SUNDAY MORNING FUTURES

US Chamber of Commerce President and CEO Tom Donohue breaks down dismal GDP numbers

Breaking down the dismal GDP numbers and doing business in the face of the Obama administration's policies

 

This is a rush transcript from "Sunday Morning Futures," June 29, 2014. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, HOST: Hot on the trail of those IRS e- mails.

Good morning, everyone. I'm Maria Bartiromo.

Welcome to "Sunday Morning Futures."

The chief of the tax agency now telling Congress he'll have information about Lois Lerner's missing e-mails by the week's end. Oh, really? A member of the House Oversight Committee joins us live to guide us through this labyrinth.

A stunning announcement from House Speaker John Boehner. He plans to sue the president over misuse of executive power. He says it's not about impeachment. Then, what is the end game here?

BARTIROMO: And why do the latest figures suggest the economy is in free-fall? Are regulations holding back business? The head of the U.S. Chamber of Commerce is with me on getting America thriving again -- as we look ahead on Sunday Morning Futures."

(MUSIC)

BARTIROMO: Fox News has obtained a letter written by IRS commissioner, John Koskinen, to House Ways and Means Committee chairman, Dave Camp. Koskinen tells camp he expects to produce, quote, "information" about former IRS official Lois Lerner's e-mails by the end of this upcoming week.

My first guest this morning is a member of the House Oversight and Government reform committee, also trying to get to the bottom of the IRS scandal, Congressman Jason Chaffetz of Utah joining us.

Congressman, good to have you on the program. Thanks for being here.

REP. JASON CHAFFETZ, R-UTAH: Good morning. Good morning.

BARTIROMO: How do you plan to get to the bottom of this?

CHAFFETZ: Well, we want all of the information. We have been asking for this for more than a year. Both the Ways and Means Committee, the Oversight Committee. We issued a subpoena on August of 2013. We issued another subpoena, February 14th of this year.

And thus far, the Internal Revenue Service has not provided information that we're due to see.

BARTIROMO: So, what are the implications then? I mean, can we just keep going on and on with this witch hunt?

CHAFFETZ: Well, they were targeting Americans. Remember, it was President Obama who very first came to the microphone and said he was angered by this. He wanted to get to the bottom of this. He wanted to hold somebody responsible.

Nobody has been fired. We haven't seen all the information. We deserve to see that information. And make sure that people aren't being targeted.

Remember, it's the same IRS that leaked information about another organization out there, the IRS more than anybody else cannot be a political organization. But that's what it looks like it's been lately.

BARTIROMO: Yes, I am having a hard time getting my arms around the idea that today in this day and age, 2014, that there are e-mails that cannot be gotten when, in fact, we all know that the information is there, and is gettable.

We've got a lot to talk about with you, Congressman.

But first, let's get for the details here -- pushing for answers in the IRS targeting scandal. Did those e-mails vanish, or were they actually destroyed intentionally?

FOX News senior correspondent, Eric Shawn, now, with the very latest.

Good morning, Eric.

ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT: Good morning, Maria. And good morning, everyone.

So where are these e-mails? Well, the IRS says it is doing all it can to find them. That their disappearance, it says, is no mystery, but a typical computer crash that it says has happened to 2,000 other employees besides Lois Lerner. But critics don't buy that.

(BEGIN VIDEO CLIP)

REP. LOUIE GOHMERT, R-TEXAS: You know those e-mails are out there. You know they are. And Bill Flores said, "You know what, we ought to offer a bounty." It's a brilliant idea, Bill. Let's do it. And so, it's a million bucks for whoever comes up with the e-mails, because they're out there.

(END VIDEO CLIP)

SHAWN: Now, there's that bounty, like the Wild West, for the writings of Lois Lerner. Texas Republican Congressman Louie Gohmert saying her missives have to be out there somewhere, to people he suspects she was e- mailing as part of the conservative group targeting scandal.

Well, the agency has denied there is any cover-up or wrongdoing in this. The IRS commissioner saying that its IT department did all it could to try and restore Mrs. Lerner's compromised hard drive.

(BEGIN VIDEO CLIP)

JOHN KOSKINEN, IRS COMMISSIONER: Ms. Lerner was advised, quote, "Unfortunately, the news is not good. The sectors on the hard drive were bad, which made your data unrecoverable. I am very sorry. Everybody involved tried their best," unquote.

(END VIDEO CLIP)

SHAWN: Well, Lerner's attorney, William Taylor, told Politico, quote, "She doesn't know what happened. It's a little brazen to think she did this on purpose."

But the reward still stands.

(BEGIN VIDEO CLIP)

GOHMERT: If you help to hide evidence in what will end up being a criminal case, guess what? You're part of the crime. So take your pick -- a million bucks to come up with all the e-mails? Or go to prison as part of the crime? Your choice.

