Donald Trump talks Ted Cruz, gun control and the Clintons; Denis McDonough previews Obama's final State of the Union

This is a rush transcript from "Fox News Sunday," January 10, 2016. This copy may not be in its final form and may be updated.


With just 22 days until the voting starts in Iowa, Donald Trump doubles down.


WALLACE:  Questioning whether Ted Cruz is eligible to be president.

Honestly, do you have any doubts that Ted Cruz is a natural born American citizen?


WALLACE:  Attacking both Bill and Hillary Clinton for personal scandals.

A lot of Republican officials, including a lot of Republican women say this is going to backfire.

Hitting President Obama’s new gun control plan.

You said the other day that pretty soon, we’re not going to be able to get guns and the president responded that that's all a conspiracy.

The GOP frontrunner one on one, on "Fox News Sunday."

Then, two days before President Obama's final State of the Union, we'll ask White House Chief of Staff Denis McDonough whether the president will work with Congress or around it.

Plus, our Sunday group on the growing threats from North Korea and ISIS, and how the president is handling them.

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


WALLACE:  And hello again from Fox News in Washington.

As we count down to the first voting of 2016, Donald Trump continues to lead Republicans nationally with rival Ted Cruz now in first place in Iowa.

On Friday, I sat down with Trump in his headquarters in New York City’s Trump Tower to discuss the campaign and his questioning whether Cruz is eligible to be president.  But we began with Trump's special area of expertise -- money.


WALLACE:  Mr. Trump, welcome back to "Fox News Sunday."

TRUMP:  Thank you.

WALLACE:  The stock market has dropped dramatically in recent days in large part because of fears about the Chinese economy.  What would President Trump do about the markets?

TRUMP:  Well, if they would have been listening to me over the last six years, we are so tied into China, when China goes bad, we go bad.  We're just tied in, and we're tied into their advantage, not to our advantage.

What we have to do is be smart.  They want to, as you know, they want to continue to devalue their currency in order to devalue out.  But what that's doing, it's stopping our companies from being able to compete with China, and other places, including Japan -- which, by the way, is doing big devaluations.  Not good for us.

Anytime you see these countries devaluing their currency, that's a bad thing for us.  And, China wants to do that now again to get itself out of a problem.

WALLACE:  But as President, you said the other day, that you would impose a 45 percent tariff on all Chinese goods coming into this country.  Wouldn't that both increase the price of these goods to American consumers, and weaken the Chinese economy even more?

TRUMP:  Chris, I didn't say I was going to do it, I was going to -- I told them, I would not say to them very strongly, if you don't start living by the rules -- they're not living by the rules.  What they're doing with their devaluations is a disgrace to us.

And, by the way, China's not the only one.  But China is the worst abuser of all, and they have to stop doing it.  And, if they don't do that, we have tremendous power over China, you know?  The Obama administration doesn't understand that.

We have tremendous power, economic power, over China because once that stops, they have a depression the likes of which you have never seen.  So, we have a lot of power.

WALLACE:  Why should Republican voters in Iowa, more than half of whom say that they're either Evangelicals, or Born-Again Christians, why should they choose you over Ted Cruz?

TRUMP:  Well, I'll tell you what.  I've formed a great bond in Iowa, I'm doing very well with the Evangelicals.  I'm Protestant, I'm Presbyterian, I have a great bond with Evangelicals -- and, by the way with the Tea Party, and you see that in your polls.  I'm doing very well with them, with both --

WALLACE:  Why would they pick you over Cruz?

TRUMP:  Because I think that I will be much better on illegal immigration, I will be much better on security, I will be much better on the military, I will be much better on the economy.  I mean, the economy's my thing.

WALLACE:  Let me ask you about immigration because Cruz says that he's tougher than you when it comes to immigration.

Your policy is you want to deport all of the illegals out, and then let what you call "the good ones" back in.  He says if you're deported, you never get back in.

TRUMP:  He's changed what he's done.  He's also said the other day for the first time, "we have to build a wall, we have to build a wall."  He never talked about building a wall.

WALLACE:   Actually, he campaigned on that in 2012?

TRUMP:  I don't know 2012.  I can tell you for this whole cycle, he's just mentioned it three days ago.

Look, I'm going to build a wall, we're going to have a strong border, we're going to get people out, and, you know, when you start the process, everyone else leaves.  The good ones, they will go through a process like everyone else, and they'll come in.  But, they have to come in legally.  Not citizenship, but they have to come in legally.

That's much tougher than Ted.  Ted was actually weak on illegal immigration, and that's why he and Rubio have been fighting who is stronger.  They were both weak on it actually.  Nobody can compete with me on illegal immigration, nobody.

WALLACE:  Now, there's also the question that you have raised in the last few days about whether or not Ted Cruz is a natural born a citizen...

TRUMP:  I didn't raise it, The Washington Post raised it.  They asked me a question, I said, "I really don't know."

I know he was born in Canada, I know he was -- I think he was a Canadian citizen, along with, maybe, he had a joint, but he was a Canadian-American --

WALLACE:  Joint American and Canadian?

TRUMP:  He had a joint citizenship.

And, what I told Ted to do is go into court for declaratory judgment because, you know, you can't run -- I'm talking about from his standpoint, not from mine -- I did not bring this up.  Washington Post brought it up.

WALLACE:  I know.  But people say you're trolling him.

TRUMP:  I’m not trolling.

WALLACE:  And you're under the guise of helping him, you're sticking in the knife.

TRUMP:  No, I'm not.  What he should do is ask for declaratory judgment because, you know what?

WALLACE:  But he says it's not an issue, and in fact when you raised it, he posted a video of the Fonz jumping the shark, and --

TRUMP:  OK, look --

WALLACE:  He's kind of laughing at this.

TRUMP:  Chris, he's not laughing, he's taking it very seriously.  He should take it very seriously, and I don't want -- you know what?  I think I'm going to win.  I don't want to beat him in this way.

