Transcript: Sens. Corzine, Graham on Homeland Security

The following is a transcribed excerpt from 'FOX News Sunday,' December 12, 2004.

CHRIS WALLACE, FOX NEWS: I'm Chris Wallace. The White House starts all over again looking for a new secretary of homeland security — next on "Fox News Sunday."

Soldiers call out the defense secretary about the armor they need to fight in Iraq. Is America doing everything possible to protect our GIs? We'll ask two key senators: Republican Lindsey Graham and Democrat Jon Corzine.

He's part of the vanishing center in Congress, one of the moderates who got things done. What has retiring Senator John Breaux learned in his years on Capitol Hill? We'll find out.

Plus, it's not called the third rail of American politics for nothing. Can Social Security be fixed? We'll ask our panel: Brit Hume, Ceci Connolly, Bill Kristol and Juan Williams.

And our "Power Player of the Week" is an expert on music and life.

All right now on "Fox News Sunday."

And good morning again from Fox News in Washington. Here's a quick check of the latest headlines.

President Bush is expected to move quickly to find a replacement for Bernard Kerik as secretary of homeland security. The former New York City police commissioner withdrew his nomination Friday, saying he had employed an illegal immigrant.

The U.S. has intercepted dozens of phone calls involved Mohamed ElBaradei, head of the International Atomic Energy Agency. According to The Washington Post, key officials in the Bush administration think ElBaradei has been too soft on Iran and too critical of U.S. policy in Iraq and are looking for evidence to force him out.

And in Iraq, terrorists continued to disrupt preparations for January elections. Using rocket-propelled grenades and a suicide car attack, they are targeting Iraqis who cooperate with the U.S.

Well, there's been a lot of news in Washington this week. Bernard Kerik in, then out, as head of homeland security. Defense Secretary Rumsfeld took some pointed questions from soldiers about the lack of armored protection. And President Bush started the drive for one of his top goals, Social Security reform.

For answers on all these, we turn to Senator Lindsey Graham, a member of the Armed Services Committee, who joins us from South Carolina, and Senator Jon Corzine, a member of the Foreign Relations Committee, who's in our Fox newsroom in New York.

And, Senators, welcome. Thanks for coming in today.

U.S. SENATOR JON CORZINE, D-NJ: Good to be here.

U.S. SENATOR LINDSEY GRAHAM, R-SC: Thank you.

WALLACE: Let's start with the president naming Bernard Kerik as head of homeland security. How do you explain a White House nomination that had so many problems?

Senator Graham, why don't you start?

GRAHAM: Well, it's happened in the past. It happened this time. I don't know why he wasn't better vetted. Obviously his resume is good. He has a lot of experience from 9/11. He's been the top cop in New York. But these problems have surfaced. I don't know why they weren't known before. But just press on and move forward.

WALLACE: Senator Graham, any suggestions for a replacement?

GRAHAM: I heard on Fox News this morning about several names that the president was entertaining. They all seem to be good. Senator Lieberman, if he's interested, would be a terrific pick, but there are a lot of good people out there.

WALLACE: And, Senator Corzine, your answer to the same question: Why all the problems, and any ideas about a replacement?

CORZINE: Well, first of all, those of us from the metropolitan New York region and New Jersey in particular — I have to be self- interested here a bit — believe we have to have homeland security focused on threat-based and risk-based allocations of funding. And that hasn't occurred. We were very optimistic Mr. Kerik would bring that perspective to bear, so I find it unfortunate.

There is a real vetting problem, that you can't have the person in charge of immigration having problems with immigration or his employees, and that's unfortunate.

I think we need to move forward with a strong homeland security director. I hope that Joe Lieberman concept flies.

WALLACE: Gentlemen, let's turn to the controversy this week over protection for our forces in Iraq and the whole Middle East theater.

After that National Guardsman asked Secretary Rumsfeld a question about that, the House Armed Services Committee came out with the following figures, and let's take a look at them.

Seventy-eight percent of Humvees in Iraq, Afghanistan and Kuwait have protective armor. But only 10 percent of medium-weight transport trucks do and only 15 percent of heavy trucks.

WALLACE: Senator Graham, has the Pentagon done everything it realistically could to protect our troops? And if not, why not?

GRAHAM: I think our biggest problem was that we expected to have 30,000 people in Iraq at this point in time. But after Baghdad fell, we misunderstood the scope of the insurgency. We paid a price for that. We did not expect the insurgency to be so large.

The vehicles you're talking about normally operate behind the lines, where they don't need armor. There is no behind-the-lines.

So we made a — we have misunderstood, I think, the nature of what we thought would happen after Baghdad, and we paid a price, and now we're playing catch-up.

WALLACE: But, Senator Graham, before I turn to Senator Corzine on this, I mean, the fact is that we've known about the nature of this insurgency, that it's a lot bigger, stronger, tougher than we had expected, for months. We've been in Iraq for 20 months now. Could we realistically have tooled up and put armor on some of these vehicles a lot sooner than we have?

