How will US respond to the hacking attack on Sony Pictures?

This is a rush transcript from "Fox News Sunday," December 21, 2014. This copy may not be in its final form and may be updated.


A gunman kills two New York City policemen he says to avenge the deaths of Eric Garner and Michael Brown.

And U.S. officials are calling the cyberattack on Hollywood one of the gravest national security dangers we face.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We cannot have a society in which some dictator someplace can start imposing censorship here in the United States.

WALLACE: How will the U.S. respond to the hacking attack on Sony Pictures? And how vulnerable is the U.S. to cyber warfare from North Korea and other countries?

We'll ask the chair of the House Intelligence Committee, Mike Rogers, who says we need much stronger firewalls against this growing threat.

Then, the U.S. and Cuba end a cold war that lasted half a century.

OBAMA: Suddenly, Cuba is open to the world in ways that it has not been before.

SEN. MARCO RUBIO (R), FLORIDA: This president has to be the worst negotiator we've ever had, and he has betrayed, betrayed those Cubans that have work so hard and have sacrificed so much.

WALLACE: Two members of the Senate Foreign Relations Committee will debate the president's opening to Cuba, Republican Ron Johnson and Democrat Ben Cardin.

Plus, Jeb Bush moves one giant step closer to running for president. How does his early announcement shift the landscape for 2016? Our Sunday group weighs in.

All, right now, on "Fox News Sunday."


WALLACE: And hello again from Fox News in Washington.

First, some breaking news. A gunman has shot and killed two New York City police officers execution-style after vowing on social media to retaliate for the deaths of Michael Brown and Eric Garner.

Our FOX News correspondent Bryan Menas -- Llenas, rather, sorry -- has the latest from New York -- Bryan.

BRYAN LLENAS, FOX NEWS CORRESPONDENT: Chris, chillingly, the killer posting images on Instagram of his semiautomatic weapon and bloodstained pants with anti-police messages, suggesting the shootings were revenge for the deaths of Michael Brown and Eric Garner at the hands of police. Writing, quote, "I'm putting wings on pigs today. They take one of ours. Let's take two of theirs. #shootthepolice, #ericgarner, #ripmikebrown. This may be my final post."

Police say this man, 28-year-old Ismaaiyl Brinsley, walked up to an NYPD patrol car in Brooklyn Saturday and opened fire through the passenger side window, shooting officers 32-year-old Wenjian Liu and 40-year-old Raphael Ramos in the head. He later killed himself in a subway station.

Earlier that morning, Brinsley shot and seriously wounded his former girlfriend in Baltimore before traveling to Brooklyn, a wanted flyer sent to the NYPD too late.

Police Commissioner Bill Bratton says the officers were, quote, "targeted for their uniform".


BILL BRATTON, NYC POLICE COMMISSIONER: Today, two of New York's finest were shot and killed with no warning, no provocation. They were quite simply assassinated.


LLENAS: The shooting fueling tensions between the NYPD and New York Mayor Bill de Blasio. New York City's police union says de Blasio essentially threw city police under the bus by failing to back the officer not indicted by a grand jury in the choking death of Eric Garner.

Last night, police officers turned their backs on the mayor moments after he visited the families of the fallen officers.


PATRICK LYNCH, NYC PBA PRESIDENT: We tried to warn. It must not go on. It cannot be tolerated. That's blood on the hands starts on the steps of city hall, in the office of the mayor.


LLENAS: The president briefed while on vacation in Hawaii, issued a statement urging calm while unconditionally condemning the murders -- Chris.

WALLACE: Bryan Llenas -- Bryan, thanks for that.

In other breaking news, President Obama has now directly blamed North Korea for the cyberattack on Sony Pictures. And he promised a proportional response.

But what does that mean and how vulnerable are we to cyber warfare?

We'll talk with Congressman Mike Rogers, chair of the House Intelligence Committee, in a moment.

But, first, Fox News chief intelligence correspondent Catherine Herridge brings us up to date.

CATHERINE HERRIDGE, FOX NEWS CHIEF INTELLIGENCE CORRESPONDENT: Chris, the Sony attack is believed to be the first time destructive malware has targeted a firm inside the United States. And it's now part of the broader pattern where hackers physically destroyed data and systems. Similarities between the hack last year on South Korea's banks that left many customers unable to withdraw money from ATMs with the Sony attack led the FBI to conclude North Korea was a principal in both.

A bureau statement reads, "North Korea's actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves." The president went further, saying Sony was wrong to pull the movie, "The Interview," starring James Franco and Seth Rogen, because it silenced free speech.


OBAMA: I am sympathetic to the concerns that they faced. Having said all that, yes, I think they made a mistake. Or even worse, imagine if producers and distributors and others start engaging in self-censorship.


HERRIDGE: Sony's president responded that they had not caved or given in to North Korea's demands, explaining the entertainment company had few options after theaters started dropping out. A petition by actor George Clooney to support Sony and the film's release failed to gather signatures, with the actor telling "Deadline Hollywood" not a single person in his industry would sign up.

An entertainment source told FOX that Sony even took the film to major online streaming companies and they all refused to run the movie -- Chris.

