This is a rush transcript from "Sunday Morning Futures," June 22, 2014. This copy may not be in its final form and may be updated.
MARIA BARTIROMO, HOST: Does Iraq's president have to go? Good morning, everybody. I'm Maria Bartiromo. Welcome to "Sunday Morning Futures."
Growing calls for Nouri al-Maliki to step down so that a new inclusive government might be formed before Iraq completely breaks apart. A member of the House Select Committee on Intelligence is here with us on what America should and should not do to avoid another quagmire.
Lawmakers accuse the IRS commissioner of lying about missing e-mails. The chair of the House Ways and Means Oversight Subcommittee joins us live on how to recover those hard drives that the taxman claims may be gone for good.
Plus, new GDP numbers due out this week to give a report card on the economy. One industry that's been thriving all along? Technology. The cofounder of PayPal will talk jobs, the markets, immigration and a lot more as we look ahead on "Sunday Morning Futures."
Good morning. With more and more of Iraq falling under the sway of Sunni militants, what can the U.S. do to stop the country from completely sliding into chaos?
Congressman Peter King is a member of the House Permanent Select Committee on Intelligence and the former chairman of the House Committee on Homeland Security.
Congressman, good to have you on the program. Thanks so much for joining us.
REP. PETER KING, R-N.Y.: Thank you, Maria. Thank you very much.
BARTIROMO: So I guess the question is, at this point, does Maliki have to go?
KING: Yes, I do believe Maliki has to go, but I don't know if we have time to wait for Maliki to go, because by then it may be too late. It is absolutely essential that we stop ISIS from gaining this foothold in Iraq and also Syria.
So I believe it is important that we do make airstrikes, that special operations are on the ground. I would hope they're out trying to be able to call in attacks and give us the intelligence as to where to attack.
Maliki is a bad guy, there's no doubt about it. But for us to stand back and wait for Maliki to go before we take any action, it could be too late. I think we should do both, taking military action in the form of airstrikes and using whatever leverage and diplomatic pressure we have to push Maliki out.
BARTIROMO: I guess one of the real issues here is how did we get here and why is Maliki a bad guy? I want to talk with you about that. Plenty more to say from Congressman Peter King.
But first, let's get to Eric.
How did the crisis in Iraq get to this point?
Many say it has everything to do with the government and policies of Iraqi Prime Minister Nouri al-Maliki. Let's get to Fox News senior correspondent Eric Shawn, joining us with more on that.
Good morning, Eric.
ERIC SHAWN, FOX NEWS SENIOR CORRESPONENT: Good morning, Maria.
And good morning, everyone. He was once Iraq's hope, but now the U.S. wants him out. Prime Minister Nouri al-Maliki, who lived in Iran for years and some fear could become or has already become an Iranian puppet, well, his critics say he has brought this catastrophe upon his nation himself.
The 62-year-old al-Maliki, a prominent Shiite, took office back in 2006, promising to end the violence and terrorism that plagued his country in the wake of the U.S. invasion. But his tenure was marked by a harsh crackdown on rival Sunnis, purging them from the military, raiding Sunni camps, suppressing opponents all while wanting U.S. forces to leave.
Al-Maliki began his political career as a prominent Shiite activist in the Islamic Al-Dawa (ph) Party, opposing Saddam Hussein . He fled to Syria and lived in Iran, living in exile for more than two decades before returning to Iraq.
He did support the U.S. surge that largely worked and did leave the offensive against fellow Shiite radical cleric Moqtada al-Sadr back in 2008. But the successes were short-lived. Instead of bringing the Shiites, Sunnis and Kurds together, critics say al-Maliki's policies have done just the opposite. And his refusal to permit even some U.S. forces to remain has, now many charge, led to his military's stunning collapse.
(BEGIN VIDEO CLIP)
NOURI AL-MALIKI, IRAQI PRIME MINISTER (through translator): The status of forces agreement expires on December 31st, 2011. The last American soldier will leave Iraq. Secondly, this agreement is sealed. And, at the time, we designated it as sealed, and it is not subject to extension.
(END VIDEO CLIP)
SHAWN: For now, al-Maliki refuses to go anywhere, as the Islamist advances have ironically put Washington, Tehran and Moscow all on the same page against the Islamic State of Iraq and Syria militants. But you know, it could still take at least another 45 days before Iraq's political parties decide on their prime minister's fate as each day his country edges closer to becoming completely apart -- Maria.
All right, Eric, thanks very much. We are back now with Congressman Peter King of the House Intelligence Committee.
Congressman, what would you like to see done? Last week, it seemed that the president was shying away from airstrikes.
