This is a rush transcript from "Sunday Morning Futures," July 27, 2014. This copy may not be in its final form and may be updated.
MARIA BARTIROMO, HOST: Holding Russia's feet to the fire. Good morning, everyone. I'm Maria Bartiromo. Welcome to "Sunday Morning Futures." Video this past week appears to show actual Russian rockets firing across the border directly at Ukrainian troops. This might be the beginning of a full out assault by Moscow.
Are sanctions enough? House Intel subcommittee Chairman Peter King is here. Cease-fire in Gaza keep coming and going and what will it take to bring about a permanent truce? Can Hamas be reasoned with? And it could be another bombshell in the IRS targeting scandal after the agency changes its story yet again.
Lois Lerner's hard drive was scratched not erased? That Obama-Care in chaos, the border crisis and a lot more as we look ahead this morning on a jam-packed "Sunday Morning Futures."
Evidence is mounting that Russia's proxy war in Ukraine is becoming a direct war. The U.S. and Ukraine accusing Moscow of moving heavy artillery across the border. Straight to the pro-Russian rebels there. Ukraine's president is now calling on the United States to take an even tougher stance against Russia. And for Europe to follow America's lead. So are world leaders right to isolate Moscow?
Congressman Peter King is the chairman of the House Subcommittee on Counterterrorism and Intelligence on the Homeland Security Committee. Good to see you, Congressman. Thank you so much for joining us.
REP. PETER KING, R-N.Y., CHAIR, SUBCOMMITTEE ON COUNTERTERRORISM: Thank you, Maria. Good to be with you.
BARTIROMO: Will this new video, this obvious evidence that Putin is behind taking that plane down be enough to get the world together in isolating him?
KING: Maria, not unless the President of the United States shows real leadership, unless he works with David Cameron who has done an outstanding job so far. The Australian Prime Minister Tony Abbott, they have to be the leaders and they have to get especially the European allies to stand together on this. Because, you know, it's been said that, really, Russia without its energy supplies going to Europe, it's basically -- it's economy is -- it's a gas station. I mean, this is not a real economy over there. So strong economic sanctions. Again, if all the allies are working together could really, really hurt Russia.
Also we should, of course, be sending more weapons to the Ukrainians so they can resist and fight back. But, again, combined effort by the allies, well, that is going to take, really, aggressive leadership by the president. He can't just be traveling around the country doing fundraisers. And I would suggest, for instance, that we cut off the U.S. banking system to state-owned Russian companies. And if they can't move their money towards the United States, their currency becomes worthless.
BARTIROMO: A lot of important points that you are making right here. I want to get back to a number of them. But let me get a status check from you. What do we know right now in terms of Russia firing at Ukraine and really getting behind this and being the instigator?
KING: Well, we've known all along that it was Russia which provided the rockets to the Ukrainian separatist who's brought the plane down. And to me that makes them criminally culpable and liable. We also know that they are now sending in increased amounts of weaponry, really heavy duty weapons coming from Russia into Ukraine and also there's now evidence that there's actual rockets being fired from the Russian side of the border. There's no doubt that Putin is behind this. There's no doubt that Putin is dramatically or significantly increasing the Russian imports here, and you would have thought in a real world after what happened with the Malaysian jet, he would back off for a while.
But no, he's being more aggressive than ever. And as he's doing that, our president is more and more -- just not seen. And there are so many things we could be doing. Also, I could mention we could begin talking of a boycott of the World Cup in 2018. That means a lot to the Russians, to their pride, to their economy. Again, President Obama is missing in action on this.
BARTIROMO: Yes. I want to get to all of those things you just mentioned -- Congressman Peter King. But first, let's look at Russia's role in Ukraine. Has the country brought its shadow war to life?
FOX News senior correspondent Eric Shawn with us with that angle over New York. Good morning.
ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT: Good morning, Maria, and good morning, everyone. It seems the Russians will even lie about this disaster, claiming the airliner was downed by a Ukrainian war jet, not one of its sophisticated BUK missile systems smuggled across the border and then spirited back home to try and hide the evidence. Reports say, the rebels have even been placing parts of a shot down Ukrainian war plane among the airliner records to try and pin the blame on Kiev instead of Moscow. And the State Department has now released these photographs. It says they show that the Russians have been firing across the border at the Ukraine military using rocket launchers.
That says, Ukraine President Petro Poroshenko has pleading for the U.S. to do more, calling for a tougher sanctions against Russia. In an op- ed piece in today's Washington Post, he writes, quote, "My country needs help in facing the threat from Russia. Russia has tested us with its transfer of cash, weapons, and other equipment to the separatists. And as vast, anti-Western anti-Kiev propaganda campaign, but we will not yield to its interference. He says Russia is giving missile systems to the rebels and doing that is like he says giving a handgun to a child. But others like former Secretary of State Hillary Clinton defend the White House Russian strategy.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, FORMER U.S. SECRETARY OF STATE: The reset works. It was a -- an effort to try to obtain Russian cooperation on some key objectives. While Medvedev was president. And of course, doesn't still, you know, pull the strings. But he gave Medvedev a certain amount of independence to negotiate.
