Inside the search for Flight 370; Gov. John Kasich reflects on Ohio's economic turnaround

This is a rush transcript from "Fox News Sunday," March 23, 2014. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

Now, a French satellite finds debris in the search for Malaysia Airlines Flight 370.


WALLACE: The investigation now focuses on objects spotted by satellite in the Indian Ocean.

TONY ABBOTT, AUSTRALIAN PRIME MINISTER: It's about the most inaccessible spot on the face of the Earth. If there is anything down there, we will find it.

WALLACE: And the FBI tries to retrieve files deleted from the pilot's flight simulator. While passengers and families continue their agonizing wait.

We'll have a live report on breaking developments, and we'll talk with Michael McCaul, chair of the House Homeland Security Committee, and Alan Diehl, a former investigator with the NTSB and the FAA.

Then, Russia defies the U.S. again and completes the annexation of Crimea.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The world is watching with grave concern as Russia has positioned its military in a way that could lead to further incursions into southern and eastern Ukraine.

WALLACE: Our Sunday panel analyzes what's Russian President Putin wants and what it will take to stop him.

Plus, as the 2016 race for the White House heats up, one potential GOP candidate is counting his states' economic turnaround.

GOV. JOHN KASICH, R-OHIO: The nation and the world, they have their eyes on Ohio. They know we're coming back. They want to know, frankly, how we're doing it.

WALLACE: Ohio Governor John Kasich joins us. It's a FOX NEWS SUNDAY exclusive.

And our power player of the week, former "Washington Post" CEO Donald Graham on his new initiative for the dreamers.

DONALD GRAHAM, FORMER WASHINGTON POST CEO: I think helping low income kids get to finish college is about as good as it gets.

WALLACE: All, right now, on ‘Fox News Sunday.’


WALLACE: And hello again from FOX News in Washington.

We're now in the week three in the search for Malaysia Airlines Flight 370, and potential leads keep coming. But so far, none have led to that missing jetliner. Malaysia says it's now received satellite images from France offering the latest sign of the potential debris in the Indian Ocean.

Planes and ships search a remote stretch of water 1,500-mile southwest of Australia. Some are looking for pallets spotted from the air Saturday. But so far, they turned up nothing.

Joining us with the latest, FOX News national security correspondent Jennifer Griffin -- Jennifer.

JENNIFER GRIFFIN, FOX NEWS NATIONAL SECURITY CORRESPONDENT: Chris, when the Air France flight went down off the coast of Brazil in 2009, the first sign of that plane was a wooden pallet floating on the waves. Wooden pallets are used inside plane's cargo containers. The search continues to focus on the southern corridor.

Australian officials have asked Malaysian Airlines to provide them with a packing list. The new French satellite images show objects in the same search zone as the satellite images provided by the Chinese government Saturday. The Chinese photographs show an object 72 feet by 42 feet, which could be a wing.


ABBOTT: We have now had a number of very credible leads and there is increasing hope, no more than hope -- no more than hope -- that we might be on the road to discovering what did happen to this ill-fated aircraft.


GRIFFIN: The U.S. Navy's P-8 Poseidon returned to the search Sunday after a day of rest and maintenance, joining a total of eight search planes. Australian authorities said the plane that spotted the wooden pallet was unable to take photos from the air. It takes these planes four hours to fly to the search zone from Australia. They can spend three hours searching before they have to return.

Seven Chinese ships have now joined the search. Weather continues to be a factor. It is much clear today. Sea fog and low clouds have been clearing up. The Malaysian defense minister appealed to churchgoers around the world to say a prayer today for those onboard Flight 370 and, of course, for their families, Chris.

WALLACE: Jennifer, thank you.

For more, let's bring in Texas Congressman Michael McCaul, chair of the Homeland Security Committee, and from New Mexico, Dr. Alan Diehl, a former crash investigator for both the National Transportation Safety Board and the FAA, and author of "Air Safety Investigators: Using Science to Save Lives One Crash At A Time."

Chairman McCaul, any new information on what happened to Flight 370 and where it is now?

REP. MICHAEL MCCAUL, R-TEXAS: Well, as I've said all along, I believe it's in the Indian Ocean. I think the Malaysian government spent way too much time focusing on the northern routes and the Gulf of Thailand and Kazakhstan. It would have been picked up by radar and we knew that. And I know satellite imagery given to the Malaysians established that, but we wasted a week of precious time up in that region when all along it's been in southern Indian Ocean I think is where the location is.

I think this is hopeful that now we have the third satellite imagery of debris in this area and the good news is we can find it I think the area where the debris so that we can get to the black box to finally found out what may have happened in this case.

WALLACE: Let me ask you about another law enforcement aspect of this, Chairman. The FBI has now gotten ahold of the hard drive of the flight simulator of that chief pilot. And we know that he deleted some files. Any information that they have been able to come up with anything to retrieve some of those files and also I know that law enforcement authorities are looking back through all of the e-mails of the two pilots.

