Finding real solutions to the border crisis

This is a rush transcript from "Sunday Morning Futures," July 13, 2014. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, HOST: Good morning. Finding real solutions to our border crisis. Hi, everybody, I'm Maria Bartiromo. This is "Sunday Morning Futures." Nearly 60,000 immigrants, many of them kids, causing a humanitarian crisis. We will talk to a Republican congressman who wants to stop pointing fingers and start finding answers.

Another federal judge ordering the IRS to explain what really happened to Lois Lerner's e-mails. So what happens if the agency does not meet the judge's 30-day deadline?

Speaking of deadlines, a judge just pushed a big decision on the Keystone Pipeline to at least September. Could that impact the midterm elections? We're looking ahead on "Sunday Morning Futures."

Well, the ball is now in Congress's court. It's taking a look at a $3.7 billion request by the White House to deal with the immigrants, including children, who have been crossing the U.S. southern border by the tens of thousands. Jeff Denham is a Republican congressman from California, joining us right now.

Sir, good to have you on the program. Thanks so much for joining us, Congressman.

REP. JEFF DENHAM, R-CALIF.: Thank you. Good morning.

BARTIROMO: Now, you have stressed border control. What does border control look like? What kind of solutions can you offer to get our arms around this problem?

DENHAM: Well, border control looks something different across all of our different states. I just took a bipartisan group down to San Diego, where we actually have this strongest border security, because we've got two large cities, Tijuana and San Diego, that border against each other. You've got two sets of fences. You've got cameras. You've got motion detectors that are detecting the tunnels. But we still saw people coming through the ports of entry, asking for asylum. So even in the most secure areas, it's still going to take a solution that is far different from Texas, where people are just running across the border in the tens of thousands.

BARTIROMO: Well, the problem is, so many of these children thought, over the last couple of years, that it was OK, that they could go into America and be part of the process, get processed and ultimately become a taxpayer and a citizen.

DENHAM: Absolutely. I mean, this has been a problem for quite some time. But it has reached new magnitudes here in the last six to eight months, something the president should be focusing on, because our problem will only get worse in the United States.

BARTIROMO: Congressman, stay right with us. We've got a lot to talk about with you, Jeff Denham, but first, we want to break down how we got to this immigration crisis point. Fox News senior correspondent Eric Shawn with that. Good morning, Eric.

ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT: Good morning, Maria. And good morning, everyone. It seems to be the cost of good intentions. The goal of saving young Central American children from human traffickers and drug cartels has instead turned into a mass, unstoppable wave of illegal immigration that has overwhelmed the federal government, strained localities and is now spreading across the country.

December 23, 2008, President George W. Bush signs the Trafficking Victims Protection Reauthorization Act, giving new legal protection to unaccompanied minors, except those from Mexico and Canada. It was supposed to curb child trafficking. But instead, say many, it enabled Central American parents from Guatemala, El Salvador and Honduras, especially, to pay smugglers to send their kids up north. And once here, they get an immigration hearing and stay with family. But others, including the border agent union, blame President Obama.

They cite the administration's so-called policy of catch-and-release for encouraging this illegal cascade. Just over 19,000 unaccompanied minor children were picked up in fiscal year 2009. Well, that has now jumped to 52,000 this year and has projected to nearly triple. And in the mix, the authorities are gang members.


GREG ABBOTT, TEXAS ATTORNEY GENERAL: This very dangerous -- it's probably the most dangerous international gang there is, MS-13.


SHAWN: Well, Investor's Business Daily is blunt, saying, quote, "Obama was grumbling that if Congress didn't give him the$3.7 billion he wants to deal with the border crisis, there was nothing he could do about it. Did Obama's pen suddenly run out of ink and his phone get disconnected? Such blatant and political contradictions would immediately land any republican in boiling hot water. So why is Obama getting a free pass?" it asks.

And it turns out that polls show about 60 percent of Americans, while they want the illegals sent back. But when they arrive here, they are given those court dates for immigration hearings. But that process, we're told, could take up to two years. Critics point out they commonly don't even bother to show up and their absence makes their deportation, which the president is promising, nearly impossible. Maria?

BARTIROMO: All right, Eric. Thanks very much. And we are back now with Congressman Jeff Denham of California.

Congressman, let me ask you about that. First off, you have said you want to get rid of this catch-and-release program. What we haven't spoken about is the cost of all of this. We have been talking about this, of course, as a humanitarian crisis, which it is. But can you tally up what the cost of this is? Can America afford this?