(END VIDEO CLIP)
SHAWN: Meanwhile, as Congressman King indicated, officials continue to say that Russia is pouring in more military equipment to the rebels. As demands now built on Capitol Hill for the U.S. to provide military systems to Ukraine, not just nonlethal items like MREs. And this morning, the New York Times says, the Pentagon could also target the rebel's missiles but has yet to do so.
The paper quote as senior administration official is saying, "the White House prefers to be cautious" -- Maria.
BARTIROMO: All right. Eric, thanks very much. Eric Shawn with the latest there. More now with Congressman Peter King. Congressman, we were just looking at those satellite pictures. We have more satellite pictures that actually confirm that the Russians are behind taking down that Malaysia jet. I want to ask you about these sanctions. Because everyone that I have spoken with say that these sanctions are so limited. Why aren't we being more aggressive with the sanctions against Russians now that we even see this evidence in front of us with these satellite pictures?
KING: It's a failure of will. It's a failure of leadership. And Europeans believe that they depend on Russia for their energy supplies. And as a result of that, they're backing away. David Cameron in the British tremendous credit. But other than that, the other European nations don't want to engage Russia because they're afraid of the cutoff in their energy supplies which is wrong. The United States is more energy than we can provide to western allies. If we were just, again, increase our exports, increase our production, but also Russia needs us more than we need them.
I mean, the European allies, if we had again a firm leader in this country, and I can't believe that Hillary Clinton is still praising the reset button.
BARTIROMO: I was just going to ask you about that.
KING: That was a failure in policy if ever, an absolute failure in American policy. It gave Putin a free run. But again, I don't want to oversimplify this. We need leadership and we're not getting it. The Brits are giving it, the Australians are giving it. But the Germans, the Italians, the French is still talking about selling warships to the Russians. They're not going to get in line unless we show that standing up to Putin is more important than fundraising on the west coast.
BARTIROMO: But why is Obama not more aggressive here? I mean, you're right, you know, he was in all of those fundraisers over the last week and a half while all of this is going on. Hillary Clinton just said that the reset work. Is this administration just unaware of who Putin is?
KING: I mean, somehow they come into this back in 2009 thinking that all the problems in the world were because of George Bush, that our troubles were Russia were because of George Bush. And somehow if we reached out the hand of friendship, if we pressed the reset button, if we turned on other check, if we show that we're being reasonable, that somehow Putin and the rest of the world aren't going to respond. What we've seen what Putin has done. Putin has become more and more aggressive and our allies except the British are becoming more and more passive.
And if anything has been shown over the last 75 years is that the western world only acts together and only demonstrates strength when there's American leadership, whether it's Harry Truman or Eisenhower or Ronald Reagan. The fact is, the western world needs strong leadership in the U.S. We don't need a president who equivocates, we don't need a president who only shows moral equivalency. We need someone who is going to be tough and stand in there and take aggressive action.
BARTIROMO: All right. What's next? You mentioned a moment ago that we should be getting the banks in the U.S. to get a lot harder on Russia, as well as you mentioned the U.S. needing to send artillery to Ukraine. Are these two things you're going to be pushing for in the coming weeks?
KING: Yes. I'm certainly going to be pushing for that and I'm sure that other members of Congress will, as well. Because we realize this administration is just not getting the job done. I'm not saying that in a partisan way. But this has been such a failure in leadership, the fact that you have the Ukrainian president and the prime minister begging for support, and the fact that Putin just starts this with the impunity. The fact that business for the most part is going on as usual with Russia. Yes, there's some sanctions, but they're having no real impact. And when the Russians look to us and we're saying we should have stronger sanctions in terms of the President, talks about more sanctions and then he's silent, he disappears, they're content to disappear.
This is been the European philosophy, if American is on lead, they're not going to line up. They're going to cut deals for themselves. And again, what the French are doing as far as their deals with Russia is absolutely shameful and disgraceful. These other countries, the same way. But again, where is the United States? President Obama should be there. He should be in the forefront. This is a strong message that we should be sending and, instead, you have Hillary Clinton talking about the reset button.
BARTIROMO: Congressman, we'll be watching your efforts. Thanks so much.
KING: Maria, thank you.
BARTIROMO: We'll see you soon. Congressman Peter King joining us today.
Meanwhile, fighting between Israel and Hamas flaring up once again after a shaky humanitarian cease-fire falls through when Hamas starts firing yet again. Now, they are the ones calling for the troops. Hamas now wants a truce. Can anyone negotiate with them?
Follow me on twitter, @MariaBartiromo, tell us what you'd like to hear on the program, and @SundayFutures. Stay with us. We're looking ahead this morning on SUNDAY MORNING FUTURES. Back in a moment.
