Eric Holder being investigated for Hill testimony; impact of political scandal on 2014

The following is a rush transcript of the June 2, 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.

Is Eric Holder telling the truth?


ATTORNEY GENERAL ERIC HOLDER: The focus should be on those people who break their oaths and put the American people at risk, not reporters who gather this information.

UNIDENTIFIED MALE: Is it not too much to ask that the attorney general give straight answers when he comes before Congress?

WALLACE: The attorney general most now explain must now explain the contradiction between his testimony and his role in calling a reporter a potential co-conspirator. We'll talk with lawmakers demanding answers. The chairman of the House Judiciary Committee, Bob Goodlatte, and Congressman Chris Van Hollen.

Then, a tough prescription for the GOP.

FORMER SEN. BOB DOLE, R-KANSAS: They ought to put a sign on the national committee's doors that says "closed for repairs."

WALLACE: On the heels of our interview with former Republican leader Bob Dole, we'll ask GOP chair Reince Priebus what he thinks the party needs to do.

And --

OPRAH WINFREY, TV HOST: There is no such thing as failure. Failure is just life trying to move us in another direction.

WALLACE: Stars of media and politics offer the class of 2013 words of wisdom.

All right now on "Fox News Sunday."


WALLACE: And hello again from Fox News in Washington.

Attorney General Eric Holder is on the hot seat, caught in conflicting accounts of his role of the Justice Department's investigation of reporters.

Joining us to talk about the growing scandal, the Republican chairman of the House Judiciary Committee, Bob Goodlatte, who's in Roanoke, Virginia, and Democratic Congressman Chris Van Hollen of Maryland.

Gentlemen, let's we begin with Attorney General Holder and what he told the House Judiciary Committee on May 15th.


HOLDER: With regard to the potential prosecution of the press for the disclosure of material, that is not something that I've ever been involved in, heard of, or would think would be a wise policy.


WALLACE: But we found out that a few days later, we found a few days later that Attorney General Holder, back in 2010, signed off on the request for a search warrant that would have named James Rosen, the potential FOX reporter and let's put up in the screen what it said.

"There is probable cause to believe that the reporter committed or is committing a violation of the Espionage Act as an aider and abettor and/or co-conspirator." The request also spoke of the reporter's own potential criminal liability in this matter.

Chairman Goodlatte, did Eric Holder lie to your committee?

REP. BOB GOODLATTE, R-VA.: Well, we're going to give him an opportunity to respond. The chairman of the subcommittee, Jim Sensenbrenner, I sent a letter a few days ago giving him until next Wednesday to answer some very pointed questions about the conflict between his testimony under oath before the committee and the language that you just cited in the request for the warrant. That indeed is very troublesome.

It's even more troublesome when the department issues a statement saying that because Mr. Rosen was not prosecuted, therefore the attorney general was telling the truth.

Well, quite frankly he referred in his testimony to potential prosecution, and then went on to say that he had never even heard of such a thing.

So, this is very troubling. But in addition, it's more troubling that the department might be putting false information into requests for warrants so that they can get a warrant to get, not just the phone records of the -- the phone numbers dialed as in The A.P. case, but the actual emails written by Mr. Rosen, the chief Washington correspondent of Fox News. This is a very, very serious allegation, and the Justice Department, I think, made the problem worse by claiming that because they were not prosecuting him, there was no false information given by the attorney general.

WALLACE: Well, let me ask you about it directly. On the one hand, you have him in his testimony saying that he never heard of, was never involved in any potential, you're right, potential prosecution. And, on the other hand, he signed off on this warrant with all these buzzwords in it. Is it fair to say that you're investigating Attorney General Holder for possible perjury?

GOODLATTE: Well, we're certainly concerned about that. That was the purpose of sending the letter. So, yes, it is fair to say we are investigating the conflict in his remarks. Those remarks were made under oath. But we also think it's very important that the attorney general be afforded the opportunity to respond.

So, we will wait to pass judgment until after we receive his response, unless, of course, he's not forthcoming with that. You know, in "The A.P." case, he passed the buck to the deputy attorney general. And so after the hearing two weeks ago, we wrote to deputy attorney general James Cole with a series of pointed questions about that matter. The deadline that he had for responding was Friday. We still have not heard from him.

WALLACE: So, let me ask --

GOODLATTE: So, the matter I think is a serious matter, and I hope that --

WALLACE: Let me just interrupt for a second. I'm going to bring in Congressman Van Hollen in a moment. You say you are investigating him for possible perjury. What could Holder say to clear up this clear discrepancy?

GOODLATTE: Well, I think in fairness to the attorney general, I'm not going to second-guess what he will tell us, nor will I second- guess and I need more information about what exactly his involvement was with the issuance of the search warrant with regard to the Rosen matter, which, of course, wasn't even a subject of the hearing. That was focused on "The A.P." matter. It was only when a federal judge recognize that this sealed warrant had been held an additional 18 months, or nearly three years, beyond when the warrant was issued, that this became public since the hearing.

So, this is new information to us, and we want to hear from the attorney general in response to what you point out is a clear contradiction between his statement and the facts as we know them as this point.