DENHAM: We certainly can't afford it. I mean, we have been saying for quite some time that, if we have full immigration reform, it will bring $1 trillion to our debt to help reduce our debt. But this new problem, nobody is able to define it, because it is so huge. We know what it's going to cost to fix our border. We know what it's going to cost to fix the court system so we can expedite the return of these immigrants.

But when you are just releasing back into the community, whether it be with a parent, documented or undocumented, or an aunt or an uncle or even friends right now, and saying come back and look at a court case two years from now, we don't know what the impact is to our schools, to our hospitals, to our community, or whether or not there could be some type of health epidemic that hits one of our communities or one of our schools, once schools open again?

BARTIROMO: What's your timeline on this? Can you envision how this plays out over the coming years?

DENHAM: Well, certainly both parties have been very slow to react to immigration reform. This is a multi-generational issue now. It's gone over three decades. So I think we've got to address all aspects of immigration. But, immediately, we've got a humanitarian crisis with a huge surge coming across not only the Texas border but other parts of our border, as well.

So I think we've got to use this opportunity over the next couple weeks, secure our border and then expedite the court system so that we can return these children back to their homes, back to their residences and where we really have true asylum issues, where you can prove the ID, the birth certificate, know who these kids are and what the challenges they're facing at home. Then this great nation, America, will provide asylum to the very neediest.

BARTIROMO: Can they really be deported? I mean, where are they in the time frame of that two years leading up to the trial, which Eric just reported?

DENHAM: Well, it depends. I mean, we are seeing more and more retention centers across the United States that continue to open more military bases, more high schools -- or church gymnasiums. I mean, so these retention centers are building in different states all across the country. We have an immediate opportunity to address those very, very quickly, triage the situation.

But, no, those that have already been released back into the community, ICE and Border Patrol are already overextended. I think it will be very difficult to go back into different communities to try to address that. But we've got to address the immediate problem. And those that are in retention centers, and those that are coming in today and may come in tomorrow, we need to actually stop that in-flow.

BARTIROMO: So a humanitarian crisis, an economic crisis -- let me ask you, how vulnerable are the borders in terms of allowing in the bad actors of the world?

How do we know, you know, drug traffickers, terrorists are not coming in the way all of these children are?

DENHAM: More vulnerable than ever, because while we're seeing over 160,000 children that are expected to come over within the next year, that's still only one-quarter of the undocumented that are coming across the border. So the other three-quarters are exactly what you're saying. Drugs that may be coming across, terrorists that may be coming across, just those that are actually coming across to look for jobs and a better life.

But that's, you know, still is -- while the children are a big issue, because Border Patrol is spending the greatest amount of time catching and releasing and sending to retention centers, there's still over a 75 percent problem that's out there coming across other areas.

BARTIROMO: Congressman, are you expecting any movement on this before the midterm elections, or before the end of President Obama's presidency?

DENHAM: I am. I expect both parties to work together on this. Certainly the Senate has sent us their bill. It's time for us to send them bills back. But what we can't ignore is what's happening right now, today. We need to make sure that we are expediting the court system. That's going to take an appropriation. That's something the president can't do on his own. And we have to have border security. Those two things we have to get done immediately. And hopefully some of the other reforms will follow, so that we can address our internal problem. But right now, we've got to address the external problem coming across our border in huge -- huge amounts.

BARTIROMO: All right. Congressman, we'll be watching. Thanks very much for weighing in.

DENHAM: My pleasure. Thanks for having me.

BARTIROMO: We will see you soon, Congressman Jeff Denham.

Lois Lerner, meanwhile, warned employees to be careful what they put in their e-mail. Then hers disappeared. Darrell Issa calling this a smoking gun. A member of the House Commerce Committee will be with us on where this investigation heads next at the IRS.

You can follow me on Twitter @MariaBartiromo and @SundayFutures. Send me a tweet. Tell us what you think of the program and what you'd like to see next. Stay with us as we look ahead on "Sunday Morning Futures."


BARTIROMO: Welcome back.

A U.S. district court judge giving IRS officials a month to explain under oath what happened to years of e-mails from Lois Lerner and six other officials tied to the targeting of conservative groups. This as Fox News has learned that Lois Lerner warned fellow employees to, quote, be careful about what they put in their e-mails.

Congressman Lee Terry is with me. He is on the House, Energy and Commerce committee.

Congressman, welcome back to the program. Thanks so much for joining us.

REP. LEE TERRY, R-NEB.: Well, thank you for having me and good morning to you.

BARTIROMO: So what do you think this means? I mean, are we finally going to get some answers, since the federal judge is forcing officials there to testify under oath?

