SUNDAY MORNING FUTURES

Can we trust Russia to tell the truth on MH17?

Fallout from Malaysian plane shot down in Ukraine

 

This is a rush transcript from "Sunday Morning Futures," July 20, 2014. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, HOST: Connecting Russia to the crash site. Good morning, everyone. I'm Maria Bartiromo. Welcome to "Sunday Morning Futures." The latest Intel suggests Russians provided separatists in Ukraine with sophisticated anti-aircraft systems. Will Moscow now own up to at least some responsibility of the downing of Malaysian flight 17?

Here at home, governors telling the feds, enough is enough. Stop the overflow of children coming over the border, because our state cannot take care of them. We'll talk to a governor on the crisis line.

And the Treasury Secretary appealing to economic patriotism to try to keep companies from moving overseas. We'll point him in another direction toward the bottom line as we look ahead on "Sunday Morning Futures."

FoxNews has learned more evidence points toward Pro-Russian separatists, shooting down Malaysian flight 17. And killing all 298 people on board. According to the latest intelligence, the Russians provided the separatists with the sophisticated anti-aircraft systems in recent weeks. This as Secretary of State John Kerry called his Russian counterpart, foreign Minister Lavrov and pressed him to allow global investigators unfettered access to the crash site.

Stewart Verdery is with me. He's the former Department of Homeland security assistant secretary for border and transportation. Sir, good to have you on the program. Thanks very much for joining us.

STEWART VERDERY, FORMER DEPARTMENT OF HOMELAND ASSISTANT SECRETARY: Thank you. Thank you very much.

BARTIROMO: Lay out the lay of the land here. Do you believe we can trust Russian investigators to tell the truth about what happened?

VERDERY: Well, I think the answer is pretty obvious to that, based on what's happened to date. And really, I saw Secretary Kerry on early this morning. They obviously had some tough decisions to take on. I think the bottom line is going to be, we have to insist that the trigger man be turned over for accountability, and whether that's the separatists or somebody else. The fact that the weapons got in seemingly with Russian help, that's kind of the bottom-line. And it's not so much the access to the crime scene. It's really kind of how did the weapons get to the site, how are they used, was there any training provided, and we really need to make this more of a crime scene and less of an aviation disaster scene.

BARTIROMO: But, you know, even the access to the crime scene. I mean, we're seeing this morning and all weekend families of the victims, they want access to the body and the bodies of those who perished, they want access to the black box, the people want access to the black box. Are we ever going to get the truth? I mean, Russian investigators are in charge here.

VERDERY: Well, I think that we need to insist. That we have very good international mechanics for solving aviation disasters. ICAO, the International Civil Aviation Organization has an excellent track record in coming in and finding out exactly what happened. In this case though, it seems somewhat obvious what happened. It's less about trying to figure out the cause of a crash and more about who was to blame, who was the trigger man, those types of things. But clearly, you can understand the families' desire to get information, to find out accountability and the like. And certainly for the remains and the bodies to be treated with more respect than they have shown the last couple days.

But, again, I hope the administration leans not only directly on Russia also through the EU, who really has a deeper relationship with Russia. There are things we can do on our side on sanctions, on getting our energy sector less detached or more detached, excuse me, from the Russian sector. But clearly, this is something where the Obama administration has to step up their game and really lean hard on Russia and in Europe to lean directly on Russia themselves.

BARTIROMO: Yes, I'm glad you mentioned the European Union. I want to ask you more about that. Stay with us, Secretary. We'll have more with you, Assistant Secretary Verdery. But first an update on the rapidly changing status of the investigation into flight 17's downing and the breakdown of what we know so far.

FOX News senior correspondent Eric Shawn, with us. Hi, Eric. Good morning. (INAUDIBLE)

The flight data recorder has reportedly been recovered, but rebels are said to be removing evidence from the crash site as Russia seems to be in cover-up mode. The Ukraine government says this video shows the BUK M1 missile carrier that is believed to have shot down flight 17, secretly spirited back across the border to Russia within hours of the disaster, along with two others to hide evidence.

(BEGIN VIDEOTAPE)

ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT (voice-over): Those missiles missing, and officials say Russian operatives certainly had to help fire this complicated and sophisticated system. And it was believed the order may have come from this man, Russian commander Igor Strelkov Girkin. The Russian backed rebel leader. Senior Western intelligence officials say, he oversaw the missile strike. He is a Moscow-born former Russian intelligence agent who Ukraine officials charge is still in Russian military intelligence. And apparently boasted on social media about the shootdown before realizing the target was a passenger airliner and not another Ukraine military jet. Here is a clip of an intercepted rebel phone call.

UNIDENTIFIED MAN: We have just shot down a plane. That was minors group. It fell down outside.

UNIDENTIFIED MAN: Pilots. Where are the pilots?

