Dan Pfeiffer talks North Korea, gun control and immigration reform; Asa Hutchinson on protecting America's schools

The following is a rush transcript of the April 7, 2013, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace. Today, the showdown on gun safety: pass new restrictions or beef up security?


WAYNE LAPIERRE, NRA: If you're going to stop something horrible from happening in a school, put police officers or certified armed security in every school.

WALLACE: Four months after Newtown, an NRA task force says the key to making schools safe is to put armed guards in them. We'll sit down with Asa Hutchinson, director of the task force. It's a "Fox News Sunday" exclusive.

Plus, the president takes his push for gun control on the road.

PRESIDENT BARACK OBAMA: There is no reason we can't do this unless politics is getting in the way.

WALLACE: The White House tries to shore up fading support in Congress for new gun restrictions. And make a deal on immigration reform. We'll discuss both with the president's senior adviser, Dan Pfeiffer.

And the Obama budget two months late. We'll ask our Sunday panel about the president's offer to cut entitlements. Is it the start of a grand bargain?

And our Power Player of the Week -- running the paper of Bradley, Woodward and Bernstein in the age of the Internet.

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


WALLACE: And hello, again, from Fox News in Washington.

After more than 100 days of intense lobbying on both sides, the Senate is about to take up legislation to impose tougher gun controls. But, in the months since the Newtown massacre, support for those measures has faded on Capitol Hill.

In a few minutes, we'll talk with Asa Hutchinson, head of a task force on school safety funded by the NRA.

But, first, the president's senior adviser, Dan Pfeiffer, joins us from New York.

And, Dan, welcome to "Fox News Sunday."


WALLACE: Before we get to guns, I want to ask you about some breaking news. The Pentagon has delayed a test-firing of a Minuteman ICBM, intercontinental ballistic missile, this week, fearing that it would ratchet up tensions with North Korea and its young dictator, Kim Jong Un.

Does the Obama administration risk looking like it is caving to threats from Kim?

PFEIFFER: Absolutely not, Chris. Let's take a step back and look at the whole picture here. We have a situation where North Korea is engaging in the kind of behavior we have seen for many, many years, provocative actions and bellicose rhetoric and the onus is on North Korea to take the step back and meet their international obligations so they can undertake what they say is their number one goal, which is economic development.

That can only happen if they rejoin the international community, which can only happen if they meet their international obligations.

WALLACE: Well, having said that, North Korea moved a medium range missile to its east coast. Jay Carney said he would not be surprised if they fired the missiles. The South Koreans seemed to expect it. It is within range of Guam.

How would the president regard it, given the fact that you have delayed the U.S. missile test by the U.S., if North Korea goes ahead and fires its missile?

PFEIFFER: Well, you know, we have seen the reports you cite there. As Jay Carney said, we wouldn't be surprised. Missile launches have been, you know, part of this repeated pattern of behavior for the North Koreans and like I said, the onus is on the North Koreans to do the right thing here. This only -- they are the source of the problem, and, the only way to solve it is for them to take a step back.

WALLACE: When you say --

PFEIFFER: And that's the case we're continuing to make.

WALLACE: When you say the onus is on them, what if they don't?

PFEIFFER: Well, they're going to be able to continue to further isolate themselves in the world. They will continue to further hurt themselves. You know, the North Korean people are starving because of the actions like the ones North Koreans are taking right now.

WALLACE: All right. Let's turn to guns.

Just after Newtown, the president said that he would use -- told the families of Newtown, the victims, that he would use all the powers of his presidency to push for new gun control to try to prevent more massacres like this. Now, as the Senate takes up the bill, and, maybe this week, the ban on assault weapons is dead. A plan to limit the size of the high capacity -- excuse me -- magazines is in great trouble, and, even the idea -- although it has broad public support -- of expanding background checks is in trouble.

Question: why has the president been so ineffective, apparently, in pushing his plan?

PFEIFFER: Well, this isn't a -- well, let's be very clear. The president has pushed very hard, he was in Denver last week. He's headed to Connecticut on Monday, too, to make the case. He's marshaled the American people to his side. Like say, 90 percent of Americans support background checks. That is -- you know, you can't get 90 percent of Americans agree on the weather. So, he has made tremendous progress.

And the question here -- is Congress and the Republican Congress in particular, listen to the American people and do the right thing?

WALLACE: Well, you blame Republicans, but, I want to put up what Harry Reid, the Senate majority leader, said, talking about Dianne Feinstein's plan to ban assault weapons, what he said about that.


SENATE MAJORITY LEADER HARRY REID, D-NEV.: Right now, her amendment -- using the most optimistic numbers -- has less than 40 votes. I -- that's not 60.


WALLACE: If they don't have 40 votes in the Senate for the assault weapons ban. That means at least 15 Democrats have joined the Republicans in opposing that. Why has the president, Dan, been unable to marshal more support from Democrats as well as Republicans?

PFEIFFER: Well, I think there's -- two things here. First is, on all of these issues, the majority of Democrats are supporting it and a tiny, minority of Republicans, if any Republicans are supporting some of these common sense measures completely consistent with supporting the Second Amendment.