(COMMERCIAL BREAK)
BARTIROMO: Welcome back. Rockets are firing once again over Gaza this morning. After a shaky cease-fire allows civilians a few hours to gather supplies and get their lives in order. Can a permanent truce be brokered? Is that possible with Hamas which makes no bones about wanting every Israeli wiped off the map?
Ambassador Adam Ereli is with me. He's the former U.S. ambassador to Bahrain. He currently is vice chairman of the public strategy firm, Mercury. Sir, good to have you on the program. Thanks so much for joining us, Ambassador.
AMBASSADOR ADAM ERELI, FORMER U.S. AMBASSADOR TO BAHRAIN: My pleasure. Thank you.
BARTIROMO: Is it possible to negotiate with Hamas?
ERELI: Difficult. Never say never, but I wouldn't give it good chances. I mean, look, it's hard to imagine a population that is more poorly served by its leadership than the Gazans. And frankly, as long as Hamas believes that violence and conflict can achieve their political objectives, it's hard to see a solution to this problem.
BARTIROMO: So where does this go next, then? What happens? What is next with Hamas? Do you see a possible coming together of the world knowing that Hamas has been very clear about its intentions regarding Israel?
ERELI: Yes, I think this is much bigger than Hamas. And we need to put this local conflict in a bigger context. I mean, the fact of the matter is that Gaza is one of the -- is the most densely populated territory in the world and also one of the poorest territories in the world. So what happened in 2012 when we last had a conflict with Israel and Hamas? There was a cease-fire, it lasted two years, and in that time Hamas rearmed, got more rockets, built more tunnels and increased their capacity for nastiness. They didn't do that alone. They had the help of Iran. They had the help of thunders in the gulf and they had other political support around the world.
I mean, this is part of a bigger conflict between, I would say, the forces of dialogue and moderation and the forces of religious extremism and irredentism. So, how do you deal with that? I think you have to go to the source. It's important that we focus on the -- the hubs of the trouble making, which is in Tehran, Baghdad, and Pakistan, the Fatah where the al Qaeda used to be. I mean, this is where the money is coming from and this is where the fighters are coming from. BARTIROMO: Yes. Who do you see as sort of the middleman? I mean, John Kerry trying to set up a seven-day truce. That's not happening. You know, you had the Qataris brokering a U.S. deal with the Taliban for the Bergdahl release, you remember.
ERELI: Right.
BARTIROMO: Egypt was a middleman. Who should be an appropriate middleman and is it even possible to think that that is actually doable?
ERELI: Yes. That's the problem. I mean, to have a negotiation, you have to have a trusted third party. Problem with Egypt is that Egypt and the military got rid of the Muslim Brotherhood. Well, let's remember, Hamas is a part of the Muslim Brotherhood. They're not going to deal with Egypt. They don't want to deal with Egypt. The United States is seen as I think too partisan, too pro-Israel. I don't know that that's true. I don't necessarily think it is. But -- so for that reason, the Hamas won't take the United States.
Oh, by the way, the Israelis think we're probably too pro-Hamas and too pro-Palestinian. So we've really undercut our credibility as a trusted third party negotiator. The Qataris, the Turks, they're on the side of Hamas. The Israelis aren't going to deal with them. So, that's why I think you've got a big gridlock. And again, what you've got to go beyond Hamas, beyond Gaza and deal with the root of the problem, which is frankly an international support network for extremism that you see in Damascus, that you see in Baghdad, that you see in Tehran, that you see in Beirut, and the Hezbollah. This is a much bigger problem than this tiny little part of -- between Israel and Egypt.
BARTIROMO: Right. And the U.S., I guess, is looking for international support here. But is the U.S. undermining Israel?
ERELI: No. I think Israel is finding itself in a very difficult situation and one that it really needs to get out of. I mean, what happens four or five days ago? You had 10,000 people on the West Bank, not Gaza, the West Bank protesting against Israel. Three of whom were killed by Israeli riot police, this in my view opens up the prospect of a two-front conflict for Israel. Not just in Gaza but in the West Bank. That is a real problem. It will sap Israel militarily, it will sap Israel economically and it will cost Israel politically. They need to watch out for that.
BARTIROMO: Right. Ambassador, we'll be watching. Thanks very much for joining us.
ERELI: Thank you.
BARTIROMO: Ambassador Adam Ereli joining us. A new controversy, meanwhile, back in the United States over ObamaCare. Were all those income-based subsidies legal or illegal? Two different courts' ruling this week with two very different outcomes.
Coming up, what it means for the future of the health care law and your money as we look ahead on "Sunday Morning Futures."