KING: First of all, I wish the president would stop saying what he would not do. One of the reasons we're in the position we are right now is because the president did not get the forces -- the status of forces agreement with Iraq by pulling all of our troops out, we lost much of the leverage we had. We allowed Maliki to fall into this way of Iran.
Also by not saying significant action in Syria, we've allowed ISIS to build up the space. The border's now porous between Syria and Iraq ,and they're going back and forth. This isn't just Iraq. It's Iraq and Syria and it represents a threat to the United States.
I would remind people that ISIS three years ago attempted to attack Ft. Knox in Kentucky. That was before they were anywhere near the power that they have today. So I think the president -- we should find ways to use air power that works.
And I think if these special forces are on the ground, I would hope that the main purpose is for them to get intelligence as to where we can attack. That's not going to be enough to win, but that could be enough to blunt the ISIS offensive and give the Iraqi army the chance to regroup. And also, at the same time, be bringing in a new unity government which would work with the Shiites, the Sunnis and the Kurds.
BARTIROMO: Congressman, what are the implications of all of this accelerated fighting to the U.S.?
KING: This is a direct threat to the United States. This would set up an Islamist caliphate in the Middle East. It would be a privileged sanctuary from which they could launch attacks against the United States.
It also would be a direct threat to Jordan, a direct threat to Israel, a direct threat to all of our vital interests in the Middle East. This is an offshoot of Al Qaeda, which is the worst of the worst. The Islamists say that Iraq and Syria is deadly; it is so bad that Al Qaeda has actually pushed them aside.
So this is like -- they are like the spear point for the Al Qaeda movement and this is a direct threat to the United States and also as far as oil supply, as far as boosting up Iran, as they basically make Al Qaeda and Iran the two powers in the Middle East. And neither one of them is in any way helpful to the United States. They're both extremely dangerous to us.
BARTIROMO: Well, it does feel like we're making one bad policy decision after the next in regards to foreign policy.
KING: Well, and it's -- again, I think, I hate to sound partisan. This is a lack of leadership. When the president drew the red line in Syria and then allowed the Russians to come in and we basically took no action at all. I know people like for instance Rand Paul say that the problem is because of the U.S. in Iraq and Syria.
No, the opposite. The problem is we pulled out of Iraq and we did nothing in Syria and that's why ISIS has the power that it has today. And I'm not worried about ICBMs coming from this new caliphate. What I am worried about is a sanctuary being set up where they can have training and be able to go to Europe and to the United States, because any of these Syrian fighters who are a part of ISIS are from the United States and from Europe. And they can come back here and kill us.
BARTIROMO: Congressman, real quick, let me move on to Khattala, one of the suspected ringleaders of the assault on our embassy in Benghazi.
What is the status of him right now? Is he still on a military ship being questioned? Should the interrogation happen at Guantanamo Bay?
KING: Ideally, I would want it to happen in Guantanamo, but it's not going to happen. The president doesn't want to do that. So long as he's on that ship -- and they should keep him on the ship as long as they have to -- they should interrogate him. I'm not worried about Miranda warnings.
All that would mean is that they couldn't use that evidence against him at trial. He's going to be convicted no matter what. I want to get the intelligence out of him to find out who is active in the Al Qaeda movement in Libya, how Benghazi came about and also what plans they have for the future. Intelligence is the key thing here, not a criminal conviction.
BARTIROMO: We've got more on Khattala with you after the short break. Congressman, stay with us.
We'll ask Congressman King about interrogating Ahmed Abu Khattala, the Libyan fighter captured in connection with 2012 attack on the consulate in Benghazi as we look ahead on SUNDAY MORNING FUTURES. Back in a moment.
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BARTIROMO: Welcome back. Senior U.S. officials tell Fox News the suspect captured in the 2012 attack on our consulate in Benghazi, Libya, Ahmed Abu Khattala, is undergoing intelligence interrogations and is still talking and is answering questions.
Khattala was captured by U.S. special forces and FBI agents last Sunday on the outskirts of Benghazi.
We're back with Congressman Peter King of the House Permanent Select Committee on Intelligence.
Congressman, what have we learned so far from the interrogation?
KING: Maria, I really can't tell you that. First of all, I don't have direct access to that. Secondly, I don't think we should be telling anyone what we found out, because what I'm hoping we found out is other members of Ansar al-Sharia who are in Libya finding out the details as to what happened with Benghazi and also where they could have, operatives located elsewhere, what plans they have for the future so we can head them off.
So I don't think we should be telling anyone what we're hearing. I wish we hadn't even announced that we had captured him because that gave his cohorts the opportunity to disappear.
