National Security Adviser Tom Donilon Talks Bin Laden Raid; Dick Cheney on War on Terror

The following is a rush transcript of the May 8, 2011 edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, ANCHOR: I'm Chris Wallace -- and this is "Fox News Sunday."

The world's most wanted man is dead. We'll talk about the daring raid that got Usama bin Laden.

And where the war on terror goes now? With the president's national security adviser Tom Donilon.

Then, almost 10 years after 9/11, should the U.S. resume enhanced interrogation? Is it time to pull out of Afghanistan? And can we trust Pakistan? We'll get answers from former Vice President Dick Cheney. It's a "Fox News Sunday" exclusive.

And we'll ask our Sunday group how this week's dramatic events changed the 2012 presidential race.

All right now on "Fox News Sunday."

And hello again from Fox News in Washington.

The daring raid that took out Usama bin Laden raises new questions about where we go now in war on terror. We'll talk with former Vice President Cheney in a few minutes. But, first, President Obama's national security adviser, Tom Donilon.

Mr. Donilon, welcome to "Fox News Sunday."


WALLACE: Let's start with that iconic photo of the Situation Room as the bin Laden raid was going down. There you are in the middle of that tense scene.

What was happing at that moment? Were you watching aerial surveillance or were you also getting video from the commandos on the ground?

DONILON: Let me say a couple of things in response to that. First of all, I really can't get into exactly what we were receiving technically. But we were able to monitor the operation in real time and receive briefings from Admiral Bill McRaven, the operational commander, and from Leon Panetta over at the -- over at the CIA, first.

Second, I'm not exactly sure what we were monitoring at that very moment. But I have looked at the picture, obviously, since then. And clearly, everybody was deeply concerned about the success of the mission and the safety of our operators. The president visited with the Special Forces operators yesterday at Fort Campbell and received a minute-by-minute briefing yesterday from the operators -- not from the brass, from the operators yesterday, on every minute of the operation, from the point they left Afghanistan, to the point that they returned to Afghanistan after the assault on the compound and the killing of Usama bin Laden.

As I look at it now, though -- and you know, I worked for three presidents -- my eyes go to the president who made this decision. And we ask a lot of our presidents. This had been a project -- the hunt for Usama bin Laden that had gone across two administrations. And, indeed, many of the same people who worked on this under the Bush administration worked with me today and worked on this project.

And I looked at the president -- and, you know, a week ago Thursday, the president received his last briefing on this. The options were put on the table. And as you can predict, there were disagreements and there was divided counsel.

And at the end of the day, we ask our president to make the decision. It's the president who gets out of the Situation Room, stands up, and walks across the colonnade by Rose Garden, that walk you know so very well, into the residence and makes that -- makes that decision. And that's where I focus because he had obviously weighed this through a rigorous process. And the decision was on his shoulders.

WALLACE: Let's go kind of in a quicker fashion through some of the issues that have come up since then.


WALLACE: The Navy SEALS have information inside the compound.


WALLACE: Computers, hard drives, DVDs.

From what you know, so far, does it contain actionable intelligence, hard leads on either Al Qaeda operations or personnel?

DONILON: Still looking at it at this point. The size is quite notable. It's the largest cache of intelligence information gotten from a senior terrorist that we know of.

Secondly, to give you a sense of the size, it's size of a small college library. It will need to be translated. It will need to be assessed. It will need to be reviewed. And we're in the process of doing that.

We've released some evidence today. The point, it's a very important point, and I know you want to get to other issues, but I think it's important for your viewers to know, though. And it really does go to the significance of the raid and the assault last Sunday -- that Usama bin Laden was not just a symbolic leader of Al Qaeda. In fact, he had operational and strategic roles he was playing. And that's clear in the information we have been able to seek to date.

WALLACE: But you talk about that information -- has anyone been caught? Has any operation been stopped because of the information you picked up last Sunday?

DONILON: I don't want to comment on that at this point.

WALLACE: The administration released video this weekend of bin Laden watching himself on television, and apparently dyeing his beard during some of his appearances.


WALLACE: What do you think that shows?

DONILON: I think it shows an attention to his own image and an attention to the propaganda aspects of the Al Qaeda operation. I think that's what it shows.

WALLACE: Since the raid, the CIA director, Leon Panetta, and former counterterrorism chief, Jose Rodriguez, both say enhanced interrogation, including waterboarding, provided some of the information that led to that raid on the bin Laden compound. Are they right?

DONILON: Well, I can answer it this way -- as the national security adviser, I'm not going to comment on specific piece of intelligence gotten from specific sources. But I can tell you this, and it's important I think -- an operation like this is a result of hundreds of pieces of information and intelligence over time. I can represent to you that no single piece of intelligence led to the result that we saw --

WALLACE: I understand that, sir. But what I'm asking you is: did any of the information, any of the fruits of enhanced interrogation -- was that part of the jigsaw puzzle?

DONILON: It doesn't really work that way, though, right? I mean, it works in terms of a whole mosaic of information being put together. And we got information from detainees, from human sources, from technical sources, from other leads on services that all come together.

And I want to say this -- this is very important -- this was the work of intelligence professionals, as I said, over multiple administrations. And it was a real success.

