Former NSA, CIA Director Gen. Hayden, Rep. Amash talk surveillance of Americans; Rep. Cantor on effort to get economy growing again

The following is a rush transcript of the August 4, 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.

The U.S. government closes up shop across the Muslim world.


WALLACE: Responding to intelligence of an Al Qaeda threat, the State Department shuts embassies and consulates in the Mideast and North Africa, and issues an extraordinary worldwide travel alert to Americans.

Plus, new questions about relations with Russia after Moscow grants asylum to Edward Snowden.

SEN. CHUCK SCHUMER, D - NEW YORK: Russia has stabbed us in the back. And each day that Snowden is allowed to roam free is another twist of the knife.

WALLACE: Now, the White House is rethinking whether the president should meet with Russian President Putin.

Plus, growing controversy about the surveillance of Americans here and overseas.

We'll talk with former director of the CIA and the NSA, General Michael Hayden. As well as NSA critic, Congressman Justin Amash of Michigan.

Then, Washington keeps heading for a budget impasse and government shut down.

PRESIDENT BARACK OBAMA: We've seen a certain faction of Republicans in Congress saying that they wouldn't pay the very bills that Congress racked up in the first place.

REP. JOHN BOEHNER, R - OH, SPEAKER OF THE HOUSE: Instead of working together, the president yesterday threatened to shut down the government.

WALLACE: In an exclusive interview, we'll ask House Majority Leader Eric Cantor if they can make a deal before the deadline.

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


WALLACE: Hello again from Fox News in Washington.

We begin with a terror threat that has prompted the State Department to issue a global travel alert for Americans and to close almost two dozen embassies and consulates across the Muslim world. We are told the Al Qaeda threat is specific, but the targets are not.

Chief Washington correspondent James Rosen has the latest -- James.

JAMES ROSEN, FOX NEWS CHIEF WASHINGTON CORRESPONDENT: Chris, good morning. President Obama and his national security team approached this day, the president's 52nd birthday, not in a state of celebration, but rather one of apprehension. The U.S. embassy compound in Cairo, Egypt, is one of two does then U.S. installations that would have been open today but is now the closed.

At the U.S. embassy in Yemen, heightened security was readily discernible. A senior lawmaker told Fox News that terrorist chatter picked up by U.S. signals intelligence exceeds anything in more than a decade.

Lisa Monaco, the president's counterterrorism adviser, and Susan Rice, now the president's national security adviser, have led the interagency response. Rice chaired a principals committee meeting that included among others the secretaries of state and defense and the directors of the FBI, CIA and NSA.

Still, another participant in that session told ABC News that the plotting appears aimed at Western, not just American interests.


GEN. MARTIN DEMPSEY, CHAIRMAN, JOINT CHIEFS OF STAFF: It is more specific and we are taking it seriously, which I think you would expect us to do. Yes. There is a significant threat stream and we are reacting.


ROSEN: The latest threat will likely revive American's memories of the scary second week of September last year when Islamists rioted at three dozen Western embassies, from Europe to South Asia, which culminated, of course, in the fatal attack on the U.S. consulate and annex in Benghazi.


MARIE HARF, STATE DEPT. DEPUTY SPOKESPERSON: It is possible we may have additional days of closing as well. Of course depending on our analysis, individual U.S. embassies and consulates will announce whether or not they are open and whether they are implementing restrictions or other measures.


ROSEN: President Obama is at Camp David this morning, returning to the White House later today, and said to be receiving regular briefings on the Al Qaeda threat and our response, Chris.

WALLACE: James Rosen, starting off our coverage today.

The terror alert comes as Russia has granted NSA leaker Edward Snowden temporary asylum. And there are growing demands in Congress to impose new limits on government surveillance of Americans.

Joining us now to discuss all of this -- in New York, General Michael Hayden, former head of the NSA and CIA. And here in Washington, Republican Congressman Justin Amash of Michigan, who led and effort to restrict the NSA's data collection.

General, based on your long experience, what's going on here with the U.S. closing almost two dozen embassies and consulates across the middle east and also this extraordinary global travel alert for August? And what does it say about our standing now in the Middle East?

GENERAL MICHAEL HAYDEN, FORMER HEAD OF NSA, CIA: Well, Chris, as you know, I'm out of government, so I'm not reading any of the cables, but I can only imagine what it would have taken while I was in government in terms of the stack of evidence that would have been required for our government to take the kinds of actions that you and James just described.

And so, this looks serious. The only thing we are missing, as both of you suggested, is the geography. And therefore, we are taking caution and warning folks between Algeria and Bangladesh. Clearly, this is a serious thing. Also kind of points out that this Al Qaeda danger is not yet over, and at least elements of Al Qaeda aren't yet totally on the run.

WALLACE: I was going to ask about that. Does this show that Al Qaeda is stronger than President Obama has led us to believe over the last year or so? And in a sense, is there a danger that by reacting the way we have -- as you say -- closing facilities from Algeria to Bangladesh, that it only empowers Al Qaeda?

HAYDEN: Well, that's the cost of oh doing business. I understand the argument that it seems to, as you say, empower them more than perhaps they are really capable of performing. On the other hand, you have a real danger to Americans. You want to be cautious.

And let me add an additional factor in here. The announcement itself may also be designed to interrupt Al Qaeda planning, to put them off stride. To put them on the back foot, to let them know that we're alert and that we're on at least to a portion of this plot line.