But I think right now it's important that this interrogation continue. These are very top FBI interrogators and the purpose here is not the traditional FBI role of interrogating someone for the purpose of getting a criminal conviction. To me, it's to obtain intelligence to prevent future attacks and also to find out what happened in Benghazi.
BARTIROMO: Of course, understood.
So do you expect that this interrogation will have any impact and the information that we're getting from him will have any impact on the other investigation of how the White House handled the attack in the days after the Benghazi attack?
KING: Yes, Maria, I think it well could. Because it really is important that we find out what happened in Benghazi. I believe the new committee under leadership of Trey Gowdy is going to do an excellent job there, professional investigators, top priced (ph) staff people working for them, good members of Congress on both sides.
And this, to me, is an added part of the mosaic. What we can find out from someone who was actually the leader, someone who was actually there, he can tell whether or not they were inspired by the video, he can tell whether or not it was a spontaneous demonstration. He can tell how early on those in the embassy or those in the consulate and even those back in Washington should have known that this was a terrorist attack.
Also how many terrorists are in the region. No, this -- and also what was done leading up to the attack that should have been stopped. This is not just a blame game. It's also to prevent these type of attacks from happening in the future.
BARTIROMO: During the president's re-election campaign, he really campaigned a lot on the idea that, you know, he captured Osama and the terrorists on the run, Al Qaeda is on the run, and yet it feels like things are heavier than ever. And flaring up to quite an extent once again.
KING: Yes, they really are and it was really irresponsible for the president to be saying that during 2012. He owed more to the American people, but Al Qaeda was far from dead. Bin Laden was dead. But so many new affiliates had formed. Al Qaeda was spread out around the world throughout Africa. It has elements here in the United States.
And for the president -- and so in many ways, Al Qaeda is more dangerous now than it was prior to 9/11. Because at least before 9/11, we knew where it was and where it was coming from. Now it's a constant effort on our part to try to monitor, to try to head off these attacks.
At any given time, Al Qaeda or its affiliates is attempting to attack us, whether it's Al Qaeda in the Arabian Peninsula, whether it's al- Shabaab, whether it's now ISIS. We can go through the list of these -- Ansar al-Sharia up in Libya, I mean, there Al-Nusra in Syria. There's so many of them. And it makes it much more difficult.
The president really was selling a false bill of goods to the American people and that's why it's hard for him to rally the people now when he has to.
BARTIROMO: Well, let me get back to Iraq for a minute because you said a moment ago Maliki really does have to go, the prime minister of Iraq.
But how do we square that off? What if Maliki goes; how do we find his replacement? How do we know that that's not going to be even worse than what we have right now?
KING: Well, actually, you know, when it comes to the Middle East, there's very little that we know for sure. But again, part of intelligence, part of being on the ground, part of working with the government is to know who the players are.
And it would be irresponsible if we do not have someone, if not lined up, at least potentially who could work with us. That's why it was so wrong for the president to pull out in 2011 the way we did. You can't just sever connections. Now we do have an embassy there, it's a very active embassy, a lot of very capable people in it. And we have intelligence people also, of course working in Iraq.
So I would hope that we do have potential candidates there that we could work with and we can make them a part of the new government, even lead the new government. But we can't just roll the dice on this and -- Maliki staying there is just going to basically make this into an ongoing war.
It's not really a civil war any more than it was a civil war back in Greece back in 1947. This is an attempt by the Al Qaeda movement to take over a country -- two countries actually -- and use it against us.
But as far as the new leader in Iraq, we have to have our intelligence people on the ground, finding someone, working with that person. Again, that's what the president should have been doing for the last three years.
BARTIROMO: Congressman, we'll be watching the developments. Thank you so much.
KING: Thank you, Maria. Thank you very much.
BARTIROMO: Congressman Peter King joining us.
Technology has been a haven for entrepreneurs, meanwhile, despite an economy that is bumping along the bottom. We'll talk to the co-founder of PayPal to find out why and all of the innovation in tech. Then a House Ways and Means member on how he plans to uncover Lois Lerner's missing e- mails as we look ahead on "Sunday Morning Futures."
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BARTIROMO: Welcome back. New GDP numbers due this week after really miserable ones in the first quarter. Remember that lousy winter we trudged through? Well, it caused the economy to fall to a measly 1 percent decline in the last quarter. Economists are expecting that to worsen with this new revision next week to show a decline, a contraction of the economy of 1.8 percent.
One business, however, is thriving and that's technology. My next guest is right in the heart of that industry. Max Levchin is the co- founder of PayPal. He's also corporate director at Yahoo!, and on the board of directors at Yelp. He founded Yelp as well as Affirm and Slide, among others.