And what it shows, I think, to the world -- and I monitor, obviously, the reaction of these kinds of things around the world, right? And the message that the world is hearing is one of perseverance, dedication, determination, that the United States does what it says it's going to do, even if it's across a couple of presidencies. And most importantly, or importantly, we have the capability to do so.

And this being a national achievement -- the first person that the president called when he found out, when he was informed by me, that our forces were safely back in Afghanistan, was President Bush.

WALLACE: We'll stipulate -- we'll all stipulate that bin Laden was a monster. But why is shooting an unarmed man in the face legal and proper while enhanced interrogation, including waterboarding of a detainee under very strict controls and limits, why is that over the line?

DONILON: Well, let me talk first about the first half of the statement you made. Again, the president met with the operators yesterday in Fort Campbell, Kentucky. And here are the facts: we are at war with Al Qaeda. Usama bin Laden is the emir or commander, indeed, the only leader of Al Qaeda in its 22-year history. This was his residence and operational compound.

Our forces entered that compound and were fired upon in the pitch black. It's an organization that uses IEDs and suicide vests and booby traps and all manner of other kinds of destructive capabilities.


WALLACE: Let me just make my point.


WALLACE: I'm not asking you why it was OK to shoot Usama bin Laden. I fully understand the threat. And I'm not second-guessing the SEALs.


WALLACE: What I am second guessing is, if that's OK, why can't you do waterboarding? What can't you do enhanced interrogation of Khalid Sheikh Mohammed, who was just as bad an operator as Usama bin Laden?

DONILON: Because, well, our judgment is that it's not consistent with our values, not consistent and not necessary in terms of getting the kind of intelligence that we need.

WALLACE: But shooting bin Laden in the head is consistent with our values?

DONILON: We are at war with Usama bin Laden.

WALLACE: We're at war with Khalid Sheikh Mohammed.

DONILON: It was a military operation, right? It was absolutely appropriate for the SEALs to take the action -- forced it to take the action that they took in this military operation against a military target.

WALLACE: But why is it inappropriate to get information from Khalid Sheikh Mohammed?

DONILON: I didn't say it was inappropriate to get information from Khalid Sheikh Mohammed.

WALLACE: You said it was against our values.


DONILON: I think the technique -- there's been a policy debate about and our administration has made our views known on that.

WALLACE: Let me ask you about one other aspect of this and we'll move on. The Obama Justice Department reopened an investigation of half dozen CIA agents who were involved in interrogation after 9/11, raising the question -- and this has been a closed. This has been a closed investigation. It was reopened by your Justice Department on the issue of whether or not they were using undue force.

We talked earlier with Vice President Cheney who says that investigation is an outrage.

Question: with interrogation -- and you certainly have agreed, whether, however it came -- with interrogation such a key part of this raid, why not end that investigation?

DONILON: Well, what I said was the interrogation is one part of a mosaic --


DONILON: -- of hundreds of pieces of information over time that builds an intelligence case. I think it's very -- and it was not just the CIA. It was multiple agencies -- which is another important aspect that we don't have time to get into. It's the teamwork in the intelligence community.

WALLACE: But why not end the investigation?

DONILON: Well, I'll get to it now. That's not something I can really comment on. That really is an issue for the attorney general. I'm a national security adviser, not the attorney general. I'm not a law enforcement officer.

WALLACE: Do you think keeping these officers who helped protect the country, the CIA officers, continued investigation -- this has been going on for more than two years. A year ago, Eric Holder said it's about over and it's still going on. Do you think that's appropriate?

DONILON: Chris, I work as closely with the intelligence community as anybody in the White House, as you know. And I have the highest regard for our intelligence professionals. They have -- we have seen in the last week, one of the really great achievements in the history of intelligence.

DONILON: I have the highest regard and I am quite familiar with the tenacity and the skill with which this case was put together. But on this specific case, I really can't comment. I'm not a law enforcement official.

WALLACE: OK. We're going to -- we're running out of time. I want to ask you about three different countries, so I am going to ask for quick answers. My questions may be a little longer than they should be.

The Obama administration is now making several demands of Pakistan. Let's run through them. You're asking for the names of top intelligence operatives to check whether or not they were helping bin Laden. You want access to bin Laden's wife who was shot in the raid. And you want the tail section of that Black Hawk helicopter returned.

Question: Have they agreed to any of those requests? And is the president prepared to cut off aid, billions of dollars in aid to the Pakistanis if they continue to stonewall?

DONILON: We also want to have access to any other information they gathered at the compound. And as we discussed earlier in the conversation, that really is a treasure trove of intelligence, that we have made those requests.

Those discussions are ongoing, as we sit here today. And it is important, by the way, for the Pakistanis to investigate what happened here. We don't have evidence at this point that the political, military and intelligence leadership of Pakistan knew about the bin Laden operation in Abbottabad, Pakistan. But that issue is front and center in Pakistan right now. It does need to be investigated.

One last point on Pakistan. You need to look at this relationship in its totality, and in terms of our strategic interest. As the national security adviser, it's my job to pursue our interests. And we have had our problems with Pakistan, but we have also had a tremendous amount of partnership and cooperation with them in the effort against terrorism, including against Al Qaeda.

