This is a rush transcript from "Fox News Sunday," December 28, 2014. This copy may not be in its final form and may be updated.
CHRIS WALLACE, FOX NEWS ANCHOR: I'm Chris Wallace.
The year in review -- looking back at some of the biggest stories of 2014 and what we should expect in the year ahead.
WALLACE: From the midterm elections and that GOP wave set to sweep over Washington.
SEN.-ELECT CORY GARDNER , R-COLO.: Tonight, we shook up the Senate. You shook up the Senate.
SEN. MITCH MCCONNELL, R-KY., INCOMING MAJORITY LEADER: I would welcome the president moving to the middle. First indications have not been very hopeful.
WALLACE: To the growing fight against ISIS.
GEN. MARTIN DEMPSEY, CJCS: This is an organization that has an apocalyptic end-of-days strategic vision, which will eventually have to be defeated.
WALLACE: And old wounds of racial discrimination reopen. Our Sunday group journalists Jason Riley, Susan Page, Steve Hayes, and Bob Woodward on this year's biggest headlines.
Then, looking ahead to 2015.
We'll get our panelists' predictions on politics, the economy, entertainment, and sports. And a rare interview with author Laura Hillenbrand, whose bestseller "Unbroken" is now a major motion picture.
LAURA HILLENBRAND, AUTHOR: I think Louis has an inspiration for a generation of people. He is a man who survived the seemingly unsurvivable.
WALLACE: All, right now, on “Fox News Sunday.”
WALLACE: And hello again from FOX News in Washington.
First, some breaking news. Search-and-rescue operations are under way after an AirAsia flight carrying 162 people went missing over the Java Sea. The plane headed from Indonesia to Singapore lost contact with air traffic control about an hour before it was due to land. The pilots had asked to change course to avoid bad weather.
It's been a remarkable year in the news with shocking developments from the bitter debate over race and justice, to the rise of a new terror threat in the Middle East.
Today, we want to drill down to get some perspective on this year's biggest stories. And we begin with the year in politics that saw voters turn over Congress to Republicans while President Obama pushed the limits of executive action.
Here to help us understand where we are and where we're headed, let's bring in our Sunday group. Jason Riley of "The Wall Street Journal", Susan Page, Washington bureau chief of "USA Today", "The Weekly Standard's" Steve Hayes, and Bob Woodward from "The Washington Post".
The big story in politics this year, of course, was the Republican wave on Election Day. The GOP picked up nine seats in the Senate and will now have a 54 to 46 majority. In the House, the GOP picked up 13 seat, the new balance of power 247 Republicans, 188 Democrats.
The question for President Obama and new Senate Majority Leader Mitch McConnell is how will they handle the new reality?
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I intend to continue to do what I've been doing, which is where I see a big problem and the opportunity to help the American people and it is within my lawful authority to provide that help, I'm going to do it.
MCCONNELL: The American people have spoken. They've given us divided government. The question for both the president and for the speaker and myself and our members is, what are you going to do with it?
(END VIDEO CLIP)
WALLACE: Jason, what do you expect in 2015? Do you expect the president to continue to act on his own or do you expect some real bipartisan compromise with a Republican Congress?
JASON RILEY, THE WALL STREET JOURNAL: Probably a little more of the latter. I'm optimistic, Chris. I think Republicans are going to try and use the majority to show voters that they can govern. They want to put legislation in front of the president, whether it's immigration reform, tax reform, maybe even health care reform. Whether the president signs it is another matter. But gone are the days when Harry Reid can stop the president from having even to consider difficult legislation.
WALLACE: When you look back at the president' actions, executive actions this year, it's a pretty remarkable list. Let's put it up on screen. An order, raising the minimum wage for federal workers, climate deal with China on carbon emissions, shielding 5 million illegal immigrants from deportation, resuming diplomatic relations with Cuba.
Susan, how far do you expect the president to go on this wave of executive action? And at some point, will either Congress or the Supreme Court say enough?
SUSAN PAGE, USA TODAY: Well, you know, it's interesting those four things you list, three have happened in the past eight weeks since the midterm elections, which were undeniably a rebuke of President Obama by voters. But since then, he's demonstrated how powerful a lame-duck president can be.
And if the Republicans, I think we'll see some pushback by Republicans in Congress, you know, another effort to repeal the Affordable Care Act and so on. But they're in box it seems to me because actions that they take that are at odds with President Obama he's likely just to veto. So -- and it seems to me, it's hard for them son some of these fronts to do much to curtail the powers that he's showing by executive order.
Steve, do you buy that, as the new Republican majority in a box?
STEVE HAYES, THE WEEKLY STANDARD: Yes. I think it's difficult for them to practically do much to stop the president. Although I disagree strongly with Jason, I'm not optimistic at all that either Republicans or the president are going to try to work together in any kind of a concerted way.
I think you're going to have basically a year of the two parties and the two major ends of Pennsylvania Avenue talking past one another. The president is going to push forward with executive orders, do everything he possibly can, push the limits, maybe go beyond the limits as I think has in a couple cases already, and Republicans are going to do everything they can to set forth an alternative agenda that they're not going to be much. But I agree they would like to make the president be the obstructionist. They would like the president to be, you know, the party of no, the Democrats to be the party of no.
