Super Committee Members on Debt Deal Prospects

The following is a rush transcript of the November 20, 2011, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

It's three days and counting for the congressional super committee.

Can they make a deal or will the old political obstacles derail the latest attempt to cut our national debt? We'll hear from two members of the community: Republican co-chair Jeb Hensarling and Democratic Xavier Becerra, only on "Fox News Sunday."

Then, what would a stalemate mean for the financial market? And would the U.S. credit rating get another downgrade? We'll ask Mark Zandi of Moody's Analytics, who's been a top economic adviser to both parties.

Plus, Newt Gingrich rises to the most dangerous place in politics, the top of the Republican field. We'll ask our Sunday panel if the former speaker can hold on where others have failed.

And as we approach Thanksgiving, our power player of the week takes me dancing with turkeys.

All right now on "Fox News Sunday."

And hello again from Fox News in Washington.

Well, after months of secret talks and public posturing, we are now in the end game for the super committee. Will they make a deal by Wednesday to cut the deficit by $1.2 trillion over the next decade?

In a moment, we'll talk with the key Democrat on the committee. But, first, the Republican co-chair Jeb Hensarling.

Congressman, welcome back to "Fox News Sunday."


WALLACE: Simple question -- is this thing dead?

HENSARLING: Nobody wants to give up hope. Reality, to some extent, starting to overtake hope. There were 12 good people who invested a lot in this and trying to find common ground to achieve the goal of this committee. So talks have that taken place over the weekend and they will continue to take place.

But the reality is, we need to come to an agreement. We have to get it drafted. It has to be estimated by the Congressional Budget Office by the end of Monday. So, it's a daunting challenge, no doubt about it.

WALLACE: Is there any sign that either Republicans are going to make a big concession or Democrats are going to make a big decision, because as you say, you really got a little over 24 hours to make a concession that will somehow break the logjam.

HENSARLING: You know, Chris, we're not going to give up hope. Talks are continuing and we are not giving up hope.


HENSARLING: But we're not going to give up hope.

WALLACE: This is a big missed opportunity, Congressman.

HENSARLING: I agree. It's a huge missed opportunity. The nation is facing a debt crisis. It's facing a jobs crisis. And the two are interrelated.

And we all know -- I mean, even the president will admit the great drivers of our debt are Medicare, Medicaid and health care, and nothing else comes close. And he's right. I give him an A for courage for stating that.

But, unfortunately, what we haven't seen in these talks from the other side is any Democrats willing to put a proposal on the table that actually solves the problems.

And so, unfortunately, what we have -- particularly in Medicare, there is a program that seniors are going to see forms of rationing. Seniors like my parents. It's going to be around for my 9 year old daughter and my 8 year old son. And it's driving the country bankrupt.

And so, here was an opportunity. Republicans put forth a plan that was in our budget. It was rejected by Democrats. We went and then we gave them the bipartisan plan, the Rivlin-Domenici Medicare plan, which was principally drafted by the Democrat Alice Rivlin, who was the director of the Office in Management and Budget in the Clinton administration -- preserves an option for fee for service Medicare. That was rejected, too.

Now, to their credit some of the Democrats were willing to put some aspects of health care on the table. But at best, it would just kick the can down the road. And, frankly, part of the challenge we have, I think it was on your show last week, where Congressman Jim Clyburn said the Democrats hadn't coalesced around a position. And so, it's a little hard for us to negotiate with them when they're still negotiating with themselves.

WALLACE: I want to get to this -- follow up on what you just said in there. But I just want to make it clear. At this point, is there any effort or going to be a final, last-ditch Republican plan? A new offer?

HENSARLING: Chris, there are multiple offers that are on the table now.

WALLACE: I mean, a new offer.

HENSARLING: There is frameworks that are out there now, and if we have an opportunity to work on one of those frameworks, the answer is yes. There are multiple frameworks. Now, only one came to the attention of the media but there are multiple frameworks out there. So, again, we know that the time is very late when one or two strokes before midnight and we understand that. But we haven't given up hope. Again, there is a jobs crisis.

We also hope and we thought maybe there could be some common ground for fundamental tax reform that could help create jobs and make the tax code fairer, simpler and more competitive, broaden the base, bring down everybody's rate, keep current levels of progressivity. So, people, defending on their income bracket, would pay the same percentage of taxes.

There's been studies by the National Bureau Economics Research that that could help create, you know, over half a trillion dollars of pro-growth revenues. Some show it could create a million jobs.

WALLACE: Excuse me -- are you saying that this is all the Democrats' fault?

HENSARLING: I am not saying anybody's fault. I'm saying you got people have very different views, frankly, of what it means to produce -- what it takes to produce jobs and what it takes to produce economic growth. It's not assigning blame.

