Does the president have an 'Obama Doctrine'?

President's legacy in limbo


This is a rush transcript from "Sunday Morning Futures," August 31, 2014. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, HOST: What is the Obama doctrine? Good morning, everybody. I'm Maria Bartiromo. This is "Sunday Morning Futures."

The president winding towards the close of his second term, his legacy may hang on foreign policy.

And the events of a raging summer overseas.

So what is the mission? Can it be defined?

Summer is coming to an end, which means lawmakers will soon be headed back to Washington. They have a full workload, but with re-elections hanging over them, are they likely to get anything done?

And the kids headed back to school. The CEO of one of the biggest online retailers is here. He'll tell us what you're shelling out for clothes and gear means for the overall economy. We hope you're having a great holiday weekend as we look ahead this morning on "Sunday Morning Futures."


BARTIROMO: President Obama entered office on campaign promises of a more multilateral military approach. Now, six years later, following drone strikes upon U.S. citizens in the Middle East and power vacuums in countries where the Arab spring overthrew despots, the U.S. is facing a new mission creep, a creep right back into Iraq.

It appears every time this president attempts to define the Obama doctrine, events change the parameters on him.

So what will his legacy be?

Rick Grenell is a former spokesman for four U.S. ambassadors to the U.N. He's a fellow at the Prague Freedom Foundation and a Fox News contributor.

And retired U.S. Navy Captain Chuck Nash is a Fox News military analyst.

Gentlemen, thank you so much for joining us. Good to have you.

Rick Grenell, let me kick this off with you.

What is the president's vision in terms of foreign policy? How would you define it?

RICHARD GRENELL, FORMER U.N. AMBASSADOR SPOKESPERSON: Well, I'm not sure he has a vision. I think that's been the problem. If you think about the Obama doctrine, I've written quite a bit on this, and I think it's the war or ignore strategy.

The president came in, promising us to withdraw all the troops from Iraq and Afghanistan and really reminding the world in every single crisis that it's really none of our business.

So this either go to war or ignore the situation, which, by the way, I think, is a very libertarian philosophy that Rand Paul shares, but the Obama doctrine of war or ignore has gotten us into trouble. We've seen the Arab spring turn into the Islamic awakening on the watch of President Obama.

BARTIROMO: Captain Chuck Nash, do you agree with that? What are the implications of that no vision, war or ignore strategy?

CAPT. CHUCK NASH, U.S. NAVY (RET,): Well, the problem is that it's inconsistent across the board. It's been described lately as don't do stupid stuff.

Well, who makes the decision on what's stupid?

And is that person present for every decision made throughout the chain of command?

The other thing is, as has been pointed out, if you have a vision, that implies that there's a strategy somewhere that you're trying so execute. And a strategy has three components. There's an economic, there's a political-diplomatic and there's probably a military component of that as well.

And then through it runs the intelligence piece, which informs the decision makers in those three on what's going on and how to adjust going forward.

But without laying that out, and just coming up with a subjective "don't do stupid stuff," it's very tough for everyone else in the defense and national security policy arena to make decisions.

BARTIROMO: Well, it's very hard to make decisions and, Rick, I guess one issue I have is what is being felt on the front lines?

Let's talk about our military for a moment. I was speaking to some military men and women recently who said, you know, we're not judging the president on his decisions. We just need a decision. We need to know what the direction is so that we have unity and can move forward.

Do they have that consistency in terms of confidence and what the vision is or not?

GRENELL: Well, I can certainly tell you that the diplomatic front lines absolutely do not have that direction. There's no strategy coming from Foggy Bottom. There's no strategy coming from the secretary of state, whether it was Hillary Clinton or John Kerry.

I think our military is obviously the best in the world. And they can respond appropriately. But they, too, are confused. Our enemies are taking advantage of the situation. Our allies, certainly in the Arab world, are very confused about what the strategy is.

You know, Saudi Arabia decided not to go on the Security Council after winning a seat. They decided not to join and serve simply because they didn't want to serve with the Americans because, as they said, the Americans don't have a plan. And they don't want to be a part of something that is really chaotic.

So we're having problems with our enemies and our allies because we don't have a strategy.

BARTIROMO: What about that, Chuck Nash? From a Navy perspective or the military men and women on the front lines, do they feel that they've got a plan?

Do they need a more defined doctrine?

NASH: The folks on the front line don't worry about them. They are well trained, they're properly motivated and well led. They know exactly what their job is and they will do their job when called upon.