Will it be covered that way? I'm not very optimistic.
WALLACE: Let me, before I get to you, Bob, let me ask you, Steve, about one potential flashpoint that I know that you've been covering and that's Guantanamo, because this president seems very determined to do everything he can to close the prison at Guantanamo. It now holds 132 detainees, that's the fewest since President Bush opened the facility.
Steve, how explosive if President Obama continues to go down this path?
HAYES: Very, I think. And you'll see Republicans almost unanimous in their opposition to what the president does. But the group I'll be watching is Democrats.
Democrats in Congress, whatever moderate Democrats are left in Congress, do they support the president as he goes about emptying Guantanamo? I mean, there are reports that he wants to release or transfer another three, four dozen of the detainees who remain there of the 150-some-odd detainees who remain there to this day. Detainees who are there to this day are there for a reason. These are the worst of the worst that we've been hearing about.
WALLACE: Well, wait. Of the 132, I think about 68 have been cleared for release. One could argue whether they should be. But you're right, 64 of them have not been cleared for release and those certainly are the worst of the worst.
HAYES: Well, of those who have been cleared for release, it's important to understand what happened. There was the original Guantanamo Joint Task Force, the intel that made these assessments high risk, medium risk, low risk, in terms of transfers.
Then, the president empanelled a separate board, which reviewed what the work of the intelligence professionals and re-categorized a lot of these. And the president's board, which was made up a lot of human rights lawyer, folks who are more sympathetic to emptying Guantanamo, not surprisingly came to different conclusions than the intelligence specialists.
WALLACE: But you're saying all of these are high risks.
HAYES: Cleared for release does not mean innocent or somebody who is not a risk.
WALLACE: Bob, and I have to sort of count this up -- you've been covering Washington for more than 40 years now.
BOB WOODWARD, THE WASHINGTON POST: Yes. People ask, what did I think of Grover Cleveland?
WALLACE: I get those questions too.
WOODWARD: Yes. Not quite.
WALLACE: With the exception of Richard Nixon, who you did cover, we all know, have you ever seen a president act on his own, go off on his own to the degree that this president has?
WOODWARD: Well, I don't think -- I agree with Jason in terms of what's going on here and what might happen, and I would be optimistic. I think the issue this year that was hidden in plain sight and kind of snuck by was the deal on a trillion dollars of spending, a deal between Obama and the Congress.
And it worked. They didn't go to the brink. They didn't shut down government. And I think both Obama and the Republicans see value in achieving some things. And, of course, when you achieve something, you have to give up something in divided government, and I think people are willing.
So, I think there will be steps here. On your question -- you know, because Obama's declared I'm doing all of these thing, if you go back and look at all other presidents, they, without declaring them, just doing them, did lots of things through executive action.
I don't think it's changed the dynamic. It is inevitably big news. But, I -- you know, one of the little secrets that has not been much discussed is that Mitch McConnell is a deal maker. Now, he's majority leader, and I think he can work with Obama if not at least with Joe Biden.
WALLACE: That's right. Uncle Joe.
I want to switch political subjects because it won't be long into 2015 before we start seeing candidates, and we've already started to see Jeb Bush talk about running for president in 2016. I want to put up the latest Real Clear Politics polls. This is the average of recent polls.
Hillary Clinton continues on the Democratic side to swamp a possible Democratic field, including, yes, Senator Elizabeth Warren. Among Republicans, Jeb Bush has a small lead over Paul Ryan and Chris Christie, in a field of 12 potential candidates.
I want to play clips for you of Bush on what it will take for a Republican to win the White House and Clinton on whether it's important to have a woman president.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, FORMER SECRETARY OF STATE: It matters because we have half the population that has given so much to building this country, to making it work, and of course I want to see a woman in the White House.
JEB BUSH, R, FORMER FLORIDA GOVERNOR: It has to be much more uplifting, much more positive, much more willing to, you know, be practical now in Washington where lose the primary to win the general without violating your principles.
(END VIDEO CLIP)
WALLACE: Susan, you are already on the campaign trail. How strong do you think Clinton and Jeb Bush are in their respective primary contests at this absurdly early day?
SUSAN PAGE, USA TODAY: I think that Hillary Clinton is in a situation where she can cost herself the Democratic nomination and no one else can cost it for her. It would take a decision on her part or a big error on her part for her not to be nominated by the Democrats.
I don't think Jeb Bush is in nearly that same position on the Republican side. There's going to be a big field on the Republican side. There's going to be a big debate about where the Republican Party stands going forward.
I mean, he's got a strong position. His name is well-known. Some antipathy towards the Bush name has faded over the past eight years, past six years. He'll be able to raise a lot of money. But so will some of these other contenders.
And you'll see I think a powerful demonstration by Rand Paul, who's been maybe the most interesting new figure on the Republican scene, by Scott Walker. I think he has the potential to be formidable. So, I would see a big fight on the Republican side, but on the Democratic side, it's all up to Hillary.