WALLACE: Catherine, thank you.

Now, let's bring in the chair of the House Intelligence Committee, Michigan Congressman Mike Rogers.

And, Chairman, welcome back to Fox News Sunday.


WALLACE: The FBI used very tough language to describe this hack attack. Let's put it up on screen. North Korea's attack on Sony pictures entertainment reaffirms that cyber threats pose one of the greatest national security dangers to the United States.

Two questions: how serious was the attack? Do you regard this in a sense as an act of war?

ROGERS: Well, you can't necessarily say an act of war. We don't have good, clear policy guidance on what that means when it comes to cyberattacks, but let's back up this a minute. Russia attacked Estonia. We saw a disruptive cyberattack for nation-state purposes, Iran attacked Saudi Arabia, clearly a destruction on the Saudi Aramco, a company there, destroyed 30,000 computers, wiped and destroyed data.

We kept warning, those of us that have been paying attention to this, this is coming to the United States, probably sooner than later. What you saw was a nation-state who engaged in trying to really destroy an American company and then took it to the broader level of using threats of violence in order to get their political will. This was a nation-state attack on the United States, and saying aloha and getting on an airplane going to Hawaii is not the answer really the world needs, let alone America.

WALLACE: All right. Well, the president has promised there will be consequences. Here's what he had to say about that.


OBAMA: They caused a lot of damage and we will respond. We will respond proportionally, and we'll respond in a place and time and manner that we choose.


WALLACE: So, how tough should he get with North Korea?

ROGERS: Well, unfortunately, he's laid out a little bit of a playbook before we've done anything. That press conference should have been, here's the actions we took on -- excuse me -- North Korea's actions, and here's what we're going to continue to do.

Right now -- and trust me, our intelligence services, the folks who would be responsible for at least the first wave of trying to make sure they don't have the capability to do this again, were ready. They have the capability. They were ready to go.

The problem here was not the fact that we didn't have a capability to do something nearly in immediate time. We just didn't get a decision from the president of the United States.

WALLACE: But wait, sir, are you saying that we should launch a cyberattack to take out their cyber warfare capabilities?

ROGERS: I'm saying, if you're talking about a proportional attack, it should be at least proportional. The United States has the capability to make it very difficult for the North Koreans to do an attack like this anytime soon.

WALLACE: Take out their cyber infrastructure.

ROGERS: Well, I'll let you define what that looks like. They have the capability to do it.

Here's the problem. So, there is lots of discussions last week about what this looks like. Do you acknowledge -- do you not acknowledge, do you take an initial step and then acknowledge? By acknowledging it and then laying out to say, well, we're going to do something in the future, you have diminished the capabilities we can engage in this particular --

WALLACE: Why, because they can protect themselves?

ROGERS: Well, for a whole host of reasons I can't go into in detail. But you just limited your ability to do something. Just calling North Korea out isn't going to be enough. So, I would argue you're going to have to ramp up sanctions. It needs to be very serious and significant.

Remember, a nation-state was threatening violence. So, forget the fact that there was, you know, the Hollywood drama of this particular event. They went into a company and they used something called a wiper virus. They wiped out data.

So, if you're at home and thinking how does this affect me, this is Hollywood, you know, who cares? The problem is what if it's your car company that you work for? What if it's a bank that you work for? Or what if it's a bank that you have transactions with and that data is gone, it's destroyed?

Meaning, I don't know how much money I have in my bank and the bank can't tell me how much money I have in the bank. That's how serious this is.

WALLACE: What you're saying is they took cyber action against us. We need to take cyber action in retaliation against them.

ROGERS: Again, I'm not going to say exactly specifically, but I can tell you we have the capability to make this very difficult for them in the future, at least in the near term. But I don't think that's enough. This was a nation-state who attacked an American company and then threatened violence in that second order against people who would go to the movies.

Take the movie part out of it. This is the fact that they were willing to commit acts of violence or threaten acts of violence against U.S. citizens in the United States. That's a huge and significant problem. This is the country that tested nuclear weapons as late as last year.

WALLACE: OK. You talk about, you know, the effect this could have an all of us. The federal government is now banned from helping private companies build up stronger firewalls to prevent cyberattack. In fact, you sponsored a bill that passed the House last year that would have made it easier for the government to cooperate and deal with private companies to protect themselves against this kind of threat. It passed the House. It did not pass the Senate because privacy advocates were worried about more abuses from big brother, if you will, on the Internet.

Question -- did those privacy advocates in this new world that we've seen post-Sony, do they need to get over those concerns?

ROGERS: I think healthy concern is a good thing. We accommodated those concerns in the bill. That's why we got a bipartisan vote in the House of Representatives on a bill that does simply this -- it allows the NSA and other agency who go overseas and collect malicious source code, that nasty stuff that hurt Sony, that could hurt your bank, that could hurt your job, bring it back, they protect the government networks but were prohibited from sharing that with the private sector.

Eighty-five percent of all the networks out there, Chris, are private sector networks, and contrary to popular belief, the NSA is not monitoring those 85 percent of the networks. They're private networks, which is why North Korea can attack a company like Sony. This would have allowed them to share malicious source code to protect themselves.

