FOX NEWS SUNDAY

Newt Gingrich on national security challenges facing Trump; Jerry Falwell Jr. on evangelicals' role in election

This is a rush transcript from "Fox News Sunday," December 25, 2016. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST:  I’m Chris Wallace.  

President-elect Trump turns his focus to national security as a wave of terror attacks hits Europe.  

(BEGIN VIDEOTAPE)

PRESIDENT-ELECT DONALD TRUMP:  What’s going on is terrible.

(SIREN WAILING)

TRUMP:  It’s an attack on humanity, that’s what it is.  It’s an attack on humanity.  And it’s got to be stopped.  

WALLACE:  As the president-elect huddles with his national security team, we'll discuss his plan for taking on ISIS and protecting the homeland with one of his most outspoken supporters, former House Speaker Newt Gingrich.  

Then on this day of faith and family, a look at how evangelicals helped propel Mr. Trump to victory.  

TRUMP:  We won so big with evangelical Christians.  

WALLACE:  We'll speak with the president of Liberty University, Jerry Falwell Jr., one of Mr. Trump's top spiritual advisers, about the president-elect's appeal to evangelical voters.  

Plus, we'll ask our Sunday panel to look back on a tumultuous 2016.  And ahead to what we can expect from President Trump in 2017.  

And our power player of the week -- a mission to honor our nation's veterans.  It's the quarter century mark.  

UNIDENTIFIED MALE:  I think it's really, it's America.  It's what America needs to be.  

WALLACE:  All right now on "Fox News Sunday."

(END VIDEOTAPE)

WALLACE:  Hello again, and merry Christmas from Fox News in Washington.

Well, with terror attacks across Europe, Donald Trump was talking this week about how he intends to keep our country safe, including plans to limit who is allowed into the U.S.

Joining me now to discuss what the president-elect will do is former House Speaker Newt Gingrich.  

Mr. Speaker, Merry Christmas.  

NEWT GINGRICH, FORMER HOUSE SPEAKER:  Merry Christmas.  

WALLACE:  Before we get to the war on terror, President-elect Trump seems to have in some sense reset our nuclear policy this week.  After Vladimir Putin talked about building up Russia's nuclear arsenal, Mr. Trump tweeted this, "The United States must greatly strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes."

And when asked to clarify, Mr. Trump told a reporter, "Let it be an arms race.  We will outmatch them at every pass and outlast them all."

Question: are we back in an arms race with Russia?  

GINGRICH:  Well, let me point out, this is the same Donald Trump that liberals were terrified was going to sell out to Putin, who's now pivoted and said, look -- to quote General Mattis, "we can be your best friend, or we can be your worst enemy."  

You want to make threatening speeches, let me show what a threatening speech looks like.  And he does it in 140 characters.  

The truth is, the Russians have been rebuilding their nuclear capability.  We've allowed ours to weaken.  The Chinese have been rebuilding their nuclear capability.  The North Koreans are trying to build missiles to reach the continental United States.  The Iranians are trying to build a nuclear weapon.  

I think for the president -- the next president to say, you know, we’re going to have to systematically rebuild our nuclear capability is exactly right.  And if that -- he's also serving notice.  If he succeeds economically in making America great again and we get back to 5 percent or 6 percent real growth, we can out-produce everybody.  And I think what he's telling both the Chinese and the Russians is, you really want to be in this competition, it's going to be a competition, we have the potential to win it.  

WALLACE:  But a couple of questions there.  First of all, the manner in which he did it.  I mean, you say in 140 characters.  Is this really any way to conduct foreign policy?  

And second, it's one thing to talk about modernizing our nuclear arsenal.  He had said that during the campaign.  But expanding the arsenal, it flies in the face of a half century of arms control limiting, reducing our number of weapons.  

GINGRICH:  Right, which has failed.  We've had arms control, the Chinese have had an arms build-up.  We've had arms control, the North Koreans have developed nuclear weapons.  

WALLACE:  But the Russians had complied.

GINGRICH:  The Russians -- the Russians in the last few years have increased the capability of their systems dramatically.  They've introduced new missiles.  They've introduced new kinds of missiles that are designed to avoid our anti-ballistic missile systems.  There are a number of steps they're taking to be a war-fighting capability.  

And we have to -- we have to candidly overmatch that.  It's not something we want to do.  But if you want to be in the real world -- and on the tweeting thing, let me suggest if I might, we might as well get used to it.  

This is who he is.  It's how he's going to operate, whether it's brilliant or stupid.  He beat 16 rivals and he beat Hillary Clinton and he beat the elite media.  He ain't giving it up.  

WALLACE:  Do you think it's brilliant or stupid?  

GINGRICH:  I think it's brilliant, because -- because, first of all, he's able very quickly over and over again to set the agenda, at an almost no cost.  

WALLACE:  During the campaign, Mr. Trump talked about working with Putin in the war on terror.  Here's a clip --

(BEGIN VIDEO CLIP)

TRUMP:  We could found common ground with Russian in the fight against ISIS.  Wouldn't that be a good thing?  Wouldn't that be a good thing?