Max, good to have you on the program.
MAX LEVCHIN, CO-FOUNDER & CEO, AFFIRM: Great to be back.
BARTIROMO: Thank you so much for joining us.
Let's talk about, you know, next week you've got GoPro going public, later in the summer you've got Alibaba going public. Lots of innovation and job creation and growth happening in technology.
How does that compare to the rest of the economy? Why so much innovation in growth and tech?
LEVCHIN: I think it has been the story for at least the last at least 10, maybe 20 years. We are living in the information age. The means of production are shifting to keyboards. So you would expect most of the jobs and most of the creativity and investment to pour into that.
So the stock market is driven by technology companies as a result.
BARTIROMO: Where is the growth within tech? How do you -- I mean, there are so many different areas. I know Affirm is a company that you have founded and are talking about a lot. That's giving credit at the site of the sale.
But where is the growth in terms of broadly speaking in technology? Is it social networking? Is it the cloud? What's your take?
LEVCHIN: First of all, it's kind of all over the place. It's really hard to name an area of tech and say, well, that's just done. That's just not really the case.
The most interesting ones to me personally are the ones that are really carving at the very hard problems. So education, medicine, health care in particular, finance is my personal area of passion, obviously, but all of those things are just really hard to dislodge.
On the one hand, they are big, big problems, huge market caps, and they're tightly regulated. So for a typical start-up to roll out of bed one morning and say, I'm going to go take down the international finance market, you know, it's a little big easier to start a photo-sharing company, but the momentum is now, you know, let's go take the hard problems.
BARTIROMO: And in terms of -- I know immigration is something that you think about a lot. In terms of finding the folks that you need in terms of creating jobs and getting the skill sets required to put those folks in the jobs, are you finding them?
What's your take on immigration right now and how would technology even seek further growth with immigration reform?
LEVCHIN: So I'm a huge proponent of immigration reform. The time is now to do something about it. And the fact that our various powers that be in the legislator seem to just have failed to come to an agreement to even start thinking about it is a tragedy.
I'm an immigrant, came to this country as a refugee. Pretty soon I think we'll be at 23 years ago. And I.
BARTIROMO: So you came from Russia 23 years ago?
LEVCHIN: Ukraine. But, yes, that's what happened. And I came here legally (ph). Thankfully, I worked my way up to a green card and citizenship, very proudly so. And I came for the American dream.
I was running up and down my Pan Am flight looking for computer magazines, because I wanted so badly to start a computer company. And I did. And I was very, very lucky.
And I think the number of immigrants responsible for businesses in computing alone is something like 34 percent at this point. So on immigration, once you graduate a top flight American university, for God sakes, staple a green card to that diploma so that the person can stay and start a company or join a start-up or just work for the country that gave them the education.
We need to solve the illegal immigration. I think we have a porous border and the current crisis is a part of it, just a showcase how bad we are at it. But a high skill start-up visa, it's all kind of obvious. I don't understand why we can't solve that.
BARTIROMO: Yes, and it has such huge implications. I mean, you look at one of the most successful industries, technology, and even there, we're seeing real shortages in terms of jobs because of this immigration shortfall.
Let me ask you about Affirm, your latest company. You say this is going to redo the entire credit card company landscape.
LEVCHIN: Yes, I think so. I think we've been stifled by, on the one hand, a somewhat tough regulatory environment, some for good reasons and some for bad. But also, the banks just have been stuck in the '70s with technology and underwriting methods forever.
And so I decided that it's time to take on the hard task of rebuilding things from the ground up.
BARTIROMO: How does it work?
LEVCHIN: It's a point of sale credit. You go to a online so far shop that supports Affirm, and transparently and honestly, clearly we tell you if you want to split this payment into three parts, here is what the cost is, here is when your next payment is due. There are no late fees so long as you are performing correctly and that's it.
It's very simple and transparent.
BARTIROMO: Well, knowing your success and PayPal and Yelp and so many other companies, we'll all by watching.
Max, good to have you on the program.
LEVCHIN: Great to be here.
BARTIROMO: Thank you so much.
LEVCHIN: Thank you.
BARTIROMO: We'll be watching Affirm, Max Levchin there, founder.
The IRS caught in a web of lies. A new report suggesting those missing emails they claimed were gone for good should have been archived. The chair of the House Ways and Means Subcommittee will join me -- he Oversight Subcommittee next as we look ahead on "Sunday Morning Futures."
Back in a moment.
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SHAWN: From America's News Headquarters, I'm Eric Shawn. Here are some of the other stories that are making headlines at this hour.
