This is a rush transcript from "Fox News Sunday," August 25, 2019. This copy may not be in its final form and may be updated.
CHRIS WALLACE, ANCHOR: I'm Chris Wallace.
The trade war with China escalates dramatically as Beijing imposes new tariffs and President Trump fires back.
DONALD TRUMP, PRESIDENT: We are having a little spat with China and we'll win it.
WALLACE: With the president attacking both the Chinese and the Federal Reserve, he meets with world leaders at the G7 amid a global economic slow down slowdown. We'll discuss the economy, trade, and new fears of a recession with Treasury Secretary Steven Mnuchin who is traveling with the president.
It's a "FOX News Sunday" exclusive.
SEN. AMY KLOBUCHAR, D-MINN., PRESIDENTIAL CANDIDATE: This is about him not keeping his promises to the middle class of this country.
WALLACE: We'll get reaction from presidential candidate, Senator Amy Klobuchar, and ask about her plan for the economy, in a "FOX News Sunday" 2020 sit-down.
Plus, our Sunday panel on the president's plan to end family separations at the border by allowing children to be detained longer.
TRUMP: This new rule will do even more to bring them together.
WALLACE: All, right now, on "FOX News Sunday".
WALLACE: And hello again from FOX News in Washington.
President Trump is back on the world stage at a critical time of the global economy as trade disputes are raising fears of a recession. All eyes are on Mr. Trump to see how he'll navigate tensions with allies at the Group of Seven Nations Summit in France.
One of the big questions, just how far he'll go in his standoff with China?
In a moment, we'll speak exclusively with Treasury Secretary Mnuchin, who's at the G7 with the president.
But, first, John Roberts has the latest on the president's trip -- John.
JOHN ROBERTS, CHIEF WHITE HOUSE CORRESPONDENT: Chris, good afternoon to you from Saint-Jean-de-Luz, which is just a short distance away from where the G7 Summit is being held.
And the escalating trade war between the United States and China really taking center stage here at a breakfast meeting with the new U.K. Prime Minister Boris Johnson. President Trump asked this morning if he has any reservations about where the trade war is headed.
REPORTER: Mr. President, any second thoughts on escalating the trade war with China?
TRUMP: Yes, sure. Why not?
REPORTER: Second thoughts?
TRUMP: Might as well, might as well.
REPORTER: You have second thoughts about escalating the war with China?
TRUMP: I have second thoughts about everything.
ROBERTS: After President Trump's comments were interpreted as regret for the trade war, the press secretary later said of the president regrets anything, it's not raising tariffs higher. President Trump did say he has no plans at the moment to invoke emergency powers to force American companies to stop doing business with China, also insisting he is under no pressure from G7 allies to end the trade war.
TRUMP: I think they respect the trade war. Presidents and administrations allowed them to get away with taking hundreds of billions of dollars out every year and putting it into China. So, the answer is nobody old me that. Nobody would tell me that.
ROBERTS: In his first meeting with President Trump since becoming U.K. prime minister, Boris Johnson mildly voicing his dissent.
BORIS JOHNSON, BRITISH PRIME MINISTER: The U.K. has profited massively in the last 200 years from free trade. We don't like tariffs on the whole.
ROBERTS: As the trade war with China remains at a hot boil, President Trump today announced that he and Japanese Prime Minister Shinzo Abe are very close to rewriting their trade relationship.
TRUMP: If it gets done, we will possibly know by the end of this meeting.
ROBERTS: Another topic of controversy at the G7, President Trump's desire to invite Russia back into the fold and resurrect the G8.
TRUMP: Ii think it's adventitious. I think it's a positive. Other people agree with me and some people don't necessarily agree.
ROBERTS: Next year's G7 Summit will be held somewhere in the United States. As the host, President Trump can invite anyone he wants to the summit, even Vladimir Putin - Chris.
WALLACE: John Roberts, reporting from the G7 in France -- John, thanks for that.
Joining us now for an exclusive interview from the summit, Treasury Secretary Steven Mnuchin.
Mr. Secretary, I want to ask you first about the president's comment this morning that he has second thoughts about the trade war with China, which set off some confusion, which I hope you'll clear up, which is it? Is he regretting how far the trade war has gone? Is he thinking about holding off on another round of tariffs, or does he wish he been even more aggressive?
STEVEN MNUCHIN, TREASURY SECRETARY: Well, Chris, it's great to be here with you. The president is determined to have fair and reciprocal trade with China and this morning's comment (ph) weren't meant to back that off. It was meant to say that he's determined as ever on this issue.
He wants a good deal. He wants free, fair, and reciprocal trade.
WALLACE: President Trump tweeted this on Friday about American businesses -- I want to put it up on the screen.
Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies home and making our products in the USA.
Mr. Secretary, is the president ordering U.S. companies to stop doing business with China? And if so, under what authority?
MNUCHIN: Well, he would have the authority to do that under -- if he declared an emergency. He has not done that. I think what he was saying is he's ordering companies to start looking because he wants to make sure - - to the extent we are in an extended trade war -- that companies don't have these issues and move out of China. And we want them to be in places where they are trading partners that respect us and trade with us fairly.