(END VIDEO CLIP)

SHAWN: Well, the IRS says it is still compiling more e-mails on top of the 500,000 pages of documents it's already delivered. But others say this will only be solved with the appointment of a special prosecutor. And if someone does come up with those e-mails, Gohmert says they'll be $1 million richer. And guess what, the money under his pending bill, that would come from the IRS budget -- Maria.

BARTIROMO: I love it.

All right, Eric. Thank you so much.

We're back with more right now with Congressman Jason Chaffetz, joining us on the House Oversight and Government Reform Committee.

Representative, what about a special prosecutor?

CHAFFETZ: Oh, absolutely. Remember, again, the president is the one that said he was outraged by this. I cannot believe that the IRS then worked with Department of Justice. The Department of Justice with more than 10,000 attorneys, their point person is a maxed out donor to the Obama campaign.

Come on. Put a special prosecutor in place, please?

BARTIROMO: And do you think we will see that? I mean, really, at the end of the day, you just keep getting more excuses and more excuses.

The other thing is, I mean, during the Commissioner Koskinen testimony there, I don't know why he was so snarky. I mean, you would think that, you know, just for the -- just to answer the American people, to make sure that people feel like they're not -- you know, taking this as a joke. That he would take this more seriously. But he said, oh, I gave up law for lent and never looked back, and yes, so what.

You know, I mean, it's just all so cavalier.

CHAFFETZ: There was a degree of arrogance there that I think permeated, not only in the room, but through the television sets, as well. You're absolutely right. There was a degree of arrogance there. This is an IRS that gets nearly $2 billion a year for its IT operations.

And when they say, well, we lost e-mails, we had this hard drive crash. When I asked the IRS commissioner why didn't they go to the backup tape? They made a big deal about how they tried to recover this information but they had a six-month backup tape. They never even tapped into the taping, because they said it was costly, and they said it was cumbersome.

BARTIROMO: Yes.

CHAFFETZ: So, if they really did want to get those e-mails, they were there. They just decided not to.

And it was just coincidentally, 10 days after Dave Camp, the chairman of the Ways and Means Committee, asked to have the e-mails.

BARTIROMO: But do you have IT specialists that will actually find those e-mails? I mean, it's really virtually impossible to believe that in this day and age, when everything is recorded and copied and you've got replacements all over the place that these e-mails cannot be gotten.

But how are you actually going to do it? Do you have specifics for us in terms of what your next move is, in terms of getting IT specialists, that IT firm that the IRS hired years ago in terms of backup e-mails? Can you actually get them?

CHAFFETZ: We want to bring in the geeks and the nerds. You bring in the geeks and nerds and put them up on the stand, bring them in for a deposition, I think we'll get a whole different answer about how this works. Bring in the good people at Microsoft.

I doubt they built a product that made billions of dollars over the fact that you could just suddenly lose all of these e-mails. Go to the inbox, go to the outbox, these things can be figured out.

I don't know if we can ultimately find them. But when you bring in the geeks and the nerds, then you'll find out.

BARTIROMO: So, what happens next? Guide us through the next couple weeks here.

CHAFFETZ: Well, you have parallel investigations, both the Ways and Means Committee, the Oversight Committee. We have issued another subpoena for additional information.

We're trying to track down the actual computer itself, try to find those -- that hardware that's out there. But also continue to talk to those people within the bowels of the department of the -- the IRS, and try to get that information. Ways and Means is doing something similar there, and there are other people that need to be interviewed.

Remember, the White House is the one that told us it was just two rogue agents in Cincinnati. That was not true. So, we are pursuing a whole host of leads.

BARTIROMO: All right. We will be watching. Congressman, thanks very much. We'll see you soon.

CHAFFETZ: Thank you.

BARTIROMO: Thanks very much, Congressman Chaffetz, joining us.

So, how low can we go? The economy shrinking by a whopping 2.9 percent in the first quarter. Are White House policies to blame? The president of the U.S. Chamber of Commerce is putting America back to work.

And I hope you'll follow me on Twitter. Join the conversation @MariaBartiromo.

Stay with us as we look ahead on "Sunday Morning Futures."

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BARTIROMO: Well, the third and final estimate of the economy shows that the economy is shrinking by an annualized rate of nearly 3 percent. So, now, the heat is on to turn that around and get America growing again.

Tom Donohue is with me. He's the president and CEO of the U.S. Chamber of Commerce.

And, Tom, it's wonderful to have you on the program.

TOM DONOHUE, PRES. & CEO, U.S. CHAMBER OF COMMERCE: It's great to be back.

BARTIROMO: Were you surprised that a 2.9 percent contraction print on the economy last week?