Where things start to get a little wishy-washy is when you get back up here into Washington and you start trying to figure out where you're going to appropriate and authorize money for what equipment to buy going into the future, to make sure that you have the military component ready to serve that overall strategy.

So if we're going to do humanitarian work, that's fine. We've done it in the past, we'll do it in the future.

You want to fight small wars? OK, fine, you can do that.

But now we're talking about pivoting to the Pacific. Now it's a peer competitor, we're talking China, and you have a resurgent Russia and you've got Iran and North Korea operating with nuclear weapons -- soon in the case of Iran -- and currently with North Korea. And they're sharing ballistic missile information.

So all of these things require investments to be made in the future. Those investments hinge on the strategy and the strategy of "don't do stupid stuff" is a little bit wanting.


Well, I mean, look, let's face it, the president was facing re- election and it was a very story line to say the terrorists are on the run. Osama bin Laden has been captured and my team has, you know, finished all these terrorists off.

Today, we recognize that is absolutely not true.

So what happens next with the budgets? You know, we know that the president wanted to cut the military budget, also taking troops out of Iraq.

Do we have a clear sense of where the budget goes and what we are, in fact, allocating money to?


GRENELL: Well, let me just start by saying, you know, I think there's always waste that can be cut at the Pentagon. There's no question about that. Even Senator McCain has said that.

But we have to have the hardware build up. If you talk to any experts, we really are at the point where we're at the bottom of the barrel, so to speak, and we don't have the ability to respond like I think our Pentagon and DOD officials want to be able to respond.

So we need to put money into the hardware build-up. But there's a lot of savings to be made at the Pentagon and certainly a lot of savings at the State Department, which I know very specifically we don't need hundreds of U.S. diplomats in European capitals. We have to be able to cut back the State Department budget, which is just growing every year by leaps and bounds.


NASH: Actually, there is money that can be saved in defense procurement, a former chief of Naval Operations said if he had any choice other than his current acquisition system, he would use it because the current one is broken beyond repair. It needs to be replaced, not fixed.

So yes, we tend to buy a bunch of -- not a bunch. We buy a few uber systems -- elegant, as one former Secretary of Defense called them -- so they're elegant when, in fact, they way overqualified for use in small wars.

But if you were to actually apply them and use them in big wars, you don't have enough of them. They can only be one place at one time.

So in going against a peer competitor, mass has a quality all its own.

BARTIROMO: Real quick, gentlemen, as the president has declared terrorists on the run, would you say ISIS today is a direct threat to the United States?

GRENELL: Absolutely. There's no question about it. We've already seen that they are a killer organization that takes out Americans. And I think they're only growing and they absolutely will target us and they want to target us.

NASH: There are about 1,000 ISIS fighters right now by estimates; 400 of them are Brits, with British and European passports, probably some American passports. They're going to be able to travel around the world and get under a lot of people's radar. So yes, it is a threat and it is coming here. We have to believe that and defend against it.

BARTIROMO: Gentlemen, thank you very much for your insights. We so appreciate it. Rick Grenell and Captain Chuck Nash joining us.

Meanwhile, as kids return to school, Congress is returning to Washington with a lot of their plate.

But will anything get done before the midterm? I hope you'll follow us on Twitter. @MariaBartiromo, @SundayFutures. Please send me a tweet and tell us what you would like to hear about on the show as we look ahead on "Sunday Morning Futures."



BARTIROMO: Welcome back.

Congress set to return from its five-week break with a full agenda, including immigration, fixing Veteran's Affairs. And another budget battle looms with a shutdown possible in mid-October.

All of this with Republicans threatening to sue the president and mid- term elections just two months away.

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.

Judy, it's great to see you.

You heard our conversation with Chuck Nash and Rick Grenell. Let me get the same question to you as we kick this off. What do you think Obama's doctrine is in items of foreign policy?

JUDITH MILLER, MANHATTAN INSTITUTE: I don't think he has one. I think he has a bumper sticker rather than a strategy. And it's nice to say don't do stupid stuff, though he used another word, but that doesn't tell us anything as your previous guest said.

I think the problem with the president is he misjudged the situation on the ground. He was so intent on taking credit for pulling out of Iraq, for pulling out of Afghanistan, that he failed to see this incredible looming threat in the form of ISIS.

He himself called that group the junior varsity team. His CIA director, John Brennan, said not six months ago that these guys were kind of living in a fantasy world. They thought they were going to declare a caliphate, they thought they were going to spread Islamic militancy and their brand all over the world. Now they've started to do that. So they're catching up with events on the ground.