WALLACE: Congressman Amash, how do you see the closing of our embassies, diplomatic facilities across the Muslim world -- as a sensible response or as an overreaction?

REP. JUSTIN AMASH, R-MI: Well, I don't have any more facts than anyone else here. I think the administration needs to take whatever steps it deems appropriate.

But it's precisely because we live in this dangerous world that we need protections like the Fourth Amendment to the Constitution. The framers of the Constitution put it in place, precisely because they were worried you'd have national security justifications for violating people's rights. They weren't worried that the government was going to say, well, we want to come to your home to host a nice dinner party or we want your papers because we want to find some recipes. They are worried about national security justifications for violating people's rights and in a dangerous world, you need the Fourth Amendment. You need the Constitution.

WALLACE: Well, we're going to get to the heart of this debate about the NSA and whether or not there should be restrictions in a moment. But let me ask you, first, Congressman, about the other big news development this week. That, of course, is Russia granting temporary asylum to the NSA leaker Edward Snowden.

When he gives up secrets to other countries about information, programs that have been approved by the president, approved by Congress, approved and overseen by the courts, is he a whistleblower? Because you've suggested he is. Is he a whistleblower or a traitor?

AMASH: Well, we don't know the facts about what he's doing and what kind of information he's given up. But I certainly think that without his doing what he did, members of Congress would not have really known about it. There's allegations that this information was given to Congress. Of course, Congress passed the Patriot Act. They passed the FISA Amendments Act.

But members of Congress were not really aware on the whole about what these programs were being used for, the extent to which they were being used. Members of the Intelligence Committee were told. But members who are rank and file members really didn't have the information.

WALLACE: So, you still consider him a whistleblower?


WALLACE: Because?

AMASH: Well, he --

WALLACE: I mean, he had signed a note. He had said he wasn't going to give up these secrets and he gave up the secrets.

AMASH: Yes. As I said, he may be doing things overseas that we would find problematic, that we would find dangerous. We'll find those facts out over time. But as far as Congress is concerned, sure, he's a whistleblower. He told us what we needed to know.

WALLACE: General Hayden, it isn't just Congressman Amash. According to a new poll, 55 percent of Americans now regard Edward Snowden as a whistleblower, not as a traitor.

A couple of questions. One, are they wrong? And secondly, in your mind, how tough should President Obama get with Russia, get with Vladimir Putin now that they have given Snowden temporary asylum?

HAYDEN: Yes, well, first of all, Chris, put me in the 45 percent in that poll who doesn't believe he's a whistleblower at all.

Look, a whistleblower is someone who raises concerns within our government in order to affect change. There is no evidence whatsoever that this young man warned anyone, went to his supervisor, his supervisor's boss, even to the congressmen. No evidence of that whatsoever.    What he did was go to Glenn Greenwald and some other news outlets and publish information that he may, in his own conscience, believe we need to be concerned about. But what he did was not tell the appropriate authorities. He told the world, including our enemies. And he's made it more difficult for our security services to keep America safe.

Now, with regard to the Russians, I think I agree with the senator from New York. It's a bit of a slap in the face. I know the administration is reconsidering the visit in Moscow after the G-20 with President Putin. Frankly, I don't think President Obama should go. And maybe it must betrays my own personal background, Chris, that I think it's jump ball whether he should go to the St. Petersburg for the G-20 at all.

WALLACE: Let's get because you've been on the fringes of it. Let's get directly into this question of the NSA, what it's doing, whether there should be new limits.

General, the House almost passed, as you know, last week a measure offered by Congressman Amash that would have put an end to the kind of blanket collection of phone records of all Americans and instead limit that only to information on Americans who are under specific investigation for links to terrorism. On a practical level, General, would that have hamstrung you?

HAYDEN: Oh, Chris, it would have turned the program on its head.

Look, this isn't -- this program, the metadata program that we are talking about here, isn't about targeting Americans. It's about trying to divide, trying to decide with the lightest touch possible who in America -- legally, operationally, ethically -- should be targeted for increased interest from the FBI or from our intelligence services.

Look, this is metadata, business records. The court has held it had no expectation of privacy. And therefore, what the agencies have done is go down this path, frankly informing members of Congress. I read the letters released this week in 2009 and 2011 that specifically invited members of Congress to come read what the government was doing, and the phrase in the letter was bulk metadata collection.

WALLACE: All right. Let me bring in Congressman Amash.

Sir, you just heard the general say that Americans' privacy is not being violated, and that your amendment that you almost passed, I mean, it only lost by a few votes, would make it harder for them to get the information they need about terrorists.

AMASH: Well, we don't have any evidence that it would make it that much more difficult. We're not going to have a perfect system, you can't have a perfect system unless you have people under constant lock down being monitored. And even in that system, you have essentially a police state, and I think you've run the risk of having a much more dangerous society.    You have senators like Senator Widen, and Udall and others who have said and, Senator Leahy, who have said, they don't think this program is very effective. As to whether Americans' privacies being violated, just ask my constituents. If I go to a town hall or meeting, they will tell you that their privacy is being violated.

The court case that the Justice Department and the intelligence community rely on so heavily is a court case from the 1970s where one person was under suspicion for a limited period of time and they collected his records. That's very different from collecting the phone records and other data of every single American in the United States.