MCCAUL: Sure. They're going to scrub all the e-mails. The hard drive of the simulator at Quantico is under review. Having worked with the FBI as a federal prosecutor, I know that even though you may delete a file, they can be retrieved later. And I know that the FBI is working to do that.

Now, we all delete files. But the question is what was deleted and could that be evidence of a route that was taken in this case? And so, I think that's all under review.

Let me just say there are many theories floating around out there. None in my opinion connect all the dots at this point in time. But that's why we have an investigation on going.

WALLACE: Let me bring you in, Alan Diehl.

The best lead that we have so far are the satellite images of debris, something about 70 feet long in the Indian Ocean. One image, the one on the left taken by an American satellite company last Sunday, the other on the right taken by Chinese satellite on Tuesday. Now, of course, we have the French satellite that spotted something.

Alan, a couple of questions. First of all, do you have an opinion on whether or not that is wreckage from the plane or is that just impossible to tell from those satellite images? And what do you make of this pallet that was seen apparently by one of the search planes yesterday?

DIEHL: Well, they're all promising. But, obviously, there's a lot of debris out there. We need a lot more resources than eight airplanes and 20 some ships. I think we need 48 airplanes and we need it quick. I just hope that President Obama is getting the right kind of information.

We have a fleet of P-3 Orions. They're older than the P-8s. They need to be out there looking. The U.S. Air Force has MC130s that have aerial refueling. They can stay on station a lot longer than the P-3s. That sort of equipment needs to be moved into the area to help identify what's on the surface.

WALLACE: Now, Alan, as you may know, the sailors call this stretch of the Indian Ocean the Roaring 40s both for its latitude on the globe but also for very rough seas and high winds. What do you think of the chances given the fact that these satellite images are days old, one, that can you find what they are, and then if does it turn out to be parts of the plane that can you retrace over the course of what is now two weeks all the way back to the crash site?

DIEHL: Well, that is problematic, even if it does turn out to be part of the aircraft for all the reasons you talked about -- the tides, winds and so on. We've seen this before in 1987, the South Africans lost a 747. That was talking to air traffic control when it went down. It was an onboard fire. They didn't get throughout in time to find the pingers on the black boxes. It took them two years just like with Air France in the south Atlantic.

So, this is probably going to be a very long search and unless we just luck out and one of these P-3s or P-8s hears the pinger and we localize it quickly.

WALLACE: Chairman McCaul, as head of the Homeland Security Committee, are security officials still pursuing the possibility that this is a terrorist plot? Are they still pursuing the possibility that plane didn't crash, that it landed somewhere on a remote runway in the southern Indian Ocean, or have they basically given up on that scenario?

MCCAUL: Well, I think in terms of landing it on a runway somewhere, probably less likely. I think it's in the Indian Ocean. However, we haven't ruled out terrorism, although there is no direct evidence of that at this point in time.

But if this was a deliberate attack as we think it probably was, because remember, the transponders turned off right after they exited Malaysian airspace which is sort of odd scenario and the ACARS system. And then the route is completely turned around dramatically. That suggests that either the pilot intentionally did it for whatever reason or that something was happening in the cockpit on the airplane with some possibly some of the passengers. So we can't rule out the possibility of passengers, of the terrorist link to that. But one thing we do know for certain is the transponders turned off, ACARS, the routes from that were changed.

What caused that? We don't know at this point in time. It's either an accidental fire that may have caused that or a more deliberate intentional act. And I think that's why we need to get to the bottom and get that black box in the Indian Ocean.

WALLACE: Alan, there is also a good deal of speculation about what's called the Payne Stewart scenario, because that's how the famous golfer ended up dying. However this event started, that in the end all of the people on the plane, including the pilots and the hijackers, were incapacitated and the plane just kept flying on autopilot until it ran out of gas and crashed into the ocean.

How likely do you think that is?

DIEHL: Well, that is certainly a possibility. I have to agree with Congressman McCaul, everything is still on the table.

There is even a better example of that and that was with a Helios Greek 737. They had a slow decompression. The pilots passed out along with the passengers and a flight attendant who they have these walk around oxygen bottles and masks ended going to the cockpit. He flew the aircraft until it ran out of gas 2 1/2 hours later.

Well, we know the 777 has a lot more fuel than the 737. And that scenario is in play.

But there is a better one that I called Cairo-gate. And that was a 777, Egypt Air 777 sitting at the gate in Cairo and they had in that case a rapid fire that within a matter of minutes burned a hole in the fuselage. So, sitting on the ground that's a problem. They got everybody off.

The captain fought the fire, the first officer got everybody off the plane. I'm not saying that's exact scenario. But, Chris, it burned a hole in the fuselage. And if that would have happened at 35,000 feet, we would have had multiple emergency and I'm not sure any crew member or crew members could have handled that.

And people talk about the gyrations, the vertical gyration, that's not an autopilot maneuver. There may well have been a flight attendant at the control.

So, this is all speculation. I'm not saying that's what happened. But it does fit some of the data. So you need to take a look at what happened at Cairo-gate there.

WALLACE: One last question for you, Congressman McCaul.