BARTIROMO: Well, what -- you know, junior varsity for is, we are watching ISIS do horrible things in terms of really wanting the United States, sort of taunting the United States. Everybody says that they're a direct threat to the U.S. what do we miss?

MILLER: Well, it's hard. It's hard to miss them unless you want to miss them, unless you want to downgrade their importance and say, this vacuum is not going to come back to haunt us.

Look, I think the president would have had a conversation with the American people in which he said, we are not going back into Iraq, we're not refighting that war, we're sending people and advisers and boots there -- though we don't need the boots on the ground or as many of them as some people are afraid of -- but we're sending people back to prevent a replay of Afghanistan, because those -- that was his essential war. The people who had come to us and struck us.

Now that's what's at stake. This is what ISIS wants to do if we let them gather strength.

I don't think they're an immediate threat, but if we let them get stronger, they will be.

BARTIROMO: What kind of an effect does this leave behind strategy have on America, the perception of America, the strength and power of America? I mean, this does have real implications?

MILLER: Oh, Maria, I'm going to eastern Europe in a month -- less than a month.

But I can tell you that our Arab allies are not only perplexed, they're so disappointed in the United States. There were many complaints about Iraq and the way we fought that war, but the absence of America is an even greater threat on the world stage and to their region. They're fighting historic forces and a historic battles and we're not there. We're letting other people do it, except no one wants to do it. We're the only nation that can.

BARTIROMO: It's pretty extraordinary. You know, somebody made the point, unfortunately, when you look at foreign policy and this administration, it's all political, it's all senators. I mean, look at who is running things, all former senators, that we know that that's political. It's not necessarily -- where are the Colin Powells, where are the people who we know who are strictly foreign policy strategists and not senators?

MILLER: Well, there aren't any.

I mean, if you look at his team, speaking of junior varsity, I hate to say it, because many of these people have extraordinary experience. But there's no one in the kind of Kissinger, you know--


That's what I was referring to.

MILLER: You know, there are no Kissingerian figures, there are no strategists. You can't have a strategy without strategists.

The president knows what he doesn't want to do. I'm not sure he knows what he can and wants to do now that the situation on the ground has changed so dramatically.

BARTIROMO: So what's most important to you as you study this in the weeks and months ahead? What are you going to be looking for in terms of direction, in terms of giving you more clarity?

MILLER: I think what I want to see is a president who is willing and able to lead our European allies into a kind of coalition that tells Putin, for example, you cannot go on doing what you're doing in the Ukraine, you cannot play this double game of speaking about de-escalation and actually still feeding in Russians to stir the pot and keep this terrible fight going. You need to rally people behind you. I'm not saying America has to do it, but we have to lead a coalition effort.

In the Middle East, we really do need to do more. We need to send in more advisers, we need to concentrate on how to get rid of ISIS and they know these people and they know how to get rid of them.

BARTIROMO: Not to mention Hamas, where all of our neighbors in the region are siding with Israel, which is extraordinary.

MILLER: Absolutely.

BARTIROMO: Which is quite extraordinary.

MILLER: It's extraordinary.

BARTIROMO: It really is.

Judy, always wonderful insights from you. Thank so much.

MILLER: Thank you so much.

BARTIROMO: Judith Miller joining it is, meanwhile, the most wonderful time of the year, just ask any parent. The CEO of one of the biggest online retailers is here next to explain what back to school shopping can tell us about the health of our economy. We're looking ahead on Sunday Morning Futures.


BARTIROMO: Well, there are a couple of times a year when consumers can offer us a crystal ball into how the economy is doing. Back-to-school is one of those times. The National Retail Federation expects American families to spend some $26.5 billion dollars on everything from clothes to laptops to good old backpacks.

Patrick Byrne is CEO of to help us navigate the back-to- school season.

Patrick, good to see you. Thanks so much for joining us.

PATRICK BYRNE, CEO, OVERSTOCK.COM: Maria, it's such an honor to be on your new show.

BARTIROMO: Thank you so much.

So how would you characterize the back-to-school season so far?

BYRNE: We had a great back-to-school and back-to-campus sale. Ours was up about 20 percent over last year. So we're very happy with that although I'm not sure that our experience was typical among all retailers. I think in general the retail industry was expecting about a 5 percent surge.

BARTIROMO: Well, that was good. Then in terms of your own business, give us your sense of the consumer today. Even though we're seven years past the financial upset, it feels like people are still nervous, unsure and certainly value conscious.