WALLACE: Well, General, let's get to this and answer these two concerns, to the congressman's constituents in Grand Rapids, Michigan. Explain why their privacy is not being violated and, specifically, why do you need this information on every phone call that's made by every American -- again, just the fact of that the phone call, not the content -- why do you need that to fight terror?

HAYDEN: Well, let's start with the legal premise here, Chris, and I realize Smith versus Maryland in 1979 was about a very specific ant discrete case. But the fact of the matter is, the court held that metadata, in essence our phone bills, has no expectation of privacy. And that's why we in the intelligence community felt it was the lightest as I said, the lightest touch possible, to try to divine who in America might be the enemy inside the gate.

Now, what we do with it, Chris, is important. I understand the congressman and his constituents' concerns, so they would want to know -- all right, you've got this ocean of data, what do you do with it? And that's important.

Look, the government has lots of oceans of data. The government demands that I tell them every penny I make and how I made it. That's also in one sense an invasion of privacy. But there is a larger national purpose which that serves.

The same applies to metadata collection, what do we do with the data. And what we do, Chris, let me give you an example. We roll up a terrorist cell -- let's say Yemen, which James Rosen referred to in his piece.

We roll up a terrorist cell there. We find a cell phone about which we had no knowledge prior to that raid. We take the cell phone number. Metaphorically, we approach the ocean of data and simply say, has this phone been in contact with any of these phones inside this metadata database.

WALLACE: Let me bring, Congressman Amash in.

It sounds reasonable.

AMASH: Well, you're collecting the phone records of every single American in the United States. It's important to understand that what the Justice Department and intelligence community are relying on is a third party doctrine. They are saying that because you've given your data, because it's shared with a third party, it becomes a public property.

WALLACE: The phone company, because they have a record that you called me.

AMASH: And it's important to understand that it then goes beyond metadata. So, we start with metadata but the government is not suggesting that it can't collect your actual communications. It can't collect your content.

Under this doctrine, they certainly can collect your content just as they can collect your metadata. And metadata itself can tell you a whole host of information about a person's life with the kind of computer power we have today.

WALLACE: Let me, just quickly, we've got less than a minute left, so I'm going to ask you to do this quickly, both of you.

General, rightly or wrongly, it seems clear that there is a move under foot represented by Congressman Amash to put new restrictions on the NSA. It seems that's going to happen.

I want to put up a couple of the ideas that have been suggested -- creation of a special counsel to challenge the government's surveillance request in the secret FISA court, reducing how long phone records can be retained from five years to two, releasing information each year on how many warrants the government seeks.

Briefly, General, could you live with any and/or all of those?

HAYDEN: There are several there I think the intelligence community is looking at right now, Chris, and to make Americans more comfortable about the programs.

I've got to add, Chris, it doesn't make Americans more comfortable about the program to misrepresent it. This does not authorize the collection of content, period.

WALLACE: Congressman, you heard those three suggestions I have. Would that satisfy your concerns, or do you just want an end to this bulk collection of records?

AMASH: I think we've got a whole host of ideas out there. I've got -- they're called the Liberty Act.

Chairman Goodlatte is very committed to working through this process and I think we're going to have a lot of good bills come to the Judiciary Committee.

WALLACE: Congressman Amash, General Hayden, I want to thank you both for coming in today.

HAYDEN: Thanks, Chris.

WALLACE: We'll stay on top of all these issues. Thank you both.

AMASH: Thanks, Chris.

WALLACE: Congress leaves town for a five-week recess with the clock ticking on a potential government shut down. We'll discuss the unfinished business with House Majority Leader Eric Cantor, next.


WALLACE: Congress headed home this week for its August recess. With deadlines approaching to fund the government for the next year, and to raise the dealt limit, or go into default.

I sat down with House Majority Leader Eric Cantor Friday to discuss where things stand.


WALLACE: Congressman Cantor, welcome back to "Fox News Sunday."

CANTOR: Chris, good to be on.

WALLACE: Let's start with the latest jobs numbers that are out Friday. The economy added 162,000 jobs in July. Unemployment dropped to 7.4 percent, the lowest in four and a half years. Factory production, home construction and auto sales are all up.

The July numbers are a bit disappointing, but overall, if you look over the last year, unemployment has gone from 8.1 percent to 7.4 percent. Isn't the overall trend positive?

REP. ERIC CANTOR, R – VA, HOUSE MAJORITY LEADER: Well, Chris, for those who have found the job and gotten full-time work, I think all of us were happy for those people, and we want more of that to take place.

I think if you get into the details of the numbers, what we are seeing, though, is unequivocally the majority of the new jobs have been created, at least last year were part-time jobs, not full-time jobs. And we've also seen the labor participation rates, a number of people who actually are still in the market for jobs go down, which means there are an awful lot of Americans who have given up.

And that's really I think that's so critical right now is that we focus on seeing how we can fundamentally get this economy growing again so that people can find full-time jobs and we can take away the impediments of job creation like ObamaCare and some of the red tape and regulation coming out of this town.

WALLACE: OK. You talk about creating jobs. You talk about growing the economy. But you have spent the last week in the House working on and passing your agenda, a series of bills called Stop Government Abuse. Included in the bill, and let's put it up on the screen, block the IRS from endorsing ObamaCare, place limits on taxpayer-funded conferences, require Congress to approve new regulations that cost more that $100 million.