(APPLAUSE)

(END VIDEO CLIP)

WALLACE:  So, after you heard things like that and what he said during the campaign, does Mr. Trump view Putin as an ally or an adversary, and what happens when he see that's Russia's core strategic objectives -- whether it’s in the Middle East, or on nuclear weapons, or on the whole host of subjects like Ukraine -- are very different than our own?  

GINGRICH:  Well, I think right now, he sees Putin as potentially either or both.  There are places you compete.  There are places you cooperate.  

This has been true, by the way, all through the tension with Putin.  We've been using Russian rockets to put Americans up to the space station because NASA was so screwed up and so mismanaged, we don't have an American rocket right now.  So, the Russians allowed us to use their rockets to get into space at the same time we're yelling at each other.  

So, you can have a lot of things going on simultaneously.  I think he also recognizes the total failure of the Obama/Kerry/Clinton foreign strategy in this region.  You know have had a meeting in Moscow of Turkey, our NATO ally for over a half century, Iran, and Russia to decide to talk about Syria with zero American input.  That should really trouble us.  We’ve reached a dead end of weakness and we have got to rethink what we're doing.  

WALLACE:  We began this program talking about the wave of terror attacks this week in Europe, Switzerland, Turkey, obviously in Berlin.  Do you have any idea what President Trump's strategy is to fight ISIS both overseas and in the homeland?  He's been very vague about his plans.  

GINGRICH:  I don't think they have a strategy yet.  I think what they know, which is important, is that they’re going to need a strategy.  They have in General Flynn, and General Mattis, and General Kelly, three remarkably experienced war fighters.  I think they're going to be able to produce a very aggressive strategy.  They have a much better grip on reality than the Obama administration did.  

But this -- this is going to be a hard problem, and my suggestion is people should go back and look at how Lincoln dealt with southern sympathizers during the civil war, we passed the Sedition Act, for example, which changed our ability to control people who are advocating treason.  

So, I think we’re going to have to really think about what are the rules of the game and how do we succeed?  You know, we’ve found out again apparently in the last few days, that the Europeans are actually looking at this Tunisian before he attacked the Christmas market in Berlin.  I mean, again and again, we find people that we were sort of looking at, and then they go kill a bunch of folks.  

WALLACE:  Let's turn to the domestic side.  What do you think of the president-elect intervening with individual companies that are talking about moving, and this week intervening with federal contractors on planes, budget overruns and things like that?  I want to ask you about this -- here's the exchange I had with Mr. Trump recently.

(BEGIN VIDEO CLIP)

WALLACE:  What about the free markets, sir?  

TRUMP:  That is -- that’s not free market when they go out and they move and they sell back into our country.  

WALLACE:  But that's a free market.  They made a decision that makes --

TRUMP:  No, that's the dumb market, OK?  That's the dumb market.  

(END VIDEO CLIP)

WALLACE:  Should the president of the United States be telling private businesses what to do?  

GINGRICH:  The president of the United States should do everything he can to keep companies in the U.S., and the president of the United States should be very tough on large companies who have been rigging the entire process of acquisition to their advantage and to the disadvantage of the American people.  Trump is going to be more like our governor than our traditional sense of a president.  Governors intervene, they're aggressive, they’re in your face.  

I think the F-35 program has been a disgrace.  I think the acquisition process at the Pentagon has to be totally redone.  And I think that serving notice that we are not trapped by large contractors with big armies of lobbyists is going to shake up Washington about as much as any single thing you could do.  

WALLACE:  Let's talk about the current president, President Obama.  This week, he banned oil exploration on millions of acres in the Arctic and the Atlantic.  There's a lot of talk that he's about to transfer as many as 18 detainees from Guantanamo to other countries.  

But this president, who has made heavy use of executive action, had this advice to Donald Trump.  Listen.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA:  My suggestion to the president-elect is, you know, going through the legislative process is always better because in part it's harder to undo.  

(END VIDEO CLIP)

WALLACE:  What's going on here with President Obama?  

GINGRICH:  I think President Obama is beginning to figure out that his legacy is like one of those dolls that as the air comes out of it, it shrinks and shrinks and shrinks.

And at 60 percent or 70 percent of his executive orders, almost all of which will be repudiated by Trump.  The things he's done this week can be turned around.  It takes a little bit of legalized -- I mean, the smart lawyers, but they'll turn it around.  

And he's in this desperate frenzy.  What he's actually doing is he’s setting up a series of things to distract Trump which will make his liberal allies feel good about Democrats and hate Republicans when Trump rolls them all back.  

But I think, you know, he's right, the movie "Lincoln" has an extraordinary moment where Lincoln says, look, we have to have a constitutional amendment ending slavery because we have to lock it into the Constitution or it could be repealed.  I think had Obama understood the centrality of that to the American system, he would have passed a very different Obamacare in a bipartisan basis.  He would have done many other things.  He would have been a more limited president, but his legacy would have lasted far longer.  

WALLACE:  Speaking of presidents and legacies, how transformative a president do you think Donald Trump will be, and how quickly will we see when that's the case or not?  