UNIDENTIFIED MAN: Set off to search for the shot down plane and take pictures of it. A plume of smoke is visible.

UNIDENTIFIED MAN: How many minutes ago?

UNIDENTIFIED MAN: About 30 minutes ago. SHAWN: Now the question, was Strelkov Girkin allegedly acting alone or with the blessing of his Moscow patrons?

MARVIN KALB, FOX NEWS CONTRIBUTOR: Is he on his own? Is he an independent operator? Is he being paid by Moscow? Is he taking Moscow's orders directly? All of these things play into the complexity of the problem, because who, in fact, is in charge of the insurgents who are running much of Eastern Ukraine?

(END VIDEOTAPE)

SHAWN: Russia continues to deny any role in this tragedy. Echoing Moscow's denials in 1983 when a soviet war plane shot down Korean airlines flight 007. But this time the blame seems apparent for the world to see, still strewn in the quiet fields where this wreckage has fallen -- Maria.

BARTIROMO: Eric, thank you so much. Eric Shawn, with the latest there. We had a problem with your microphone at the top of your report. Our apologies to our audience. More now with former DHS Assistant Secretary Stewart Verdery. And secretary, you know, I think the world is seeing this the way it is. But that doesn't really give much information to all of us who are trying to figure out how this happened. What do you think the goal here was of Putin and the separatists?

SHAWN: Well, again, it's a little risky to guess, but it sure seems that this was an accident, they were trying to go after a military target, hit a passenger plane by accident. Again, that's why kind of piecing this together is all the more important to figure out what the instructions were, was to say, a mistake or, you know, was this actually a cowardly act to go after a passenger plane, which seems kind of odd. I think the question now is, you know, how do we respond from a foreign policy perspective? The, you know, the bad news is, is it the facts aren't known.

The good news is, this act was so horrific and it's really galvanized the world's attention, that you would think this will make people maybe lean forward a little more on sanctions that might have an impact and give people political courage not only in this country but in Europe in particular to take on some steps that, you know, sanctions do have pain on both sides. But this is such a bad act, such a galvanizing moment that hopefully it will give people the willingness to lean forward a little more aggressively, especially in the energy sector where we really can make a big difference.

BARTIROMO: You know, Sean made a remarks the other night which I thought really was apropos, and he said this really goes back to the perception of America today. And he said the bottom line is because of our foreign policy and the idea that America is not going to play policeman to the world and would rather take the laissez faire attitude, MIA attitude, our friends in the world no longer trust us. Our enemies in the world no longer fear us.

SHAWN: Well, that's a pretty harsh commentary. I'm not sure I would go quite that far. But clearly there is a time to step up now, the senior administration trying to lean forward. It's interesting that some of the President's advisers have been a little more forward leaning on their criticism of Russia than the President himself. But there is still time as the investigation unfolds. And, you know, sometimes these types of negotiations with your allies and the E.U. in particular have to be done behind closed doors, can't be made in front of television cameras.

And so I think the jury is still out a little bit on what our reaction is and should be. But as this information, the black box seems to have been recovered, will give us kind of the concrete proof on exactly what happened. And we can move forward with the sanctions and other types of responses that are clearly appropriate in addition to trying to provide some type of dignity to this horrible crime scene and human condition scene.

BARTIROMO: Now that we have the black boxes, what's the timing on this? When do you expect we will get real information, and what is the information that you are looking to glean from that black box?

SHAWN: Well, they're quite sophisticated and this is a modern aircraft, and so it's really just a question of getting the information off the disks into a computer system that can tell you exactly what the changes in the aircraft behavior were. I'm guessing it's going to show quite a horrific reaction to being shot down in the middle of the air. So it's really just making sure that trained people -- we obviously have excellent people in our country, ICAO have access to these people. Other modern economies. So, just making sure that they are handled in a place that's not tampered.

Again, this is not like the prior Malaysian situation, where you really have no idea what happened. It's pretty clear what happened. It's just making sure that we figure out exactly, was there anything captured between the -- on the data recorders, in-flight communications, any warnings given to the pilots? Doesn't seem likely. But those are the types of things we'll be looking for. And then unfortunately, finding out what the demise of the plane how imminent it was, how long it took for it to go down.

BARTIROMO: Thank you, sir. Good to have you on the program. We appreciate it.

SHAWN: Thank you so much.

BARTIROMO: We'll see you soon. Stewart Verdery joining us.

States putting the feds on notice. It is time to end the border crisis, because our local government simply cannot take in anymore of these children. The chairman of the National Governors Association, will join us next.

And you can follow me on twitter @MariaBartiromo, let me know what you think of the show and what you would like us to cover. Also @SundayFutures. Stay with us as we look ahead on "Sunday Morning Futures."

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. President Obama is set to meet with several Central American leaders this week in an effort to cut off the border crisis at the source. My next guest is among those state governors who has put the white house on notice, saying this crisis is placing an unfair burden upon our states and their taxpayers.

