Sen. John McCain on 'Sunday Morning Futures'

Republican lawmaker reacts to President Obama nominating Ashton Carter as defense secretary


This is a rush transcript from "Sunday Morning Futures," December 7, 2014. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, HOST: A new boss at the Pentagon again.

Good morning, everyone.

I'm Maria Bartiromo.

Welcome to "Sunday Morning Futures."

President Obama taps Ashton Carter. I will ask John McCain, set to become the next chairman of the Senate Armed Services Committee, why Defense secretaries never stay very long in this administration. My two part interview moments away.

Then, how high can the stock market climb?

Will there be a selloff in 2015?

A pioneer in the hedge fund industry is ahead. Julian Robertson on that and a lot more.

Plus, it's happening, folks -- gasoline prices have fallen below $2 a gallon in at least one major city. But what's been a boon to our wallets could put a stop to some high paying jobs.

Our panel takes on the pros and cons of plummeting oil prices, as we look ahead on "Sunday Morning Futures."

Well, last week, just as President Obama was announcing the nomination of Ashton Carter as his next Defense secretary, I had the opportunity to speak with Senator John McCain. We'll get to my exclusive interview with the senator in a moment.

But first, who is Ashton Carter?

Fox News senior correspondent, Eric Shawn, joins us with that angle -- good morning to you, Eric.


And good morning, everyone.

Forget facing Vladimir Putin or the Iranians, the real challenge for Ashton Carter is standing up to Valerie Jarrett and Susan Rice.


PRESIDENT BARACK OBAMA: Now, with a record of service that has spanned more than 30 years as a public servant, as an adviser, as a scholar, Ash is rightly regarded as one of our nation's foremost national security leaders.


SHAWN: Well, he apparently wasn't the first choice. But Ashton Carter said yes and vows to give his two cents to the president straight.

ASHTON CARTER, SECRETARY OF DEFENSE NOMINEE: If confirmed in this job, I pledge to you my most candid strategic advice. And I pledge also that you will receive equally candid military advice.


SHAWN: Well, Carter is 60 years old, a Rhodes scholar, Yale graduate with degrees in physics and Medieval history.

He may have to rely on the latter when confronting the threat of the radical Islam terrorists of ISIS. But his specialty for years, has been nuclear arms. A Pentagon veteran, he rose to the number two spot as deputy Defense secretary under Leon Panetta.

Carter is seen as an unusual and perhaps unorthodox selection. He'll apparently have to push back against his own government before facing America's enemies.

The reporting infighting and micromanaging of our country's defense policy from the president's inner circle is said to have partly helped drive Carter's three predecessors out of the Pentagon.

In fact, former Defense secretary, Robert Gates, complained about the White House interference just last month.


ROBERT GATES, FORMER DEFENSE SECRETARY: I told the commanders, you get a call from the White House, you tell them to go to hell and call me.



SHAWN: Well, with Carter's nomination, the revolving door at the Pentagon may finally have stopped.

But the bigger questions are these.

Can he roll back Putin's brazen aggression against our ally, Ukraine?

Can he direct the final defeat of ISIS and the Taliban?

And can he help stop Iran from having the ability to build a nuclear bomb -- Maria.

BARTIROMO: All the right questions.

Eric, thank you.

Now to my interview with Senator John McCain.

Earlier, while I was traveling, I asked the senator about the president's choosing Ash Carter.


SEN. JOHN MCCAIN, R-ARIZ.: -- ending, so to speak, and also I hope that Ash Carter, unfortunately, like his three predecessors in this six year period, understands that he has no influence on the overall strategic directions or tactical decisions that generally the secretary of Defense has been part of.

Secretary -- former Secretary Panetta and former Secretary Gates and now you'll see now Secretary Hagel have been very, very strident in their dissatisfaction of being -- in being excluded from the decision-making process.

It's in the hands of three or four people in the White House and the result has been disastrous, in my opinion.

BARTIROMO: Well, Senator, I mean you make really the right point.  This will be the fourth Defense secretary in six years. We know that there were others who the president wanted to tap for this job who actually said, no, I don't want the job.

Why has it been so difficult to -- for this administration to have a Defense secretary in place for a sustained period?

MCCAIN: Look, when you have the job of secretary of Defense and managing the armed forces of the United States of America and being at the top of that pyramid, you expect to be included in the decision-making process that affects them and their use and their mission.