So, we built in all the protections for civil liberties. Again, this isn't about reading your e-mail. It's about stopping malicious source codes, zeros and ones in a configuration that do nasty things to your computer and your information and are highly disruptive.

WALLACE: There was a different kind of terror attack this week in Australia, an Iranian held 17 people hostage in a Sydney cafe for 16 hours before police finally stormed the place. And it reminded people of the lone gunman who attacked the Canadian parliament as well as the man in New York who attacked police there with a hostage.

How big a threat are lone wolves, and to you distinguish between the committed jihadist, one thinks immediately to somebody like Nidal Hassan at Ft. Hood, and some of these cases which seem to be deranged, sick individuals who kind of latch on to Islamic teachings as a kind of cause or a script?

ROGERS: Hard to argue you're not a deranged individual if you're willing to be inspired to chop someone's head off. I don't care if you're stable one day and not stable the particular day. Same with the other lone wolf candidates.

Here's the problem. Earlier in Australia, which really fundamentally changed the way we saw groups like ISIS, ISIL, or Daesh operate, they had people identified in Australia who were going to come to fight in Syria. They made a really significant change. They called back and said, no, don't come, got plenty of people coming. Stay in Australia, randomly kidnap people, chop their heads off, film it, and we'll use it for propaganda purposes. That is a fundamental change.

So if they're doing it in that case, you know they're pushing out this notion to inspire others to commit these acts. Canada, we've seen arrests in Germany, France, Spain, the United States, Great Britain. It's getting worse, not better.

WALLACE: Finally, let's discuss your committee's report, the House Intelligence Committee report on Benghazi, which as you know has gotten a lot of criticism, including from some commentators here on FOX News.

The committee found, and let's put this on the screen, that no evidence that there was -- that either a stand-down -- that there was either a stand-down order or a denial of available air support to prevent rescuing U.S. personnel.

Here are two security contractors who are at the CIA annex and say they were prevented from going to the consulate to rescue U.S. personnel there. Here they are speaking both before and after your report.


JOHN "TIG" TIEGEN, ANNEX SECURITY TEAM: I said, hey, you know, we've got to get over there, we're losing the initiative, you know? Bob looked at me and said, stand down, you need to wait.

UNIDENTIFIED MALE: We feel our words have not been recognized or used as validation for what took place that night. I don't know how you cannot use our words. There were eyewitnesses there.


WALLACE: They say there was a stand-down order, Chairman. Why don't you believe them?

ROGERS: Well, they were certainly clearly told to wait. Again, they acted very bravely that particular evening. But on sworn testimony, including people who have gone on TV, it's very clear that they went through the line of questioning of no stand-down order. They were told to wait, which was a tactical decision on behalf of the leader to get more information about when they should go and if they can get more arms to go.

And I argue that's very, different. I think this clear, bright line people have drawn, as well, there was either a stand-down order or not, in this particular case.

Now, remember, we interviewed contractors who are now public. We've also interviewed security contractors who are still working overseas who provided sworn testimony and witness testimony. And as a former FBI agent working bank robberies and bombings and other things, sometimes in a very high-adrenaline combat environment impact, people's version of events are a little bit different. The goal here was no piece of information could go forward if it wasn't substantiated or corroborated.

WALLACE: I want to ask you --

ROGERS: All of that was done in the report. And, by the way, the report was very narrow. This was not designed to be a huge end of the conclusion. There are serious questions yet to be answered.

WALLACE: Let me ask you about that because you've also been criticized for going easy on the administration talking points in which, among other things, Susan Rice came on this and four other Sunday talk shows and said that this was a spontaneous protest that went violent, it wasn't a planned terror attack. Your report says the process used to generate the talking points was flawed and mistakes were made in the process of how those talking points were developed.

Critics say that you're ignoring the fact or glossing over the fact that this was in effect political damage control in the midst of President Obama's re-election campaign.

ROGERS: Well, that part we wouldn't be able to get at because it was beyond the scope of the report. Now, that's what's I think unfortunate about this. Most of the people who are out publicly beating up the report have never read the report or they've never accessed the classified annex, which is an important part of why these conclusions were come to, and the classified evidence, including members even on the committee.

WALLACE: Let me ask you a quick question. Do you think this is political damage control by the Obama administration?

ROGERS: Well, what I believe and what the report -- I want to make very clear, two separate things.

WALLACE: I'm asking what you believe.

ROGERS: I do believe that the administration used this -- the way they tried to present the facts for their own political purposes. And I believe that in the State Department, we have very little answers on what happened in the State Department. Remember, my committee was only to do the laying of intelligence on the ground. So, our committee report only did the intelligent lane, didn't do the State Department, didn't do DOD, didn't do the White House --


WALLACE: But do you believe this was used for political advantage, political damage control?

ROGERS: I think -- it's hard for me not to come to that conclusion. Again, my report, the committee report, was only for the intelligence. I do believe that people in the State Department had not yet been held accountable, and I believe in expeditionary diplomacy. I believe in putting these folks in really tough circumstances.


WALLACE: Would say that people in the State Department haven't been held accountable, including Secretary of State Clinton?