TERRY: Well, let's hope so.

What the American public really needs right now is the truth. The truth will be a powerful antidote, because right now what's being caused is a great deal of mistrust in government, regardless of what party you're in. People just see this as evidence that government isn't working right. And hopefully, the judge can get the truth, because when -- just looks like they're hiding evidence.

BARTIROMO: Well, why do you think it's so important to point out that she told the staff, watch what you put in e-mails? This was very close to when, in fact, this was about to blow up.

TERRY: Well, what it tells me, as a lawyer, this is very damaging evidence, because first of all, it tells me that she knew what she was doing was wrong, and then secondly, when she is e-mailing others, it tells me that it's a bigger conspiracy than just one, lone, rogue, IRS person.

BARTIROMO: So what are you expecting to hear from this testimony under oath? Do we know who from the IRS will, in fact, testify? Will it be the commissioner, Koskinen?

TERRY: Well, I hope he does. Because he's the one that's ultimately responsible for the agency, and the one that should have all of the information. So we don't know when this is going to take place. We know that they have to supply the information. But we also know, and this is -- this goes back to the trust issue. So you say, oh, gee whiz, we spilled coffee or whatever on our hard board and it erased everything and we had to throw it away. But we know by law they have to have that backed up at least one time. So we know that the data is stored someplace else, and they're just not being forthcoming.

And so we need the commissioner to stand up, be honest with the public and start establishing some level of trust and honesty.

BARTIROMO: But it just seems so extraordinary that in 2014, in this day and age, that e-mails are destroyed and we don't have backups, et cetera. So I agree with you, there's got to be a backup somewhere. But why has it been so difficult for congress to get their hands on it? I mean, what about summoning the IT guys here?

TERRY: Well, we can. But we don't have access to them. And I think that's where the judge is really going here, is not only saying, OK, we're going to give you one chance to show that you really do have this information.

The next part is the judge can order them to make the technology available for our forensic people to go in and now find it. Because we do know, very confidently know, there is storage of this data accessible someplace, but they are preventing us from getting it.

BARTIROMO: What do you think those e-mails say? What do you think this is going to prove?

TERRY: Well, again, as a lawyer, when you're trying to hide something, it means you have something to hide. So we may not know the specifics of what it says, but it's got to be pretty damaging that there was a real conspiracy here to use Soviet-style tactics, to use government resources against your political opponents. And I think there will be direct evidence of that.

Now whether it goes into the White House or not is yet to be determined. But the -- certainly, the amount of fight in them to prevent it would certainly raise that question that it goes to the White House.

BARTIROMO: What catalyst should we be watching? Ok, so the judge is giving the IRS 30 days. What happens before that? What's your time line on this? Next couple of weeks.

TERRY: Well, we're going to have to rely on the judges to do what's right and just. That's what they get paid to do. And they need to provide subpoenas. They need to force the information out. And whether or not that occurs within the next 30 days.

I don't think the administration and the IRs is going to be forthcoming. I think they're going to continue to drag their feet on telling the people the truth of what happened. And it will take court orders to get it done, and that will be after 30 days.

BARTIROMO: So what are the implications of that if they continue dragging their feet? I agree with you. That's what I think too. They're not going to give this up. We have learned that.

TERRY: Yes. And frankly, the federal courts can have more authority to penalize them, to force them to open up their technologies, wherever their storage servers are, to open the access to that. Where perhaps the House doesn't have that level of authority, but certainly when judges start ordering, and I think the people pay attention more to that.

BARTIROMO: Yep. For sure.

Congressman, please stay with us, because we want to talk more with you after a short break. The Supreme Court in your home state of Nebraska just made a decision on the Keystone Pipeline that could have big political and economic repercussions. What's that about next as we look ahead on "Sunday Morning Futures." Stay with us.


BARTIROMO: Welcome back.

This past week the supreme court of Nebraska announced it plans to wait until September to hear arguments on a property rights case. It involves the Keystone Pipeline going through that state. That would likely push any White House decision on Keystone's approval until after the midterm elections.

Nebraska Congressman Lee Terry on the House, Energy and Commerce committee, is back with us.

Congressman, what are the implications of this? We already expected that the president did not want to make this decision before the midterms. This is basically solidifying it.

TERRY: Well, yeah. We knew that the president was going to delay until after the election, anyway. He's already said that months ago. But the reality is, even though the arguments have been made to our state supreme court, there's a stay in place that's currently in place, and the president could go ahead and agree to allow the border or the crossing of the border, because, frankly, the president has no decisions to make in the state of Nebraska.