GRAHAM: Probably so, but I think we're doing the best we can right now to adapt to a changing enemy, a ruthless enemy.

But it goes back to planning. When Bremer asked for 50,000 troops right after the fall of Baghdad, I'd like to know who told him no and why.

It's clear to me that our scenario for Iraq after Baghdad fell was totally different than reality. We need to understand how we missed it so badly, get it right, get the people the protection they need, because there really is no front line or rear line in Iraq. Everybody's at risk.

WALLACE: Senator Corzine, as we pointed out, the troops have been complaining for months about the fact that the lack of armor has made them vulnerable as they take those roads around Iraq.

Why do you think the Pentagon hasn't moved faster?

And when we hear now that on Friday, the secretary of the Army called up one of the armor companies and said, "Let's start producing more armored Humvees, 100 more a month," do you think that the Pentagon now finally gets it?

CORZINE: Well, I think — I hope that they have become better aware of their problems.

I have almost nothing to disagree with what Lindsey said. The fact is that we have had a pattern of missed calculation and misjudgments with regard to, particularly, the post-conflict elements of the Iraqi insurgency.

It has been tragic in the loss of life and particularly the casualties we've taken even among men and women that have survived. And it needs to be addressed.

And we hear now that they want to go into production, but they say it's not a matter of money, it's a matter of physics. Good Lord, we hear from the production people who do these armored Humvees that they're only operating about at half capacity.

We need to be truthful with ourselves and get on with the fact that we need more troops, we need a much more disciplined plan about how we're dealing with this insurgency, and we definitely need a plan to take care of our troops on the ground.

WALLACE: Senator Corzine, your reaction to all of this news that came out of the conversation, the question from the National Guardsman to Secretary Rumsfeld, was to call on the secretary to resign.

Isn't that a leap of logic, to hold the secretary of defense responsible for armoring Humvees?

CORZINE: Chris, I believe this isn't the issue only of Humvees.

The miscalculation and interpretation of the intelligence before the war — there was a failure to secure all the weapons dumps that are now being used for all the (inaudible).

There's been a problem with our administration of the prisons. No one has been held accountable.

There's no exit plan.

Now we find that there has been underinvestment in protecting our men and women on the ground. And as we have said, there's been an underinvestment in the number of troops on the ground to actually protect themselves.

I think, at some point, someone needs to be held accountable for all the series of mistakes and miscalculations we've had.

WALLACE: Senator Graham, let's talk about that. Even before last week, we had John McCain on this show, and he said that he could not give a vote of confidence to Secretary Rumsfeld.

You've just talked about tremendous miscalculations about the insurgency, the number of troops we should have there. Can you give Secretary Rumsfeld a vote of confidence?

GRAHAM: Yes, I can, because he stood up in front of the troops and he said, "What's on your mind? Tell me."

The leadership that he's provided, I think, has been firm when we needed to be firm.

War is a messy thing. The insurgents are ruthless people. We're trying to adapt. We have made mistakes. It was the right thing to take this dictator out. A year ago tomorrow, we found him in a spider hole.

Over time, we're going to have elections in Iraq, like we did in Afghanistan. And Afghanistan's a better place. Iraq will be a better place.

We've made mistakes. We need to adjust. I don't with to play politics with this. Let's give the people what they need. Let's press on and learn from our past mistakes.

WALLACE: Gentlemen, let's switch, if we can, to another hot topic this week, and that's Social Security reform, one of the top items on the president's second-term agenda.

Before we talk about this idea of private retirement accounts, let's examine what the president said this week he won't change about Social Security. Here it is. Both watch.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It's very important for those who have retired to recognize that nothing is going to change when it comes to Social Security. And it's very important for those who are near retirement to understand nothing will change.

We will not raise payroll taxes to solve this problem.

(END VIDEO CLIP)

WALLACE: Senator Graham, you have called for raising what's called the income cap, the amount of income that is subject to Social Security payroll taxes, from $88,000, as it currently is, up perhaps to $200,000.

Is the president making a mistake taking any increase in taxes off the table? And do you now regard that as a non-negotiable item?

GRAHAM: Well, the president is right when he says you cannot save Social Security by raising taxes.

What I'm trying to start in Washington is what happened in 1983, when you had Ronald Reagan, one of the great conservatives in American history, and Tip O'Neill, one of the great liberals, setting aside their ideology to come up with a solution.

In 1983, Chris, Ronald Reagan and Tip O'Neill raised the rates. They put people in Social Security that were never subject to taxation. They extended the age limit to 67, which will be phased in over time. They made some hard decisions.

But the president's right. You cannot save Social Security by raising taxes. You have to reform the system. The new money comes from the personal investment accounts that will generate a lot of money, over time, to save the system.

But the transition costs are what I'm focused on. The transition costs in my plan that will save Social Security is a trillion dollars.