Where we are right now and the focus is on passing a -- what the president wants to sign -- is a strong bipartisan bill with enforceable background checks. That has 90 percent support, it can get done. But what it's going to require is the Republicans to not filibuster the bill, to not require 60 votes.

When the president gave the State of the Union, with the Newtown families in the audience, all of the Republicans stood up and applauded when the president called for an up-and-down vote. And now the cameras are off and the families aren't there, they are engaging in legislative tactics to make this harder. There's no reason we have to do that, and as the president said, politics is the only reason this stuff won't get done.

WALLACE: But again on the assault weapons ban part of the president's program, Harry Reid says it doesn't have 40 votes. So, even if you didn't have a filibuster, it still wouldn't pass the Senate because you don't have Democrats, which raises the question: why didn't the president go harder at Democrats from red states, states with a lot of people who support gun rights and try to persuade them to get on board?

PFEIFFER: Well, it's important to understand. When we put forward our package, we knew this is the ideal package is what, you know, conferring with law enforcement, community leaders, gun right advocates, gun owners and sports men, that was the best response to Newtown and gun violence in this country. We knew not all of it was going to pass right now.

But so, where we are right now, there is a bill in the Senate, which is the most progress we have made legislatively in many years to try to address gun violence and that and the crux of that bill is what many advocates said is the most effective thing we can do, which is universal enforceable background checks. And so, the question is, are we going to -- are we going to pass that bill? Or are Republicans going to block it?

That's the fundamental question facing folks, right now.

WALLACE: We're talking with Asa Hutchinson, the head of the NRA- funded task force on school safety in the next segment. They say -- the task force that Hutchinson led -- put armed guards in every school.

What's wrong with that?

PFEIFFER: Well, I mean, first, there is no one who thinks that -- who's worked with the issues, not law enforcement or anyone else thinks that is the best response to this. Now, the president has been very clear in a significant piece of the recommendations he's put forward in trying to get passed involves school safety, involves giving communities the opportunities and resources to make decisions about what they -- whether they want to put a trained police officer in schools.

So, we should do more to make our school safe. Absolutely, there's no question about that. But doesn't mean we shouldn't take other common-sense measures that are supported by the majority of Americans, by overwhelming majority of Americans, majority of Republicans, and majority of gun owners. That's the right thing to do and there is no reason not to do it.

WALLACE: The president submits his budget Wednesday, and we already know a good deal of what is in it. He offers to cut Social Security and Medicare by more than $430 billion over 10 years. If -- if -- Republicans agree to $600 million in more taxes. Couple of questions, first of all, is it a final offer on entitlements or is the president willing to negotiate and, for instance, consider putting his earlier offer to raise the eligibility age for Medicare back on the table?

PFEIFFER: Well, what the budget is, is we have taken the final -- the last offer we gave to Speaker Boehner before he walked away from the fiscal negotiations on these efforts and put in the budget, one, to show that the president is serious about addressing our deficits and our economy in a comprehensive way, but also to show that it is -- there's a false choice between deficits as far as the eye can see and job creation and economic growth now.   You can do both. That's what the president's budget does, that's what you'll see on Wednesday.

And, look, the president is having dinner with Senate Republicans on Wednesday night. We're continuing to talk with folks. So, we are open to conversations.

But, right now, the approach of many Republicans, particularly the leadership in the House, is my way or the highway. Their view is the only acceptable plan is to try to cut away prosperity, turn Medicare into a voucher program and essentially enact the Romney economic plan.

The American people rejected that and Republicans shouldn't be doubling down on it.

WALLACE: I want to ask you, you are exactly right. House Speaker Boehner, as soon as he heard the reports of the Obama budget, flatly rejected it because he said it calls for new taxes and he's not going to go along with that.

As you point out, your -- the president is going to be having dinner Wednesday at the White House with some Senate Republicans.

Question -- do you think -- does the president really think that he can go around the leadership of House Republicans and Senate Republicans, go around the leadership, deal with the rank-and-file members, and get some of them to support him on the budget?

PFEIFFER: Well, what we're looking for is what the president called a caucus of common sense. Folks who are willing to compromise and who understand that in divided government, both sides aren't going to get everything they want. There have been some willing partners in the Senate Republican caucus, and we have had good conversations with them.

But there's a lot of work to do before we get there, and I would say to Speaker Boehner's statement, if you are looking for the answer to the question as to why the approval ratings, for Republicans is at a historic low, to look no farther than that statement. Their view is, my way or the highway, do exactly what I want and massive tax breaks for the wealthy and, asks the middle class to pay the freight. That's not what the American people want.

And, if the Republican Party wants to reach out to Americans, as they say, they should start by listening to Americans.

WALLACE: The March jobs numbers came out Friday. And I think you would agree they were grim. Just 88,000 jobs created, 496,000 Americans left the job force. Labor force participation is now 63.3 percent. That's the lowest since Jimmy Carter was president.

