America's overseas military report card; why do Americans still feel like we're in recession?

Gen. Keane asses U.S. airstrikes in Iraq, the drawdown in Afghanistan and more


This is a rush transcript from "Sunday Morning Futures," August 10, 2014. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, HOST, : The U.S. military back in Iraq. Good morning, everyone. I'm Maria Bartiromo. And this is "Sunday Morning Futures." A third round of airstrikes today in Northern Iraq where ISIS has created a humanitarian crisis among Christians and other religious minorities. But with the president insisting we will not put combat troops back on the ground, what impact can this mission have? Another shaky cease fire today, but full truce talks are still in question. And yet Israel's economy seems to flourish no matter how it's assaulted. How is this possible? Are there lessons the U.S. can learn here?

And a blow to conservatives groups, they are down but not out after a judge hands them a disappointing ruling in the hunt for Lois Lerner's missing emails. What it means for those seeking justice from the tax agency. As we look ahead this morning on "Sunday Morning Futures."

President Obama calling the new fight against insurgency in Iraq, quote, "a long-term project." But one that must involve a deep commitment from the Iraqis themselves. This as the U.S. conducts a third round of airstrikes this morning in the northern Iraqi region where ISIS has been terrorizing religious minorities.

Retired four-star General Jack Keane is the former U.S. army former vice chief of staff. He's now chairman of the Institute for the Study of War and a Fox News military analyst. General, thanks so much for joining us this morning. Good morning.


BARTIROMO: You really were one of the key architects to the surge in Iraq back in 2007. Can you characterize these air strikes, how would you assess them?

KEANE: Well, these are defensive air strikes designed to protect our American presence in Erbil and also to protect the refugees on top of Mount Sinjar. And they're just attacking as you indicated, we have had three rounds, Friday, Saturday, Sunday. They're attacking ISIS positions that would threaten both of those locations. So they're very limited, and they're totally defensive in nature.

BARTIROMO: So, what do you think the future of the U.S.'s involvement in this Iraqi conflict will be?

KEANE: I think eventually Maria we're going to involve and change from defensive air strikes, to offensive air strikes. Right now as we speak ISIS has total initiative and total freedom of movement. They are conducting attacks in six other locations inside Iraq, also in Syria and in Lebanon. So, they have initiative and freedom of movement. To stop that initiative. To start locking them up, to stop them from moving, we would have to change the mission that our commanders have now, which is defensive to offensive air campaign, which would then permit us to engage the command and control or head of ISIL, the tail of ISIL logistics and also the body of ISIL which is they have a maneuver forces. We would engage all three simultaneously. All that that said, Maria, that would stop them to defeat ISIL and to drive them out of Iraq, would take ground forces, not our forces. Iraqi's Peshmerga, Sunni tribes and airpower support it. But I think that's months away.

BARTIROMO: I want to ask you more about that, particularly the defensive mission versus moving to an offensive mission. Stay with us General Jack Keane. More first on this. How much ground has ISIS gained in Iraq so far?

FOX News senior correspondent Eric Shawn with that angle. Good morning, Eric.

ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT: Good morning, Maria. And good morning, everyone. Reports of Christians being executed. Children in Mosul beheaded, their heads put on a stick in a park as a warning. Those are the actions of the barbaric Islamist terrorists of ISIS. Could any of this have been prevented?


PRESIDENT BARACK OBAMA: I think that there is no doubt that their advance, their movement over the last several months has been more rapid than the intelligence estimates and I think the expectations of policymakers both in and outside of Iraq.


SHAWN: And President Obama said the administration appears to have been blindsided but the Islamic terrorists took Iraq's second largest city Mosul two months ago today on June 10. And reports say the president repeatedly turned down desperate pleas from the Iraqi government and the Kurds to take aggressive military action. But instead, right now, 40,000 Yazidis face certain death, at the mercy of ISIS terrorists on that mountain top. And like the Nazis, killing Jews, ISIS targets Christians. Putting a red mark on their door ordering them to convert, pay attacks or be killed.


UNIDENTIFIED MAN: Men are being massacred, women are being raped, children are being beheaded. They are trying to wipe out Christianity to the entire Middle East.


SHAWN: ISIS vows not to stop saying they'll raise the flag of Allah in the White House.


ABU MOSA, ISLAMIC STATE SPOKESMAN: I say this to America, that the Islamic Caliphate has been established. And we will not stop. Don't be cowards and attack us with drones. Instead send your soldiers, the ones we humiliated in Iraq. We will humiliate them everywhere, God willing, and we will raise the flag of Allah in the White House


SHAWN: And sadly we have heard that before in the spring of 2001, just months before 9/11, a group supporting Osama bin Laden protesting in- front of the United Nations vowing to raise the flag of al Qaeda over the White House. That group that was determined not involved in a 9/11 plot. But 13 years later, radical Islamic continues that call and now they control a large swathe of Syria and Iraq -- Maria.