GINGRICH:  He's recruited a cabinet of winners.  I mean, the number one characteristic of that entire cabinet, these are very successful, powerful people who like winning and are prepared to work very hard to win.  They will face a crisis probably around March when they realize how big the swamp is and how many alligators there are.  And they will then reach a crisis --

WALLACE:  Now, I have to ask because you said, well, I’m not sure --

GINGRICH:  I was wrong.  I was totally wrong.  I blew it.  I talked to him the other day.  He said -- newt, come on.  I had to go on and do a Facebook live and say I made a boo-boo, which I then got attacked for people saying I made a boo-boo, but I did.  

He clearly -- he said flatly and tweeted again, he likes the term, he's happy to use the term.  My point's this, everybody who comes into the city underestimates how really hard to change the city is.  I say this as a former speaker of the House who did a fair amount of change.  

WALLACE:  Right.  

GINGRICH:  But, boy -- I mean, it was all uphill.  It was all hard.  In the end, it wore us out.  

They'll reach a crisis point where they look in a room at each other, they're all winners, and they’re going to say, either, we've got to be more reasonable and get along with the city or we have to become even more unreasonable and break the power structure that's opposing us.  My hunch is they’ll pick the latter.  But that will be the decisive moment of his domestic presidency, which way do they go.  If they decide collectively that they want to break the existing power structure, they have the resources to do it, and it will be then the kind of presidency you love covering.

(LAUGHTER)

WALLACE:  I’d say -- I have to say, I feel like a cub reporter already.  I’ve never seen in before.  

Finally, got about a minute left, I want to talk about you.  You say you will be the senior strategic planner for this administration.  But when reporters have followed up, transition officials say there's no such formal or informal role.  So, what will you be doing?  

GINGRICH:  I'll be planning and trying to focus on the things I think are strategically the most important for the administration.  

WALLACE:  And has President Trump, President-elect Trump given you that charter --

GINGRICH:  We've talked about it several times.  I suspect I'll get a letter from him once he's president.  But I think my access is fairly overwhelming.  And my ability to reach across the House and Senate and governors and state legislators -- I mean, we have a whole system here.  That's the nature of the American system.  

And you know, my first big step toward this will be a series of speeches at Heritage on Trumpism and what is Trumpism and probably a book in the late spring.  But that's because there are 4,000 federal employees who are brand new, eager people.

They need to understand how different Trump is and that is not just a personality quirk.  It is a way of thinking and a way of doing business.  And it's learnable, but it is very different from what we've seen in the past.  

WALLACE:  Speaker Gingrich, thank you.  Thank you for your time and thank you for joining us on Christmas Day.  

GINGRICH:  And have a happy New Year.  

WALLACE:  And happy New Year to you, as well.  

Up next, we'll bring in our Sunday group to discuss President-elect Trump's plans and the team he is putting together to implement them.  

Plus, what would you like to ask the panel about President Obama's push to protect some key legacy items during his final days in office?  Just go to Facebook or Twitter @FoxNewsSunday.  And we may use your question on the air.  

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP:  You’ve known my plans.  All along and I’ve been proven to be right.  One hundred percent correct.  What's happening is disgraceful.  

(END VIDEO CLIP)

WALLACE:  President-elect Trump saying he'll stand by his plan for extreme vetting of people trying to come into the U.S. from countries with a history of terrorism.  That after a series of attacks this week in Europe.  

And it’s time now for our Sunday group.  Syndicated columnist George Will, Gerald Seib, The Wall Street Journal's Washington bureau chief, Julie Pace, who covers the White House and the transition for The Associated Press, and the co-founder of the web magazine "The Federalist," Ben Domenech.  

Ben, let's start with the president-elect's comments late this week about let's have a new arms race with Russia, flying in the face of a half century of arms control and doing it as Newt Gingrich said in 140 characters.  Your thoughts about the policy and the way of conducting it?

BEN DOMENECH, THE FEDERALIST:  Well, I think that, you know, certainly, this is one of the early days of experiencing what foreign policy discussions are going to be like under the Trump presidency, which I think are going to be very different than they have in the past under a lot of other presidents.  

I think that one of the things we're going to have to get used to is that the idea when Donald Trump tweets something, it's going to be followed up with explanations of what he meant within those 140 characters by his supporters.  

I think in this case, when it comes to modernizing our nuclear -- our nuclear program and understanding our position vis-a-vis Russia, this does send a message that things are not going to be necessarily all fine and dandy when it comes to our relationship with Putin or with other world leaders.  It I think the more important and interesting part of the discussion is another thing that you brought up in your conversation with the former speaker, which is what is our policy going to be as it relates to these continued terror attacks that we've seen play out over the past week?

We have a situation now in Europe where you had an individual who was on all of the necessary watch lists, who was tagged as being someone who is dangerous, who had dealt with, you know, a car robbery in Tunisia, a deportation issue when it came to -- when it came to Italy, a terror probe when it came to Germany.  These are all situations that should have had this individual much higher on the appreciation of our European allies, as someone who resembled a threat.  