And I can assure you, I was on a panel with former Secretary Gates and former Secretary Panetta, both of whom, in many different venues, have expressed their extreme frustration.

We have people ma -- in the White House, just a handful of people, who have no military experience, no background whatsoever. Their only credential is that they are close to the president of the United States.

Frankly, in all my years of public service, I have never seen an arrangement this exclusive with one exception, and that was during the Vietnam War, when targeting was actually taking place, the picking of targets in Vietnam were actually taking place in the Oval Office.

This is really almost that bad.

BARTIROMO: Let me -- let me move on to some other job that will be in front of him. Now, secretary of State John Kerry said in Brussels this week that the US' efforts to destroy ISIS have begun to take effect in terms of degrading ISIS, both in Syria and in Iraq.

Do you agree with that?

MCCAIN: Of course not. I'm sure there have been some slight gains.  The fight over Kobani goes on with a full -- what could be, it's not, but could be the full weight of American air power. ISIS still controls a significant part of it. There's a little bit of back and forth.

But there's still -- there's no strategy. And therefore, there is sort of a hit and miss, decisions made on the fly, because there's no cohesive or coherent strategy to defeat ISIS.

And among other things, they are treating ISIS as two different wars, one in Syria and one in Iraq. I guarantee you, ISIS doesn't treat it that way.

BARTIROMO: The president continues to be adamant in terms of saying no boots on the ground, in terms of destroying ISIS.

Will this be effective or will we eventually see boots on the ground?

MCCAIN: Well, we've already seen boots on the ground, as you know.  They just refuse to call them combat troops, because they're in combat areas. I mean it's a, you know, it's a charade. Yes, we -- and they'll have -- be having to put more in. This will be the same kind of gradualism as I recall Vietnam.

So there already are boots on the ground. They need more. We now have the world's most powerful air force doing pinprick strikes against empty buildings in many occasions. And that's because we have not got forward air controllers on the ground to identify these targets, one of the reasons why we haven't done better in Kobani, for example.

But you know what's -- another thing that's morally unacceptable, is we still refuse to provide defensive weapons to the Ukrainians. This is after their country is being dismembered by Vladimir Putin, his troops are -- are there. He's going to move further south. And he may even move to the west, while we refuse to give them weapons with which to defend themselves.

You know what I'm told why?

They don't want to provoke Vladimir Putin. I'm not making that up.

BARTIROMO: Senator, that's exactly where I was going next. I do not understand, and the public does not understand, why we are sending things like blankets and food to Ukrainian Army and military rather than armament.

MCCAIN: I am told that -- that the -- it is because they don't want to further provoke Vladimir Putin. The guy is dismembering the country.  The guy's people are responsible for the shoot down of an airliner. They have now overtaken -- does anybody talk about Crimea anymore?

And, of course, the recent reports from our head of NATO, General Breedlove, is that more troops and equipment from Russia have moved in, into Eastern Ukraine, as well, which, by the way, one of Putin's goals is the collapse of the Ukraine Army. And by controlling Eastern Ukraine, which is the industrial part of Ukraine, he certainly puts enormous strain on the Ukraine economy.

So to say to the Ukrainians, we're with you, that the hundreds of thousands that gathered in the Maidan and the square in Kiev, that they wanted to be like the West, they wanted free of this kleptocracy and be governed by Russians, we have -- we've basically told them no deal.

Blankets don't do well against Russian tanks.

BARTIROMO: What should we expect from you, Senator, when you take up your new role, likely, the chairman of the Senate Armed Services Committee in the new Congress?

MCCAIN: Well, first, we will have hearings. We need to repeal sequestration. We need to have a policy that drives the budget, rather than a budget that drives the policy. And then we will also be going after this unacceptable waste and mismanagement in the Pentagon and the bloated bureaucracy there. But we will also be doing what is necessary to bring these issues to the forefront and use legislation.

I'll be working closely with Senator Corker, the Foreign Relations Committee and Senator Burr, who will be chairman of the Intelligence Committee. We're going to all work together. We're going to see if we can't force some of these policy changes that would make America strong and viable again and emerge from the position of the greatest weakness that I have seen in my lifetime.


BARTIROMO: And we'll take a short break. Still ahead -- stay with us -- more with Senator McCain, as I ask him about next week's budget deadline and will there be a government shutdown?