First they were flown to Arizona, causing an uproar. Now they will be on their way to California, the Border Patrol deciding to fly hundreds of those Central American immigrants who crossed into our country to San Diego for processing. Nearly 300 will be transported from Texas to California, all in an effort to try and ease the load on the nation's busiest border crossing. An immigration official says the flights will start tomorrow, are expected to continue every three days. And officials then will decide if they will remain in custody or be released pending deportation proceedings.
The search for prominent outdoor writer 70-year-old Karen Sykes has been suspended, this after Mount Ranier search crews say they have found a female body. Park officials would not confirm that that body is indeed Sykes. Crews have been looking for her since Wednesday. That's when she was last seen. She was reportedly working on her latest story.
I'll be back with Arthel Neville at noon Eastern for a half an hour of news two hours from now. And then "The Doctors" are in. Doctors Siegel and Samadi join us for "Sunday Housecall" at 12:30 Eastern Time. That's it for now. I'm Eric Shawn. Now back to "Sunday Morning Futures" and Maria.
BARTIROMO: Thanks, Eric.
IRS Commissioner John Koskinen in the hot seat, grilled by angry lawmakers. They want to know what happened to the lost e-mails from at least eight hard drive crashes, including those of Lois Lerner. Louisiana Congressman Charles Boustany chairs the House Ways and Means Committee's Oversight subpanel. He joins us now with more.
Congressman, good to have you on the program. Thanks for joining us.
REP. CHARLES BOUSTANY, R-LA.: Maria, great to be with you this morning.
BARTIROMO: Look, we all know that the American people are angry and they want answers from the IRS. How are you going to get these lost e-mails that the tax men are saying are gone forever?
BOUSTANY: Well, first of all, we found out a week ago on Friday, Friday afternoon, buried in a letter that Lois Lerner's e-mails were missing. We also found out that the IRS and including the commissioner knew about this months ago but was not forthcoming in bringing that information to us.
This is just completely unacceptable. It's an indefensible position. Now, what we need to do is to go forward with the other eight employees. And we've asked a number of questions about those hard drives. We haven't gotten all the answers yet, but we want every one of those hard drives and nothing less than that will be acceptable.
BARTIROMO: But you keep saying that and we're not getting them. I mean, isn't it fair to say that this may very well be one more thing that the administration just gets away with and they're just doing it the way they want to do it?
BOUSTANY: Well, that is -- that is the fight we're having right now. And I can tell you, Treasury, for instance, was circling the wagons on this issue and was very noncooperative. But then, 30 minutes before the hearing, 30 minutes before our hearing on Friday, they gave us 2,500 new documents.
So we're going to keep the pressure on. We're using all the tools that we have to keep the pressure on the IRS, on Treasury, on the White House and other agencies. And we may have an opportunity to piece together Lois Lerner's e-mail to these outside agencies if we can continue to get those folks to cooperate with us. Chairman Camp's going to use all the tools available to make that happen.
BARTIROMO: You know, that's what I was going to ask you, really. Is there another way that you can prove that there is, in fact, evidence that they were targeting groups that they just didn't agree with politically, or are the e-mails, sort of, your only shot?
BOUSTANY: Well, it's the e-mails, the internal documents. Those are the things that are still missing. And everybody knows that Lois Lerner was at the center of all this. But we also know that these eight other employees have vital material that we need. But I do think there's an opportunity to piece together the missing e-mails from Lois Lerner, whether it's e-mail that went between her and the Federal Elections Commission, the White House or Treasury, we're going to continue to pursue all those lines of inquiry and demand that they turn over this material.
And, you know, of course, we've -- we've pushed to get a special prosecutor in this. I think the American people want to see a special prosecutor to dig into this and determine what exactly happened.
BARTIROMO: Congressman, talk to us about why this is so important. I mean, this is not just another fight between the Republicans and the Democrats. This is about the abuse of power.
BOUSTANY: This is about the abuse of power at the highest level. This is about the violation of constitutional rights in our government. This is a very big deal. And given all the other scandals out there, I mean, you can put what you want into them. This affects every single American because it's the IRS, arguably the most powerful institution in our country because it can affect everybody's lives. It can destroy lives.
And we cannot abide this kind of abuse of power. And we will not stop. I can tell you, we will not stop.
BARTIROMO: Can you imagine, if a taxpayer said, "Well, you know, I just -- the e-mails are lost and I just don't have that information for you about my taxes," what happens to that person?
BOUSTANY: Well, they're going to see the full brunt of the law thrown at them with the threat of prosecution and jail time. You know, this is a double standard. And it's just incredible that the IRS commissioner could defend this and say, "Well, we have processes that we don't have to keep these e-mails," but yet an individual has to keep seven years' worth of documentation?