WALLACE: Thirty seconds left, Jason, in the political panel.
How solid is Hillary Clinton at this point? Is she still just cruising to this nomination?
JASON RILEY, THE WALL STREET JOURNAL: I think that the Democratic side of this could look a lot different in six months. I think you could see names like Jerry Brown, the governor of California, into the mix. I'm not sure Hillary is sure she's going to run yet.
So, I don't know if it she's -- if it's baked in the cake for Hillary. I really don't think she's made up her mind at this point. And I know there are others chomping at the bit, not just Elizabeth Warren.
WALLACE: Well, as the host of the Sunday talk show, all we hope for is a good race in both sides.
We need to step aside far moment, but when we come back, racial tensions in America reach a breaking point.
PROTESTERS: Hands up, don't shot! Hands up, don't shot!
WALLACE: Protests continue in cities across the country as a slain New York police officer is laid to rest.
JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: When an assassin's bullet targeted two officers, it targeted this city.
WALLACE: The deaths of Michael Brown in Ferguson, Missouri, and Eric Garner in Staten Island, were the catalysts, reopening old wounds separating blacks from whites. But where does the debate over race and justice go from here?
Our year in review panel tackles race in America, next.
(BEGIN VIDEO CLIP)
BIDEN: I believe that the state police force in this incredibly diverse city can and will show the nation how to bridge any divide.
(END VIDEO CLIP)
WALLACE: Vice President Biden speaking yesterday at the funeral of New York City Police Officer Rafael Ramos, one of two policemen executed by a man who said he was avenging the killing of unarmed black men by police. More than 20,000 law enforcement officers gathered for the ceremony.
Jason, how do you explain it? With an African-American president in a country that some people said was post-racial, how do you explain the fact that we're having this debate over race and the criminal justice system and it's still so raw?
RILEY: Well, part of it is the left has no interest in being post-racial. I think they pretend to want to be post-racial, but they practice identity politics, which is divvying us up by race and gender and sexual orientation, and making specific appeals based on those characteristics.
So, I think the whole notion that the left wants to be post-racial is false. And this is I think demonstrates that. What we see with this false narrative being pushed in the wake of the Garner and the Ferguson incidents.
The problem is not police shooting black men. That is not what is driving the homicide rate in this country. It is non-police shootings of black men that is driving the homicide rate, yet we have protesters all over this country pushing a false narrative and everyone from the president on down refusing to simply correct the record here.
WALLACE: But it's not just Ferguson, and it's not just New York City. Let me put these numbers on the screen. In a recent poll, whites are more than twice as likely as blacks to think that both races are treated equally by police. You see only 22 percent of blacks think they face equal treatment by police.
Bob, this is a continuing problem.
BOB WOODWARD, THE WASHINGTON POST: Well, of course it is. It's real. But I thought at that funeral, Bill Bratton, who's the police commissioner, gave a very good talk, and he said, quote, "When we see each other, we'll heal." And I think that's exactly -- this is about exposure. This is about talking. It is a serious problem, one obviously Obama hasn't solved, and it's going to continue.
WALLACE: When he says when we see each other, it's 2014, we do have an African-American president. When are we going to see each other if we don't see each other now?
WOODWARD: Well, it takes work and takes lessons -- I mean, awful, tragic lesson like this that push the issue in people's faces. And, you know, the police department's going to be strong and will go on and do its job, and so will New York City and all of these places. But no one has found a formula to bring about that healing, including Obama.
WALLACE: Well, you talk about New York City and we've seen an awful, a terrible case study in New York over the last month or so, after the grand jury voted not to indict the police officer in the Eric Garner choking, the mayor talked about teaching his biracial son to protect himself not only from criminals but also from the police.
Then, at the funeral yesterday, the mayor continued to try to reach out to the force.
(BEGIN VIDEO CLIP)
MAYOR BILL DE BLASIO (D), NEW YORK CITY MAYOR: For so many of our young people, there's a fear, and for so many of our families, there's a fear. So I've had to worry over the years. Chirlane had to worry, was Dante safe each night.
Police officers are called peace officers because that's what they do, they keep the peace.
(END VIDEO CLIP)
WALLACE: But outside the church, hundreds of police officers turned their back on the screen outside the church showing the words of Mayor de Blasio.
Steve, de Blasio has unleashed quite a backlash in New York, hasn't he?
STEVE HAYES, THE WEEKLY STANDARD: He has. And I think looking forward this is of most concern. You have Mayor de Blasio who ran for office in effect running against tougher policing. He basically said, yes, it's true we have peace and security in New York City, but that's not necessarily the result of the policies followed by Mayor Giuliani, Mayor Bloomberg, et cetera, so he came in to change it. He frontally took on the unions, the police force, and aligned himself purposefully with the protesters.
It's no surprise now that the police force, that the police unions in particular are saying you're not our guy, and we don't buy the words that you're saying now in the aftermath of the tragic killing of these two officers, when you weren't with us before.
So, I think Mayor de Blasio has a lot of work to do, and I'm not sure he's going to be able to solve that rift, to bridge that gap between the things he said, the way he ran and the way the police look at him now.