Mary Fallin is the governor of Oklahoma, the first woman to chair the National Governors Association, and the former chairman of the NGA. Good to have you on the program Governor, thanks for joining us.

GOV. MARY FALLIN, R-OKLA.: Thank you, Maria. Always good to be with you. And I'm actually the third woman to be the chair, but the first republican woman to be the chair.

BARTIROMO: Well, thank you for that. Apologies. Can you characterize the problem from where you sit?

FALLIN: Absolutely. You know, I think governors across the nation are concerned about the migrant children that are coming into the United States. We want to know what is the plan and what is the end game for all that's going on across our nation with migrant children. We have received migrant children here in Oklahoma. We were told they were going to be here 120 days, and then we could get back to our regular military operations at our army posts itself. But now we're hearing there may be rumors that they could be extended at that facility.

And so I would like to put the President on notice that the people of Oklahoma accepted them for the 120 days, because that's where they put them. But now time is to end that contract and go ahead and send them somewhere else. And you know, we need to get back to our military operations here in Oklahoma. We're concerned about our schools, we're concerned about our DHS, concerned about certainly health. And the public safety of our communities and we delivered on that 120 days, but it ends October 10th and it's time to move on.

BARTIROMO: Well, can you give us a sense of what's happening within those facilities? I mean, the American people have no way of knowing what's going on once those children are being placed in these facilities, what the conditions are like. Cameras are not allowed in. The media has been totally locked off. Tell us about once the children get to those facilities what life is like.

FALLIN: Absolutely. And I did have the opportunity to go down there within a couple days after they opened up the facility in Oklahoma. But you know, basically, I saw what they wanted me to see, and I have to say, I was pleased with what I saw at that point in time. But we had about half the children that we have now in the facility, around 1,200. At the time we had about a little under 600 children that were there. But actually, when I say children, they were actually 12 to 17 years old, there were migrant juveniles that were there. But, you know, basically, what we saw was cots and beds and playing games and out playing soccer on the ballpark itself.

But we also know that we had double the amount of children coming after that time. And so we haven't really been able to get in and see behind the scenes. We see what they want us to see. But I'm hearing all kinds of stories. I took my secretary of health with me down there to make sure the children were first safe, because they are children. We want them to be fed and have appropriate medical care and certainly be safe within the facilities themselves. And they're segregated. But one of the things I've heard since they have been there and it was reported when I was there, actually, that they were not only El Salvador children and Honduras and Guatemala, but they were 90 children reported to be from India that were actually at the facility. And it was one of the case workers that told my secretary of health that we have people there besides South American children. And so that's of great concern. And we also know the state of Oklahoma, our Department of Human Services, has been contacted about taking some of these children and placing them out in foster care. But the state of Oklahoma, we already have 1,200 children who are in DHS, Department of Human Services custody in our state, and a lot of our children are on wait lists for foster care in Oklahoma. So that's kind of the concern from a governor's standpoint, is making sure the children, first of all, are taken well care of that are here. But secondly, what's it going to cost the states, what's the burden to our communities and we already have challenges with our state budgets and our systems already.

BARTIROMO: Right. And how taxing is it? Can you give us a sense of what you're expecting in terms of the cost and the taxing on the system in America?

FALLIN: Well, first of all, you know, Americans need to take care of American children. And we have a lot of people, as I said, in Department of Human Services custody right now. We have a lot of certainly -- as every state does, kids are in foster care systems, kids in juvenile facilities. We have a lot of people on Medicaid, people are getting free and compensated care in our health care delivery systems. Those students will probably go into our public school systems, especially if they go out and they're into some type of foster care family.

But every time do you that, you're taking away from services that one of our Americans here legally would be able to have access to. So I think the question is, when do we secure the border, how do we send a message to those countries that you can't just send your children here and have them get amnesty and the United States is going to pick up the cost. Secure the border, have a plan and enforce the laws of the United States.

BARTIROMO: Well, I think you make a really good point about children coming from India. Because the fact is, because of this vulnerability at the border, we don't know who is coming in.

FALLIN: We don't.

BARTIROMO: I mean, it could be Central American children, it may not be. I mean, we don't know if it's terrorism. We don't know who is coming in. Why is it so difficult to secure the border?

FALLIN: Well, it is difficult to secure the border. And here's one of my other concerns. You know, we're so busy with all these migrant children who are coming, and adults, you know, older-age children who are coming up to the border, just being dropped off at the river. How do we know what's going on down the river?

BARTIROMO: Exactly.

FALLIN: What's going on down the land? How do we know the drug cartels aren't smuggling in drugs, aren't trafficking people, aren't kidnapping people? How do we know that? I think we're being distracted.

BARTIROMO: Yep. Governor, we will be watching this. We so appreciate your time today. Thanks very much.

FALLIN: Thank you.