The White House on Friday was blaming the sequester and Republicans for supporting the sequester. But a lot of independent analysts, Dan, say, much bigger problems are the fact the payroll taxes have increased, and also, the fact that the cost of hiring new workers under Obamacare is keeping some employers from getting new people.

Aren't those more serious problems than the requester?

PFEIFFER: The end of the payroll tax cut is hurting Americans because it means there's less money in their pockets, less money to spend on small businesses, less money to spend while they are shopping. So, that does have an impact on the economy. There's no question about that.

I think it's important to look at the overall picture on the economy. We have made a lot of progress, 6.5 million private sector jobs created over the last three years. The housing market is coming back, manufacturing is coming back. The American auto industry is back, but there is more to do.

And so, we shouldn't focus on any individual month because if we created 290,000 jobs this month, I would have given you the same answer, which we are making progress, but we'll have to do more.

WALLACE: But then, just briefly and I want to get immigration, before I let you go, the total number of jobs created the first three months of this year -- and there were two pretty good months before March -- is still less than the total number of jobs created the first three months of last year. It is not a roaring recovery.

PFEIFFER: No, it is -- we have to do more. That's the president's point. That's why when you get see his budget on Wednesday, you're going to see a comprehensive plan that focuses on creating jobs and growing the middle class. We have to do more.

What we can't do is try to cut our way to prosperity, as some Republicans are suggesting.

WALLACE: Finally, the bipartisan "gang of eight" in the Senate is expected to come up with its release, its immigration reform plan this week, which will include a trigger on border security before illegal immigrants can move towards becoming citizens. But, Secretary of Homeland Security Napolitano says, "Relying on one thing as a so- called trigger is not the way to go." And a draft of the president's -- the president's plan on immigration reform does not make a link between border enforcement and the path to citizenship.

Question -- would the president sign an immigration reform plan that does make that kind of link, citizenship but first border security?

PFEIFFER: Well, we have been working very closely with the "gang of eight." This is one of the -- this is a bright spot in Washington where Republicans and Democrats are coming together, trying to find common cause. You have the AFL/CIO and the Chamber of Commerce working together to agree to some portions of this bill. That's tremendous progress.

And we feel very good the product they are working on is a product that is completely consistent with what the president has put forward, what he ran on, and will actually address immigration reform in a common sense way. So, we feel very good about where this is going.

WALLACE: But just to answer my question would the president sign a bill that mandates that kind of trigger on border enforcement?

PFEIFFER: What they are looking at and what has been talked about in the "gang of eight" proposal is 100 percent consistent with what the president is doing. So, we feel very good about it and they are looking at it the right way.

WALLACE: Dan, thank you. Thanks for coming in today, and we'll stay on top of all of these stories in the week ahead.

PFEIFFER: Thank you, Chris.

WALLACE: Up ahead, we'll talk with the head of the NRA-funded task force on how to keep our schools safe.


WALLACE: As the Senate prepares to debate new gun controls, a task force funded by the NRA has come out with its response to the Newtown shooting -- put armed guards in every school.

Former Congressman Asa Hutchinson is head of the task force and he joins us from Little Rock, Arkansas.

Congressman, welcome.

FORMER REP. ASA HUTCHINSON, R-ARK.: Good to be with you, Chris.

WALLACE: Critics say, Congressman, that you are just responding to the last attack. They note that before Newtown, a gunman killed two people in a shooting at a shopping mall in Oregon and before that, James Holmes killed 12 people and wounded 58, in a movie theater in Colorado. So, they say all you're doing is shifting the target.

HUTCHINSON: Well, President Clinton first initiated cops in schools or armed guards in schools and it has been a very effective program but it is not received -- only about a third of the schools.

And so, our recommendations are much broader than simply an armed guard in every school, and it's also about new resources for schools to add to safety from online assessment tools to best practices.

So the report, which I hope everybody reads, is 252 pages, very comprehensive with the armed guards part of that. And let me emphasize, it is not about arming teachers. Teachers should teach and others should protect. It is really about providing armed officers first and then, secondly, if that is not available to have an armed school staff trained and selected.

WALLACE: But, Congressman I guess my point is, if you did harden the schools, and, Lord knows we don't want people going into schools and shooting young kids, a demented shooter could still go to a shopping mall, a movie theater or a playground or down the street. So, are you really solving the problem if you just harden one target?

HUTCHINSON: Well, you are protecting children and that's a huge objective in life. Certainly, whether you are a shopping mall -- and they already are having off-duty police officers protecting shopping malls, should we not provide and have the greatest responsibility for protecting our children as they go to school for education?

So, to me it's a common-sense approach that is really happening, whether the federal government gets engaged or not. Every school district in America is looking at ways to better protect the students at school, just like the private sector from shopping malls to movie theaters are considering the same thing.

WALLACE: Let's talk about the broader ideas that the Obama administration is pushing. The NRA opposes the president's plan to expand background checks.

WALLACE: But, since that went into effect, in 1994, 1.9 million gun sales have been blocked because the person trying to make the sales showed up on a record as either having a criminal record, or a history of mental illness.

Here's what President Obama said about that this week.