WALLACE: We asked you for questions for the panel and we got this on Facebook, from Tammy Korol, who wrote, "Why is it all we ever get told is that the police community must be retrained to learn how to deal with black communities but no one has ever introduced the concept of the black community to be trained to be law abiding, productive, respectful citizens?"
Susan, that's pretty tough talk, but to get back -- and I'm sure some people will be offended by it -- but it is the view of a lot of people, and to get back to what Jason said, the biggest threat to young black men doesn't come from the cops. It comes from other young black men.
SUSAN PAGE, USA TODAY: Yes. Well, that's undeniably true, and shouldn't be .ignored. But, surely, it's possible to criticize police tactics that target African-American men inappropriately, as I think you have to say that Eric Garner cell phone video showed without criticizing the police force as a whole, honoring the police force for what they do, and the great danger that they undergo, but there are cases in which the behavior of the police has been inappropriate and ought to be addressed.
JASON RILEY, THE WALL STREET JOURNAL: But the problem is when we take exception and pretend they're the norm. Clearly, there is excess force used by police in some cases. But that's not producing the high black body count in the country.
Tension between the black community and the police department stems from black criminality in this country, high black crime rates. Blacks are about 13 percent of the population but commit half of all murders in this country. Blacks are arrested at two to three times their number in the population for all manner of violent crime, all the manner of property crime.
Until that ends, you are going to have tensions between the police and the black community. You are going to have young black men viewed suspiciously.
If we want to address perceptions, negative perceptions of young black men, we have to address the behavior that is driving those perceptions, and that is not a conversation President Obama or Eric Holder or Al Sharpton or all the rest want to have because they have a vested interest in pushing a false narrative, which is that racism is an all-purpose explanation of what drives what's wrong in Black America.
BOB WOODWARD, THE WASHINGTON POST: OK. But the mayor of New York now has a big leadership challenge, and he can't distance himself from the police force. It's his police force. It's like when the president criticized the CIA and all of a sudden, it's their CIA, they look very differently on it if -- and they have to reach out. And he's got to reach out to the police force, and that's where there has to be some reconciliation. And, you know, that's not hard for a good leader.
STEVE HAYES, THE WEEKLY STANDARD: At the very least, he needs to stop I would say demonizing the police force despite the fact that -- I mean, the Eric Garner video was horrendous, it's one of the things that has caused people to react in this sort of gut level way.
And I think it's a mistake to lump the Ferguson verdict and the Ferguson outcome where I think you can have people with very different views come to different conclusions. I mean, reasonable people can disagree with what happened there if you read the grand jury testimony.
The Eric Garner case is very different. When you look at the video, it seems inconceivable that that was a proportionate response to whatever it was that he had done. It may be the case as Jason suggested, I think it is the case, that that's not representative of sort of day to day policing in the United States. But it's -- the perception in this case is the reality and is driving this debate.
WALLACE: That gets us to another issue, that is the grand jury and what we saw one could argue rightly or wrongly in Ferguson but I think much more troublesome in the case of Staten Island is that you get a grand jury with a prosecutor who deals with the police force every day and he goes and talks to the grand jury and somehow in the Garner case, best example, not only isn't the cop convicted, he's not even passed to stand trial, you know, a reasonable cause.
I mean, the question there was not reasonable cause that he had caused the death, maybe not murder but manslaughter, whatever, of Eric Garner certainly is troublesome, isn't it?
PAGE: Well, and there are two things that could address this problem. One is to remove prosecution from local prosecutors. There's a lot of public support for that idea, for independent prosecutors in cases --
WALLACE: Not -- wait, in cop case
PAGE: In cop cases where police officers are accused of inappropriate death of a suspect or an individual.
And the other is body cameras. I mean, it seems to me that the power of the cell phone video in the garner case was like that could have also exonerated the police if it had shown a different scene.
So, the move toward body cameras for police seems to be an important step that could address some of the deficiencies you see in perceptions.
WALLACE: Jason, do you agree to any of these reforms or do you think we're just going the wrong turn?
WALLACE: I mean --
RILEY: I mean, the -- we had a camera in the Garner case. But that's not all the in evidence that case. Only the grand jury has seen all of the evidence in that case, and I'm reluctant to second guess a group of people that has seen all of the evidence, where we just seen the snippet.
So, I'd be hesitant. Both the prosecutors in New York and St. Louis have successfully prosecuted other cops in the past. So the idea that they can't do this properly again is something I'm not going to assume.
WALLACE: All right. Panel, let's take another break.
Up next, new challenges to the U.S. overseas from Russia and from ISIS.
(BEGIN VIDEO CLIP)
WALLACE: As the terror threat grew, President Obama's policy to combat it kept changing.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: As commander in chief, I will not allow the United States to be dragged into fighting another war in Iraq.
I don't want to put the cart before the horse. We don't have a strategy.
There's going to be no reasoning, no negotiation with this brand of evil. The only language understood by killers like this is the language of force.