It turns out there were lithium batteries in the cargo, the possibility that they could have caught on fire.

MCCAUL: Lithium batteries are hazardous cargo. In the United States, they would never be onboard with passengers. I think that's very important to note in this case, they were. We had the flight out of Abu Dhabi, the UPS flight that went down, actually went out and returned and 30 minutes later crashed as well.

So, we have examined that possible theory in this case because they did turn right back around to Malaysia. So we thought about that. But then he says, OK, good night. And the transponders turned off two minutes later.

It makes you wonder there's no distress on the plane at the time. It makes you wonder if there was any sort of crisis. And the fact it flew seven more hours after a potential he electrical fire is on the plane. They could have turned off the transponder? Is that really a viable theory?    But I do think it is a theory out there that needs to be examined, along with an intentional deliberate act to bring down the plane.

WALLACE: Well, what I come away from this today is that the mystery continues.

Congressman McCaul, Alan, thank you both. Thanks for joining us today. Obviously, we'll stay on top of the story, gentlemen.

DIEHL: Thank you.

MCCAUL: Thanks, Chris.

WALLACE: Up next, Russian troops mass on Ukraine's border as the U.S. imposes new sanctions and Kremlin retaliates. What happens now? Our Sunday group weighs in.

Plus, what you would like to ask the panel about the situation in Ukraine? Just go to Facebook or Twitter @FoxNewsSunday, and we may use your questions on the air.



ANGELA MERKEL, GERMAN CHANCELLOR (through translator): It is clear as long as the political conditions for the G-8 are nonexistent, like right now, the G-8 does not exist anymore either as an organization or as a summit.

ANDERS FOGH RASMUSSEN, NATO SECRETARY-GENERAL: This is the gravest threat to European security and stability since the end of the Cold War.


WALLACE: German Chancellor Angela Merkel and the head of NATO reacting sharply to Russia's annexation of Crimea.

And it's time for our Sunday group. Radio talk show host Laura Ingraham, Bob Woodward of "The Washington Post," Paul Wolfowitz, former number two at the Pentagon under George W. Bush and former president of the World Bank, and FOX News political analyst Juan Williams.

Well, Russia is massing 20,000 troops on the border of eastern Ukraine armed with tanks, artillery and aircraft.

Laura, I mean, it's a guess. But do you think Putin invades and what can and should the U.S. and the West do to try to persuade him not to?

LAURA INGRAHAM, RADIO TALK SHOW HOST: Remember that commercial that says your brain on drugs?    This is your country in decline. And I would say that United States has a leader now who had a great -- this expansive view of what the world community would be like, would have more harmony, the U.S. would kind of step back and the world would step in and we'd have a more stable world.

What I think you see now is that, of course, the world is less stable with America weaker.

What we can do in this part of the world, I don't think we're going to do much. I think we can talk a lot about sanctions. Sanctions might have some minimal effect. But unless Europe steps up, unless Angela Merkel matches her rhetoric with real world actions against the former Soviet Union, I think Putin sees this as a massive opening for him domestically and on the international stage.

You see him getting closer to China. The Sino-Russo alliance is very strong now. I think America's options are very limited.

WALLACE: Well, President Obama flies to The Hague tomorrow to meet with the leaders of the G-7, Russia is excluded. So, it will be the leaders of the G-7 to talk about what they do next.

Bob, do you think it's fair to say that Putin's response is because of weakness from the U.S.?

BOB WOODWARD, THE WASHINGTON POST: Well, you have to start with some sort of policy and actually if you look at the sanctions policy that Obama has proposed, it's reasonable. It's a reasonable starting point.

Remember, the sanctions had worked to a degree in Iran. And a lot of experts look at this and remember Russia is in a sense an oil and gas company masquerading as a nation state. And that being the case, the leverage here and particularly if you ratchet it up is a starting point. I think the problem is the country is not speaking with one voice. You need some sort of --


WALLACE: Our country or Russia?

WOODWARD: Our country. Russia is speaking with one voice, the Putin voice. But we have multiple voices here. And the president needs to bring in the Republicans and the Congress on this and come up with some sort of plan.

You know, the opening here is absolutely right. This is a deadly, serious moment and it's got to be treated as that.

WALLACE: Paul, I want to get your assessment based on your jobs at the Pentagon and then as head of the World Bank. First, here is Vladimir Putin speaking this week and expressing a long list of grievances about being pushed around by the west, led by the U.S.

(BEGIN VIDEO CLIP)   VLADIMIR PUTIN, RUSSIAN PRESIDENT (via translator): They have come to believe in their exceptionalism and their sense of being the chosen one, that they can decide the destiny of the world, that it is only them who can be right.


WALLACE: Your sense of Putin and how far he is prepared to go to restore greater Russia?

WOLFOWITZ: I think you can say Putin is playing a weak hand with brutal force and brutal strength. He did this in 2000 when he was prime minister. He rode to presidency in Russia by this wave of support for genocidal war in Chechnya. He is playing the Russian nationalism card which works very well for him.