BARTIROMO: Governor Fallin joining us.

Major crises around the world putting President Obama's foreign policy to the tests. We'll discuss his response as we look ahead on "Sunday Morning Futures."

(COMMERCIAL BREAK)

BARTIROMO: Tragedy and violence forcing President Obama to focus outward. Not just taking a hard line with Russia, but walking a fine diplomatic line in the Gaza strip. Recognizing Israel's right to defend itself while simultaneously voicing concern for the hundreds of innocent civilians killed in the crossfire there. Christian Whiton is president of the Hamilton Foundation, he was the State Department senior adviser during the George W. Bush administration. Christian, it's good to have you on the program. Thanks for joining us.

CHRISTIAN WHITON, FORMER STATE DEPARTMENT SENIOR ADVISER: Great to be here, Maria.

BARTIROMO: How would you characterize the President's policies towards Israel?

WHITON: Well, it's very hard to truly define what his foreign policy is in any sphere. As you said, he has given some pro-forma statements to support Prime Minister Netanyahu, but noticeably, didn't have any communication with him, the leader of a key ally state, early in this conflict. And also set one of his NSC, his National Security Council staffers over to Israel, to give a speech that was broadly condemning of Prime Minister Netanyahu and his approach to so-called peace talks. Peace talks that we instigated that failed quite miserably and obviously would have been since the factors were really never present for a comprehensive agreement between Israelis and Palestinians. So, you know, it's behind sort of the backdrop or the facade of good relations. We have a president that isn't terribly supportive of Israel or its current political leadership.

BARTIROMO: And how does that play out? I mean, what are the implications of such a policy or non-policy or nonsupport for Israel?

WHITON: You know, I think you have to take a step back. We're often told that solving Israeli/Palestinian disputes solve the rest of the Middle East. Actually I think other problems in the Middle East drive this. So, take a step back, and what's really at play here, and that is Iran. Iran has two proxy armies on Israel's borders committed to Israel's distraction, it's Hezbollah in the north and Hamas in the south. My concern is that with President Obama sending mixed signals like this, it encourages bad actors in the region. And President Obama has really frankly encouraged Iran's sense of inauguration, saying that if you unclench your fist we'll outstretch your hand. The implication that we can reach grabbed bargains with Iran, we can talk them out of their conduct, which has been focused on Israel's destruction and America's destruction since 1979. So I think he is sending mixed signals and I think this plays out in other places like Russia, Asia, as well.

BARTIROMO: So this is important going into talks with Iran. What do you expect to come out of those talks?

WHITON: I would expect a deal that is deeply flawed. I mean, the administration needs some sort of foreign policy win. Usually administrations turn abroad in their second terms, especially when they don't control both houses of Congress, that is just where the power of the presidency is. But looking abroad, there is just a series of very bad things, the collapse of Iraq into three sorts of proto states and just the series of problems that have happened since Ukraine. And -- so I think they want to win. I think they'll get a deal. But it will frankly allow Iran to move closer and closer to a nuclear breakout, because it can still use very highly advanced centrifuges for enrichment. Still has a plutonium program. It still has a ballistic missile program. So it will be something where there can be a nice photo op, perhaps, but nothing that actually makes the region more secure.

BARTIROMO: So in terms of the conflict in Israel, the conflict in Gaza and as well as what's happening in Russia, do you expect the U.S. to become more engaged or less?

WHITON: You know, in the short term, I think that the basically the wildfires around the world are going to blaze untended, not that we need to solve everything or be involved in everything. But look at even with Russia, with this plane shooting down. So, the priority is getting safety investigators in there. What are they going to find? They're going to find the plane fell out of the sky after one of its engines was blown up by a missile. We already know that. The question is what are we going to do with Russia?

So I think we're going to do nothing. It will be more sort of desultory, very targeted sanctions. Nothing like broad sanctions on the energy sector in Russia, which would actually cause some real pain. So in the short term, it means we won't be involved, and there won't be turmoil, but we're setting up all of these problems, frankly, for the next president. A terrorist state in the middle of Iraq. We wouldn't tolerate one in the middle of Central Asia, but we're tolerating one in the middle of Iraq. It already has half of billion boxes in the banks and now access to oil fields. All these problems will manifest itself so short term moderate risk. Long term, very high risk.

BARTIROMO: I mean, is it fair to say we got it wrong with the Russians? You know, the President said we were doing this reset, the President went for burgers with Medvedev and then was caught with his mic hot saying, "I'll have more flexibility once I get past the election." Did we get it wrong?

WHITON: I think so. And of course this is a key part of Secretary Clinton's tenure was the reset with Russia. You know, countries act with their own national interests and Russia has seen its interest and this is what's typical for a repressive state to indulge nationalism, to try and reclaim what it deemed is near abroad that's what's lost in the collapse of the Soviet Union. We saw it in Georgia. We saw it in Ukraine. And to think that your personality as president of the united states is so appealing that you can talk a calculating leader like Vladimir Putin out of what he thinks his interests are is somewhat ludicrous. We have to sort of, you know, think a little bit harder about how you influence governments and what is possible through diplomacy and not. So, I think we did miscalculate there.