BARTIROMO: All right, Eric. Thanks very much, Eric Shawn now more with General Jack Keane. And general, you heard Eric's reporting, do you think it was a mistake to pull the troops out of Iraq, could this most recent upset have been avoided?

KEANE: Well, to a certain degree it could have been avoided, certainly the 2011 pull-out presidential decision to remove all our troops, what that denied us, Maria is the opportunity when the al Qaeda who admitted defeat in 2008 and 2009 because of a surge, when they raise their head again, we would have pounced on them with our counter-terrorism forces, also we would have continued to train and grow the Iraqis. The second key decision in 2012, when ISIS had moved into Syria, Clinton, Petraeus, director of the CIA, Panetta, secretary of defense all recommended to President Obama to robustly arm and train the free Syrian army who was the only force that was wanting to engage ISIS but also, the regime Assad. The president said no.

In June of this year, when ISIL moved into Mosul so rapidly and surprising most everybody because of the collapse of the Iraqi army. Maliki as you mentioned in the intro desperately asked for air strike assistance and we denied that. If we had been pounding ISIS for the last two months, I guarantee you they're not sitting at the foot of Mount Sinjar and at the doorstep of Erbil. And they're not threatening Hadith (ph) in Anbar province. They would have stopped their forward movement and taken away their initiative and the freedom of their movement.

BARTIROMO: Who is providing ISIS or ISIL with artillery? I mean, who is really the money behind this? Who's helping them?

KEANE: Well, they don't need any help now, they did have some Sheiks in the Sunni world who initially funding them. But they took money out of Syria, they have taken huge amount of money out of Iraq and Anbar province. And every bank they've ever gone into, they have taken the money out of that. Their accumulative worth now is somewhere over a billion dollars. But listen Maria, what is so interesting here is that we know what banks they're using and we know the seven portfolio managers who take care of their transactions every day, that should, both of those issues should be targeted.

We should arrest those people who are managing the money and we should take the money out of the banks, those banks are in the Middle East. We did this with the al-Qaeda, the U.S. treasury, largely in Europe but also in the Middle Eastern banks, and we're not doing any of that now. This is a non-military intervention, that we could clearly do, take their support away from them. In terms of the artillery, they got all of that from the Iraqi army as to the tanks and also their another maneuver vehicles.

BARTIROMO: So do you expect that we will do that and what should the American people understand about the U.S.'s involvement in Iraq in the coming six months?

KEANE: Well, first of all, I think our involvement in Iraq will continue to grow. And I think, you know, what's happening now will condition the American public and we'll continue to learn more about this threat. The reason I say that is because ISIS has to be stopped and I'm confident even though this president does not want to get involved more militarily, at some point he will have no choice. ISIS threatens the stability of the Middle East. Then he along with our allies in the Middle East will begin to oppose them at some point in a consequential way.

Also as noted before, Maria, ISIS also threatens the security of the American people. And for those two reasons, we will eventually get involve more significantly than we are now. I'm not talking about our combat troops, but I'm talking about airpower, more air ground coordinators and advisors to help the Sunni tribes, to help Peshmerga and I'll do believe we'll give arms to the Peshmerga in a way that we're not doing now.

BARTIROMO: All right. We will leave it there. General, good to have you on the program. Thanks so much for your insights.

KEANE: All right. Good to talk to you, Maria.

BARTIROMO: General Jack Keane, good to speak with you. Meanwhile, Israel has more startups than any other country in the world by far. How is it that people there can manage to do so much under such constant chaos? We'll speak with the author of the book called "Start-up Nation: The Story of Israel's Economic Miracle." You can follow me on twitter @MariaBartiromo, let me know what you would like to hear from Dan Senor and our guest today @SundayFutures. We'd love to hear from you. Stay with us. We're looking ahead today on "Sunday Morning Futures."


BARTIROMO: Welcome back. Another new shaky cease-fire in Gaza this morning. But only after another weekend exchange of rocket fire between Israel and militant groups there. This is nothing new for Israel which has been the target of assault from its neighbors, from virtually the moment the Jewish state was established. And yet the people there have not only survived, in many ways they have thrived. Dan Senor is the author of "Start-Up Nation: The Story of Israel's Economic Miracle." He's now Elliott Management's senior adviser. Dan, it's good to have you on the program.

DAN SENOR, AUTHOR, "START-UP NATION": Good to be with you.

BARTIROMO: Thank you so much for joining us. So, first, before we go into really the upset this morning, what do you think it is about Israel? You wrote in the book a lot about the military culture.