WALLACE: I want to just press down on us a little bit because the president claims he does have authority on something called the Emergency Economic Powers Act passed in 1977. Here he is on Friday night.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT: Well, in 1977, we had an act passed -- a National Emergency Act. I have the absolute right to do that. We'll see how that goes. But I have the absolute right. 1977, check it out.
(END VIDEO CLIP)
WALLACE: But there are a couple of problems here, Mr. Secretary. First of all, as you pointed out, the president has to declare a national emergency, which he hasn't. Secondly, the act only blocks American countries sending the transfer of future funds, not past investments. And also, in the past, of the last 42 years, it's only been used to stop businesses with outlaw nations or with drug dealers, not with trading partners.
So, is this really a realistic option for the president?
MNUCHIN: Well, the president has lots of options. And again, our first choice is to have fair and reciprocal trade. The reason why we put on tariffs is for the last two and a half years, we've been working with China to rebalance the trading relationship and it hasn't rebalanced. The trade deficit has grown significantly despite assurances from China that we would -- we would improve this.
And as you know, when we were close to a deal, the president was happy, and they backed off of that. So, the president does have lots of authorities. You know, we use these authorities successfully with Mexico on certain issues there. We now are close to hopefully having the USMCA passed. We had a terrific meeting with Canada today on this, and we're looking forward to getting that agreement passed.
WALLACE: So, just to lock this up, the president fully intends to impose the next round of sanctions as he's announced on September 1st unless there is some break in the negotiations?
MNUCHIN: Absolutely. And to the extent that the Chinese respond again, you can assume the president will consider all his options.
WALLACE: I want to ask you about another tweet from the president on Friday -- and let's put this up on the screen.
My only question is, who is our bigger enemy, Jay Powell, the head of the Federal Reserve, or Chairman Xi, the president of China?
Question: does the president really regard the chairman of the Federal Reserve, whom he appointed, to be an enemy of the country? And I guess a larger question, which is -- with all of these statements from the president, all of these tweets, how seriously, how literally should we take what the president says?
MNUCHIN: Well, Chris, let me first comment on the President Xi side of this, because I was with President Trump today and he was very clear that President Xi is still his friend, he has a very good relationship with President Xi. We worked on lots of different things together.
But as it relates to financial issues and trade, you know, we have become enemies. We're not -- we're not making progress. But this was not intended to send a message that President Xi is his enemy in the sense of all these different areas.
And the other thing I would say is, we are very hopeful that there will be a humane solution in Hong Kong. We are obviously watching what's going on there. The president again reiterated he thinks that President Xi sat down with the protesters. He could get this over with in a few hours. So, we're hopeful that there will be calm in Hong Kong.
WALLACE: Well, let me pick up on that. If there isn't, if the Chinese were to crackdown as they did in Tiananmen Square in 1989, what impact will that have on U.S. relations with China?
MNUCHIN: Chris, I'm not going to speculate because that's not the outcome we're hoping for. The outcome we're hoping for is a peaceful outcome. I think you know there was a deal with the U.K. when Hong Kong was transferred over. We'd expect China to meet that deal. It's the -- and it's something we hope we respect -- they respect the laws and they respect what's going on there.
But President Trump is hoping there will be a humane solution there.
WALLACE: So, you were at pains to say, well, Chairman Xi is not an enemy of the country, but you didn't say the same about Fed Chairman Powell.
MNUCHIN: Well, I really wanted to first comment on President Xi.
On Powell, I think -- I don't think it was a literal comment that he is an enemy. But, again, you know my position on the Fed is that I don't make specific comments about the Fed. I meet with Chairman Powell weekly.
And as my role as treasury secretary, I don't comment specifically on the Fed.
WALLACE: But this does bring up the bigger question, which I do want you to address, which is, you know, for Americans, whether just people, people investing, CEOs, when the president says something, how seriously, how literally should we take it?
MNUCHIN: I think, most of the time, you should take it very literally. I think sometimes he says things that are meant to be a joke. Obviously, the comment, you know, recently on the "chosen one", that was -- that was said tongue-in-cheek. That wasn't meant to be a serious comment.
I think most people know the president is serious about China and trade. So, people should understand that. He is very determined. He's trying to correct something that's gone on for the last 20 years, but we have a very unfair trading relationship that's been a tremendous disadvantage to U.S. companies and U.S. workers. And he's working hard to rebalance that.
WALLACE: Now, when Chairman Powell spoke at that Fed conference out in Wyoming on Friday, he said one of the greatest headwinds that he and the economy are facing are the president's trade policies. In fact, there are a number, and I think we could all agree, there are a number of signs of strength in the economy, especially jobs, especially GDP growth, at least solid signs of strength.
But there are some concerns -- and I want to ask you about those. Growth of business investment dropped from 9 percent last year to 1.4 percent now, and the manufacturing sector has contracted for the first time since 2009.
Secretary Mnuchin, many financial experts say that one of the biggest headwinds that they now face as companies deciding whether to invest or investors deciding whether to put more money in the stock market, is uncertainty about administration policies and that that uncertainty is a much bigger problem than whether or not the Fed should drop interest rates 100 basis points or 1 percent.
MNUCHIN: Chris, let me first comment that the single biggest thing that everybody is talking about here in France is the U.S. economy. It's the bright spot of the world. We have growth.
People are now talking about doing tax cuts and cutting regulations in Europe. So, people are looking at the Trump economic policies and wanting to replicate them, because that's the reason we have all this growth.