I'm just saying, in my opinion, and you already seen it, the Democrats are going to bring a lawsuit.  If it’s Ted, the Democrats are going to bring a lawsuit.  He's got to have this thing worked out.

WALLACE:  Honestly, do you have any doubts that Ted Cruz is a natural born American?

TRUMP:  I don't know.  I really don't know.  It depends.

Does natural born mean born to the land, meaning born on the land?  In that case, he's not.  But, nobody knows what it means.  And, it hasn't been adjudicated, and it hasn't gone to the Supreme Court.

And I'm only saying this -- and I speak well of Ted.  I'm only saying that Ted has to get this problem solved because if he's running against a Democrat, and they bring a lawsuit, he's got a hell of a thing over his head.

WALLACE:  President Obama is making a big push about gun control.  You said the other day that pretty soon, we're not going to be able to get guns.  And, the President responded that that's all a conspiracy.  Check it out.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  Contrary to claims of some presidential candidates apparently before this meeting, this is not a plot to take away everybody's guns.


WALLACE:  Your reaction?

TRUMP:  So, President Obama has been hitting the Second Amendment, and he would like to hit it very hard.  Number one, you shouldn't do it through executive order.  You should get together with the Republicans, and the Democrats, and work something out.  And, that's the way it's supposed to be done, not by the signing of an executive order.

Now, he's done executive orders, he's done it on the border, he's done it all over the place.  I mean, I don't think -- does he meet with anybody anymore?  All he does is sign executive orders.

The one on the border was just overturned, and who knows what's going to happen, but it's a big legal mess.  But, you got to get the people in a room, and you got to talk to them, and cajole them, and see if we can do something.

So, I have a real problem with the way it's done, and I have a real problem anytime you start knocking, and taking chunks out of the Second Amendment.

If people had guns in California when these two horrible people that were married, however -- whoever was radicalized first, nobody knows, but they were both radical, obviously, in the end.  Had in that room had guns, a couple of them, it would have been a totally different story.

In Paris is an example.  Use Paris -- so, in Paris, the toughest gun laws, they say, in the world, or just about.  France, the toughest gun laws in the world.  All of these people, 130 people killed.

Had people in those rooms in Paris when they were being shot -- no guns, no guns on the good guys’ side.  Had there been guns they would have been shooting, and they would have been gone, and, you know what?  There would have been a much smaller tragedy than it turned out to be.

WALLACE:  This week you released a short video, once again hitting Bill Clinton on his personal problems.  Here it is.


HILLARY CLINTON, D-PRESIDENTIAL CANDIDATE:  Women's rights are human rights and human rights are women's rights.  Once and for all, let's keep fighting for opportunity and dignity.


WALLACE:  First of all, you put Bill Cosby in there, and you have compared Bill Clinton’s problems to Bill Cosby's.

TRUMP:  No, I'm not doing that.  I mean, that's to the -- that’s actually up to the public


WALLACE:  Well, you have mentioned them both in the same sentence, and the reason I ask is --

TRUMP:  I mean, it's not up to me...

WALLACE:  -- as inappropriate as his relationship with Monica Lewinsky may have been, since she was an intern --

TRUMP:  Well, you're not talking about Monica, you’re talking about many.

WALLACE:  It was consensual, Clinton and Monica.

TRUMP:  You're talking about many.  I mean, if you read the book, the book has other ones that were really horrible.  You have one being -- accusing him of rape, and other things.

Hey, look, he was impeached.  He lost his law license, couldn't practice law.  He had to pay a massive fine or a massive amount of money to -- whether it's Paula Jones, or whoever.

And this was all done in the White House.  A lot of this was done in the White House.  Not a good situation.

Now, had she not mentioned about penchant for sexism, to me, penchant -- I have a penchant for sexism.

I have more respect for women than Hillary Clinton has.  I have more respect than Hillary Clinton, OK?  I will take care of this country far better than Hillary.

So, I thought it was appropriate.  I mean, to be honest, I thought it was appropriate.  He's campaigning for the wife.  She said I had a penchant for sexism, which I don't.  But, that's what she said.  She made the statement.

WALLACE:  Now, a lot of Republican officials, including a lot of Republican women say that's going to backfire.  That, you're going to make her more popular.  Once again, she's the victim, that it's going to turn a lot of...

TRUMP:  No, no.  She's not a victim.  She was an enabler -- she

WALLACE:  She was an enabler?

TRUMP:  She worked -- yes, she worked with him.  I mean, she was -- some of the women have been totally destroyed.  Some of these women have been destroyed, and Hillary worked with him.

I mean, there's no -- there's no feeling sorry for Hillary in this situation.  And, all you have to do is look at some of the facts, and look at some of the settlements.  There's no feeling sorry for her.

WALLACE:  Clinton has refused to respond to your statements, saying she's made a made a New Year's Resolution.  Here it is.


CLINTON:  I’m going to let him live in his alternative reality and I’m not going to respond.


WALLACE:  Your reaction?

TRUMP:  Well, I can tell you right now, during the debate, the Democrat debate -- even though they call it the Democratic debate, it really is the Democrat debate.

Then she brought the sexism, penchant for, and I said, what's going on over here?  I mean -- and then her husband says I'm going out to -- you know, he's going to go out to campaign.  So, with all of that happening, I think he's fair game.

And, I would say 95 percent of the people that have looked at it, including the liberal press, has agreed with me.

WALLACE:  In the time we have left, let's do a lightning round.  Quick questions, quick answers.

North Korea tested a nuclear weapon this week, they say it was a hydrogen bomb.  What would President Trump do about North Korea?

TRUMP:  I think North Korea is a disgrace.  I've been saying, in fact, I told you a long time ago, they better start looking at that.

The Iran deal is one of the worst deals I've ever seen, $150 billion dollars, and everything else.  But, at least right now they're going to have one soon, by the way, because of this stupid agreement.  But, at least right now they don't have one.

North Korea has very dangerous weapons of some sort.  We don't know exactly what.

WALLACE:  So, what would you do?

TRUMP:  I would get China, and I would say, "Get in there, and straighten it out.  You'd better straighten it out."