This is just not -- not the right way to approach this. But I can tell you, it doesn't pass the smell test.
BARTIROMO: I mean, are you -- are you expecting to go to Treasury? Tim Geithner was running Treasury. Doesn't Treasury oversee the IRS?
BOUSTANY: Well, the Treasury has a role. And we are going to pursue all of these lines of inquiry. Treasury, the Federal Elections Commission, other agencies including the White House -- we want all this information, and I can tell you we will not stop until we get it.
BARTIROMO: So there is a hearing that's beginning tomorrow. Tell me what you're expecting out of the House Oversight Committee holding a hearing on -- on the Lerner e-mails.
BOUSTANY: Right. Well, some of the members of that committee under Darrell Issa watched our hearing. They heard the testimony that the commissioner put out there. And they will continue to pursue lines of inquiry in all of this. They have some broader jurisdiction which allows them to go after aspects of this. But we have special powers that allowed us to dig and get information that they didn't have. So we're -- the two committees have complementary roles.
And I think, combined, we will get to the bottom of this before it's all over with. It's not going to go away.
BARTIROMO: All right, Congressman...
(CROSSTALK)
BOUSTANY: It's not going away.
BARTIROMO: Congressman, we'll be watching how the committees work together and what you find out. Thanks so much.
BOUSTANY: Thank you. Great to be with you.
BARTIROMO: We'll see you soon. Thank you very much for your time, Congressman Boustany.
And now, with a look at what's coming up on "Media Buzz," let's check in with Howard Kurtz.
Howie, what have you got at the top of the hour?
HOWARD KURTZ, HOST, "MEDIABUZZ": Hi, Maria. We're going to sit down with Bret Baier and Greta van Susteren to talk about their interview with Hillary Clinton, what their strategy was, how they hope to get her to make news, some of the criticism of the interview.
You know from doing a lot of big interviews over the years that people always take pot shots almost no matter what you do.
BARTIROMO: Well, I thought it was a great interview, really. I mean, it showed Hillary raw. I mean, I thought that it was, you know, hearing Bret's take on it and then Greta, I thought it was a terrific interview. And it came across very, you know, straightforward.
KURTZ: They really got her to relax and there were some revealing moments in that interview. So we'll have our panel evaluating it, as well.
Also going to talk about Megyn Kelly's rather confrontational interview with Dick Cheney over Iraq. We've got -- and the Redskins controversy. We've got a full hour coming up.
BARTIROMO: All right. We'll be there. thanks so much. I'm interested to hear what your panel says about the Redskins name change. Thanks, Howard. We'll see you in 20 minutes.
KURTZ: Thanks, Maria.
BARTIROMO: So does the president still want to stick with his claim that there's, quote, "not a smidgen of corruption at the IRS?" We'll talk about that, Iraq, new economic numbers and plenty more with our panel, as we look ahead on "Sunday Morning Futures."
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BARTIROMO: Welcome back. So the plot thickens. The software company Sonasoft (ph) bragged on Twitter back in 2009 about providing backup to the servers at the IRS. Let's bring in our panel right now to talk about it.
Keith Banks is president of U.S. Trust, author of a new survey on wealth and worth. Judith Miller is adjunct fellow at the Manhattan Institute for Policy Research, Pulitzer Prize winning author and journalist and a FoxNews contributor.
And GOP strategist Tony Sayegh with us. Good to see everybody. Thank you so much for joining us.
Let's first talk about -- and he's also, by the way, former aide to Jack Kemp, I meant to say.
The IRS story, we just heard from Congressman Boustany. Judy (ph), your thoughts. He said it's not just about the e-mails. It's about other areas that he can find out what was going on in terms of targeting groups that they did not agree with.
JUDITH MILLER, AUTHOR AND JOURNALIST: Exactly. This is, as The Wall Street Journal called the it, Watergate for a digital age. Where's the 18.5-minute gap? In this case, it's thousands of e-mails that will tell us if they can be restored, who said what to whom about what, whether or not there was a political motive and who else was involved in this.
We've moved a long way from the office in Cincinnati and there's no smidgen of evidence if anything was wrong.
BARTIROMO: It's pretty extraordinary in this day and age.
Keith, you're a business guy.
In business, what are we told?
KEITH BANKS, PRESIDENT, U.S. TRUST: We are told something very simple which is if you send an email, if you put something out electronically, it is there. The footprint is there forever. It doesn't go away.
BARTIROMO: Even if you have a crash, right ?
BANKS: Even if you have a crash.