ROGERS: Well, again, the investigation needs to determine that. That's where I think the select committee can get at. The State Department, which we had no answers -- no questions answered, and the White House itself and the National Security Council, we've had no question of --

WALLACE: You feel those are unresolved issues?

ROGERS: I do believe they're unresolved issues, yes.

WALLACE: Chairman Rogers, thank you. Thanks for coming in today. Merry Christmas, and good luck with your new career where you join us and you're going to become a radio talk show host. Good luck.

ROGERS: Thank you so much, Chris. And merry Christmas to you and your family.

WALLACE: Thank you.

ROGERS: We'll see you on the radio real soon.

WALLACE: There you go. See you on the radio.

Next up, our Sunday group joins the conversation about the cyberattack on Sony.

Plus, what would you like to ask the panel? Just go to Facebook or Twitter, @FoxNewsSunday. And we may use your question on the air.




BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Sony's a corporation. It's, you know, suffered significant damage. There were threats against some employees. Having said all that, yes, I think they made a mistake.


CHRIS WALLACE, FOX NEWS ANCHOR: President Obama with surprisingly strong criticism of Sony Pictures for pulling its controversial film "The Interview" under pressure from North Korea.

And it's time now for our Sunday group. Syndicated columnist George Will, Judy Woodruff, co-anchor of the "PBS NewsHour," FOX News contributor Liz Cheney, and FOX News political analyst Juan Williams.

So, George, did Sony make a mistake? What should they have done when the big movie theater chains said they wouldn't run the movie? And how serious a threat is this to freedom of expression in the country?

GEORGE WILL, SYNDICATED COLUMNIST: Well, the president is right. You cannot have a free society if a dictator can impose censorship on us. That's true but not exactly pertinent, because North Korea did not and does not have the power, unless the country is full of sleeper cells of North Koreans ready to act against every Cineplex in the country.

This was self-censorship, and it happens in America all the time, and I wish the president would come to the party and talk about it. There are two great citadels of American liberalism unchallenged in America, Hollywood and college campuses.

College campuses constantly restrict speech in the name of a new entitlement, not to have your intellectual serenity disturbed, your emotional equilibrium upset, or your feelings hurt. It happens all the time.

So, when this occurred, Sony had no vocabulary, no philosophic basis for pushing back. That said, you have to sympathize with them because they're operating in an era and a place where we need new protocols. It's not formally negotiated some understanding. Was this or was this not an act of war?

The president understandably is reluctant to say this, understandably for a number of reasons, one of which is called Stuxnet. That is the United States probably was involved in using a computer virus to physically damage Iran's nuclear weapons program. Good but dangerous.

WALLACE: We asked you for questions for the panel, and we got several -- in fact, a number of people who are outraged by Sony's decision to pull the picture. Let's put a couple of them up on the screen.

Lisa Winters-Rogers sent this on Facebook, "If we give in to them, North Korea, about a movie, what's next?"

And we got this on Twitter from Roscoe Arbuckle, "I don't know if I can ask a question. I have to ask North Korea first."

Judy, how do you answer Roscoe and Lisa?

JUDY WOODRUFF, CO-ANCHOR, PBS NEWSHOUR: Well, Sony has now backed down. They've said in essence the reporting in the last day or so is that they are going to find a way to get this film out there. It may be live-streaming or video-streaming, video on demand, Netflix, something like that. Sony -- as George said, you have to appreciate the dilemma they were in, 80 percent of theaters were saying we're not going to run this movie.

But now, they are going to get it out, and I think the question you have to move on to is what is the American response going to be? This is a serious attack, and the U.S. has to respond. It's not just a hack. It is -- they were using blackmail. So, the administration really has no choice than to do something.

WALLACE: Well, let's talk about that because President Obama does promise a response, and some are suggesting that he put North Korea back on the list of state sponsors of terrorism. Others are suggesting we once again freeze all transactions with a bank in Macau, which has acted apparently as a money launderer to provide oodles of cash for the Kim regime.

Liz, it turns out that both of those were sanctions that were in place but that were taken off during the Bush/Cheney administration. Were you guys too soft on North Korea?

LIZ CHENEY, ALLIANCE FOR A STRONG AMERICA: Well, I think that the North Korea policy in the latter half of the Bush administration didn't work. And it was primarily State Department pushing this notion. It was Secretary Rice who signed the document, removing them from the terrorist list, over the objections of the Office of the Vice President and others.

But, so, yes, I think North Korea's clearly been a challenge for administrations for many years now. You've seen this pattern of lying, deceiving, cheating, they did it to the Clinton administration when they sign the agreed framework in 1984. They did to the Bush administration when we were anxious to get an agreement on their plutonium nuclear program.

This is an opportunity now for this president, you know -- somebody said this week -- to prove that he knows how to confront dictators and not just coddle them. And I wish I were more hope that feel's what he was going to do.

But I think putting them back on the terrorists lists, working with Europeans to get swift to stop approving financial transactions, designating them a money laundering concern, all of these steps could be taken that would both send the signal that we take very seriously this attack on Sony and also frankly would help us with respect to our standing in the world and our credibility with respect to other dictatorships and rogue states.