But we are unaware of any Democrat offer that didn't include at least $1 trillion tax increase on the American economy. Now, again, it's not a matter of blame going on here. It's just a matter of fact. We believe that's bad for the economy. We don't want to do that.

WALLACE: But let me pick up on that and we are going to talk with Congressman Becerra in a moment about entitlements and what they were and not willing to do. The fact is, Republicans -- at least they say, Republicans wouldn't agree to a sizable increase in taxes especially on the wealthy, because even the Toomey plan, yes, it was going to do away with the deductions. But it was going to actually have a 20 percent reduction in the tax rate. Not only would the Bush tax cuts be extended, but you'd see a 20 percent reduction, to 28 percent. And they say the result of that was going to be is a huge tax windfall for the wealthy.

HENSARLING: Well, I disagree. I mean, this is exactly the same approach that every other bipartisan plan put on the table, be it Simpson-Bowles, be it Rivlin-Domenici. And again, the idea is we have over $1 trillion of so-called tax expenditures in the tax code. We want to take out all the different loopholes and special interest provisions.

And so, again, you are broadening the base. And as I said earlier, you keep the current rates of progressivity. So, by definition, you can't have a tax cut for the wealthy. I mean, that's not just what happens.

What I want to do is I'm not trying to tax the wealthy into oblivion. I'd like to take away the bailouts. I'd like to take away the subsidies. I'd like to take away the special interest deductions.

But most importantly, I want to create jobs for the American people and I don't understand the economics that says that if we raise taxes on my employer, or my boss, somehow they're going to go out and hire my unemployed brother in law.

WALLACE: All right. There are a bunch of issues out there for the next few days. And let's do a lightning-round quick questions/quick answers.

How is this going to end? There's some talk that you're going to have a formal meeting on Wednesday. You'll put up your plan, they'll vote it down. They'll put up their plan, you'll vote it down.

And then there's some talk that you and other co-chair, Patty Murray, would just come out and say it's over?

HENSARLING: Chris, I don't know. And again, people have invested so much in this. Nobody wants to give up hope. So, I can't answer that question.

And until, again, we have the stroke of midnight, I suppose on Monday. As long as there we have members who have an opportunity to continue to talk, we'll continue talk.

WALLACE: But do you see any point in having a formal meeting on Wednesday for both sides to vote the other down?

HENSARLING: You know, we'll see what the group of 12 wants to do. Right now, I don't find that a useful discussion as we're still trying to say we can put forward something that deals with the nation's unsustainable spending crisis and unsustainable unemployment that we have today.

WALLACE: Assuming there is no deal, what happens to the extension of unemployment benefits and the extension of the payroll tax cuts?

HENSARLING: Well, I think all of us have been laser-focused on trying to get success on this. I don't know the answer to that. Certainly, we would want to make sure that they are paid for.

We know the tube of the debt crisis and the unemployment crisis are related. And so, that's something that Congress would have to debate.

I mean, the good news, if -- if there is no agreement, the nation is going to end up with what Republicans said. And that is -- there will be a dollar spending reduction for every dollar increase in the debt ceiling. Now, it's going to be $1.2 trillion perhaps the dumb way as opposed to $1.5 trillion the smart way.

But the bigger tragedy is we have unsustainable debt that is threatening our national security, is threatening our jobs, frankly, and is threatening our children's future. There was an opportunity to do it. But unless you fundamentally figure out as a nation how to get quality health care opportunities for all of our citizens at a price that doesn't bankrupt the children -- yes, we will fail. WALLACE: A couple of questions, final questions. One, the reason you say that there will be deficit reduction is because you have these automatic triggers, $1.2 trillion.


WALLACE: Half in the Pentagon, half from nonmilitary spending. What do you think of the chances that the Pentagon trigger and the $600 billion for the Pentagon will be changed so that, yes, you'll still get $600 billion, but it won't all come out of the Pentagon?

HENSARLING: Well, I hope it will be changed. I mean, the Secretary of Defense Leon Panetta said that cuts of that magnitude would hollow out our national defense. I would hope members of Congress, I hope the president of the United States, will listen to it carefully.

But I am committed to insuring that the American people get the deficit reduction that they were promised. But under the law, Congress will have 13 months to do that in a smarter, more prudent fashion. And I plan to be part of the process.

WALLACE: Finally, and we have a less than a minute left. During the debt ceiling mess this summer, there was a 2,000-point drop in the stock market, and the approval ratings for everyone in Congress jumped just sharply. Assume and you certainly are leading me in the direction to believe you are going to fail, whether it's Monday or Wednesday, what do you think the impact will be both in the market and politically?

HENSARLING: I don't know what the impact in the market will be. I would hope there wouldn't be again an adverse impact in the sense that the American people are still going to get the deficit reduction that was contemplated under the law. But it is a huge blown opportunity.

