some stars from Hollywood. As usual, President Obama spoke, poking fun at himself as well as the media including one of his favorite targets.


OBAMA: The Koch brothers bought a table here tonight, but as usual, they used the shadowy right-wing organization as a front. Hello Fox News.



OBAMA: I'm just kidding. Let's face the facts, you'll miss me when I'm gone.


OBAMA: It will be harder to convince the American people that Hillary was born in Kenya.




WALLACE: It's always better to be mentioned at those dinners than not to be mentioned. Up next, our "Power Player of the Week." One of Broadway's leading lights comes to Washington.


WALLACE: The Kennedy Center holds its spring gala tonight to raise money for performances and education programs. They're doing a special concert of the musical "Camelot" and King Arthur is our "Power Player of the Week."


BRIAN STOKES MITCHELL, ACTOR AND SINGER: I analyze the song very -- with great detail before I even start singing it. I analyze the lyrics. I analyze the rhyme scheme.

(SINGING): This is my quest to follow that sun.

WALLACE: Brian Stokes Mitchell has been called Broadway's last leading man. And he gave us a master class on how he creates a magical moment.

STOKES MITCHELL (SINGING): To dream the impossible dream, to fight the unbeatable foe.

WALLACE: He said his signature song, "The Impossible Dream" had traditionally been sung in long flights of music.

STOKES MITCHELL: It is I was reading the lyrics to the song, I thought -- there is actually a question and an answer kind of in the song. And implied question to dream what? The impossible dream. To fight what? The unbeatable foe.  (singing): Now I'm alone

WALLACE: Mitchell's big break on Broadway came in 1998. When he originated the role of Coalhouse Walker in "Ragtime."

STOKES MITCHELL: And everybody said, oh, you're going to win the Tony Award. The show is going to win the Tony Award. And we could feel something wonderful with the show. And then "The Lion King" opened.

(singing): So kiss me, Kate.

WALLACE: Mitchell would win his Tony two years later in "Kiss Me Kate." Then there was Sweeney Todd and man of La Mancha. All with a voice uniquely suited for musical theater.

STOKES MITCHELL: For one thing, I had this big baritones sound that is kind of out of fashion now in the recording world.

WALLACE: But there's one way, in which he differs from everyone else who's ever heard him.

STOKES MITCHELL: I hate listening to myself sing.

WALLACE (on camera): Why on earth?

STOKES MITCHELL: It's because I only hear the mistakes.

WALLACE (voice over): 15 years ago Mitchell became close friends with Ted Kennedy who was a big fan of musicals.

STOKES MITCHELL: We were talking to each other on the phone, and that, is usually the first thing that he would do. (INAUDIBLE). And we would go into this whole duet together.

WALLACE: After Kennedy's death, Mitchell sang at his memorial service.

STOKES MITCHELL (singing): And one man scorned and covered with scars, still strong with his ...

WALLACE: Which made it even more fitting Mitchell would star at the annual gala for the Kennedy Center and what create one more enchanted evening.

STOKES MITCHELL: The audience is the last character of the show that's introduced because they tell you what's funny, what's not. So, it becomes this huge conversation with all of these people that are involved and it turns into something greater than you ever hoped or ever dreamed. That's the joy and the excitement of doing it.




WALLACE: Wow. If you want to hear Brian Stokes Mitchell, he has a CD out called "Simply Broadway." And he'll be appearing in "Shakespeare in the Park" this summer in New York City. And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

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