WALLACE: OK. Afghanistan. The president plans to begin a drawdown of U.S. forces in Afghanistan in July. Given that there are now, according to reports, fewer than 100 members of Al Qaeda in Afghanistan, and given the fact that you have had more threats, more attacks or attempted attacks on the U.S. homeland from Yemen in the last two years than from Afghanistan, does it make sense to keep 100,000 troops on the ground in Afghanistan in a long-term counterinsurgency operation?

DONILON: A couple of points. The principal goal of our effort in South Asia, including in Afghanistan, is a strategic defeat of Al Qaeda. Absolutely, and we took a very big step towards that on Sunday night, first point.

Second point is, we also have as a goal not to have Afghanistan become or again a safe haven or a place where an organization like Al Qaeda could have the operational space to plan against us. We are making progress, Chris, on both of those goals, and we made a lot of progress on goal No. 1 on Sunday night.

With respect to the drawdown pace and numbers, that will be decided on conditions going forward. Those decisions have not been made.

With respect to AQAP, Al Qaeda in the Arabian Peninsula in Yemen, when the president came into office, he decided to intensify our efforts against Al Qaeda, including globally. And we intensified the efforts in South Asia, as you know, and had I think a tremendous amount of success on really pressuring this organization. And we have efforts globally as well against places like AQAP.

WALLACE: Finally, we have less than a minutes left.

DONILON: Institutions like AQAP.

WALLACE: Libya, where the war between Qaddafi and the rebels seems now to be a stalemate. An administration official recently defended the president's decision to turn over the lead of this operation to NATO. And here was the comment. Obama may be moving towards something resembling a doctrine. One of his advisers described the president's actions in Libya as leading from behind.

Question -- can you honestly say that the idea of leading from behind is working in Libya?

DONILON: I have absolutely no idea who that adviser was. That adviser has not been in any meetings with the president on foreign policy that I know of, that would have been reflected, and I think I'm in all the president's meetings on foreign policy, point one.

Point two, on Libya, we acted militarily in an emergency humanitarian situation to protect thousands of civilians in a town called Benghazi, and we have succeeded in doing that. And we have established in that case, after our lead, putting the coalition together, including Arab partners, we have provided now a base of support, and they are doing the ongoing operation. It's a perfectly good division of labor.

WALLACE: Perfectly good division of labor.


WALLACE: Even though Qaddafi is still in power and we have got a stalemate?

DONILON: Qaddafi is still in power today. We have done the following, though. We have protected civilians who were under threat in Benghazi and other towns in eastern Libya, and we have organized the international community to continue to put the pressure on him. Time will not be on Qaddafi's side, Chris.

WALLACE: Mr. Donilon, we are going to have to leave it there. We want to thank you so much for coming in today.

DONILON: Thank you for having me. It is a pleasure.

WALLACE: Please come back, sir.

DONILON: I will.

WALLACE: Up next, our exclusive interview with former Vice President Dick Cheney on the death of bin Laden, the role of enhanced interrogation, and the way forward in Pakistan and Afghanistan.


WALLACE: From the moment this country was hit on 9/11, Dick Cheney became the point man in the war on terror. When Usama bin Laden finally met justice this week, we wanted to know what he thought. I sat down earlier with the former vice president at his home to discuss where the war on terror goes now.


WALLACE: Mr. Vice President, welcome back to Fox News Sunday.

DICK CHENEY, FORMER VICE PRESIDENT: Good to see you again, Chris.

WALLACE: Over the last two years, no one has been more critical of President Obama's conduct of the war on terror than you have. At one point, you said that he was raising the risk of another attack.

How much credit do you give him for taking out bin Laden? And does it change your mind about the way he has been fighting this war?

CHENEY: Well, I think you've got to give him a lot of credit for making the decision to have SEAL Team Six conduct the raid that got bin Laden. There is no question that was his responsibility. And I think he handled it well. I give him high marks for it, for making that decision.

I still am concerned about the fact that I think a lot of the techniques that we had used to keep the country safe for more than seven years are no longer available. That they've been sort of taken off the table, if you will.

When the president first came into office, he moved to close Guantanamo. He has had to give up on that now. He also suspended the enhanced interrogation program and substituted the provisions of the U.S. Army Manual for that purpose. So, it's not clear to me today if we still have an interrogation program that we can put somebody through should we capture a high-value detainee that had crucial information.

WALLACE: I am going to get to enhanced interrogation in detail in a moment, but I want to ask you a little bit more sort of an overview of the war on terror. President Obama has tripled the number of troops we have in Afghanistan from what it was when you guys left office. He has more than tripled the number of drone attacks in Pakistan.

When you left office, one could argue we were losing in Afghanistan. Today, one could argue we're winning there.

CHENEY: Well, I certainly hope we're winning there. I think it's very important for us to do whatever we need to do to be successful.

Yes, I'd give him high marks for the drone program. It's one we started; it worked very well. He has done good work with it as well, too.

But, again, why I worry about -- I'm a bit concerned that we're now going to see a situation -- or because we've got bin Laden, there will be a rush to try to get out of Afghanistan, to pack up all the troops and say their task is done and we can leave. I'm not sure that's wise at all.

WALLACE: One more question around the raid. The president decided not to release a photo of bin Laden after he had been killed. He said that we don't take out the trophy, we don't spike the football. What would you have done?

CHENEY: Well, it's his call to make. I didn't really have strong feelings about it one way or the other. We did, of course, release the photographs of Saddam Hussein's sons. We thought that was important to drive home the point to the Iraqi people that they were dead.