I hope you'll follow me on Twitter @mariabartiromo @sundayfutures. Our panel is ahead. Stay with us. Let us know what you would like to hear from the panel, as we look ahead on "Sunday Morning Futures."


BARTIROMO: Welcome back. More now with Senator John McCain. I asked him about the congressional budget deadline this upcoming Thursday.


MCCAIN: On the budget issue, I think we will have a continuing resolution. Everything but the homeland security part will be for well into next year. But I think what the agenda -- and I'm pretty well -- most of us are in agreement is show we can govern, pass legislation that reaches the president's desk even if he vetoes it.

For example -- a small example -- immediately, we could do the XL Pipeline. We can do tax reform. We can do a lot of things, working together, because, if we can show the American people we can govern, then I think we can elect a president in 2016 that's Republican.

BARTIROMO: So is a government shutdown, then, off the table?

MCCAIN: As far as I'm concerned, it's off the table. Last time we turned away 600,000 visitors from our national parks, just one of the bad results from it. No. We cannot shut down the government. But we can rifle- shot certain appropriations bills, and that is the best way to approach it. We can do that. And there are many ways we can do that.

Under Harry Reid, we never took up an appropriations bill. Under Mitch McConnell and John Boehner, we will take up individual appropriations bills and rifle-shot some of these programs and try to clean it up.

BARTIROMO: But the truth is you need a willing partner. I mean, you just mentioned the XL Pipeline. What if the president vetoes it?

MCCAIN: Well, then, over time, we will succeed there because there are a number of Democrats that are also aligned with us. But, look, this president can only veto so many times. And, incredibly to me, unlike his predecessors who lost the mid-term election in their second term, and I go all the way back to Ronald Reagan, who was afflicted with the Iran-Contra scandal and fired everybody, including his chief of staff, and Bill Clinton after we regained the majority with Dole and Gingrich sat down and negotiated with him, this president is talking about the two-thirds of the people that didn't vote. His reaction still puzzles me -- not puzzles me but frustrates me, because I want to work with him.

BARTIROMO: Senator, the House already passed the bill to limit the president's immigration executive order. How does that play out? What exactly does that mean in terms of funding decisions?

MCCAIN: In the short term, until next January, not at all. And then I think we are going to -- I think this was largely -- and I think the sponsors of the bill will tell you this was largely a protest vote to show the displeasure of the majority of the House of Representatives, including some Democrats, over this unconstitutional act that the president just carried out.

But then we're going to sit down together in January and say, "OK, how do we address this issue? How do we do it in the right way?"

Let me just give you one example. In 2008, in the name of the problem of human trafficking, we said those three countries where these children come from, that anybody who can get to the United States then is eligible for immediate legal help, unlike if a child from Mexico comes, OK?

We need to change that law so that we can expand our consulates there, and if they have a reason for asylum, go to our consulate there. Don't show up on our border.

So there are a number of things we can do which can rifle-shot and maybe, one by one, rather than trying to just roll back the president's executive order.

BARTIROMO: Tell us what the implications are of the president's executive action.

MCCAIN: Well, first of all, he poisoned the well. If the president had been really serious about working with Congress on immigration reform, he knew that this latest election expands Speaker Boehner's number of people and, I think, thereby giving him more latitude to act on immigration reform. Why not wait two or three months and see if Congress acts?

BARTIROMO: Which is why Senator Jeff Sessions accused the president of trying to implement executive amnesty before the American people actually figure out the consequences.

MCCAIN: Well, I think that he -- I think that he's right. And I believe that the president, again, if he had common sense, would have had him wait several months. For political reasons, he waited until after the election.

So all I can say is it's all got to do with the president's attitude since the election. And that is different from every other president that I have served with in their second-term mid-term elections, which have been defeats. And that is, all his predecessors, in face of the defeats, have admitted it and reached out. This president has gone on television to talk about the two-thirds of the people that didn't vote. I don't get it.

BARTIROMO: It's extraordinary. Senator, it's always wonderful to have you on this program. Thanks very much.

MCCAIN: Thank you.

BARTIROMO: And up next, what looked like a blow-out jobs number Friday triggering yet another record high for the stock market. A legend in the business on how you should be investing now, as we look ahead on "Sunday Morning Futures." That's next.