Second issue, I'd say, is the consumer is very, very strong. We're seeing that across the board.
And the third issue, I'd say, is on these other statistics, I think you've got to look at them quarterly. There's a bunch of volatility. At the end of last year, people worry about the economy slowing down based upon some numbers, and then the numbers came out in the beginning of this year, and it was clear the economy was roaring back.
And as it relates to uncertainty, there's only one area, and that's trade. We are close to having a major announcement with Japan. We expect to have USMCA passed in the next month or two. That's going to add a significant amount to U.S. growth and growth in Mexico and in Canada. We had the Korea deal done.
There's three or four other major agreements that Ambassador Lighthizer is working on. So, these trading relationships are going to add significantly to growth and we're still somewhat hopeful that China will come around and enter into a fair, good deal with us.
WALLACE: Let me just push back a little bit on the idea that the only concern is trade, because the president has flipped on a few issues. For instance, tariffs and taxes in recent days.
And I want to play some of his contradictory statements.
(BEGIN VIDEO CLIP)
TRUMP: The tariffs are not being paid for by our people. It's being paid for by China.
We're doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers.
Payroll tax is something that we think about and a lot of people would like to see that.
I'm not looking at a tax cut now. We don't need it. We have a strong economy.
(END VIDEO CLIP)
WALLACE: The issue is whether or not, I -- there -- you can see this widely. I'm not -- I'm sure you've read it, too, Secretary, whether this administration has a steady path to keep us out of recession.
And the question I guess I have for you is, as the markets open on Monday, after falling 600 points in just a few hours on Friday, what do you have to say to them?
MNUCHIN: Chris, first of all, we don't see a recession on the horizon. I don't think the yield curve reflects a recession. I think the yield curve reflects the fact that it anticipates the Fed is going to lower short-term rates, and the long end has already reflected that. That's the first thing.
The second thing on tariffs, the reason why the president decided to delay $150 billion of tariffs was because U.S. companies had already purchased those goods for holiday in U.S. dollars, so it was a very specific situation that had nothing to do with passing on or not passing on -- those had been committed prior to the tariffs going into effect, and that's something we wanted to do as it relates to holiday.
As it relates to prices going up, going forward, we have seen China depreciate their currency. That's going to mean that a significant amount of the tariffs are paid for by China. We haven't any inflation yet. We haven't seen prices go up.
We will have some exceptions for the rare circumstances where we have problems and the Ambassador Lighthizer is running that.
So, I don't think there's any mischaracterization on the tariff issue. And I'd be happy to comment on the tax issue if you want as well.
WALLACE: We're out of time. But that's only a better reason for you to come back when you're back in his country and set across the desk from us and we'll have a conversation.
Secretary Mnuchin, thank you. Thanks for taking time from the summit to speak with us, and we'll be tracking developments out of France, sir.
MNUCHIN: My pleasure. Look forward to seeing you soon.
Up next, we'll bring in our Sunday group to discuss growing concerns about the state of the economy and the president's increasingly bitter war with Fed Chair Jay Powell.
(BEGIN VIDEO CLIP)
TRUMP: We are having a little spat with China and we will win it. We put a lot of tariffs on China today, as you know. They put some on us, we put a lot of them.
(END VIDEO CLIP)
WALLACE: President Trump defending his escalating trade war with China as he left the White House with the G7 Summit in France.
And it's time now for our Sunday group. GOP strategist Karl Rove; columnist for "The Hill", Juan Williams; Julie Pace, Washington bureau chief for "The Associated Press"; and FOX News contributor Emily Compagno.
Karl, what do you make of the president's Twitter storm on Friday when he is saying -- ordering U.S. companies get out -- ordered U.S. companies get out of China, the Federal Reserve chairman is an enemy of the country. What are we going to make of all this?
KARL ROVE, FORMER BUSH WHITE HOUSE ADVISER: We make that it's a wild, wild Friday.
But let's step back for just a moment. The president is making a gigantic bet. His reelection depends on three things: a strong economy, the Democrats nominating somebody who's out of the mainstream or can be depicted as out of the mainstream to the American people, and doing something to rehabilitate his strength among suburbanites who defected to the Democrats in 2018.
Friday raised the stakes on the economy. I mean, there's a lot good in the economy. I mean, Democrats talk about it. You wonder whether they are fearing for the economy or hoping for recession.
But think about this, consumer confidence up in July. NFIB small business numbers up in July. Confidence of small business people, top 7 percent of the 50-some-odd-year history of their pole. Family -- single-family housing purchases up nearly 2 percent over July -- over July. I mean, lots of good numbers.
WALLACE: So, o why is the president acting the way he's acting? He doesn't act as if he believes it.
ROVE: Well, because he's made a big bet on redoing the relationship with China and that involves some challenges to our economy. And we saw on Friday, he tweets, and 600 points later, we're at the bottom of the day on the Dow.
But having said that, you know, Paul Samuelson was right, the Nobel economist, when he said the stock market has called nine out of the last five recessions. So, I don't put a lot into that one day but the president is making a huge bet that he's going to be able to pull off a deal with China that's going to be good for the economy and at the economy will be in good shape in 2020.