And, if you don't straighten it out, we're going to have trouble because we have power over China.  We have trade power over China.  And, Obama doesn't understand, he's not a business person.

WALLACE:  There have been several terrorist -- domestic terrorist incidents recently.  There were two Syrian refugees who were arrested for trying to support ISIS in Syria.  There was a cop who was shot in Philly, and the person who shot him said he was doing out of his allegiance to ISIS.

TRUMP:  We have to be very strong, we have to be very -- look.  If we're not vigilant in this country, we're not going to have a country left.  You look at what's happening in Brussels, and you look at what's happening in Germany, and you look at what's happening in Paris, and so many places.  We have to be vigilant.

WALLACE:  We hear about Bush Doctrine, an Obama Doctrine, is there a Trump Doctrine on foreign policy?

TRUMP:  Yes.

WALLACE:  Is there a guiding philosophy?

TRUMP:  Yes.  Tough, and smart, and vigilant.  We have to see what's going on.  We don't.

We have to be respected because right now, Chris, we're not a respected -- we're not respected by anybody.  And, when other people, I have to tell, in terms of foreign policy, we're losing a fortune -- other people have to pay up.

When we -- and, again, when we take care of South Korea militarily, when we take care of Germany, and all this stuff -- many people don't even know this.  But, we're protecting all of these countries, when we're protecting Saudi Arabia, as an example, Saudi Arabia was making a billion dollars a day, now it's less because of the oil, but they're still making plenty, OK?  We got -- they got to pay up.

I mean, we're protecting them, they got to pay up.  I didn't like what they did, by the way.  I felt what they did was not good, all of the executions.

But, when Saudi Arabia's making a billion dollars a day, and we get peanuts, every time they have a problem, we have to go and defend them, not going to work that way.  It's not going to work that way.  They have to pay up.

WALLACE:  You have had remarkable success as a Republican candidate.  Lord knows you surprised me, but, there are people who say if you should actually become the nominee, and be in the general election, you're going to have problems.  You're going to have to reach out to Hispanics, to minorities, to women, to independents, that you're going to have to move to the center, and you're going to have to tone it down.

TRUMP:  Look, all I can tell you is what I can tell you.  You said I wouldn't run.  Most people -- like you, said, I don't want him on this program because he's not going to run.  OK, so I ran...

WALLACE:  I said --


TRUMP:  Not only did I run, not only did I run, I have 42 percent now in the latest poll, and other people have 12, and two, and one, and everything else, OK.  So, I ran, I'm doing well.

WALLACE:  It's not attractive to say, "I told you so, Mr. Trump."

TRUMP:  No, I didn't.  I understand.


TRUMP:  But, I think I'm going to do very well.  If it's Hillary, and it shouldn't be Hillary because of what she did with the emails.  I mean, frankly, it shouldn’t be, she shouldn't be allowed to run.  I think I'm going to do very well.  Recent polls have shown that I'm going to do very well.

And a lot of people are saying that if it's Trump against Hillary, it's going to be the largest voter turnout in the history of this country.

And, those extra people, those people that have never been part the process before are doing it because they're going to vote for Trump.  So, I think we're going to do very well.

WALLACE:  Mr. Trump --

TRUMP:  Thank you.

WALLACE:  -- thank you.

TRUMP:  Thank you.


WALLACE:  Up next, we'll bring in our Sunday group to discuss the Republican race, and a new problem about Hillary Clinton's private e-mails.

Plus, what would you like to ask the panel about the Trump/Cruz birther debate?  Just go to Facebook or Twitter @FoxNewsSunday, and we may use your question on the air.



SEN. TED CRUZ, R-TEXAS, PRESIDENTIAL CANDIDATE:  I have never breathed a breath of air on this planet when I was not a U.S. citizen.  I’ve never been naturalized.  It was the process of being born that made me a U.S. citizen.


WALLACE:  Senator Ted Cruz defending himself against claims he may not be eligible to be president, because he was born in Canada.  And it's time now for our Sunday group.

Syndicated columnist George Will, Bob Woodward of The Washington Post, Laura Ingraham, editor in chief of the website LifeZette, and FOX News political analyst Juan Williams.

Well, we asked questions for the panel and we got a bunch about Cruz questioning whether or not Cruz is a natural born citizen.  Here’s one, Rob Hogan tweeted this, "Why did Trump and media insist about talking about another nonissue?  Stick to real issues."

And Glenna Palmer sent this on Facebook, "If place of birth didn't matter with Obama, why should it matter with Cruz?"

Laura, how do you answer Glenna and Rob?

LAURA INGRAHAM, HOST, "THE LAURA INGRAHAM SHOW":  Well, Ted Cruz's mother was born in the United States.  Ted Cruz never renounced his U.S. citizenship.  He mother did not live the requisite five years according to Canadian law to even request Canadian citizenship.

But I will say, as long as Ted Cruz feels like he has to answer questions about this, what I think what's driven him up in the polls in Iowa is somewhat diminished, because I think people who don't really follow this all that closely will get their heads wrapped around this issue -- well, wait, he was born in Canada.  Like I think people sort of take this an issue that really is a disqualifier.

I do not believe it is.  Paul Clement is one of the smartest legal minds in Washington.

WALLACE:  Former solicitor general.

INGRAHAM:  Yes.  Also, we both clerked on the Supreme Court, different years.

He’s -- this is -- this is a joke, according to him.

WALLACE: One of the things I have to say I enjoyed this week was John McCain saying, well, this might be a legitimate issue.

INGRAHAM:  He's likely a Rubio supporter.  So, when Trump --

WALLACE:  Yes.  But part of that also is, how much as he dislikes Trump, he really hates Cruz.

INGRAHAM:  He really hates Cruz.  Cruz came on my radio show and said, look, he’s going to endorse Rubio any day now, so that this is McCain’s way of getting back at the wacko birds he called Ted Cruz famously after the green eggs and ham soliloquy on the Senate floor.  So, there’s bad blood there all the way around.