SENOR: Sure. Almost every single Israeli aged 18 goes through a crucial leadership experience, males for three years, females for two years and must be going longer in the army into, you know, training, officer training school. But by and large, almost every Israeli gets this, this management experience, this leadership experience, how to manage and survive and navigate in chaos. So when our young people are going into college, 18, 19, 20, 21, they're going into the army and getting real leadership experience, then they go into university and then they go on to the start-up world. And they're hard wired at a very young age skills about how to deal with ambiguity, how to improvise, how to manage, how to lead. Their hard wire for start-ups.

BARTIROMO: And also this is sort of the norm, what they see today and has been for a long time. You know, this is a very serious crisis that has accelerated.

SENOR: So, in 1991, Iraq launches, during the first gulf war, Iraq launches scud missiles in Israeli. Everyone thought that the missiles were laced with chemical weapons. Israelis were in gas masks. Literally, sealed rooms and gas masks. At the time Intel, which was the second largest employer in Israeli was getting ready to launch its Israel team a chip that powers our laptops to this day. And they had to make the decision to call all the employees in, they let them do a -- basis. Even as the scud missiles were landing, they gave the employees the option, over 80 percent of the employees showed up on the first day of the bombings, the second day closed to a 100 percent. Why?

There was a sense of mission, there was a sense of no matter what you throw at us, we will deliver, we will perform. Intel Israel never missed a shipment. They were always on time. That culture permeates Israeli society when they're in crisis, like they've been the last month. And the economic numbers in terms of how the start-ups have done both. In terms of fundings, venture fundings and exits have boomed during the last month.

BARTIROMO: Incredible performance.

SENOR: They're already up over 80 percent in terms of start-up funding from last year, and they do that obviously during crisis, but even when they're not in crisis, nothing surprises them. This is why Israeli venture capitalist from around the world and multinational companies want to back some of the Israeli's start-ups. Because they're un-laughable, nothing surprises them.

BARTIROMO: So, what do you -- how do you assess what's happening today? I mean, there are efforts at a cease fire, it doesn't last, once again, same thing overnight?

SENOR: Yes, it's tragic. The reality is, the Arab world is divided right now, many countries like Egypt and Jordan and Saudi Arabia have been quietly rooting for Israel on this. The Israeli public is united. Israel has decimated a lot of Hamas' capabilities. But Hamas has to show something for all this bloodshed and all this rubble. And they're trying to come sort of keep this alive, keep this fight alive. Until Israel has achieved most of its military objectives in the short-term. They have decimated this labyrinth of tunnels. They've wiped out a lot of Iraqi capabilities. So, Israel is accomplishment that needs to accomplish. Now it's just really responding to Hamas, you know --

BARTIROMO: Constant -- SENOR: Provocation.

BARTIROMO: Yes. Let me switch gears because you were the spokesperson for Iraq's coalition, provisional authority back in 2003, 2004. What is your assessment of these air strikes? I mean, the CPA's northern headquarters is right in Erbil. So, you have a unique perspective in terms of working side by side with the people in Iraq directly. Can you tell us about these clashes of culture?

SENOR: Yes. I would say that the Kurdish community up north right in and around Erbil, and Sulimania (ph) which was this Kurdish town that was being evacuated or some of America's best friends, I mean, in the world, the Kurdish community in Northern Iraq. The Christian minority communities like the Yazidis that are under siege right now. We are on the cusp of watching a human catastrophe, quite a substantial scale of ISIS is able to persist. So, the strikes that the president has authorized and fully supportive of I think is the right thing to do, I'm not sure they're going to be sufficient. We're going to need at some point, some combination of airpower, intelligence capabilities on the ground and training for the local forces and arming of the local forces, including the Peshmerga, like the Kurdish army.

Because if we don't set ISIS back, we're going to have this huge ungovernable space on the Iraqi-Syrian border. That will be ungovernable and ungoverned. And basically in the hands of radical Islamic extremists. And it sort of like Afghanistan pre-9/11, which has ungoverned space, you had terrorists training camp, 20,000 plus people in terrorists training camp. This could be the same dynamic, it's just much more valuable real estate, an area in Iraq and Syria that ISIS is trying to take over and built some version of a caliphate to borrow their words strategically valuable territory. So, we have got to do more, I believe, than just simply say, we're going into protect American civilians which we're doing, and American troops which we should be doing. And helping this minority communities, Yazidis, they're under siege, we have got to also think strategically about how we protect this whole area from being overrun.

BARTIROMO: And whether or not, that means, another boots on the ground. I mean, the president has been adamant about this and yet, we're reengaged.