In this particular case, they decided they didn't need to do that. I wasn't part of that decision, but I -- I really can't quarrel with it.

WALLACE: After looking at all the information, for the last week, since the takeout of bin Laden, and I'm sure talking to some of your friends in the intelligence community -- how big a role did enhanced interrogation play in all of the information that led up to the identification of that compound?

CHENEY: Well, I think we'll know more in the days ahead, and a whole range of issues with respect to the bin Laden operation. But, as best I can tell, from the people I talked with and worked with, that when we talk about Jose Rodriguez who ran the counter -- the insurgency --

WALLACE: Counterterrorism.

CHENEY: -- the counterterrorism program, Michael Mukasey, who was the attorney general, we've -- Leon Panetta, all have said one way or the other that the enhanced interrogation program played a role. That is to say some of the early leads came out of that program. My guess is that's probably the case that it contributed, just as did a number of other factors.

WALLACE: Which raises the question, if we were to now capture another new high-value target, which is certainly more likely, given this apparent trove of information that they recovered in bin Laden's compound -- should the president reinstate enhanced interrogation, including waterboarding?

CHENEY: Well, I certainly would advocate it. I'd be a strong supporter of it. We went to a lot of trouble to find out what we could do, how far we could go, what was legal and so forth.

And out of that emerged what we called enhanced interrogation. And it worked. It provided some absolutely vital pieces of intelligence.

There is a study that was done by the CIA, that's in the National Archives, some of it has been declassified now, that shows that enhanced interrogation of Khalid Sheikh Mohammed provide a vast treasure trove, if you will, of intelligence.

So, it was a god program. It was a legal program. It was not torture.

And I would strongly recommend that we continue it.

WALLACE: Now, you say it's not torture. Even waterboarding? Because Leon Panetta has said waterboarding is torture.

CHENEY: Well, I disagree. And the lawyers disagreed when we asked them for their opinion, and where we should draw the line in terms of what we could and couldn't do.

Waterboarding and all of the other techniques that were used are techniques that we use training our own people. This is stuff that we've done for years with own military personnel. And to suggest that it's torture I just think is wrong.

WALLACE: So, you would put it back on the table if you were the president and they got another new high-value target?

CHENEY: If it were my call, I'd have the program ready to go on the chance that any day you may capture a detainee who has vital piece of information about the next attack or about some new developments, and I think the program provides us with the capacity to collect that intelligence. And, again, that program, together with our terrorist surveillance program, those two things, I think, are the most important steps we took that kept us safe for seven years.

WALLACE: As you know, the Obama Justice Department reopened an investigation of half dozen CIA officers for whether or not they used undue force in interrogation after 9/11. This is an investigation that had been closed in 2007 during the Bush administration. Now, last June, Attorney General Holder said that this investigation was close to its end. It's still going on.

CHENEY: Correct. It's unfortunate. These men deserve to be decorated. They don't deserve to be prosecuted.

And the fact of the matter is there was a complete investigation done. It was done by a career attorney in the Justice Department, concluded that nobody had violated the law, and the whole matter was closed.

The Obama people came in, Holder reopened it. And the investigation, I understand, is still underway today.

Now, these are our government employees. They did nothing wrong. As best as any of us knows, it was, in fact, matter where they followed the policy set by the president of the United States, lawful decisions and lawful policy. And, now, we're in a situation where the Obama administration won't abide by the findings of the career lawyer who checked it out originally in the first place, but they have kept it open and refused to close it.

WALLACE: So, you're saying --

CHENEY: I'm saying --

WALLACE: -- close it now?

CHENEY: I'm saying it is an outrage that we would go after the people who deserve the credit for keeping us safe for 7 1/2 years. And that these men -- all devoted, capable officials -- shouldn't have to look over their shoulder and worry that if they follow the orders of this president to carry out this interrogation program, that at some point down the road, when there's a change in policy, that they can expect to be prosecuted. It's a terrible precedent.

WALLACE: I want to change subjects with you. Is it conceivable to you that no one in the Pakistani government knew that bin Laden was in that compound, in that very sensitive area 30-miles from the capital? And what should doe about Pakistan going forward?

CHENEY: Well, I don't know what they knew there are a lot of suspicions at this point. The fact of the matter is we've had a god relationship with Pakistan over the years -- although, sometimes, there have been conflicts. This is clearly one where there are questions that are going to be asked, and I'm sure they will answer.

WALLACE: Do you have questions?

CHENEY: I have questions. I'd like to know more about it.

But I also think it's important for to us remember we have a broad range of issues that we work with Pakistan together.

I can remember going to Pakistan in the 1980s when I was on the intel committee, we were running a covert action program to support the Afghan mujahidin against the Soviet. We were doing it in conjunction with the Pakistani government, President Zia. And, you know, we were admitted together in the program that was very successful and it worked.

We've got a lot of interest in that part of the world. We have an interest obviously in India and Pakistan together, and the potential that may be represented in terms of the possible conflict. We had A.Q. Khan, for example, operated in Afghanistan, ran black market to provide nuclear technology to the Libyans.

So, we have a lot of interest that we need to be able to work with the government of Pakistan. And we need to make it clear, obviously, that we don't appreciate it, if, in fact, as a matter of policy, they were providing safe harbor or sanctuary for bin Laden. In the end, we got him. That's what counts.