WALLACE:  But, you know, it is interesting as you pointed.  Cruz is feeling the need to respond to this and it gotten such traction that this week, the Cruz campaign released a document.  Let’s put it up on the screen, this is the birth certificate for Ted Cruz's mother documenting the fact she was born in Delaware, clearly one Cruz feels he can't ignore this.

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST:  I don't think he can at this point, because it's now solidly established as a media story.  It’s everywhere.  And I do agree with what Laura said.  I think lots of people, including voters are saying, "Oh, he was born in Canada?  That's news to me."  It's not news to us around here, but it might be news to them.

And again, I don’t think there’s much of a legal argument here, but the fact is, it's never been litigated, and never been to the Supreme Court, as Trump pointed out to you.

So what we have here is the enemy of my enemy is my friend when it comes to John McCain.  John McCain has no love for Donald Trump.  Donald Trump called him a losing for getting captured in Vietnam.  But he -- but remember, what you have here is Cruz is a guy who's campaign against fellow Republicans through the Senate Conservative Fund.  He's a guy who has called Mitch McConnell, the Senate majority leader, a liar on the floor.

So, his own friends, his own Republican caucus have a strong distaste for Ted Cruz and I think that’s what you’re seeing from John McCain.

WALLACE:  Chickens coming home to roost.

WILLIAMS:  For Ted Cruz.

WALLACE:  On the Democratic side, Hillary Clinton seems to be cruising to the nomination, but there was a new release of e-mails on Friday.  And this may cause some problems for her.  Let’s put up this up on the screen.

In 2011, when an aide was having trouble sending her material by a secure fax, she sent these instructions: "If they can't, turn into nonpaper with no identifying heading, and send nonsecure."

Bob Woodward, why is this important?

BOB WOODWARD, THE WASHINGTON POST:  Well, because here you have the secretary of state in 2011 saying let's subvert the rules, which say you've got to send -- presumably -- I mean, it's very clear from the earlier e-mails that this was a security issue, and I’ve written about nonpapers or no papers, and this is the way people in the government take the heading off and create something that exists.

WALLACE:  Explain that, explain that to the rest of the world here.  What's a nonpaper and what is taking the heading off?

WOODWARD:  By taking it off, it's just a piece of paper that has a bunch of paragraphs.  And there's no classification, there's no subject, so it's not in the system, so no one can discover it through Freedom of Information Act or some sort of subpoena.

I mean, look, here is Hillary Clinton, somebody who worked on the staff of the Nixon impeachment committee, and what was the lesson, one of the lessons from that?  Never write anything down.

She did years of Whitewater investigations where she was the target, and here, many years later, she's saying oh, let's subvert the rules and writing it out herself?  You know, whether that's some sort of crime I think is not the issue.  The issue is, it shows she kind of feels immune, that she lives in a bubble, and no one is ever going to find this out.  Well, now we have.

WALLACE:  George, I think it's fair to say that after -- first of all, Bernie Sanders said, "I’m tired of your e-mails" and then the Benghazi hearings, the e-mails seemed to be fading away.  Does this revive it?

GEORGE WILL, SYNDICATED COLUMNIST:  It keeps it going and that matters I think.  I think the question really at the end of the day is a question of legality.

The problem with this as a political issue, the force of an issue is upon a function of its simplicity.  And when the average voter hears about a server in a closet in Colorado, they say, I know what a closet is, I know what Colorado is, what’s a server?  And I think people are kind of unclear about that.

But what does this is reinforce a preexisting perception about the Clintons, that whenever they come, they come in a cloud of seaminess of some sort.  And this also occurs in the context of the Petraeus precedent.  Petraeus, former high military official, former director of the CIA, got in trouble for the mishandling of classified information.

So, at the end of the day, this comes down to the Justice Department.  We know -- we don't think, we know from the IRS example that the Holder Justice Department was eager to be complicit in covering up certain scandals.

The question is, if the FBI makes a recommendation to the Justice Department about illegality, then the ball is in Loretta Lynch's court, and we'll see if she's a different kind of attorney general.

WOODWARD:  But going back many years, I have followed the Hillary Clinton -- you know, what she does and biography is character and behavior is character here, and when I read that, I was really surprised that she would type that out and say, "Let's send it nonsecure," and, you know, maybe we'll get answers.  In fairness to her, it's not clear what this is about, what the talking points were and so forth.


WALLACE:  Does it matter in that sense?  I mean, if it was supposed to be send secure and she, as you say, subverting the law by saying send it -- or at least the regulations by sending it nonsecure, isn’t that --

WOODWARD:  The question is, what is it?  I’m tried to look into the record and figure out what was going on that day and she was going to give a press briefing.  Maybe it was talking points for a press briefing, and there may be not classified information in there.  At the same time, she was meeting with the Russians and maybe there was.  So, we'll see.

INGRAHAM:  Remember, she hasn't released all of her e-mails.  She was supposed to reach a threshold by December 31st, she did not.  Her staff said, we were working really hard.  We are trying -- Lord knows what’s on the other ones.  You are not allowed under federal law to act as your own declassifier of information.  A GS-15 employee at the NSA tries to do this.  Do you think -- why are you scowling?  Do you think there would be a legality issue?


WILLIAMS:  The secretary of state is in fact the person who decides if it's classified or not.

INGRAHAM:  No, no, no.

WILLIAMS:  Not only has she said, that the State Department has said, Justice Department put out a memo saying this.

INGRAHAM:  So, you’re saying -- you're saying that Hillary Clinton's handling of this e-mail situation is all -- that’s all cool, this is the way our government is supposed to work?

WILLIAMS:  I never said it was cool.  I agree with what Bob said.  I don’t think it’s a legal issue.

INGRAHAM:  Joe DiGenova, former U.S. attorney, said on my radio show --


WALLACE:  He said he doesn't know.

INGRAHAM:  Joe DiGenova said the FBI, Chris, is in a major, on the verge of a major revolt in right now with the way this issue is being handled.  And I think George --

WALLACE:  Joe DiGenova, we should say former U.S. attorney.