(COMMERCIAL BREAK)
BARTIROMO: Welcome back. Two contradictory court rulings this week throwing ObamaCare into question. One D.C. Appellate Court panel calling subsidies to people on the Federal Exchange unconstitutional. But just hours later, a mile away, a panel of judges in Virginia rule the opposite. Steven Parente is a professor of Health Finance and the director of the Medical Industry Leadership Institute at the University of Minnesota. Lanhee Chen is former policy director for Mitt Romney. He's a board member on the partnership for the future for Medicare. Gentlemen, good to have you on the program. Thank you so much for joining us. What do you think this mean? Does this mean that this is headed back to the Supreme Court and can ObamaCare survive a second push at the Supreme Court?
STEPHEN PARENTE, PROFESSOR OF HEALTH FINANCE UNIVERSITY OF MINNESOTA: It probably means it's headed back to the Supreme Court. It's going to go through two or three different ways to get there. It probably will survive, again, but it's going to get messed up along the way. And one of the biggest concerns is that this is going to be coming down probably down the pike. A lot of pieces right in the midterm election cycle.
BARTIROMO: Yes. Lanhee, let's not forget how we arrived here.
LANHEE CHEN, FORMER POLICY DIRECTOR FOR MITT ROMNEY: Yes.
BARTIROMO: You know, the allure for the states to set up these exchanges were these subsidies, these tax benefits. And then 36 says said that we're not going to do it. So the federal government has to have these exchanges set up so then they decide, oh, well, everybody can get the tax subsidies.
CHEN: The interesting thing is, this is really about a lot more than just -- whether it's a federal issue or state issue. It goes back to a fundamental plan ObamaCare, the thing was poorly designed and we're seeing the impact of that now. You have all of these conflicting court decisions. You had the 2012, remember, when we were in the Supreme Court before. This thing is going to get ugly and it's going to get ugly fast.
BARTIROMO: Steve, the issue is that for the person at home who is trying to figure out if they have health insurance or not, they're confused. Am I in this state? Am I federal? I mean, what does that do to the overall economy, to the state of health care? You just give up.
PARENTE: Yes. It doesn't bring a lot of confidence.
BARTIROMO: Exactly.
PARENTE: I mean, and to Lanhee's point, this really was not supposed to be this way. It was supposed to someone of a better design. It was always messed up to begin with because of just the way it got briefed politically. And so, this is where a lot of the strikes to come down to roost. I mean, the only reason why we have these differences anyway is the Senate and a House version that never got reconciled and the House -- actually, the House version never made it anywhere. It's the Senate version and inadequacies in the Senate version in 2009 that have come to roost.
CHEN: You know, the funny thing is, that this really shouldn't surprise anybody, right? That we are in this place now where there's all this confusion. Even the people who wrote ObamaCare disagree over whether this was intended to be state administered or federal administered. And then you have the IRS in the story, again, they're the ones that have said, you can do this through federal exchanges.
BARTIROMO: I'm glad you brought up the IRS. And we'll bring this up with our panel. But I love this op-ed out of the journal about the fact that the IRS is handling ObamaCare. I mean, we know what a mess the IRS is and how they are politically motivated. Is the IRS going to be deciding if I can get that knee replacement, if my grandmother can stay alive? Is it the IRS who is deciding and are they going to decide based on my political motivations?
PARENTE: The IRS decides whether it's tax deductible or not. And the IRS has more to say right now in treasury about what's an improved medical device, what's an approved deduction for or secondary prevention for drugs in the future than at any other time in history and they're understaffed to do this. This has been the critical problem with this is that these things have been laid at the treasury's door steps without adequately thinking them through and stuffing them, and that's going to slow everything down and make a mess.
CHEN: No one would have thought that the IRS was going to be the agency at the center of this scandal, as well. But indeed, you know, it is the IRS and it's all of these federal agencies now that have an enormous amount of power. If you look at the D.C. Circuit decision, it really did focus on what did the law say? And the law said that the subsidies have to come through the states. And so now, we're seeing a huge overstep of the responsibilities of the federal government all because of the way the administration interpreted the law.
BARTIROMO: More oversteps. Real quick. How does this play out going forward? What's the next catalyst in this?
CHEN: Well, I think it's going to be a huge legal situation. In the D.C. Circuit, you know, they're going to hear the case on bunk. Chances are the Supreme Court will take it, but you never know. This is going to be a huge mess.
BARTIROMO: Yes. Gentlemen, thank you very much for joining us. We appreciate your time, we'll be watching this.
Up next, the cat and mouse game is over. Back-up tapes of Lois Lerner's lost e-mails have turned up. What that means for the IRS scandal. As we look ahead on "Sunday Morning Futures," back in a moment.
(COMMERCIAL BREAK)
(NEWSBREAK)
BARTIROMO: Thanks, Eric.
Well, it turns out it was just a scratch. IRS Chief John Koskinen confirming to a House subcommittee that investigators found backup tapes of Lois Lerner's e-mails, despite earlier testimony that her hard drive was gone forever.