OBAMA: Why wouldn't you want to make it more difficult for a dangerous criminal to get his or her hands on a gun?


WALLACE: Even if the NRA is right and we have had Wayne LaPierre on the show and he says, look, if a bad guy wants a gun, he's going to find a way to get a gun. The fact is 1.9 million sales, as I say, have been blocked. Why not make it as hard as possible for people to get their hands on a gun who have this history of either a criminal record or mental illness?

HUTCHINSON: Well, if you take those statistics at face value then the current system in place has been effective in blocking people who are not entitled to obtain a firearm from getting one. So, that's effective. Now, the question is, do you want to expand that system from where it is right now.

And I think in general concept, Americans, everybody would like to see effective background checks so that criminals do not have access to firearms.

But as a practical matter -- and I read the bill last night, if you are a farmer, 30 miles from town and you want to transfer a shotgun to a neighbor, you've got to go 30 miles into town, find the federal licensed firearm dealer, fill out the paperwork, pay the fee, have the background check and then you have a responsibility to keep those records for inspection by the government and that's a huge burden on citizens.

So, my look at that is, I don't know whether that's going to pass or not, but it's not going to address the problem of safety in schools. I'm not a spokesman for the NRA on this topic. I'm expressing my views but I want to look at things that work and keep children safe.

WALLACE: Well, let me ask you about one thing senators are considering that might work. They say that you expand the background check to all commercial transactions, at a gun show, on the Internet, if somebody put an ad in the newspaper, but you except the kind of situation you are talking about, where it is a transaction between friends, or between family where it's entirely private. Is that something you could get on board with?

HUTCHINSON: Well, again, I read the bill last night and I didn't see that in the legislation --

WALLACE: No, but the bill is certainly not a final measure, and, this is one of the ideas that is being actively considered in the Senate.

HUTCHINSON: Well, from my view, sure. If you go to a gun show and you are buying a firearm from a licensed dealer and have a background check but you also go out to somebody's vehicle and you get a firearm there and purchase it and you don't have a check, there is some inconsistency there, and certainly from my personal standpoint, that's a fair debate. And again Americans would like to see that.

But let's don't put the burdens on the casual sale. Let's -- and as you, we do need to make the system better. The Senate bill does provide incentives for the states to put more information into the instant check system to make them more effective and that's a step in the right direction.

WALLACE: But, again I want to make it clear and I understand you are not a spokesman for the NRA though they did appoint you to run the task force, on school safety, you are saying that you would support expanding the background check to include non-dealer sales at gun shows and, also, for instance, sales on the Internet, which are now not covered.

HUTCHINSON: Well, I can't speak to all of those just because, you know, it's all in the fine print. These are very difficult things to accomplish an objective without burdening the average citizen and bringing the government intrusively into their lives. But we also -- and so, I think, you have to look at the language. I could look at the gun shows and the sales that surround that, and that environment, if we can make sure that there's a comprehensive check and we keep criminals from obtaining guns, in that environment, then, those checks would seem appropriate.

WALLACE: Let me ask you about this, because instead of expanding background checks, the NRA is talking about limiting them even further. They are saying -- and in fact, they have put forward legislation, that some opponents of the president's plan are now supporting. That would say that if you are a veteran or someone else who has been deemed to be mentally ill and, therefore, would fail a background check, if you are said to have recovered, that you would then be able to get a gun.

Do we really want to open that door?

HUTCHINSON: Well, Chris, this is where the president has taken the debate totally in the wrong direction. I really believe that our focus should be on the school safety. That's an objective that we can accomplish.

It's not that difficult to increase safety. It's not even the most substantial cost measures that a local school has to do.

And whatever you do, in terms of legislation, even if you had all of your universal background checks, bad guys are going to get guns and it's not going to solve the problem of the schools. It's not going to diminish the need for greater security in the schools.

So I report, I hope that becomes the focus of the debate because that's what's going to solve problems long-term for the safety of our children.

WALLACE: Well, I understand that and, obviously, Newtown was the precipitating event but you certainly agree making schools safer will not protect the afternoon citizen going to the movies or going to a shopping mall or in a playground or even kids on a school bus going to school.

HUTCHINSON: Well, you can't address all the problems of society, I mean, you are talking about why do we have a violent society? Is it video games? Is it the mental health issues? And how do you deal with those?

And, no. I mean, you -- government has certain responsibilities in transportation, in protection. Education is a special environment. But, you can't expect the federal government to solve this problem because it's not solvable in that fashion. It's dealing with the hearts and minds of people. It's dealing with giving people the ability to protect themselves.

And, so, you talk about movie theaters, you talk about on the streets, these are law enforcement issues, primarily, but it's also societal problems that have to be addressed.

Let's take one thing at a time and after Newtown, the focus has been schools and safety, let's get this right.

WALLACE: In the couple of minutes we have left, why do you think it is that President Obama's efforts to prevent more acts of violence appears like it's going to accomplish so little?