WALLACE: Congressman Van Hollen, same question to you basically. How do you reconcile Holder's testimony under oath to the committee that he had never heard of, was never involved in, not the prosecution, but the potential prosecution, of a reporter with the fact that he signed off on the request for a search warrant that spoke specifically of James Rosen's potential criminal liability?

REP. CHRIS VAN HOLLEN, D-MD.: Well, first, Chris, I'm glad the chairman will give the attorney general an opportunity to respond here.

Here's how. These are perfectly consistent. And it's often the practice in cases where you have investigations that you target somebody for the purpose of gathering information with never having any intention of prosecuting them.

And what the attorney general said is that it's -- it was never -- it was not their intention to prosecute Rosen in this case, but that doesn't mean that they shouldn't seek relevant information to a case where we know that important, top secret national security information was disclosed to potentially compromise our sources and methods in North Korea.

Let's remember, what happened was you had a contractor at the State Department, Steven Kim, who gave information to Rosen.

WALLACE: Allegedly gave information.

VAN HOLLEN: Allegedly.

The FBI apparently went after Kim and got his records, but there was missing information that they were seeking, and that's why they went to a federal judge, an independent judge, and an FBI investigator under oath filled out an affidavit, seeking information as part of their case against Steven Kim.

WALLACE: But the fact is the FBI investigator, Mr. Reyes, who signed off on this affidavit, did it -- we're now told, the Justice Department admitted -- with the approval of the attorney general. And it isn't that they went to one judge. They went to three judges before they got one who would agree that Rosen would not be notified of this.

You don't think that's in any way signing a false affidavit? Which I must tell you, sir, is also perjury.

VAN HOLLEN: Yes, it would be. But tell me what's false in the affidavit. There are no false allegations that are made in this affidavit that I know of. And certainly, I don't think Chairman Goodlatte has any information about false allegation in this affidavit.

WALLACE: The attorney general says --

GOODLATTE: Well, Chris --

WALLACE: Go ahead. I'll Chairman Goodlatte -- what's the false information in the affidavit?

GOODLATTE: Well, the false information is that they found probable cause to find that he was an aider, abettor or co-conspirator with the alleged leaker of the information. Therefore, when the attorney general says that he'd never heard of such a potential prosecution, it raises the question, either the attorney general is not being truthful or the Justice Department has a lot to answer for in using allegations with regard to an individual to get a search warrant that they would not otherwise get unless they indeed could show they had probable cause to find that to be the case.


WALLACE: I'm going to ask you about that directly. Attorney General Holder says in his testimony to Congress, with regard to the potential prosecution of the press -- never heard of it, never involved in it. The search warrant talks about James Rosen's potential criminal liability.

Potential and potential.

VAN HOLLEN: Yes. But the attorney general and the Justice Department always have the discretion not to bring a prosecution or criminal case. And as the attorney general said, it's their policy essentially not to bring that kind of case. That does not mean it's not true as a legal matter to allege exactly what they alleged in this affidavit. After all, as we know, there are lots of facts in this case. The fact is Rosen and Kim set up these alias names, special email accounts.

But that doesn't mean that the Justice Department ever intended to criminally prosecute Rosen. I mean, not at all. I mean, people fill out affidavits as part of cases where they're trying to collect information in this kind of cases.

WALLACE: I think -- I think we plowed this ground.

Let me move on to another subject, and you can get back into this in your answer, Congressman Goodlatte.

Congressman Van Hollen, you say some Republicans are using the Holder case to distract from the real issues of the economy and jobs. Do you not think that the possible infringement of First Amendment rights of reporters is a real issue?

VAN HOLLEN: Of course, it's an issue. The issue is how do you balance our legitimate national security needs with our First Amendment rights?

You've got to admit this whole thing reeks of hypocrisy, Chris. It wasn't that long ago you have Republicans on Capitol Hill, and a lot of folks on Fox, going after the Obama administration, saying you're not getting to the bottom of these national security leaks. It was nonstop for a while.

Then, the administration goes after these national security leaks, and people say, hold, you can't do that. The reality --

WALLACE: In fairness, that's not what people said. People said you can't talk about a reporter as a potential co-conspirator.

How many -- let me ask you a question as a lawyer.


WALLACE: How many times has the Justice Department successfully prosecuted, or even tried to prosecute, a reporter under the 1917 Espionage Act?

VAN HOLLEN: Oh, I don't think we have.

WALLACE: So whose hypocrisy are we talking about here?


VAN HOLLEN: And, you know, you're point is, the attorney general is saying -- weren't planning to prosecute this reporter either. That's the whole issue here, that they were never intending to prosecute him. They were trying to collect information in a case that involved a leak of important national security information that compromised sources and methods. I think it's perfectly legitimate once they exhausted their search of Kim, who was the target, that they collect additional information for the prosecution against Kim, not Rosen.

WALLACE: Congressman Goodlatte?

GOODLATTE: Chris, if I might add, the information submitted to the judges indicated that Mr. Rosen was considered to be a flight risk. Well, how would he be a flight risk in the mind of the Justice Department, of the officials pursuing this matter if they did not have a potential prosecution, an intent to prosecute him when they went and requested this search warrant?