And, Chris, as a nation, we are on borrowed time. We are borrowing 40 cents on a dollar from the Chinese and sending the bill to our children and grandchildren.

So, it wasn't so much of a failure as it was a failure to seize an opportunity. And if it's not this opportunity, this nation better seize another one or we will be in economic trouble.

WALLACE: Congressman Hensarling, we're going to have to leave it there. Thank you so much for coming in. I hope that we and you get surprised over what happens in the next few days.

HENSARLING: I agree. Thank you.

WALLACE: Thanks so much.

For Democrats, a key sticking point is what to do about the Bush tax cuts that are due to expire at the end of 2012. If the breaks for the top 2 percent of all earners were allowed to expire, that would provide $800 billion in added revenue. But Republicans are demanding that the tax cuts be extended as part of any deal.

Joining us now is a key Democrat in the super committee, Congressman Xavier Becerra.

Congressman, welcome back to "Fox News Sunday."


WALLACE: Well, you just heard Congressman Hensarling. It sounds like the thing is dead.

BECERRA: I think we are deep in the fourth quarter, but there's time on the clock. We are trying everything possible to get there.

WALLACE: You say, you know, fourth quarter comeback. Are the Democrats preparing a last minute offer?

BECERRA: As Jeb said, the conversations continue. I think they're going to continue until Wednesday if they have to.

WALLACE: Well, you only have until Monday because you have to submit something to the CBO by Monday.

BECERRA: Well, Chris, the reality is that the Congressional Budget Office, which has to score this plan, has essentially seen all of the different elements of --

WALLACE: It doesn't have to be made public 48 hours in advance?

BECERRA: If it would have to be made public in advance, I suspect we could put forth out there what essentially would be the outlines of the plan. I don't think we're going to try to give up on an opportunity to get this done. But it's better than letting automatic triggers decide where we're going to make the cuts. It's better to have a smart plan than not a plan that you can't live with.

WALLACE: But to be honest, it sounds more to me from what you and Congressman Hensarling are saying, that you just don't want to admit failure because you would just have it be blamed on the Republicans, not Democrats. But it's going to be failure.

BECERRA: Well, think about this way. It's not an issue between a deal or no deal. It's a matter of getting a better deal.

We have a deal that was struck in August. It's whether we do something or not, there will be $1.2 trillion additional savings after the $1 trillion of savings in August. But it's better to do it the smart way than have some sequestration process decide to automatic triggers how you'll get this done. Do it smart.

WALLACE: Now, in the interest of being fair and balanced, Congressman Hensarling pretty much made the blame on Democrats, said that you are unwilling to come up with changes to entitlements. Is that why this thing failed?

BECERRA: I don't think that's the reason. I don't there's failure yet. I believe that the elements of a deal probably not as big as some of us would like. It's still -- they are still there.

WALLACE: But assuming there is failure, why do you think?

BECERRA: I'm not going to assume failure, Chris. You give me -- unless you discount the hours and days that we still have left? We can try and get there. We can figure out a way to do $1.2 in savings, better than letting the bland act edge of a guillotine do it for us.

WALLACE: Let's talk about Congressman Hensarling's criticism. Isn't a big part of the deadlock, the fact that Democrats refuse to do anything serious about structural reform on entitlements?

BECERRA: No, that's not the case. Everything has been on the table, including reform of our entitlement programs. But at the same time, let's eliminate the programs that don't work before we start to talk about taking away programs that people have paid for and services that they have to live with, whether it's Social Security or Medicare.

There are a lot of programs where we can look and see waste. Well, we should go after those before we tell people, you pay for this program, but we're still going to cut it to balance the budget.

WALLACE: Well, let's talk about that ask specifically. Let me ask you a couple of specific questions.


WALLACE: Have you collectively, and I say collectively, the Democrats, rejected any increase in the eligibility age for Medicare?

BECERRA: The increase on eligibility has been on the table, and depending on what's in the package, it might have been, or could be something that's in a package. But it all depends on whether it's a balanced package. Why do you want to balance the budget on the backs of seniors by telling them they won't get to receive their Medicare that they have been paying for all of these years until two years later than they expected?

It has to be a balanced approach where everyone understands that if we're going to get this economy moving and Americans back to work, it's because everyone chipped in.

WALLACE: But let me ask you one other direct question. Have you rejected any reduction in the cost of living adjustment for Social Security?

BECERRA: That's on the table. Now, once again, Social Security is never once contributed a single penny to these deficits, to the $15 trillion in national debt. Not one single penny has come from Social Security.

But many of us have said, it should stay on the table. I'm going to fight like the Dickens to take it off. But we should be prepared to go in with everything.

The moment we walk in with these protections of these special interest pledges, we get ourselves all in trouble. And so, everything should be on the table. But a good package need not take away benefits away from seniors.