HUTCHINSON: Well, because, it's -- to me, it is a political agenda. It's more divisive to America and the wonderful Newtown parents that have gone through such an incredible tragedy -- they have not even reached unity among themselves on what needs to be done. Because America's divided on that point but there is a unity that, whether it's mental health concerns, that we can do better on, or whether it is providing more safety for our children in schools, that's the crying need of our country and something we can agree upon very readily. There is no dispute about that, but very little has been done.   And so I'm disappointed the president has not focused the debate on the right issue for America.

WALLACE: And less than 30 seconds left. Just picking up on that. What do you think the president should have done differently after Newtown?

HUTCHINSON: Well I think that he should have come across with a strong program of school safety. You look at the Senate bill right now, it's $40 million. It's -- that's not going to solve anything.

And, because it is -- and so I would like to have seen the president say, we want to have each of the school districts to do more in safety, the states to be engaged in it and the federal government can provide additional support for technology grants. I think to open up the Homeland Security Grant Fund which is even more money. And also we have three different agencies involved. Let's get it more organized and greater leadership.

WALLACE: Congressman Hutchinson, we want to thank you so much for joining us today. Always good to talk with you, sir.

HUTCHINSON: Thank you, Chris.

WALLACE: Up next, two months late, the president puts his budget in writing. We'll ask our panel, is it enough to put a grand bargain back in play?



OBAMA: Well, it's not my ideal plan to further reduce the deficit. It's a compromise I'm willing to accept in order to move beyond the cycle of short-term, crisis-driven decision making and so that we can focus on growing our economy and our middle class for the long run.


WALLACE: President Obama defending his new budget, which calls for entitlement cuts and more taxes and is already drawing criticism from both the left and the right. And it's time now for our Sunday grill. Brit Hume, Fox News senior political analyst, back from his winter break. Kirsten Powers of the Daily Beast Web site, Jennifer Rubin from The Washington Post and Fox News political analyst Juan Williams.

So, two months late, the president will finally submit his budget this week, and we know some of what is in it. Let's put it up on the screen.

He cut spending by $1.1 trillion including cuts to Social Security and Medicare. And he gets $600 billion from more taxes. Brit, how big a compromise, the president putting entitlement cuts in writing?

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: I think that is a step that's not inconsequential. It is a little odd the way he presented it. I mean is this a proposal or is this a concession? Nonetheless, there it is. This is the first time he has been willing to put the adjustment and the cost of living increase in writing and that is all to the good. I think a lot of the new taxes that are in there are un-passable. So the question arises: if nothing else passed, would the president sign the adjustment in the cost of living increase which gets, what, $130 billion over ten years? Not a lot of money, but, nonetheless, not nothing. Would he sign it by itself, in other words, is he proposing it or merely offering it in tandem with the another round of tax increase ...

WALLACE: I think from everything I've read, the president's made it pretty clear it is all a package ...

HUME: Right.

WALLACE: And that if you going to cut the entitlements, you've got to have the tax increases or else, they are off the table.

HUME: Well, you know, no president's budget ever passes intact. So, you know, I think that is a nonstarter, but we'll see how it goes, I mean the Congress is already up and running and working in its normal processes. So, we'll have to see what comes out of that. I think the president putting that on the table is not big, but it is not nothing.

WALLACE: Kirsten, we know, and quoted it with Dan Pfeiffer, that a lot of Republican leaders are happy with the call for new taxes. John Boehner immediately rejected it on Friday. How much heartburn is there on the left, the idea that their Democratic president has in a sense taken away from them the issue that these entitlements are sacrosanct and untouchable?

KIRSTEN POWERS, THE DAILY BEAST: Yeah, well, there is a lot of heartburn. The White House says that this is not a menu, that it's a comprehensive package. It said that it doesn't have the all go together and I think that that is reasonable. The left is very angry. Bernie Sanders has come out and said I will do  everything I can ...

WALLACE: Senator from Vermont.

POWERS: ... do everything I can to stop this from going through, you have moveon.org coming out and they are very angry about it. But, look, these is -- these are actually -- this offer is the offer that was made during the fiscal cliff talks. So, it's actually not new. I guess maybe they are concerned that it's actually going to actually happen this time. But, I think the president should get a lot of credit for coming back and basically trying to do a grand bargain, even though it's going to upset his base, even though it's going to upset some Democrats and look, both sides are going to have to do something that they don't want to do, Republicans on taxes, Democrats on entitlements, if there is going to be a deal.

WALLACE: Jennifer, all over this comes, and again as I pointed out with Dan Pfeiffer, all of this comes as we got a bad jobs report for March. Only 88,000 jobs created. And five times that on those half a million jobs, workers left the workforce looking for jobs. The president calls for some new spending in this plan. More stimulus, if you will, for short-term economic growth, but as we say he also wants to raise taxes again, is this the right prescription, the budget, in these economic times?

JENNIFER RUBIN, THE WASHINGTON POST: Well, it strikes me that a number of things in the president's plan are disconnected from our current situation. These plans, of course, are long in the making and the parties have gotten stuck in their traditional positions. But on tax increases, we have, just as you mentioned, had a rotten month and really, even aside from the month, this is a very anemic recovery and he wants to put on top of the 600 billion in tax increases he got in January, another 1.6, or however you want to count those dollars. A lot of people are going to have a trouble with that, particularly since some of the slowing in the employment sector, certainly is attributable to the increase in the payroll tax, so taxes do have an impact, and to add more, it seems to be going in the wrong direction.