So the construction can start in Montana and South Dakota, and then let the supreme court resolve it in Nebraska, because, frankly, the issue to be resolved in the state of Nebraska is a procedural matter, nothing to do with the merits of the pipeline.

BARTIROMO: Well, let's talk about the merits of the pipeline, because the State Department has issued several reports, up to four or five reports, basically saying that the transfer of oil via the Keystone, can be done safely, and not impact the environment negatively. What else do we need to hear in terms of unlocking this and creating this 40-plus thousand jobs that all of the people who want this done say that could be created?

TERRY: Well, this is such an important project for our energy security and stability of our energy in the United States. And so we've got to keep fighting for this. But the reality is that it's not only the security of this, but I want to bring up something other, is that since we last talked, the Canadian government has approved the western pipeline. So what that means is that the oil that could be coming into the United States from Alberta can now be exported in Canada to China. So it will it be used anyway.

And I think that's one of the things that we really need to make clear, is this oil is going to be used anyway, whether it's in the United States from our good friend, Canada, or China is going to use it, where -- and this is a good point that dovetails into your question is, when you put it on ships, it's going to emit greenhouse gases and when you refine it in China, there is going to be more greenhouse gases emitted that are top of the line, environmentally safe refineries in the United States. And that's why that report that you just referenced said there will actually be a 30 to 40 percent decrease in greenhouse gases if we are allowed to use a pipeline and refine it in the United States.

And the president himself said that he will not sign it if it significantly increasing greenhouse gases, but his own studies say it actually will reduce greenhouse gases.

To me, there's no more excuses.

BARTIROMO: You know, we have had a number of officials from the Canadian government on this program, and the bottom line there is, they need a plan B. They're not going to wait. So, you know, the fact that they have approved this western pipeline, what does that mean in terms of the options that Canada has?

We know that China needs the oil.

TERRY: And they -- they're getting -- China is trying to search the world to get oil. And they already own assets in Alberta.

And so this is their plan B. Canada's plan B is a western pipeline and an eastern pipeline. The eastern pipeline is already in construction phase. The western pipeline has been approved in the eminent domain and land has already been approved too.

So they're already working on their plan B, Maria.

BARTIROMO: How substantial would the jobs being created by Keystone be? I know that you've talked about 40,000 jobs, as have others. But what really is the impact of all of these delays?

TERRY: Well, the impact is that people still sit on the bench. Most of these are union jobs. In fact, a lot of the contracts are with union members in my own district and I would love them to go to work.

And as you mentioned, the president's own State Department study is the one that we're quoting on 40,000 jobs. But those are direct construction jobs. And then all of the indirect support jobs to the construction effort. And those will last about two years. And then there will be a handful of permanent jobs.

But these are the type of infrastructure jobs the president has talked about, and that we have talked about in congress that we need and want in the United States. And I think we -- I don't like a policy where on infrastructure jobs you can just sit there and say well I don't like that one, and we like this other one. That's not the way it's supposed to work.

BARTIROMO: All right, congressman, we'll be watching the developments. Thank so much for weighing in today. We'll see you soon.

TERRY: Thank you.

BARTIROMO: Congressman Lee Terry joining us.

Oh, here's a fun fact for you: aerospace technology continues to be America's most exported good. How are corporations like Alcoa helping to put the U.S. economy back on track? We'll talk to the CEO of Alcoa when he joins us next ahead of a big conference he's looking forward to next week.

We're looking ahead on Sunday Morning Futures.


BARTIROMO: Next weekend, a big international air show will spotlight the aerospace industry, which is not only the United States' leading exporter of manufactured goods, but it's also growing.

Last year, U.S. aerospace exported $72 billion more than it imported. And that figure was up 10 percent over the previous year. That's even as so much of the rest of the economy is still getting back on its feet, as we look for some traction.

Klaus Kleinfeld is with me.

He's chairman and CEO of Alcoa, the global leader in technology, engineering and manufacturing, particularly in aluminum.

Klaus, nice to have you on the program.


BARTIROMO: Good to see you again.

KLEINFELD: A pleasure to be here.

BARTIROMO: First, let me ask you about the Farnborough Air Show, a huge event...


BARTIROMO: -- attracting 100,000 visitors next week.

What are you expecting from this air show next week?

KLEINFELD: Well, this is exciting. And once a year, everybody who's in aerospace comes together. Typically, it fluctuates between England and -- and Paris. Last year, it was in Paris, this year it's in Farnborough in England. And everybody brings the latest technology.