They would not have received a search warrant if they had not said that he was a potential --

WALLACE: Flight risk.

GOODLATTE: -- a target of this investigation. And therefore, you have a real crossing between First Amendment freedoms and overzealousness on the part of the Justice Department.

It is important. I agree with Chris Van Hollen -- it is important to investigate leaks. And we have always said that and will say it right now. But I would argue that in both the mishandling of this case, and "The A.P." case, the Justice Department has damaged their ability to investigate leaks properly because they haven't followed the rules, and in this case, the attorney general has to answer for it in particular.

WALLACE: Gentlemen, I've got to break in. We've only got a couple minutes left. I want to get to one more question that I think you'll both agree is very important.

This month, the Senate is going to consider a comprehensive immigration reform plan, including a path to citizenship.

Congressman Goodlatte, you're at the center of this in the House, as the chairman of the House Judiciary Committee, will you support a comprehensive immigration reform plan or does it have to be done piecemeal, piece by piece, and would you -- does the border have to be secured? Not a plan to secure it, but actually secure it before you'll even consider a path to citizenship?

GOODLATTE: We are hard at work on this problem. We have a broken immigration system in the country. It needs to be fixed. Our legal immigration, our enforcement, and figuring out the appropriate legal status for people who are not lawfully present in the United States all need to be addressed.

We think it's better to do it with a step-by-step approach. We've introduced a series of bills in the House, both the Judiciary and the Homeland Security Committee. We'll continue down that path.

But the final outcome will be in terms of the form of the legislation is not yet known. We are, though, dedicated to solving all three of those problems.


WALLACE: And very briefly -- we're running way over. Does -- would you consider a path to citizenship before the border is actually secured?

GOODLATTE: I -- I do not think a special pathway to citizenship should be provided at all, but a legal status should not be provided before we have underway the actual implementation of a number of reforms, not just border security, but interior enforcement since 35 percent to 40 percent of the people who are unlawfully present in the United States enter legally. And therefore, the border isn't relevant to that, but the enforcement in the interior of the country is.


WALLACE: I want to bring in Congressman Van Hollen.

Brief answer, sir, if you will.

VAN HOLLEN: Well, first, Chris, I can't let the comment go that the attorney general violated the guidelines. They're talking about revising the guidelines, not because he violated them, but maybe because they need to be changed.

On immigration reform -- you've got a big bipartisan piece of legislation that looks to be coming out of the United States Senate, which balances all these issues, border security, but also making sure that people can come out of the shadows and get on a pathway over a long period of time, after paying fines, learning English, toward citizenship, so they can participate fully in the society, and frankly become full taxpayers as part of that process.

I hope the House will move finally, like the Senate is. The judiciary committee has not marked up any legislation, just like they've not had a single hearing when it comes to gun safety and gun violence.


VAN HOLLEN: No, but I mean -- but, look, the Senate is moving on important issues. This First Amendment issue is a very important issue, but we should be able to walk and chew gum at the same time.

WALLACE: Congressmen Van Hollen, Congressman Goodlatte --

GOODLATTE: And we are, Chris.

WALLACE: -- we're going to have to leave it there. Thank you both for coming in today, and we will be watching for the attorney general's response to your questions, Congressman Goodlatte, on Wednesday.

Next up, with the White House juggling three scandals, a new poll shows public support for the president is dropping. What does that mean for the GOP? We'll talk with the head of the Republican Party, next.



DOLE: I think they ought to put a sign on the national committee doors that says "closed for repairs" until New Year's Day next year.


WALLACE: Former Senator Bob Dole made quite a splash with that advice for the Republican Party in our interview last Sunday. But short of standing down what should the GOP do as it heads for the 2014 election and beyond?

We've asked Republican National Committee Chairman Reince Priebus to talk about. Democratic Party Chair Debbie Wasserman Schultz turned us down.

Well, I'm sure you watched Bob Dole's interview. His point was that your party has moved too far to right. And I one of the questions I asked him is whether he and even Ronald Reagan could make it in today's Republican Party. Here's what he said.


DOLE: Reagan couldn't have made it. Certainly Nixon couldn't have made it, because he had ideas. And we might have made it, but I doubt it. I mean --

WALLACE: Too moderate? Too willing to compromise?

DOLE: I just consider myself a Republican. None of this hyphenated stuff.


WALLACE: What he's saying is that the Republican Party basically has moved out of the mainstream.

REINCE PRIEBUS, REPUBLICAN NATIONAL COMMITTEE CHAIRMAN: Yes. You know what, look, he's a hero in this country and we all love Bob Dole. But the reality is, if you look at our last two nominee, it's Mitt Romney and John McCain. I think that's a good counter position to what Senator Dole had to say.

I think we've got the tale of two parties here. Number one, we've got a party that in the off year wins about everything imaginable. Governors across the country, state legislatures, on the issues, we win races.


PRIEBUS: We win races. But then you've got a presidential election. If we're being honest about it, we haven't decisively won a presidential race in 24 years.

This is not something that suddenly happened. But it is something that the national party and Republican Party at all have to address, which we did, which we basically went around the country. We talked to 52,000 people. We have a very serious project that we're working on. We unveiled it.