INGRAHAM:  Former U.S. attorney, George hit the nail on the head.  This is a matter of legality.  This goes to the heart of whether we can trust our government to be fully transparent when they're supposed to be, and properly handle this kind of information, and the professionals will have the final say.

WILLIAMS:  I think you're lost in the weeds on this when I think the voters --

INGRAHAM:  That's what you hope.

WILLIAMS:  -- the voters really don't care, and I think that Jim Comey, the FBI director, is beyond reproach --


WOODWARD:  The voters care about whether we're going to find out who she really is and what she did.  And this is one element of it.

WALLACE:  All right.  We have to take a break here.  See you a little later.

Up next, President Obama delivers his last State of the Union Address.  We'll sit down with White House Chief of Staff Denis McDonough to discuss the challenges the president faces.

Plus, what do you think of President Obama going around Congress on gun control?  Let me know on Facebook or Twitter @FoxNewsSunday and use the #fns.


WALLACE:  Coming up, President Obama blames the NRA, not his plans for the recent spike in gun sales.


OBAMA:  The NRA has convinced many of its members that somebody is going to come grab your guns.


WALLACE:  We’ll discuss the president’s latest executive actions with his White House chief of staff, next.


WALLACE: President Obama says his final State of the Union Address will highlight his accomplishments over the last seven years and look beyond the next election when someone else will be in the Oval Office.

We're joined now by the president's chief of staff Denis McDonough.

And welcome back to FOX NEWS SUNDAY.


WALLACE: The White House says that the president’s State of the Union Address will be, quote, "nontraditional." That it will be let about specific pieces of legislation, more about the challenges facing the country, which raises the question, does he not expect to get much through Congress this next year?

MCDONOUGH: Well, look, I think he -- we expect to get a lot of good things through Congress this year and we, obviously, just had a very successful end of the last year with the budget agreement and with the tax extender’s package. So we feel good about that. But what the president is going to lay out is a picture of the country moving forward, focused on the future, not afraid of it, and very optimistic about our future because of what he knows about this country, which is that when we draw on everybody 'strength, when everyone has a shot in this economy, when every -- when we're using all of our elements of national power to make the world safe, and, by the way, when everybody gets their shot at this democracy, not just the select few, then there is -- the sky’s the limit for what the American people can do and what this country can do. And that what he’ll lay -- lay out on Tuesday night.

WALLACE: Well, one of the ways that he's been moving the country forward is through executive action, not working through Congress. And I want to just take a look at a list of some of the executive actions over the last 14 months. November 2014, carbon emissions deal with China, same month, temporary amnesty for 5 million illegal immigrants. December 2014, normalized relations with Cuba. July, 2015, Iran nuclear deal. December 2015, Paris climate deal. This week, tightened gun controls.

Mr. McDonough, whatever happened to Article I of the Constitution which says, all legislative powers herein granted should be vested in a Congress of the United States?

MCDONOUGH: Yes, well, look, I -- I was actually happy to see that list because when I was on your show a year ago, you asked me whether the president was done, whether he recognized that he was basically -- had lost the election and there was nothing left for him to do. Everything that you just laid out are things that he got done in the last year, which, of course, we’re very proud of. Most particularly, this climate deal, which will protect this country, and its people for decades to come --

WALLACE: But -- but through your terms (ph).

MCDONOUGH: And the Iran nuclear deal, by the way, which fulfills his --

WALLACE: But you’re kind of avoiding my point, which is that he’s --

MCDONOUGH: Which fulfills his promise to not let Iran get a nuclear weapons.

WALLACE: But he did it on his own. He didn't do what the Constitution says, which is observe Article I, that all those legislative powers reside in the Congress.

MCDONOUGH: Well, let me come back to Article I in a second and particularly the war power, which is something that we hope the Congress will take up and -- and --

WALLACE: Well, I'd -- I’d like to talk just generally about legislative power.

MCDONOUGH: Sure. And, absolutely. And then we just completed a deal, which I talked about a second ago, a budget deal which allows us to invest $50 billion above what Congress wanted to do in things like middle-class prosperity, middle-class economics and our national security priorities. We got a tax extender --deal -- a tax extenders deal with Congress, because we wanted to make sure that's invested in middle class families.

WALLACE: But, see, you’re not -- you're not -- you’re ducking my question.

MCDONOUGH: And they had an opportunity there, if they wanted to exercise under their Article I priorities and powers, whether they wanted to be heard on any of these questions. They decided they didn’t.


MCDONOUGH: So these are not self-executing powers. They have to make a decision to do it.

WALLACE: But -- but -- but the Constitution doesn’t say, well, all legislative powers are -- are vested in the Congress unless they don't act, in which case the president can do whatever he wants. That -- it doesn't say that.

MCDONOUGH: Their -- their -- well, look, (INAUDIBLE), let's take the guns announcement from earlier this week. Very simple question. Everybody -- in fact, many of the Republicans and -- and many of our Fox commentators, I’m sure as you’ve seen throughout the course of the week, have urged us to enforce the laws that we have. So what the president did is two things, he clarified, using guidance from the attorney general, exactly what the law expects. A law that was passed by Congress three decades ago. The second thing he did is he asked Congress for 200 new agents to enforce those laws. I don't know why that’s so objectionable or whether this is a constitutional question, Chris. I think this is not a constitutional question. This is a question of protecting the American people, 30,000 of whom last year died from gun violence. That's too many.

WALLACE: Well, let's talk about another issue that’s coming up. The president made it pretty clear in his year-end press conference that if Congress doesn't act to close the prison at Guantanamo Bay that he will. Take a look.


OBAMA: We will wait until Congress has definitively said no to a well thought out plan with numbers attached to it before we say anything definitive about my executive authority here.


WALLACE: But Congress has repeatedly prohibited him from transferring prisoners from Guantanamo to the United States. And, in fact, just this November, the president signed a defense bill which barred him again. Question, why isn't that the end of the argument?