WALLACE: Here's the thing that I trust -- what frustrates a lot of Americans, frankly frustrates me. We know of the arguments. We know the argument. You know, we heard it to debt, we heard it during the debt ceiling. We heard it, you know, during the continuing resolution to keep the budget going and to keep the government going and the budget.

You guys want to protect entitlements. They want to protect their tax cuts, the Bush tax cuts.

You have had three months and you have a $44 trillion that's going to be spent over the next decade. We have a $15 trillion debt.

Why couldn't you make a deal?

BECERRA: Chris, every plan that Democrats put forward has included cuts to entitlement programs. Some deeper, the bigger deal. Some smaller. But all --


WALLACE: Why couldn't you make a deal?

BECERRA: Well, I think for Democrats, we would say that there's still a deal possible, but it's got to be balanced. You can't say you're going to take benefits away from services that people have paid for, like Social Security and Medicare, and not ask wealthiest Americans. Remember, we have 1,400 multimillionaires who didn't pay a single bit of income tax since 2009. Why should they escape participation when we are asking seniors to help cover the costs of the deficits that in the case of Social Security, they didn't cause?

WALLACE: I understand that's what Republicans are worried about. You're worried about what you're worried about. Why couldn't you make a deal?

BECERRA: Well, there are -- I believe there's a deal out there. I believe there is a better deal than letting automatic cuts decide for us. Chris, that's why I don't that we should call the game over deep in the fourth quarter. We still have an opportunity to go somewhere. Both sides I think have honestly tried to put what they believe would be a good solution on the table.

WALLACE: You keep saying, you know, we want to have smart deficit reduction, not stupid deficit reduction. Would you vote to change the triggers, the $1.2 trillion trigger, if there's no deal, and specifically to roll back on some of the defense cuts?

BECERRA: You are asking one of the 12 who's asked to do something so we can avoid the triggers. I would want to change the triggers. I got to tell that whether you're one of the 12 on the super committee, or if you are someone who voted for this legislation that created the triggers and the super committee, I think it's a wimpy way out to say we're going to change the triggers because I don't like the result out of the super committee is what I wanted.

We should be prepared --

WALLACE: Even if you think that that the triggers are dumb?

BECERRA: We've got to move forward. The triggers give us $1.2 trillion in savings. I think there's a smarter ways to do it than with triggers. But you start shaving away the responsibility to actually some of those cuts and savings, and guess what? You are in a worse hole than a year from today.

You have to have some discipline and I believe that the super committee was set up to try to avoid the harsh results of automatic triggers.

WALLACE: Congressman Becerra, thank you. Thanks for joining us.

BECERRA: Thanks, Chris.

WALLACE: And we'll stay on top of this story for the next hours or days. I hope your optimism is justified, sir.

BECERRA: You got to be optimistic, pragmatically so.

WALLACE: Consciously optimistic.

Up next, what would no deal mean for the U.S. economy and the country's shaky credit rating? A top economist from one of the rating agencies joins us after this quick break.


WALLACE: As the super committee tries to find some compromise over the next day, no one will be watching more closely than the financial markets. And that includes Mark Zandi, chief economist for Moody's Analytics, a top credit rating agency. He joins us from Westchester, Pennsylvania.

Mr. Zandi, welcome back, sir.


WALLACE: This week, you handicapped the odds of the various out comes of the super committee and let's put them on the screen.

Gimmicky deal, like using war funding to cut the deficit 10 percent. No deal, 30 percent. Partial deal, not the full $1.2 trillion, 40 percent. Done deal the full $1.2 trillion, 15 percent. And big deal, the so-called $3 trillion plus grand bargain, 5 percent.

After hearing our two congressmen, Mr. Zandi, what do you think is going to happen?

ZANDI: Well, Chris, to my ear, it sounds like it's a no deal. Hopefully, my economic forecasts are better than my handicapping of what they decided to do -- what they decided to do earlier in the week. But it sounds like no deal.

WALLACE: Before we get to the impact in the markets of that, let me ask you, because you heard two, it's the old familiar refrain. Republicans say let's do this primarily through spending cuts, especially to entitlement reform. Democrats are saying we want to see some sizable tax increases, especially on the wealthy.

From the strictly economic point of view, which is the better way?

ZANDI: We need both. You know, I think we came to terms around the debt ceiling debate back in August that we needed $4 trillion in 10-year deficit reduction. And I think the most logical approach would be about $3 trillion. That $4 trillion should be government spending cuts and $1 trillion should be additional tax revenue.

So, we need both. We're not going to accomplish this until they come to that realization. WALLACE: During the debt ceiling debacle this summer, the markets dropped 2,000 late July, early August. Let's assume for a moment that we get no deal. On the one hand, a terrible failure. On the other hand, the automatic triggers kick in. So we still get the deficit reduction.