WALLACE: Brutal executions and the seizure of broad chunks of territory finally pushed the White House to respond with U.S.-led air strikes. But where do we stand now in the fight against Islamic extremists? As “Fox News Sunday’s” year in review continues.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: But the world is better, it's safer, it's more peaceful, it's more prosperous, and our homeland is protected because of you and because of the sacrifices you make each and every day.
(END VIDEO CLIP)
WALLACE: President Obama telling troops on Hawaii on Christmas day things are getting better, headed into the New Year. Steve, give us an overview. Is the world safer? Is it more peaceful?
HAYES: No, absolutely not. And the president there is not only contradicting, I think, the reality, the way that the American people look at the world, he's contradicting the views of his top intelligence officials. You've heard from Dianne Feinstein, the Democratic chair of the Senate Intelligence Committee, Mike Rogers, the Republican chair of the House Intelligence Committee, the president's own top intelligence advisers that ISIS is growing stronger. James Clapper in testimony that he gave earlier this fall said he's never seen the world as crazy as it is right now. So the president's living in an alternate universe, and I think part of the reason that we're at that point is because he's been living that way for the past six years. He's choosing to govern in a world as he wants to see it rather than the world as it is. So you are seeing while the president has in effect ended the war on terror, not won the war on terror, ended the war on terror, you've seen ISIS grow, you've seen al Qaeda gather territory, amass territory throughout the region. You've seen them grow in Africa, you've seen them grow across the region, you've seen Russia taking over territory in ways that we would have thought would be inconceivable just a few years ago. And the United States is not exercising its strength or influence.
WALLACE: You know, Bob, one of the things that struck me preparing for this show is a year ago Crimea was still part of Ukraine. A year ago maybe Steve, because he's very up on these issues, but I'd never heard of ISIS, which, again, overview, is the world safer than it was a year ago?
WOODWARD: Well, it clearly is not, and Obama has contradicted himself on that because he's declared war on ISIS and said not just are we going to contain it, but we are going to destroy it. So there's lots of danger out there. But at the same time, if I may say this, there was some excellent reporting in my own paper, "The Washington Post," by Liz Sly about ISIS and said they have lots of trouble putting this government together. Electricity is not sufficient. Water is not sufficient. You can't -- you know --
WALLACE: They're talking about creating an Islamic state, not just having ...
WOODWARD: Yeah. They don't have a capital or they've created a capital. They don't get Baghdad. They don't get Damascus. They have no currency as they've promised. There are lots of governing problems that are very real that are staring them down. Now, does that mean they're going to go away? Absolutely not. I thought in your paper, Jason, there was an excellent interview with General Allen, who's the envoy to the region for President Obama. And essentially what Allen said is we're going to move along slowly on this. It is a giant problem. And there's almost a disconnect with Obama where he said we're going to destroy him and Allen says we're going to contain them.
WALLACE: Well, let's talk about that, because after a very shaky start when he said we don't even have this strategy in the middle of the summer, President Obama finally in the fall declared war on ISIS. Here he is.
(BEGIN VIDEO CLIP)
OBAMA: We will degrade and ultimately destroy ISIL through a comprehensive and sustained counterterrorism strategy.
(END VIDEO CLIP)
WALLACE: So, Jason, how are we doing?
RILEY: Things are getting better. I think we'll make some incremental progress. Though I don't - mostly in Iraq, though. I don't know that we're going to go into Syria, and which is where the heart of the problem is. But so long as we have a president that doesn't appreciate the importance of U.S. global leadership, the world will be less safe, than it ought to be, and that's what we have in Obama. And to get back to Steve's point about Obama governing in a way that he wants the world to look instead of governing the way it actually is, it ties back into our discussion of Gitmo and trying to close Gitmo. We don't send people to Gitmo anymore. And something like a third of the people we've released have rejoined the battlefield. That ties indirectly with this ISIS thing sneaking up on us. We don't send people to Gitmo anymore, and interrogate them anymore and find out about the intelligence. We don't have that operation anymore because this president is more interested in obtaining a political goal of shutting down Gitmo regardless of whether it helps us fight these real-world problems.
WALLACE: You know, I was talking about things that we weren't aware of a year ago or hadn't happened a year ago. One thing we were talking about a year ago was the effort by the U.S. and our allies to restrict Iran's nuclear program and we were about to begin talks with Iran. Well, it's a year later, the talks have been extended twice, they've missed two deadlines. Here is Secretary of State John Kerry on the continuing effort.
(BEGIN VIDEO CLIP)
JOHN KERRY, SECRETARY OF STATE: We would be fools to walk away from a situation where the breakout time has already been expended rather than narrowed. And where the world is safer because this program is in place.
(END VIDEO CLIP)
WALLACE: Susan, do we finally get a deal in 2015? We certainly didn't this year. And if not, what does President Obama do about Iran?
PAGE: You know, I think it's entirely possible we get a deal, and it's not only because of the negotiations that have gone on and on and on. It's also because of what's happened with oil prices, which has put enormous pressures on the Iranian economy beyond what our own sanctions have - have caused them to do. I think that leads us to the possibility of getting a deal, and that would be despite the problems with ISIS, which I agree you can hardly overestimate the threat from ISIS now. That would be very good news and a huge achievement by this administration.