WALLACE: Well, I was going to say that, because while the White House was blaming the sequester and the Republicans for pushing the sequester, a lot of independent people and you heard this concession from Dan Pfeiffer on this, or saying it is the payroll tax, it's also saying that Obamacare is beginning to kick in, because there are limits, if you have a company with 50 employees, you fall subject to some of the mandates, but if it is 49, then you don't fall, so maybe you don't have much of an incentive to hire somebody new.

RUBIN: Right. This has been the complain of the Republicans since the beginning and a number of the items of Obamacare, including, for example the medical device tax, which acts as a deterrence, if you will, on technology companies, (inaudible) companies, a lot of Democrats don't like that. So I think there are a lot of factors conspiring to prevent hiring or to suppress hiring and the budget really doesn't go to that. On the other hand, we also have defense spending, which is cut again. We have the North Koreans going nuts, we have the Iranians and, yet that president is insisting on cutting more from defense. That doesn't seem connected with our current situation.

WALLACE: All right, Juan, the budget, the economy ...

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, I think this is a terrific step by the president. I think he's taking a political risk. I think what you've heard from Kirsten, I think what we have heard from Brit is, look, is this the stuff of consequence, the Republicans have been saying, if you really are subscribing to the idea of doing chained CPI on Social Security, if you really are buying into the idea that you are willing to make some changes in the way Medicare is structured, well, take the risk, Mr. President, say it to your Democratic supporters, to your base, say it to the seniors in the country and the president has now said it. So he's taken a first step and I think the dinner coming up Wednesday night, the Johnny Isakson, the Senator from Georgia is putting together is an opportunity for ...

WALLACE: Let me just explain it. So, a bunch of Senate Republican back benchers, not the leaders, are going to have dinner with the president.

WILLIAMS: Right. And I think it is an opportunity there for the president to begin using the Senate as a key, if you will, to unlock the House. Because, he can say, I'm being reasonable, here's a balanced approach. It is two to one, in terms of cuts, to new taxes. And, I'm willing to buy into this and, if the -- he can get Republicans in the Senate in sufficient numbers to buy into that deal, he can then say I've got something on the plate. Why won't you House Republicans come along? Now, the difficulty -- and I think you've heard that this morning from Dan Pfeiffer -- is that, well, you know, so the Democratic Senate plan now seems to be out the door and Republicans may just see what the president has proposed, as Brit said, as a starting point rather than a package.

WALLACE: Brit, I want to talk about, though from the Republicans' point of view, because we have had Senate Republicans on this program, like Bob Corker of Tennessee who have said if the president gets serious about entitlement reform and goes out and speaks on behalf of it and gives us all political cover, that he and some other Senate Republicans would consider more revenue. So, does his concession now force them to make a concession of their own?

HUME: I think he would have to go farther than this proposal goes, let's make no mistake about it.

HUME: The adjustment in the cost of living increases is a sensible step, it's been recommended for many years by economists who say that the CPI indicator that we use now is sort of out of whack with the way people really live. So, you might think this is the kind of thing that the president would propose as a stand-alone, but he doesn't. Nonetheless, there it is. The rest of the cuts, as I gather, in entitlements have to do with cutting, for example, providers to Medicare.

WALLACE: Drug companies ...

HUME: The administration, on this issue, and it has been true for some time, seems to live in sort of a fantasy world, in which you can cut the payments to the providers without depriving the recipients of anything and they keep saying that. And I see people say it all the time, it is not - I mean if you stop paying for something you're going to get less of it. And there is nothing about that that ...

WILLIAMS: But there's a possibility of efficiencies and let me just ...

HUME: I don't dispute that for a moment, and efficiencies are wonderful and so on, but, one of the problems we are having is, you try to find yourself a general purpose physician. It is hard to find them. Life for doctors ain't what it used to be.


HUME: And these proposals, and these various cuts that are coming in, are not going to help us get any more doctors and we are developing a doctor shortage now and it's going to get worse. Now, that may be a way that his idea of a way to cut spending on these programs. And pretend that the beneficiaries won't be affected, but they will.


WALLACE: Juan, you have to (inaudible) understand, Brit and I are having trouble finding doctors ...


WALLACE: All right. We have to take a break here.


WALLACE: But when we come back, North Korea's saber rattling keeps the world on edge.



UNIDENTIFIED MALE: The Web site is our present and our future.

WALLACE: Like a lot of papers, it will start charging this summer.

Baron has been in newspapers his whole career.

UNIDENTIFIED MALE: That is where readers are going. Go anywhere and people are looking at Smartphones all the time.

WALLACE: Stay tuned. We'll be right back.




JOHN KERRY, THE UNITED STATES SECRETARY OF STATE: The United States will defend our allies, we will not be subject to irrational or reckless provocation.