WALLACE: Juan, how tough should we get with North Korea?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: How tough should we get with China, Chris? Because I think China is their patron in this situation.

So, you have here a moment where you have to realize North Korea doesn't have the capability to really do a serious attack on Sony. I think what they had to do was have some help from inside of China. China helped North Korea to exist. I mean, North Korea could not exist without China there as a helping hand.

The question is about the U.S. then relationship with China and how much pressure are we willing to put on the Chinese? Edward Snowden, as we know when he was first busted, for his attack on the American systems, it looked like he was gaining information on what we were able to do against China.

And don't forget that we have, in fact, indicted five members of the People's Liberation Army, whatever they're called, the Chinese, for launching hack attacks on American entities.

So, I think -- don't want to start a war over this. Let's not go crazy. I think President Obama is right when he said this is cyber vandalism, not an act of war.

But you have to understand the broader consequences. And I think therefore I would stand with Liz Cheney. Let's go after some of the markets and banking transactions. Maybe that's a proportional response.

WALLACE: All right. Thank you, panel. We'll see you a little later.

So, what do you think? How should Sony Pictures have handled North Korea's threat? Let me know on Facebook or Twitter @FoxNewsSunday, use #fns.

Up next, a historic shift as President Obama moves to restore diplomatic ties with Cuba. But did we give up too much for too little from the Castro regime? Two members of the Senate Foreign Relations Committee debate the issue.


WALLACE: After a half-century of Cold War sanctions, President Obama has opened a new chapter in relations between the U.S. and Cuba. Joining us now to debate this dramatic shift in policy, two members of the Senate Foreign Relations Committee, which will have to review some of the changes. From Wisconsin, Republican Senator Ron Johnson and from Florida, Maryland Senator Ben Cardin. Gentlemen, let's start with the big picture. President Obama says that a half a century of sanctions, of isolation of Cuba just hasn't worked. Here he is.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I don't anticipate overnight changes, but what I know deep in my bones is that if you've done the same thing for 50 years and nothing's changed, you should try something different if you want a different outcome.


WALLACE: Senator Johnson, I guess that's the question. Why not engage Cuba? Why not expose it to Western values and Western capitalism, especially as the country is about to go through a generational change from the Castro brothers?

SENATOR RON JOHNSON (R-WI), FOREIGN RELATIONS COMMITTEE: Good morning, Chris. Well, your panel was talking about North Korea. We relaxed sanctions on North Korea. We've relaxed sanctions on Iran. Has that worked? The fact of the matter is these are repressive regimes. I agree, 50 years of this kind of policy unfortunately hasn't worked, but it's not necessarily because it's the bad policy. By the way, it's the Helms-Burton Act was actually passed in an overwhelmingly bipartisan fashion and signed by President Clinton.

So, on a bipartisan fashion this has been the policy of the United States for 50 years and Helms-Burton is 18 years. And I would argue it's not because it's bad policies, it's because we're trying -- we are dealing with very bad and evil people, a repressive regime that has backed terrorists around the world and is going to threaten the national security of America and not improve the lives of Cuban people.

WALLACE: Well, Senator Cardin, that's the other side of the argument you hear, that President Obama has given up too much to the Cubans in return for too little. Here's another member of your Senate Foreign Relations Committee, Senator Marco Rubio.


MARCO RUBIO (R ) FLORIDA SENATOR: These changes will lead to legitimacy for a government that shamelessly, continuously abuses human rights, but it will not lead to assistance for those whose rights are being abused.


WALLACE: And just to add to that, Cuban President Raul Castro pledged in a speech before his parliament yesterday, Senator Cardin, that his government will not abandon communism.

SEN. BEN CARDIN (D-MD) FOREIGN RELATIONS COMMITTEE: Chris, I can assure you that we will continue to point out the faults of the Cuban system, and we will speak out against human rights. But one thing is clear. The more Americans, business people that interact with Cubans, the more Americans that have a chance to interact with Cubans, the more the Cubans will realize that their current system is failing them and will want the benefit of a more open society. That I think is clear. But we will stay strong in our message on violations of human rights. We've done that in the past. Alan Gross is now home with his family. That's an important step of progress that's been made. Commitments given by the Cubans. We'll see how they'll carry them out. So, we have moved on to a new chapter. We're looking forward rather than back, and I think that's going to be good for the Cuban people and good for the United States.

WALLACE: Gentlemen, let's take a number that I suspect you can argue both ways, and that's number of political prisoners in Cuba which has risen from 2,000 in 2010 to 8,400, four times as many, last month. Senator Cardin, I guess the question is, why reward a dictatorship that, as you can see in the last few years, has become more repressive, not less so?

CARDIN: I think the question would be why continue a policy that hasn't brought about change? Let's try a different policy. So the number of political prisoners is outrageous. It's hurting Cuba. We know that. If they don't open up their society, their people are the ones who suffer. I think the more exposure we can give them to Americans, the better it's going to be. But we're going to continue to speak out in regards to the fault of their system.

WALLACE: Well, Senator Johnson, answer, if you will, Senator Cardin's question, which is it hasn't worked, why not try something different?