His vulnerability is everyone in Russia knows that he is corrupt and they hate it. So, he doesn't like it when Yanukovych's mansion is revealed for what it was. He doesn't like it when one of his close friends who I think is the 16th richest man in the world is put on the Treasury list and Treasury list notes that some of that money is going to Putin. That's his vulnerability. I think that's what has to be pushed.

WALLACE: I want to talk about another vulnerability and that -- and I ask you put it on your hat as head of the World Bank and that's the Russian economy, because since this all started at the beginning of this month the Russian stock market went down 10 percent. Credit groups have downgraded the Russian economy from stable to negative.

How effective would these U.S. sanctions and western sanctions be in weakening the economy of Russia? How vulnerable is it?

WOLFOWITZ: I think it is a vulnerable economy. And, of course, what he is trying to do is play the card back the other way because like any former communist, he believes that our government is run by business people. So, he is putting the squeeze on American businesses in Russia.

But I don't think that's going to work. And, look, we're not going to get him out of Crimea with anything we can do, but we can make him pay a very high price for it, which will in turn help to deter from doing more like destabilizing the rest of the country, even without invading it.

And the third thing is essentially, strengthen spine, if you like, that's a little unfair, he has spine, but to give the Ukrainians and polls and the other countries who correctly feel deeply threatened by this new Russian doctrine to stand up to him and we'll be supporting him. That has been the key to stability in Europe.

WALLACE: Would you send military aid?

WOLFOWITZ: I would. I think I'm disturbed to hear that we may be cutting one of the Pentagon programs that would support these countries.    But I would have like to see a much quicker, much stronger response to what's going on here. I am encouraged that they are finally putting some serious trouble-makers on the sanctions list. I am encouraged that it looks like they're kicking him out of the G-8. I think some of these things should have been done sooner.

WALLACE: We asked you for questions. We got this on Facebook from Greg Orcutt, who asked, "Why is this even an issue for the U.S. to intervene?"

Juan, how do you answer Greg and some others? And we got a bunch of e-mails like this, Facebook postings like this.

Why do we need to get involved in Ukraine? What is our interest there?

WILLIAMS: Well, European security is the primary concern for us, for the world. But I think the reason you're getting so many of these questions, Chris, is there was a Pew poll this week that said overwhelmingly, 60 percent of the American people say the United States should not get involved in fighting Russia in the Ukraine. That's not our business. And it's less important to take a stand there than it is for the U.S. to simply pay attention to what's going on here.

You know, it's interesting because it's like half of Republicans -- it's a weird point of agreement. Half of Republicans, 55 percent of Democrats, 60 percent of independents say we should not intervene in the Ukraine.

The breaking point would be if Putin goes beyond Ukraine and then you start getting involved in the NATO allies.

WALLACE: Well, if he goes to eastern Ukraine.

WILLIAMS: Yes. If you get -- well, that's what I'm saying. If -- the American people don't -- have not set up that line in their political thinking, and so right, now they're in line with President Obama who is taking military action off the table pretty much for anything to happen in Ukraine.

WALLACE: Briefly.

INGRAHAM: I think -- we have to look at the sense of upwards of $20 trillion in Iraq, right? We don't have a lot to show for it. We are stumbling still in Afghanistan.

American people -- I mean, we can talk about we should do this and we should do that -- and I understand that. I really do. But we have a country right now where people look around and say wait a second, why do we only seem to care about borders and sovereignty when they're other countries' border -- border and sovereignty? Why is it that we're obsessed about that but in our country, we have a middle class completely flat-lining, we have economic opportunity dwindling?

And I think it's a hard sell to the people spending money where we don't know where it's coming from in an economy that needs desperate help here.

So, these are the perils of military adventurism and previous decades. We're paying the price of that a little bit today.

I was a big supporter of the war in Iraq. And I understand there are a lot of complexities there. But the American people are looking and going, where is the bang for the buck? That's what they're running into, in the Democratic and Republican Parties.


WOLFOWITZ: You can't do this in the rearview mirror. The problem is --

INGRAHAM: You've got to learn from the past, Paul, right?

WOLFOWITZ: Yes, I know. But one of the things to learn from the past includes unfortunately the past of 1930s, is that if you don't deter this sort of moves early, when you can do it without military force, you end up in wars. And that's what we're trying to avoid here.

WOODWARD: Well, I don't think anyone is really talking about military force.

INGRAHAM: Not now, not right now.

WOODWARD: No. But there are alternatives. I think there is a strategy here that the White House can set themselves on that road and that is the economic sanctions. There is covert action, supplying defensive weapons in Ukraine, helping them in some way. And I think that eventually gets on that table.

WALLACE: All right. We have to take a break here. But we'll see you later in the show. What do you think President Obama should do about Putin and Russia? Please let us know on our Facebook page and join the conversation with other FNS viewers.

Up next, Ohio's economy is on the mend and its governor has called that a miracle. We'll talk with governor and possible presidential candidate, John Kasich, when we come right back.