BARTIROMO: Welcome back. The stock market continues hovering near all-time highs with the major averages continuing to see new money coming in to the market.

Joining us right now is a legend in the business to talk more about the stock market, investing and the broad economic landscape. He is Julian Robertson. He's the founder of Tiger Management.

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

JULIAN ROBERTSON, TIGER MANAGEMENT: It's great to be here. Thank you, Maria.

BARTIROMO: Thank you so much for joining us.

Let me get your take, first off about the political situation. We've got new hires coming in in Washington and of course a new congress taking over in January. What do you think the impact will be?

ROBERTSON: I think the impact will be good. I think we need some little lift in Washington. I think we are not really trying to solve our problems. I think you and I could sit down and in five minutes solve Social Security.

I mean, after all, any psychiatrist will tell you that the people are happiest are those who continue to work later in life. What am I doing?  And it's true.

So all you have to do is expand it a little and you probably have to say, okay, Mr. President, you -- Julian and I are not going to expect to be socially insecure and so we won't expect, you know, Social Security payments and they will go to some people who need it.

BARTIROMO: You have been really investing in a number of growth companies, technology names like Apple. Apple has certainly dominated.  What's so exciting about Apple?

ROBERTSON: I think the relative price of Apple -- I mean Apple is priced as a pedestrian market value company and I think it's much more than that. And I think Google is. And I think Netflix is. And I think there are companies in biotechnology that are.

And that's one of the advantages of age. In the 70s, 80s and 90s, I think these stocks would have sold at three times their current prices.

I mean Apple is below a market multiple. It's kind of ridiculous.

BARTIROMO: So, when you say below market multiples it's not trading at a very high level relative to its earnings potential.



So, in an environment when you see growth bumping along the bottom in the economy, you're finding growth in technology.


BARTIROMO: And in biotech. Gilead Sciences in one of your holdings.

ROBERTSON: That's right. And I am a great believer in that company.  That's been a great stock and is a great company.

I think -- I sort of put them together with an Apple, with a Google.  I mean I think Gilead is, you know -- I really think my grandchildren are going to live some of them to 135 or even 150, I mean healthfully and happily to those ages. And that's going to be due in large part to companies like Gilead and other ones.

BARTIROMO: Yeah, it's interesting that you say that, because I was actually just talking with Craig Venter who of course mapped the genome and he said to me in the next ten years we are going to be living into our second century. So, these are some of the themes that you look at to actually invest.

ROBERTSON: Well, that's right.

BARTIROMO: Longevity.

ROBERTSON: Yeah. And I think longevity is a very interesting thing.

BARTIROMO: Well, Dow Jones industrial average nearing all-time highs once again. Does it worry you that things are getting a little extended?

ROBERTSON: It does because I don't think we have much of an anchor to windward. And I think right now stocks are inflated because bonds are so terribly expensive that people have been forced into the stock market and, therefore, stocks are now getting very richly priced.

The strange part is that it's going somewhere other than these really great technology companies that in years gone by would have sold at much higher multiples.

BARTIROMO: What's your take on the federal reserve? Do you think interest rates start moving higher in 2015?

ROBERTSON: Yes. I do think they will. I think the federal reserve will tighten a little bit and I don't think rates will go up for a while big, but I think they will do a little bit.



BARTIROMO: And will that be a headwind for the stock market? I mean, if you have an alternative to...

ROBERTSON: Well, that's the only thing where you can say the market is really cheap is in relation to interest rates. And it's really used -- it's wildly cheap on that basis. But the interest rate thing is all artificial done by the government.


So, in terms of the market going into 2015 would you start peeling back then?


BARTIROMO: You think we'll see a selloff?

ROBERTSON: Yes. I think we will eventually see some sort of selloff.  And I think, you know, the poor old hedge funds which have suffered lately may do very well in that kind of an environment.


Julian, it's great to have you on the show today.

ROBERTSON: Thank you, Maria. Thank you very much. I enjoyed being with you as always.

BARTIROMO: Thank you so much. Julian Robertson is the founder of Tiger Management.

And remember drill baby drill? These low gas prices we're all enjoying could put a cork in all of that. Our panel starts there as we look ahead this morning on Sunday Morning Futures.