JOHNSON: Well, again, it hasn't worked, relaxing sanctions in Iran or North Korea, but let's listen to the words of some of these political prisoners from Castro. It is discomforting that the accounts of Castro's regime can grow as the first step will be more effective repression and a rise in the level of corruption. Another form of political prisoners said this is a betrayal that leaves the Democratic opposition defenseless. Obama has allied himself with the oppressors and murders of our people. These are people that in the past who have been repressed and imprisoned by this evil regime. And again, I don't see relaxing sanctions working in Iran and South Korea or North Korea. Why would you expect that type of relaxation sanctions are going to work with the evil Castro regime?

WALLACE: Well, let's pick up on that, because that's the point, Senator Cardin, that you continue to make, which is there's going to be exposure to Western values, Western people, Western business, and that that is somehow going to at least begin to open up Cuba. Here are some of the things that President Obama is going to be able to do unilaterally. Ease U.S. exports of building materials and agricultural and telecommunications equipment, establish banking relations between the two countries.

Senator Johnson, let me get you to directly confront what Senator Cardin said. Do you think that that kind of relaxation, that kind of opening of business and trade between the two countries, even though we're not lifting the trade embargo, will that benefit the average Cuba?

JOHNSON: No. The Cubans who had access to those kind of goods from other trading partners, and the Cuban, the Castro regime has remained every bit as oppressive and repressive, as, you know, so that is not going to help the Cuban people at all. It's going to funnel funds into the Castro regime that they can use for creating mayhem in the Western hemisphere. So, it's just not going to work.

WALLACE: Senator Cardin, Senator Johnson does make a good point. Other countries have trade, other countries have diplomatic relations and it hasn't softened or eased the communist regime of the Castro brothers.

CARDIN: You know, I had very interesting conversation with Alan Gross who -- talked about ...

WALLACE: And explain. He was an American who came down there to try to provide more Internet access and ended up as a political prisoner or accosted, whatever you want to call him, for, what, five years.

CARDIN: Five years he was in the Cuban prison. So, he said the country is so underutilized. It's a country, in which they don't even have enough vegetables to feed their people and they have plenty of land and great weather. So, I think that people are going to recognize the fact that their country is underperforming and they are the ones who have been victimized by the Castro regime. That's going to come. We saw that with the fall of the communism in Europe as the Iron Curtain fell. People want the type of standard of living they see in their neighbors where they have more open and democratic societies. Cuba's close to the United States, it's in our hemisphere. It's our neighbor. It's a country that we have a direct interest -- it's in our interest for Cuba to change, and this policy gives us hope that we'll see a different Cuba.

WALLACE: All right, gentlemen. We have a couple of minutes left and I want to get to I guess really in the end the big question as far as the two of you are concerned, which is what can Congress do about it. Senator Johnson, as an opponent, what can you do to block the opening of diplomatic relations, and what can you do to block the easing of trade limits?

JOHNSON: First of all, this is another example of President Obama spending a lot of time trying to circumvent the very clear spirit in the law of Helms-Burton. Again, that was a bipartisan effort. Chairman Menendez is saying the exact same thing. And so, really, there's some real prescriptions in that Helms-Burton act that you really have -- the administration has to follow some very specific steps before they lift the embargo. The president has not followed them. In other words, the determination that there's actually been a transition government, that hasn't happened. And so there are a number of things we can do to try to actually enforce the law that this president -- that this president simply is ignoring.

WALLACE: Senator Cardin, look at it from your point of view. How effective can opponents be in blocking, for instance, the establishment of full diplomatic relations? You're certainly going to have a problem if the president decides to name an ambassador, getting him confirmed in a Republican-controlled Senate. And what about if they pass legislation to restrict any of the trade openings that he's making here unilaterally?

CARDIN: Well, you know, Ron's right. There's different views among Democrats on this subject, there's different views among Republicans on this subject. I think you're going to see a change developing in Cuba. The American people are going to get it. Our political system will want to be engaged. I think you'll see action in Congress. A lot can happen without direct congressional activity, but there will be a need for Congress to take action hopefully as we move to a new chapter in our Cuban relations. And it's going to be an interesting debate in Congress and it's not going to be one party versus the other. It's going to be what we think is best in this country, and I hope Democrats and Republicans can come together and work on a new chapter in our relation with Cuba.

WALLACE: Senator Cardin, Senator Johnson, we want to thank you both so much for coming in today. Merry Christmas and Happy Hanukkah to both of you gentlemen.

CARDIN: Thank you.

JOHNSON: Merry Christmas to you, Chris.

WALLACE: Up next, Jeb Bush shakes up the race for the White House by announcing early he'll explore a run for president. Our Sunday panel is back to discuss how it's picking other potential GOP candidates into high gear.



JEB BUSH (R ) FORMER FLORIDA GOVERNOR: If you run with big ideas and then you're true to those ideas and get a chance to serve and implement them and do it with passion and conviction, you can move the needle.


WALLACE: Jeb Bush sounding very much like a presidential candidate and then announcing on Facebook he will actively explore a White House run in 2016. And we're back now with the panel. Liz, what do you make of Jeb Bush deciding so early, not necessarily that he's going to run but kind of running? And do you see his support for legal status for people who are in this country illegally and his support for common core educational standards, are those too moderate for the Republican base who will be voting in the GOP primary?