And there is a lot going on there, a lot of big deals get cut, right?

So this is an industry, as you said in the lead-in that's growing. It's -- for the U.S., it's very, very important. It's the largest exporter, $71 billion exports and a lot of jobs, you know, 500,000 jobs, very well-paying jobs, on average, $10 higher at -- what's -- hour...


KLEINFELD: -- the hourly rate than -- than other manufacturing jobs.

And a lot of innovation is happening here.

BARTIROMO: This is really...

KLEINFELD: A lot of innovation.

BARTIROMO: -- interesting, because these jobs require skill sets and that's why they are higher paying.

KLEINFELD: Exactly. Exactly.

BARTIROMO: So what are you seeing in that regard, in terms of jobs and really where the job creation is happening in the economy right now?

KLEINFELD: Well, aerospace is certainly a big one, a big one, also, for us. And when you look at where investments are going -- and I mean let's just take Alcoa. If you look at the last 18 months, what we have announced -- we've invi -- announced investments in Indiana. We've announced investments in Virginia. We have invested in California. We have invested, in the last year, in Ohio, right. There is aerospace -- there's aerospace facilities in Texas.

This is a -- really across the board, a large growth engine. And the nice thing is, the market is growing by 7 percent over the next years. And it has a nine year order backlog. So that's a nine year order backlog sitting there. So it's a very, very safe environment.

But that's just one exciting market, right?

The other exciting markets you ask for, we are, fortunately, also in other exciting markets -- automotive.


KLEINFELD: Automotive, I mean...

BARTIROMO: The autos are doing very well (INAUDIBLE)...

KLEINFELD: Fantastic. And it's even better for us, because a lot of what's going on in automotive is innovation for lightweighting, because nobody wants to pay. I mean the -- the fuel costs. So people are investing in lightweighting. And the F-150 came out earlier this year, the Ford F-150, 700 pounds lighter. It's an all aluminum vehicle. And that's the reason why it is so light, right?


KLEINFELD: So that's super exciting. And...

BARTIROMO: That's a big deal.

KLEINFELD: -- and -- and there's still -- I mean even though the demand numbers are up, but there's still pent-up demand. The average age of the cars here in the U.S. is higher than it used to be. Eleven years in all, and it used to be nine -- 9.4 years.

Go to commercial trucks and trailers. You know, commercial transportation, the same thing. Commercial transportation has grown. Order income has grown by 2 percent. Order backlog has grown by 50 percent. Those are all great numbers.

Building and construction, you look at the early indicators. The market is back. The first quarter, I mean we know, in most places in the U.S., it was brutally cold.


KLEINFELD: So construction had to stop.

But what we are seeing is it's back. It's back and people are trying to catch up.

So overall, I would say a very exciting situation.

BARTIROMO: Yes, let me ask you about that, because you reported earnings last week, $216 million. The quarter was better than expected.

What did you see in the last three months of business to show us really what the economy is doing from a corporate level?

KLEINFELD: Well, as I said, I mean there are positive signs here on - - on all fronts, pretty much. You know, the -- the...

BARTIROMO: Auto and aerospace really are leading this.

KLEINFELD: -- auto and aerospace, building and construction tran -- commercial transportation, a lot of these ones and these are the big engines of -- of the -- of the U.S. economy. And all of this is doing very, very well.

BARTIROMO: What about pricing, Klaus?

Are you expecting aluminum prices to move higher from here?

KLEINFELD: Well, look, I mean what's interesting, particularly, also, when you talk about aerospace, this has almost nothing to do with -- with aluminum anymore, you know?

The aluminum plane is still -- I mean there wouldn't be a -- planes all around if aluminum hadn't been invented by our forefathers (INAUDIBLE) 25 years ago.

But when you look at what we are doing, this has gone further. I mean we've become the margin materials innovation powerhouse, really. I mean most of the very, very unique applications are actually new aluminum alloys, aluminum lithium, new lightweight material or nickel -- nickel super alloys. I mean we are also one of the largest providers of engine parts. And we've just, two weeks ago, announced that we are acquiring Firth Rixson. And we are bringing the two really tough engine innovators - - engine parts innovators, you know, Firth Rixson and Alcoa and creating this new powerhouse there.

BARTIROMO: It sounds like you think things are getting much better in the economy.


BARTIROMO: Certainly from the...

KLEINFELD: Absolutely.

BARTIROMO: -- the large engine-related, automotive, aerospace part of -- part of the -- the economy.