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

Republicans picking up their ninth Senate seat this election season, last night, for a total of 54, Congressman Bill Cassidy defeating Democratic incumbent Mary Landrieu in their bitter runoff in Louisiana. The victory gives Republicans a clean sweep of the Deep South. Senator-elect Cassidy is calling his win, quote, "the exclamation point" on mid-term elections that put Republicans in charge of the Senate.

And six Guantanamo detainees now being sent to Uruguay as refugees. The U.S. announcing the news early this morning, saying the deal had been delayed for months by security concerns. The six men, all with suspected ties to Al Qaida, have been locked up for 12 years. They are the first to be transferred to South America and appear to be part of the president's push to close Gitmo. Fewer than 140 prisoners are still there. Sixty-seven of those have already been cleared for release.

And I'll be back with Arthel Neville at noon Eastern. Then the doctors will be in. Doctors Siegel and Samadi join us, as always, for "Sunday Housecall" at 12:30 Eastern. I'm Eric Shawn. Now back to "Sunday Morning Futures" with Maria.

BARTIROMO: Thank you, Eric. Gasoline prices have now fallen below $2 a gallon in at least one U.S. city. Take a look at this. Check out Oklahoma City. Look at these prices in other places as well. Spending less at the pump essentially acts like a wage hike for many American families.

But we want to tell you there are down sides as well. Remember "Drill baby, drill," well, new U.S. oil and gas well permits have tumbled nearly 40 percent in the month of November. That could lead to job cuts in that industry, and those are high-paying jobs.

Let's bring in our panel on this. Ed Rollins is former principal White House adviser to President Reagan. He has been a longtime strategist to business and political leaders. 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 Alfonse D'Amato is with us, the former U.S. senator for New York.

Senator, thanks very much for joining the conversation.

ALFONSE D'AMATO, FORMER N.Y. SENATOR: Great to be with you.

BARTIROMO: Great to see you, Judy and Ed.

I want to -- I want to read you something about the decline in oil because I recognize that a decline in gasoline is a great thing going into the holidays because it's putting more money in all of our markets. However, the plunging price of oil has sparked a drop of almost 40 percent in new well permits issued across the U.S. This is a sudden pause in the growth, the shale revolution that we have all been talking about for so long. Are you concerned by this, Ed?

ED ROLLINS, FOX NEWS POLITICAL ANALYST: I'm concerned about it. First of all, it's good news to have the -- it will help jump-start the economy both here and across the world, but there is down sides, and the down side is clear, just as you say there. The shale is what's given us a great opportunity to get energy independent, and that's going to slow down. That's more expensive to get out.

Equally as important, what I worry about is there's a great number of new cars being bought because of the new economy. People have a tendency now to go buy bigger cars...

BARTIROMO: Absolutely.

ROLLINS: ... SUVs, what have you, and once you buy a new car, you're going to be in there for three or four years; you're not going to trade it out six months from now. Equally as important -- and Judy, I think, is going to cover these points, but I worry about the world, that places like -- that import, like Nigeria, Libya, Egypt, Iraq, their prices are going to be down and Iraq desperately is going to need money.

BARTIROMO: And also, there's an Iran element, Judy?

MILLER: Absolutely. I mean, the poorer OPEC nations that produce and export and depend on this revenue totally do not like oil at this price at all. Neither do...

BARTIROMO: How about Russia?

JUDY MILLER, MANHATTAN INSTITUTE FOR POLICY RESEARCH: Exactly, because they depend on it. On the other hand, the haves within OPEC -- that is, Saudi Arabia -- understand that, if it can keep the price low enough, it may dent the American shale explosion and the revolution. That's their goal.

On the other hand, the Saudis, too -- they may not like us or trust us, but they need us, and they too are fighting Iran and they know they can't do that alone. So they are very, very ambivalent about America and even about oil prices. They put a couple of major capital projects on hold, but they have got a cushion. They can withstand this. Not so sure, Iraq; not so sure, Iran.

BARTIROMO: it's interesting, because isn't it true, Senator, that, as oil prices get lower and America becomes energy independent, that changes our relationships with some of these guys?

D'AMATO: Absolutely. In the fullness of time, this is a great plus, energy independence, more independence on our part. There are some, as Judy and Ed have pointed out, some pitfalls that may -- and some bumps that will hit along the road. But if you look at the totality of it, a great win for America.