WALLACE: Julie, let me pick up exactly on what Karl said. From what you're hearing from your sources at the White House, how freaked out is the president at the possibility, despite all this good news, that there could be a recession and that the tensions with China could help precipitate it?
JULIE PACE, THE ASSOCIATED PRESS: From what I've heard, he toggles between two different views on this. On the one hand, he watches the markets incredibly closely. He believes the markets are a signal of the strength of the economy and so he gets incredibly nervous, incredibly worried when he sees these drops. He's watching some of the
WALLACE: But wait -- he's the one -- the market was doing just fine on Friday even with --
PACE: Until he tweeted.
WALLACE: Until he tweeted at 11:00.
PACE: Exactly, that's what caused the drop. But he sees some of these other indicators as well. So, he is nervous about a downturn in the economy.
But then he has this part of him that also thinks that some of this is being ginned up by his political opponents. He thinks that the media is making too much out of these and he has this tendency to say, look, everybody in the sort of establishment has warned me against my own election prospects, against all of these negative outcomes, all of these different things that I've done, and I haven't seen that come to fruition, why would this time be any different?
And that's why he keeps the pedal on the gas largely on the China trade talks.
WALLACE: What's curious about all this is exactly the fact that we talked about, which is that on a lot of levels, the economy is pretty solid. Yes, there are some concerns, but you've got 3.7 percent unemployment. You've got GDP growth still over 2 percent and sometimes, the president focuses on that.
Take a look.
(BEGIN VIDEO CLIP)
TRUMP: I think the word recession is aware that's inappropriate because it's just a word that certain people -- I'm going to be kind -- certain people in the media are trying to build up because they'd love to see a recession. We are very far from a recession.
(END VIDEO CLIP)
WALLACE: But then, Emily, as we say, you get a day like Friday, the president saying we are far from a recession, where he lashes out at China and the Fed and starts ordering U.S. companies around, and the question becomes -- or at least in my mind, does he believe his own argument?
EMILY COMPAGNO, CONTRIBUTOR: I think he does strongly and I want to point out that just after the conference when Chair Powell came out and said essentially, look, market policy -- we are not going to establish market policy to affect a recession or predicted, but we will use it for trade policy developments. And not an hour later is when the president tweeted that out, essentially escalating the trade war and potentially spurring the drop in interest rates.
I want to point out that, you know, the market response to stability and to certainty, and that interest rates are not the only predictor of a recession, nor is it the only tool to stave it off. And I think what would be more important and what perhaps the president understands is that the achievement of a substantive trade deal with China, with the two most primary components being them buying more products from us and us enlarging our market share over there, including I.P., that is the largest indicator and that would be the largest staving off for a recession, and especially with the European and Asian markets, you know, we are not an island. We are not isolated.
So, yes, our economy is robust, but there are others that are on recessions -- in recessions or on the brink of recessions, Germany included, with negative interest rates.
And going back to the larger picture, the most important thing is the messaging with our trade deal. One of us cannot win. We need to save face, us and China, for there to be a global positive response.
WALLACE: Yes, of course. But as Karl says, all of that depends on getting a deal. If you don't get a deal, all that becomes a huge issue.
We got to talk about the G7. That's where the president is now. He's meeting with the other six great industrialized nations and he seems to really at this point be the odd man out on a lot of issues there, whether it's trade, whether it's Iran, whether it's climate change, and also now about re-admitting Russia. In fact, some people are calling the G6 plus one.
JUAN WILLIAMS, POLITICAL ANALYST: Right. It used to be the G8 --
WILLIAMS: -- with Russia -- and in fact when he was leaving, the president went out of his way to blame President Obama for getting Russia out. I mean, the reason Russia is out as they invaded Crimea and --
WILLIAMS: But I think what you get is there's differences about Russia and readmitting Russia. There are differences about Brexit and Boris Johnson. Trump is a huge Boris Johnson fan.
WALLACE: The new prime minister of Britain.
WILLIAMS: The prime minister of Britain. But money to many of the other European leaders don't want Britain to become a junior partner to the United States. They see that as undermining the European Union.
And then, of course, finally, you have the trade war with China, in which, you know, the president is over there, he wants them, he wants the European countries to focus on their economies. You know, Germany is contracting. You have a lot of these countries in slow down. He wants them to spur their economies on.
They see the principal problem here, globally, as the trade war and that the trade war is having negative consequences not just for China, but for people who trade with China, people who do business with China. So, they want -- they want to get away from this nationalistic kind of America first or nation first thought that the president is advancing.
WALLACE: Good luck with that.
WILLIAMS: I don't think it's going to happen.
And, by the way, an answer to your earlier question, isn't it obvious, he comes out and says, how about a tax -- cutting payroll taxes? How about we look at capital gains taxes differently? And he says, I'm not doing that.
Yes, he's worried about the economy.
WALLACE: Let me just ask one last question. We got about 30 seconds left. The president blew up the last G7, if you remember, a year ago in Canada, in his fight over tariffs. What do you expect this weekend and how much does he hate these big multilateral conferences?
PACE: He hates them. And, look, that's not unique. American presidents, most I think world leaders don't like these summits. They can be -- they can be a little bit mind numbing, actually.
But part of the problem that he has when he goes over there is I think he likes stirring it up with some of these world leaders. I think he likes creating a little bit of controversy and therefore, it's pretty likely that we're going to come out with much of an agreement on anything.