BARTIROMO: Tony, what's next here? Don't you think the American people basically know what happened? They were targeting groups that they didn't agree with?
TONY SAYEGH, GOP STRATEGIST: Well, yes. And the Internal Revenue Service's own audit internally has revealed that these conservative groups were unfairly targeted. The question now is why and how. And this is what these e-mails can potentially link us to, which is what did Lois Lerner do? Was it on her own. Was she directed by others? And who did she direct?
And the degree that they have gone now to hide these e-mails claiming a crash, because I think a lot of people on its face realize that this is a bit too far to believe, that the Internal Revenue Service lost 43,000 e- mails during this 2009-2011 period that they've been requested to deliver them.
What -- who told Lois Lerner to do what she did? Did she act alone? And the recovery is very likely. This is why I think this is a big gamble for them to claim they've just somehow been lost in cyberspace.
BARTIROMO: It is extraordinary that they're saying all of this now. Because it makes you feel like this is actually much bigger than we thought. Treasury oversees IRS. I wonder if there's a connection there.
SAYEGH: Well, this is the exact question, Maria. Is it to Treasury? We know it's to the political appointee in the Treasury, the counsel that was appointed by the president. There's even belief that this went all the way to the White House. Don't forget, the IRS commissioner at the time, Mr. Shulman, had visited the White House this unprecedented number of times for an IRS commissioner and the lack of transparency here is going to feed the flame of fire.
And these people are actually requesting the 72 percent in a recent FOX poll showed that more people believe something wrong happened and they want to know what happened.
MILLER: There's been is a suggestion that everybody who had anything to do with the restoration or deletion of these e-mails in the federal agency be put under oath and asked to testify, so that maybe one of them won't want to cover up for a boss.
BARTIROMO: Yes. But I mean when you have Lois Lerner taking the 5th, you're probably going to have everybody taking the 5th.
MILLER: It's just amazing, a senior IRS officials, this is a law enforcement agency.
If George Bush had done this, can you imagine the outrage? Once again, I think it's, alas, an example of the double standard in the media.
SAYEGH: And what has complicated it, frankly, is that about a month ago, you had 26 House Democrats, some of whom were very liberal member, Congresswoman Gabbard (ph) from Hawaii's 2nd District, a very liberal Democrat, join Republicans in calling for a special prosecutor. This is not going to go away easily.
BARTIROMO: It's amazing, when you have the IRS, this is happening in Washington and sort of questions about economic policy, foreign policy, and yet, Keith, the stock market keeps hitting all-time highs.
BANKS: It does.
BARTIROMO: Are investors worried about any of this?
What do you see from your clients?
BANKS: Investors are worried. The interesting difference in this bull market, Maria, versus the others that we've experienced is the fact that the wall of worry for investors has never gone away. It's just changed in composition.
Most recently we have now -- whether it's Iraq, whether it's Ukraine, and what's interesting is -- and this gives me some confidence that we still have a ways to go in addition to the underlying fundamentals in this bull market.
People have never fully embraced it. They've always grudgingly gone in because there's been so many things to worry about and that's one of the big differences this time, it's the mindset of the investor, very different from other bull markets.
BARTIROMO: It's just fascinating, it's climbing a wall of worry. Lots to worry about, just keep buying stocks. So despite all the geopolitical issues, the market is at record highs. Is it safe to buy into this rally today after such big gains? We'll take a short break. Our panel will look ahead on Sunday Morning Futures," next.
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BARTIROMO: And we're back with our panel, Keith Banks, Judy Miller, Tony Sayegh.
Tony, let me ask you about Iraq. You heard Congressman Peter King earlier, basically saying Maliki has to go?
SAYEGH: That's a challenge, Maria, because Maliki does have to go, but it's how do we get rid of him -- that is the question.
BARTIROMO: Yeah, and what's the alternative?
SAYEGH: And what's the alternative? And that's why it's not really the quicker resolution to the problem right now in Iraq.
The moderate Sunnis have lost faith in us. They don't trust America anymore because we've allowed Maliki to do this government without being unified and building a grander consensus. They've been excluded.
The radical Sunnis, as we know in the ISIS group, don't fear us because they view America as weak. They've seen how we've responded to Syria, Iran and Egypt.
The Shiites, which Maliki represents, particularly as a patron of Iran -- Iran is his patron, rather -- actually have us exactly where they want us. Because, as much as we want to get rid of them, the reality is we really can't right now.
BARTIROMO: Implications for the U.S., Judy?
MILLER: Look, I think that we are limited in terms of what we can do. And as David Petraeus warned the other day, we don't want the American Air Force to become Maliki's Shiite strike force, bombing targets willy-nilly on the ground.