LIZ CHENEY, FOX NEWS CONTRIBUTOR: I think it's fascinating that he made this announcement as early as he did. He's clearly going to be a serious, formidable candidate if he ends up getting in the race fully. His record as governor of Florida is certainly a conservative one and he certainly is still very popular in Florida. So I think that, you know, the conventional wisdom that you sort of see now forming that he's not a conservative, you know, we'll see. And he's going to have to fight for this and prove himself just like any other nominee would.

WALLACE: But do you think those positions on immigration and education are in some sense disqualifying?

CHENEY: No, I don't believe they're disqualifying. I think that people have to remember, though, that conservative principles, conservatives, you know, are the heart and soul of our party. And we got beat in 2008. We got beat in 2012 in part because we didn't get our voters energized, enthused into the polls. And so whoever is our nominee, whoever is successful in the primary is going to have to be somebody who really can lead and inspire and energize the conservative base of our party. And, you know, we'll see what happens. But I think, you know, Jeb is going to have to fight for this, just like every other candidate will. I think it's interesting to plant the flag this early and to sort of feel the excitement of the primary season beginning.

WALLACE: Well, we're certainly excited at the Sunday talk show, Judy. Planting the flag so early is obviously these two years, literally, is Jeb Bush now the front-runner for the nomination?

CHENEY: Oh, I don't think you can say anybody's the front-runner. I mean you maybe be able to say Hillary Clinton is the front-runner on the Democratic side. I think it's much more wide open than that on the Republican side. By the way, on these two issues that you were just asking Liz about, it's so interesting because if those are the two issues that are defining whether he is conservative enough, those both have their roots in his brother's presidency. Certainly immigration reform and then the common core, the debate over educational standards, had its roots in No Child Left Behind and what came out of that and the educational standards argument that came out of that. But who knows whether he's the front runner. We will see. But it's clear that he is speeding the process up.

I can guarantee you a number of Republicans are not spending this holiday just toasting marshmallows with the family around the Christmas fireplace. They're sitting, they are thinking and are we going to go or not and it's sped up the timetable. Chris Christie, you know, has to be thinking about it.

WALLACE: There's money, there's organizers, there's -- you know, there's this whole infrastructure before you actually announce. And Jeb Bush is obviously going to soak a lot of that up. George, two things. One, I'd love your thoughts on Bush. But I also want to ask you about really what has been a surprisingly nasty flap this week between the Senators Rand Paul and Marco Rubio over the question of President Obama's opening to Cuba after Paul said, Rand Paul said he supported as Rubio said, like many people, he, Paul, has no idea what he's talking about. Then Rand Paul fired back, seems to me Senator Rubio is acting like an isolationist who wants to retreat to our borders and perhaps build a mote. George?

WILL: Well, Cuba is a museum of two failures, the failure of communism and the failure of our embargo which made perfect sense in 1961, one that was put in place with this explicit purpose of affecting regime change. Since 1991, with the disappearance of Cuba's patron, the Soviet Union, it has not made any sense at all, as far as I'm concerned. Marco Rubio is right that the president should have struck a better bargain to help the breathtakingly heroic democratic movement in Cuba. On the other hand, he's wrong to say that this confers legitimacy. American public philosophy is clear that governments drive their legitimacy from the consent of the governed, and that does not exist yet in Cuba. Rand Paul is right that some kind of exposure of Cuba to the culture of America, both our popular culture and the culture of commerce, is apt to be a solvent to the regime. However, Rand Paul does not seem to be, as many of us know, our sadder but wiser about the liberalizing effects of trade because we've tried this with China, we've tried this with Vietnam, and both have shown the compatibility of an open economy and a closed political system.

WALLACE: All right, before I bring in Juan, your thoughts quickly about Jeb Bush.

WILL: Well, he has four strikes against him -- common core, immigration, his name and the big sign on his back that says establishment choice. All that said, he's enormously talented, does his homework. The Republicans have not won the presidency without a Bush on the ticket since 1972. They're ready to start again. But I think he's a huge plus to the race.

CHENEY: And if he won, Chris, he'd be the third Bush to be president within 25 years.

WALLACE: Fox News -- different subject. Fox News has obtained a letter that Chris Christie has sent to President Clinton. Very interesting, calling on the president to demand that Cuba return convicted cop killer Joanne Chesimard who's been given safe haven in Cuba since the 1980s. Christie writes to the president, "I urge you to demand the immediate return of Chesimard before any further consideration of restoration of diplomatic relations with the Cuban government." Juan, I mean this is just an indication. There's a lot of unfinished business and a lot of scar tissue between the U.S. and Cuba.

WILLIAMS: There's no question about it. And in that letter Chris Christie refers to her as notorious and a cold-blooded killer. And so interesting because if you listen to her and, you know, it's even political in terms of how I speak about her, is she Joanne Chesimard or is she Assata Shakur, she is, by the way, the aunt or godmother of Tupac Shakur, the musician. So, she has described herself as someone who is a folk hero. She has become a folk hero and a revolutionary figure in much of black America. She talks about herself as an escaped slave. But the reality is that she's a convicted murderer. So, if you believe ...