WALLACE: I do want to say before he was on the air, I asked Secretary Mnuchin, how was the food? He said, it's France, the food is fabulous.
PACE: That's the one thing they've got going for them.
WALLACE: All right. Panel, we'll have to take a break here. We'll see you all a little later.
Up next, Democratic presidential candidate Amy Klobuchar on her plans for the economy, gun control and winning the Democratic nomination. Senator Klobuchar joins us for a Sunday sit-down, next.
WALLACE: Coming up, Democratic presidential candidate Amy Klobuchar takes on Donald Trump's economy.
(BEGIN VIDEO CLIP)
KLOBUCHAR: He inherited a stable economy coming out of that downturn. So what does he do? He gloats about it, says how great it is instead of meeting the challenges of our time.
(END VIDEO CLIP)
WALLACE: We'll ask Klobuchar how she would avoid a recession, next.
WALLACE: Democratic presidential candidates have until Wednesday to qualify for the third round of debates next month in Houston. So far 10 have qualified as the field is beginning to shrink. Someone who will be on that stage in September, Senator Amy Klobuchar, who joins us now for a FOX NEWS SUNDAY sit down.
Senator, welcome back.
KLOBUCHAR: Well, thanks, Chris, it's great to be on again.
WALLACE: You say that President Trump is right to take on China, but that he's going about it the wrong way. So given all the problems that -- with trade with China, how would President Klobuchar get tough with China and get them to clean up their act?
KLOBUCHAR: In this case, Chris, I think you've seen it in so many other areas, he creates chaos. And I don't think that's good for getting an agreement with a country like China.
You look at what he's done and you pointed this out earlier, you know, August 1st he claims he's going to put tariffs on $300 billion worth of new goods. Then August 13th they dial it back. Then on August 20th he says he's going to lower taxes because he's concerned about what's happening, which would, of course, add even more to our debt. And then the next day he dials that back.
China's watching. And I think when you look at trade negotiations with the world, and I saw this in my role as the Democratic chair in the Senate of the Joint Economic Committee, you've got to keep your promises and you've got to keep your threat. He has done neither. And so I think that's the first thing is that this negotiating by tweet hasn't been working. We're at an all-time trade deficit at $891 billion.
WALLACE: But, Senator --
KLOBUCHAR: The second thing is you go back to the negotiating --
WALLACE: Senator, let me -- let me just -- Senator, let me just pick up on this, though.
KLOBUCHAR: Go ahead [ph]. Sure.
WALLACE: Because the fact is that the U.S. economy, and there are some troubles, but it still, by historical standards, pretty strong, as we were discussing with the panel, historically low levels of unemployment. GDP growth not quite the 3 percent the president promised, but still OK. Haven't the president's policies -- I'm turning now from trade to just economic policy, haven't the president's policies of tax cuts and especially deregulation been effective?
KLOBUCHAR: I don't think so, Chris, because I look back to the downturn and how we got out of that. That was our workers. That's been affective. They've worked really hard. And our businesses that got us out of that downturn and got us to a better place right now of some stability.
But what a great leader does, and, you know, there's this old Ojibwe saying that, you make decisions not just for this generation but for seven generations from now. In this case, we have a president that can't even keep his decisions seven minutes from now. And so what a great leader does is rises to the challenges of our time. We know what they are. Republicans, Independents, Democrats, I think people know. You can't keep escalating this debt like he has. We just found out that over a trillion dollars we're going to reach in the deficit by 2020. That's a big problem.
You have to do something about immigration reform --
WALLACE: But -- but Barack Obama had -- made a huge -- and I understand part of it was out of a recession, but Barack Obama added more to the debt than anybody in history. I'm not saying that -- that Trump isn't --
KLOBUCHAR: Well, I'm looking -- OK.
WALLACE: But -- but Barack Obama, and I didn't hear a lot of people squawking about that.
KLOBUCHAR: But, Chris, look at where we are now. A different situation. We're in a stable time in the economy. We hope we stay there. And that is when you work on these challenges, climate change, immigration reform. We know we need workers in our hospitals, in our nursing homes, in our fields, in our factories, starting small businesses. This has been America.
And so what bothers me is when you look at any of these long term problems and goals and things we have to get done, he's not doing them. And I just thought -- I was just in Iowa. You know, soybeans mounting up in bins. You've got pork at its lowest export level in nine years. And so go back to the negotiating table, let the Federal Reserve be independent. Start pushing on these long-term challenges that I just mentioned, as well as infrastructure, long-term care. You've got doubling of the senior population coming up --
KLOBUCHAR: And they're still re-litigating the Affordable Care Act instead of dealing with that and Alzheimer's.
WALLACE: Let --
KLOBUCHAR: I just think we need to start looking to the future and dealing with those challenges.
WALLACE: Well, let's -- let's talk about the immediate future in politics and -- and let's talk about where you stand in the Democratic race right now.
In the latest national polls, your 11th, in the Real Clear Politics average with 1.2 percent. In Iowa, you're 6th, at 3.5 percent. And in New Hampshire, you're tied for 7th at 2 percent.
Now, three candidates dropped out of the race this week. You are going to be on the debate stage next month. But what's the threshold for you? At what point does this not make sense?