BARTIROMO: Sure. Christian, good to have you on the program. Thank you so much.

WHITON: Thanks, Maria.

BARTIROMO: Christian Whiton joining us. More corporations meanwhile in America looking to move out of America to avoid the highest taxes on the globe. The White House suggests economic patriotism should keep them on the home front. But my next guest will weigh in with some other ideas as we look ahead on "Sunday Morning Futures."

(COMMERCIAL BREAK)

BARTIROMO: Many American companies are looking to move their headquarters out of America, and abroad to avoid the 35 percent corporate tax rate here in the U.S., the highest in the developed world.

On Tuesday, Treasury Secretary Jack Lew sent a letter to House Ways and Means Committee Chairman Dave Camp, saying that Congress should be punishing these companies and claiming our nation needs a new sense of economic patriotism.

Joining us now is Maya MacGuineas, she is from the Committee for a Responsible Budget, one of the foremost experts on tax policy.

Maya, good to see you.

MAYA MACGUINEAS, COMMITTEE FOR A RESPONSIBLE BUDGET: Thanks for having me.

BARTIROMO: Thank you so much for joining us. So what's your assessment of this letter that Jack Lew sent to Dave Camp?

MACGUINEAS: Well, I mean, I have to say, we all know what's going to fix the situation, and it is really a threatening situation to the economy, which is we need to reform the tax code. And so his call for economic patriotism, frankly, I found insulting and meaningless, right? It's not really going to do anything to change the environment.

And it sort of implies that companies that are doing what they have to do to deal with a really onerous and complicated tax code to be more profitable, and do what's in the best interest of their shareholders, companies that are doing those right things that also help them invest and grow wages and create jobs, are somehow not being patriotic.

And I don't think that's the right assessment of the situation at all.

BARTIROMO: Look, the bottom line is these companies have already created tens of thousands, hundreds of thousands of jobs in this country. But their business is global. And they have customers and employees overseas, as well.

The list is getting longer, Maya. I mean, Pfizer tried to acquire AstraZeneca to move its headquarters. Walgreens is trying to acquire Alliance Boots so that it can get a 20 percent tax rate as opposed to 35 or 39 percent.

And there are companies that have already been successful: AbbVie- Shire, or Mylan-Abbott, Medtronic, Destination Maternity. Is this going to be the catalyst that actually gets tax reform gone?

MACGUINEAS: Well, right. So the pace of these inversions is speeding up. And I actually think one of the reasons that's happening is, companies don't want to do this. Companies don't want to make these changes.

And many of them are holding out for the hope that we were going to have comprehensive tax reform, which it looked in the past couple of years like we might have.

And remember that the White House did put out kind of a broad blueprint for tax reform. And more importantly, Senator Baucus, when he was at the Finance Committee, and Chairman Camp, put out excellent, excellent starting points for tax reform.

People looking at this thought we would reform the tax code as part of an overall budget deal and to help deal with the non-competitive measures.

Now though that it has slowed down, and I would say in many ways it slowed down because Washington just can't get anything done right now, I think these companies are probably giving up hope and saying, OK, if we can't wait for tax reform, maybe we do have to look at this other restructuring.

I think it is actually very likely to put a lot of pressure on changing the corporate and hopefully comprehensively the tax code. There's a lot of pressure coming now from companies saying, you know, I don't want to have an inversion, but if somebody else in my industry is, that puts the pressure on that company.

And lawmakers, I think, are understanding that, you know, pleas for don't do this isn't going to fix it. They understand the tax code is broken.

BARTIROMO: Right. What do you think is stopping this from moving forward? I mean, we all know the issues and yet we can't get this done. What is so difficult about getting our arms around this complicated tax system in America?

MACGUINEAS: So tax reform is hard. And the reason is, we know the basic model of how you reform the tax code. You broaden the tax base. There are so many tax loopholes, and tax breaks, and things that favor certain industries.

If you get rid of them, that allows you to bring the tax rates down significantly. That makes us more competitive in this global environment in which we now work. And it simplifies the tax code at the same time.

The problem is, when you start looking specifically at those tax breaks. Nobody likes them when you call them loopholes, but when you get to the specifics, there are certain companies or industries that benefit very clearly in a very financial way from each one of those that are going to push to keep those tax breaks from being brought out of the tax code in order to give you the room to bring down the rates.

So you then start pitting companies and industries against each other. Everybody knows we need to reform the tax code, once you get to the details it's hard. And politically, it's very hard, which is why I think when Dave Camp came out with this really excellent blueprint for tax reform, politicians on both sides didn't actually want to engage in the real nitty- gritty of figuring out how to reform the tax code.