I think the more interesting and challenging question going forward is what Trump's policy is going to be toward situations like that.  Not just in Europe but here, as well.  

WALLACE:  Jerry, on both nuclear arms and the war on terror, when you see who Trump has been saying, when you see the team he's putting together on national security, do you see the outlines of a strategy, of a foreign policy?  

GERALD SEIB, THE WALL STREET JOURNAL:  Well, first of all, I think you have to view what president-elect Trump as signal sending, not policymaking.  I mean, signal sending and positioning, and it’s not really literal policy.  On the nuclear question, for example, totally lost in the conversation is the fact there's already underway a trillion dollar 30-year modernization program that the Republicans in Congress and President Obama agreed to a couple of years ago.

So, this is happening.  I think what he's saying is not "I’m creating some new policy on nuclear arms, but I’m sending a signal to the Chinese, to the Russians, to the Iranians, to the North Koreans, we’re going to fall behind in any nuclear arms race if there’s going to be one."

So, I think people tend -- you know, there was a rap in the campaign, don't take him too literally.  I not there's still an admonition out there, don't take him too literally.  

WALLACE: Do you agree with that, George?  Don't take him too literally?  

GEORGE WILL, SYNDICATED COLUMNIST:  It's hard to know what he's said, so far, because he said he's going to expand and improve.  We all know that nuclear weapons decay.  They age and have to be brought up to date again.  So, as Jerry says, this is already baked in the policy, the $108 billion to be --

WALLACE:  But not the expansion part.  The idea of modernization is.  But when he talks about expansion and then he says, you know, we're ready for an arms race, that’s different than what we’ve learned.  

WILL:  That is very different.  And in fact, that's what’s alarming.  It could be -- things change.  Forty years ago we had this policy.  Maybe now with new nuclear actors, it ought to be changed.  

But what's a little bit disconcerting is what Mr. Gingrich considers a virtue, which is that it's done in 140 characters.  If we're going to change national policy on the most awesome and frightening aspect of national existence, these kinds of weapons, then it would be nice to see at issue after deliberation with people who thought about this for a long time, rather than as what seems to have been the response to something a few hours earlier said by Mr. Putin.  

WALLACE:  George, I want to continue with you about President Obama and his moves this week to ban oil drilling on millions of acres in the Arctic and the Atlantic and very serious talk about transferring as many as 18 prisoners out of Guantanamo.  We asked you for questions for the panel and here's what we got from Monica Neis on Facebook.

"What is Obama's thinking -- Obama's thinking after the American people clearly rejected his failed policies by continuing with his agenda in his last days in office?"

George, how do you answer Monica?  

WILL:  Well, first about Gitmo, that must be one of his principal frustrations because this is a limit of presidential power where presidential power is presumptively at its greatest, connecting to national security.  There were 780 people in Gitmo, I think, by George W. Bush.  It’s now down to 59.  This would reduce it to 42.  It’s not close, but it’s close enough for government work.

Drilling, the president likes and his party likes to remove fossil fuels from the hand of consumers, and they'd like to expand government's control over things such as the outer continental shelf.  So, it all fits.  

Monica's question however is, why is he still doing this?  Short answer, he's still president, even though Mr. Trump seems to think that at this point, because he's -- I think he's exercising power, not just signaling.  

But first of all, the progressive view of the presidency is that what is not explicitly forbidden by the Constitution is permitted.  That's from Teddy Roosevelt to Woodrow Wilson on.  They believed that.  

And Monica says, well, what about the consent that was sort of withdrawn by the election?  Good progressives don't take consent that seriously because progressivism is ruled by experts who are needed because the people consenting to the political class don't quite know what they're doing without the guidance of experts.  

WALLACE:  I got to say, Monica, you got a heck of an answer that from George Will.  That was an extended answer.  

Julie, what is the mood in the Obama administration at this point?  How worried are they that -- to use a phrase I used with Donald Trump a couple of weeks ago -- he's going to take a wrecking ball to the Obama legacy?  And to what degree do they think with these steps at the last minute they can lock in some of that legacy?  

JULIE PACE, THE ASSOCIATED PRESS:  Well, they're incredibly worried, which is why they're taking some of these steps right now.  And with most of the things that you're seeing the president do over the last few weeks, he can't lock things in permanently.  But he can make them harder for President Trump to remove.  And I think that’s what you’re seeing.

Create enough obstacles that it becomes just too difficult to focus on overturning the drilling ordinances and push him in a different direction.  

But on some of these things, Gitmo I think is an interesting example.  Basically what he's trying to do is say, there are so few people that are going to be left here, that the costs will be so high that Republicans and President Trump who's talked about waste and government spending may actually decide to close it.  

He's -- he's looking for ways to make his legacy stand up even if President Trump isn't going to say, yes, I’m keeping Obama's policies.  

WALLACE:  I just want to pick up on this question of the mood.  I mean, is the sense, whether it's the president, or his top aides, is there a feeling there that the barbarians are at the gate and about to take over?  

PACE:  I think there’s a division between some people in the staff and Obama himself and may be some of his more senior advisers.  Certainly, I think that they’re still -- at the staff level, still coming to grips with this idea that there was such a rejection of the president's legacy and that so many things they've been working on are probably going to be at stake.  