Here's what Democratic Congressman Elijah Cummings had to say about the way you spent the last week.


REP. ELIJAH CUMMINGS, D - MD: Republicans are more interested in playing partisan games and advancing political messaging bills. Americans want Congress to focus on creating jobs and growing our economy.


WALLACE: Is what you've been doing the best way to spend Congress's time when you are about to go on a recess for five full weeks?

CANTOR: Well, first of all, Chris, government doesn't create jobs. The private sector does. And what we have going on today is a real erosion of confidence on behalf of the American public in terms of their trust in government and frankly the faith in their economy.

And the kinds of bills that we brought to the floor this week, you mentioned the Raines Act. That was a bill that said, you know what, stop the bureaucrats from passing these massive regulations that are impeding the ability for our businesses to grow. Let's think about the people out there that actually are out of work because they don't have the proper skills and training. Stop burdening our economy.

That's what the purpose of the bills were this week, Chris. And the problem is, we don't get a lot of bipartisan support. We passed a bill that said bureaucrats shouldn't be allowed to give excessive bonuses right now. People ought to know that their taxpayer dollars are being spent wisely.

These are kinds of things that can rebuild confidence, long term progress in America. Growth in our economy is dependent on that.

WALLACE: But, Congressman, rightly or wrongly, none of these bills that you passed is going to become law. Your own members say they're not going to pass the Senate. The president won't sign them.

Let's talk reality. You haven't pass add farm bill. You've only passed four of 12 appropriations bills you are supposed to pass. We face a government shut down and a debt limit in the fall.

Again, is this the best time to spend your time, passing bills that aren't going to become law? And added question, with so much unfinished business, why not stick around instead of taking a five- week vacation?

CANTOR: Well, let me -- let me address and those. I mean, first of all, you've got the president now out giving campaign speeches as if we are in the middle of the presidential election again. These speeches that he's been giving over the last two weeks have nothing new in them. In fact, he's engaging in the blame game.

And when it is easy for the president to get progress going here now. He talks about job creation. We, in the House, we passed a bill that speaks to the fact that they are unemployed workers because they don't have the skills necessary. The president could pick up the phone and tell Harry Reid to bring the bill right up.

We pass a number of energy bills in the House that go towards trying to relieve the consumers out there who are in the middle of the summer driving season of the increasing price at the pump. Is the president joining us and encouraging the Senate to bring it up?

WALLACE: Congressman, I raised exactly the same issues with Treasury Secretary Jack Lew last week. And I said, you keep talking -- the administration -- about how pointless, what a waste of time it is to keep repealing ObamaCare by the Republicans when it's not going to happen. And yet they are making a bunch of proposals that also aren't going to happen.

But you could tend to your own knitting. You could pass a farm bill. You could take -- you have the power of the purse. Only four of 12 appropriations bills have you even passed.

Why not do what the House is supposed to do?

CANTOR: Let me address -- let me continue to address the list of items that you put forward. One, on the farm bill, we have passed the farm bill, OK? We, in the House, what we did is said, you know, we are going to bust up the almost 50-year custom where you're going to marry two different issues and force people to vote on those. We passed the farm bill.

WALLACE: But you take out (ph) all of the food stamps -- maybe the only way for 40 years that you've been able to get a deal.

CANTOR: No, that is not true, not on a Republican majority. And so, Republican majority for the first time says we don't like the way things have always been done in Washington. That's exactly what we are trying to change. And we're going to bring a bill forward under Chairman Lucas' leadership, that actually says about food stamps, we want the people who need those food stamp benefits to get them.

But you know what? It's an issue of fairness. If they are able- bodied people who can work, they ought to do that in order to receive a government benefit. That's the proposal we are bringing forward.

You talk about appropriations bills. Yes, we passed four in the House. The Senate has passed zero, right? And the fact is the House of Representatives has been the only one focused on trying to get a handle on our fiscal problems.

WALLACE: Let me bring up an appropriations bill because this week, you had to pull the transportation and housing bill because you couldn't get enough Republicans to vote for it, to support it.

Afterwards, the House Appropriations chairman, Harold Rogers, said this. Put it on the screen. "I believe that the House has made its choice. Sequestration and its unrealistic and ill-conceived discretionary cuts must be brought to an end."   Question, are you willing -- when you get this from the chairman of House Appropriations, a conservative Republican -- are you willing to give, are you willing to compromise on the $109 billion in automatic sequestration cuts starting in October?

CANTOR: Here is the problem. What we need to have happen is leadership on the part of this president and White House to come to the table finally and say, we're going to fix the underlying problem that's driving our deficit. We know that is the entitlement programs and unfunded liability that they are leaving on this generation and the next.

WALLACE: So, are you're saying you are willing to get -- you're willing, if you could get a compromise on entitlements, then you would give up on the sequestration?

CANTOR: What we have said in the House as Republicans, leadership and members alike, is that we want to fix the real problem. The real problem is entitlements. We've also said sequester is not the best way to go about spending reductions. It was, as you know, a default mechanism because Congress couldn't do the job it was supposed to a couple of years ago. We've always said that. But, in fact --

WALLACE: You're willing to give up on sequestration?