But, again, like we were just saying, I think the pressure of these inversions is the really real reminder of why we have to do this. And you may see a renewed interest probably after the midterm elections because everything is so political in Washington. But there may be a real renewed interest in actually doing a tax overhaul.

BARTIROMO: All right. So nothing before the midterms. You think the conversation gets going right after it, and we maybe see some success in '15. Real quick.

MACGUINEAS: That's my hope. I mean, to be optimistic about Washington right now is to be somewhat naive, because basically it feels like the city is broken, but I think people recognize this is a real problem.

BARTIROMO: Maya, we'll we be watching. We so appreciate your time today.

MACGUINEAS: Thank you.

BARTIROMO: Thank you so much. Maya MacGuineas joining us.

And now let's get a look at what's coming up top of the hour on "MediaBuzz." Howie Kurtz with us.

Hi, Howie. What are you covering?

HOWARD KURTZ, HOST, "MEDIABUZZ": Hi, Maria.

Well, we'll be leading with the shoot-down of the jet over Ukraine. Of course, some of the stumbles and speculations.

But I've also got John McCain on the media. Fascinating conversation, talking about the coverage of the border crisis, of the war in Iraq, why he was more restrictive toward the press the second time he ran for president in 2008, why he thinks he is sometimes portrayed as a grumpy old man. And he says he used to get very mad about negative stories but now he has got the anger thing under control.

BARTIROMO: Wow, I want to see that for sure. We'll see you at the top of the hour about 20 minutes away. Thanks so much, Howie.

KURTZ: Thanks.

BARTIROMO: Meanwhile, the Department of Justice weighing in on the IRS scandal, testifying before Congress about why there's no need, it says, for a special prosecutor. Our panel will have their opinions. We'll kick it off there as we look ahead on "Sunday Morning Futures."

Back in a moment.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. A Department of Justice official testified before Congress last week, brushing off calls for a special prosecutor, in the investigation into the IRS targeting of conservative groups. Meanwhile, two IRS officials swearing under oath that Lois Lerner's lost e-mails are gone for good.

Let's bring in our panel. Ed Rollins is former principle White House adviser to President Reagan in both his terms. He's been a long-time strategist to business and political leaders, and he's a Fox News political analyst.

Judith Miller is adjunct fellow at the Manhattan Institute for Policy Research. She's a Pulitzer-Prize-winning author and journalist and a Fox News contributor.

And Steve Moore is chief economist for the Heritage Foundation. He's a contributor to The Wall Street Journal and a Fox News contributor, as well.

Good to see everybody. Thanks so much for joining us.

IRS, the DOJ now saying that we do not need a special prosecutor.

Ed, I mean...

ROLLINS: Well, if they do their job, which they haven't done, we wouldn't need a special prosecutor, but we do, because they're obviously not going to basically investigate the IRS. This administration has been very lax in anything that deals with them.

You cannot have lost these documents. It's just...

MOORE: Yeah, it's like asking a cat to put a bell on itself. I mean...

(LAUGHTER)

... there is no way that the IRS is going to get to the bottom of this scandal. It's been cover-up almost from day one, lost e-mails, people taking the Fifth Amendment. And what's interesting about this story, Maria, as someone who has covered the IRS most of my career: if you were a business and you used these tactics against the IRS, I mean, they would throw you in jail.

BARTIROMO: You would be in jail. You would...

(CROSSTALK)

BARTIROMO: You know, that's why this story just infuriates...

MOORE (?): Right, it's a double standard.\

BARTIROMO: ... certainly infuriates me. I mean, it's amazing to me that we're not seeing this on the mainstream media. Every journalist should be upset and outraged by the bullying of the IRS.

MILLER: Right. I mean, the IRS is not the Department of Agriculture.

(LAUGHTER)

It is a law enforcement organization. It is absolutely -- should be sacrosanct.

But I think we have enough investigations ongoing. I just want to wait and see what the results are. I think they are going to get to the bottom of it, and I think Lois Lerner's fifth is going to ultimately rebound against this administration.

MOORE: You know what's almost comical about this story, if you go back to the very start of it, Maria, remember the IRS line was "This was just a couple of rogue agents."

BARTIROMO: Right.

(CROSSTALK)

BARTIROMO: Not a smidgen of fraud here.

(LAUGHTER)

ROLLINS: Rogue agents in leadership positions.

The problem is this agency needs credibility now more than ever because it has such a key role in the health care implementation. And my sense is the American public absolutely can have no faith in it...

(CROSSTALK)

MILLER: Absolutely. I've got to tell you, when Koskinen testified, he was so snarky...

ROLLINS: Absolutely.

MILLER: ... just blowing it off like it's no big deal.

All right. Let me move on to the risks of Israel's Gaza incursion. As you wrote your headline over the week, and you've been writing about this, Judy, does the U.S. have to change its policy toward Israel? Will it?