WALLACE: Who incidentally got out of prison when she was sprung by some of her confederates?

WILLIAMS: Correct. People who were members of the Black Liberation Army brought guns into the prison. So, what you've got here, is a situation if you believe in law -- you know, I don't -- you can take sides with the police, you can say this is a racial issue, a black white issue, especially after what's happened with Michael Brown and Eric Garner, but -- and of course that horrible killing in New York yesterday. But the fact is if you believe in us, the American people, black, white, Asian, Hispanic as a country of laws, you have got to say this is a convicted murder and should be brought back to this country. Cuba has 70 -- 70 U.S. prisoners there that they have designated as political prisoners, and I think Fidel Castro gave her protection, sanctuary, really to give us a thumb in the eye. And so it appeals to all the attitudes in terms of black America's, you know, love of the revolution and fighting against the white man and all that. But you know what, this is all about Fidel Castro. And he is a despot in my opinion and someone who the United States needs to be very clear, until there are human rights established, until there are political freedoms, and freedom of the press established, we should not be playing footsie and shouldn't be sending Christmas cards to Fidel Castro.

CHENEY: I stand with Juan Williams.

WALLACE: I was going to say.


WALLACE: What is in the water here? I don't know if it's a Christmas miracle or whatever, but you two are the hardliners today.

WILLIAMS: I was born in Panama, and my dad had some attitudes about some of these Latin-American decimates (ph). So, I don't have any ...

WALLACE: No romanticism about that.


WALLACE: All right, thank you, panel. See you next Sunday. Merry Christmas to all of you. Up next, our "Power Player of the Week," honoring America's fallen this Christmas season. Plus, a holiday visit from the Wallace grandkids.


WALLACE: It's a Christmas tradition here to share the story of how one family has found a way to express the meaning of the holiday season. It's a moving example of love for our country and personal generosity. Once again, here's our "Power Player of the Week."


MORRILL WORCESTER, FOUNDER, WREATHS ACROSS AMERICA: We wouldn't have the opportunities if it wasn't for the people that fought for us and who gave their lives for us.

WALLACE: It's that plain-spoken wisdom that has driven Morrill Worcester for years on a mission that has touched America's heart. Each December, Worcester places wreaths at Arlington National Cemetery, and thousands of volunteers are there to help him.

WORCESTER: I think a lot of people think like I do. And they just want to -- you know, they appreciate the veterans and they want to show it.

WALLACE: This story begins back in 1962, when Worcester, then a 12-year-old paper boy from Maine, won a trip to Washington. What impressed him most was Arlington, its beauty and dignity, and those rows and rows of graves.

WORCESTER: Every one represents a life and a family and a story. They're not just tombstones. I mean those are all people.

WALLACE: 30 years later, in 1992, Worcester was running his own wreath company in Harrington, Maine. But as Christmas approached he had a bunch left over.

WORCESTER: These wreaths are real fresh, just made, and I just didn't want to throw them away.

WALLACE: He thought of Arlington and all those graves. When the cemetery approved, he and a dozen volunteers drove the wreaths down and laid them on the headstones. And so it continued for years until a few Christmases back, when an Air Force sergeant took this picture, which ended up on the Internet.

WORCESTER: It kind of struck a nerve and people emailed it to each other, and it really went around the world.

(on camera): Going right there.

UNIDENTIFIED FEMALE: Here you go, sir.

WALLACE: We were there the next year as he and his workers at the Worcester Wreath Company loaded up 5,265 wreaths. Then they embarked on what Worcester called the world's longest veterans parade, a 750-mile journey that at some point attracted more than 100 vehicles. And when they got to Arlington, so many people wanted to participate.

UNIDENTIFIED MALE: This ceremony you are about to witness is an Army reclaimed ceremony to be conducted for the Worcester Wreath Company.

WALLACE: For years Worcester paid for all of this out of his own pocket and he started Wreaths across America, sending hundreds to cemeteries and war memorials around the country. But he will need help to reach his new goal.

WORCESTER: I think around 2.7 million graves, and that's a tall order to decorate 2.7 million graves. So --

WALLACE (on camera): But you'd like to do it, wouldn't you?

WORCESTER: I really would. Yes. Sometime. I don't know how. But, hey, you know.

WALLACE: How long are you going to keep doing this?

WORCESTER: I'm going to keep doing it for as long as I work and then I know my family's going to continue. So it will be here for a long time.


WALLACE: This is the 23 year Morrill Worcester has taken on his Christmas wreath project. At Arlington and other veteran cemeteries in all 50 states and overseas. This year more than 700,000 wreaths mark the graves of veterans thanks to over 50,000 volunteers.

And now, another Christmas tradition. All five of the Wallace grandkids are here this year. Here is Libby, this is her very first Christmas, Sabine, James, Caroline, and William. From our family to yours, have a very merry Christmas and we'll see you --

UNIDENTIFIED BOY: Next "Fox News Sunday."

WALLACE: All right. Kids, three, two, one --


WALLACE: You did that very well. That was good. Well done.

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