You know, it's interesting because it was Romney, if we remember, in the last campaign, who talked about the energy independence that we could achieve and what it would do for the economy. The guy was really well ahead. He was thinking. He was seeing what is taking place.

So there will be some bumps, but let me tell you, it's a terrific thing to have so that we're not held blackmailed by some little Arabic states and some other states who use their power disproportionately.

BARTIROMO: Absolutely, 100 percent. Now, in terms of the economy broadly speaking, we had a pretty good jobs number on Friday, but people are poking holes in it, again, Ed, in terms of the...


BARTIROMO: ... rate?

ROLLINS: Yeah, I think the reality, this is a good number. This is the kind of number we're going to see for the foreseeable future. The energy prices may alter that slightly. You know, I think this is -- the big issue is the wages. I mean, we're just not getting good-paying jobs, and I think people at this point are grabbing anything they can get that's solid; they want to stay there, and I think that's a positive. But I think, long term, we've still got a ways to go.

BARTIROMO: Wages will not move until growth moves, and we are just not moving the needle in terms of growth.

MILLER: That's true, but I think that Barack Obama is very happy about these numbers. I mean, this is -- there has been very little good news anywhere, but what he has done is he can look back and say it was the stimulus that got us to where we are today.

BARTIROMO: Not the Federal Reserve?


MILLER: Well, the Federal Reserve will now have to, as you know, Maria, and you have been warning us, will now have to re-examine this issue of whether or not we're going to continue to do all of this stimulus and whether or not they are going to move ahead their program to go down to zero in March.

D'AMATO: Well, if you get a good tax program, you can begin to move this economy, and at least we're going to have some hope in the future that we get a Congress that recognizes this and isn't going to play to the left wing, to the haves and this economic redistribution that this administration has been all about.

BARTIROMO: Absolutely. I want to get your take on the new Congress, on 2016, and on that John McCain interview.

So stay with us, everybody. We want to get a look at what's coming up at the top of the hour on "MediaBuzz."

Let's check in with Howard Kurtz. Howie, good morning to you.

HOWARD KURTZ, HOST, "MEDIABUZZ": Good morning, Maria. We're going to look at this journalistic train wreck of a Rolling Stone article that alleged a brutal gang rape at the University of Virginia. How was this piece ever published? Why did the reporter and the editors agree not to contact the men who were being accused of this heinous crime?

And interestingly, Maria, this morning Rolling Stone changing its apology statement from, kind of, blaming the accuser, the woman identified only as "Jackie" to saying, "No, no, we can't blame Jackie. These were our mistakes." These were very serious journalistic mistakes in this story. It is not over.

BARTIROMO: Well, the victim said, don't check with the accusers.  Rolling Stone magazine should have done more due diligence. Right? In terms of was there a party that night? Did this actually go on before making these allegations?

KURTZ: Yes. And her friends now say she changed her story; first she said there were five attackers, then there were seven. More digging before publishing charges of this magnitude. Hard to understand why Rolling Stone didn't do that before putting this into print.

BARTIROMO: Howie, we'll see you in about 20 minutes. Thank you.

Defense nominee Ashton Carter walking into a busy job. The fight against ISIS, the Pentagon's latest announcement that we'll be keeping additional troops, bringing the total to nearly 11,000 in Afghanistan after the drawdown at the end of this month. Our panel tackles that next as we look ahead on "Sunday Morning Futures."


BARTIROMO: Welcome back. We're back with our panel looking at the job the new Defense secretary will be stepping into -- Ed Rollins, Judy Miller, Senator Al D'Amato.

As Senator John McCain just said, it's not necessarily about the Defense secretary, but about the pushback they have been getting from the White House.

This is the fourth Defense secretary in six years, Ed.

ROLLINS: This is a real grownup though. I mean, I think this is like the equivalent of Gates. He knows the department. He's supported by the generals. He'll come up with a very clear policy and the White House will either push it aside as they have so often, but at least there will be a clarity. There will be no infighting in the Defense Department, I don't thing. And I think it's a superb choice.

BARTIROMO: You like him.

ROLLINS: I think it's a great choice.

MILLER: Ditto. I've known him a long time and he was really very creative. A mathematician who's very creative and worked very hard on what he called the future threats as well as the numbers at the Pentagon.

What I'm looking for is a good partnership with Senator John McCain whom you had on the show here because he is nonpartisan and he wants to do what's right for the country and that means doing something about Senator McCain's issue of sequestration.