The president himself is taking a bit of a more measured view of this.  He's in conversation with President-elect Trump a lot, trying to explain the theories behind some of his actions.  And I think that he hopes -- we don't know if this will hold -- but he hopes that when Trump actually gets into office --

WALLACE:  He keeps saying that he’s going to have a transformation.  

PACE:  And I don't know if transformation is the right word, but certainly, you would imagine that when you actually are in the Oval Office and all of these decisions really are on your desk, that there's more of a sense of responsibility that comes with the office.

WALLACE:  Ben, 30 seconds?  

DOMENECH:  John Adams said that you would never congratulate a friend on winning the office of the presidency.  I think that could be playing into this a bit.  But, really, I think that what's going on the left now is an archetype of what happened to Ivanka Trump this past week, someone yelling at her on a plane that your father is ruing the country.  

He hasn't even taken office yet.  He hasn't done anything yet.  I think the left is still dealing with whiplash from this election.  And a lot of the people who are under President Obama haven't woken up yet.  

WALLACE:  Let me incidentally say, that was the height of the bad manners and I’m glad those guys got kicked off the plane.  You know what?  Somebody's traveling on a plane, leave them alone.  

DOMENECH:  Exactly.

WALLACE:  All right.  We have to take a break here.  We’ll see you a little later, panel.  

But up next, 80 percent of white evangelicals voted for Donald Trump in this election.  We'll talk with the president of the largest Christian university in the world, Jerry Falwell Jr., about why he thinks Mr. Trump will be better for social conservatives than Ronald Reagan.   

(COMMERCIAL BREAK)

WALLACE:  A look outside the Beltway, at Donald Trump’s Mar-a-Lago club in Palm Beach, Florida, where the president-elect is spending the holidays with his family.

Our next guest, Jerry Falwell Jr., is president of Liberty University, and a member of Mr. Trump's evangelical advisory board.

Mr. Falwell, Merry Christmas, and welcome to "Fox News Sunday."

JERRY FALWELL JR., PRESIDENT, LIBERTY UNIVERSITY: Merry Christmas. Merry Christmas to you, Chris. Thank you.

WALLACE:  Last January, Donald Trump spoke at your Liberty University. Here's a clip.

(BEGIN VIDEO CLIP)

TRUMP: We're going to protect Christianity. And I can say that. I don't have to be politically correct or --

(END VIDEO CLIP)

WALLACE:  Now, you were one of the first prominent evangelicals to endorse him. And for the rest of the campaign, other leaders of your faith, as well as a lot of students, or some students, I should say, at Liberty University criticized you, especially after the release of that "Access Hollywood" tape. But you never wavered. How come?

FALWELL: No. I just saw in Mr. Trump someone who really loved the American people, who was for the working man, the common man. I saw that early on. He spoke at Liberty in 2012, as well. So I've gotten to know him over the years. And I just really believed it -- it was sort of a gamble because I didn't know where he'd come down on all the issues, but I -- because I believed he was a good man, I believed he would come down on the right side of the issues and he's done that in the last year. And I've been proud of him and I -- I just think it’s -- it was a -- like I said, it was a big risk for me, but so much was at stake, I couldn't afford to stay silent.

WALLACE:  Let's look at the exit polls from election night a little over a month ago. As you can see there, Donald Trump got a higher percentage of the white evangelical vote than Mitt Romney did four years ago or McCain before him or even George W. Bush in 2004. How do you explain that?

FALWELL: Well, he made -- he made it very clear who his Supreme Court picks would be if he was elected. I think that was a big factor. Some of the social conservatives on the platform committee, the Republican National Committee Convention told me that -- that not since 2004 has any Republican candidate allowed them to set the platform with that interference, but Donald Trump was the first one who had done that in a long time. That was another good signal.

And then the other -- the other factors -- you know, even added to the platform, the repeal of the Johnson Amendment, which has been used by government to silence conservatives and pastors and -- and conservative universities, like the one I’m -- non-profit universities, like the one that I had. And so all those things, he just -- they just resounded with evangelicals and with Christians. And -- and my wife's noticed since she's done her Christmas shopping this year, that more of the retailers are saying "merry Christmas." There's a new hope, an optimism. There's a -- there’s a good spirit in America and I think that's -- I think that's coming from his lead.

WALLACE:  I think you would agree that -- that Mr. Trump is no student of theology. I want to play a clip for you of an interview he did last year with the Christian Broadcasting Network. Here it is.

(BEGIN VIDEO CLIP)

TRUMP: God is the ultimate. I mean, God created this. And, you know, here's the Pacific Ocean, right behind us. So, nobody, no thing, no, there's nothing like God.

(END VIDEO CLIP)

WALLACE:  But you say that Mr. Trump, you think, probably, your word, will be a better for social conservative as president than Ronald Reagan was. Now there's a -- there's a contrary view, I don't have to tell you, that he doesn't really care about this. That he said it because that would help him get elected. But he cares about issues like trade and national security more than he does about issues like abortion or gay rights, which he was a late convert to. What's your feel about that?