And I would say that we're not closed for repairs, but we're open for repairs. And that's the Republican Party that needs to grow, that needs to win presidential elections, and needs to be a year-round permanent operation, which is what we're built on.

WALLACE: Let me pick on that, Chairman --


WALLACE: -- because after the 2012 election you commissioned a study on prospects, what the party needs to do after the 2012 defeat.

And on policy, the so-called "autopsy" was some people called it, said you've got to do a better job of reaching out to Hispanic voters, to women, to young voters, a variety of groups and a variety of issues.

You just heard, for instance, the House Judiciary chairman, Bob Goodlatte, say he opposes comprehensive immigration reform. He wants to do it on a bit by bit it. Enforcement first.

That isn't going to sale. And you know Democrats are going to go to Hispanics and say, that's exactly the problem, these guys don't want comprehensive immigration reform.

PRIEBUS: Well, first of all, the first part of your point -- we've got to be the party for the 100 percent. So, that's number one.

I also think things like self deportation do a lot of damage to our brand.

WALLACE: That's what Mitt Romney said.

PRIEBUS: Right. So --

WALLACE: I got to tell you, they're not going to like what Bob Goodlatte just said either, which is the idea of, you know, incremental piecemeal immigration reform.

PRIEBUS: Look, most people in our party, including Rand Paul and others, believe we need comprehensive immigration reform. Now, what that means and what exactly steps that we need to take is up for debates.

But no one can deny the fact that Marco Rubio is leading the debate in this country on comprehensive immigration reform. I mean -- and he's a Republican. Without Marco Rubio, we wouldn't even be having this conversation.

To your overall point, though, we recognize our party has to be a year-round party in every community across the country. We have to be on the ground. Hispanic, Asian, African American -- we have to be there with people from the community working in those communities on a year-round basis.

WALLACE: But, Chairman --

PRIEBUS: And so, we've been a five-month party before a presidential election and that matters and it makes a difference.

WALLACE: But, Chairman, it's not just a question of being there, it's also what you say. I mean, let me give you another example on reaching out to Hispanics. When I interviewed Mitt Romney several months ago, he said, as important as immigration reform, he said, we found in our exit polls, with Hispanics, that a bigger issue was Obamacare. They really liked Obamacare.

This is the party that wants to repeal Obamacare.

PRIEBUS: Look, you have people like Congressman Pearce that represents 2/3 of southern New Mexico. He doesn't agree with a pathway to citizenship, but he puts 90,000 miles on his car, goes everywhere unimaginable and overwhelming elected.

I do believe that policy positions matter, but I also believe that it's also sometimes not what you say, it's how you say it.   And I also believe that having a year-round party that's on the ground, all the time, is also telling the story of the Republican Party -- the history of equality, freedom and opportunity -- is something that our party needs to do. And we haven't been doing it. But we're going to be. And I think that's the difference between presidential elections and off year elections.

WALLACE: All right. Let's turn to the scandals that President Obama is dealing with right now. According to a new Quinnipiac poll and let's put it up on the screen, 45 percent now approve of the job the president is doing while 49 percent disapprove. That is a swing of minus 7 points from just a month ago.

With the economy, and a lot of the numbers in the economy generally doing better, do you think that drop in the president's approval rating, minus 7 points in a month, is because of the scandals?

PRIEBUS: I think it's both things. The economy is going to go up and down. But the long-term health of this country, the improvement, is not being felt by the American people.

So, we know we've got long-term issues in the economy to address that aren't being addressed. Short-term up and downs aren't being felt by people out on the street. The scandals are something that is taking its toll, because it goes down to trust, and whether or not people believe the president and his people are being honest with the American people.

The fact of the matter is Eric Holder is not representing the American people. He's representing the Democratic Party. And it's very clear, when you look at these three scandals, for someone who's trying to run a national party, Benghazi talking points, targeting reporters, and an IRS targeting the president's political opponents, screams that these scandals and these episodes are clearly targeted to the president's rivals in order to help him win an election.

I mean, it doesn't take a lot of dots being connected for us to think that that is the case.


PRIEBUS: But we have to -- we still have to present the case to the American people.

WALLACE: Let me pick on this. The Wall Street Journal now reports that the IRS tried to make donors to a conservative to a political group, Freedoms Watch, pay gift taxes on their contributions.

Do you think that all of this targeting of conservative groups, groups opposed to the president's political views, that it came on direct orders from the White House, or do you think this is just part of a culture in this administration?

PRIEBUS: Well, certainly, the second part is easy to agree with, that certainly the culture of the president calling Tea Party groups terrorists and tea baggers, and that entire culture, has been cultivated by the president and his people, and everyone has been following suit.

WALLACE: So, how does that end up leading people in Cincinnati to --

PRIEBUS: That's why it doesn't make sense. I mean, that's why we need to keep digging, because the idea that two or three people in lower offices in Cincinnati just suddenly out of thin air just decided, you know what, why don't we let's launch this massive effort to derail conservative groups, and actually go after individuals that give to conservative groups, that this suddenly happened.