CANTOR: But, in fact, Chris, we've always said, president, come join us. But the House really is the only one who has consistently engaged in trying to address the spending problem. And this fall is going to give us a great opportunity I think to all come together and try and tackle the real problem which is the entitlements.

WALLACE: Well, let's talk about that, because when you come back from your five-week recess, you have only nine legislative days until the end of September, when the government runs out of money, funding shuts down.

First of all, do you support a short-term extension, a continuing resolution to give you more time to work out a deal, and what's the basis for a real deal to fund the government and to raise the debt limit?

CANTOR: Well, yes. I think most conservatives, most on the left, Republicans, Democrats alike say we shouldn't be for a government shutdown. What we are trying to do is fund the government and make sure also that we take away the kinds of things that are standing in the way of a growing economy, a better health care. And all the while keeping our eye focused on trying to deal with the ultimate problem, which is this growing deficit.

And that means when we get to the issue of the debt ceiling, it's not some sort of fictional process or just a process that we go through. What raising the debt limit means, it's increasing the credit limit. For too long now, Washington has disregarded the fact that that does -- what that does is it burdens our kids and theirs. And we actually are digging the hole deeper for the next generation.

WALLACE: But, Congressman, the president -- I'm not saying who's right or who's wrong -- the president wants higher taxes and more spending. You want lower taxes and less spending. The president says, clean debt limit, just give me the increase in the debt limit, and you, the Republicans, the Boehner rules say, no increase in the debt limit without an equal or greater cut in spending.

I'm not saying who's right or wrong. Aren't we headed for a train wreck?

CANTOR: I hope now that we have learned through the process that we can actually find some common ground between the sides.

WALLACE: Where is the common ground?

CANTOR: Well, I can tell you one thing. Last week, Chris, in the House, what we did is codified the president's delay of the ObamaCare employer mandate. And we also said it's only fair to extend that delay of a mandate to individuals and working people as well.

WALLACE: But he opposes that.

CANTOR: We had 22 member s of his party in the House join us. And in fact, what we also saw that week were three national Democratic union leaders speak out on ObamaCare as well. And they said this law is already creating nightmare scenarios to working people in this country. Because as we know, and this union letter specified this, that ObamaCare is turning our economy into a part-time economy.

WALLACE: Again, if I may, sir.

CANTOR: We have -- we have common ground.

WALLACE: Again, I'm not saying -- but you don't have common ground with the president and you don't have common ground with the Senate Republican leadership. I'm not saying you should cave. I asked Jack Lew last week, you know, short of surrender what are you asking for from them. Aren't we headed for a train wreck?

CANTOR: I hope not. Because I think that we are earnest in our desire to fix these problems. And we believe there is common ground in trying to say all of us know you've got to do something about the entitlements. The biggest growing entitlement before us right now has to do with health care. We can do something. The president has already given on ObamaCare, he's already conceded that it's flawed and the employer mandate shouldn't be put into effect. Let's do the same for individuals, let's say it is only fair not to burden them with the taxes in the mandate.

WALLACE: We've got less than a minute left. Immigration. Congressman Paul Ryan says the House will vote this fall. He suggested as specifically as October on a bill to provide 11 million illegal immigrants who are already in this country with legal status. Take a look.


REP. PAUL RYAN, R-WI, FORMER VICE PRESIDENTIAL CANDIDATE: This is system that gets people right with the law where they have a probationary period where they have to pay taxes, pay a fine, learn English, learn civics and get right with the law.


WALLACE: Question. Are you committed to a House vote this fall on an overall path to legalization?

CANTOR: We have not made any announcements as to the schedule yet as to how this will come forward. What I can tell you, Chris, is we have said we are not going to be bringing the Senate bill up. We don't believe that that's the right path towards an immigration reform bill. I think the House has also indicated that we're going to take a position on this. We know the system is broken. We want to fix it. And so, as you know, our committee, the judiciary committee in the House headed up by Bob Goodlatte, my colleague from Virginia, has already taken action on bills having to do with temporary worker permits.

WALLACE: We're running out of time. A simple yes or no. Are you committed to a vote this year on a path towards legalization?

CANTOR: We will have a vote on a series of bills at some point, Chris. And it will deal with a variety of issues. Border security is a really important issue. Because it goes to the trust factor as well. We also, as you know, I have been very active in promoting what I'm calling a kids' bill. It's not ...


CANTOR: And it says that you ought not hold kids liable for illegal acts of their parents.

WALLACE: All right. We're going to leave it there. I've got to take that as you are not committed to an overall vote on legalization.

CANTOR: I have said that we will be addressing the issue of immigration in the House according to our terms, not the way the Senate did. Because as you know now there is a lot of doubt being cast on whether the folks who voted for that know even what in the end was voted on because of the scramble to get the votes in the last piece of that legislative activity. And we're going to do a lot more deliberative and smart in the House.

WALLACE: Majority Leader Cantor, always a pleasure to talk with you. Covered a lot of ground. Thank you. Please come back, sir.

CANTOR: Thank you, Chris.

WALLACE: Up next, 22 U.S. embassies close their doors and the State Department issues a global travel alert. We'll ask our Sunday panel about the terror threat and what it says about the president's foreign policy when we come right back. And here they are now.