Now, the inspector general's office is reviewing those tapes to see if there is anything on them linked to the targeting scandal.
I want to bring in our panel right now. Douglas Holtz-Eakin is with me, president of the American Action Forum. He's the former director of the Congressional Budget Office. He was also the chief economist for the Council of Economic Advisers. Judith Miller is adjunct fellow at the Manhattan Institute for Policy Research. She's a Pulitzer-Prize-winning author and journalist and a Fox News contributor. And John Hilsenrath is chief economics correspondent at The Wall Street Journal.
We've got a lot of economic data and the Fed meeting next week. Good to see everybody. Thanks so much for joining us.
OK, now the IRS tapes were scratched; they were not destroyed forever. The ObamaCare part of this is also intriguing.
Let me start with you, Doug. Because, knowing that the tax vouchers and the individual mandate of Obamacare has to go through the IRS is just extraordinary to me. I know this has been the case all along, but now that the IRS is such a mess, it's really zeroing in on it.
HOLTZ-EAKIN: Yeah. I think there were people that had concerns about this from the beginning because it was asking the IRS to do much and really step outside their area of expertise. And we've seen some evidence of that.
But, in light of this, sort of, "We have the e-mails; we don't have the e-mails; yes, we do have the e-mails," it just casts a lot of doubt and, really, cynical suspicion over everything. And that's not good for the IRS. It's certainly not good for anyone trying to figure out what's going to happen in the future. BARTIROMO: Exactly. And, you know, I mean, Judy, you have a face on...
(LAUGHTER)
BARTIROMO: I want to know what that face is all about.
MILLER: There is not a smidgen of corruption within the IRS. And maybe there's a little more efficiency, but we haven't seen it yet.
Look, I think -- I'm not certain whether or not I'm happier about the IRS making some of these calls or the Supreme Court interpreting a badly written law. Yes, enrollments are way up in Obamacare, beyond expectations. However, we're not going to know the impact of this for a long time, and the tactics of this for the administration are simply terrible. The optics are awful.
Absolutely.
(CROSSTALK)
HILSENRATH: I mean, what this (inaudible) says to me is that the IRS has actually always been at the core of the inefficiencies in our health care system. I mean, we're talking now about subsidies for individuals. But it's the subsidy that many of us get for our employer-provided health care which runs through the IRS. And that's the part of health care reform that Obama didn't touch, that subsidy. And that causes so much inefficiency because all of our health care has to run through our companies and through these -- the subsidized programs that we get from our companies.
HOLTZ-EAKIN: Jon's right about the policy. I mean, this is actually part of our health care (inaudible). But the IRS has never been in -- at the centerpiece of the administration of health care before. And that's the difference now. I mean, it's really remarkable to have it be the focus of what happens. Ad because of the dysfunction of Congress, it gets kicked to the IRS to make these decisions and then appealed to the Supreme Court. So we've got the wrong people making the calls.
HILSENRATH: This is the point I'm making, is that we basically double down on an inefficient system...
BARTIROMO: Right.
HILSENRATH: ... with the last round of reforms.
BARTIROMO: And in terms -- and let's talk about that inefficient system for a minute. Because now we see that there are these tapes of Lois Lerner's e-mail. How do you think this plays out, Judy
MILLER: Look, I think that the IRS was always the huge scandal waiting to happen. There were so many denials. Now there are so many investigations. This is a terrible political problem for the president and it's a terrible problem for the country. This is a law enforcement agency that has now been really cast into real doubt.
BARTIROMO: Yeah, I'm glad you said that, law enforcement agency.
MILLER: This is not the Department of Agriculture.
(LAUGHTER)
BARTIROMO: Correct.
So, I mean, do you think, at this point, first of all, it's clear that they were hiding something? And what are we going to find out?
I mean, they must be hiding something big to have gone through this whole, you know, cat-and-mouse game, in terms of, you know...
HOLTZ-EAKIN: Or they're just really incompetent.
BARTIROMO: OK.
(LAUGHTER)
HOLTZ-EAKIN: I mean, we don't really know. And, you know, I think the problem is they're not a law enforcement agency. They're a tax enforcement agency that is now being asked to make decisions about political activities by outside groups. They shouldn't be in this business, either. We have just -- we have just guaranteed that this is going to fail.
BARTIROMO: They've been in that business and they've been doing that.
HILSENRATH: Currently, yes.
You know, in terms of how this is going to play out, I mean, what I see happening in Washington is really a two -- two-sided debate. You see Democrats on the Hill saying there's nothing here; you guys are making a mountain out of a mole hill, and Republicans saying this is a really big deal.
And I think it's, kind of, gliding along like that and it's going to flare up from time to time when we get information uncovered like the hard drive. But I don't see a boiling point, at least at this point in time, where there is a consensus that something major has to change about it.
BARTIROMO: And real quick, on ObamaCare, is it inevitable that it goes to the Supreme Court, now that we have these two different views?