BYRNE: They are value conscious. That's good for Overstock. But in my general sense of the consumer -- I hate to be Debbie Downer, but, no. We're not out of the recession. What happened in '08 was just the beginning and all they've done is reflate a bubble until, for the last six, seven years.

And now we're having trouble reflating the bubble. So there is no real fundamental recovery at all in the economy and I think the consumer -- I think it's getting harder to fool the consumers into spending money.


BYRNE: It works OK for us. Value -- when people are value conscious, it's good for us. But in general, I don't think there is. I think that we've seen all we're going to see of the recovery.

BARTIROMO: So, I mean, you're right, the economic data will show that it's been quite bumpy, choppy, if you will, bifurcated in the retail area.

What do you think it's going to take to move the needle on economic growth?

BYRNE: Well, frankly, I mean, that's a big question. I think that we have to really radically change some institutions. All we're doing now, we have a central bank that's buying 93 percent of the bonds that the government issues. So that's essentially monetizing all the debt.

And that's to create a wealth effect, prop up the wealth, the market, so there's people, stocks go up and they go and spend money. That's, you know, that's what happened in '06, '07 with the housing market. That's not any real recovery.

What it would take is radically transforming our financial system. I think deleveraging the banks, going to a non-fractional reserve banking system, having real effective government regulation and not what we have now, which is pretty much a revolving door between Washington and Wall Street, some things like that would have to be fixed.

The fundamentals would have to be fixed. All that's going on now is cosmetics.

BARTIROMO: So tell us about the highlights of the back-to-school season.

What are families spending money on these days?

BYRNE: There's a lot for us -- the big surge was in back-to-campus, frankly. So there's back-to-campus and back-to-school that get mixed together. We saw the biggest surge from people whose children are going to college. And they're outfitting dorm rooms and things like that.

That may be partially skewed by the fact that we started this year giving -- we have something called Club O, it's our loyalty program, considered one of the top three on the 'Net. We started giving it for free to students, military and police and firefighters.

And so because we've done that, the college students, that may be why we had -- partially explain why we had such a big surge in sales of kids going back to, you know, furnish their college dorm.

BARTIROMO: What about in terms of value?

Where can people find the most value in terms of products?

Are we seeing a lot of promotions? And sort of sales ahead of back- to-school?

BYRNE: We are. I think that the inventory in the second quarter, from my read, is the inventory chain got a little bit overstuffed. People ordered a little bit more than they wish they had.

And so now there are liquidation sales going on, different promotions, because I think the retail industry in general realized it got a bit ahead of its headlights and it overstuffed its supply chain.

BARTIROMO: Now you have a plan to allow some customers to pay in bitcoin.

BYRNE: We do, indeed. We were the first major site to take bitcoin in January and as of September 1st, we will be taking bitcoin globally from -- consumers all over the world will be able to spend bitcoin at September 1st.

BARTIROMO: So how do you get paid? Explain bitcoin for our audience.

BYRNE: Well, bitcoin is a virtual currency. It's a lot like gold, except it's virtual. It's like gold in that it's limited in supply. No government mandarin can tweak it and adjust the supply. So that's why I like it.

In our case, as people spend bitcoin with us, we convert it into dollars less 10 percent. We hold -- we're accumulating reserves of 10 percent bitcoin sales, keeping them in bitcoin. We just think it will be good some day to have a little pot of bitcoin.

BARTIROMO: And are we still seeing the online portion of retail taking market share from bricks and mortar?

Or is it more of both strategies working?

BYRNE: No. I think that there is very clearly a secular shift. Online retailers are growing at about 10 percent to 12 percent a year. Walmart same-store sales are now shrinking a little bit, but they're actually shrinking.

So when you see the growth numbers in the retail industry, you really have to disaggregate them from brick and mortar and online.

And the truth is, online is growing many, many multiples of the brick and mortar. And they average -- there's some positive number, but the truth is brick and mortar is basically flat or in some cases shrinking and the real growth is all coming in the online industry.

BARTIROMO: So you mentioned, you know, your sales are up better than 20 percent, 26 percent or so, and yet you also mentioned that the broader economy doesn't feel so hot to you, that we are sort of bumping along the bottom.

How is it that your firm has been able to track such a better performance than the broader market?

Is it just that value conscious consumer because you're getting a better price?

BYRNE: That's a big part of it. It's 22 percent. That's just with the back-to-camp, back-to-school period. I'm not giving away quarterly numbers in advance.