WALLACE: You know, it's interesting because that is certainly something we didn't even see on the horizon a year ago. And some could argue it could end up being the biggest foreign policy story in 2015, and that is that just the collapse of oil prices around the world. Talk about the deal with Iran and talk about the impact that these cratering oil prices, Steve, could have not only on the mullahs in Iran, but also on Vladimir Putin and Russia.
HAYES: Well, I think it does, I think Susan is right. I think it does put additional pressure on the mullahs in Iran to want to find a way to get to a deal. But I don't think that that's a difficult place for them to be, because I don't think the administration has driven a very hard bargain. The administration sees the deal itself as the accomplishment. It almost doesn't even matter what the details of the deal are at this point. They want a deal for the sake of having a deal, largely because people will say this is an achievement, having gotten the deal. And to do this, to get to this point, the administration is willing to just shrug off or set aside --
WOODWARD: I think that's really unfair. I mean, they haven't been negotiating all this time just because they want a deal. They've been negotiating about the particulars.
HAYES: There's no question they've been negotiating about the particulars.
WOODWARD: There are certain things they want to get. And I can share your cynicism about some of this, but I think John Kerry's really worked hard on this and there is a potential to ...
HAYES: I don't even suggest that they are not negotiating anything. I mean to suggest that they know that they want to get a deal because they'll be praised for ending up with a deal. And as we've seen in other deals that the administration has struck, that it doesn't matter what the details of the deal are. They want the deal for the sake of having the deal. The diplomacy is the end -- do you think they're going to have a deal?
WOODWARD: Well, who knows? I mean some of it we know, some of it we don't. One reality here, which you know well, is the intelligence community in the United States is looking over their shoulder, and it's quite likely they'll blow the whistle on some sort of deal that doesn't give them the sort of verification that they want ...
HAYES: I don't know. We basically caught - we've caught Iran cheating on the interim deal and rather than saying look, we're done, you've proven that you're not an effective partner that we can't trust you, that the very occasion (ph) measures that we have may have worked, and this is - this is why we can't trust them eventually. And the administration doesn't say that. They say we'll give you more time because we're going to get to a deal.
RILEY: I just want to bring in how this could affect Russia. The Russian ruble hit a low against the dollar recently. Inflation is accelerating there. Capital is blamed (ph). These are body blows to the Putin regime. It will be interesting ...
WALLACE: But the question is ...
WALLACE: does that make him less aggressive on the world stage or does he -- and some say that's what he did in 2014, hold up the shiny object of some new adventure, to try to rally the Russian people around him?
RILEY: I think potentially it makes him more dangerous. How will the Kremlin respond? Will they lash out at their neighbors, will they cut off gas supplies, as they've done in the past, in the middle of winter? I think they need to be watched.
WALLACE: All right. We have to take another break. But when we come back, the real fund against - is our Sunday group gives us their predictions for 2015.
(BEGIN VIDEO CLIP)
WALLACE: On politics --
GEORGE WILL: I want to first look for areas that we can agree on. And there probably are some.
TED CRUZ: The era of Obamalawlessness is over.
UNIDENTIFIED MALE: Yes!
UNIDENTIFIED MALE: Yes!
WALLACE: The economy.
WALLACE: Entertainment and sports.
All to come on Fox News Sunday's "Year in Review."
WALLACE: We have a year-end tradition around here to have the panel make some predictions for the New Year on a range of topics. And under the heading often an error but never in doubt, let's get to it. All right, Jason. Start us off on politics.
RILEY: Barack Obama, our twice-elected black president, will use his State of the Union address to lecture America on the persistence of racism.
WALLACE: And will he also talks about the issues, the responsibility in the black community?
RILEY: No, he will not.
WALLACE: OK. Susan.
PAGE: Jason, you started out by talking about how Mitch McConnell is a deal maker. Maybe that was you, Chris, who said that. I think we'll see the Republican-controlled Senate move within the first six weeks to confirm the nominations of Loretta Lynch to be attorney general and Ashton Carter to be Secretary of Dense in a demonstration they can get some things done. And I think after that they may confirm no one else.
WALLACE: And does Ted Cruz throw a wrench into the gears?
PAGE: Ted Cruz has the ability to throw a wrench into the gears, but Mitch McConnell is a guy who knows how to work the Senate rules and he's really eager to demonstrate his skill at that.
HAYES: So, earlier in the show you showed polls showing that Jeb Bush was the Republican front-runner and Hillary Clinton is the Democratic front-runner. I think sitting here a year from now, as we are heading into Iowa, Jeb Bush will no longer be the Republican front-runner and Hillary Clinton will look surprisingly vulnerable as we get ready for voters to actually turn out.
WALLACE: And who will be the frontrunner on the Republican side?
HAYES: Going into Iowa maybe Scott Walker, maybe Rand Paul ...
WALLACE: It's such a ..
HAYES: Maybe Ted Cruz. Hey, she said Scott Walker first ...
WALLACE: And Hillary will look vulnerable just because she's been bad or because somebody else will have risen?