Let me ask you about tax reform. As the leader of a multinational business -- and we see so many of your colleagues in business saying, look, we're going to move our headquarters to Switzerland, we're going to move our headquarters to there, because the U.S. has the highest corporate tax rate.

What do you think tax reform would do in terms of impact on the economy?

KLEINFELD: Well, the reality is that it would be good if we had a more modern and more competitive tax system. The details would need to be hammered out in Washington, you know.

But if we had a tax level that would be more closer to the average in the developed countries, the OECD developed countries, that would be much better for U.S. business.

BARTIROMO: Do you think people and companies would take money back to the U.S. that they're sitting on -- companies -- they're sitting on all this money, trillions of dollars.

KLEINFELD: Oh, yes. Well, that's -- that's true. That's one issue. We have a relatively archaic system where we tax every dollar earned no matter where it -- where it has been earned, right. Whereas most countries have gone to a territorial system, only tax the -- the -- the earnings in the certain country, right?

I would believe that if we were to go to a more flexible system, a more -- more modern system, it would probably also stop quite a bit of the outflow. I think that's more where I'm coming from.

BARTIROMO: And real quick on Russia. I know you have a big business in Russia. Now that we've seen the developments in Crimea and throughout Ukraine, what has been the impact on your business?

KLEINFELD: Our business in Russia is doing OK, you know. So, obviously, the Russian economy has -- was already slow and it has slowed down a little bit. The good news is the business that we have in Russia continues to do relatively well.

The other events are much unfortunate and I very much hope that all the efforts that exist are accelerated and that we soon find a diplomatic solution, because it's very painful to watch what's going on there.

BARTIROMO: Klaus, it's very nice having you on the program.

KLEINFELD: A pleasure, Maria.

BARTIROMO: Thank you so much.

We'll be watching the air show next week.

Klaus Kleinfeld.

Now with a look at what's coming up on "MediaBuzz," let's check in with Howard Kurtz -- Howie, what do you have top of the hour?


We're going to examine the coverage of the war in the Middle East that is escalating by the day. But we're going to lead, as you did, with the border crisis. There's been a flood of stories about the plight of these unaccompanied minors being held in places like Texas.

Only in recent days, though, has the coverage turned more critical of President Obama, especially after he dismissed what he called a photo-op and declined to go to the border while he was in Texas.

BARTIROMO: All right. Howie, we'll be there. Twenty minutes away, "Media Buzz." We'll see you then, Howie. Thank you.

Meanwhile, another bloody day in the Gaza Strip between Israel and Hamas. Is the U.S. going to get pulled into another conflict in the Middle East? Our panel will be up kicking that off as we look ahead on "Sunday Morning Futures." Stay with us.


BARTIROMO: Welcome back. Israel now calling for people to evacuate their homes in the northern Gaza Strip, suggesting more violence to come. The death toll from Israel's air offensive against the terrorist group Hamas has now topped 160. And the campaign shows no signs of stopping.

Could the U.S. get pulled into yet another debacle in the Middle East? We bring in our panel right now. Ed Rollins is former principal White House adviser President Reagan in both his terms. He's been a long-time strategist to business and political leaders and a Fox News political analyst. Judith Miller is adjunct fellow at the Manhattan Institute for Policy Research. She's a Pulitzer-Prize-winning author and journalist and a Fox News contributor. Keith McCullough is CEO of Hedgeye Risk Management. And we are thrilled to have all of them at this table.

Good to see you. Thank you so much for joining us.


BARTIROMO: So the issue in Israel, obviously, not -- not an issue, but a massive debacle. Ed, how do you think this plays out?

ED ROLLINS, FORMER REAGAN WHITE HOUSE ADVISER: Well, we have to support our ally. We have one ally there who really has a democracy. They're being fired upon. You know, it's not unreasonable for them to basically do everything they can to stop -- protect their own people. And I think they will.

I don't think they should invade. I think they should do what they did with, like, the equivalent of our navy SEALs going in there and trying to knock out some of the rockets -- launchers. But you can't sit there and have hundreds and hundreds of rockets fired on your country every day and - - and find that acceptable. And I think the U.S. has to support them.

BARTIROMO: Are we supporting them, Judy?

JUDITH MILLER, ADJUNCT FELLOW, MANHATTAN INSTITUTE FOR POLICY RESEARCH: Well, we are for the moment. And except to the U.N., this is, kind of, a no-brainer. As Ed said, if someone is bombing your house, you have a right to defend it. The issue will be if the Israelis decide to do something beyond that; if they decide to send in ground troops, would the United States stand with them?