DONOHUE: Everybody was surprised.

BARTIROMO: It was a shocker.

DONOHUE: It was a shocker. But you have to look at it in the context of what we would describe as some of the causes, and what we see going on in this quarter, which is more hiring than we had a year ago. Some improvement in exports and a little better feel in spite of what's being done to business day in and day out.

BARTIROMO: Well, let's talk about that, because I think most people were expecting a contraction because of the weather. We know we had horrible weather period in the first quarter. But 2.9 percent I think is indicative it's more than the weather.

DONOHUE: Well, and you can put a lot on the fact that companies were not aggregating their inventory, which they normally do in the first quarter. You put those two things together, you still have a hole left, but it's not as big.

BARTIROMO: Now, what about business today? You're speaking with CEOs all of the time. Why are they sitting on $2 trillion in cash and not putting that money to work?

DONOHUE: Well, you wonder about a lot of things. If we were sitting in the executive suite, we're a global company, let's say.

What's happening around the world? Challenges in the Mideast, the challenges in Europe, the challenges around the world, have everybody being very careful and holding their cash.

What's happening with all the regulation of the finance business, the financing of business? You do see more pressure on the banks. We still have a third of the Dodd/Frank regulations to do. Of course, I'm going to hold on to my cash.

And you do see big questions about the Ex-Im Bank, questions about immigration, because we need the people, questions about the Highway Trust Fund, which can put a lot of people out of business.

I've got to tell you, if I were running the big company or a medium- size company, I'd be sitting on my cash.

BARTIROMO: Why wouldn't you? You don't know what health care is going to cost you. Obamacare has been very precious for them, as well as the EPA.

DONOHUE: We're a good team. I got the first half, you got the second half. Those are all the issues we're worrying about.

BARTIROMO: Yes. All right.

Let me ask about this last two weeks as it relates to the Supreme Court, because if you're looking at some of these onerous regulations, you've got some suggestions this week that maybe it won't be as bad. Tell us what happened this week.

DONOHUE: Well, the best example of that is, we have always been able to go to court on the issues of the pollution questions and EPA. But when you got to the questions of global warming or carbon, one court decision suggested the EPA had the power. John Podesta, my friend, said, that Congress should mind their own business now. We're going to do this.

The court ruled last week, no, no, no. First of all, you can be sued. Second of all, you can't use this information to broaden the regulations beyond what the law said. And third of all, and very, very important, it said you can't put all of this on small companies.

I think we're in a much better place. We've had this same issue on the decision on the financial issues. Can you sue back when there are broad class action suits, can you go in as an individual company and say, no, no, not me. Prove it.

BARTIROMO: Yes.

DONOHUE: And so, the courts are beginning to say, they're going to make very sure that the government is not doing the wrong thing.

And then the best one was the whole question of could the president, when the Congress really was in session, appoint those people to the National Labor Relations Board, and could they do 400 rules? And guess what? The court said no, 9-0, things are getting better.

BARTIROMO: Well, the Constitution says you have to -- the Congress makes the law.

DONOHUE: And the Congress --

BARTIROMO: The Congress passes law, not the president.

DONOHUE: And I'm waiting for the Congress to stand up on its hind legs and say, wait a minute, the Constitution says that. And they -- Congress is partly guilty, because they have given away their authority. They have given away their authority on entitlements, giving away their authority on the whole environment. They have got to take it back.

BARTIROMO: Let me ask you about going into the midterms. Because I feel like companies today are fasting. In other words, they're not spending any money, because they feel like we're not going to spend all of this money for all of the reasons you just explained so eloquently. But going into the midterms, if the GOP does take the Senate, do you think we're going to see a free flow of cash where companies say, OK, maybe it's not going to be as onerous as it was with the GOP running both Houses and we'll start spending again.

DONOHUE: That would give people some comfort that there wouldn't be another major increase in regulation. But you would have to ask a couple other questions. What's going on in the global scene, where people are very nervous?

And by the way, they have a lot of reason to be. And the whole question about taxes, we're not going to get to a tax bill for a long time. But there's one fundamental issue in it. If you ever could fix it would help.

We're the only major nation in the world that is double taxed on everything we do around the world. If we had a single tax, we pay it there, we pay it here. You'd see a lot more money flowing.

BARTIROMO: We will be on that repatriation story for the next couple years, for sure. CEOs across the board talk to us about that all of the time.

Tom, it's wonderful having you on the program.

DONOHUE: It's great to be here. See you again soon.

BARTIROMO: Thank you so much. We'll see you soon. Tom Donohue joining us from the Chamber.

House Speaker John Boehner announcing plans to sue the president over executive overreach. We will talk with a constitutional attorney on where those chips may fall as we look ahead on SUNDAY MORNING FUTURES. Stay with us.