The other piece to this that we're not talking about but we -- that is evident, is that government under Barack Obama has gotten so big that its main defense is, look, I can't -- I don't know anything about any of these scandals, because everything underneath me is so big and unwieldy, that I can't possibly know about it. Well, that's a world and that's an America that our Founding Fathers didn't fight for. And so, I think that we need to go back to a constitutional America that respects the Bill of Rights, that this president and this A.G. don't do.

WALLACE: I want to ask you about these videos that are coming out of IRS conferences. Let's put them up on the screen. Millions of dollars, $49 million spent on 220 conferences over three years, IRS conferences, at which -- sort of like the GSA, they had these parties, and they were spending -- here's the video now.

I'm not quite sure I see the humor in this, but in any case, they spent millions of dollars on these videos and these conferences. What does that say to you?

PRIEBUS: Well, I think it says perhaps this is a great segue for leadership in both parties to have a serious conversation about overhauling the IRS, the tax code, and doing something big in this country, like making a fair, flatter tax code, and let's have that conversation, because clearly IRS is failing. How far up that goes, we're yet to see.

But I think that there's a lot of answers that need to be coming forward. And we're going start with Eric Holder again this week.

WALLACE: Finally, President Obama attended fundraisers in Chicago this week, and one of his central themes was to blame Republicans for what he called their constant obstructionism.

Take a look.


PRESIDENT BARACK OBAMA: We've got to figure out a way to work around that. One of the best ways to work around it is to have a Democratic House of Representatives.


PRIEBUS: So he can have nothing but daylight in front of him, and he can be even further unchecked. We've seen what an unchecked DOJ and IRS is up to. Clearly, having an unchecked Barack Obama for two years is not going to be good for this country.

WALLACE: Do you think -- you know, I hesitate to ask it, because it sounds like a softball, but do you think that this president is serious about trying to deal, to negotiate, to compromise? Because it's interesting, when the Dole story came out, The New York Times had an editorial that said, basically, the GOP needs to stop grandstanding and start governing.

Some people would question whether this president is grandstanding to try to win the 2014 election.

PRIEBUS: You know, I just don't see that. I mean, I see one of the my friends in Paul Ryan that offers up year after year after year, a serious position and legislation on tackling our 10-year debt window, getting our economy under control long term, doing at his own political peril, but yet, he stands there and does it and the House passes it every time -- and it goes nowhere.

So, look at the president's --

WALLACE: In quick fairness, and we are running out of time, he has passed a budget -- and now --

PRIEBUS: For the first time in like three and a half years.

WALLACE: The Senate wants a conference, and the Republicans are refusing to have a conference.

PRIEBUS: Listen, I think that big things can happen in this country, but I think trust is an issue. I think this president says one thing and does another. And I think perhaps this IRS issue will give us an opportunity to tackle the IRS, our tax code in this country, and get ourselves back on the rails.

WALLACE: Chairman Priebus, thank you. Thanks for coming in.

PRIEBUS: Thank you.

WALLACE: Thanks for coming in. It's always a pleasure to talk with you, sir.

PRIEBUS: You bet.

WALLACE: Up next, another week of scandals for the president -- we'll ask our Sunday panel about the congressional investigations and the White House response.


SEN. RAND PAUL, R-KY.: It's kind of like Old McDonald's farm of scandals, here a scandal, there a scandal, everywhere a scandal.



WALLACE: Senator Rand Paul at the Reagan Library in California having some fun with all the problems the Obama administration is facing right now. And it's time for our Sunday group. Radio talk show host Laura Ingraham, former Democratic Senator Evan Bayh, Jennifer Rubin of The Washington Post, and Amy Walter from The Cook Political Report. But let's start with the attorney general looking at reporters' emails and phone records, and also, Laura, he invited a bunch of bureau chiefs for various news organizations to have off-the- record sessions with him. Most of them, not all, but most of them, said no thank you. How did the attorney general do this week?

LAURA INGRAHAM, HOST, "THE LAURA INGRAHAM SHOW": Well, I think he did pretty poorly as I think public polls will show. The trust in government is declining. I think the trust in both parties is at an all-time low, but trust in our federal government, whether it's the IRS, I know you're going to talk about, or the Justice Department. We look to the Justice Department to be as much as possible non- ideological. And I think you touched on this idea of the fishing expedition, using a reporter, calling him a co-conspirator, a potential co-conspirator, only to get more information, they say only about this, you know, this one individual, but was it really? Was there something else going on? I think we need the documents. I think Congress wants more documents on this. We want to know if 18 U.S. E-1621, which is the perjury statute was violated. Was there a false statement, a potential violation as well. It's a little less of a burden than to prove perjury. So those are the questions that are out ...

WALLACE: The false statement to the judge in this ...


WALLACE: ... request for the search warrant.

INGRAHAM: Yes. This idea -- we never thought we would prosecute him, well, what were you really after here? There is so many questions that are still out there for people to blow this off and say, well, this is overreach by the Republicans. How many times did we hear about overreach-in the Valerie Plame prosecution? I don't remember one time.

WALLACE: All right, Brad Woodhouse who was a spokesman for the Democratic National Committee, Senator Bayh, sent out a tweet this week, in which he said, and let's put on the screen, "For those reporters, those members of the media, who refuse to meet with Holder, they kind of forfeits your right to gripe." Senator Bayh, what do you think of that argument, and what do you think of this discrepancy between the attorney general's testimony before the Senate -- the House Judiciary Committee and his actions in the James Rosen case?