MCDONOUGH: Maybe you and I just watched a different clip. What the president just said is he’s going to work with Congress, present them a plan to close it, and the he’ll make some final determinations. So I -- I don’t know if you and I watched something different, Chris --

WALLACE: But -- and wait -- and wait, wait, wait -- and --

MCDONOUGH: But let me be clear, the president has said from the beginning of this administration that we will close Gitmo because it's bad for our national security and because it's too costly. $4 million per year per detainee in that facility. That's a travesty. We ought to make sure that we're in a position to close that facility because it strengthens us when we close it. that’s what the president will do. He feels an obligation to his successor to close that. And that's why we're going to do it.

WALLACE: You are going to do it?

MCDONOUGH: Sure we are.

WALLACE: Whether Congress says yes or not.

MCDONOUGH: The president just said that he’s going to present a plan to Congress and work with Congress and then we’ll make some final determinations.

WALLACE: And if they say no, which they almost certainly will --

MCDONOUGH: I’m not an if/then guy, Chris. I’m a guy that just -- that just --

WALLACE: Well, that’s -- he was.

MCDONOUGH: No, he wasn’t at all. He -- he -- again, you and I may have watched a different clip but what i just saw the president say --

WALLACE:  He said, we’re going to wait and see what they do before I say anything about my executive authority.


WALLACE:  Bur you're saying you’re going to close it on way or the other?

MCDONOUGH: I said we’re going to close it. He just said he’s going to present a plan to Congress to do that.

WALLACE: You -- you talk about --

MCDONOUGH: And we’re going to do it because it's too expensive. But, much more importantly, it's not in our national security interests to --

WALLACE:  You say it’s not in our national interest. The Office of the Director of National Intelligence says that 30 percent of the detainees that we’ve transferred so far are either confirmed or suspected of returning to the battlefield. Why help our enemy by giving these people, who were clearly -- wouldn't be in Guantanamo if they didn't have some role in the war on terror for all these years, particularly the ones who are still here, why help our enemy in the middle of the war on terror?

MCDONOUGH: This is why we, from day one, went deep into the question of Gitmo to look at each of the individual detainees and also worked very closely with our allies so that when we transfer them into their custody or into their care or into their watch, that we make sure that we have a rock-solid agreement for them to do that. Those 30 percent --

WALLACE: Well, wait a minute. Just those --

MCDONOUGH: Those 30 percent --

WALLACE:  But the --

MCDONOUGH: Those 30 percent, Chris  go back to the start of this, which the overwhelming majority of them transferred under the previous administration with insufficient protection. That's why we changed the policy. That’s why we changed how we handle them.

WALLACE:  You’re saying --

MCDONOUGH: And that's why that number’s gotten better under this administration.

WALLACE:  You’re saying none of the ones you have released have gone back?

MCDONOUGH: I didn’t say -- I didn't say that none of the ones that we have released. I’ve said that we do this with considerable care pursuant to arrangements with our allies to ensure that they are kept out of that fight.

WALLACE:  You -- you had a --

MCDONOUGH: And that's exactly what we're going to do.

WALLACE:  You had a huge fight with the previous defense secretary, Chuck Hagel, who said that you were pushing him to release people he wasn't comfortable releasing.

MCDONOUGH: Oh, I think that every secretary of defense only signs the transfer orders that he's comfortable signing. And so I -- I -- I won’t go any further than that.


MCDONOUGH: I’ll let the secretary -- I’ll let the secretaries of defense defend their positions one way or the other on that. What I am -- what I’m not willing to do is that -- and what the president’s not willing to do is to make this problem, which has consumed enormous amounts of time and important relationships with our countries and allies around the world for the next president. He feels an obligation to the next president. He will fix this so that they don't have to be confronted with the same set of challenges.

WALLACE:  In the time we have left, let’s do a lightning round. Quick questions, quick answers.

Iran has violated a ban on ballistic missile testing at least twice in recent months. The administration on December 30th said, we're going to send you, Congress, a list of sanctions to punish them, because that’s a -- there's a ban on ballistic missile testing. Then just hours later, the administration said, no, we’re not going to send you a list. Question, are you going to punish Iran for violating the ballistic missile testing or not?

MCDONOUGH: We didn’t sent them a list of sanctions. We sent them a list of individuals who are carrying out nefarious actions in the region, including as it relates to the ballistic missiles, that we will --

WALLACE:  But on December 30th you said you were going to list -- you were going to send sanctions --

MCDONOUGH: Mind if I answer the question?

WALLACE:  Well --

MCDONOUGH: We will issue those sanctioning and those designations at the appropriate time. There’s no question about it.

WALLACE:  What's the appropriate time?

MCDONOUGH: What -- we'll issue the designations when it's time.

WALLACE:  But there’s no immediate plan to do so?

MCDONOUGH: We'll issue them when it's time.

WALLACE:  Will the Obama administration push to extradite the drug kingpin El Chapo as quickly as possible back to this country?

MCDONOUGH: We welcome extradition. I’m not going to get ahead of the -- any kind of conversations that the Department of Justice may be having on that.

WALLACE:  But the effort, the desire to bring him to this country to justice stands?

MCDONOUGH: We're very proud of the record that we've had working with our Colombian and with our Mexican counterparts to dramatically increase the number of extraditions into this country’s judicial system, until this president. We'll continue to do that.

By the way, Chris, I will say, we face a dramatic problem as it relates to heroin abuse, heroin addiction in this country. We will continue to press, including with the Mexicans, until we get that back in the box.

WALLACE: Would you like to see El Chapo in an U.S. prison?

MCDONOUGH: I’d like to see El Chapo on -- in prison and I’d like to make sure that the bragging that he did last night on -- and that we’ve read about in these newspapers is something that he can't continue to do.

WALLACE:  Finally , the standoff continues at that wildlife refuge in Oregon, ranchers questioning what rights they have over federal land. Are you going to let the protesters continue to occupy that territory or are you going to force them out?