REP. ED ROYCE, R-CA, CHAIRMAN, FOREIGN AFFAIRS CMTE: We have had an ongoing threat. It's Al Qaeda linked. And based upon our experience of the past we know that when the information surfaces that shows that our personnel are at risk we should act on that information.


WALLACE: Congressman Ed Royce, chairman of the House Foreign Affairs Committee discussing the extraordinary steps the Obama administration is taking to respond to the latest terror threat. And it's time now for our Sunday group. Bill Kristol of The Weekly Standard, Fox News media analyst Howard Kurtz, former Republican senator, now head of the Heritage Foundation Jim DeMint and Fox News political analyst Juan Williams.

Bill, what do you make of the decision to close all those embassies, all those consulates as Mike Hayden has said from Algeria to Bangladesh. What does it say about the president's foreign policy and what does it say about our fight where we stand with Al Qaeda?

BILL KRISTOL, THE WEEKLY STANDARD: Four years ago President Obama gave a much heralded speech as outreach to the Muslim world. And now, four years later we are closing embassies throughout the Muslim world. The year ago the president said Al Qaeda is on the run. And now we seem to be on the run. I'm not criticizing the decision to close the embassies. That's probably the right thing to do for the sake of trying to save American lives and others, but it's a terrible thing. That, you know, just a year ago boasting Al Qaeda is on the run and Usama bin Laden is dead. And now an unprecedented closure of 22 embassies and the travel alert, which lasts for a month, which incidentally -- I'm not sure people understand that State Department hates to do that. You know, this -- this is the highest level of the -- the travel advisory they do (inaudible), and the travel alert, every host government dislikes that. It cuts tourism. They are objecting to the ambassadors there, the ambassadors are cabling back to the State Department saying, travel alert, are you sure we have to do that? For the U.S. government and the State Department to issue a travel alert for the next month means the threat is serious.

WALLACE: Senator DeMint, the president was criticized heavily last September after Benghazi for not doing enough. Is it fair now to criticize him for doing too much?

JIM DEMINT, HERITAGE FOUNDATION PRESIDENT: Well, it's clear that Al Qaeda may be more of a threat to us than they were before 9/11 now. And we don't know exactly what all the intelligence says, but as you have heard from a lot of the experts on both sides of the aisle in Congress, there is a very real threat there. So, I'm not questioning what he's doing. I think what Bill is saying is true. Is our attempt to placate parts of the world, reset whether it's Russia or somewhere else are clearly not working. And the perception of weakness in this administration is encouraging this kind of behavior.

WALLACE: Juan, what do you think about that? The idea that the Obama administration is in retreat and now we are on the run, not Al Qaeda.

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, first of all, I mean I just think that's a miscast interpretation of events. Clearly, the Al Qaeda that attacked us on 9/11 really has been denuded. I mean that line of command and control, and training centers that they had in Pakistan, Afghanistan. We as an American people have gone -- and we have paid a tremendous price to dismantle that operation. What we are dealing now with is this kind of loosely organized terror network often influenced by the Internet. You get these lone wolves like the Tsarnaev brothers in Boston.

WALLACE: Yeah, but we are talking about Al Qaeda in the Arabian Peninsula.

WILLIAMS: Yeah, which is an offshoot, which is, you know, their own creation. And so, what we have to do is I think get away from the politics for a second and understand the severity of the terror threat and the fact that it has sort of metastasized and it has this element here and there. This is a new kind of threat. And to simply play politics and say, oh, Obama -- President Obama said Al Qaeda was gone, that Al Qaeda has been dismantled thanks to Republican and Democratic efforts.

KRISTOL: (inaudible) Al Qaeda in the Arabian Peninsula is the original Al Qaeda.


KRISTOL: Where is Osama bin Laden from? Where is he from? Yemen and then Saudi Arabia. That is core Al Qaeda.

WILLIAMS: The people who attacked us were Saudi Arabians. But ...


KRISTOL: ... new threat is coming from.

WALLACE: Howard Kurtz, you're going to learn -- you have to jump in.


HOWARD KURTZ, FOX NEWS MEDIA ANALYST: Let me pull a couple of elbows here. Maybe the administration is suffering from post-Benghazi syndrome and is over reacting. We don't know the classified details. And "New York Times" reports this is based on specific intelligence intercepts. So I don't think it is just an exercise. And at the same time, you know, it does dent the administration and narrative that Al Qaeda has been largely neutralized as a terror force. But to be fair, Barack Obama never rolled out a mission accomplished banner and said that the threat had been completely eradicated. And for all the chatter on something (inaudible) elsewhere, about whether or not the politics of this are smart, are they doing too much, or doing too little, that pales compared to what would happen if there were attack, if there were American casualties and everybody would be on the White House, why didn't you do something before the attack took place?

WALLACE: Senator DeMint, does the administration's policy -- I mean look, they don't need any excuse to hate us. They hate us. And they are going to continue to hate us, the bad guys in that part of the world. Has the administration's policies in any way contributed, however, to this?

DEMINT: Chris, it's hard to tell. But I can tell from you -- from talking to people all over the world who have come through the Heritage Foundation. And we have had discussions. There is a perception of weakness of this administration.

KURTZ: Perception? Was there a perception of weakness during the eight years of the Bush administration during those ...

DEMINT: I'm not -- I'm not ...

KURTZ: ... color-coded alerts?


DEMINT: I'm not making a comparison here.