Obviously, I'm biased, but we're about 10 percent cheaper than Amazon with better customer service. So it's a surprise to me why it's taken this long, you know, for the audience to really start -- to buy into Overstock as much as they are.

But so, yes, value -- when times are really tough is when people -- when we've had our biggest surges, actually. It's when there's a lot of money floating around and times aren't tough, people go shopping, they pay full retail when times are tough.

And you know who does it? You'll find this interesting. Who really turns to us are affluent people and low income people. Middle class people pay full retail. They don't squeeze a penny. The people who squeeze a penny are rich people and poor people, interesting fact.

BARTIROMO: That is interesting. Patrick, good to have you on the program. Thanks so much.

BYRNE: Anytime, Maria. Thank you so much.

BARTIROMO: We'll see you soon. Patrick Byrne joining us, CEO.

ISIS determined to expand its caliphate across Syria and Iraq.

How must our military and the world respond? Our panel starts there as we look ahead on SUNDAY MORNING FUTURES. Back in a moment.



ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT: Live from America's news headquarters, I'm Eric Shawn.

Iraqi forces claim what they call an important victory against ISIS, saying they've ended the terrorist six-week siege of a town in Northeastern Iraq. Those new U.S. airstrikes and aid drops also helping turn the tide there. This as Australia now says it will arm Kurdish fighters. Joining an international coalition that includes the U.S., Britain and Canada.

Just hours from now at the Atlanta Motor Speedway, driver Tony Stewart will make his official return to NASCAR, that three weeks after he was involved in that fatal crash that killed driver Kevin Ward Jr. at a dirt track in upstate New York when he got out of his car.

There is still no word though on whether Stewart will be charged in that incident. Authorities say the investigation will last at least two more weeks.

I'm Eric Shawn. We'll be back with more news at the top of the hour at 12:00 Eastern time. Now back to "Sunday Morning Futures" and Maria.

BARTIROMO: Welcome back.

ISIS has made it clear it wants to expand and maintain its Islamic caliphate. It has already seized large parts of Iraq and Syria.

So what should be our military response? I want to bring in our panel, Ed Rollins is former principal White House adviser to President Reagan in both of his terms and has been a long-time strategist to business and political leaders. He's a FOX News political analyst.

KT McFarland is a FOX News national security analyst. She's the former deputy Assistant Secretary of Defense during the Reagan administration.

Martin Sass is chairman and CEO of M.D. Sass Investors Services.

Good to see everybody. Thank you so much for joining us.

KT, let me kick this off with you. Judy Miller was on earlier. She gave me a really interesting stat during the commercial break. She said we are looking at right now we have the smallest U.S. Army since 1940. We have the smallest Air Force and oldest Air Force in history. And we have - - as far as the Navy is concerned, it is now back down to the size it was in 1912.

I mean, we are talking about real cutbacks for the military at a time it feels to me that ISIS is probably among the more dangerous players.

KT MCFARLAND, FOX NEWS NATIONAL SECURITY ANALYST: Well, and the president keeps saying no boots on the ground, no U.S. boots on the ground as if to say we're going to have a small military because we don't need a big military we're not going to put boots on the ground.

BARTIROMO: But KT, we have boots on the ground. We have special forces, we keep saying this, and yet they've been there.

MCFARLAND: Well, the other problem is that frankly, boots on the ground, large, American military presence has not worked in the Middle East. It didn't work in Afghanistan, it hasn't worked in Iraq, it didn't work in Vietnam.

But what we need to do, then, is to get the local sandals in the sand. We need to use the locals to fight ISIS and the expanding threat.

And the way we do that? We take out the checkbook and we take out the military weapons catalog and say what do you guys need to take on this threat directly?

We'll give you close air support, we'll share intelligence, but not American boots on the ground, but we need to enable you to do the fighting.

BARTIROMO: But, Ed, we are cutting military --

ED ROLLINS, POLITICAL CAMPAIGN STRATEGIST: But the other side of that, and KT's the expert on this, the other side has unlimited money. They have unlimited weapons from what was left over from us or the Russians or what have you, for the first time we are against really very significant forces with all the resources in the world.

So what KT talks in terms of somehow we have to prop up these people that are there that should be fighting for their own land. Petraeus said - - who obviously knows more about this that anybody -- we can't be their air force. We are now serving as their air force.

Any progress we made in the last week or two has been because of that and we can't do that long-term.

BARTIROMO: It's interesting when you look at the economic impact.