I don't think the Israelis are going to do that. it's too expensive. It's too costly. And international opinion would turn against them. But it is a possibility, and that would be the challenge for the administration.

BARTIROMO: There's not a lot of will to be going into another conflict in the Middle East. Does the U.S. get pulled into this?

MILLER: I don't think so. I think we're going to stand on the...

ROLLINS: I don't think so...

MILLER: ... on the backs and watch.

ROLLINS: I think it would depend on what Syria does. And, obviously, if it gets more than just the one-on-one, at this point in time, then I think we'd have to do something. But, at this point, we just need to support them militarily.

MILLER: The Israelis have made it very clear that they think they can handle this on their own, but international support is important to them.

BARTIROMO: Let me turn to the -- to the IRS. We talked with Lee Terry earlier. Of course, the judge is now saying that the IRS has 30 days to get somebody on the record, under oath, to find out where these e-mails are, from Lois Lerner. You think this is going to work?

ROLLINS: They're going to get to the bottom of this. When the courts get involved and start subpoenaing and people basically are facing not contempt of Congress but a contempt of the federal court, you know, you can end up going to jail for -- so my sense is they're going to get to the bottom of this. They're going to continue to -- the Congress is going to keep fighting for it, but more important, the courts are going to make sure that they get...

BARTIROMO: Isn't it unbelievable, Keith, that, in an era of, you know, no privacy anywhere, that we are talking about years, two, four years of e-mails, missing?

MCCULLOUGH: It's unbelievable. Actually, it is believable. If you look at the new year of transparency, accountability and trust, yes, we can, I mean, yes, we can audit the IRS. I think that that's what we should be doing at this point. And I think, to Ed's point, you need to get to the bottom of this very, very quickly. Because you're disenfranchising a lot of people in this country, if you, kind of, think the zeitgeist that is out there in terms of nontrust, we're entering -- you know, a great book in 1997 was called "The Fourth Turning." We're entering that crisis period where Democrats, Republicans, independents, just don't trust the system. And that certainly doesn't add to this.

ROLLINS: You cannot trust...

BARTIROMO: We don't trust any institution anymore.

ROLLINS: You cannot trust in the IRS is -- all of us being taxpayers, I mean, that really undercuts the whole credibility of the government.

BARTIROMO: But we haven't heard very much lately from the White House about not a smidgen of evidence that there's anything wrong. We haven't heard that lately.



BARTIROMO: Well, will we get -- will we see the president ask Eric Holder to get a special prosecutor on this?

MILLER: Well, I'm not a big fan of special prosecutors, having experienced what happens when...

BARTIROMO: Of course.

MILLER: ... a man believes he can do anything he wants with the judicial system. But I do think, now that we have all of these judges demanding depositions and affidavits from people explaining what happened to those e-mails, we are going to get to the bottom of this.

BARTIROMO: You do think we will get to the bottom of this?

MILLER: I definitely do, yes.

MCCULLOUGH: We have to. I mean, how could you not? People don't trust the process.



BARTIROMO: I just think they're dragging their feet...


MCCULLOUGH: Purposely.

BARTIROMO: All right. Let's take a short break, because this next panel segment is an important one. It's a big week for the economy next week. Second-quarter earnings are kicking off and new data on inflation will be released. The panel on what it means for your bottom line, as we look ahead on "Sunday Morning Futures."


BARTIROMO: Welcome back. We are back with our panel: Ed Rollins, Judy Miller, Keith McCullough. Big week for business this week. Federal Reserve Chairman Janet Yellen giving her semi-annual testimony on the economy. On Tuesday, a lot of earnings coming out. The PPI coming out, inflation.

Keith, what's most important this week?

MCCULLOUGH: Well, the most important thing is that inflation is accelerating. So we're getting this now, it's actually on the cover of Barron's this week. The impact of inflation accelerating is also who has to eat it. So while it's good for companies like Alcoa, (INAUDIBLE), you know, explaining that. These are late cycle pricing cycles that they're enjoying.

But at the same time, the consumer has to continue to eat these higher and higher prices. At the same time, the government is saying there's no inflation. In fact, the government said that there was no inflation at $150 oil. So we're going to see that reported on an actual basis this week.

BARTIROMO: But oil prices are moving higher. Food prices are moving higher. Things are getting expensive out there.

ROLLINS: Well, it's not certainly counting food in their projections. It's idiotic. I mean, you have a serious drought.

BARTIROMO: It's true.

ROLLINS: . in this country. Every ag person in the country says every kind of food price is going up and that has an impact on ordinary people.