D'AMATO: He's a policy wonk. He understands. No doubt about it.

Is the White House going to change? No.

Is Valerie Jarrett, the Chicago mystery who is running the country, is she going to change?


D'AMATO: Is she going to have less power?

Is Susan Rice, the defender of things that she knows are untrue and Susan Rice and Valerie Jarrett are there and if their power is diminished maybe he has a shot. But I don't think it's going to be.


ROLLINS: The important issue though here is John McCain, who has more power than he's ever had before, a friend of yours, I know, a friend of mine, John has an ally now and the critical battle here is the next two years to lay out a blueprint, how do we get out of sequester, long range plan of the defense needs of this country and this guy is very capable of doing that. They may not like it but at the end of the day it will be for the American people.

D'AMATO: I agree with you on that. Let's look at the real thing.  Let's look at ISIS, John was talking about. You won't beat them unless you put troops on the ground. That's where we're at. We're holding them off, but to have victory, to achieve it, to get out of there because the longer we stay and the longer this continues, it's not good for us.

ROLLINS: I'm not even sure holding them off. The moment we pull out, as you know, this past week Al Qaeda whatever crazy ass group gets in there and I think to a certain extent -- we can bomb the pickup trucks going up and down the highway.

But we can't basically --

BARTIROMO: And Defense secretary after Defense secretary has said we need boots on the ground and the fact is, as Senator McCain said we have boots on the ground but they don't want to call them combat troops.

D'AMATO: Look, Chuck Hagel was pushed out because he didn't go along with them. He couldn't. Because you can't defend a policy which was a losing policy. Pull the troops out of Iraq. Keep Maliki in. They should have gotten rid of that son of a gun a long time ago.

But there's no one at the White House who has the guts. It's all politics and it's politics geared to the left wing. Maybe after they took this shellacking, they will change a little.

BARTIROMO: But the president hasn't changed. Let's face it. Listen to his rhetoric, listen to how he's talking. He's talking about getting his plans through regardless.

D'AMATO: Remember who writes his speeches and remember who gives him all of his mo. Who does it come from? Valerie, his creator.

MILLER: The president may be doubling down on these policies but somebody like Ash Carter, who is number four -- I don't think the president can tolerate a number five. That gives Ash Carter and people who think the way you do and the way a lot of Democrats do, now can exert more influence -- we hope.

BARTIROMO: We have to talk about 2016 -- in my interview with John McCain the senator saying if the Republicans can, quote, "show the American people they can govern, then they can elect a president in 2016." I'll get the panel's reaction to that as we look ahead on "Sunday Morning Futures."


BARTIROMO: Back with our panel, Ed Rollins, Judy Miller, Senator Al D'Amato.

And John McCain just said it moments ago, if the Republicans can show the country that they can govern in the next two years, then they can choose a presidential person for 2016. Your thoughts on that, Senator?

D'AMATO: It's going to be tough to win in 2016, even if we do a fantastic job.


D'AMATO: You know who the person is that the Democrats are going to run. Make no...


D'AMATO: Hillary. Make no mistake about it. Then they're talking about Elizabeth Warren and this one and that one. That's all baloney. They've lined up billions. And that's -- that's the nature of it.

BARTIROMO: And you think she's a shoo-in?

D'AMATO: For the nomination. What can we do, though, for the country?

And if we really show people that we're thinking about the country and not this partisan politics, maybe we can do something. Lower the corporate tax rates, for God's sakes. It's easy. Repatriate...

BARTIROMO: The president could veto.

D'AMATO: Pardon me?

BARTIROMO: The president may veto.

D'AMATO: Let him veto it.

And by the way, I think you can override him. I think you can put together a package that you really can lower it, for corporate America, for small businesses, repatriate hundreds of billions of dollars. Bring it back here. You want to create jobs and see to it that it's invested within a certain period of time, you then have money to rebuild the infrastructure of this country without raising taxes. It makes sense.

BARTIROMO: The president doesn't want to do it.

D'AMATO: Well, guess what? Take him on. That's the battle you can win, public relation-wise, with the right and with the left, with putting people to work. And you can get unions to support you.

MILLER: Well, Senator, but that depends on having a coherent Republican message, and that depends, as we've spoken of so often on this show, on Mitch McConnell and John Boehner holding the troops in line and saying, "No, we're not going to shut down the government and be blamed for it this time," the closure of national parks -- if they can do that. And I think the jury is really out on that.