MCDONOUGH: I'm going to be very careful what I say here, because I'm just not going to add anything into this. It's an enforcement matter that FBI is working on with Department of Interior on and they’re -- I think they're doing just a very fine job on it.

WALLACE:  But can you let them just occupy the land in flat violation of the law?

MCDONOUGH: I think that the FBI and the Department of Interior are handling this very well.

WALLACE:  Mr. McDonough, thank you for answering some questions and skillfully not answering some of the other ones.

MCDONOUGH: Thanks for having me, Chris.

WALLACE:  Thank you. Thanks for your time today, sir.

MCDONOUGH: Appreciate it.

WALLACE:  And you can watch the president’s State of the Union Address this Tuesday on Fox News Channel. And I'll see you on your local Fox station. Coverage starts at 9:00 p.m. Eastern.

Up next, North Korea tests another nuclear weapon. They say it was a hydrogen bomb. We'll bring back the panel to discuss what the U.S. response should be.



JOHN KIRBY, STATE DEPARTMENT SPOKESMAN: No, you -- we are not going to accept North Korea as a nuclear arms state. And we're not going to recognize that.


WALLACE:  State Department Spokesman John Kirby continuing to say the U.S. will not accept North Korea as a nuclear state nine years after it conducted its first test of a nuclear bomb. And we're back now with the panel.

Well, this is the fourth nuclear test that North Korea has conducted, the third on President Obama's watch. But the Obama policy towards dealing with the regime is what the president has called, quote, "strategic patience."

Laura, how’s that working out?

INGRAHAM: "The Daily Beast" just wrote a fabulous piece examining how foreign policy experts, beyond, you know, conservatives and Republicans, people of the Council on Foreign Relations, Brookings Institution, are now squarely blaming the Obama’s foreign policy for the situation we're in right now in North Korea. It's gone beyond the partisan bickering that Republicans are just going to point fingers at Obama, to people who have spent their lifetime studying North Korea and said, look, this -- this strategic patience has been a strategic disaster for the United States.

WALLACE:  Because?

INGRAHAM: Well, because, obviously, the test goes forward. It looks like, from the reporting, and Bob might know more about this, that we were surprised by this test. Then there was some question of whether it was a successful test and the kind of back and forth of the White House. I just think it -- we come across at bystanders once again when something as important as this happens in Asia, when the president promised a major pivot to Asia at the beginning of his administration. So for all of Denis McDonough's crowing about all that they’re getting done in the -- in the last year of the administration, boy, this Asia pivot never really happened.

WALLACE:  But -- but, one, to be fair to Obama, Clinton and Bush 43 tried to negotiate with the Korean regime -- North Korean regime. That doesn't work. Obama has tried to ignore Kim Jong-un. That hasn't worked either. What can the U.S. do? And can you really say that Obama has messed up what was going on beforehand?

WILLIAMS: I don't think it's fair to say he messed up, but I think it is fair to say that he has been inattentive. And you could go back farther. I mean, you know, George H.W. Bush, and pull some nukes out of South Korea because the hope was that you would see North Korea reciprocate in kind.

The leverage here is with China, obviously. China’s really the big player in that neighborhood. And the question is, what influence do we have to exert on China that would get China to put some pressure on North Korea? Right now China this week said they're very unhappy with what the North Koreans did. It's a threat to them. And so China, the question is, why aren't you acting, China? Your -- you provide food, energy to North Korea. They are their patron. When you see this kind of behavior, it do -- pushes the United States into a position where we could say to Japan, where we could say to North Korea -- to South Korea, go ahead, build nuclear weapons to confront the North Koreans, to challenge the North Koreas. That's not in China's interests. So that's the only leverage we have at this point, going after China.


WOODWARD: Well, you -- you talk to people in the intelligence world and they will -- some of the really smart ones say, North Korea is the most dangerous state out there. and the idea that you have this maniacal regime with nukes and obviously willing to flaunt it, is, very, very scary. Overtly, I think there’s not much you can do. The question is, either back channel diplomatically with the Chinese and others and intelligence operations.

WALLACE:  But we have been doing -- we have tried that with Clinton. We have tried that with Bush 43 and it didn’t work.

WOODWARD: Yes, but the -- I -- the intelligence people are aware, this is a big, giant problem. And there are things that can be done that are not overt.

WALLACE:  All right. With -- since this panel is a democracy, sort of, we're going to call an audible here and you wanted to talk, Bob, about the interview I just did with Denis McDonough.

WOODWARD: Yes, because I thought it was very revealing. First of all, in fairness, Obama’s had a much better year. The deal on the budget really is important, and it stabilized things. Unfortunately, McDonough sounds very, very defensive and nonresponsive on things, but I -- I think the bottom line, and the important bottom line here is, it illustrates the concentration of power in the presidency. It’s gone up from Nixon to Obama. Obama has more power, will exercise more power. A lot of this is constitutionally doubtful, as the -- as George will -- and Laura I'm sure will say. But the Congress can do only certain things. And the main thing is cut off funding. That's where they control things. And if they start cutting off funding on some of these executive actions, you'll see real conflict. But Obama's probably going to get his way on these sanctions.

WALLACE:  But -- but let me ask you, on the broader issue, as somebody who cut his teeth talking about Nixon and the reporting on Nixon and the abuse of power, does it trouble you at all to see this tremendous expansion, self-proclaimed expansion of executive authority under Obama?

WOODWARD: Sure, but it -- I mean, to us as journalists, the important lesson is, we've got to -- we’re going to have a new president in about a year, and let's make sure we tell people who that might be and not -- you know, we -- we've got to cover the polls --

WALLACE:  But you’re kind of ducking my question.


WALLACE:  The question I’m asking is, does it trouble you -- and I want to get to George on this --


WALLACE:  To see the -- the powers and the ability of a president to run, I'll say it, rough shod over Congress and Congress is willing to -- does that trouble you?

WOODWARD: Sure. Well, you raised the issue, Article I of the Constitution, which clearly says the Congress has the power on this. And, sure, it's -- it’s troubling, but the reality is that Obama is doing it.