KLOBUCHAR: Oh, this makes perfect sense to me, Chris, and that is because I've always known that I wasn't going to jump to the front of this pile right away. There's 20 some people. I look at it this way, I've made the playoffs, all right, and I've done that coming from a position of a state that's a little -- not as big as some of the other ones. And coming from a position where my whole focus from the very beginning when I announced in the middle of that blizzard on an island in the Mississippi River was to bridge the river of our divides to get to a higher plane in our politics. And I have won with moderates and I have won in rural and I have won --
KLOBUCHAR: -- even with a bunch of Republicans, as well as liberals. And I do that by bringing people together. And day in and day out I have heard from people out there, that's what they want right now.
WALLACE: All right, let me --
KLOBUCHAR: They don't want a whiner in the White House. They are tired of hearing the president whining every day when they are struggling to make ends meet.
WALLACE: Let -- let -- let me ask you about --
KLOBUCHAR: They want a leader. A leader should lead.
WALLACE: You -- you talk about being a moderate and I -- and you are running in the moderate lane. I want to put up some of your positions on various issues.
You support a public option, but not Medicare for all. You call the green new deal aspirational. And you oppose decriminalizing illegal border crossings.
Joe Biden is also in that lane and he's -- he's leading, beating you in that lane at this point. You say that you are -- and you use this phrase, a candidate for our times, which may be a nice way of dealing with the age issue.
I want to ask you something honestly, and I don't -- I don't know that you're going to give me an unguarded answer, although I know that you -- you -- you often -- in private you do. Honestly, do you have concerns, as you see the gaffes by Joe Biden mounting up, day by day, week by week, do you have concerns as to whether or not he is up to taking the fight over the next year and a half to Donald Trump?
KLOBUCHAR: I'm focused on my own campaign, Chris, I've made that very clear, and taking it to Donald Trump myself. I have strong arguments that I am the candidate to do this. I am from the Midwest. As you know, Democrats had trouble winning the Midwest in 2016. But we can do it.
I can lead the ticket because I've got an optimistic, economic agenda for this country. And I know people are looking for something else. And I can lead because I have a proven track record of bringing in independents and moderate Republicans and Democrats.
And this isn't just about this campaign. I am not running for chair of the Democratic National Committee. I am running for President of the United States. And if you want to lead, you've got to run a campaign that's going to show people how you're going to govern. And we have had a time like no other with the shootings in Dayton and in El Paso, the divide that the president causes every single day where people are just crying out for a different kind of leadership. And that's why these debates coming up and the -- going into the spring, I'm going to have a chance to do that.
And as you know, you are a veteran watcher of all this and commentator, you know we've had plenty of presidents that have been in single digits at this moment that over time the American people got to get to know them and said, you know what, this is my candidate.
WALLACE: All right, I -- I got less than --
KLOBUCHAR: That's what I want to be.
WALLACE: I got less than two minutes left.
And, finally, I want to ask you about Ilhan Omar, the congresswoman, who's a member of the Minnesota delegation.
You've called -- you talked before about the president stoking divisions. You've called the president's comments about her, quote, racist and reprehensible, but what about Omar's statements, one of which, I want to play, one of which she made just this week. Take a look.
(BEGIN VIDEO CLIP)
REP. ILHAN OMAR, D-MINN.: We give Israel more than $3 million in aid every year. This is predicated on there being an important ally in the region and the only democracy in the Middle East.
(END VIDEO CLIP)
WALLACE: Now, you couldn't see it, because you can't see our feed, but when she said the only democracy, she did it in air quotes.
Are you troubled by Congresswoman Omar questioning whether or not Israel is a democracy, and earlier saying that -- explaining American politicians support for Israel as, quote, it's all about the Benjamins, baby? Are you prepared -- you talk about the president and his divisiveness. Are you prepared to call out Congresswoman Omar?
KLOBUCHAR: I have. I don't agree with her on her positions on Israel and I certainly don't agree with anti-Semitic comment.
All of that being said, and I have been very clear about that, I thought this decision by the president to say that elected members of Congress who were duly elected, shouldn't go to visit Israel, that they shouldn't be allowed in that country, which is our ally, and, yes, a beacon of democracy in a really tough neighborhood in the Mideast, I think that was wrong. And I was pleased to see that AIPAC and J Street and other leading Jewish groups came out and said the same thing, because when people go to Israel, they see, despite my disagreement with some of the policies --
KLOBUCHAR: -- of [ph] the prime minister there, they see a democracy. And I think that is the -- one of the worst things, a strong democracy allows people in their doors, they don't shut them out.
WALLACE: Senator Klobuchar, we're going to have to leave it there. Thank you so much. Thanks for your time. Please -- please come --
KLOBUCHAR: Thank you. It was great to be on, Chris.
WALLACE: Yes, well, please come back and safe travels on the campaign trail, Senator.
KLOBUCHAR: Thank you.
WALLACE: When we come back, Joe Biden's campaign says Democrats need to focus on one thing, beating Donald Trump. We'll ask our Sunday panel whether the frontrunner can make that case to voters, next.
(BEGIN VIDEO CLIP)
JILL BIDEN, WIFE OF JOE BIDEN: May be have to swallow a little bit to say, OK, I sort of personally like so-and-so better, but your bottom line has to be that we have to beat Trump.