WALLACE: With two years until the 2016 presidential election, there's a lot of talk the strongest GOP nominee would be a governor from the Midwest. One possibility from the key electoral state of Ohio is making his state's economic turnaround the basis for his re- election bid in November. Joining us now from Columbus, Ohio, Governor John Kasich and, governor, welcome back to "FOX NEWS SUNDAY."

GOV. JOHN KASICH, R-OHIO: Thanks, Chris. Good to be with you.

WALLACE: You have engineered quite a turnaround at Ohio since you took office in 2011 and let's put up part of your record. Your state has been the number five job creator in the nation over that period of time. And number one in the Midwest. Unemployment is now 6.5 percent. The lowest in your state since June of 2008. And Ohio has gone from an $8 billion deficit to a $1.5 billion surplus. Question: what is the secret to your success?

KASICH: Chris, something that conservative Republicans promoted, you know. I was a supporter of Ronald Reagan what I was first elected to Congress in '82. When we were in the midst of a deeper session, and that is balancing budgets and being fiscally responsible. Common sense regulations and tax cuts. I like to say if you have a restaurant, you don't have any customers, you don't raise your prices. And that's where Ohio was. And so what we've done is we balanced our budget, created this surplus, provided certainty, cut taxes for small business, killed the death tax and we have common sense regulations and we are engaged in workforce training. All these things coupled with certainty here in Ohio with what's allowed job creators to feel comfortable and allow them to invest in our state. Almost a quarter of a million people more now working than when we all came in three years ago and we're deeply grateful. But we've got a long way to go.

WALLACE: All right. But the national economy is also in the midst of a recovery. Have President Obama's policies been part of the solution?

KASICH: Well, look, I think the economy is healing a little bit, Chris. But this is not the kind of recovery that we expect after a recession. We should be growing a lot faster. And I think the problem is you have these giant deficits. You have got the threat of taxes. You've got the problem of ObamaCare, which creates uncertainty. And all of those things are a drag on what is the natural healing process. So think about healing when you're 30 years old as opposed to you're 90 years old, right? I mean we should be growing as a 30-year-old and healing as a young person rather than an older person and the fact of the matter is that this recovery is anemic. And I just -- I wish the president could provide the certainty because that would mean that more Americans would be able to be able to realize their god given dreams and destinies in life.

WALLACE: But Governor, you have just proposed a new budget that seems to track with at least some Obama policies. You propose spending at $2.4 billion on construction and maintenance projects. Half a billion dollars, rather, more than two years ago. And while you would cut the state income tax by 8.5 percent, you would pay for it by raising taxes on oil and gas drilling, on business, and on tobacco. The conservative group, Americans for Tax Reform criticizes you for those tax increases.

KASICH: Well, Chris, I think first of all, we have really restrained ourselves in terms of rebuilding the infrastructure of Ohio. But the time comes when every state needs to rebuild their infrastructure and we've done it conservatively. Look, our bond ratings from -- or our credit ratings from New York have improved. So they look at Ohio as very strong. So as we're building the economy with the private sector, there are some places where we need to rebuild the infrastructure of our state. In term of tax reform, we know even Ronald Reagan knew that there are some taxes that penalize economic growth. What we want to do is reduce that income tax. At the same time, giving people at the bottom an opportunity to have some tax reform and tax relief as well. And so, Chris, we know that cigarette taxes, frankly, they're aggressive. Cutting the income tax is pro-growth. You have got to have a tax system. The question is, what is the tax system that allows you to collect revenue, but at the same time provides the most -- the greatest chance at economic growth?

And, look, the proof is in the pudding. We've been doing this for three years since we all came in to office. And it's working. We're up, you know, the jobs, you saw, you posted the numbers. The philosophy that we have seems to be paying off.

WALLACE: For all your successes, you've also, understandably, hit some bumps in the road. In 2011 you signed a law stripping public employees of their collective bargaining rights. The voters of the state overruled you in a referendum later that year. If you're re- elected, would you take that fight on again?

KASICH: No. I would not take it on, you know, Chris. The fact is the voters spoke. And when we lost that referendum in 2011, you listen to the people when they're clear. And so as I said the night that we lost that election, you know, we heard the voters. And we'll move on. And that's kind of where I am. And Chris, my direction and my priorities today are train workers, real improvements in K to 12 education, continued fiscal responsibility, continue to have a tax system that encourages economic growth and continue to make sure that our regulations make total, complete sense in our state.

WALLACE: All right. Let's talk about another bump. On -- and maybe you don't think that's a bump -- on ObamaCare you declined setting up a state exchange leaving that to the Feds. On the other hand, you have agreed to accept the money to expand Medicaid over the objections of the majority, Republican majority in your state legislature. How do you explain those different actions?