SENOR: We are reengaged, Iraq is now a country that's perplexed three presidents including this one. I think we do not need a full bore ground presence, we will need some kind of special ops or intelligence capabilities on the ground to help the coordination with the airpower.

BARTIROMO: Dan, good to have you on the program.

SENOR: Good to be with you.

BARTIROMO: Thank you so much. Dan Senor joining us. Up next, stocks on Wall Street surging and the U.S. economy reportedly now thriving, so why do nearly half of all Americans feel like they're still stuck in 2008 and the recession? Where is the disconnect? We'll talk with the CEO of the top Bankers Association about what is really going on as we look ahead at "Sunday Morning Futures," stay with us.


BARTIROMO: Well, despite what any academic economist out there might be saying, the American people still feel like there are big holes in their pockets. According to a new Wall Street Journal poll, nearly half of the people feel like we are still in a recession. Five years after Vice President Biden promised a summer of recovery. And 70 percent have said that the country is headed in a wrong direction. Alex Sanchez is joining us. He is the president and CEO of the Florida Bankers Association to talk more about this. And Alex, good to have you on the program. The stock market is near record highs, we got a GDP report that showed four percent growth for the first reading for the second quarter, and yet, these poll numbers are just disastrous, why do you think that is? What's the disconnect?

ALEX SANCHEZ, PRESIDENT OF FLORIDA BANKERS ASSOCIATION: Well, Maria, I think, you know, here on Main Street, good morning from Tampa, Florida. I think there is a deep concern about a lot of issues, ObamaCare, taxes, regulation. I think we need leadership. I will tell you, you know, the Congress and the president both get blamed. I will tell you, though, the house on a bipartisan basis works a lot better than the Senate. But we still needs leadership, and the president is the commander-in-chief, and we need more leadership from him and I think the American people, you know, are feeling it.

One of the concerns that we have is the journal reported in March Maria that $31 trillion has moved from the FDIC banking world which is very regulated to the non-regulated shadow banking industry. That's bad news for Americans, Maria. These are payday lenders, these are mortgage brokers. No one's really basically regulating these folks, and when the Americans have to go to these type of financial providers, that's bad news.


SANCHEZ: What the president and his administration understand is, Dodd Frank and the tens of thousands of pages of regulation are driving the lenders on Main Street out of business and selling, that's community banks.

BARTIROMO: So, what would you like to see? I mean your focus really has been regulation. So you've got Dodd Frank, you've got the Affordable Care Act, you've got EPA, the new EPA regulations, what is most onerous and what kind of leadership would you like to see? What would you like to see the president do at this point?

SANCHEZ: Well, I think we need relief for our community bankers, Maria. I mean, right now, they provide 60 percent of the loans to small businesses which is the main provider of jobs in America, and you know what small businesses are telling our bankers? Hey, look, we're not borrowing because we don't know what the future holds, we don't know what Obama is going to do, ObamaCare is going to do to our costs, even the office where ObamaCare is going to be administered, the federal government office has finally admitted in march of this year that the insurance costs for small businesses has doubled, so there's a lot of uncertainty.

I think, you know, you have things where our young people today Maria are not buying homes like they used to. And Maria, we aren't in a recovery yet, we are at a 14-year low for mortgages in this country. And what this administration and Congress has to understand is that, you know, the regulations or killing, our banks, our community banks, which provide the lending to fuel this economy.

BARTIROMO: So, what kind of costs are we talking about, Alex? I mean, how would you characterize the substance? I mean how would you characterize the actual costs that businesses are faced with today and is that the reason that they're not putting more money into hiring and providing benefits for long-term workers?

SANCHEZ: I think so. Let's take for instance the ObamaCare rules. I mean, you know, obviously 50 employees or less. You're exempted from that. And you know, a lot of small businesses are probably going to toe the line and keep under that number so they won't be under the ObamaCare rules. So, right there, that's an inhibitor of job creation which is very important from our small business sector. So for our community banks, you know, we're hiring more compliance staff and more lawyers than we are lenders.

It's sad when you go to a bank, a community bank Maria, and you have more compliance stuff than you do lenders in some cases. You have things like operation choke point that was administered by this attorney general, with the federal banking regulators and the last time I was on with you, we talked got this, the FDIC two weeks ago is kind of moved away from operation choke point, away from Attorney General Holder because they know what was wrong. And that operation choke point was to closed down the accounts of legal businesses in the United States. Maria, for the first time -- yes?

BARTIROMO: No, no, please, continue.

SANCHEZ: For the first time, Maria, in over 70 years, we had the longest period of time in this country where a community bank has not been formed in our country, it's been over six years that a community bank has been chartered. Why? Because community leaders don't wanting to take the risk, just like small business owners don't want to take the risk and expand and get into this business.