FALWELL: Well, I mean, like I said, he -- he -- he said -- he told us what Supreme Court justices he would -- he would appoint. That's about all a president can do on the abortions issue is to appoint the right justices. And he -- you know, he never pretended to be a theologian. And I said through the -- through the campaign that we're not electing a pastor in chief. We need to -- it’s just like when you have a sick child, you look for the best doctor for that child. You don't look for the doctor that shares your faith or your theology.

And that's what I think we have to do with government. We have to find the -- the -- the candidate and -- who is most likely to support all the values that we hold dear. And, you know, evangelicals aren't that much different than the general population. They’re -- they’re concerned about all the issues you just mentioned, trade, immigration, terrorism, all the things that the general population was interested in. And so it -- it's -- it’s not like evangelicals only vote on one or two issues. They vote on all the issues, just like --

WALLACE:  Let me -- let me -- let me just pick up on that, if I may. Excuse me, Mr. Falwell.

FALWELL: Yes.

WALLACE:  Because you've gotten some controversy with other evangelical leaders about supporting the nomination of Rex Tillerson to be the secretary of state, even though as a board member of the Boy Scouts he succeeded in lifting the ban on gay scouts. Why doesn't that concern you?

FALWELL: Well, I've said that watching Trump assemble his cabinet has been the most exciting thing because he's brought in the captains of industry, he's brought in the leaders from every walk of life. It reminds me of the -- the N -- the -- the basketball dream team from the 1992 Barcelona Olympics when America was finally allowed to let professional athletes play. They beat every team by an average of 44 points. And that's what I see. I -- I think what Trump is doing with his cabinet is assembling a dream team. I think Scott Pruitt is -- I'm especially excited about him -- his appointment at the head of EPA. But --

WALLACE:  But -- but if I -- but if I may, before we run out --

FALWELL: But -- but -- but -- but actually --

WALLACE:  Well, especially about Tillerson?

FALWELL: But back -- but back to Tillerson. But back to Tillerson, his position on social issues I don't believe are relevant in the -- in the position of secretary of state. I don't think he'll ever have to weigh in on any of those issues. I think he's going to be out cutting deals like he did as the CEO of a global enterprise with Exxon. And I think that's what we need in that position. I don't think his position on social issues will ever make a difference as secretary of state.

WALLACE:  The North Carolina legislature just failed to repeal the law that's known as House Bill 2, which would ban people from going into bathrooms unless their gender on their birth certificate matches the bathroom they're in. Is that something you think that states should get involved in?

FALWELL: Well, I think each state, of course, is going to make their own decision on that. But if you follow that -- that logic to its -- to its conclusion, does that mean that men will be able to play on women's basketball teams? I mean you -- you have to draw a line somewhere. And I think -- I think the concern of the North Carolina legislature is that men, women, and children are -- I mean, sorry, that women and children are protected from men coming into women's shower rooms. And -- and it makes sense. I mean, I -- I haven't studied it closely exactly, what the bill says, but it's -- it just seems like common sense to me.

WALLACE:  Let's talk about your school, Liberty, which, as we mentioned earlier, is the largest Christian university in the world. And I want to put up some numbers. Since you succeeded your father in 2007, enrollment has increased from 9,600 to 15,000 residential students and from 27,000 to 98,000 online.

FALWELL: Correct.

WALLACE:  Mr. Falwell, why do you think there is such a great and apparently growing demand for a Christian education?

FALWELL: Because it's so rare in -- in higher education. Mayor Bloomberg, in his -- in his commencement speech at Harvard a couple of years ago chastised the Ivy League because 96 percent of their faculty and staff had donated to the Obama administration. And his point was, how can we have academic freedom and political correctness -- that’s my paraphrase -- side by side. The two cannot co-exist. And when you have everybody in -- in major universities thinking the same way and conservatives are ridiculed for -- when they speak up, I don't think that's academic freedom.

And so I think the reason Liberty has prospered so much is because it's an alternative. It's something where free expressions of ideas is allowed. Where -- where academic freedom is promoted. And I think it's -- it's just the fact -- "The Chronicle of Higher Education" said last year that Liberty's strength is in the fact that it doesn't try to be like other universities. And they said that our business model is probably the future of higher education in America. So we -- we've been able to use that business model to make Liberty one of the most prosperous universities in the country, one of the five largest universities. And we're one of only about 70 that's rated AA by Standard and Poor's and Moody's. But it's only because we don't try to be like everybody else.

WALLACE:  Finally -- and we've got less than a minute left, sir -- you’re not a pastor --

FALWELL: Right.

WALLACE:  But as the president of Liberty University , I wonder about your thoughts about Christmas on this Christmas day for your students and for our audience.

FALWELL: Well, we have to remember, Christmas -- the reason we celebrate it is because it -- it’s to recognize that God's greatest gift to mankind through his son Jesus Christ that provides the hope for redemption, forgiveness, eternal life. And I think that we can never forget Jesus and the great commandment taught that we're supposed to love our neighbors as ourselves. I think if we all live by that -- by that commandment, that we would see a totally different world.