And, Marty, I guess we haven't really seen much of an impact in the U.S. as markets ignore some of these hot spots around the world.

MARTIN SASS, CEO, M.D. SASS INVESTORS SERVICES: Precisely, Maria. And I think that's a key point. These are important geopolitical issues we're talking about. And there's geopolitical crises occurring world over.

But from a fundamental economic standpoint, it's having no impact on the U.S. economy. It is impacting psychology, it's making people more cautious, it causes gyrations in the market.

But if you look over the last 50 years at all the geopolitical crises that we've had, from the standpoint of the stock market, they've had marginal impacts, they've had impacts, they're short-lived. The market has been stabilized.

You look at 9/11 or the invasion of Iraq and all those, you know, momentous geopolitical events, they had short-term impacts on the markets, they stabilized and then they recovered.

So it's really what's -- from a market standpoint, it's will it have an impact on U.S. economics, on fundamentals of corporations?

It can have it on specific companies, but overall on the markets, it's noise, unless we start to get severe, unexpected collateral --


BARTIROMO: Is that sustainable, though?

At some point, all of the headlines -- I would think that it keeps people frozen. You don't want to spend money, you don't --

ROLLINS: I think they're making money. And I think they're like the rest of the country. The rest of the country wants to ignore all the stuff that's going on. It's not in our background or backyard any more.

This is what happened to us in 1976 and 1980 in the post-Vietnam. And we got to a point where we were very, very weak. The Soviets were on the move all over the world. We now have a different kind of an enemy today that's not like a country, but it's certainly every bit as dangerous.

BARTIROMO: We were talking earlier in the show, K.T, about the fact that there really seems to be no doctrine, the Obama doctrine, in terms of foreign policy.

Do we have a vision? And that really does have implications. It has implications on our military, it has implications on the country, knowing where we're going.

Do you agree that there's no doctrine?

MCFARLAND: They're not looking past tomorrow. They're just looking at what's the current crisis in the inbox, how are we going to solve that, not realizing you're probably getting yourself bigger problems down the road.

ROLLINS: This president jumps -- is everything political, they jumped to take credit; they did it on bin Laden, what have you. They should just keep their mouth shut. You can't fight this thing with drones. You have got to basically let the military, let the special services do their thing, but don't broadcast it. And I think that's one of the dangers of this administration.

MCFARLAND: And I would add to that, looking for new opportunities and that's what they're not seizing. If you look at the Middle East today, the Sunni moderate countries, they're looking at ISIS and they're saying, yikes, it's our heads on the stakes next, so whether it's Egypt, Saudi Arabia, Bahrain, Jordan, United Arab Emirates, if we were looking ahead, we would say we can forge a new anti-jihadist, anti-ISIS coalition using Israel, the moderate Sunni states and the Europeans. Because we all face a threat.

ROLLINS: But that takes leadership and right now there's no leadership in the foreign policy or in -- on the White House.

BARTIROMO: That's the point --

ROLLINS: That's the bottom line.

BARTIROMO: -- in terms of leadership.

All right. Stay with us, everybody. A quick programming note, "MEDIA BUZZ" with Howie Kurtz is live at the top of the hour. Stay tuned for Howie. He will join us in just about 20 minutes or so. We'll take a short break. When we come back, more from our panel. Stay with us.



BARTIROMO: Welcome back.

Congress headed back to so-called work in a few days, after a five week vacation, with many of the lawmakers also campaigning for reelection.

Our panel today, Ed Rollins, K.T. McFarland and Martin Sass joining us.

So the midterm elections begin in earnest.

What issues do you think are front and center, Ed?

ROLLINS: There are no issues. There are every -- individual races are going to be what matters and it's not going to be an overall theme. The president is so weak that he basically can't generate any kind of a turnout. And every campaign will be on challenging the incumbent, who are very vulnerable.

BARTIROMO: Is immigration on the table?

I mean is...

ROLLINS: Immigration will only be on the table if the president does something in the next couple of weeks to basically -- by executive order. And then it will be hot and heavy and it will backfire on him.

BARTIROMO: How do you think the next couple of weeks plays out, K.T.?

K.T. MCFARLAND, FOX NEWS CORRESPONDENT: Well, it all depends. Can the Republicans ahead -- turn this into a referendum against Obama's leadership or, as Ed says, is it going to be a series of local races where don't pay any attention to the president, just look at your local candidates, because if it's a wave election, if people are looking at leadership, whether it's the cities of America are exploding, the economy isn't improving or there's disaster in continent after continent, country after country in the Middle East, in the -- in the Far East, in Central Europe, then maybe people pay attention and it's a wave election.