BARTIROMO: Do you think going into the midterm elections, if in fact the GOP takes the Senate, the majority in the Senate. Do you think a new money will be unleashed in the economy where businesses will feel like perhaps regulation will be a little alleviated for them. Are you expecting that?

SANCHEZ: I am Maria, I am. And I will tell you that Senate Republicans will have the responsibility and many have said that Dodd Frank and other regulatory relief, EPA, ObamaCare relief, maybe not totally dismantling these programs. But certainly offering substantial relief that will give confidence to small business owners into Main Street. Right now, that confidence does not exist. BARTIROMO: Yes. SANCHEZ: When I talk to our bankers about the commercial lending pipeline, it's wide but not deep, Maria. Many small businesses are not borrowing, they're holding back, and we're technically out of this recession, I expected this in '09 and '10 and '11 but not in 2014.

BARTIROMO: Yes. It's certainly it's been a long time for sure. Alex, it's good to have you on the program. Thanks so much.

SANCHEZ: Thank you, Maria.

BARTIROMO: We appreciate it. Alex Sanchez, joining us, CEO American Florida Bankers Association.

A court ruling about Lois Lerner's missing e-mails could be a setback but not a defeat for conservative groups. Our panel will kick it off there with Lois Lerner's e-mails in the IRS as we look ahead on "Sunday Morning Futures." We'll be right back.


SHAWN: From "America's News Headquarters," I'm Eric Shawn. Here are some of the other stories that are making headlines at this hour.

Fresh off being hammered by a tropical storm, Hawaii is now bracing for Hurricane Julio. Fortunately, the worst of Julio is expected to miss the state. Meteorologists expect the storm to pass between 150 and 200 miles north of Hawaii, and they say that's a distance that should keep Julio's damaging winds and widespread torrential rain away from the islands.

Plus, NASCAR's Tony Stewart will now not race today in upstate New York, this just hours after a tragic incident. Stewart's car clipped Kevin Ward, Jr., last night, on a previous lap. The two competitors collided on the track, and that blew out a tire on Ward's car. Well, after that, Ward exited his vehicle, apparently walking towards the track to show his displeasure with Mr. Stewart as he approached on an ensuing caution lap. The local sheriff indicated that Stewart has been fully cooperative and this incident is not being investigated as a criminal matter after he struck his fellow driver.

I'll be back with Arthel Neville at noon Eastern for half an hour of news. Then he doctors will be in. Doctors Siegel and Samadi join us for "Sunday Housecall" at 12:30 Eastern, as always. For now, I'm Eric Shawn, and back to "Sunday Morning Futures" with Maria.

BARTIROMO: Welcome back. A judge this past week disappointing conservative groups seeking to sue the IRS, denying their request to allow an independent expert to search for Lois Lerner's missing e-mails, this as news surfaced that another White House official, Marilyn Tavenner, who is key to the rollout of ObamaCare, may have also deleted e-mails being sought in another congressional investigation.

I want to bring in our panel, right now. Alan Murray is the new editor-in-chief of Fortune magazine. He is the former president of the Pew Research Center. Judith Miller is adjunct fellow at the Manhattan Institute for Policy Research. She's a Pulitzer-Prize-winning author journalist and a Fox News contributor. Tony Sayegh -- he is former press aide to Jack Kemp, when Kemp was the GOP vice presidential nominee. He's now president of Talk Radio News Service and a Fox News contributor.

Good to have everybody on the panel. Thank you so much for joining us and being here.


BARTIROMO: Let's kick it off with the IRS. Tony, what's your take, big setback for a conservative group?

SAYEGH: No, this is a minor setback. It's basically how they're going to get these lost e-mails and whether or not the judge is going to allow this independent effort to fast-track. And he essentially said, no, you have to go through a more regular process; the bar was set very high.

The bigger case I'm going to look at is if this judge will throw out and dismiss the case, which is what the government's asking them to do. We're going to learn that in the next two weeks.

BARTIROMO: That's going to be a big outcome, obviously.


Judy, what's your take?

MILLER: I think we're going to see these e-mails one way or another. I don't think that Darrell Issa is going to give up at all. I think there's so much interest on the part of the American people in this story, it is not going to go away.

BARTIROMO: I mean, what about the fact that now another White House official, Marilyn Tavenner, has also deleted e-mails?

I mean, what does this say, Alan? It...

MURRAY: Well, there's a lot more to -- a lot more to learn about this one.


MURRAY: Yeah, it is very -- what happened at the IRS is very, very disturbing. I think this ruling -- I agree with Tony -- it's not something to get too hung up on. This is a judge who was appointed by George W. Bush. It's not a political ruling. It's just saying let's let the inspector general at the IRS have a stab at this first and see where that goes.

