Updated

The following is a rush transcript of the August 15, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

BRET BAIER, ANCHOR: With the president stepping into the Ground Zero mosque controversy, the partisan battle over how to deal with illegal immigration, and the U.S. fighting two wars, there is plenty to discuss with our first guests, Senator John Cornyn, chairman of the Republican Senatorial Committee, and Senator Jack Reed, a leading Democrat on national security.

Senators, welcome back.

SEN. JACK REED, D-R.I.: Thanks, Chris.

SEN, JOHN CORNYN, R-TEXAS: Good morning.

BAIER: First, I'd like to get you to weigh in, if you would, on the president's statement Friday night at this dinner celebrating Ramadan at the White House in which he appeared to defend the effort to build that community center and mosque near Ground Zero.

But then yesterday he issued a clarification, saying, quote, "I was not commenting and I will not comment on the wisdom of making the decision to put a mosque there. I was commenting very specifically on the right people have that dates back to our founding." There was even an elaboration on that clarification by the White House a little later.

There seems to be some confusion on the president's stance. How do you senators read it?

Senator Reed?

REED: Well, the president, I think, is right to point out that our traditions do embrace tolerance for religions, all religions. And in fact, I think he also recognized that this debate is quite painful to the victims, the families, because it again brings back the terrible moments of 9/11.

But the issue here is one that's going to be decided by local authorities, and that issue is whether the operation -- this facility is really one that is designed to provide interfaith communication, dialogue, to not in some way try to repeal the reality of 9/11, which was an attack by fanatical Muslims against the United States, but to try to find those common ground between all the religious communities.

And just another point. I recently got back from Afghanistan and, you know, we're sending young majors in Army, Marines, Special Forces people, into villages to try to find common ground with Muslims to try to put aside the obvious differences that might superficially appear.

And if we can't do that here in the United States, then we're going to have a very difficult time over there.

BAIER: Do you think the mosque should be there?

REED: I think it's a decision -- I know it's a decision that the local authorities have made. It can be there if it is -- operates to foster dialogue, to recognize the commonality of religious principles.

But it can't be there, and I don't think it should be allowed to be there, if it's going to be some type of way to undercut the truth, the reality, of 9/11. I think the local officials have made the decision that it's going to operate as a -- as a place of religion discourse, not of argumentation.

BAIER: Senator Cornyn?

CORNYN: Well, this is not about freedom of religion, because we all respect the right of anyone to worship according to the dictates of their conscience.

It's nice that folks on the left now are sensitized to the importance of freedom of religion. I think we all should be.

But I do think it's unwise, and it -- to build a mosque at the site where 3,000 Americans lost their lives as a result of a terrorist attack.  And I think to me it demonstrates that the -- that Washington, the White House, the administration, the president himself seems to be disconnected from the mainstream of America. And I think that's one of the reasons people are so frustrated.

BAIER: Senator Reed, some 9/11 family members are now speaking out.  Sally Reneguard (ph), whose firefighter son was killed in the World Trade Center on 9/11, said the president doesn't get it. Quote, "As an Obama supporter, I really feel that he's lost sight of the germane issue, which is not about freedom of religion. It's about a gross lack of sensitivity to the 9/11 families and to the people who were lost."

Do you think statements like this are what forced the president to clarify what he said Friday night?

REED: Well, I think the understanding that this issue, long before the president spoke out, has caused pain to the family members is something that we all have to recognize.

And part of the problem, too, is that we haven't moved aggressively enough in New York City to rebuild the site and to create appropriate honors for the victims. That would, I think, go a long way to help and assuage some of the difficulties.

But I think the president recognized that his position of trying to reinforce a principle that we all share, which is that this is a nation of tolerance who are fighting religion fanatics -- that position automatically doesn't translate into a facility down there in lower Manhattan unless that facility is contributing to this tolerance, to this communication between different religious groups.

BAIER: Right, but he didn't make the distinction Friday night in his comments.

REED: He did not, and I think he felt he had to make the decision or reinforce the fact that he was speaking about basic constitutional principles.

BAIER: As a Democrat, is it disappointing that he jumped into this fray?

REED: I don't think it's disappointing. I think at some point the president is called upon to make these pronouncements about issues, many, many different issues.

I think he emphasized appropriately and, again, not without, I think, a uniform position we have in the United States, that religious tolerance is what makes this country different than a lot of countries, particularly some of the countries that are sponsoring these terrorists.