HOLTZ-EAKIN: Yeah. I see no way that they don't actually have to settle what the world looks like because they're the only ones who can settle it.
BARTIROMO: Does it survive another Supreme Court ruling?
MILLER: Well, as Nancy Pelosi said, you know, we have to pass it in order to know what's in it. We're going to know what's in it when the Supreme Court decides what's in it.
BARTIROMO: I want to talk to you about Hillary and her comments, actually, this weekend, saying that the reset worked on Russia.
Stay with me, panel. But let's get a look, though, first, at what's coming up on "MediaBuzz." Howard Kurtz is with me right now in Washington.
Howie, what have you got in the next 20 minutes?
HOWARD KURTZ, HOST, "MEDIABUZZ": Hi, Maria. Hi, Maria.
We're going to lead with whether Hamas is winning the media propaganda war against Israel while losing militarily. But we're going to focus also on President Obama and this whole question of optics, this constant drum beat of criticism now that he's going to fund-raisers, that he's playing golf, he's going out for burgers, at a time when we have a confrontation with Russia over the jet that was shot down in Ukraine, at a time when the Mideast is on fire.
And I wonder whether you think that there's a little too much media focus on that.
BARTIROMO: Yeah, well, you know, I have to say, Howie, I mean, this last week and a half or so, even the liberal media, the mainstream media has actually criticized the president for being at all of these fund- raisers when -- when the plane was shot down and when we've got so many hot spots around the world.
KURTZ: Yeah, optics do matter. And I wish he had gone to the border, for example. I know he tends to dismiss these things as a photo-op. But I think journalists -- not just journalists at Fox, as you point out, are now saying that part of leadership is showing that you're engaged in these problems.
BARTIROMO: Howie, we'll see you in about 20 minutes. Thank you.
Our leaders in Washington calling on our neighbors to the south to shoulder some of the burden. Will Central America help stop the upward flow of illegal immigrants right across or border?
The panel weighs in on that next, as we look ahead on "Sunday Morning Futures." We'll be right back.
(COMMERCIAL BREAK)
BARTIROMO: Welcome back. President Obama calling on his Central American counterparts to step up, the president meeting in Washington with the leaders of Honduras, Guatemala and El Salvador, asking them to help stem the rising tide of unaccompanied children at the U.S. border, this as House Republicans offer their own plan for dealing with the crisis
We're back with our panel, Douglas Holtz-Eakin and Judy Miller, Jon Hilsenrath.
Dough, what's your take on this?
HOLTZ-EAKIN: I think this is a real opportunity for the House Republicans. But, you know, the administration's had warnings for a year. They did nothing. If they had wanted to do nation-building in Central America, they would have had to start a lot earlier than now.
And so they just sent up a bloated request for money with no plan. They're going to get back less money, because the House and Senate agree there's too much. The Republicans have a plan that involves changing the 2008 law and allowing expedited reviews to get folks back to South America. They have a plan for the National Guard at the border. So they have a chance to actually act, act effectively, and move first, and then ask the president to respond.
We'll see if they do it. But that would be the best outcome.
BARTIROMO: What do you think, Judy?
MILLER: I think the -- the president has a plan, and he has specific proposals, $3.8 billion, the Honduran initiative, which would let people apply as refugees from their own countries. The Republicans have a "No, no, go away; I don't want to do anything right now, except deal with the situation at the border."
The answer at the border is not more security because these children are coming across and embracing border guards. So I think, right now, the Republicans are really out to lunch on immigration, which is going to be a big national issue in the election.
BARTIROMO: If all of these kids are getting in, you know, so easily, drug traffickers could be getting in.
(CROSSTALK)
(LAUGHTER)
BARTIROMO: Terrorists could be getting in. I mean, I -- this is...
So I'm going to agree with that.
BARTIROMO: OK. All right.
HOLTZ-EAKIN: I mean, they didn't pass immigration reform.
BARTIROMO: No.
HOLTZ-EAKIN: I think that's a great disappointment. But this is an opportunity to take the border security piece, which always has been the thing Republicans wanted to do first, and do it first, and then come back.
And they have a chance here. I'm not saying it's a guarantee, but they have a chance to get going on this...
BARTIROMO: Jon, this isn't economic, is it?
HILSENRATH: I'll make three points. First of all, in terms of the politics, come on.
(LAUGHTER)
I mean, November is coming up. Nothing is going to happen politically on this.
In terms of the economics, I think this is an important economic issue. As you know, immigration is America's trump card. It's why we're not going to go the way of Japan in terms of growing very slowly for the next 20 years.
We need -- we need to keep refreshing and growing our workforce and our population. And we can do it. So it's an important economic issue.
And the third point is I think it's part of the American character.
You know, these debates about immigration get so heated up, but, you know, we should remember where we talked about these children. The Statue of Liberty says we welcome huddled masses. I mean, that's what we're talking about at the border.