BARTIROMO: But I think, with Tony, what you said is really critical. I mean, if they dismiss this case, that's going to be a huge -- but why would they, e-mails?

MILLER: They're not going to...

SAYEGH: There's too much here, and as we've all, I think, agreed, the American people are demanding transparency on this. Ironically, at a time that we're so divided as a country, three out of four Americans think something bad happened to the IRS that we should know about. So, if they short-circuit this entire process by dismissing this case, I think they're going to have a lot of interesting hangups there.

BARTIROMO: Well, the point that you always make, Judy, this is a law agency, so this is not going away, is it?


MURRAY: It's a law agency and an agency that reaches into everybody's lives, as well.

MILLER: Right, exactly, and, you know, they're extremely good at thinking up creative ways, as we have now seen, for -- to tax corporations or to make sure that corporations don't have to pay some kind taxes; they're very good at loopholes. But they don't seem to be so good at ensuring a fair playing field for the American people, for conservative groups. And this has to be...

BARTIROMO: And they're deciding on ObamaCare.

MILLER: And they're deciding on ObamaCare.

BARTIROMO: The IRS is so critical right now, in terms of the rollout of ObamaCare.

SAYEGH: That's the critical link. Tavenner was one of the agents, you know, at CMS that was the most instrumental in the implementation and passage of ObamaCare. So, clearly, if these e-mails were being deleted on both sides, something must be part of an effort to try to conceal stuff.

MURRAY: You know, one of the issues here, Maria -- and I spent a lot of time on this in my previous job as president of the Pew Research Center -- is the increasing polarization of the American public along these issues. And, of course, you know, if you look at government workers, for the most part, they fall on the Democratic side of the equation. And it's a -- you know, it's a very harmful thing to our society to see these kinds of divides, which I think is part of what was happening in the IRS...

BARTIROMO: Very, very divisive.

All right. Stay with us, panel. We want a lot -- a lot more comments on the other issues of the day. But let's get a look at what coming up on "Media Buzz" and check in with Howard Kurtz right now in Washington.

Howie, what have you got in the next 20 minutes?

KURTZ: Good morning, Maria. I'm actually I'm out in L.A., where it's a little bit early. We're going to look at President Obama's "shaping the media" coverage of the air strikes in Iraq, and my special guest is Chris Wallace. But here in L.A., we'll also have pollster Frank Luntz, who's asked some focus groups why they don't trust the media. And the overwhelmingly negative reaction, that we're too partisan and we're not credible really speaks to the low esteem in which the news business is held these days.

BARTIROMO: All right. We'll be watching. Thank you so much, Howie. We'll see you in about 20 minutes.

On Thursday, Putin will discuss Moscow's annexation of Crimea, meanwhile, with Russian lawmakers. We're going to take a look at that, as well as Gaza and the other crises impacting the world stage, with our panel, as we look ahead on "Sunday Morning Futures." We'll be right back.


BARTIROMO: Welcome back. We're back with our panel, taking a look at world affairs, Alan Murray, Judy Miller, Tony Sayegh.

Let's talk Russia for a moment here, Judy. This Thursday, Putin has a meeting with other Russian lawmakers to talk about the annexation of Crimea. What are you expecting there?

MILLER: I'm not expecting...


... and I'm trying to get to Thursday. I'm more worried about what he's going to do in between today and Thursday, because he has 20,000 to 30,000 troops amassed on the border. We have Donetsk, which is one of the pro-Russian rebel groups, which is now under siege. They are falling. Is he going to move across that line, in which case this meeting is going to be, as we say, overshadowed by events?

BARTIROMO: You know, from an economic standpoint, Alan, I feel like it really is about the European economy, and then that will also -- that connects the dots to the U.S. economy. But will Europe continue to, you know, go with deeper sanctions, when they are handcuffed because they are getting their gas from Russia?

MURRAY: Probably not. Look, Maria, I think the bigger economic issue here is this whole suite of foreign policy issues we're dealing with. I mean, you have a president who clearly doesn't want to engage with these issues. You have a public that clearly -- all our polls showed -- doesn't wanting to engage with these issues. And what we're learning is that, when the U.S. wants to engage, it becomes a very dangerous place. I mean...

BARTIROMO: The president...


BARTIROMO: ... he leads from behind. You know, Mayor Giuliani was with me the other day, and he said, "What do you think leading from behind means? It means following."

MILLER: That's right.


SAYEGH: And this is the first American president who has basically subordinated the leadership of the world stage to others, and this is the result.

The issue...


MURRAY: There is no other to subordinate to is the problem.