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BARTIROMO: Welcome back.

An unprecedented lawsuit could shake things up in Washington. House Speaker John Boehner threatening to sue President Obama over his use of executive orders.

Douglas Kmiec is a constitutional law professor at Pepperdine University and a former ambassador to the republic of Malta.

Douglas, thanks for being here.

DOUGLAS KMIEC, PEPPERDINE UNIVERSITY: Good to be with you this morning.

BARTIROMO: Let me ask you about some of the actions in this lawsuit. John Boehner did not specify which actions he's referring to. But, of course, we could go through a list of times the president has gone around Congress, whether it be the Affordable Care Act, the EPA regulations, releasing the five detainees from Gitmo.

What's your sense of this lawsuit?

KMIEC: Well, the sense of the lawsuit is that it's not a good sign. Obviously, whenever you've got a domestic government suing itself rather than working together, you've got complete dysfunction.

For the most part, the courts like to stay clear of these lawsuits, because they want the political branches, the Congress and president, to work things out themselves. And they will make every effort as the litigation goes forward to try and get the parties to resolve the matter by doing their own respective responsibilities.

But here's the thing -- a long time ago, the Supreme Court said there's three postures that tend to exist. The president can act together with the Congress -- that's the strongest posture. The president can act in an area where the Congress has been ambiguous -- that's a place where lawsuits happen. And the president can act in the context of where he's acting directly against the Congress' specifications.

Mr. Boehner thinks the president is in that third category, and that's very serious. If he is in that third category, that's a constitutional violation, and the court won't blinker that. They'll take a look at it.

BARTIROMO: So, what do you think the implications of this are? I mean, John Boehner has said this is not about impeachment. But what's the end game? And what are the implications if, in fact, the Supreme Court does rule in that way that you just referenced?

KMIEC: Well, the implications are is that we need the House of Representatives in particular to reexamine its rules to make sure that they are doing everything possible to make clear what the accountability standards are. What their deadlines are, and so forth.

On the president's side, and he's got a legitimate argument here, sometimes, the Congress of the United States has done nothing. They haven't responded on the Senate side to particular nominees.

You know, if they don't like the president's nominees, vote them down, send them back, give the president another chance to nominate someone else. If they don't like the president's health care legislation, come up with a constructive alternative, put that forward rather than just saying no. It's important on Congress' side to be as specific as possible.

On the president's side, he has a duty under Article 2 to take care that the laws are faithfully executed. That means when executive orders are written, there has to be a clear statutory or constitutional power that he's pointing to. It can't just be vague language, pushing it to the margins.

We have a situation in the United States and it's affecting our economy, as you well pointed out in the previous segment, where both sides are not working to form a government. They are instead staying involved, staying grouped as a tribe or as a clan, and things are measured in terms of do they advance the Democratic agenda or the Republican agenda? They should be measured, do they advance the interests of the people of the United States?

BARTIROMO: But what about -- what about the idea that -- and, again, John Boehner has not cited which actions. But if Congress is not aware of what's happening, for example, the release of the five Gitmo detainees, Congress was not aware of it. So, could Congress have done anything to, you know, get involved there, if the president made this decision unilaterally, and released the prisoners and did a swap?

KMIEC: Well, if this is -- given that this has happened. Obviously, Congress will want to know why it wasn't aware. Its job is to do legislative oversight and executive oversight. And obviously, you can't do anything about the five that are gone. But you can do something prospectively.

And if Congress believes that the interests of national security have been jeopardized --

BARTIROMO: Right.

KMIEC: -- now is the time to have their oversight hearing.

BARTIMORO: I guess the question is -- is there any other course of action that the Republicans should be taking? I mean, John Boehner says continually that he is not brought into the discussion. Congress has not brought into the discussion in some of these big decisions.

Is there any other course of action to be taking other than suing the president for misuse and overreach of executive orders? I mean, what are they supposed to do?

KMIEC: Well, fundamentally, I think they have to be as clear as possible as to what they want to happen. And what they need to want to happen is something more than just no. It has to be here's alternative, A, B and C. This is what we think we have authorized for you.

And if you're in that category, we'll work with you. If you're not in that category, we'll oppose you.

They've got to be that clear. You know --

BARTIROMO: Yes.

KMIEC: One of the things that -- one of the things that the founders did not provide for was for a review of the scope of legal authority that the president had before a law went into effect. James Madison wanted that. He called it the council of revision. He would have added it to the Constitution.

Maybe it's time we reexamine that 1787 proposition, because it's clear, both sides are not in agreement. They are far from being in agreement as to what legal authority each side has.