What do you think that the reaction will be from the markets?

ZANDI: I don't think there'd be much of a reaction. You know, it's all relative to expectations and investor expectations with regard to the committee I think are -- have been and are still very, very low. I don't think many expected much to come out of the process.

So, you know, at the end of the day, I don't think there'll be a significant market reaction.

Now, I do think, however, because it looks like the committee is going to punt, that we got some bigger problems ahead of us. And those could be inflection points for the financial markets. So, we are not out of the woods yet that we could still have some problems. In fact, I would count on it.

WALLACE: Well, explain. What do you see coming out of the committee that's going to create problems?

ZANDI: Well, two things. First, very immediately, we are going to have to figure out what to do about a number of provisions in the tax code, government spending programs, that are going to expire at the end of the year. That matter a lot in the economy.

So, for example, the payroll tax holiday that we all got this year expires at year's end. Everybody's taxes are going to go up on January 1st. It doesn't seem that makes a lot of sense in the context of how weak this economy is. That could have significant implications for growth next year, and therefore, for financial markets.

Emergency unemployment insurance, that comes to an end. That will have the impact. Of course, we have AMT Patch, the doc fix. You know, there's whole slew of things. But now, it's very unclear how Congress and the administration are going to come to terms and figure this out. I had hoped that they would figure it out as part of the super committee process. Of course, now, if that's dead, then that's a big problem.

And then going into next year, the big problem is whether Congress or the administration has afforded to follow through on the automatic spending cuts that would hit in 2013. You know, it's unclear that they will follow through. If they don't, then that will be a fodder for problems in the financial markets and the economy.

WALLACE: Yes. In you are handicapped, you said that if they were to undue the triggers, that would be a disaster for the markets.

ZANDI: I think so. I mean, I think, at the end of the day, financial markets still believe, and I think appropriately, so that Congress and administration are getting it together. You know, they -- obviously, they didn't get this opportunity together. But they got a few more and I think the expectation is that they'll get it together. But if they don't and it is cheer they are not going to, then we got a problem. Then, financial markets are going to become very unruly, turmoil will hit the bond markets. The equity market, the stock market, bond market, it would be a problem.

WALLACE: All right. Let's talk about the U.S. credit rating because when S&P, Moody's did not downgrade U.S. debt, but S&P, one of your competitors, did. And they did it because they did raise the debt ceiling. They did it primarily because of what they saw as the political dysfunction in this country.

Clearly, if there's a failure as it now looks like there is going to be on the super committee, you know, that's the political dysfunction extended and increased. Could that have an impact on our credit rating?

ZANDI: I don't think the super committee fails, which it look it will. They will have any impact the credit rating, no.

You know, I do think that in current law, if policy makers do nothing, we're going to achieve that $4 trillion in 10-year deficit reduction and then some, right? Because we do get those automatic spending cuts that begin in 2013 and the Bush tax cuts, they expire at the end of 2012. So, everybody's tax rates are going to go up on January 1st, 2013. That's a lot of revenue and that's more than we need to achieve the goal of $4 trillion.

So, in current law, we got what we need.

Now, I do think the rating agencies will wait to see, you know, whether the law has changed and how it's changed before they change their mind about the rating of the U.S. treasury debt.

WALLACE: You know, there are some hopeful signs for the U.S. economy right now. And, in fact, it looks like growth. And the fourth quarter is going to be over 3 percent, which is about double what it has been for the first nine months of the year.

But if you get the super committee failure and also looking at it compared to the European debt crisis where Greece and Italy will have done better in terms of passing austerity packages than the U.S., could this have an impact on the U.S. economy?

ZANDI: Yes, absolutely. You know, you're right, Chris. The economy is feeling better as we come to the end of the year. But part of that is related to the decline in oil and gasoline prices. That's a temporary bump.

Part of it is due to the fact that the Japanese economy is coming back on line. That's helping our manufacturing, our vehicle industry. That's a temporary bump.

So, we go in to early next year and those sources of growth begin to fade, and then we have the tax increase if we don't have any legislation to extend the payroll tax cut holiday.

Emergency unemployment insurance benefits expire. That's money to unemployed workers. If they don't get the money, they don't spend.

And then, of course, now, the angst and confusion with regard to how we're going to address our fiscal problems. Now, is Congress and the administration is going to follow through on the automatic spending cuts?

All -- and then, of course, Europe.

So, my point is that 2012 is shaping up to be a very, very tough year in large part is because the super committee decided to punt. At least at this point, it appears that they decided to punt.

WALLACE: Mr. Zandi, we're going to have to leave there. We want to thank you so much for coming in and for your insight. It's always good to talk to you, sir.

ZANDI: Thank you.