KASICH: Well, Chris, first of all, I don't think it was over the objection of the majority of Republicans. Had there been a vote, I think it would have passed. But I have a chance to bring back $14 billion in Ohio dollars back to Ohio to do what? To strengthen our local communities as they treat the most significant problem of drug addiction and the problem of mental illness. Now, I guess I could leave that money in Washington and leave it to those congressmen and senators to spend it wisely. Unfortunately, I was there for 18 years. And I know what they do with that money. I get it back to Ohio to solve some of the most vexing problems. See, my philosophy is this, Chris. As the state does better and gets stronger economically, we must help people who live in the shadows. The people who have drug addictions. We have to get them rehabbed. The people who have mental illness. Those two groups of people should not be sitting in our jails and our prisons. That's unconscionable in our state. And so, it's two -- it's a two-pronged strategy. Continue to grow the state. Continue to make it stronger and stronger economically. And help to lift people out of the ditch where they are, bring them into the mainstream and give them an opportunity to realize their God-given purpose. I think it's entirely consistent with conservative and Republican philosophy. And I'm really pleased we're doing it because there are many people in Ohio now whose lives, frankly, will be in a position of being able to move forward.

WALLACE: You are up for election in November. And according to the latest poll out there, you lead Cuyahoga County executive Ed FitzGerald, the DemDemocrat by five points. He says that like Republicans in Washington, your policies favor the wealthy at the expense of the havenots. He points to the fact that with all of these income tax cuts, the top tax bracket for the wealthiest in Ohio will be five percent. How do you respond to that general argument that you're favoring the wealthy at the expense of the havenots?

KASICH: Well, I don't respond to those political arguments. But what I will tell you is that our latest tax cut we have increased the earned income tax credit so people at the bottom are going to get more. And, in fact, we've increased the standard deduction. And this is interesting, Chris. Between zero and 40,000, we're increasing the standard deduction by $1,000. Between 40 and 80,000, we're going to increase it $500. At the same time, excuse me, we're bringing in the top rate down. This again, kind of looks like a Reagan philosophy. Give tax relief from the bottom up. And get that top rate down so we don't continue to drive the most successful out of our state and as we cut the income tax rate it helps small business because most small business people file their taxes as individuals. And as those taxes come down, it gives them more space to invest in their equipment. It gives them more space to hire people. And we believe that small business is one of the greatest engines of economic growth in our state. So lowering taxes will help us. $12 billion has walked out of Ohio to lower or no income tax state since 1995. And we aim to make Ohio the best state in the country.

WALLACE: Governor, if you are re-elected, you would be an obvious candidate for the Republican nomination for president in 2016. You went on the record this week as saying you are not interested in that. On the other hand, your opponent, Ed FitzGerald has put up a website with a pledge that you will serve everyone who takes -- who gets elected, whoever gets elected will serve the full four year term. Why not sign that if you have no interest in running for president?

KASICH: Chris, Chris, look, let me just be clear. We brought Ohio back from the brink of disaster. I mean we were down 350,000 jobs. Now we're up almost a quarter of a million. We were $8 billion in the hole, now we're up a billion and a half. We have so much to do with workforce. We just put into play a third grade reading guarantee so kids are not socially promoted to the point where they drop out. We have got a major program --

WALLACE: Respectfully, sir, can you answer my question?

KASICH: Yeah, the answer is real simple. My only focus is now being re-elected and continuing to lift Ohio, period. I don't fall for gimmicks in this and that. That's all silly politics. My direction and everything that I am committed to is our great buckeye state. And at the same time, if I could, I would suit up and try to help Dayton in that round of the Sweet 16.

WALLACE: Well, I'm about to get to that in a second. But I'm just -- I mean -- when you say you're not interested in running, are you flatly ruling out running in 2016?

KASICH: My only focus, Chris -- I mean I don't know how many times I have to say this, I'm flattered about the fact that people talk about my running for president. You know, I tried to run for president in the 2000 election and nobody would pay any attention. Now all I'm focused on is Ohio and everybody wants to talk about something else. So, I'm here in Ohio.

WALLACE: All right, I want to talk about ...

KASICH: All the musings are great.

WALLACE: I want to talk about something else. March Madness which you already started to get a plug in. I mean you have to point out the fact Dayton beat your alma mater.

KASICH: I know. I know.

WALLACE: Ohio state in the first round. Now they pulled off the big upset last night over Syracuse. Two questions. How are you feeling about Dayton and how are your brackets?

KASICH: Well, I haven't filled out a bracket. But they asked me down in Dayton what I thought about the Dayton-Syracuse game. And here's what I said. You know, Syracuse had a great run this year. But you also know that Syracuse lately had trouble being able to hit the three, being able to have really good shooting. And I thought with Dayton's depth and their ability to shoot that they had a pretty good chance against Syracuse. The next game, which I think they'll play Kansas, that will be a little bit tougher. In terms of Ohio state, we've had a lot of glory here and we'll have it again. And it's kind of nice to see a place like Dayton get so excited. I guess the president of the university was crowd surfing down there, Chris. So ...

WALLACE: I've never seen you crowd surf. I've never seen you crowd surf. But I think that is in your future.

KASICH: Well, I was going to say, if this politics thing doesn't work out, governor, you may have a sports commentating and analysis job in your future. And, you know, the paper down there wrote "The University of Dayton." So, they're now the basketball power in the state. Governor, thank you so much for coming in today. Always a pleasure. We'll be talking with you soon.