HAYES: I think there's so little enthusiasm for Hillary among the Democratic base as evidenced by her book launch, as evidenced by the responses to her, when she gives speeches. Somebody is going to come and some other candidate will have a moment, the question is that other candidate be viable.
WALLACE: And who will that be?
HAYES: I have no idea.
HAYES: So, there are limits to those prediction. Bob, your prediction on politics.
WOODWARD: Wolf, first of all, there's a theory of the case here, and that is that the Republicans are going to nominate somebody who's not a shouter, somebody who's soft, somebody who can govern. I think particularly on your poll it showed Governor Kasich of Ohio at 2.5 percent. My god, he won by 18 points in Ohio. Blue state, red state. So I think it's either Paul Ryan or Rand Paul who interestingly enough is not a shouter. I saw him in San Francisco at a tech conference a couple of months ago, and he charmed absolutely everyone. And so, you know, it's going to come from the Midwest. Finally going to have its moment in Republican politics.
WALLACE: And we should point out you're a Midwest guy, right?
PAGE: Yeah, me too. And you.
WALLACE: As am I.
WALLACE: All right. Economy. Let's move on to there. In fact, that we have to say, Jason, the economy ending the year is strong.
RILEY: I'm very bullish, Chris. Yes, five percent growth in the third quarter, consumer spending is up. I could see GDP around three percent in 2015. Unemployment could get as low as five percent. And I think the Dow could reach as high as 19,000.
WALLACE: Wow. Buy. Susan.
PAGE: I would say we should curb the shed and (INAUDIBLE) we are feeling about Russia's economic problems because the decline of the Russian economy, which is incredibly serious, is going to be a big problem for European economy, and that's going to have an effect on our growth next year as well.
WALLACE: So, you're saying that Jason's wrong.
PAGE: I'm saying I hope Jason is right, but I'm saying that this is a - while the economic news is generally good for the United States and we're doing well compared to the rest of the world, there is a cloud on the horizon.
HAYES: Yeah, I'm much more embarrassed than Jason. I think if we see continued growth, but I expect we'll see continued growth, but if we see that growth, it will come in fits and starts. It won't be a national - certainly, we are not going to be growing from five percent. Three percent sounds reasonable. I wouldn't be surprised if we come in below that. Unemployment may tick down. But I don't think this is likely to be a very good year for the economy.
WOODWARD: I forgot what I said. I mean, who knows?
WALLACE: What you said - you should have a note here. You said that Obama and Congress ...
WOODWARD: Yeah, I think tax reform is the giant issue and if there's ever any movement on that and you want to make sense out of our economy, fix the taxing system, which is all screwed up. And there is a moment for both Obama and the Republicans to do something.
WALLACE: OK. That was very interesting. I don't think I've ever had a prediction where the person forgets -- just write them down on a piece of paper.
WOODWARD: Well, you asked for our predictions two weeks ago.
WALLACE: Anyway, that hasn't changed. Sports.
RILEY: Johnny Manziel, the Cleveland Browns quarterback, will continue to disappoint his fans, even when we comes back from his injury, and continue to prove his skeptics correct. I think he's headed for a career closer to a Tim Tebow than Eli Manning.
WALLACE: Oh my gosh. And I must say this thing of, you know, show me the money ...
WALLACE: that every time they sack him, they just - the defensemen do that right in his face. Susan?
PAGE: Let's go Nats. I mean the Nats had a kind of a disappointing season this year.
WALLACE: To point out, that's a Washington baseball.
PAGE: The Washington Nationals. But they will make it to the World Series next year, first time since 1933. They will win the World Series, first time since 1924.
WALLACE: Finally, a bold prediction. I have to say also the Washington Wizards, our basketball team, very strong. And John Wall, a potential MVP.
PAGE: It's our year.
WALLACE: That's right. It's our year. And America is not going to be particularly happy about that. Steve.
HAYES: I'm not a Washington sports fan in general, but the Washington Capitals have been on a tear and I think are well positioned to make a run in the Stanley cup playoffs. That's not my prediction. My prediction is that -- the Wisconsin Badgers will win the NCAA men's basketball tournament. Why are you laughing? Because this is a serious prediction.
WALLACE: Have you mentioned the fact that you come from Wisconsin?
HAYES: I come from Wisconsin, look, I didn't pick the Packers to win the Super Bowl.
HAYES: But Badgers - I think I ranked sixth as of right now.
WALLACE: Does that show a lack of confidence in the Packers?
HAYES: They've had a rough couple of games against Buffalo and Tampa over the past couple of weeks. No, I think the Packers will do well and could make a super bowl run. I'm just very confident in the Badgers.
WALLACE: And I'm handing Bob - there's your prediction.
WOODWARD: No, this was, I remember, because I did some reporting and I actually put some thought into it, and that is Danny Snyder, the owner of the Redskins, who's had past success in business, will realize he's part of the problem and he's going to sell it. He's going to sell the Redskins and the bidding war is going to be between Apple and Google. They are the ones that have the money. They're the only ones who could afford it. I mean think of it, the Washington Apples?
WALLACE: Well, let me say, I think - there was absolutely no chance of that happening. I know Mr. Snyder a little bit. He ain't selling. All right. We've got less than two minutes left. Entertainment. Let's go, guys.