The Iraqi people have to solve their own problem now. They have to get their house in order. And I think we've come a long way when Ayatollah Sistani basically called for Maliki to step down. There are other people there who are -- who can be more inclusive and have more credibility and make it easier for an American government to help them. But we can't substitute ourselves for them. And I think President Obama has that right.
BARTIROMO: You know, so far the fighting has been in the north, but it's in the south, in Iraq, where, really, the production facilities are, the export facilities are. So we have not seen an impact on their exporting of oil, second-largest exporter in OPEC behind Saudi Arabia. And that's why oil prices are at a nine-month high.
That's one major implication, Keith.
BANKS: It is a major implication. And it comes back to the fact that I feel so good about what the U.S. has done with respect to oil production. We have seen a surge over the last five years.
Last year, we accounted for 84 percent of total demand in the U.S. for our own internal production. That's up from a low of 69 percent back in 2005. And compare that to Japan. Less than 10 percent of their total demand is met through internal production, and Germany, less than 40 percent, which reinforces Germany's vulnerability, especially when you look back at Ukraine and Russia and all the other geopolitical issues that we've been forced to deal with.
BARTIROMO: And that's even without, you know, Keystone, delaying that.
SAYEGH: Right. But let's not underestimate the potential threat here. Even though ISIS has the swath that doesn't have the oil, they did -- recently seized the largest refinery in Iraq. It's inevitable that they're going to try to make gains, whether it be in the Kurdish north or the Shiite south, where the oil resides.
And if they actually formalize the state, they're going to have to finance it and fund it, and oil is a big part of that.
BARTIROMO: Yeah, that's a good point.
Let me ask you about the economy overall. Because higher oil prices are just one more pressure for the market. Next week we get the GDP report out, Keith.
BANKS: Right.
BARTIROMO: It was down 1 percent last quarter. People are expecting it to be down 1.8 percent when that report comes out on Wednesday. Are you seeing that in business, that things are not exactly where people feel they should be at this point in the cycle?
BANKS: Well, I think we all understand what the first quarter was all about. It was weather.
BARTIROMO: Yeah.
BANKS: And our expectation is, in the second, third and fourth quarters, you'll see the underlying -- the true underlying strength of the economy show forth. We still think, on a full-year basis, the U.S. will have real GDP growth in excess of 3 percent.
BARTIROMO: This year?
BANKS: This year. And globally, that will -- you know, we'll see strength globally.
The biggest risk right now I see, outside of geopolitical risk, which clearly does matter, is Europe. The ECB has been too slow in responding. There's still a significant risk, in our point of view, of deflation and just lackluster growth. And it's really impacting global growth and impacting the U.S.
We have a huge trade deficit with the E.U. It's two times as high as it was in 2009. And through the first four months of this year, our trade deficit with Germany is higher than Japan. So that's an important thing.
But we do believe, net-net, the U.S. will grow.
BARTIROMO: All right. We'll take a short break. Then, the one thing to watch for in the week or the weeks ahead, on "Sunday Morning Futures." Back in a moment with our panel.
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BARTIROMO: And we're back with our panel.
What is the one big thing to watch for this week or the weeks ahead? Tony Sayegh, Judy Miller, Keith Banks, what's your one thing?
BANKS: We've got to make sure the economic growth does reaccelerate, and it's got to start to reaccelerate in the second quarter.
BARTIROMO: Yeah, because you don't think that it is going to see 3 percent, Judy?
MILLER: I think that's optimistic. I hope I'm wrong.
BARTIROMO: What's your big thing?
MILLER: My one thing is watching Iran. What are they going to do in Iraq? They've already got 2,000 fighters there, an estimate. Will they misinterpret John Kerry's statement that he wants to work with them?
SAYEGH: And dovetailing off of that, it's the American response to the fact that we have this opening, apparently, with Iran, which I think would create a very dangerous potential, a strange-bedfellow alliance, and I'd like to see how we're going to handle Maliki as a result.
BARTIROMO: All right. I'm going to go with Keith. My one thing is the GDP out on Wednesday. And I'm also watching the IPO of GoPro, a lot of anticipation about that.
That will do it for "Sunday Morning Futures" today. Thank you so much to our panel for joining us. I'm Maria Bartiromo. I'll be back tomorrow on "Opening Bell" at 9 a.m. Eastern on the Fox Business Network. Here is where to find FBN on your cable network or satellite provider, or click on "Channel Finder" at foxbusiness.com. "Media Buzz" with Howie Kurtz is up next. Thanks for joining us. Have a great Sunday.
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