WALLACE: Good to see you, Chris.


KASICH: Governor in Ohio, sir.

WALLACE: Thank you.

WALLACE: When we come back, ObamaCare marks a big milestone. But is it a cause for a celebration?



KATHLEEN SEBELIUS, HEALTH AND HUMAN SERVICES SECRETARY: The real madness in March would be if people have this opportunity for the first time for financial security and health security for themselves and their families and don't take advantage of it before the 31st of March.


WALLACE: Health and Human Services Secretary Kathleen Sebelius still trying to reach out to young people as today we mark the fourth anniversary of President Obama signing the Affordable Care Act into law. And we're back now with the panel. Well, the latest administration figure as of mid-March is that $5 million people have now signed up on the ObamaCare exchange. But they still won't say how many of them are the so-called young invincibles. They still won't say how many of them were previously uninsured. And they still won't say how many of them have actually paid for their policies. Laura, do you think they don't know, really don't know or they are just not saying?

LAURA INGRAHAM, HOST, "THE LAURA INGRAHAM SHOW": They can follow every keystroke on our computers. We don't think they know the facts on this? Of course they do. Look, if the facts were really good, I think Jay Carney would be crowing. The fact that, wow, we have 42 percent of young people have now signed up. They're paying their premiums. We're on track. We might be a little low, but we're strong, we're vital, we're moving forward. I think they would do that, right? I think it doesn't make any sense for them not to tell us. But the fact is even among groups that are traditionally very favorable to the president, Latinos, for example, we've seen the numbers in California go up somewhat in the final push to March 31st, but still lagging way beyond behind what they want. And that's why Obama as the Russian troops are amassing goes on "Ellen," you know, he goes on the "Two Ferns" show on the Internet. They're doing everything. You know, Sebelius, talks about March madness so we think she's really cool now because she actually knows what March madness is. She probably picked Stephen Austin, you know, Stephen F. Austin, now -- to go to the final four.

WALLACE: They won the first round.

INGRAHAM: Yeah, right. But she would have said that they were the final ppick. But none of this is mattering. I mean the fact you can throw-in some pop culture references and go on some of these cool comedy shows isn't going to change the fact that most young people are -- want choice. They want freedom. And they don't want to be told what to do on health care. I think this is going to be a big, big problem in November.

WALLACE: Bob, you have spent 40 years dealing with administrations trying to keep secrets. What do you make of their lack of knowledge, allegedly, about some of these things? And generally speaking, what do you think of the rollout?

BOB WOODWARD, THE WASHINGTON POST: Well, I think, first of all, you have to find people who are supporters of ObamaCare and ask them privately what do you really think? And just yesterday I talked to a physician, very knowledgeable, involved, supporter of ObamaCare. And I said so what is the bottom line? And he said ObamaCare is like a car stuck in first gear. I asked well, when they are going to get into second gear? And he said the problem is that the transmission is in the shop for repairs. When does it get to second gear? And he said honestly, years. So it's not just years in terms of it working. I think it's somewhat maybe years, certainly many months away from measuring what these real numbers are. I mean of lot of it -- the way the numbers are thrown around, what credibility do they have on either side? I think that is irrelevant.

WALLACE: Well, we haven't heard from you on ObamaCare, as former head of the World Bank. What do you think of how it is going so far?

PAUL WOLFOWITZ, FORMER DEPUTY SECRETARY OF DEFENSE: The World Bank doesn't have much to do with this. But you know, it seems to me I hear numbers. I think it is correct, if 5 million people had their policies canceled, the ones that they were promised they could keep. Presumably, some of that 5 million of new enrollees are just people who got kicked out and they are back in. This was supposed to reduce the number of uninsured. It may actually have increased the number. I think Nancy Pelosi famously said, we have to pass the bill so you know what is in it. Well, they passed the bill and there are so many changes by administrative -- I don't think the authors any longer know what is in it. It's -- you can't reform 17 percent of the economy with 900 pages of legislation that nobody's bothered to read.


JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: You know, I'm just stunned when I hear all this. Because, you know, you look back and you think what happened in the model that we have, which is the Republican model in Massachusetts? Nobody was paying attention to these kinds of very small, minute numbers about how many have enrolled in this period and that period. The reason for this is the intense opposition to ObamaCare uniform on the part of Republicans and the House and the Senate. And at this point, you have to say these folks are looking for a way to crater ObamaCare. Because in every other instance, you say just as far what we just indicated, you give this thing a few years to see, well, does it work or doesn't it work? And in fact, if you look at the opinion polls, the American people think, including Republicans, not Tea Party Republicans, but a majority of non-Tea Party Republicans say give it some time. We can fix this. We can make it work. Republicans on their own now are looking for alternatives to propose, so that they can say here's how we would appear the very deficient status quo. Because right now you have fewer people who are uninsured. You have more people who are able to get preventative care, the seniors getting lower cost prescription drugs. You know, and the problem for the Democrats is they have not been aggressive in saying this is a landmark achievement for the American people. And not being defensive because the critics are so persistent and intense.   INGRAHAM: How does that explain the fact that young people who voted overwhelmingly for Obama and Latinos who voted overwhelmingly for President Obama are not rushing to support his signature piece of legislation? I mean yes, the Republicans have been unified at this, for sure. But the president has invested enormous amount of political capital, PR, he's gone on every television program known to man, Michelle's been helping out. She is still very popular. So, he's done everything to push this. I mean -- and he is still personally quite popular. And it's not working.