And, you know, he always -- he -- he taught personal charity. That means, he didn't say go vote for somebody who's going to take money from your neighbor and give it to the poor. He said, you help the poor. So it doesn't absolve us to vote for somebody who's going to promote welfare, to -- you know, it's our job to help the poor. And I think that's what Christmas is all about. And I think the electors the other day gave America a great Christmas present when they made it official that Donald Trump will be president in January. And it’s just a -- there’s a new spirit of the hope and optimism in the country like I've never seen, even among people who didn't support Trump. And I think that's encouraging.

WALLACE:  Mr. Falwell, thank you. Thanks for your time. And merry Christmas to you and your family, sir.

FALWELL: Thank you, Chris. Merry Christmas to you.

WALLACE:  Thank you.

When we return, we'll bring back our panel to explain what happened this year and what to look for in 2017.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP: Every single American will have the opportunity to realize his or her fullest potential. The forgotten men and women of our country will be forgotten no longer.

(END VIDEO CLIP)

WALLACE:  President-elect Trump promising in his victory speech to renew the American dream.

And we're back now with the panel.

Well, George, I think it's fair to say, you’ve made it very clear during the course of this year how you felt about Donald Trump. But putting that aside, how do you explain his victory? Why did he get elected president?

WILL: He got elected in part because he had a weak and untalented opponent who made tactical mistakes regarding some crucial states, Wisconsin, Michigan, Pennsylvania. And she promised continuity at a time when the country, by the right track/wrong track figures, said the country’s on the wrong track, we want change, not continuity.

All that said, he ran a brilliant campaign. If it was antecedent was a pronoun campaign. If you’d ask, you’d say, what do you like about Donald Trump, they’d say, he tells "it" like it is. And you could fill in the antecedent to the pronoun "it." The transition has been a kind of shrug since then saying, oh, never mind. Not going to appoint a special prosecutor to lock her up. We're not going to deport 200,000 people a month to get 11 million people out of the country in two years. It doesn't matter because what he -- he brilliantly understood was the power of social media.

One of the consequences of his victory will be, I think, that we'll hear very little from now on about campaign finance regulations and the power of money in politics. He was badly outspent because he understood you could go around that on the new platforms and make 30-second television spots marginally important.

WALLACE:  Julie, why did Donald Trump win and how do you explain it? And -- and -- and less so of why did Hillary Clinton lose?

PACE: I think there were a couple of reasons. I think, one, he did see that there was anxiety in the country on a bunch of different fronts, economic anxiety, anxiety over immigration, anxiety over terror threats that feel different than what we maybe have become accustomed to. And I think that he was authentic. You never felt with Donald Trump like he was speaking based on what he saw in internal polling or based on what he saw in focus groups. And he understood that for a lot of Americans, Democrats and Republicans, they look at Washington and don't really believe anything that they hear. And he was an antidote to that. And I think that that resonated with a lot of people, regardless of the actual words that were coming out of his mouth. The mere fact that he was willing to challenge Democrats and his own party I think was really appealing.

WALLACE:  Let's turn -- we've been talking about 2016, let's turn to 2017.

Jerry, you and I are old enough to remember when Ronald Reagan came to this town and Clark Clifford (ph), a big Democratic lawyer and insider, famously dismissed him as an amiable dunce. I have to tell you that I've been to some Christmas parties the last couple of weeks talking to politicians of both parties, talking to some of our colleagues in the media who are dismissing Trump the same way and talking about what a disaster he's going to be as president. I'm sure you've had that same experience. What do you think are the chances that they are going to be as wrong as Clark Clifford was about Ronald Reagan?

SEIB: Well, you know, I lived through the Reagan experience we -- with George. We all did. And I think the -- there was an evolution in the Reagan presidency, but there was also an evolution in Reagan the president. But I think the key was that Ronald Reagan was smart enough to surround himself with people who made up for whatever deficiencies he had. And he had a vision, he had an ideology.

Donald Trump doesn't have an ideology or a vision. He's transactional. It will be different. Now, is that going to be more effective or less effective? I don't know. But I think the parallel to Reaganism and the Reagan presidency falls down there. There's not some ideological north star for the Trump presidency. There's going to be getting business done, making transactions.

WALLACE:  But -- but there was an underestimating of Ronald Reagan as a person and a leader, and I wonder if there isn't the same about Donald Trump.

SEIB: Well, I mean, we've been through a year of underestimating Donald Trump, right? So there's ample reason to think that will continue. You know what, Donald Trump really understood that all the other campaigns did not really understand, wasn't that there was an idea -- there was a desire for change or that there was a desire to bring in an outsider. Other campaigns, other candidates got that. What he understood was the anger in the country and he tapped into that and then he stoked it. Now, can you continue to do that as president? Is that a safe thing to do as president? That, to me, is a big question we'll confront in 2017 and 2018 and beyond.