BARTIROMO: Right.
HILSENRATH: So I think people shouldn't lose perspective on that, either.
BARTIROMO: Yeah, it's a great point.
Let me move on to Gaza. You've been writing about that this weekend. You know, Kerry said he wants a seven-day truce. That's not happening. Can you negotiate with Hamas?
MILLER: No, Hamas has already said they don't even want an extension of a 12-hour cease-fire for humanitarian purposes.
I mean, look, this -- look at the numbers in terms of who is dying in this conflict. The Israelis have now 44 people; 5 percent of them are civilians. You go to the Palestinian side, you have 73 percent civilians. You have a Hamas leader who is hiding under a hospital, according to (inaudible), the Israeli newspaper. They are using their people as human shields. We shouldn't be negotiating with these people who are a terrorist organization.
BARTIROMO: So what -- so what do we do? How does this play out?
MILLER: I think the Israelis are going to do what they have to do, which is to clear out the tunnel network. And if Hamas wants to give them a hand by not agreeing to a humanitarian break or a cease-fire, fine. But this has got to end. We can't go through this every two, three years.
But we will.
(LAUGHTER)
MILLER: Right.
HOLTZ-EAKIN: I mean, this one will end because they have a clear objective, which is the tunnels. And they will reach that objective and that will be the end of it this time. But, with Hamas and its current leadership, it won't go away.
MILLER: But the strategic situation has changed. We now have an Egypt which is hostile to Hamas, which is not going to let the smuggling go on that used to go on.
BARTIROMO: And then there is Russia.
HILSENRATH: What's disturbing is that Hamas seems to have no support in the Middle East except what we've started to see in the last week in the West Bank. You know, you would think, with so many civilians being killed here, people would turn to a more moderate authority in the West Bank. But instead, they're protesting in support of Hamas.
BARTIROMO: In terms of Russia, we have these satellite pictures which basically show evidence that, in fact, Russia supplied the artillery to the separatists to shoot down the plane in Ukraine. Is the world going to get with the U.S.? Are the sanctions going to be tougher? How does this play out, Doug?
HOLTZ-EAKIN: One can only hope, because the sanctions today have really been laughable. I mean, they have changed nothing about Russian behavior. And let's face it, a huge chunk of the Russian economy is not very integrated with the global economy. The energy sector is. We're afraid to touch that because of European customers. The financial sector -- you could hurt some institutions, but the money flows.
So this strategy isn't going to work...
BARTIROMO: Peter King, at the top of this show, said the U.S. banks should start shunning Russia. Would we go as far as that?
HILSENRATH: I'll give you two -- two numbers that matter here. The first one is 83 percent and the second one is 1 percent. Putin's popularity in Russia is 83 percent.
(CROSSTALK)
HILSENRATH: He doesn't care about the evidence that we're putting out there. The 1 percent is what -- how fast Europe might grow this year. They're so afraid of going back into a recession, they don't want to disturb an economic partner that's providing them natural gas.
MILLER: Yeah, there are 28 European nations. It's hard to mobilize them all, but a little American leadership would help.
BARTIROMO: Well, that's -- that's the bottom line, American leadership. We'll talk about that next.
We've got some big announcements coming out of the Federal Reserve this week. Meanwhile, stimulus, the GDP -- with a 2.9 percent contraction first quarter, what will this week's GDP show us? Can we shoot some real life into this lame economy? The panel on that, as we look ahead, on "Sunday Morning Futures." Stay with us.
(COMMERCIAL BREAK)
BARTIROMO: We are back, now, Doug Holt-Eakin, Judy Miller, Jon Hilsenrath.
Jon, big week for the economy. You've got a Fed meeting.
HILSENRATH: Right.
BARTIROMO: You've got the GDP report. You've got the jobs numbers, not to mention lots of other economic -- and some earnings. What do you expect?
HILSENRATH: Well, so, on the economy, there's a real puzzle right now that we're trying to entangle. On the one hand, the economy is producing jobs. The unemployment rate is coming down, employment growth of 200,000- plus every month.
On the other hand, it's barely growing. And it's very hard to understand how that could be happening. The only answer, really, is that the our workforce isn't very productive, so the companies are hiring a lot of people.
But we get two really important pieces of information this week. We get information on how fast the economy grew in the second quarter and how many jobs got produced in July. So we could put more pieces of this puzzle together, but it's hard to figure out.
BARTIROMO: You know, Doug, after a 2.9 percent contraction, so many people I've spoken with are saying, "Oh, we're going to grow 3 percent, 4 percent."
How do you get to 3 percent, 4 percent for 2014?
HOLTZ-EAKIN: You can't.
BARTIROMO: We better have huge numbers next week, if we're going to get to 3 percent.
HOLTZ-EAKIN: We're not going to get to 3 percent for the year. We'll be lucky to get to 2 percent for the year, quite frankly.