BAIER: Senator Cornyn, the latest polls on this issue show that almost two-thirds of those surveyed say the mosque should not be built near Ground Zero. Thirty percent approve of the plan.

With emotions, as we've talked about, so high on this issue, do you think that this becomes an election issue 79 days to go before the midterms? Will you be telling your candidates to make sure what the Democratic opponents -- how they stand on this particular issue?

CORNYN: Well, I think it does speak to the lack of connection between the administration and Washington and folks inside the Beltway and mainstream America. And I think this is what aggravates people so much.

I agree with Jack, this is going to be a local decision. I'd like to hear what other elected officials in New York -- the two United States senators and other local officials -- think about this. And the American people will render their verdict.

BAIER: So yes, it becomes an election issue?

CORNYN: I think -- I think whether you're connected with people, whether you're listening or whether you're lecturing to them, I think this is sort of the dichotomy that people sense, that they're being lectured to, not listened to, and I think that's the reason why a lot of people are very upset with Washington. So I think in that -- to that extent, yes.

BAIER: Last thing on this topic, Senator Reed. Do you worry that this sucked up a lot of oxygen in a news cycle where, you know, in August the Democrats really wanted to talk about Social Security and the 75th anniversary this weekend, and perhaps the gulf oil spill and the cleanup down there?

REED: It's the nature of current affairs and of politics that issues arise. They're dealt with. I think the overriding issue remains the economy, and that issue will be the most dominant one as we go forward into the election.

BAIER: On the issue of immigration, Senator Cornyn, the president signed a $600 million border security bill this week, adding resources to the southern border. Homeland Security Secretary Janet Napolitano was asked is this enough. Here's what she said.

(BEGIN VIDEO CLIP)

QUESTION: Do you think this is enough or is more needed to do the job that you think needs to be done?

HOMELAND SECURITY SECRETARY JANET NAPOLITANO: I think this is -- this is what we asked for. And of course, what we asked for is what we thought would be enough.

(END VIDEO CLIP)

BAIER: So the question is is it enough.

CORNYN: Well, it's not enough to stop our -- the lack of security along the southern border. It's a step in the right direction, and I -- I'm glad the administration has come around to support more boots on the ground, more UAVs, technology.

But last year there were 540,000 people, roughly, detained coming across the border illegally. Forty-five thousand of them came from countries other than Mexico, demonstrating the fact that Mexico itself now is a pathway into the United States for people all around the world, and we don't know what their intentions are.

So this remains a very serious national security problem. And I think until we do actually secure the border, until we do actually enforce our current law, I don't think the American people are going to have confidence in the federal government.

BAIER: What about this issue election-wise with the midterm for Democrats, Senator Reed?    REED: Well, I think the fact that together on a bipartisan basis we were able to approve these funds to strengthen the boarder is a very, very good sign.

The president has taken significant steps over the course of the last 18 months to strengthen our protection at the borders. That's part of our, and must be a major part of our, immigration policy.

The fact that we're deploying technology as well as additional about 1,500 agents along the border shows that we're very serious and we have to -- if we have to do more, we should do more. And that, I believe, is the view of the president.

BAIER: You're on the Senate Armed Services Committee. On Afghanistan, Senator Reed, David Petraeus, the general on the ground, now says that -- this about the Afghanistan draw down in July 2011, quote, "This is a date where the process begins, that is conditions- based. And as the conditions permit, we transition tasks to our Afghanistan counterparts and the security forces in various government and institutions, and that enables a, quote, 'responsible' draw down of our forces. The situation on the ground drives it."

Do you see any distinction or difference in that statement and what the administration has been saying about July 2011?

REED: No, I don't. And one reason is because General Petraeus was intimately engaged in the planning for the strategy the president announced at West Point last year. He was the CENTCOM commander. He was involved in the conversations, along with General McChrystal and the whole nat security team.

And that is the view on the ground, and that's the view here in Washington, that next July, based on conditions, we will begin to shift missions and resources in Afghanistan, we hope more and more to the Afghani national forces. Those are the -- ultimately, those are the forces that are going to win the battle and stabilize their country.

BAIER: Vice President Biden was quoted in Jonathan Alter's book as saying, "In July 2011 you're going to see a whole lot of people moving out.  Bet on it." And then he repeated, bet on it. Do you think that's inaccurate?

REED: I don't think it's inaccurate. I believe that you'll see people moving out, missions changing. But I don't sense immediately a dramatic pell-mell withdrawal. I think you'll see a change based on conditions.