SEN. CORY BOOKER, D-N.J., PRESIDENTIAL CANDIDATE: Can't we have bigger aspirations than that? Beating Donald Trump as the floor, it's not the ceiling.
(END VIDEO CLIP)
WALLACE: Joe Biden's wife Jill making the case electability is the top issue for Democrats in 2020, while rival Senator Cory Booker tries to poke holes in that argument. And we're back now with the panel.
Well, Karl, you helped George W. Bush win two presidential elections. Do you think this message of, you may like somebody else better, but swallow hard and he's the guy that can be Donald Trump, is that the kind of message that you can win a party's nomination and the election?
KARL ROVE, CONTRIBUTOR: No, you can. But that's not the only argument that's being made here. Let's step back a little bit because of presidential primary is a collection of individuals. And Biden is making two arguments, one explicitly and one implicitly. The explicit one is, I'm the most electable guy. And that's not sustainable.
But his opponents are helping him make the argument that he's the only guy who's a traditional, reasonable Democrat. When you have Elizabeth Warren out there, and Bernie Sanders, and Kamala Harris and maybe Pete Buttigieg as a -- those are the only people who really have a chance of this nomination, with all due respect to Senator Klobuchar.
WALLACE: I was going to say, thank you very much for --
ROVE: You know, look, these are -- these are -- these are --
WALLACE: Folks, we just wasted a few minutes, but, hey --
ROVE: Yes, look, these are vanity candidates. What Julie and I were talking about, was there somebody who was at single digits and -- and actually won the nomination. I think maybe James K. Polk in 1844 was maybe in that (INAUDIBLE).
WALLACE: I was running out of time, but I was going to say, I don't think anybody's been this low this late.
ROVE: Yes. So -- but -- but there is two -- there are two arguments that the Biden campaign is making. One would -- one --- you, I'm electable, but the other one, there -- he's got a lot of help. This week Bernie Sanders came out with a $16 trillion alternative to the green new deal, and they're all endorsing weird stuff and putting themselves in knots.
WALLACE: The Biden gaffes, however, are starting to pile up. Here was the former vice president just -- I think it was on Friday, say -- talk about how the assassinations of Martin Luther King and Bobby Kennedy in 1968 affected him when he was still in college.
(BEGIN VIDEO CLIP)
JOE BIDEN, D-PRESIDENTIAL CANDIDATE: Imagine what would have happened if, God forbid, Barack Obama had been assassinated after becoming the de facto nominee. What would've happened in America?
(END VIDEO CLIP)
WALLACE: I know, Emily, the president likes to say he lost it and you could argue that's political rhetoric, but these statements, misstatements, curious statements, they're piling up.
EMILY COMPAGNO, CONTRIBUTOR: They are. And I think it's why he is quickly becoming the starter nominee for a lot of voters, which is essentially who they support while they're waiting for someone to really inspire them.
And I think kind of to your point, Karl, the electability argument is fast becoming stale. Voters, especially Democrats, need to be inspired, and we see when they vote with her head that they essentially become catastrophic, right? We've seen that with Gore and Dukakis and Kerry. And here I think, as this campaign falters, there are others clearly waiting in the wings that can inspire.
And I think that, you know, the -- the head of the Monmouth Polling Institute, which just released a poll, which still proves that he's leading in the polls in Iowa, said I have not yet met one Biden voter that in any way, shape, or form is excited about voting for him.
WALLACE: And then there was President Trump's controversial comment this week, which he made one day and then doubled down the next day. Take a look.
(BEGIN VIDEO CLIP)
TRUMP: In my opinion, you vote for a Democrat, you're being very disloyal to Jewish people and you're being very disloyal to Israel. And only weak people would say anything other than that.
(END VIDEO CLIP)
WALLACE: Juan, some top Jewish groups were very upset by that and pushed back saying, look, Jews, American Jews, who voted overwhelmingly for Hillary Clinton in 2016, vote on a lot of issues, they don't just vote on who's the best candidate for Israel.
JUAN WILLIAMS, POLITICAL ANALYST: Right. And the Anti-Deformation League just said explicitly, this is kind of an anti-Semitic trope that you are using here, Mr. President. And people like Charles -- Chuck Schumer, the Democratic leader in the Senate, said at a time of rising hate crimes against Jew globally, but also here in the USA, that he was in essence, you know, encouraging kind of white nationalist anger at Jewish people.
This trope has been used for a long time to isolate Jews is the other, people who are really self-interested or interested in Israel more so than they're interested in being American patriots. But I think that in some ways it helps the president with the evangelical base that sees him as having moved the capital into Tel Aviv and done all the --
WALLACE: No, to Jerusalem.
WILLIAMS: To Jerusalem, excuse me, and also in terms of the settlements and -- I mean they see him as having taken steps that strengthen their love for Israel. I'm not so sure it works with American Jews though.
WALLACE: Julie, Karl talked in the first segment, when we were talking about what the president needs to get re-elected. And one of the things he talked about his Republican suburbs, college-educated women in Republican suburbs.
When the president seems to stoke these divisions, whether talking about "the squad" or about Jews being disloyal for Baltimore Congressman Elijah Cummings, how does that play in the Republican suburbs among college- educated women?