But going forward, we need to have a clear understanding that we don't appreciate it.

WALLACE: You mentioned earlier Afghanistan and that you hoped there wasn't going to be a rush for the exit now that bin Laden is dead. But does nation-building there still make sense when there are more Al Qaeda members in Pakistan, when you could certainly argue there is more of a threat coming from Yemen? Do we still need tens of thousands of troops in Afghanistan? Or could we do what we need to do to protect the U.S. homeland with just small units of Special Forces?

CHENEY: It's entirely possible. We could change some aspect of our policy.

I'm not -- today, I don't have enough familiarity with the specific details of what's being considered. I think all of that is likely to be reviewed and that's fine.

What I don't want to see happen is what happened again in 1980s. After everybody -- after we solved the Soviet problem, everybody left Afghanistan and we ended up -- ultimately, the Taliban took control. Usama bin Laden showed up, it became a safe harbor. They trained 20,000-some terrorists to launch an attack against the United States.

If we turn and walk away from Pakistan or Afghanistan, or that part of the world, generally -- I'm fearful that we're headed for trouble down the road. So, we do have a vested interest in what's going on in that part of the world. We need to tend to that interest. We need to safeguard our strategic capabilities there.

And I think we need to maintain relationships, working relationships with Pakistan, Afghanistan and the rest of them. I don't think we need to run for the exits.

WALLACE: In Libya, the president has turned over command to NATO. And one of his advisers says that the policy, and even says it might be the Obama doctrine, is to lead from behind. I'm sure you've read this.

I get to see the Cheney smile there. What do you think of the president's Libya policy?

CHENEY: I've been confused by it. I think most people have been. It's not clear exactly what the policy is.

The idea that you can turn something that important over to Libya -- over to NATO, and have NATO deal with Libya and pursue a lot of interests there doesn't work very well. Frankly, NATO only functions effectively when the United States is involved to lead NATO. And I think it's -- I think it's unfortunate that we haven't been more forthright and more forceful in terms of our approach.

WALLACE: When you say forceful, would you take out Qaddafi? Would you arm the rebels? How far would you be willing to go?

CHENEY: If you make a decision that you're going to use military force to support the insurgents against Qaddafi and that you want Qaddafi gone, it's not enough to simply sit on the sidelines and say get rid of Qaddafi. What are you going to do about it? How are you going to achieve it?

Are you prepared to use the resources of the United States to make that happen? And it's been -- it looks as though what the policy of the administration has been is to hope for Qaddafi's departure, but not be prepared to do enough to make sure it happens.

WALLACE: Would you be prepared to do to make sure it happens?

CHENEY: Well, I'll leave that to them. I think Qaddafi ought to depart. I think the world would be better off without him. But it's not clear to me that this administration is up to the task.

WALLACE: Finally, how are you doing? How is your health?

CHENEY: Well, it's going pretty well. I had a rough patch there for a while last year, but I have undergone major surgery last summer.

I've been blessed with the wonders of modern medical technology. And I'm getting ready to go fishing at the end of this month and working on a book and spending a lot of time with family. So I haven't got many complaints, Chris.

WALLACE: Well, you know, I notice you have this pump, and you have -- what is it, a battery that's permanently attached to it? And I must say, It wonder about going fishing. I take it you don't electrocute yourself.

CHENEY: You're not supposed to fall in.

WALLACE: Is there anything you can or can't do that you used to be able to do?

CHENEY: Well, they don't like to have you swim with it. A rig like this on, obviously it is battery-powered. It's a pump that supplements the action of your heart and restores the normal blood flow to your body. And that's crucial.

I was in in-stage heart failure when I went into the hospital and they fixed it. So I'm a great believer in the technology. But you do have to be sensitive to it. You have got a lot of gear you always have got to have with you. You've got to be prepared to keep your batteries charged. But you get used to it. It's easy to handle.

WALLACE: Finally, in this regard, are you considering a heart transplant or have you ruled that out?

CHENEY: I haven't decided yet, Chris.

WALLACE: Do you have any --

CHENEY: I haven't decided yet. I'm not prepared to make any medical announcements today.

WALLACE: It sounds like me asking you a political question.

CHENEY: About like that, yes.

WALLACE: Well, we are so happy to see that you are in such good shape, I must say, because there was a time when you looked awfully gaunt. Dick Cheney is back. A little lighter, but still in fighting trim.

CHENEY: Well, and I need to get a little lighter, too, so that's all good.

WALLACE: Thank you, sir. Always a pleasure and an honor to talk to you.

CHENEY: Thank you, Chris.


WALLACE: And again, our thanks to the former vice president.

Up next, our Sunday panel on President Obama's big victory in the war on terror and whether he has turned a corner as commander in chief.



PRESIDENT BARACK OBAMA: The bottom line is this: our strategy is working, and there is no greater evidence of that than justice finally being delivered to Usama bin Laden.



WALLACE: President Obama, addressing troops at Fort Campbell, Kentucky, Friday, and making it clear the war on terror goes on.

And it's time now for our Sunday group -- Bill Kristol of The Weekly Standard; Mara Liasson of National Public Radio; Paul Gigot of The Wall Street Journal; and Fox News political analyst Juan Williams.