We have 18 months. We've got a battle coming up in Kandahar which will be critical. The most critical factor, though, is the ability of the Afghan national army to step up to their task. They've showed mixed results so far.

But the good news is that they seem to be trying much more aggressively now than they were a year ago, and that probably is in some part related to the fact that there now is a point in time where they know they're going to have to step up to the plate.

BAIER: Senator Cornyn, politics. Democratic Party Chairman Tim Kaine said of Republicans last week running in November, quote, "The Tea Party takeover of the Republican Party is really producing millstones for them."

He pointed to Sharron Angle, the candidate in Nevada, and Ken Buck in Colorado, saying they are, quote, "wacky with ideas about the role of government that are way outside of the mainstream that are just going to be offensive to people." Your response?

CORNYN: Well, I think what the American people are sensing and the reason why they are voting in such large numbers -- 65,000 -- 68,000, I think it was, more people voted in the Republican primary in Colorado than in the Democratic primary -- is because they think that what's happening in Washington is out of the mainstream -- 9.5 percent unemployment, spending, unsustainable debt, failure to deal like adults with real problems in an adult-like fashion.

Look, I think, you know, these races are going to be decided based on how people feel about the economy, how they feel about spending and debt.  In Nevada, for example, 14.2 percent unemployment, 70 percent of the home mortgages are under water. If you like the way things are going in Nevada, I suppose that people will vote for Harry Reid. If they don't, then I think they have a good alternative in Sharron Angle.

BAIER: So the fact that six candidates that you all supported lost in the primaries -- you don't see that as a negative for the party?

CORNYN: Well, we support the nominee and respect the right of the primary voters to make that selection.

I suppose the Democrats in Florida with Kendrick Meek and Jeff Greene running in a spirited primary down there and in South Carolina with Al Greene, who's now been indicted on obscenity charges, who's running against Jim DeMint -- I mean, these sorts of things happen in the context of politics. But the American people will be able to render their verdict on November the 2nd.

BAIER: You bring that race up.

Senator Reed, should Alvin Greene step aside in South Carolina?

REED: That's a decision he'll have to weigh. Again, I think what John has talked about is a very, very difficult primary season for both parties, frankly, because people are very upset. They're very frustrated.  They see economic opportunities that they took for granted now evaporating before them. And so this is a very unpredictable season.

I think the campaigns will come down, really, to the individual candidates now that the primaries have sorted them out and their skill at communicating to the public what they want to do and how effectively they can work here in Washington.    BAIER: Chairman Kaine says the millstone for Republicans are these candidates for the Tea Party.  Republicans charge that President Obama may be a millstone with his approval ratings in the mid 40s for some Democratic candidates especially in moderate districts and moderate states.

Do you think that many candidates will want President Obama to campaign in their district?

REED: I think the president will be campaigning -- I know the president will be campaigning throughout the country. He'll be campaigning in many, many districts.

I think his ability to talk about what his administration has accomplished in terms of health reform, in terms of stabilizing a terrible situation -- and I recall when he became president we were losing 790,000 jobs a month. We had -- the Bush administration had taken a surplus and turned it into a deficit. He dealt with those problems -- still dealing with the problems.

So I think he will be out there and making the case that we have to go forward. To go back to the Bush policies would be a disaster for the country. And many candidates will be wanting that message.

BAIER: Two quick lightning-round questions here.

Senator Cornyn, looking at the landscape now, how many Senate seats do you believe your side can pick up? Do you think that you can take control of the Senate how it's shaping up right now?

CORNYN: If everything goes our way on November the 2nd, I could see a plausible pathway there. But realistically, I think it's going to be a two-cycle effort.

But we're going to try to get as many Republicans because we think that will force President Obama to the middle, for example, when President Clinton had a Republican Congress. And we think that would be a good thing for the country, forcing things back toward the middle instead of the extreme policies that we've seen coming out of Washington.

BAIER: Senator Reed, there's a report that Vicky Kennedy is being encouraged to run against Republican Scott Brown in 2012 in Massachusetts.  Will you add your name to the list encouraging her?

REED: I think she is a tremendously talented person. She certainly has been involved in the public life of Massachusetts and here in Washington for many, many years with her husband Ted.

As I've said before, I haven't talked anybody into a race or out of a race in my entire history, and I'm not going to start now.

BAIER: Senator Reed, Senator Cornyn, thank you much for being with us.

REED: Thank you.

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