BARTIROMO: Ed, what do you think?

I think it's gotten a lot tougher. I would have to disagree with you, Senator. I don't know. I mean, you can think Hillary was a shoo-in. I'm not so sure.

D'AMATO: For the nomination.

ROLLINS: For the nomination, she clearly...

BARTIROMO: For the nomination, of course she's a shoo-in.

ROLLINS: There's -- there's two tracks that the public is going to get to watch. Can Republicans make the Congress work? And that's a big challenge in and of itself.

And the things you talked about already are important, but there's two things they need to do. They need not to be the anti-Obama party. They need to be the pro-Republican. And that means an economic plan and a defense plan. They're going to basically develop the defense plan that the next presidential candidate's going to run on. The sidebar to all that is 20 candidates running for president. And that starts in January or February of this year.

BARTIROMO: Good point.

ROLLINS: And are they going to destroy each other in that process, while, no matter how stable you may be on the big picture, if both sides are unstable, you don't have a Congress that's working and you don't have candidates that seem to be, then the Democrats will win.

BARTIROMO: Which is what happened last time.

ROLLINS: It's what happened last time.

BARTIROMO: Yeah. So -- so what do you think is most important, the low-hanging fruit? Is it tax reform, as Senator D'Amato is saying? Is it the XL Pipeline?

ROLLINS: Well, I think the XL Pipeline should have been done months and months ago. I think the tax thing is very easy. Everybody is in agreement. Even the White House, I think, will give you a 25 percent corporate tax rate, but the point you made earlier during the break is small business -- small business that's the backbone of this country -- has to have an alternative way of doing it. They can't be at the 39 percent rate and corporations pay 25 percent.


ROLLINS: So -- so that has to alter if you really want to stimulate the economy.

BARTIROMO: Who is the GOP candidate, in your view, going up against Hillary?

D'AMATO: Oh, God, anybody's guess. It's wide open. Jeb Bush, I think, would be a very strong candidate in the general. Can he get through a primary with a lot of the right-wingers attacking him? I think it's very tough. So it's a jump ball.

And let me tell you, Rand Paul -- he's quietly building a machine out there with his independence, his libertarian streak. I think he'd be -- he'll be a contender.

BARTIROMO: Real quick, does the public want Jeb Bush?

MILLER: Who knows? I mean, they only know the name at the moment.


MILLER: And they know that he was a good governor of Florida, supposedly, but that's all they really know.

BARTIROMO: Yeah. Real quick, Ed?

ROLLINS: Jeb Bush would be a strong candidate, but so would several others. The problem is we have too many candidates.


If we had five or six and a significant front-runner, we could basically put this thing to bed pretty quick, but it's going to be a knock- down, drag-out fight.

BARTIROMO: All right. Still to come, the one thing to watch for in the week ahead, on "Sunday Morning Futures."


BARTIROMO: Welcome back. What is the one big thing to watch for the week ahead?

Ed Rollins?

ROLLINS: I'm watching China. I'm watching President Xi in China -- just basically about corruption charges against his security chief, unheard of. He benefits immeasurably by the oil, the second largest importer of oil. His economy will be moving again, and I think he's become one of the real strong men on the world stage.

BARTIROMO: Yeah, and they just exceeded the U.S. in terms of being the largest economy.

Judy, your one thing?

MILLER: I'm watching Dianne Feinstein because she really, really, really wants to get her report on enhanced interrogation techniques that -- all the bad things that the CIA did with the president's blessing out, and yet she's been warned by the intelligence community that that would be bad right now for the country, bad for us overseas. But she still wants to do it.


D'AMATO: I'm worried about Putin. Just how far is he prepared to go? Because the portents of this thing could be catastrophic. It could really be another kind of confrontation that we don't need.

BARTIROMO: And he's -- he's going to India, strengthening his ties further with Asia.

I'm watching December 11th. That's this upcoming Thursday. This is the beginning of the government of the GOP telling us they can govern, no government shutdown.

That will do it for "Sunday Morning Futures." Thanks for being here. I'm Maria Bartiromo. Join me tomorrow morning on "Opening Bell," 9 a.m. Eastern on the Fox Business Network. Have a great Sunday.

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