BARTIROMO: Yes. It's really unbelievable. And sort of tragic that we're it at this point of defensiveness where the two sides can't work together on anything.

Sir, good to have you on the program. Douglas, we'll see you soon. Thanks for joining us.

KMIEC: Maria, good to be with you.

BARTIROMO: And to you.

So, when is the economy going to turn around? The president of the St. Louis Federal Reserve back on talking jobs, inflation, interest rates and yes, economic growth. We'll talk with James Bullard as we look ahead on "Sunday Morning Futures."

(COMMERCIAL BREAK)

SHAWN: From America's news headquarters, I'm Eric Shawn. Here are stories making headlines at this hour.

The central Arizona wildfire forcing dozens from their homes. Fire crews say they still have not managed to contain those flames. So far, the fire has burned more than eight square miles and is threatening at least three other communities.

Rescue crews are scrambling to find survivors after an apartment building collapsed in southern India. So far, more than 20 people have died and another dozen have been injured.

Those numbers, officials say, are sadly expected to rise. The 11- story building was under construction and police believe nearly 90 workers were in the basement, collecting their paychecks, when that building fell.

I'll be back with Arthel Neville at noon Eastern for half an hour of news. Then the doctors are in, Dr. Siegel and Samadi. You can join us two hours from now for a Sunday house call, that at 12:30 Eastern. I'm Eric Shawn. Now back to "Sunday Morning Futures" and Maria.

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BARTIROMO (voice-over): Thank you.

This upcoming we get (INAUDIBLE) economic report and the unemployment report for the month of June is released on Thursday.

And while we have seen some 200,000 new jobs created on average for several months now, last week's grim GDP report showing the economy contracted almost 3 percent in the first quarter has some on edge about what to expect this week.

Joining me now to discuss the state of the economy and the Federal Reserve policy is the president of the St. Louis Federal Reserve, James Bullard.

President Bullard, good to have you on the program.

JAMES BULLARD, PRESIDENT, ST. LOUIS FEDERAL RESERVE: Great to be here. Thanks for having me.

BARTIROMO: Thank you so much for joining us. And I know going into the GDP report last week, you were pretty optimistic, expecting we are going to see a good bounce back in the second half.

Has anything changed as far as what you're looking at, and how would you characterize what you saw last week, 2.9 percent contraction in the economy?

BULLARD: Now, it's a shockingly negative number. And occurring right in the middle of an expansion. So I think it is a vexing issue.

But I think markets have been right to look through this. Most people have 3 percent-plus growth for the rest of this year into next year. That's what I have, as well. And I think that's the right bet to make, given the data we have right now.

We have good jobs numbers. We have -- and I think we have good explanations for why the first quarter was as weak as it was. We know a part of it was inventory correction. And that was pretty large. We know that part of it was exports. And that will probably bounce back, as well.

Part of it was -- a big part of it was weather. And, you know, the polar vortex sweeping down across the Midwest and the East. And then you've got this health care issue, where accounting for health care is also part of the picture.

So I think it's right to set aside the first quarter and look forward from here, and I think we're looking at 3 percent-plus growth for the rest of the year and a lower unemployment rate by the end of the year.

BARTIROMO: Wow. So 3 percent for the rest of the year. I don't know how you get there.

I mean, where does the growth come from second half of the year?

Where are you expecting the real power in terms of growth in the second half?

BULLARD: Well, I think, you know -- I think we have a lot of good sectors in the U.S. economy, just generally speaking. I think the tech sector has been a great generator of ideas. I think agriculture's, out of my district, I hear a lot about good prospects, medium term and long term. Short term for agriculture.

I think the financial sector is quite a bit stronger than it was a few years ago. I think there's reshoring of manufacturing. What about energy, we've got a great future in the energy arena. So there are a lot of good things going on in the U.S. economy. And that's coming together.

I think also a lot of the things that we've been talking about over the last five years that have been holding the economy back have dissipated. I think the idea that there's still a lot of deleveraging going on has -- that has turned around.

People are starting to borrow more. So car sales are, you know, quite high. So I think there's just a lot of good things going on in the economy. I think the first quarter was an aberration.

BARTIROMO: So when would interest rates begin to move then?

I mean, and when you look mid- to longer term, what would be a normal rate of interest rates at this point?

BULLARD: Well, you know, if you think, as I do, that the unemployment rate will go below 6 percent by the second half of this year, and inflation is coming up and inflation is -- core inflation PC today came out at 1.5 percent on a you basis and is rising.

So by the second half of this year, we could be very close to 2 percent on inflation. And very close to normal as far as the unemployment rate. I think we're OK, because inflation, after all, is still below target.

But it's rising. So, you know, I'm a little ahead of the committee on when I would like to raise rates. I would like to do it at -- looking at what the data that I know right now, I would put the rate rise at the end of the first quarter of next year.