BARTIROMO: This vulnerability of the president continues to bring up the idea that the GOP may very well take the Senate and hold onto the House.

If, in fact, we see the Republicans control both houses, what does that mean for some of the legislation that the president has talked about, Marty, for example tax inversion legislation?

SASS: Exactly. You know, as you know, that's been the hot topic down in Washington from Barack Obama to Carl Levin. And I think the rhetoric is going to heat up prior to the -- leading up to the midterm elections about tax inversions.

But I think it's just rhetoric and nothing is going to get done until after the elections.

So it's created uncertainty, which, by the way, creates opportunity for us investors, because if investors overreact to some of this rhetoric that's taking place, but nothing is going to happen until we -- in my view, until we get some comprehensive tax reform. It's not going to be isolated to tax inversions.

Meanwhile, they're penalizing some of the stocks of companies that are involved in M&A.

MA& has heated up, as you know, a lot.

BARTIROMO: I think it's $2 trillion in mergers and acquisitions (INAUDIBLE)...

SASS: Exactly. It's $2.6 trillion...

BARTIROMO: This year.

SASS: Right, year to date. And it's been -- in terms of the European deals and Asian deals, more than they -- all of last year. So we're seeing cross country -- border deals.


SASS: A lot of tax inversion deals, low borrowing costs, easy credit, you know, tax benefits.

BARTIROMO: That j that sounds like a positive for the stock market.

SASS: It is.


SASS: There's -- countries are sitting, as you know, on a -- huge amounts of cash.

BARTIROMO: Absolutely.

SASS: They're going to redeploy it in M&A and share buybacks.

BARTIROMO: You have to believe that if the GOP controls both houses, we're not going to see any legislation on tax inversions going through.

ROLLINS: No, you're not. And -- but at the end of the day, it's going to be a very close election in the sense that Republicans may gain in both the House and the Senate and get close, if not the majority, they have to have a very aggressive two year agenda, because come 2016, when more voters turn out in the presidential race, all the Republicans who are vulnerable are up in the next cycle.

So there's -- you've got -- you've got a two year gap here. You've got to go and make -- do something that differentiates you from the Democrats. And I think they will.

BARTIROMO: Is it a positive that we -- we could see a situation where nothing gets done?

Or do you disagree with that, a lot gets done in that two year period?

ROLLINS: I think a lot gets tried to get done. The president, obviously, has the veto power and he can -- there's certainly not going to be the votes to overturn any vetoes. So he has to go to a different kind of strategy.

BARTIROMO: Maybe he will, in fact, veto, because we haven't seen a veto yet, K.T.

MCFARLAND: But then what happens, you know?

Then what happens to the Democrats?

Are they the veto president?

Are they going to be a Hillary Clinton don't do dumb stuff or...

UNIDENTIFIED MALE: Well, you see -- you see every Democrat will be anti-Obama. They'll run as far away from Obama as possible and -- and that will happen real quick.

BARTIROMO: Do you think it is Hillary, by the way?

MCFARLAND: Who knows?

She's tough to beat because she's a woman.


All right, we'll -- we'll take a short break.

When we come back, we're facing a fall economic season that looks like more of the same -- stagnant wages, sluggish jobs numbers, while corporations hold onto those record amounts of cash.

Can anything change?

Our panel will tackle the economy next, as we look ahead on SUNDAY MORNING FUTURES.


BARTIROMO: We're back with our panel, Ed Rollins, KT McFarland and Martin Sass.

Marty Sass, let's talk economics for a second. We did get a pretty good second quarter GDP number, but that was on top of a contraction in the first quarter.

What kind of a second half are you looking for?

SASS: Improvements: so I think we saw some precursors to this improvement with corporate earnings. They substantially beat analyst estimates, which is pretty typical, by the way, at this stage of an economic recovery, where analysts tend to underestimate the strength in the economy. We had a 9.3 percent increase year-over-year.

BARTIROMO: Second quarter profits.

SASS: In second quarter, S&P 500 earnings, way blowing away analyst estimates. They are all in the process of raising estimates now.

BARTIROMO: So is that a reason to buy stocks?

SASS: Yes. Well, you know, companies with strong fundamentals that are undervalued, you know, offer tremendous opportunities in there's no interest rate world we live in. We have a very accommodative Fed. Janet Yellen is going to stay with a low interest rate policy until she's sure that the economy has seen self-fulfilling growth and self-generating growth.