Well, Bill, how does bin Laden's death change the war on terror? Does it alter our mission in Afghanistan? Should we rethink how we go about protecting the U.S. homeland?

BILL KRISTOL, THE WEEKLY STANDARD: It's a victory in the war on terror, but it doesn't change the war, it doesn't change the challenge we face, which is both to obviously stop terrorist attacks and defeat terrorist groups, and persuade states that might want to sponsor terrorist groups not to do so, but also, ultimately, change the situation in the Middle East that made bin Laden possible. I mean, we really can't go into the rest of the 21st century with a bunch of illegitimate dictatorships fostering radicalism, extremism, nuclear proliferation, and terrorism.

So, the broader struggle has to continue. This was a big victory in a long war.

WALLACE: Mara, I want to pick up on that, because this happens in the course of the Arab Spring, when people in the streets, peacefully protecting, are accomplishing a lot more than bin Laden and his thugs ever did with bombs.

In that sense, does the bin Laden takedown represent a kind of turning point for the whole issue of Islam jihadism?

MARA LIASSON, NATIONAL PUBLIC RADIO: Yes, I think it does. I think the turning point already happened, and bin Laden was on the past end of the turning point. He wasn't the future, he was the past.

And I think that if there is any silver lining in getting him 10 years later, it's that the Arab Spring happened. And it was such a complete repudiation of Usama bin Laden and Bin Ladenism. I think it's pretty fitting that it happened. But I think that's also part of the White House message, that Bin Ladenism is in the past, and the Arab Spring proved that.


PAUL GIGOT, WALL STREET JOURNAL: I think it shakes up the war in a fundamental way, too, in Pakistan, because now that -- this gives us an opening to work with Pakistan to say look, we can make these cross-border raids, and if you're not going to cooperate with Mullah Omar, and you know where he is, in Quetta -- and all of our intelligence people believe that they know where he is. If you're not going to cooperate in going after the Haqqani network, which is based in Pakistan and crosses the border into Afghanistan, this kind of thing can happen again.

And the Pakistanis have had this embarrassment, frankly, and there is a chance here where we could really use this to advance our ability to really do a lot more and a lot better in Afghanistan.

WALLACE: Yes, but, you know, Juan, it was interesting. One of the few areas that both Tom Donilon, the president's national security adviser, and Dick Cheney agreed on is, yes, we're unhappy with Pakistan, but there are real sharp limits to how far we want to push them because we have a range of relations and interests there. And, you know, we don't want to push them too far and alienate them.

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, I think the key here is obviously they are still a nuclear state. And secondly, that they are under tremendous pressure from terrorist forces within their borders. So, to that extent, we want to stabilize them because that's in our national interest, just on a very basic level. And Speaker of the House Boehner said that this week, you know, for all the people who are saying run away from Pakistan, punish them for what was obviously a security lapse of incredible magnitude, we have to look forward in terms of making sure that we are able to control what comes in terms of the next step for Pakistan.

WALLACE: Yes. I thought it was interesting, Dick Cheney's line, "We don't appreciate it." That was kind of the big statement he wanted to make to Pakistan.

Bill, what does the Bin Laden raid mean for President Obama and for the public perception of him as the commander in chief?

KRISTOL: It was a success. And if you're the president of the United States, and you order the risky raid, and it succeeds, you get credit, as you should. It will help him.

You know, I'm not sure how much. A lot will depend how he follows up on this.

If this turns out to open the door to going after other Al Qaeda leaders, if we get information and if he aggressively pursues that -- it sounds like we came very close to getting Awlaki on Yemen on Thursday. It would have been great -- that would have been a great week, an even better week to have gotten both of them. But if he got good information, and we weaken Al Qaeda elsewhere, both in Pakistan and Afghanistan, but also in Yemen and other places, if he pursues an aggressive foreign policy across the board, which I think he really has a chance to do now, if he doesn't use this as an excuse to step back, as some people are worried that he might do in Afghanistan, I think this could be a very good moment for him, but only if he takes the lesson of this raid.

The lesson of this raid is being aggressive and going after the bad guys' works.

WALLACE: You know, Mara, you could envision a situation where Barack Obama runs for reelection in 2012 and it's almost the flip of what a normal Democratic candidate does, where he's strong on national security, he's strong on protecting the country, and his vulnerability is the economy.

LIASSON: I think his vulnerability is the economy, period. It just is. And the economy is going to be the number one issue in 2012.

This really helps him though. He is the president who got Usama bin Laden. And that's never going to go away. And even if he doesn't get any other terrorist figures -- and I think they will try -- and this -- even though he didn't get a huge bump, I don't think huge bumps are part of the political scene right now.

I think his attributes, the things that people really care about when they're making a choice for president -- strong leadership, decisive -- that's where he was on shaky ground before. That's the biggest improvement he got from this.

WALLACE: Paul, I know you want to weigh in on this, but I also want to ask you another question, so you can take your time and answer both.

GIGOT: Are those the rules here?

WALLACE: Yes, that's right. Well, you're the guest, so you can do anything you want.


WALLACE: What do you make of the whole renewed argument over enhanced interrogation, which we saw really engaged in the first half of this show? And what about the argument that, to the degree that Obama's policies are working, it's because whether willingly or unwillingly, he has ended up pursuing and enhancing so many of the Bush policies?