WALLACE: Coming up: Newt's prospects rise as some recent front runners continue to falter. The Sunday panel on whether Speaker Gingrich can hang on to the lead, stay tuned.



FORMER SPEAKER OF THE HOUSE NEWT GINGRICH, REPUBLICAN PRESIDENTIAL CANDIDATE: What I didn't do and would not do is I didn't go and lobby the Congress; I didn't go and lobby the executive branch; I didn't try to represent any position I didn't believe in beforehand. And I think that's a very big difference between being a lobbyist and being a strategic consultant.


WALLACE: Presidential candidate and newly minted frontrunner Newt Gingrich trying to explain the millions he made from advising a number of companies after he stepped down as speaker of the House.

And it's time now for our Sunday group, Brit Hume, Fox news senior political analyst; A.B. Stoddard of the Hill newspaper; Bill Kristol from The Weekly Standard and Fox News political analyst Juan Williams.

Well, let's start with the latest polls in the two states that are going to vote first next year. Let's put them up on the screen. In Iowa, Newt Gingrich has opened a big lead. He's at 32 percent, followed by Mitt Romney at 19; Herman Cain falling to 13; and Ron Paul holding steady at 10 percent.

And in New Hampshire, which has always been a Romney stronghold, Gingrich is now trailing Romney by just two points, within the margin of error, with Paul and Cain well behind.

So, Brit, how do you account for Newt's rise, particularly after the dismal start, million dollars in debt, his staff firing him, and now he's the co-frontrunner?

HUME: Well, in a sense, it was his turn. And he now occupies the single most dangerous place to be in American politics, which is the non-Romney leader in the Republican field, the position that has been occupied by everybody from Donald Trump to most recently Herman Cain, with a couple others in between who have fallen by the wayside.

Everybody who has occupied that spot has entered almost immediately a slide. It remains to be seen, of course, if Gingrich will. I think he has some vulnerabilities, and the explaining you saw him do on Greta van Susteren's show just now is a sign of that. One of those companies that he represented to the tune of a considerable sum of money, represented, or worked for, advised, was, of course, Freddie Mac, which was a big player in the mortgage meltdown.

So he has some vulnerabilities. And he has a long tract record. And he's got books. And he's got many public statements on many issues. In fact, if you look -- you know, he's had about every position you can have on -- on every issue. Not all of those positions were conservative. So we will hear all about that in the weeks ahead.

WALLACE: Well, let's talk about that. And, you know, with the added attention and spotlight comes the scrutiny, a bunch of stories coming out this week, as Brit mentioned, one of them that he made somewhere between $1.5 million to $1.8 million advising the failed mortgage giant Freddie Mac. Then it came out that his think tank got $37 million from various major health care companies.

How damaging do you think that is to his narrative that, yes, he was an insider, but now he's an outsider and he's the man to really shake up this town?

STODDARD: I think he's been disingenuous in his answers about, you know, the -- the health care companies and drug firms did not pay his consortium $37 million because of his grasp of history. Freddie Mac did not pay him $30,000 an hour for their monthly visits because of his grasp of history.

And I think Iowa voters will begin to discern, as they learn more about his activities, whether that's -- his answers are reasonable and credible and forgivable.

He's, I think, been disingenuous and parsing his answers on this. But he is ultimately also Romney-lite. I mean, he is admitting now, on this big website he has set up to let us know why he's such a true conservative and he's the alternative to Mitt Romney, that he really has taken back his support for TARP and he's really sorry he said what he said on climate change and a mandate for health care reform. Those are major issues, and those are called flip-flops.

WALLACE: Boy, there's a lot of Newt-bashing on the panel today.

Bill, let me ask you about it. Because it isn't just that he made the money; it's how he made the money. He got millions from health care companies and insurers at a time, which is, until very recently, when he supported the individual mandate -- he was a big supporter of this idea, frankly, until earlier this year.

He wrote that Medicare should follow the lead of one of his clients on end-of-life decisions, which sounds a lot like death panels.

I mean, it's not just the money; it's that he was taking positions that I would think conservatives may have some troubles with. KRISTOL: I think he's taken positions over the years that conservatives do have some trouble with. He's also been, however, something Mitt Romney hasn't been. He has been a leader of the conservative movement for 25 years.

I came to Washington in 1985, and as a young, you know, foot soldier in the Reagan revolution, how many, you know, conservatives have really been prominent since then, who one looked up to and thought "He's fighting our fight"?

For all of his problems, all of his deficiencies, all the fights he sometimes didn't quite fight correctly, Newt Gingrich is one of very view.

And I think that is why there's a certain rallying to Newt by conservatives against Romney.