I personally think you're going to see an improving jobs number, maybe along the lines of something like 250,000. I think you'll see the unemployment rate come down to around 6 percent from what was 6.2 percent in July and 7.3 percent a year earlier.

There is a problem of labor participation rate for long-term unemployed and part-time workers. But that is improving.

So I think we're going to see better growth. We've had four years of 2 percent real GDP growth. I think looking forward, we're going to look at 3 percent to 4 percent real GDP growth. And good bottom line growth.

BARTIROMO: And that's really -- the jobs number is an important catalyst actually to come. We'll get those jobs numbers out in about a week, the first Friday of September.

There's a real disconnect, though. Marty is talking about a profit picture that is very strong 9 percent, 10 percent profit growth year over year. And yet you look at some of these polls, "The Wall Street Journal" recent poll that basically said 70 percent of the people out there said their children are not going to have the upbringing, the life standards that they had. A big push and you think we're still in a recession.

ROLLINS: People have confidence, for those who are investing in the stock market are making lots of money. But there's an awful lot of people that are permanently unemployed and have given up on the job market. There's no hope for another middle class to come back in the short run. And I think the unemployment numbers are misleading. I think 6 percent was -- 6.5 percent, that's some readings reflect how many people are out of work and not looking for jobs anymore and it's really a scary process for the kids.

BARTIROMO: What do you think?

MCFARLAND: Also if you look at this period, and I went back and looked at Jimmy Carter's speeches in the late 1970s and looking at President Obama's speeches today, it's a declinist attitude. It's all over. America is finished. We've had our rise in the sun and now we're down in the fall.

And the only thing we can do is manage the decline. That's why I think that the country, given the economic potential, given American energy self-sufficiency and potential exports in American energy, we're potentially two or three years down the road, one of the biggest booms in world history.

BARTIROMO: You're right. And I think that's the reason why oil prices and markets haven't really reacted to some of these hot spots around the world. People know it, that we're talking about a country, America, that will become energy independent.

Is that an area to invest?

SASS: Yes. It is. Oil service companies, Slumber J (ph), Halliburton, those are the stocks we own that are benefiting worldwide, and U.S. boom in energy. You know, oil prices have not gone up in the face of all the crises in the Middle East.

BARTIROMO: They went up initially, but then came all the way down.

SASS: Came down. We're around $100 a barrel, despite all the frenzy in the Middle East. Bombs going across borders. And it's because there's more energy production and also demand is suppressed because of more efficient use of energy.

ROLLINS: The president can make a powerful message by signing the pipeline.

BARTIROMO: Instead, he delayed the decision until after the midterms, which is --

MCFARLAND: Dither, dither, dither.

ROLLINS: He's not going to do anything.

BARTIROMO: Which is unfortunate.

All right. Still to come, the one thing to watch for the weeks ahead on "Sunday Morning Futures." Back with our panel. Stay with us.


BARTIROMO: We're back with our panel.

What's the one big thing to watch for the upcoming week or weeks? Marty Sass, KT McFarland, Ed Rollins? What's your one thing?

ROLLINS: I'm watching the president on this immigration. If (INAUDIBLE) what is he going to do? If he basically steps over the bounds, and I think he will, it will basically turn this election into a route for Republicans.

BARTIROMO: In fact, immigration, you know what that means to me? Jobs. OK? The loss of jobs. Too many people.

KT, what's your one thing?

MCFARLAND: I'm looking at ISIS and Islamic jihad. There are over 7,000 European passport holders who are fighting in Iraq and Syria, several hundred Americans passport holders. The head of ISIS has said see you in New York.

What I'm looking for is those guys are all going back to their home countries, they're not going to open falafel shops, they're going to wage jihad, they're going to make cells and they're going to attack.

BARTIROMO: So ISIS is a direct threat to the United States?

MCFARLAND: It is a direct threat to the United States.

BARTIROMO: Martin --

MCFARLAND: A major one.

BARTIROMO: -- Marty Sass --

SASS: Thanks. You know, Maria, my focus is investments and so the economic data is most important. September 5th we're going to have the jobs report. As I mentioned, I think you'll see improvement there. I think you'll see corporate profits continuing to improve, real GDP accelerate. I think this will help sustain a long economic recovery.

BARTIROMO: All right. I'm also watching jobs. Next Friday, that's when we'll get the numbers.

That will do it for "Sunday Morning Futures." Happy Labor Day, everybody. I'm Maria Bartiromo. See you next week.

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