So maybe we'll get 3 percent or higher for the second quarter, but that doesn't mean 2014 is going to be a good year. And Jon has his finger on exactly the issue, which is productivity growth has disappeared. And I think the troubling characteristic of this recovery has been the lack of income growth. We've seen the median income fall. We've seen wages -- real wages, sort of, stagnate.
You don't see those pick up unless productivity picks up. So, even with the jobs, the economy is not performing well, and that's the issue.
BARTIROMO: That's interesting. Why would you be productive and go to work when you can not go to work and get lots of free stuff, I guess?
MILLER: You know, some major economists -- Byron Wien at Blackstone - - are still very bullish on this economy. They still see growth, real growth, at 2 percent, and that does depend on a little help, once again, from our European friends. They simply are so terrified of inflation; they remain so terrified that they won't do the stimulus that really needs to get their economies going because they're much worse off than we are.
BARTIROMO: Well, what about all the geopolitical uncertainty?
(CROSSTALK)
HILSENRATH: ... Fed, right, so -- so the European Central Bank is now just starting to talk about doing things that the Fed has been doing for four years now. In fact, we're coming closer to a milestone. The Fed is talking about ending a bond-buying program, which has been a huge support to the financial markets, to the stock markets. They're planning on ending that in October, and that's where we get another headline this week. They're going to be pulling back that program by another $10 billion.
BARTIROMO: So they'll go to $25 billion a month, Jon?
HILSENRATH: They're going to $25 billion a month. And, you know, so far, the markets are handling it pretty well. Ironically, interest rates are going down. People thought interest rates would go up when the Fed pulled away from this, and they're going down instead.
BARTIROMO: Well, the market's handling everything. The market's not even focused on the geopolitical events. Nothing matters.
HOLTZ-EAKIN: The markets are not reacting. And I'm shocked by that. But the reality is we'll have higher interest rates when we have better growth. And that's what we're seeing in the markets. Fed policy is one thing, but, you know, it is telling that someone says they're bullish; we can be at 2 percent. Two percent...
BARTIROMO: That's not bullish.
(LAUGHTER)
MILLER: That's actually bearish.
HILSENRATH: I think there is a global connection here between what's happening with interest rates and what's happening in the Ukraine and the Middle East.
You know, people are going and buying -- going out and buying Treasury bonds because it looks like a safe asset. They want to hold some kind of safety, so -- and that's pushing our interest rates down. It's also, interestingly, pushing up real estate prices in places like London and Sydney and Vancouver and Miami. I think people are trying to get their money out of dangerous places, literally, and put them in safe havens.
BARTIROMO: Yeah. All right. Let's take a short break. And then, still to come, the one thing to watch for in the week ahead, weeks ahead, on "Sunday Morning Futures." Our panel will weigh in. Stay with us.
(COMMERCIAL BREAK)
BARTIROMO: We're back with our panel. What is the one big thing to watch for the week ahead, Doug Holtz-Eakin, Judy Miller, Jon Hilsenrath?
Jon?
HILSENRATH: Wednesday, we have a lot of things happening. The government is putting out new numbers on how fast the economy grew in the second quarter and it's also revising old numbers. Our whole story could change. And then, later in the day, the Fed is pulling back on that bond- buying program we talked about.
BARTIROMO: So you're watching GDP and the Fed? Judy?
MILLER: I'm watching Obama to see if he's going to continue going to fund-raisers, and I'm watching Europe to see if they're going to do the right thing and just be quiet on Israel and do some sanctions on Russia.
BARTIROMO: Europe is critical to Russia, no doubt. What do you think, Doug?
HOLTZ-EAKIN: I'm watching the administration play politics over substance on tax inversions and on immigration. These are their -- their great political weapons in an election year, and they're not going to fix problems; they're going to fan them.
BARTIROMO: Yeah, let's punish companies for doing what they should be doing to make their expenses look good, rather than getting to the real issue, which is tax reform.
HOLTZ-EAKIN: Buy your red, white and blue suit, and be patriotic.
(LAUGHTER)
BARTIROMO: I'm watching GDP -- I'm with you, Jon -- 2.9 percent contraction in the first quarter. Everybody wants to know what that GDP number is going to show. Some people are expecting a complete reversal, actually, 2.9 percent growth. We'll see what the number brings on Wednesday, and I'll be covering it on the Fox Business Network.
Thank you so much for joining us, everybody. We appreciate it. That will do it for "Sunday Morning Futures" this Sunday. I'm Maria Bartiromo. I'll be back tomorrow morning on "Opening Bell" at 9 a.m. Eastern on the Fox Business Network. Here's a look at where to find FBN on your cable network or satellite provider. Just click on "Channel Finder" at FoxBusiness.com. "MediaBuzz" with Howard Kurtz" is up next, and we all wish you a happy Sunday.
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