WALLACE: No, no, but you are saying that -- you're saying that ...

DEMINT: The instability ...

WALLACE: ... the perception of weakness because of an alert.

DEMINT: The instability around the world is clearly related to at least a perception of a lack of resolve of the United States and a perception of weakness. Now, I'm not questioning what the president is doing here. In fact, I think he should probably be over cautious rather than under cautious after Benghazi. But I think what we are seeing is a reaction to a perception that the United States does not have the will to act.

WALLACE: Juan, let's just quickly in the time we have left -- what does this do to the debate over the NSA? You heard Justin Amash talking about invasion of privacy. There seems to be a real push in Congress, even among supporters. We've got to put new limits on it, on the (inaudible) probably through the NSA that we've got the electronic intercepts that gave us this information.

WILLIAMS: Look, you know, when you look at the poll numbers, what you see is Americans are concerned about violations of civil liberties. But it's still the case that a majority of Americans say it is OK if this is an anti-terror effort we believe in it. Now, they think that the government is liable to go too far, to use the data for political reasons, for personal reasons. But people think, you know what, if this is a legitimate thing, approved by Congress, approved by the president and they hear from the intelligence chiefs that they are being properly used, they say, go ahead, fight the terrorists.

WALLACE: All right. Panel, we have to take a break. Here on next, the new divide inside the GOP over ObamaCare and spending.


UNIDENTIFIED FEMALE: I couldn't be the activist I am today if I didn't have this spotlight.

WALLACE: In 2007 she started the Africa Outreach Program.

UNIDENTIFIED FEMALE: The fight for something like stopping AIDS and HIV or a violence against women.

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



GOV. CHRIS CHRISTIE, R - N.J.: If Senator Paul wants to start looking at where he's going to cut spending to afford defense maybe he should start looking at cutting the pork barrel spending that he brings home to Kentucky.

SEN. RAND PAUL, R - KY: Governor Christie can't point to any votes that I've ever voted to bring pork barrel projects to any state.


WALLACE: Governor Chris Christie and Senator Rand Paul, two potential Republican presidential candidates demonstrating the divide these days inside the GOP. And we are back now with the panel. Well, there is a growing split among Republicans on a number of issues from national surveillance to spending. And we may see that playing out on the panel here right now. Bill, on ObamaCare folks from the Tea Party wing including Senator DeMint say no funding the government unless you defund ObamaCare. Why are they wrong?

KRISTOL: Well, they're right to want to fight ObamaCare. And they are right, I think, that the leadership in the House and especially in the Senate hasn't done enough to try to force votes, especially in the Senate, to defund parts of -- or delay parts of ObamaCare. There are extremely vulnerable parts. And the House did a good job in trying to -- and passing delays in both mandates, the individual and employer mandate and got Democratic votes. Senator McConnell on Thursday night has, I think, put it on the -- tried to put it on the Senate calendar and vote this mysterious rule 14 that I don't understand, but I'm sure Jim does from these days in the Senate. And I think there might be a little force to vote in September. So, I give Heritage and I give Senator Cruz and Senator Lee and the others credit for pushing for fighting which is good. And I think there are more intelligence, perhaps, ways tactically to fight than simply saying, you know, we're going to defund all of ObamaCare. And if you don't vote -- and then voting not -- voting for any continuing resolution that doesn't ...


KRISTOL: ... ObamaCare is surrender. This is going to be very hard to fully defund all of ObamaCare with president Obama as president.

WALLACE: I have to say Bill Kristol was disappointingly diplomatic there, Senator DeMint.


WALLACE: Some -- but let's, you know, go now, some leading Republicans say this is crazy. Tom Cole says it's suicidal. Richard Burr, your former colleague in the Senate says it is, quote, "the dumbest idea I have ever heard." What are they missing?

DEMINT: Chris, ObamaCare is unfair, it's unworkable, it's unaffordable and it's very unpopular. Even the Democrats who wrote the bill say it is a train wreck. President Obama has agreed it's not ready for primetime.

WALLACE: I understand you don't like that. But what about the Republicans who say it is crazy to hold the government (ph) hostage.

DEMINT: The point is that this is a very destructive law that's going to hurt our country, it's going to hurt a lot of people. This may be the last opportunity to stop it. Now, there is no Republican that I'm aware of who wants to shut the government down. The whole point is we need to fund the government. But we should not fund ObamaCare. If this is a temporary funding mechanism that's coming out in September. It should not be funded. And this is -- would be a statement and ...

WALLACE: But Senator, you know, what they say is, you don't take a hostage unless you are prepared to shoot them.

DEMINT: Right.

WALLACE: And if you're going to go down this road, are you prepared to shut down the government? Because the Democrats are not going to go along with this. Are you prepared to shut down the government?

DEMINT: Well, I wouldn't shut down the government. But if Obama wouldn't accept the funding bill for the government that fully funds the government because it didn't have his failed law in it, then he would be shutting down the government. And that's a case we're going to take to the American people in August through Heritage action. We'll do dozens of town halls around the country. I'm convinced the more Americans know about ObamaCare the more they will stand with those of us who want to stop it.

WALLACE: Howie, what's going on here? It isn't just ObamaCare. It's also on spending. You will see some Republicans pulling back now from the sequester, they say it's too tough for domestic programs in their districts. Big fights as we just saw in the first segment about surveillance and restrictions on the NSA. What's going on? Why the split inside the party and why is it playing out so early in this cycle?