MILLER: Well, look, I think that the president had a message. On one hand, he said "We stand with you in your desire and your need to defend your territory," Maria. On the other hand, he said, "But, let's not kill too many people; let's try and make sure this doesn't escalate."

I think the danger now is what Bibi Netanyahu does on the ground in Gaza. What is his goal? What does he want to accomplish? When is enough enough? And how do we do what he wants to do without killing so many Palestinians that international opinion turns against Israel, which has every right to defend itself?

ROLLINS: His goal is very simple. He wants 100 rockets a day that are being fired at his people to stop. And there's no pressure being put from that perspective. And my sense is he's been very reserved, to date, and I think that they give warnings; they basically go in where they think the targets are, and have been pretty effective.

BARTIROMO: How does this play out?

MOORE: This has been inflamed by the fact that the Obama administration has just not been a reliable ally to Israel. And, look, I don't defend everything Israel has done over the last couple of weeks. But this is about their own, you know, right of sovereignty and their self- defense. And normally, they would depend on the United States, but I don't think Israel feels like they can depend on us now.

BARTIROMO: And yet, over the last couple of years, it feels like the president has wanted to befriend Putin, has wanted to...

(LAUGHTER)

... has wanted to befriend...

MOORE: Right. Who's side is he on?

BARTIROMO: They went for burgers, remember, a couple of years ago? He was caught on his hot mike saying "I'm going to have more flexibility after the election."

MILLER: Well, we've retired "reset." At least we don't have to listen to that anymore. But having determined now that it's pretty clear that the Russians bear either direct or indirect responsibility for this, the president simply must do more than just say we're going to have an international investigation.

BARTIROMO: But we can't even get access to the site. I mean, families want to see the bodies of the victims. You know, we want to see the black boxes. Are we able to trust the Russian investigators as far as what went on here?

PUTIN: Absolutely not. And Putin is a tough, tough guy who has longevity in his -- in his tenure here, and he sees -- he sees great weakness here, and he's not afraid of anybody.

MOORE: And, you know, what's the line -- you always used this in the Reagan administration. "Weakness is provocative."

ROLLINS: Absolutely.

MOORE: We have become a kind of weakling. Every time we set the proverbial line in the sand, Putin walks over it, and there is no repercussions. And this kind of -- these kinds of scandals and incidents, I think, are going to continue until finally Barack Obama stands up to Putin.

BARTIROMO: And we saw how Reagan responded to the Soviets back -- back then.

Somebody made a remark to me this weekend, and he said to me, and I said it with one of our earlier guests -- I wonder if you agree -- "Our friends in the world no longer trust us; our enemies no longer fear us."

ROLLINS: I think that's very true. And I think you had a combination of Richard Nixon, who basically was very tough. You had basically Reagan who was very tough. And I'm not just picking out Republicans. They were tough.

MOORE: "Peace through strength" has been, you know, has been replaced with "Peace through weakness."

BARTIROMO: Yeah.

MOORE: That doesn't work so well.

BARTIROMO: All right. Let's take a short break because we've got to get back to America for a moment because many of the country's biggest companies, almost a third of those on the S&P 500, are reporting their second-quarter earnings this week: how that impacts the markets and the economy. We'll also take a look at all of those inversions, companies wanting out of the USA.

We'll look ahead, on "Sunday Morning Futures," next.

(COMMERCIAL BREAK)

BARTIROMO: Well, welcome back. We're back with our panel, Ed Rollins, Judy Miller, Steve Moore, joining us on some of the issues of the day.

Next week is a big week, earnings. A third of the S&P 500 will report their earnings, and very much mixed economic data. So this is going to give us a window into how the corporate sector is doing. How is the economy from your standpoint, Ed?

ROLLINS: Not great. My sense is most people that I've talked to think it will make a better second half of the year. But they're not -- they're not overly optimistic about these earnings.

BARTIROMO: We need big numbers...

ROLLINS: We need big numbers.

BARTIROMO: ... in the second half of the year in order to get a 3 percent.

MOORE: Yeah, when you have the economy shrinking by 3 percent in the first quarter...

BARTIROMO: Right.

MOORE: ... we need four percent growth just to get back to...

(CROSSTALK)

MOORE: I mean, what you've really got going on here, Maria, and it's been the case for four years, you've got Wall Street doing really well. I mean, you look at the huge run-up in the Dow and the S&P.

BARTIROMO: Record highs.

MOORE: And the middle class just isn't -- isn't seeing that. And partly, I think, it's because companies are afraid to reinvest those profits into the economy because they're worried about the next shoe to drop from Washington.

BARTIROMO: Absolutely.

MILLER: Also, how will these foreign crises affect company calculations about the future, about what they can expect from America will be diverted; is there any hope of tax reform given what's going on? I don't know.