MCCULLOUGH: Huge impact, food prices are actually -- they're up 23 percent for the year-to-date. I mean, that's a huge tax. And if you look at, we've broken down the median consumer. So a big part of the population. And you look at the basket, the top three things in terms of what matters to spending are, number one, rents.

U.S. rents, don't forget, are at all-time highs, which, by my calculation, is a long time. And food prices are up, again, 23 percent year-to-date. If we get something happening coming out of Israel here on the oil price front, it's all but done from an inflation perspective. We're going up, not down.

BARTIROMO: Now oil prices have come off of their highs. But you're right, any crisis, you could wake up Monday morning, and next thing you know you have got a spike in oil and a spike in gas.

At the same time, we've got this immigration disaster happening at the border. And, Judy, we haven't even discussed the cost of this.

MILLER: Right. Very costly. Very chaotic. And a political challenge to both Republicans and Democrats. If the president does nothing, if he can't get his $3.8 billion bill through to deal with this crisis, he's going to look helpless.

But the Republicans risk looking heartless if they start deporting children in even greater numbers. So it's tricky politically.

ROLLINS: I agree totally. But the issue is, two weeks ago he was talking about $2 billion. So then he submits a $3.8 billion and says, I want it passed, without anybody looking at it. I mean, come on, this is the ordinary people's money.

They're infuriated at this. They read stories about doctors and lawyers and everybody else being hired to take care of these kids, which we should do initially, but at the end of the day we can't let 100,000 people illegally come in the country and that border and have them for lifetime.

BARTIROMO: At some point, these kids thought, well, this is my shot, this is -- you know, over the last few years they thought, well, this is my shot to get to America.


ROLLINS: It is their shit. They'll be 6 and they'll be 10 and they'll be 15 before.

MILLER: Whatever happened to compassionate conservatism? I think that this is a really tricky issue for the Republicans and for the country. Who are we? I mean, I'm the daughter of immigrants, many other people are. This is going to be an issue that defines us politically.

BARTIROMO: Real quick on this -- on the economy, Keith, it's a big week next week with earnings, you have got Citigroup, JPMorgan, Goldman Sachs, a number of others coming out next week. How would you characterize things?

MCCULLOUGH: Well, I mean, what was interesting, Maria, on Friday we talked about this. Wells Fargo should have been good, but it was bad to start off the season. And we're going to start with these banks. And as we know, banks have been regulated out the wazoo. So you end up with that type of a situation, very low trading volumes.

The only thing that's really going on for Wall Street is M&A. So M&A, we have got to see if that's going to be enough to pick it up in terms of earnings season. If it doesn't, what we end up with in the middle of earnings season, of course, are consumers reporting.

And, again, that's why the major concern is starting to come to the third quarter. After the second quarter bounce, do we start to slow again in the third quarter from a U.S. consumption perspective?

BARTIROMO: And don't forget, that's after the contraction in the first quarter, 2.9 percent contraction, the economy.

Still to come, the one thing to watch for in the week ahead or weeks ahead on "Sunday Morning Futures." Stay with us.


BARTIROMO: Welcome back. We're back with our panel. What is the one big thing to watch for the week ahead or weeks ahead, Ed Rollins?

ROLLINS: I'm going to watch very closely to see if the president and the Congress can work out something on this immigration. If they can't in this next week, because obviously the Congress is out two weeks, then they're not going to have any relationship whatsoever the rest of this year.

BARTIROMO: Wow, no relationship. That gets bad to worse.

Judy, your one thing?

MILLER: I'm going to watch Washington and the U.N. I'm going to see which of them begins to criticize Israel for defending itself first.

BARTIROMO: That's a good point.



MCCULLOGH: I'm going to watch my good friend, Janet Yellen. I want to see if she backs off like the Brazilians did in the World Cup. She is going to have to address, obviously, Congress and give us a forecast. So I want to see if she backs off on her growth forecast this week.

BARTIROMO: They said they're going to give positive growth stories of the economy.

MCCULLOGH: Yes, I think she fades. That's why I used the Brazilian metaphor.


BARTIROMO: All right. So she fades. And I'll be watching the World Cup, you guys, we haven't mentioned it. Germany-Argentina, who is winning?

ROLLINS: The best team versus the best player. The best team is Germany. I think they win.

MILLER: The best team is Germany.


MCCULLOGH: Argentina, or my father-in-law is going to shoot me.


BARTIROMO: That's it for "Sunday Morning Futures." I'm Maria Bartiromo. Have a great Sunday. I'll be back tomorrow morning on "Opening Bell" on the Fox Business Network.

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