FORMER SEN. EVAN BAYH, D-IND.: Well, first in the democracy, Chris, the press always has a right to gripe, and they're always going to gripe. So we can get beyond that. Secondly, look, my take on this, is that it's embarrassing, but not criminal. You know, it was technically accurate, but not very forthcoming. And that's not a great place for an administration to be in. So, we've got this kind of classic Washington to do going on. The press is all absorbed with it, of course, the political class is going back and forth. But my -- the two big takeaways are, number one, this is an opportunity cost. Anytime you're playing defense, you're not on offense. A second term is a depreciating asset. He needs to be out there talking about the economy, about immigration reform, not about all these scandals. So, it's -- it's distracting at the least.

Number two, and it gets to Laura's point, this gets to the ideological underpinnings of those who believe in a more activist government and who like to talk about a benevolent efficient government and a rapacious greedy private sector. This kind of undercuts the notion that the government is operating well, and it's always on your side. And so, that creates a problem, too. I think those are the two big takeaways.

WALLACE: Let's turn -- just this is an embarrassment of riches here for a Sunday talk show to the IRS case. According to a new poll, 76 percent now think that a special prosecutor should be appointed to investigate whether the IRS targeted conservative groups, and the IRS missed the deadline that they had on Friday to respond to a series of questions from the Senate Finance Committee. Jennifer, this scandal clearly has legs.

JENNIFER RUBIN, THE WASHINGTON POST: Absolutely. The average American does not like the IRS to begin with, and the notion that this should be used to attack political opponents and more than that, to go and then audit donors, just smacks of political bullying and corruption, everything that Republicans said was coming with this administration. I do think that in the case of the IRS there's an additional problem, which is no one pretends to know anything about anything. The president claims he was kept out of the loop by his White House counsel. The people at the IRS can't tell us who started this. So it looks as bad as it seems. It looks even worse than it seems, because everyone seems to be ducking, failing to take responsibility.

As far as an independent prosecutors, conservatives have a love/hate relationship with the idea. On one hand, these people have in the past gotten out of hand and run amok. In addition, once the independent prosecutor gets involved, these things tend to go undercover for a period of time. I think the Republicans benefit by having this out in the open. I think the question is whether the president is ever going to order his people to cooperate. Lois Lerner took the Fifth and was then put on ...

WALLACE: She is the head of the tax exempt division at the IRS.

RUBIN: Right. But he has not sent out an order as George Bush did, in the Valerie Plame decision, I do not want anyone in this administration to refuse to cooperate. That cost some people in his administration dearly. But no one took the Fifth in that case. Karl Rove testified, Scooter Libby testified. He demanded a level of accountability and candor that this president has not. And I think that whole hide the ball mentality, and the president's unwillingness to push his people forward to give a complete story is going to hurt him as well.


AMY WALTER, THE COOK POLITICAL REPORT: I think the bigger problem is that the IRS has more traction. This issue has more traction, because of what the IRS now is in control of, which is the Affordable Care Act, Obamacare. This is why this issue for Americans, it's not just simply Americans don't like the IRS, it's that this is going to be some -- this is an institution that is now going to be playing a more significant role in the lives of Americans going forward even than they are right now. That makes it much more difficult to just sort of push this away as a one off and getting control of the IRS, proving that this is an institution that can do this well. If they couldn't handle making 60,000 applications saying they're overburdened by 60,000 applications, what's going to happen when most Americans are going to have to go through this process in order to get their healthcare, or to get, you know, on the list for getting subsidies.

WALLACE: I want to go back to the bigger point that Senator Bayh made, Laura, and that is the idea -- here's a president in his second term, and his power is a declining asset, it ebbs away every day, and a lot of time -- you got to think most of the summer he is going to be spent on Benghazi, on IRS, on the attorney general, on the media. I mean, how hard is this going to make it for Barack Obama to push the rest of his agenda, or his agenda, this year, next year, and to some degree, it's not what the Republicans are up to here, let's keep him from doing anything, and then by 2014 he really is a lame duck.

INGRAHAM: Well, I think it depends on how dedicated the press is to doing its job here. I mean these are fundamental questions about our representative democracy, about the way the federal government works, whether there's inherent fairness in the way prosecutions are handled, in the way individual citizens, as Amy said, are targeted by the IRS. These are real questions. So we can say, blow it off and say, well, this is just -- this is more about theatrics. And the Republicans are trying to, you know, deviate from the issues of the day. I don't think so. And I think with the IRS and its involvement, with Obamacare, and Obamacare so unpopular, now we're finding out all these new things, well, it turns out pre-existing coverage is going to be limited, and all these other things. I think it plays into that (ph). And I think the president is going to try to turn it to student loans, the Republicans don't want kids to go to college, because they are going to let the loan rates go up -- they are going to try to do all that stuff.

WALLACE: Real quick.