Obviously, there will be a big assault, and a justified one, now -- or scrutiny, let's call it -- on Gingrich's record. But I think Gingrich just says, "Look, Mitt Romney was governor of Massachusetts for four years; I was speaker of the House for four years. When I was speaker of the House, I took over in '95; the budget deficit was $200 billion. When I left in November of '98, the budget was in surplus for $70 million. When I became minority whip of the House in 1989, Republicans were in the minority. When I left, Republicans were in the majority. We passed welfare reform. We did other conservative things."

I think Newt can defend his record pretty effectively against -- by contrast with Mitt Romney's.


WILLIAMS: Well, the best to say about Newt Gingrich is that lots of people think he's the smartest guy in the room and, when he enters the room, people are just overwhelmed by the ideas and the proposals that pour forth from Newt Gingrich.

But the fact is, in just hard political terms, if you're a Democrat and you're looking at Newt Gingrich as the likely opponent to Barack Obama, maybe the analogy is like those balloons that will float down Central Park for Thanksgiving. At any moment, any one of those trees along the way could poke it and the balloon explodes. And that's what's going on with Newt Gingrich.


Any moment, you say, oh, my gosh, I forgot about that baggage; I forgot about the insurance problem, you know. It's just too much at some point. You just have to wonder. So it's not about Mitt Romney -- I think it is about Mitt Romney. It's not about Newt. It's about Mitt Romney. Why is it that everybody comes along and challenges Mitt; Mitt can't get above that limit of 23 percent to 25 percent?

WALLACE: Let me just go back, and we've only got a couple of minutes, Brit, to go back to Newt. Because as Bill points out, I mean, there is a lot to like about Newt. He was -- if you are a conservative Republican. He was the guy who -- the Republican revolution in 1994. He brought the Republicans back from the wilderness into the majority for the first 40 years.

HUME: Yes.

WALLACE: Exactly.

HUME: Huge achievement.

WALLACE: And welfare reform, balanced budget, a lot of things. On the other hand, even his record as speaker is checkered.

HUME: That's true. I don't dispute a word that Bill said about the things that happened while he was speaker. Of course, the president of the United States, Mr. Clinton had a hand in a lot of that and so did -- when it comes to balancing the budget, so did a booming U.S. economy. It was the .com to be sure, but it produced a gusher of tax receipts, which has played a big role in bringing us to the surface, as Bill has mentioned.

But he did have a checkered period as speaker. He was the only speaker in the United States history ever reprimanded for ethic's violation for which he paid a $300,000 penalty. And in addition to that, of course, he was nearly ousted in a mutiny by his own troops in the House in 1997 and was finally basically forced to step down in 1998. And he became, during that period, a kind of a poster child for Republican excess. And he was the guy that was a favored whipping boy.

Could he be made into that again is the question if he was nominee for president? And I think that that's the question the Republicans have to worry about. Could he be successfully portrayed as a guy who is way out there and too erratic and extreme for the voters in multi-hundred million dollar ad campaign mounted by the Obama camp.

WALLACE: All right. We have to take a break here, but when we come back, the super committee goes down to the wire. Will they agree on anything?



SEN. JON KYL, R-ARIZ.: The hope was that even at this late date you could take things that had been scored and put them together, but that is pretty doubtful at this point, but obviously nobody want to quit until the stroke of midnight as you can see here by my presence.


WALLACE: Well, that was a glum Senator Jon Kyl, a super committee Republican with a pessimistic take on the stalled negotiations this weekend. And we're back now with the panel. A.B., we heard two from two members of the super committee today. I know you've been doing a lot of reporting on this. Is this dead, or in the hours between now and midnight Monday is there any possibility of a last minute surprise?

STODDARD: Well, the members are right that they have pre-scored much of their proposals and so it's always, you know, technically viable to the final hour. But we are staring down the barrel of failure and we are because the committee was designed to fail. There are no consequences. There is ultimately not nearly a trigger.

There are 13 months until January of 2013 for the triggered cuts to be rescinded. They will be rescinded next in the lame duck session next December following the election. And we will not have the cuts that everyone talks about being so draconian to the Pentagon or elsewhere.

WALLACE: Do you think they will be changed or rescinded?

STODDARD: They will be -- they might be replaced. But I think you heard the Congressman Becerra starting to worry that maybe that is a slippery slope. Once you abdicate your responsibility to those triggered cuts specifically, perhaps you are actually going to move the number of 1.2.

So that is a slippery slope, but we're not see those cuts that everyone keeps saying they are so scared of. Those are gone. OK. The Pentagon is not going to take the hit. It was supposed to be sort of Damocles over the committee. So they've known all along no default, no deadline, no consequences.

What you are going to see now is a fight over the next year over how to replace those cuts with other cuts. This time only 535 cooks in the kitchen, you don't have a filibuster-proof product. And you have conservatives who came here to cut everything, who have cut little, who voted to raise the debt ceiling, and are now going to begin to fight over the extension of the Bush tax cuts, which of course would have...