SAYEGH: He's segmenting it. He's allowing certain actors in certain parts of the world to take over those regions, and look what we have. We have a Vladimir Putin who has re-merged as probably the largest dominant geopolitical player in the Middle East. We have the Egyptian president, Sisi, traveling to Russia, presumably because the Egyptians and the Saudis are going to try to go the U.N. route to do some sort of disarmament, demilitarization of Gaza.

They're going to need Russia's vote on the Security Council. Putin is a major player, and we have not found one thing to adequately check. And these sanctions are not, I think, strong enough. And you talk about the European economy, it's all based on their dependence on Russian natural gas. That's going to re-energize the debate here in the United States about liquefied natural gas and freeing that up and putting that into the market and supplying Europe with it.

BARTIROMO: Yeah, no doubt about it. This is a topic that's going to be really critical in the U.S. as well, as, you know, so many expect the U.S. to become an oil exporter.

Let me ask you about -- about Gaza, about Iraq, in particular. Let's start in Iraq, more air strikes today, no cease-fire. What -- what do you think happened?

MILLER: I think, in Iraq, what we really must do is what the president addressed in his brief press conference before he went off to his vacation on Martha's Vineyard, which is we must persuade Maliki to step down, because he, as prime minister, is a nonstarter.

You cannot -- you cannot befriend the Sunnis. You cannot pry them away from ISIS without getting rid of Maliki. So that -- he has to use diplomatic leverage for that.

But, two, where is Qatar? I mean, Qatar has been supplying ISIS. We have a base, a huge base, a CENTCOM forward base, in Qatar. They want us to stay. Why are we not using that leverage to say "Your support of this barbaric group ends now"?

We don't know. He's just -- there's no transparency over what he's doing.

BARTIROMO: The Qataris were our friends, but...


MURRAY: I thought General Keane was very interesting at the beginning of your show, Maria, where he said, you know, the president doesn't want to get further engaged; the public doesn't want to get further engaged, but we are going to get further engaged. American interests are at stake. It's -- it's going to be unavoidable.

SAYEGH: As Clinton did in Bosnia -- that wasn't a very popular thing for the United States to do, but he took the leadership; he worked with Europe and NATO and he got the proper result. In this case...


SAYEGH: Sorry, just, I want to make sure -- Dan Senor made, I think, the most essential point earlier on your program, Maria. The Kurds -- we have to arm the Kurds. This is an issue where it's inexplicable how the administration could deny the most obvious at least short-term solution, which is to allow those on the ground, the best-organized, to fight it. If we don't want to put boots on the ground, boots have to do it, and those are the Kurds right now.

BARTIROMO: That's right.

MILLER: And the Kurds have been begging us to put a base near Erbil for at least 15 years now. They have wanted us there. We have always kept our distance because we don't want to do anything that would appear to endorse the dismemberment of Iraq. But now let's face facts. We need to defeat ISIS.

BARTIROMO: I think it's extraordinary, when you see how many Middle Eastern countries are actually with Israel. They are, you know, not vocal about it, but, sort of, secretly wanting ISIS down and wanting Israel to win this.

MILLER: And wanting Hamas down, also. Egypt and Israel...

BARTIROMO: Wanting Hamas down, exactly.

MILLER: ... are de facto partners against Hamas, which is the best seismic shift that's happened in the Middle East in a long, long time.

MURRAY: I have to say -- yeah, I have to say, Maria, one of the things that mystifies me -- and as you know, I'm -- foreign policy is not my expertise; I'm an economic expert, but I don't know why the administration keeps saying, "We will not put boots on the ground."

Even if you aren't going to put boots on the ground, what is the point...

BARTIROMO: Why are you telling everyone what we're doing?

MURRAY: ... of -- of advertising that over and over and over again?

BARTIROMO: Right, exactly. Let's take...


SAYEGH: ... favorably in your polls, probably.


MURRAY: Well, that's fine if it helps you domestically, but we have a dangerous world situation right now that probably needs to take precedence over poll ratings.

SAYEGH: I couldn't agree more.

MURRAY: And I say that as a former pollster.


BARTIROMO: And -- and speaking of, we'll talk about this disastrous poll this last week. Retail sales coming out next week: what's the latest data going to show us about where we are in this economic recovery? We'll tackle economics when we come right back with our panel, as we look ahead on "Sunday Morning Futures."


BARTIROMO: And we're back with our panel, Alan Murray, Judy Miller, Tony Sayegh.

This poll from The Wall Street Journal last week, I thought, was so extraordinary. Three-quarters of Americans say that they do not believe their children are going to be faring better than they did. Alan, what's behind this?

MURRAY: Yeah. And 49 percent think we're still in recession. Of course, technically, we are not still in recession. But it has been a very long, very slow recovery, and it's not surprising that that makes people pessimistic about their long-term futures.