WALLACE: Secretary of State John Kerry reacting to a series of threats and military moves by North Korea against the U.S. and South Korea and we're back now with the panel. Well, here is the latest from North Korea. They moved at least one medium range missile to the East Coast of the country, potentially putting Guam within reach of a strike and they advised foreign diplomats to consider evacuating their embassies. Brit, what do you make of the string of provocation coming from Pyongyang?

HUME: Well, you have to sympathize with any administration trying to deal with North Korea, particularly now with this new young leader, about which not much seems to be known, we know he was educated in the West, you would think he might have been a more sophisticated observer of the world, and yet he is acting as if he is crazy as a June bug. And so the administration is trying, on the one hand, you know, to show firmness as witness the military exercises with our old friend, South Korea and but at the same time we've had the cancellation of this test, long-planned and I -- my own sense about it is that if you're going to send signals to this regime by what you do, they shouldn't be mixed signals and I think that is what is worrisome at the moment. I mean, the north continues its provocations, in the past it's always been some sort of blackmail to gain some concessions to ease the woes in the inside of that country, which are terrible. But, who knows now?

WALLACE: Well, let's talk about the mixed signals, because Kirsten, the initial U.S. response to send - was to send those war planes, B-2s, F-22s, various stealth airplanes over South Korea and that only seemed to ratchet up the tensions and the last couple of days the word is, that the administration now is trying to dial back as we heard overnight, they have delayed this missile test that was scheduled for this week of an ICBM missile, and we also have just learned that General James Thurman, who was the head of all U.S. Forces in Korea, who was supposed to come back to Washington this week to testify before Congress, has now said it is too tense and he needs to stay in South Korea. So, he's delayed his trip. The Obama administration has a tricky balancing act here and does it run the risk as Brit suggests of sending mixed signals?

POWERS: Well, this is a balancing act, and I think they are balancing on the right side. We don't know enough about this leader to know what he's going to do. It is easy to dismiss it and say that he won't do anything, but he is -- from everything I have read and everyone I've talked to, he is basing his leadership not on his father, but on his grandfather and what was the first thing his grandfather did? He invaded South Korea. So, we don't really know what he will do. Is it just bluster? And I think the administration, as what they are trying to do is get with the people like China, their closest ally, who is very - expressing that they are really kind of fed up with this and they are willing to start putting pressure on North Korea and that they're going to sort of go that diplomatic route and try to get them to ratchet this down, so this - the worst of the worst doesn't happen.

WALLACE: Let's pick up on the diplomatic route and, particularly, China, Jennifer, the Obama administration has reportedly said to China, look, either you crack down and somehow get your regime, because they are the main sponsors of North Korea, under control, or you can expect an increased U.S. military presence in that part of the area. We are already moving missile defenses to the Pacific, we're moving warships to the Pacific. What do you think are the chances that we can get China to help us in all of this? And, what do you think -- more broadly of the idea of going the diplomatic route here?

RUBIN: Well, this is a little bit like Charlie Brown and that football. We have been trying to get China to take care of these people forever, China either doesn't have the will or the ability to do so, and I think the mixed signals that we are talking about are also mixed signals to China. How serious do we look to them? How serious does it look that we will be increasing our military presence there and increasing pressure on North Korea, which is a problem for them? The last thing they want is that regime to fracture and to have a refugee problem pouring into China.

So, I was struck by your earlier guest about how little this administration has to say. How little planning they've done, suddenly, they are back funding missile defense, which they cut earlier in their administration. I see confusion.  I don't see a balancing by the administration, I see a complete lack of answers, a complete lack of strategy, lack of consistency. We have done nothing to do, for example, what we did with South Korea, which is to really completely isolate these people, diplomatically, economically and all other terms and I think it is a mistake, I think they are floundering around, looking for a policy and haven't come up with one yet.


WILLIAMS: Well, I think we have come up with a policy. I think you have to have a diplomatic approach that engages China, that tries to reestablish communication with North Korea. Right now we don't have those communications. You don't want to enter into a situation where, for example, China becomes alienated from us in the course of this and right now, China has backed us in the United Nations, China is helping to enforce some of the banking sanctions.

And I think what you are seeing is that when you talk to people, to Pentagon, they say look, we don't see any logistics moving on the ground that would allow for some kind of assault on South Korea, and it could be that we are in a cycle, I think this is what Dan Pfeiffer was suggesting earlier, that we're in a cycle where these people become bellicose and threatening and it seems like Kim Jong-un somehow thinks someone wants something from North Korea, that somebody is going to invade North - I mean this seems a little bit as, as the great Brit Hume would say, like a June bug, right? So, you know, you just think to yourself, well, OK, so we don't want to raise up Kim Jong-un to say, oh, you are such an important guy and we all see you as a great threat. I think that a responsible world superpower, the lone world superpower, the United States should act in a reasonable manner and say, you know what? We understand what you are doing. As long as you don't take any, you know, untoward actions, we're not going to act in some way as to make you into this grand threat that you really are not.

WALLACE: Jennifer, did he persuade you?