RILEY: Fewer and fewer people will go to the movies and it will have nothing to do with hackers threatening to blow up theaters. That's my prediction. The future's home entertainment systems, streaming systems like Amazon.com and Netflix, and I think Hollywood needs to change its distribution model.
PAGE: I was bold on sports and I will be bold on entertainment and say a Kardashian will post something outrageous on the Internet.
WALLACE: You really think that's a prediction? That's like saying the sun is going to come up in the east.
PAGE: I bet it turns out to be true.
WALLACE: All right. Steve.
HAYES: Some Hollywood starlet or movie star will overdose this year, and that will be tragic. That's not. I was just trying to be as bold as Susan.
WALLACE: That's really a buzz kill right here.
HAYES: My real prediction, the new "Star Wars" movie will break all sorts of box office records and it will happen regardless of whether the movie is good or bad.
WALLACE: And what's your prediction, will it be good or bad?
HAYES: I think the "Star Wars" junkies won't like it, and the rest of the movie consuming public will.
WALLACE: Are you a "Star Wars" junkie?
HAYES: No. I am not.
WALLACE: Have you seen any of them?
HAYES: I've seen four.
WALLACE: OK. There have been six.
HAYES: My kids are ready to get into "Star Wars."
WALLACE: And with 30 seconds left, Bob, your prediction.
WOODWARD: Something that happened this year, the hack on - are you going to show me my list -- on Sony, is that is a giant problem. Steve knows, you talk to people in the intelligence world, there's no privacy. I think next year is going to be the year of the hack, and there will be many, many more.
WALLACE: And interestingly enough, Hollywood already engaging in some self-censorship. They've already killed another North Korea movie or a movie about North Korea.
Thank you, panel. We're going to keep this tape in a safe place and see how you all did with your predictions. There's a threat, not a promise. We'll be right back with a rare interview with Laura Hillenbrand, the writer who brought us the true-life stories of "Unbroken" and "Seabiscuit," while battling her own serious illness.
WALLACE: The movie "Unbroken" opened Christmas day. It's the story of World War II hero Louis Zamperini, who survived 47 days on a raft, and then two years in a Japanese prison camp, but who never gave up. The woman who introduced most of us to Louis in a best-selling book has faced her own heroic struggle. James Rosen tells her story.
(BEGIN VIDEO CLIP)
LAURA HILLENBRAND, AUTHOR, "UNBROKEN": I think Louis has become an inspiration for a generation of people. He is a man who survived the seemingly unsurvivable.
JAMES ROSEN, FOX NEWS CORRESPONDENT: Laura Hillenbrand is the author of the best-selling true life stories, "Seabiscuit" and "Unbroken."
HILLENBRAND: And I think all of us can look at his life, can look at the things he got through, and then look back at our own troubles and think, you know, if he got through that, why can't I get through this?
ROSEN: But Hillenbrand has her own amazing story of courage and resilience.
HILLENBRAND: It used to be called chronic fatigue syndrome. It is a disease that is characterized by profound exhaustion, and a lot of other symptoms, difficulty concentrating, trouble with balance, trouble with most of the systems of the body.
ROSEN: Such an affliction would prevent many people from even attempting the arduous task of writing a book. But Hillenbrand's condition, if anything, strengthened her bond with her subject, Zamperini.
HILLENBRAND: Somebody gave him a copy of an article I wrote for "The New Yorker" called "The Sudden Illness," which was about my journey through illness, and he realized upon reading that, I think, that I understood what it was like to suffer profoundly. One day I got a little package from him in the mail. I didn't know it was coming. I opened it up. It was his Purple Heart, and he had written next to it, "after reading your story, A Sudden Illness, I think you deserve this more than I do."
ROSEN: Zamperini was moved after discovering how debilitating the disease can be.
HILLENBRAND: There was a period of time actually while I was working on "Unbroken" when I didn't leave my house for two years, because I was simply too weak to walk to the car. It's that serious.
ROSEN: So serious that she could scarcely make it out of bed and had to conduct her 75 interviews with Zamperini by telephone. In fact, author and subject never met until after "Unbroken" became a runaway bestseller. The big-screen version, directed by Angelina Jolie --
UNIDENTIFIED FEMALE: Let it just sink in.
ROSEN: -- opened this Christmas weekend. Sadly, Louis Zamperini passed away in July at the age of 97. Zamperini is gone, but Hillenbrand has ensured that his legacy of perseverance through adversity will endure.
UNIDENTIFIED MALE: Hi. How are you?
HILLENBRAND: People read his story. People listen to him speak. And they feel the breath of inspiration coming into them. They feel like they can get through their troubles.
ROSEN: It's a lesson of a spirit unbroken embedded in Laura Hillenbrand's own story as well. Chris?
WALLACE: James, thanks.
Finally, we want to thank you for watching us each week throughout this busy news year. As we say good-bye to 2014 and look ahead to 2015, here are the names of all the people who work so hard every week to put this program on the air. From all of us, happy new year, and we'll see you next "Fox News Sunday."
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