BARTIROMO: No. No. Maya MacGuineas just said the city is frozen; forget about -- maybe we'll think about it after the midterms.

Meanwhile, you've got all these tax inversions. Companies want to move out of America because they can save literally hundreds of millions of dollars by going to a lower-tax-rate area.

ROLLINS: These companies think of themselves as international companies, not domestic countries (sic).

BARTIROMO: Of course.

ROLLINS: And they're going to go get the best deal possible for their stockholders and for their employees. And there's no reason, when America basically has a very hostile tax environment for corporations, they're not going to move out.

This whole bullshit -- excuse me -- the whole thing about...

(LAUGHTER)

I apologize.

BARTIROMO: This is a family program.

(LAUGHTER)

ROLLINS: I apologize. I apologize. I apologize, on a Sunday morning.

But the whole drill on patriotism -- patriotism, we fix the tax code and bring American companies back.

MOORE: You know, we're not going to have any -- I mean, this is not an exaggeration. We're not going to have Fortune 1100 companies that call America home any longer if we continue on this track.

I mean, what's happened in the last few weeks, Walgreens; you had Pfizer; you had Medtronic; you have (inaudible), major iconic American companies that are moving out. Liberals used to believe that tax rates don't matter. We're learning firsthand by losing jobs...

BARTIROMO: They matter.

MOORE: ... they matter a whole heck of a lot.

BARTIROMO: Jack Lew says, "Look, we need economic patriotism."

MILLER: Oh, patriotism is really a very weak flag at this point...

(LAUGHTER)

... to raise the issue is you have to come to some kind of not just American agreement but an international agreement that we're not going to play this game, that if we just keep lowering and lowering the rates, we'll have companies moving forever, wherever the rates are lowest. And that's not good for everyone.

BARTIROMO: Once again, we have a lot of politicking going on and no leading.

ROLLINS: Well, you're going to have politicking all the way through November and even beyond that. So my sense is nothing is going to happen in this session of Congress.

MOORE: Well, if we had tax reform, these companies would stay here. I mean...

BARTIROMO: Right.

MOORE: This is about -- the connection the Republicans have to make is to connect the dots between these companies leaving means jobs being offshore and abroad. That's what's unpatriotic. If we fix our tax system, those companies and those jobs will come back.

ROLLINS: Even the promise...

BARTIROMO: I think that's so obvious.

MOORE: And Reagan did this.

ROLLINS: Even the promise of being priority number one in the -- after the elections, with Paul Ryan being the new chairman of the Ways and Means Committee, say this is my number one priority; I'm going to fix this thing, a lot of these companies wouldn't move right now.

BARTIROMO: And why is it so hard to do it?

ROLLINS: It's not hard to do it.

MILLER: Because absolute paralysis is the word of the day, and Congress and the executive don't talk to one another.

MOORE: But President Obama has had two commissions that he appointed that have both said our corporate tax system is costing us jobs.

BARTIROMO: And then he blew them off.

MOORE: Right.

BARTIROMO: All right. We'll take a short break. Still to come, the one thing to watch for in the week ahead, weeks ahead, on "Sunday Morning Futures." Back in a moment.

(COMMERCIAL BREAK)

BARTIROMO: To our panel, what is the one big thing to watch for the week ahead, weeks ahead?

MOORE: Big vote coming up on the Export/Import Bank, the epicenter of the corporate welfare state. And it will be very interesting to see how the two parties line up on this. I have a feeling that the Democrats are going to be in favor of corporate cronyism and the Republicans will vote against it.

BARTIROMO: Judy?

MILLER: I want to see if Tunku Varadarajan's idea of depriving Putin of the right to host the World Cup in 2018 picks up steam.

BARTIROMO: That's a good one. Ed?

ROLLINS: I'm going to watch carefully to see if the Europeans go along with the sanctions, the tough sanctions last week that certainly had an impact on Putin. And I'm going to watch him this week to see if there's any backing off from the hard line positions, which I doubt.

BARTIROMO: This is an important one. The Europeans must act.

ROLLINS: Absolutely. Otherwise, it's useless.

BARTIROMO: Yeah. And I guess I'm watching oil prices because, you know, we got a reprieve. Oil had dropped below $100 a barrel. We're back up.

ROLLINS: Right.

MOORE: You gotta drill, drill, drill.

BARTIROMO: Yeah. Well...

MOORE: We have enough energy in this country to bring that price down.

BARTIROMO: Well, the president has struck the Keystone decision.

CROSSTALK)

BARTIROMO: Thanks, everybody. Steve Moore, Judy Miller, Ed Rollins, good to see you all. That will do it for "Sunday Morning Futures." I'm Maria Bartiromo. I'll see you next week on "Opening Bell" at 9 a.m. Eastern on the Fox Business Network. Here's where you can find FBN on your cable network. Have a great rest of your Sunday.

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