GIGOT: I think that's absolutely right. I mean, the fascinating big picture here is the degree to which the Obama policies have inherited and even expanded and built on what Bush did. The architecture here of the war on terror, whether it be permanent detentions, or almost permanent detentions, Guantanamo, secret rules for state secrets --

WALLACE: Drones.

GIGOT: -- drones -- I mean, those things, across the board --

WALLACE: Surge in Afghanistan.

GIGOT: -- he has taken those and he has basically inherited them. And much like Eisenhower took Truman's Cold War architecture, built on it, and said this is now a permanent part of American policy, I think Obama has done that with the Bush anti-terror architecture.

It's worked, and enhanced interrogations is part of that. That's the one area where he has differed from Bush substantially, and yet here we have evidence that his biggest success was built on that.

WILLIAMS: We don't have any evidence that his greatest success --

GIGOT: We do too.

WILLIAMS: Listen, this is so -- to me, this is so petty, that somehow now Republicans are trying to say we must be sure to credit President Bush. President Bush deserves credit for what he did. He kept the country safe after 9/11; we did not have a subsequent attack.

But to somehow say it's because we were engaged in enhanced interrogation, and that led -- and it's a very uncertain path that it leads directly to the murder of Usama bin Laden -- it seems to me petty, and it seems to me an attempt to diminish President Obama --


WILLIAMS: Let me finish the point. You know what? So what if we got some information by means of torturing people? As President Obama -- and we heard this morning from Tom Donilon -- it's not in our value to pull out people's teeth and eyeballs. And secondly, you know what? We can get that information in other ways.

WALLACE: You've made that point.

Bill, go.

KRISTOL: Here's something that's not petty. Eric Holder's Justice Department, for two years, as Chris pointed out, and asking both Tom Donilon and Dick Cheney about this, have been prosecuting -- investigating and claiming -- planning to prosecute CIA investigators.

WILLIAMS: They're investigating.

KRISTOL: Investigating them, but they have got lawyers and are under threat. It's an outrage. That should stop.

And incidentally, politically, if Barack Obama tomorrow says, you know what? I've ordered the attorney general to stop this investigation, what's past is past, let's move forward as a united nation, as a nation united, I think it would be very well-received by everyone.


We have to take a break here, but up next, mixed signals on the economy. And the GOP seems to waiver on overhauling Medicare.

Our panel tackles both when we come right back.



OBAMA: There are always going to be some ups and downs like these as we come out of a recession. And there will undoubtedly be some more challenges ahead. But the fact is that we are still making progress.

SENATE MINORITY LEADER MITCH MCCONNELL, R-KY.: We had a 1.8 percent growth rate the first quarter, which is beyond tepid. And so, clearly, we're just sort of bumping along here.


WALLACE: Well, President Obama and Senate Republican Leader Mitch McConnell with very different takes on where the economy is headed.

And we're back now with the panel.

Some mixed numbers on the economy this week. And let's take a look at them.

Unemployment rose to 9 percent, but the private sector added 268,000 jobs. That is the third straight month of gains over 230,000. And there were sharp drops this week in the price of crude oil and other commodities.

Paul, where is this recovery?

GIGOT: It's a middling recovery. It's sort of mediocre. It's lackluster.

It's there, there is no question. The private sector, finally creating new jobs -- that's good -- making up for the fact that the government is losing jobs, which I would argue is a good thing since the government sector has been bloated.

But this administration has been thinking, you know what? We're going to run as Ronald Reagan did in 1984, with a big booming recovery -- expansion out of the recession.

I don't think they are going to get that recovery. It's sort of bouncing along. And the key figure that I watch is, what are wages doing? What are average earnings doing?

It's only increased by 1.9 percent over the last year. And those gains -- even those gains have been swamped by increasing food and gasoline prices.

So that is why you get the sense in the public that they don't fell like these are boom times. So we have an expansion. I think it will even increase a little bit in the rest of the year. But right now it's just kind of blah.

WALLACE: But I will say this -- the meaning actually -- Mr. Gigot's newspaper, The Wall Street Journal --

GIGOT: Thank you, Chris.

WALLACE: -- which is owned by our parent company, News Corp -- because I'm that kind of a guy. But job creation this year so far has been stronger than government economists have predicted. And now you get some private forecasters who are saying that unemployment could be below 8 percent by -- just to take a date at random -- election date 2012.

If it's the low side of 8 percent, is that strong enough to be a plus for a president running for reelection?

WILLIAMS: Well, I still think it's optimistic, but any decrease is good. You want to see the trajectory headed in the right direction if you are President Obama's reelection team. But I think there are a couple of things to keep in mind here.

What we saw in terms of the bump in this latest jobs figure, these latest job figures that came from the private sectors, the biggest increase in private sector employment since '06. That is a tremendous thing, added now to months of consistent job growth, as you just heard from Paul Gigot.

The other part that we have to factor in here is a lot of people now are thinking they are going to get back in the job market. That's why we saw the unemployment rate bump up, even as we saw more jobs being created.

The other side of this, though, I think is that you have out there now the possibility of some kind of deal working toward budget and debt ceilings coming. And as you have those deals put in place, I think Wall Street will feel better about it. Wall Street has been doing fine. The big executives, your buddies, are getting all the big raises, you know.