But I think both financial markets and the public at large maybe just doesn't realize how close we are to normal compared to postwar history.

BARTIROMO: But in terms of rates in general, would longer-term rates be normal at 4 percent, 5 percent?

What would be normal?

BULLARD: I think if -- just for the policy rate, I think it should -- the long run means five to 10 years from now, you know, 4 percent, 4.25 percent would be a normal number for that.

BARTIROMO: And you mentioned the Fed's balance sheet.

Do you have concerns in terms of getting that balance sheet lower?

BULLARD: So what's happening is that the balance sheet is very large today. Some of those securities are maturing. You can just let them mature and not replace them. That's a pretty benign way to let the balance sheet get smaller.

And I think that would be an easy first step for the committee to take. I don't think anybody really wants the Fed to have $4 trillion balance sheet. Some people are talking about, you know, you could have a bigger balance sheet than we had before the crisis. And that's fine. Maybe we could do that.

But I don't think it has to be $4 trillion. So I think we could start to move that back toward normal. And I think that would also send a signal to markets that we're more confident in the U.S. economy and more confident in the recovery.

BARTIROMO: And final question here. I know the Fed has said, you have said, we're near the target in terms of inflation, right where we should be. But oil prices at $106 a barrel. Food prices are up. All sorts of food prices are up.

No inflation?

BULLARD: I think when we're expressing a target rate of inflation of2 percent, that's based on headline inflation over the medium term. And that's the way you should look at it.

So I'm not one for throwing food and energy out. Sometimes -- I do refer to core, but that's only because other people refer to core.

BARTIROMO: So there is inflation.

BULLARD: I think that there is. Core is a little bit higher year over year on PC than -- I mean, headline is higher than core right now on a PC basis.

BARTIROMO: President Bullard, good to have you on the program.

BULLARD: Well, thanks for having me. I really enjoyed it.

(END VIDEOTAPE)

BARTIROMO: All right. Now with a look at what's coming up on "MEDIA BUZZ." Let's check in with Howie Kurtz, top of the hour.

Howie, what have we got?

HOWARD KURTZ, FOX NEWS HOST: Hi, Maria. We are going to look at Diane Sawyer giving up the anchor chair at ABC. How her job is being carved up, the mornings, the lucrative morning shows, now more important for the networks, which is why George Stephanopoulos is taking over as breaking news anchor while staying at "GMA." And how did the networks end up again with three white guys in the anchor chair?

BARTIROMO: Yes, I don't know about that. I was so surprised that she announced she was stepping away.

KURTZ: Well, she is still going to be doing major interviews for ABC. But she is 68 and I think she's decided to give up the nightly grind. I know you also led with the IRS missing e-mails. We are going to look at that as well and complaints, particularly angry complaints from some conservative commentators about why the mainstream media haven't done more with that story, why it hasn't made the front pages of the nation's top newspapers.

BARTIROMO: It's a head-scratcher. Thanks, Howie. We'll see you in about 20 minutes.

KURTZ: Thanks.

BARTIROMO: Tomorrow the Supreme Court could hand down a decision on where the line gets drawn between church versus state when a woman's reproductive rights are added to the issue. Our panel will weigh in on Hobby Lobby as we look ahead on "Sunday Morning Futures." Stay with us.

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(COMMERCIAL BREAK)

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BARTIROMO: Welcome back. The Supreme Court getting set to wrap its latest session. The last session for the summer with one major constitutional case still unresolved. The owners of the craft chain Hobby Lobby argue that ObamaCare's birth control mandate violates the religious rights of employers.

We bring in our panel right now, Ed Rollins, former principal White House adviser to President Reagan in both his terms and a long-time strategist to business and political leaders and a FOX News political analyst.

Lis Wiehl, a former federal prosecutor and Fox News legal analyst.

Gerard Baker, editor in chief of The Wall Street Journal.

Good to see everybody. Thanks very much for joining us. Let's get to Hobby Lobby for a second. How do you think the Supreme Court comes down?

LIS WIEHL, FOX NEWS LEGAL ANALYST: It's going to be a split decision. Kennedy is going to be the swing vote here. And I think right now for listening to the oral arguments, Hobby Lobby has a good chance of winning this on freedom of religion, First Amendment grounds.

BARTIROMO: Implications?

GERARD BAKER, EDITOR IN CHIEF, THE WALL STREET JOURNAL: I agree with Lis. Hard one to call. Unlike these decisions in the last week, some of them were unanimous, the cell phone decision strikingly so.

This is one of those really classic highly divided. I think Kennedy is important. It's hard to -- it's hard to say. But as it comes down on the side, as Lis says, of Hobby Lobby, then it's a significant setback for a key part of the Affordable Care Act. And it will have to be undone.