At the Pew Research Center, we did polling in 40 different countries on this question, and Americans now, we found, about only 33 percent thought children would live better than their parents, which is, sort of, the quintessential question of middle-class aspiration. In Europe, it's far worse.

But what's interesting is, in emerging economies, you really see that booming, in China, over 80 percent; in countries in Latin America, over 70 percent; even in Africa, over 50 percent.

So what you really see is optimism in the world shifting dramatically away from most of the developed countries.

BARTIROMO: Wow, that's not a good thing, Judy.

MILLER: I guess cockeyed optimism is over in the United States...


... at least for a while. But what struck me as interesting about those numbers was that, yes, the president's popularity is down but not nearly as dramatically as those numbers. I mean, given those numbers, I would think that his popularity would be even lower than it is.

And the other thing is the implications of that for the midterm elections. Does that mean that the Republicans really will take the Senate, if there's that much discontent and pessimism?

BARTIROMO: What do you think?

MILLER: I don't know. I think it looks as if there is a prospect that they're going to do that.


SAYEGH: All objective actuarial tables show that we're going to look at least at a minimum of a six-seat gain, which is enough to get the majority. We've added seats that are now in play, Iowa, for example, Oregon, New Hampshire, Michigan. These were not states in the beginning of this cycle that were perceived to be competitive for Republicans, and now they all are.

I think the irony of this poll that's the most shocking is this is a president, in 2008, who ran on hope and change, and all that's changed is Americans are hopeless.


I mean, 76 percent of Americans saying our children will not be better off than us is devastating. And it goes to things, Maria, where we could talk about the markets. And I know this is a financial show. And we could talk about Wall Street and other places that are doing very well. Real Americans are hurting. Their incomes are going down. Their take-home pay is going down. Their prices are going up on everything from utilities to groceries to cost of living. And they're not feeling that hopefulness that comes with a robust economic recovery.

BARTIROMO: Yeah. You're right. And next week we get another reading on inflation. You've got the PPI report out next week. You've got retail sales, industrial production. Any surprises you think come out of these numbers next week?

MURRAY: Well, look, I think that you're seeing slow, steady improvement.


BARTIROMO: The retail segment's really...

MURRAY: It's -- it's way too slow. And while I don't think -- I don't think people are losing ground; they're just not gaining ground very fast, and particularly people in the -- in the lower reaches. They're not seeing wage increases. They're not seeing anything to give them real hope about the future.

MILLER: We've talked about productivity and job creation. But when these jobs being created are part-time jobs where people have to work two and three jobs in order to have the income of the one job they used to have and will never get back, no wonder they're depressed.

BARTIROMO: And Alex Sanchez made the point that, you know, the rule for ObamaCare, 50 or fewer employees, that you're exempt, could be an impact.


BARTIROMO: ... say I want to keep my employees to 50 people or less.

MURRAY: I mean, what you'd like to see at this point in a recovery is 300,000 or more new jobs a month. We're only seeing about 200,000. That's not horrendous, but it's not great.

BARTIROMO: All right, a quick break and then the one thing to watch for the week ahead on "Sunday Morning Futures." Stay with us.


BARTIROMO: And we -- and we're back with our panel. What's the one thing we are watching for the week ahead, or weeks ahead? Alan Murray, Judy Miller, Tony Sayegh.

Tony, what are you watching?

SAYEGH: If the president's going to do the right thing and arm the Kurds. We don't want to have boots on the ground. They have to be our boots on the ground. Air strikes are good but not enough.


MILLER: I'm looking at the Mosul Dam, because, if you control the water of Iraq, you control Iraq. We've got to get that away from ISIS somehow, someway. And I'm looking at the Sinjar mountain to make sure that a bunch of non-Islamic peoples are protected and do not become sacrificial lambs in this fight.


MURRAY: Boy, I'd like to take a -- have a different storyline here, but I think you have to be watching Iraq in the next week. It's -- you know, we can't turn away from it. The president can't turn away from it because American interests are clearly at stake.

BARTIROMO: You've got a new job, Fortune.


BARTIROMO: Priority one is digital?

MURRAY: Digital, you know, Fortune magazine is a great, great brand but was, kind of, folded up into Now it's been taken out. And so we're going to be building from start. Looking forward to it.

BARTIROMO: All right. I'm going to look at economic data next week, in particular the PPI, with the Fed and inflation top of mind.

That'll do it for "Sunday Morning Futures." I'm Maria Bartiromo. Thanks for joining us. I'll be back next week on "Opening Bell," 9:00 a.m. Eastern on the Fox Business Network. I'll see you then.

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