I think it's irresponsible to borrow the whole trillion dollars, so I'm suggesting, temporarily, we lift the cap from $87,900 on personal income subject to Social Security to about $150,000. And generates a lot of money to pay the transition costs without having to borrow it all.

I'm suggesting we do what Tip O'Neill and Ronald Reagan did, put our ideology in perspective, be great Americans, not just great conservatives and great liberals, and solve this problem.

And I trust the president when he says he won't prejudge plans.

WALLACE: So, Senator Graham, when the president says, "That's off the table," you're saying, "No, it's on the table"?

GRAHAM: I'm saying that when he says you cannot raise payroll taxes to save Social Security, he's absolutely right. You'd need $3.5 trillion in today's dollars if you just did it by raising taxes.

Ronald Reagan and Tip O'Neill raised taxes, but it didn't save the system. You have to reform the system.

What I'm asking of the president, when it comes to the transition costs, be flexible. We have to have bipartisanship. I don't think you can make the tax cuts permanent, have alternative minimum tax relief and borrow the entire transition costs, which is over a trillion dollars, and have deficits that we can sustain. It would be over $700 billion, according to one analysis.

I'm asking the president and everybody in Congress to do what Ronald Reagan and Tip O'Neill did, and that's work together to solve this problem.

WALLACE: Senator Corzine, are you willing to work together? And are you open to the idea of either increasing payroll taxes or benefit cuts as part of the effort to solve and fix Social Security?

CORZINE: Well, I do think you have to look at a broad range of possible solutions. I don't think that just raising payroll taxes or dealing with the private accounts is the solution to Social Security.

And I think there are a whole series of things that we need to talk about within this context. And so I think the theme that Senator Graham has talked about makes sense.

The idea, though, that you're going to dismiss payroll taxes if you're going to get into that kind of discussion, I think, is a mistake.

I really believe this is a basic savings issue problem in the United States. We're taking the payroll taxes and using it to spend on everything other than what it was intended. We should be setting those moneys aside, holding them up and managing them in a way that they produce the kinds of returns that will actually resolve Social Security.

I don't think that has to be done through private accounts. It shouldn't be done through so-called privatization. There are many, many other approaches.

And if we get into borrowing $1.5 trillion to $2 trillion when we're already running deficits of very, very major proportion, historic proportion, we're going to end up undermining the financial security of this country for the years and years ahead.

WALLACE: Senator Graham, let me ask you about one aspect of these private retirement accounts that seemed to come out this week. If a worker decides to put some of his payroll taxes into this private account, does that mean that he would be giving up some of his guaranteed government benefits?

GRAHAM: Well, what option 2 does that I've adopted of the presidential commission, the Moynihan commission, it changes the future growth of benefits from wage growth to consumer price indexing.

GRAHAM: I know that's a little wonkish, but it saves a lot of money.

But the personal investment accounts that I've adopted were bipartisan in nature. They came about from the commission.

The younger workers who elect these accounts will be able to have the accounts stay in their family when they pass on. It creates a lot of wealth. The defined benefit will be lower, but when you look at the growth rates of the account, you'll have more money.

The Social Security Administration has scored my plan, and it says that the average American, under my plan, will receive 25 percent more in benefits when you combine these two than the current system can pay.

I've got one challenge to every member of Congress: Come up with a plan that leads to permanent solvency. No more kicking this down the road. If you don't like option 2, you don't like my plan, come up with a plan that saves Social Security permanently. That is my challenge to everyone.

I will work with you, but we have to be honest. We're way short of money to save this, and I think private investment accounts are the way to go. They can be securely had. For younger Americans, I think it's the way to go. But you do have transition costs, and we can't borrow all this money.

WALLACE: Senator Corzine, we only have about 30 seconds left, so I'm going to ask you a tough question and ask you to answer it quickly.

In an earlier life, you were the CEO of Goldman Sachs on Wall Street. I mean, the fact is, if you look at the markets over the course of any 20-year period, they vastly outperform any other investment.

Shouldn't we take advantage of the value of private accounts to help us?

CORZINE: Chris, you actually have to say that over a longer period than that. The fact is, is that, in any given 10- or 15-year period, you can have ups and downs in markets that could leave the retiring group of individuals at that point at great risk.

The beauty, the uniqueness of Social Security is the guaranteed savings that every individual will have to provide for their retirement.

And that, I think, is a very large mistake. We had 50 percent of Americans living in poverty in their senior years before we institutioned Social Security. I think private accounts run a very grave risk of undermining that stable, guaranteed benefits, which you actually asked Lindsey about.

I think that's a big risk. I've worked on Wall Street and in the markets long enough to know there's huge, huge exposure, ups and downs in markets. And I don't think that's the way to go.

WALLACE: Gentlemen...

GRAHAM: Chris...

WALLACE: Senator Graham, I'm just going to have to cut you off, because we're flat out of time. There's obviously a lot more to talk about, but you know what? We're not going to have to settle this today. We're going to have you both back on to talk more about it, because it really is a fascinating problem and a very important one.

Thank you both for joining us today. We appreciate it.