BARTIROMO: Ed?

ED ROLLINS, POLITICAL CAMPAIGN STRATEGIST: I don't think Kennedy will go south on them on this particular one. I think it's a 5-4 decision and I think he will be with the majority.

BARTIROMO: So no implication there.

ROLLINS: No implications relative to that. I think it's got big implications in the sense of many of these Catholic hospitals and others, that basically a continuation of that fight.

BARTIROMO: What about John Boehner's lawsuit against the president? They are saying misuse of the executive power.

Suing the president?

WIEHL: It doesn't go anywhere. There may be a misuse of presidential power, but that's not the way you resolve this issue. Suing him. First of all, just on a practical term, it's not going to happen by the time it went to federal court. Obama will have been out for probably a year or two at that point.

So what are we really talking about? Impeachment? I don't really think that that's what Boehner wants to do.

(CROSSTALK)

BAKER: The Supreme Court did find this week again, also perhaps a surprisingly unanimous decision on the issue of recess appointments, it was a very a narrow decision. (CROSSTALK)

BAKER: Well, they'll take some heart from that. And it's a good way for the Republican leadership, I think, which has got some issues. We have seen what happened to Eric Cantor. Some issues within his own party, with the Tea Party.

This is something, abuse as they claim, of presidential power, something around which the Republican Party can unite at a politically valuable time for them. It seems to me to be something that has great political benefit for --

BARTIROMO: Absolutely.

ROLLINS: -- very carefully drawn out document, I think it will be an indictment, whether it's -- goes anywhere or not is -- you're the expert on the courts. But my sense is that it will be a good political document. And it has to be very carefully written so it doesn't look like a political document.

BARTIROMO: What are the most egregious? Go down the list.

ROLLINS: I think a combination of releasing the prisoners when it was very clear (INAUDIBLE). And not implementing the parts of the ObamaCare that he was supposed to. He basically could have gone back to Congress and asked for extensions or what have you and changed the law.

BARTIROMO: How about immigration?

ROLLINS: Immigration is another obvious one.

BAKER: That's another thing here. This may be an attempt also to kind of head the president off there. Because the president has -- his aides have talked about using executive -- if there isn't comprehensive immigration reform, doesn't get through Congress, it doesn't look likely to.

That's why certainly in this session they have talked about using executive orders to implement some of the things he would like to do on immigration. So maybe this is a shot across the bows on that.

WIEHL: But legal wonk here, procedurally, it doesn't work that easily. It's not just like going to the courthouse and filing a piece of paper and filing a lawsuit. They've got to go through a panel that's got to vote on it. It's just not going to happen. So they can talk about it being a political football. But it just logistically is not going to happen.

ROLLINS: I do think, though, there has been a great interpretation with signed documents and all the rest of it. There needs to be clarity as to the powers and it may take five years, it may take four years, it may not. At the end of the day, I think it's important to go through.

BARTIROMO: The president has said, look, I would not do things like this if Congress would do their job.

Does he have a point there, that Congress is -- ?

ROLLINS: No. The bottom line is Congress has passed a law, he's signed the law, his job is to basically implement them and he is refusing to implement them.

BARTIROMO: All right. Let's stay right here. We're going to take a short break. The only suspect arrested so far in the 2012 attack on our consulate in Benghazi making his first U.S. court appearance. Our panel will weigh in on that.

And the economy as we look ahead on "Sunday Morning Futures."

(MUSIC PLAYING)

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. We are back with our panel: Ed Rollins, Lis Wiehl, Jerry Baker.

Let's talk about the first Libyan militant charged in the 2012 Benghazi attacks, pleading not guilty, Ed, yesterday in connection with the crime. Brief appearance in the U.S. He is in the U.S. right now.

ROLLINS: He's in the U.S. And it will be interesting. It's going to be tried in D.C.., which is -- normally they're either in Alexandria or someplace else. This is going to be a big show trial and obviously he now has lawyers, the whole nine yards. And my sense is going to keep Benghazi alive and well all during the presidential campaign.

WIEHL: Well, he has pled not guilty, which is what they always do in an arraignment. So that is no surprise. There was one count indictment with three counts that have been sealed. There will be a superseding indictment, meaning it will be -- they will go back to the grand jury, there will be more counts added to that. He is lawyered up.

The question that is going to remain, though, Maria, what did he say to the FBI when he was out on that ship for all that time? What did he say to them pre-Miranda warning, after Miranda warning, you know, it doesn't really matter all that much if he implicated somebody else.

BARTIROMO: Does this keep this story alive going into this 2016 presidential campaign?

WIEHL: Absolutely.