WALTER: Yeah, I just to want to make a good point, which is the one conservative (inaudible), Republican is that, in this Quinnipiac poll you pointed to earlier, about the president's dropping approval rating, 73 percent said dealing with the economy and unemployment was their number one issue. So, the fear -- if I'm a Republican is, you spend so much time on this, you bring the president's approval rating -- you're bringing the president's approval rating down, but you're not bringing Republicans approval rating up.

INGRAHAM: At this point, this shows you government is too big, unwieldy, out of control, you can't contain the beast -that feeds into the Republicans' point.

WALLACE: All right, we have to take a break here. But when we come back, Syrian dictator Assad gets a lot of help from his friends, and now seems to be winning the civil war in his country. We'll ask the panel what the U.S. can do about it.



SECRETARY OF STATE JOHN KERRY: It is not helpful. They have a lot of other ammunition, other supplies, overtly going in, not just from the Russians. And they are supplying that kind of thing, but also from the Iranians and Hezbollah.


WALLACE: Secretary of State John Kerry on the growing support the Assad regime is getting from its allies. And we're back now with the panel. Well, the Russians have ignored Kerry's pleas not to send advanced weapons to Syria, and now with the Hezbollah and Iranian forces joining the Syrians, it suddenly looks like President Assad is winning. Senator Bayh, do you agree with that assessment?

BAYH: Chris, I do, unfortunately. It looked as recently as a few months ago as if Assad's days were numbered, but Hezbollah's come in, Iran's come in, Russia's facilitating this, and he's consolidating his control of the parts of the country he cares about the most. These people are brutal tough people, they care about power, and they are going to seize it through any means, whatsoever. Forget the U.N., forget the law. Forget all that stuff.

So, unfortunately right now there is no good outcome in Syria. We're going to have a protracted civil war there. There is going to be a lot of unfortunately death and destruction, and we can go one of two paths. We can either do what it takes to remove Assad and accept the downside of that, which may be a radical Islamist state, and instability in nearby countries or we can tolerate just a long protracted situation where Iran, Hezbollah, Assad, stay in power. That's not great either. But you avoid some of the downside I just mentioned. There is no good -- we're a nation of optimists, we are a panel of optimists. Sometimes you can't -- sometimes you can't ...

WALTER: Speak ..

RUBIN: Speak for yourself.

BAYH: Sometimes you can't -- unfortunately history has told us -- and look at Afghanistan and Iraq as examples, A and B. Sometimes problems can't be solved, they can only be managed. So ...

WALLACE: On the one hand you've got Russia, and Hezbollah, and Iran playing this power game. On the other hand, we had Senator John McCain who snuck into Syria to his credit, to meet with the rebels, and to express his support for U.S. intervention, but still no signs that President Obama is going to arm the rebels, and in fact the administration seems to be doubling down, Jennifer, on the idea of a peace conference, that somehow you're going to get all of these parties, the Assad, the rebels, all of them together, and work something out. How do you explain the president's continued reluctance to intervene more forcefully?

RUBIN: This is pathetic. After all of this, after setting a red line, and then letting Assad march right over it, he goes hat in hand to the Russians, the Hezbollah, to Iran, which now have the upper hand, to try to plead for some peace deal. It's absurd. And the other factor I think that greatly bolstered all of these parties was the fact that the president didn't carry through on his comments about the red line. He did nothing. He pretended that we didn't have the evidence, he is now supposedly investigating. There is no thought that it would be any kind of meaningful action by the United States. And I think what this does more than anything else, I do think Syria is a bit of a basket case, but I'm more concerned about the signal that this is sending to Tehran. They have figured out that the Americans will not put their money or their guns where their mouths are. They will be encouraged if they can rescue Assad from his current predicament. And I think they believe that there's no way on earth that this president will ever use the military option to stop Iran's nuclear program. And that's the real danger here.

WALLACE: Amy, I mean, let's look at this from a different angle, which is that the White House seems convinced, simple, Americans don't want to get involved in another land war in this part of the world. Is there no political downside for the president to see what's going on in Syria?

WALTER: I mean there's a political downside, and that's beyond it being a humanitarian crisis, now, it becomes a militaristic crisis. But what's interesting, I find, is, it's not just that Americans are war weary about engaging militarily, XFM (ph) America actually sent an interesting note the other day saying, they've a hard time getting actual contributions for humanitarian aid. They've only gotten $140,000 in aid. They are trying to raise $53 million. They've got $4 million for Darfur in one year. They have $140,000 for Syria. So, the case is still -- I mean it's one thing to try to make the case militaristically, the sale on a humanitarian basis is having a hard time getting through to Americans.