DOMENECH: Chris, the biggest loser in 2016 was Washington, D.C., and it's not even close. The norms and assumptions that they have about politics, about the way that it's supposed to work were entirely rejected by a Jacksonian revolt of the American people. A people who have become frustrated with what they felt like was a city that was happy to play to their interest during campaign years and then ignore them once they actually got into office. I think what we saw this year was Donald Trump tap into the anxieties of an American people who are very much aware that we are at a period in time now where labor force participation is at near 40-year lows. You have 95 million adult Americans who were out of the work force. You have a rise in racial tension. You have a rise in economic anxiety. You have a rise in disgust and distrust for our institutions. And they wanted someone who represented a dramatic change. They've sent their message to Washington. We're now going to see whether Donald Trump is actually able to deliver on (INAUDIBLE) --

WALLACE:  Without -- but -- but, I was going to ask, that's a good way to campaign, but how do you transform that into accomplishments as president?

DOMENECH: I think -- I think that we are going to see his approach as it -- as it plays out over the coming months and we’re going to have to assess it as it is. I think we've made the mistake all along, over the course of this year, of judging a lot of the decisions that he’s made too early, where we should have been more humble, I think, in looking in -- looking at the bigger picture --

WALLACE:  That's in very short supply in Washington, you know that, humility.

DOMENECH: Yes. I think -- I think humility. I think we should have humility about this. The reality is, he’s naming a lot of people who have achieved a lot of great things in terms of the industry or have the experience within the military or elsewhere. We're going to have to assess when these kind of change agents, just as we saw with new people coming, and Andrew Jackson’s revolt in the past into Washington, when they're able to come into these institutions and change them, or when they are changed by them.

SEIB: But I do think there's going to be some disappointment among those people who took some of the things George referred to as said in the campaign literally. They're not necessarily going to happen. And there will be a period somewhere down the line where there’s real disappointment that, oh, that didn't happen. You said it was going to happen. It didn’t happen that way, because that’s a little unrealistic.

WALLACE:  George is probably the only person here other than myself who covered Andrew Jackson. Your -- your -- your thoughts about that parallel?

WILL: Well, I think that -- it's fair that there is a Jacksonian streak in this country, "born fighting," as the title of Jim Webb’s book about them. They’re truculent people and they’re truculence was heard this year. Made it (INAUDIBLE).

Can I just say one thing, I think ten years from now people may look back and say, the big loser this year was not Washington, it was Brussels. That the most important vote taken this year was not November 8th but June 23rd when the British left the European Union and began the unraveling of that project which I hardly --

WALLACE:  And with the terrible attack this week in -- in Berlin and what that says about migrants -- migrants and migrant policy and the open door, that's going to only continue, isn't it?

WILL: It is. But I hasten to add that I hardly supported Brexit. But this was not a total loss of a year.

WALLACE:  Thank you, panel. See you next Sunday.

Up next, our "Power Player of the Week." Honoring America's veterans this Christmas season.

Plus, a holiday visit from the Wallace grandkids. You won't want to miss it.

(COMMERCIAL BREAK)

WALLACE:  It's a Christmas tradition here to share the story about 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 is our "Power Player of the Week."

(BEGIN VIDEOTAPE)

MORRILL WORCESTER, 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 (voice-over): 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. 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 -- and a family and a -- and a story. They're not just tombstones. I mean those are all people.

WALLACE:  Thirty 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 were real fresh and great, 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 -- and people e-mailed it to each other and -- and it -- and it really went around the world.

UNIDENTIFIED MALE: The one 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 calls the world's longest veterans parade, a 750-mile journey that at some points 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 wreath-laying 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 -- 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 -- I work. And then I know my family's going to continue. So it will be here for a long time.

(END VIDEOTAPE)

WALLACE:  This is the 25th year Morrill Worcester has taken on his Christmas wreath project. This month more than 800,000 volunteers helped place more than 1.2 million wreaths on veterans' graves in all 50 states and overseas. And after going to Arlington last week, Morrill dropped by to discuss why this project is still growing after a quarter century.

(BEGIN VIDEO CLIP)

WORCESTER: I think it's really -- it’s America. It's -- it’s what America needs to be. We -- you know, there's a lot of people that have roots in the military, that have veterans that have served and so on, and they just want to, you know, spend a little time remembering those people and being at the cemeteries all over the country and just saying their names out loud, keeping them alive.

WALLACE:  When I first asked you this, we were both a bit younger -- how long are you going to keep at it?

WORCESTER: Well, as long as the good Lord will let me. I'll do it for as long as I possibly can. And then my family's behind me, and they're going to keep right on going. This will never stop. It's what the country's all about. I mean, you know, we have to know where we've been and what we've been given in order to go forward in a -- in a meaningful way. And what's been given to us -- so that we can have what we have and all down through the history of the country.

(END VIDEO CLIP)

WALLACE:  And now another Christmas tradition. Here's a look from the last two years at all five of the Wallace grandkids. And now here they are again. And they keep growing. Livy (ph) and Caroline and Sabine (ph) and James and William. From our family to yours, have a very merry Christmas, and we'll see you --

UNIDENTIFIED MALE: Next "Fox News Sunday."

WALLACE:  Very well done. All right, guys. Three, two, one --

ALL: Merry Christmas.

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