RUBIN: Not really, though I appreciate the sentiment that we'd like China to solve this problem because it really is their problem as much as ours. I think, unfortunately, when we do nothing, that communicates a different message to these people, and that is that we are cowed, that we don't want to take action. That we canceled a missile test that was done previously? I think they read that as weakness, and it is not as if the status quo there is acceptable. This place is a prison. This is a gulag country, and it should be in our interests to begin highlighting this more, to put the screws on them, to demand more from China in terms of their interaction with the North Koreans. Yes, they have helped with some sanctions, but really not. And they continue, as Chris said, to subsidize that country, really to the hilt.

WALLACE: I want to switch a little in the minute-plus we have left. Brit, because while all of this was going on this week, it was almost ignored, the fact that the U.S. and our allies met with the Iranians in Kazakhstan to continue those nuclear talks, which apparently went absolutely nowhere. And the question then becomes, is Iran watching how we're dealing with North Korea very carefully, and, perhaps, are they drawing lessons that we don't want them to draw.

HUME: There is no way to know that, Chris, but I think it is a sign that this whole effort to get Iran to forsake its nuclear weapons ambitions by diplomacy and sanctions simply isn't working. While we know the sanctions are pinching in that country, but it does not seem really seriously to deter the regime there. And it remains a continuing threat. And I have to say, it is a foreign policy failure. And look, it is not easy. You can't look back at any prior administration and say, they did a great job with Iran. Nonetheless, we are where we are there, and it is not a good situation, and I don't -- there is no way to know how Iran reads our actions towards North Korea, but there it is.

WALLACE: All right, panel, thank you, see you next week and don't forget to check out panel plus, where our group picks right up with the discussion on our web site, FoxnewsSunday.com. We'll post the video before noon eastern time, and make sure and follow us on twitter, @FoxnewsSunday. Up next our Power Player of the Week.


WALLACE: Over the last 40 years here in Washington, presidents have come and gone, but one institution has stayed pretty steady. Now there is a new man in charge. Here's our Power Player of the Week.


MARTIN BARON, EXECUTIVE EDITOR, WASHINGTON POST: I want us to do agenda-setting work. I want us to hold powerful institutions and powerful individuals accountable.

WALLACE: Martin Baron is the new executive editor of the Washington Post. The paper of Ben Bradlee and Bob Woodward and Carl Bernstein, the paper that brought down Richard Nixon, which raises the question.

How intimidating was it to follow in the footsteps of Bradlee and Woodward and Bernstein?

BARON: They built this institution. And it is an institution that has played a singular role in American politics, policy and American journalism.

WALLACE: Baron knows all about taking on the powerful. Before coming to Washington, he was editor of the Boston Globe for a decade when it won six Pulitzer Prizes, including one for exposing sex abuse in the Catholic Church.

BARON: There had been a pattern, where when they knew that priests had abused children, they continued to reassign those priests, and then the priests continued to abuse children. That was a pattern of, I believe, misconduct on the part of the church. And it was another story that we needed to do.

WALLACE: Before that, Baron ran the Miami Herald during the 2000 presidential election.

BARON: The U.S. Supreme Court ruled that there would be no recount, and we felt that there should be one.

WALLACE: So who won?

BARON: Well, the results showed that George Bush won by a very narrow margin.

WALLACE: Bush beat Gore in Florida.

BARON: Yes. He did.

WALLACE: But there was a problem. Baron hired an accounting firm to do the recount, and he told his bosses it would cost $250,000.

And how much did it cost?

BARON: Well, it cost about $850,000. By the grace of God and by the grace of the CEO of the parent company, I continued to be employed there.

WALLACE: But money is no laughing matter at newspapers now. Baron had to cut his staff at the Boston Globe by 40 percent. Circulation at the Washington Post is down 20 percent in the last four years, and the paper is losing money.

BARON: You talk about the decline of circulation, but I think of the incredible audience that we have online.

WALLACE: And that is what struck is during our time at the Post.

UNIDENTIFIED FEMALE: Not too much has happened yet this morning...

WALLACE: While Baron was discussing what would be on tomorrow's front page.

UNIDENTIFIED FEMALE: That number is drastically lower...

WALLACE: Other staffers were editing videos and producing reports to put on the Post website.

BARON: The website is our present and our future. It is very much our future. That is where readers are going. Go anywhere and people are looking at smartphones all the time.

WALLACE: The Post has been giving away content on the web, but, like a lot of papers, it will start charging this summer. Baron has been in newspapers his whole career. Even as the business changes, the appeal is the same.

BARON: I am sort of a non-joiner, and so as a journalist, you can be a non-joiner and participate in public affairs.

WALLACE: Do you fear at all for the future of the Post?

BARON: I'm an optimist. I think that we are, as a profession, more resilient than people believe, and more resilient than sometimes we ourselves believe, and so I am confident, even though we face tremendous challenges.


WALLACE: This summer, the Post is launching an online video channel devoted to politics. It's all part of the trend of moving resources from print to the paper's website.

And that's it for today. Have a great week and we'll see you next "Fox News Sunday."

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