WALLACE: Why do you think -- I mean there's the old joke about, you know, the dogs don't like it in the end, but is that what is going on here?

INGRAHAM: Right. So. I mean -- Yes, in the end, I think people say, wait a second, they're telling me I need these policies. But then they seem to cancel policies. And now the policy seems to be -- seems to have a higher deductible than before. The deductibles are going way up for many Americans. Maybe not some subsets. And I think for that people say what am I doing here? And I think it has been an abysmal failure for this president who staked his entire first term on it and was re-elected by again, running up against Mitt Romney, you're right, has the Massachusetts miracle.

WOODWARD: We don't know. And the transmission is in the repair shop. And even Juan who is supporting this and I think he makes some very good arguments, there are positives in this. We aren't going to know for several years.

(CROSSTALK) WALLACE: Wait. Let me just say this. As we just pointed out, today is the fourth anniversary of that signing. Four years later, shouldn't we be further along? Shouldn't the car be out of the shop?

WOODWARD: Yes. And the reality is it's not. So in a couple of years, maybe, Hillary will be president, and we can relabel it HillaryCare rather than ObamaCare.

INGRAHAM: Chris, there is a 90-day grace period, a new rule that just -- was handed down. A 90-day grace period that enrollees have to pay their premiums? Who pays those premiums in the meantime? We have hospital groups worried about, we have doctors worried. That is just one rule of -- of (INAUDIBLE) rules out there that are going to hurt.

WALLACE: Glad we settled that. Thank you, panel. See you next week.

Up next, our power player of the week, a leading Washington figure looking to make a difference in the lives of dreamers.


WALLACE: It's a program supported by everyone from Grover Norquist to Mark Zuckerberg. And the driving force is someone who has been a major figure in Washington for 35 years. Here is our power player of the week.    (BEGIN VIDEO CLIP)

DONALD GRAHAM, CO-FOUNDER, THEDREAM, U.S.: Everybody else in high school class has access to these wonderful college aid programs that the United States provides. The dreamers are eligible for none of that. No state aid, no nothing.

WALLACE:  Donald Graham is co-founder of the Dream.U.S. The nation's largest college scholarship program for young people brought to this country illegally by their parents.

UNIDENTIFIED FEMALE: It's very hard to settle for just being another generation without education. And I'm tired of it.

WALLACE: An estimated 65,000 undocumented students graduate from high school each year.

GRAHAM: I'm not wise enough to know what the United States immigration policy should be. I think it's better for the country as well as for them if they have a chance to become nurses than to work in the shadows all their lives.

WALLACE: He's talking about young people like Alicia who was born in Mexico.

UNIDENTIFIED FEMALE: This scholarship is just going to change my life and my family and so I'm very, very happy.

WALLACE: Or Araselli from New York who wants to be a nurse or pediatrician, but spent the last three years working as a janitor.

GRAHAM: It's better for the country if people like her if she has an opportunity to care for children instead of sweeping floors.

WALLACE: Along with Bush Commerce Secretary Carlos Gutierrez and others, Graham has raised $25 million from the Gates Foundation, Bloomberg Philanthropies and other groups. That's enough to give 1,000 dreamers $25,000 each. To get them through four years at low cost, high quality schools like Miami-Dade College.

GRAHAM: We will pay full tuition for dreamers who want to complete job related programs so we're going to be graduating nurses, teachers, computer operators.

WALLACE: Don Graham is head of the family that owned "The Washington Post." But his first job in town was as a policeman. In 1999, he became chairman of the D.C. college access program, which helped double the number of local high school kids who went to college.

GRAHAM: There's a lot of things you can do in your community to help people. I think helping low income kids get to and finish college is about as good as it gets.

WALLACE: At age 68, Graham is taking on this new project just months after his family sold "The Washington Post" to Amazon chief Jeff Bezos following years of declining revenue.

GRAHAM: It was just as difficult as you think it is.

WALLACE (on camera): On a personal level, does it still hurt?

GRAHAM: Oh, yeah. The only person I'm disappointed in is myself. I wish I'd figured out a way to make the newspaper business work, but I didn't.

WALLACE (voice over): But Graham has figured out a new way to make a difference.

GRAHAM: $25,000 is a very low price to give someone a chance to succeed in life. And I think once they graduate they'll be huge contributors to their families, but also to this society.


WALLACE: Don Graham says there are 600,000 dreamers who qualify for the scholarships. He wants to raise as much money as possible to give more young people their chance. And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

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