WALLACE:  George?

WILL: Absent the power of the purse, which you rightly say, all other Article I powers are vitiated and negligible. So what Congress has to do is to reframe its budget process, start sending instead of enormous end of session government shutdown/cliff omnibus spending bills, send regular appropriations bills so that you can punish and discipline particular parts of the government without threatening chaos. Woodrow Wilson famously said, a president is free to be as big as he can be. I don't have a presidential candidate yet, but I’m going to endorse the first one who will adopt the opposite of the army's slogan. The army says, be all that you can be. I want a president who will be less than he can be, that has a kind of constitutional etiquette, some understanding of the manners of the separation of powers.

WALLACE:  But don’t you -- don't you think, George, that just like security keeping getting -- it never goes back, just keeps getting more intrusive as -- as we go on in -- in the world we're living in, that when you get something like this, which is a president expanding the definition of what he can do on his own, that you can never turn back from that?

WILLS: Particularly when he has said he can do anything on his own. What Mr. McDonough said in your interview, he used a wonderful phrase, he said, we are determined -- we’re good players under the separation of powers. We're going to let Congress be heard. Congress isn't to be heard, Congress is to be dispositive.

WILLIAMS: You know what you guys are missing, though?


WILLIAMS: You guys are missing total context here. There would be chaos. Chaos right now.

INGRAHAM: Oh, please.

WILLIAMS: Congress is doing nothing. Zero.


WILLIAMS: Congress obstructs this president, tries this --


WILLIAMS: This grace (ph) --

INGRAHAM: This (ph) is his best friend. What are you talking about?

WILLIAMS: And to somehow put down this president at every turn.

INGRAHAM: Where have they -- where have they blocked Obama?

WILLIAMS: The president responds and you say, why is this president trying to exercise power?


WILLIAMS: He’s trying to do something for the American people.

INGRAHAM: Chris -- Chris, where -- where have Republicans successfully blocked President Obama in the last year.

WILLIAMS: Oh, my gosh.

INGRAHAM: The number one thing that Obama wanted in the last year, the number one thing, for the first six months they devoted to trade, trade promotion authority. They got it. Paul Ryan did big op-eds on it with Ted Cruz at the time. They worked with Obama consistently. The one thing that Obama wanted is to have his administration funded through next -- next year. What did Republicans do? They gave him a $1.1 trillion spending bill that most of these people did not read.

WILLIAMS: Laura, the number one issues that you have --

INGRAHAM: The Republicans have been terrible at checking this president's unbridled authority.

WILLIAMS: Laura, the number one issues that -- that I think that you would have is fighting ISIS in the Middle East. And yet this Congress has not even acted to give authority to this president to go after ISIS.

INGRAHAM: OK. OK. So it’s Congress --

WILLIAMS: That talk about failure of Congress?

INGRAHAM: Wow. Wow. That’s --

WILLIAMS: Talk about Congress abandoning its ranks, George.

INGRAHAM: Yes, well, they actually aren’t the commander in chief.

WILLIAMS: Oh, gotcha (ph).

INGRAHAM: Congress should vote on -- on whether to declare war against ISIS. I totally agree with you.

WILLIAMS: Oh, thank you.


INGRAHAM: All I'm saying is, we can talk about the constitutional separation of powers, checks and balances, but it is up to the opposition party to act like it is a check on the president and this party hasn’t done it.

WALLACE:  And we’re going to leave it there to be continued. Thank you, panel. See you next Sunday.

Up next, we go on the trail as campaign attack ads fill the airwaves in Iowa and New Hampshire.


WALLACE:  With 22 days till Iowa, the presidential campaign has entered an intense new phase with attack ads jamming TVs in early voting states. Here's a look at the air wars on the trail.


WALLACE (voice-over): In New Hampshire, Marco Rubio and Chris Christie are jockeying to be the top establishment candidate. The big issue, who is the real conservative?

UNIDENTIFIED MALE, POLITICAL AD: Chris Christie. One high tax, Common Core, liberal energy loving, Obamacare, Medicaid expanding president is enough.

WALLACE: Christie fired back at Rubio on Laura Ingraham’s radio show.

GOV. CHRIS CHRISTIE, R-N.J., PRESIDENTIAL CANDIDATE (voice-over): It just shows how inexperienced he is and how unprepared he is to be our candidate against someone like Hillary Clinton. She'll pat him on the head and then cut his heart out.

WALLACE:  Rubio was also a target of Ted Cruz’s super PAC, which is questioning whether he’s up to being president.

SEN. MARCO RUBIO, R-FLA., PRESIDENTIAL CANDIDATE: Yes, I know I have a debate, but I’ve get to get this fantasy football thing right. OK.

WALLACE: In Iowa, the battle is among social conservatives. Rick Santorum, who won the caucuses last time, is going after this year's frontrunner.

UNIDENTIFIED MALE, POLITICAL AD: You want someone to read one hell of a bedtime story? Ted Cruz is your guy. If you want to protest American and defeat ISIS, Rick Santorum is your president.

WALLACE: Jeb Bush's super PAC has spent millions attacking Donald Trump, but so far it's not helping Bush or hurting Trump. Still, the ads keep coming.

JEB BUSH, R-PRESIDENTIAL CANDIDATE: They say ISIS was contained, and that this isn't our problem.

TRUMP: Why do we care? Let ISIS and Syria fight.

BUSH: He says that ISIS is not our fight. Really?

WALLACE:  As for Trump, who has trashed almost everyone on the trail, his campaign released its first ad this week. And, shockingly, they decided to stay above the fray.

UNIDENTIFIED MALE, POLITICAL AD: The politicians can pretend it's something else, but Donald Trump calls it radical Islamic terrorism.


WALLACE: On one New Hampshire TV station, 25 percent of all commercial time is now going to campaign ads. And as the voting gets closer, it will only get worse.

Now, a quick program note. Next week I'll sit down with the Iowa frontrunner, Ted Cruz, for a Sunday exclusive live here in Washington.

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

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