KURTZ: A lot of mainstream Republicans are upset, even angry at what you might call the bomb throwing wing of the party led by the Senator Ted Cruz and others for these kinds of threats. Not because they don't want to defund ObamaCare, not because they are happy with the sequester. But because this is feel-good politics. It's a political statement. It makes your base feel good. But ultimately, it disappoints those who are on your side, because when you only control one half of the legislative branch. You can't force your will on the rest of us. And here is the irony. ObamaCare remains fairly unpopular. People do like some of the benefits like no pre-existing conditions and there are clearly problems with this implementation. This -- this GOP in funding (ph) is taking the spotlight off problems with the law and putting it on the deep divisions within the Republican Party.

WALLACE: Juan, Democrats have plenty of their own internal battles of it here. Should they just love what's going on inside the Republican Party?

WILLIAMS: I think there is a Jamaican reggae song, a Jimmy Cliff song. It says the rain don't fall on one man's house. And, you know, the problems that have -- or are absolutely dividing the Republican Party right now amount to dysfunctional politics. They are about obstructing ObamaCare. ObamaCare is the law of the land. It's going to happen. They are leaderless, none of their leaders is having any impact and able to control the extremist elements of the party. So, what does it mean for the American people? It means that we create, manufacture crises that drive down our credit rating. We don't deal with energy, we don't deal with job creation. Even Republican governors, the split is about the fact that Republicans in Congress are coming to understand that Republican governors want spending like infrastructure.

UNIDENTIFIED MALE: The government needs to function.

WALLACE: Senator DeMint, I have never asked this before. Are you guys dysfunctional?   DEMINT: No. This is a debate we need to have. Whether it's the NSA, or whether it's about ObamaCare, is do we have the courage of our convictions? Is this really a law we think is going to hurt our country?

WALLACE: But what do you make when some Republicans -- I mean just this week they pulled the spending bill because a lot of people, a lot of Republicans weren't willing to go along with the sequester and all those automatic spending cuts.

DEMINT: Well, it's going to be hard for a lot in Congress to give up the spending. But we're going to bankrupt our country if we don't. So we may ...

WILLIAMS: What do you do when Speaker Boehner says it's not about accomplishment. It's about repeal. That's how we measure our success.

WALLACE: Hold that ...

WILLIAMS: It's crazy.

DEMINT: It's a healthy debate for Republicans.

WALLACE: Hold that thought. It's not about what you just said, it's about the fact that we have run out of time. Thank you, panel. See you next week. And here's a good plug. Remember, our discussion continues every Sunday on Panel Plus. We'll continue this discussion and get Senator DeMint's answer. You can find it right here on our Website, Make sure to follow us on Twitter, @FoxNewsSunday.

Up next, our power player of the week, an Oscar winner in a different role, creating a world free of AIDS.


WALLACE: It's called celeb advocacy. Famous people coming to Washington to push for their cause. We sat down in April with a special person who has been trying to save lives -- millions of lives for years. She's our power player of the week.


CHARLIZE THERON, ACTRESS: It's very hard to ignore that kind of pain and suffering -- unnecessary pain and suffering when it comes to a virus that's completely preventable.

WALLACE: Charlize Theron is talking about HIV/AIDS. The progress that's been made and the work that still needs to be done.

THERON: You all get to decide what you want to do to make something in your world better.

WALLACE: Worldwide, 7,000 people are infected and 4500 still die every day. And yet, she says, there's been so much progress.

THERON: The access to anti-retro viral drugs in South Africa has leaped to 75 percent. I mean that's huge. And that's just in two years. We are looking at our first AIDS-free generation by 2015. We are so close to really looking at the beginning of the end of AIDS.

WALLACE: Theron was in Washington as part of UNAIDS, which is leading the fight against the disease. The U.S. contributes $6 billion of the $17 billion spent each year fighting AIDS. Theron is lobbying for a bigger contribution.

THERON: I think a lot of oh Americans think that foreign aid is a huge percentage of the budget of America. But it really is less than one percent.

WALLACE: Born and raised in South Africa, Theron has been fighting this battle for more than 20 years. At age 15, she saw her mother shoot and kill her alcoholic father who threatened the family. She started speaking out about rape and AIDS.

THERON: There are so many people who care about you. Isn't it a great feeling to know that you're not alone?

WALLACE: In 2007, she started the Africa Outreach Program sending mobile health clinics to villages to teach young people about AIDS prevention and treatment.

(on camera): How much of your focus on violence against women and children comes from your own personal history?

THERON: Well, look, in my business, the film making business, there is always a saying, you know, you can't tell a story effectively if you don't emotionally tap into it. I do have a personal connection to that.

WALLACE (voice over): She's gratified to see teenagers who used to ignore prevention now leading the fight against AIDS. And she's determined to use her celebrity to do some good.

THERON: I feel like a mother in the sense that I have watched them grow up. I couldn't be the activist that I am today if I didn't have the spotlight, which, you know, sometimes it's about my hair cut. And I'm trying to maybe other times make it about the fight for something like stopping AIDS and HIV or violence against women.


WALLACE: Theron is still hard at work. She met with the South African President Jacob Zuma on Monday to discuss how the fight against AIDS is going in her home country. And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

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