JULIE PACE, "THE ASSOCIATED PRESS": Well, I think there are some differences in some of those things that he -- that he's saying there. And I would also throw in some -- some policy issues when you're talking about suburban voters, particularly suburban women.
So when you talk about "the squad," the strategy from the Trump campaign is very clear here, they want to paint the entire Democratic Party a socialist, as outside the mainstream of what we think about Democrats as. And that's in part because they want some of these Republicans, independents in the suburbs, who maybe don't like Donald Trump very much to say, all right, I don't like him, but I'm not very comfortable with is either, so I guess I'll stick with what I -- with what I know.
But then underneath all of this, there are some policy issues that are really starting to worry Republicans when it comes to suburban voters. And top of the list right now is guns. I've talked to a lot of Republicans over the last couple of weeks, after these shootings who say, we have to be careful to not look as though we're doing nothing, because particularly with mother's in some of these suburban districts, they want to see some type of action. So there are a lot of different forces at play when it comes to this group of voters.
WALLACE: But the president, who immediately after El Paso said, you know, I don't believe this slippery slope stuff. We can do something. The NRA saying you do one thing, it leads to something else was actually espousing the slippery slope this week.
PACE: Exactly. And that's -- that's because, you know, when it comes to this president, the most important group for him is his base. He -- he is constantly fearful of losing that group of voters. And that's the tension for him in his reelection. Is he going to -- is he going to play more to the base and risk losing those suburban voters or would his base stay with him if he -- if he actually moved in the direction of bringing some of these a lot more moderates --
WALLACE: But -- and -- the base is essential, but it it's enough to get him re-elected.
PACE: It's not enough. It's not enough.
WALLACE: Thank you, panel. See you next week.
Up next, our "Power Player of the Week." A biographer who has captured the essence of power, how to get it and how to use it, in his award-winning books on LBJ.
WALLACE: He's one of America's greatest biographers, the winner of two Pulitzer prizes, but this spring he took a break from his life's work to write about how he does that work. And as we told you in May, his loyal followers freaked out. Here's our "Power Player of the Week."
WALLACE: You must know that this has given a lot of people heartburn.
ROBERT CARO, PULITZER PRIZE WINNING BIOGRAPHER: Yes, I do. If you want to know the truth, it's heartwarming that so many people are worried that I won't finish.
WALLACE (voice over): Robert Caro has spent more than half his life telling the story of Lyndon Johnson, four books, some 3,400 pages. But he's only up to 1964, not yet to Vietnam, which is why when he took a detour to write "Working," it caused, well, heartburn.
CARO: I want people to have some idea of what it is I do, how it is to research this type of book.
WALLACE: Caro fans may not be happy he took time from finishing the story of LBJ, but it is fascinating to learn how he goes about his masterwork.
Caro says he learned about research from his editor at "Newsday" back in the '60s.
CARO: This guy looks up at me and he says, just remember, turn every page. Never assume anything. Turn every page.
WALLACE: It's advice he's followed researching Lyndon Johnson.
WALLACE (on camera): You walk into the LBJ Presidential Library. And when you look up at the documents section, what do you see?
CARO: You see, at that time, 32 million documents. You -- they had 40,000 boxes, each of these boxes holds about 800 pages. That's the only time I felt like turning around and going home.
WALLACE (voice over): Caro says he has one big rule when interviewing.
WALLACE (on camera): Your notebooks are filled with a notation, "SU."
WALLACE: What does that mean?
CARO: Shut up. People have a desire, a need to fill in silences. If you could just make yourself shut up, often they'll tell you what you want to know.
WALLACE (voice over): Then, there is writing. Caro remembers what a professor at Princeton told him.
CARO: You're never going to achieve what you want to achieve, Mr. Caro, unless you stop thinking with your fingers. I knew exactly what he meant. It was so easy for me to write, that I didn't think things through.
WALLACE: Which brings us back to his final book on LBJ, which is about a third written. Caro took us into his offense.
CARO: This is the outline of the rest of my last volume, from here, to there, to the end of the book over there.
WALLACE: He writes several drafts in longhand, again to slow himself down.
CARO: After I've done a number of drafts, I go to the typewriter and I do a lot of drafts on the typewriter. Then it goes into this box and the box goes to my typist.
WALLACE: When I talked with Caro about his last LBJ book, he said it would take three or four years to finish the final volume. That was seven years ago, and he's now 83.
WALLACE (on camera): Are you really going to Vietnam?
CARO: I feel unless I see it and really understand it, I can't make the reader see it.
WALLACE: If you should be unable, for whatever reason, to finish the book, have you made provisions for somebody else?
CARO: No, I've made provisions that nobody else can finish my book. Nobody is going to publish anything with my name on it that I didn't write. Not a word.
WALLACE (voice over): But Caro is determined to finish the story of Lyndon Johnson down to the last word, on a Smith Corona Electra 210.
WALLACE (on camera): How many typewriters do you have?
CARO: I have, at this moment, 11, yes.
WALLACE: And will that get you through the end of it?
CARO: I'm -- I'm worried.
WALLACE: Caro tries to take care of everything. He uses old-fashioned carbon paper to make copies of what he types. And a few years ago he bought what he says is a lifetime supply just in case they stop making it.
And that's it for today. Have a great week and we'll see you next “Fox News Sunday.”
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