WALLACE: You know, on the other hand, let's talk about the real politics of all of this, Laura. You've got Russia ignoring the United States. You've got growing instability in the region, in Jordan and Turkey and Lebanon. You've got the possibility of a growing strengthening Shiite crescent all the way from Iran, great instability in Iraq, Syria, and Lebanon. I mean, there's a real -- if there's not a political downside to this, there's a real downside in the real world.   INGRAHAM: Remember the days when we thought that once we went into Iraq, there was going to be this domino effect of democracy throughout the Middle East, and we'd have more friends in the Middle East? Well, Washington Post reports today that last month in Iraq, outside of Baghdad, 500 people dead, within those environs, overall 125,000 dead in Iraq. OK, fast-forward. America's influence in the world has declined, without a doubt, over the last four years. I'm not going to sit here and in any way defend Barack Obama's foreign policy. But in this case, we have to know who -- with whom we are dealing. Rand Paul vs. John McCain, that's -- they're arguing within the Republican Party. We had one of the holiest shrines in Syria bulldozed, bombed, the Shrine of Abraham, very important to Christians, that's place where Jesus walked. We have Christian villages, entire Christian villages slaughtered, women and children, by the Syrian rebels. There's Al Qaeda influence within the rebels. The idea that we're going to send arms to these people who are slaughtering Christians, and have one goal, which is to establish an Islamic caliphate throughout the Middle East and if they can get their way, and throughout Africa as well, is ludicrous. And if the Republican Party goes down ...

WALLACE: So, are you saying, let us not stay in?

INGRAHAM: I'm saying America has got to grapple with this idea of a limited power, in the world where the parties are unknown, where their intentions are unknown. And we see their intentions, they are ....


WALLACE: Congressman, are you saying let Assad rule?

INGRAHAM: I say America -- I say let him figure it out.

BAYH: We made another choice first.

INGRAHAM: We have to let him figure it out.

BAYH: We made another choice.  I think the reason ...

INGRAHAM: Russia wants us to get involved in this.

BAYH: The reason the president has moved slowly on this, is that we tend to overstate our ability to actually effect events in complex -- different parts of the world.


BAYH: That's number one. And number two, we tend to understate the law of unintended consequences. When we go in, all kinds of bad things can happen we don't anticipate. If you put both of those together, you move slowly.

WALLACE: You guys are saying, let Assad win, let him slaughter ...

WALTER: No, I'm not.


BAYH: I'm not. I'm saying that there may not be a realistic alternative.

INGRAHAM: We had a no-fly zone in Iraq, remember? And what happened after that? Iraq is in flames today?

BAYH: Are we really going to send 100,000 troops into Syria? This is not going to happen.

WALLACE: All right, so you're saying Saddam Hussein, keep him in power. Assad, keep him in power.

INGRAHAM: I'm saying that we have to learn some lessons. We have to do what we can to help our ally Israel, and stabilize it, what we can, but we can't do everything.

WALLACE: 15 seconds.

RUBIN: The greatest failure of this president has been to recede from the scene, and chaos does ensue when the United States doesn't stand up to its (inaudible), doesn't move swiftly, when we had a chance to get Assad out of there. And chaos reigns. If we hadn't pulled out of Iraq, it might be stable by now.

WALLACE: Thank you, panel. See you next week. And don't forget to check out panel plus. Where our group picks right up with the discussion on our website, We'll talk about this. Make sure to follow us on twitter, @foxnewssunday.

Up next, words of wisdom for the class of 2013 from our power players of the week.


WALLACE: It's become an annual tradition here to sample some of the words of wisdom college graduates are getting at their commencements. This year the speakers include politicians, the head of Twitter, and some television stars. They're all our power players of the week.


REP. PAUL D. RYAN, R-WIS.: Whenever I'm in this kind of situation, I usually ask myself, what do I know now that I wish I knew then? Well, sorry, life's not that easy. You can't just ask someone for the best shortcuts to take. You have to learn some lessons by living them.

MICHELLE OBAMA, FIRST LADY: Every single one of you has a role to play as educators for our young people. So if you have friends or cousins or siblings who are not taking their education seriously, shake 'em up! Go talk some sense in them. Get them back on track!

DICK COSTOLO, CEO, TWITTER: You know I have to start by tweeting this. Give me one second. I'm a professional. This will only take a second.

OPRAH WINFREY: When you're down in the hole, when that moment comes, it's really OK to feel bad for a while. Give yourself time to mourn what you think you may have lost, but then here's the key, learn from every mistake.

SEN. TED CRUZ, R-TEXAS: You are all prepared to go forward, carrying the torch for freedom so that together every one of us works to ensure that America remains a shining city on a hill, a beacon of hope and freedom and opportunity for the rest of the world.

PRESIDENT BARACK OBAMA: In today's hyperconnected, hypercompetitive world, with millions of young people from China and India and Brazil, many of whom started with a whole lot less than you did, all of them entering the global workforce alongside you, nobody is going to give you anything that you have not earned.

BILL CLINTON, FORMER PRESIDENT OF THE U.S.: One of the things that heartened me when President Obama asked Hillary to be secretary of state and she said yes, and they developed this -- not just working relationship, this amazing friendship, which I just watched with great interest, is that they -- they had -- oh, come on, guys. Get a life here.

KERRY WASHINGTON: You can follow someone else's script, try to make choices that will make other people happy, avoid discomfort, do what is expected and copy the status quo, or you can look at all that you have accomplished today and use it as fuel to venture forth and write your own story.

STEPHEN COLBERT: It may seem that all that's left for you is unpaid internships, Monday to Tuesday mail delivery, and thanks to global warming soon semester at sea will mean sailing the coast of Ohio.


WALLACE: Our best wishes as well to the students, and yes, the parents of the class of 2013. That's it for today. Have a great week. We'll see you next "Fox News Sunday."

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