GIGOT: You don't know any of these guys, Juan?


GIGOT: You don't any of those guys?

WILLIAMS: No. I think that those are Chris Wallace's friends.

They continue to take their pound of flesh out of the American economy, and so maybe they are starting to pay something back by hiring people.

WALLACE: Would you defend me, please, Bill?

KRISTOL: No. That's a bridge too far.


KRISTOL: I would say this -- I think we should all put aside the analogy to Reagan in '84. It's not going to be 1984. It's not going to be 7 percent growth.

LIASSON: The White House doesn't think so either.

KRISTOL: The left should abandon the dream that Obama's reelection is going to be like Reagan or that Obama's presidency is going to have the significance, I would argue, that Reagan's did.

Conservatives should probably put aside the hope that it's going to be Carter in 1980 -- total collapse in foreign policy, failure of leadership, and an economy that's just in horrible, horrible shape. And it's probably going to be neither or both. It's going to be in between. It's going to be a close and tough election, which puts much burden on the Republicans, actually, to have a coherent critique in both foreign policy and economic policy of the president.

I mean, it may be that the economy falls apart. And I hope it doesn't, but it could happen later this year. The eurozone could break up, all kind of things could happen. But the odds are that Republicans are going to have to win this election in November, 2012. I don't think it's going to be given to them on a silver platter.

WALLACE: Mara, let me pick up on something that Juan touched on; and that is that the negotiations are going on, have begun now, between the White House and particularly House Republicans about what to do about the debt limit, what to do about the budget. And it was very interesting. There are conflicting reports about whether or not House Republicans, having just passed the Paul Ryan budget, are beginning to waver on one of the centerpieces of his plan, which is the idea of a major overhaul of Medicare and turning it into a voucher system.

Where are the Republicans on this?

LIASSON: Well, they passed that plan with almost -- I think only four Republicans didn't vote for it. So that's their plan. I think that what they wavered on is whether or not it should be part of these debt ceiling negotiations that are going on right now led by Vice President Biden.

Medicare is off the table in those short-term negotiations. So are taxes, any kind of big tax reform.

I think if you're a Republican, and you believe that you are going to get the Senate in 2012, which is a widely-held assumption in this town on both sides of the aisle, why should you compromise on taxes before you have a much stronger hand after the next election? And why would you allow Medicare, which is the one thing that might stop you from getting that majority in 2012, to be part of the discussion?

So we'll have a much narrower debt ceiling negotiation, some budget process reforms, maybe some other spending cuts. But the big issues, which is a reform or radical restructuring of Medicare, and tax reform, are 2012 debate suggests.

WALLACE: But it seems to me it's a little more than that in terms of the Republican wobble here, Paul, because Dave Camp, who is the head of the House Ways and Means Committee -- and that is the committee that Paul Ryan is just offering a budget which is non- binding. It doesn't create anything. It just sort of sets some ideas out there.

Dave Camp's Ways and Means Committee would actually write the legislation to change Medicare, and he basically said, I want no part of this now.

GIGOT: Well, he said, look, we can't pass a standalone bill. We're not going to pass a standalone bill. And the reason we're not going to is because the president is not going to sign it. He's made that clear. The Senate is not going to pass it. They've made that clear.

The only way you really do significant Medicare or entitlement reform is through a process where the Senate and the House get together, and through reconciliation --


WALLACE: But that doesn't stop them from passing the repeal of health care. I mean, I've I got to say, it sounds to me like House Republicans are running scared on their own plan.

GIGOT: They already passed it. As Mara said, they own it. It's their vote.

It's not as if they can say we didn't make that vote. So they already made the vote.

The question is, you have to admit at some stage political reality that you can't pass it. So what do you do? You have to say, all right, what can we get out of negotiations?

WALLACE: OK. Let me just ask it a different way.

Are the House Republican leaders that you've talked to worried that that Medicare thing is going to end up being an albatross and they're going to end up being --

GIGOT: They are worried, and they rightly should be, because Medicare has long been a third rail of American politics, and they have to still defend the plan -- they came back from their recess and the members said, actually, we held up pretty well. But there is a crucial open-seat election in New York State that's going on later this year, in a couple of weeks, I think. And that's an important one they have to win.

So, they should be worried, but they can't walk away from what they voted for.

WILLIAMS: Yes, but let me tell you, they are trying to walk away, and aggressively so. And I think this is the sea change in this regard -- the Tea Party folks who have been the dynamic force driving the Republican Party and driving negotiations, obviously to the midterm election victories, and driving the discussion about budget and cuts, no longer have that power because of what happened at town hall meetings. And now you see Boehner, Cantor and others reasserting themselves in terms of saying, let's make this, let's actually do government. And I think that's good news for America.

WALLACE: All right. We're going to have to leave it there.

Thank you, panel. See you all next week.

Don't forget to check out "Panel Plus," where our group picks right up with the discussion on our Web site, We'll post the video before noon Eastern Time.

And we'll be right back with a program note.


WALLACE: Now a quick program note.

Next week we'll sit down with Congressman Ron Paul, who has been called the "Godfather of the Tea Party," as he explores another run for the White House.

That's it for today.

To my mom and all the other moms out there, Happy Mother's Day.

Have a great week, and we'll see you next "Fox News Sunday."

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