BAKER: Yes. Not only does it keep it alive, as Ed says, it keeps it, you know, front and center (INAUDIBLE) in Washington, D.C., as we transition from the end of the Obama presidency into the 2016 campaign where Hillary, everybody assumes, is going to be running. And the question about her role there is going to be absolutely essential.

It's really going to be a big topic.

BARTIROMO: I have got to get to the economy here, 2.9 percent contraction. Look, I know we all were expecting a contraction, but 2.9 percent? I think that tells you it's more than just the weather. What do you think?

WIEHL: The weather is over now at this point, so.

BARTIROMO: Yes -- no, but this was the first quarter.

WIEHL: I know, but still.

BARTIROMO: I mean, there are still people out there that are expecting a 3 percent grower this year, James Bullard among them, by the way.

BAKER: We're not going to get 3 percent growth for the year. In fact, the revisions -- actually, the early numbers we've had on the second quarter have also suggested that's going to be a bit weaker than thought. It's obviously going to be stronger than the first quarter.

But we could have basically zero growth in the first half of the year, which means there's no conceivable way we can get to 3 percent growth...

(CROSSTALK)

BAKER: So it's another year, yet another year of sub-3 percent growth for the U.S. economy, which, we haven't had a plus 3 percent growth year for the U.S. economy for almost 10 years.

BARTIROMO: Yes.

ROLLINS: The job numbers are going to be slow and low.

BARTIROMO: They're out on Thursday.

ROLLINS: And they're not going to be great again. And equally as important, they're not the kind of jobs people think are meaningful for long-term. Equally as important, food prices are going up, inflation is going up, interest rates are going up. And my sense is there is nothing that's going to make this economy move.

BARTIROMO: Even James Bullard, who, you know, is expecting vibrancy second half of the year, said inflation is going to be above his target in 2015.

So what does this mean? I mean, we are getting 200,000-plus jobs. People are expecting 200,000-plus jobs to have been created for the last month, when the number comes out on Thursday.

No growth and yet jobs?

BAKER: Well, we've had that number -- we've had that 200,000 job growth number for the last few months. The implication of that, Maria, as you know, is, as you say, with very little growth in the economy but with growth in jobs, is very, very weak productivity growth.

And so that is -- and that's what we've had for the U.S. for quite a long time now. The economy is not generating the kind of productivity that is really going to enable the economy to grow in the long run. And there is no capital expenditure going on. Companies are not spending. The economy, it's -- you know, we are still in a long-term stagnation.

BARTIROMO: Yes, yes. All right. We'll take a short break. Then to "One Thing," we want to get to the one thing to watch for in the week ahead or weeks ahead as we look ahead on "Sunday Morning Futures."

Back in a moment.

(COMMERCIAL BREAK)

BARTIROMO: We're back with our panel with the one thing to watch for the week ahead. Ed Rollins.

ROLLINS: I'm going to watch the Congress when they come back from the session, whether they're going to basically dump the import-export bill, which is very important, or get the highway bill through. And your former guest, Tom Donohue, is going to go fight that very strenuously.

BARTIROMO: Yes, he is.

Lis.

WIEHL: I'm going to be right here covering Hobby Lobby when it comes out tomorrow, and looking at the case. Just to give you a hint, go to the back of the decision when you try to get something really quickly, on the back of the decision, that's where you get the meat of it.

BARTIROMO: Jerry Baker, your "One Thing."

BAKER: It's summer, It's July the 4th. What's more American than soccer. Tuesday, United States versus Belgium. It's the biggest soccer game in this country for a very, very long time. Everybody be rooting for the United States on Tuesday.

BARTIROMO: Maybe that will unite everybody with a win.

ROLLINS: Absolutely.

WIEHL: Absolutely.

BARTIROMO: I guess my big thing, my one thing would be the unemployment numbers. You know, we have to see a continuation of the 200,000-plus jobs created every month in order to believe we have a shot of getting some growth second half of the year.

Real quick on IRS, any implications here?

ROLLINS: I think they're going to find something sooner or later, and then that's the smoking gun.

WIEHL: Yes. You can't keep saying the dog ate the homework. I mean, come on. You have got two years of email, you can find that.

BARTIROMO: Yes. Well, we'll see. I mean, there are continuations of hearings and everything. We'll see if anything comes out of it.

Thank you very much, everybody. Great panel. We so appreciate you. Jerry, Lis, Ed, we will see you soon.

That will do it for "Sunday Morning Futures." I'm Maria Bartiromo. I'll be back tomorrow morning, "Opening Bell," 9:00 a.m. Eastern, on the FOX Business network. Here's where you can find FBN on your cable network, or satellite provider. Click on "channel finder" at Fox. Have a good Sunday.

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