HUME: They passed -- the House Republicans passed a tough budget. And what happened to it? It went to the Senate, which passed no budget.

STODDARD: You know, Brit? Brit, I think they are going home unhappy they haven't changed enough of the bottom line now. Whether the Senate did that or not, I think that they are going to be fighting for an extension of the Bush tax cuts, that is the fight over the next 12 months and how to remove those Pentagon cuts.

But there is an immediate fight that Mark Zandi was referring to. There is on the table an effort to stop the cuts to Medicare payments to doctors and extend UI, unemployment insurance benefits, and also the pay roll tax cut. That is $200 billion in new deficit spending.

So we have an immediate fight to keep the government open, and then a whole year long fight ahead.

But there was never any consequence for this.

WALLACE: We should point out that the super committee had super powers, because if they had a proposal, it was going to -- there would be no amendments to it, no amendments allowed. And also, instead of there being the super majority needed to pass the Senate 60 votes, only 51, a simple majority, if the super committee fails all that goes out the window and we are back to the same old sausage making that we normally have.

Let's assume, and I think it's quite frankly the logical assumption, nothing gets done. There's no deal. Total failure. What do you think the impact is politically?

KRISTOL: It's hard to say. I personally don't like super committees with super powers. I like sausage making. It is called democracy. I think we will have a healthy debate over the next year. And the key thing that will happen over the next year is not anything will happen on the Hill. It's something called an election that we're going to have. And we're going to have a bigger one in November as a result of the super committee's failure.

I think the one thing that -- the one political effect, I don't know which party it will help in the short term, I think it increases the sense that November 2012 is a very big election. That the two parties do have a fundamentally different vision of the right size and scope of the federal government. And that that will have to be mitigated for and decided by the people of the country, not by a super committee with super powers.

WALLACE: But one -- to the degree that the failure of the super committee gets portrayed as Republicans refuse to cut taxes on the wealthy.

WILLIAMS: Raise taxes.

WALLACE: To raise taxes on the wealthy. And Democrats refuse to structurally reform and reduce the rate of growth of spending and entitlements, who gets the better side of that argument?

WILLIAMS: Democrats do. Easily. And it's overwhelming. It is not even close. If you look at the polls the American people. It's two-thirds of the American people think there should be higher taxes on people who make more than $250,000 a year in this country. And they think that should be part of the deal.

And I don't think anybody is going to forget that when the Republican candidates were asked will you take one dollar in tax hikes in exchange for 10 dollars in spending cuts, they said no.

HUME: You're talking about the presidential candidates.

WILLIAMS: Yes, the presidential candidates.

So the overwhelming impact in terms of the presidential campaign is that the Republican in this time of Occupy Wall Street are the protectors of the super rich at the moment.

WALLACE: I'm not sure we should talk about Occupy Wall Street as a plus anymore.

WILLIAMS: Yeah, I think we should, because they...

WALLACE: Really?

WILLIAMS: Yes, because if you...

WALLACE: Really, with all of the violence in the streets? You really think that most of the American people...

WILLIAMS: You know what, you are getting distracted. And you are distracted by simply, you know, people who are crazy...

WALLACE: I think I'm in touch with what most people are thinking, which is, they're getting fed up with it.

WILLIAMS: You are not. You are not. The fact is when you ask most people, is Wall Street out of control, is there inequality in terms of income in this country? People say yes. And those are the basic tenets of Occupy Wall Street that have trouble on the streets about, by the way, globally. So not just here in the United States.

WALLACE: OK. Let's...

WILLIAMS: Let me finish my point. So the point is...

WALLACE: Juan, Juan, there is a limit, and we've got to go. If we want to play fair here.

WILLIAMS: You are not playing fair, but go right ahead.


WALLACE: It is called being the moderator.

Brit, your thoughts about what to do about this -- how do you this playing politically, if Democrats are going to say, they didn't want to raise taxes on the wealthy?

HUME: A failure to deal with the debt and spending issue that so drove the 2010 election is going to hurt everybody. It will hurt the president even though he has done his best to stay as far away from this as possible. It won't help Republicans. I don't think, Juan to the contrary, that it's going to help the Democrats. I think it is the kind of stalemate that people hate, it makes them believe that the government is dysfunctional.

Now we'll have another year to play this out. But election years are not known to be the times when great bipartisan things happen. So I think it's -- the problem I think all along has been that this specter of these automatic cuts, as A.B. correctly pointed out, was not really that dire enough.

There was a year to play with before any of it took effect, time to change things, time to fix things, and that, as a result, has been you just couldn't get people to overcome their foremost objections.

WALLACE: A.B., let me -- we have got 30 seconds left. President Obama started blaming Congress -- the do-nothing Congress, he stayed as far away from these negotiations half a world away, and his polls have gone up. Has this been the smart play for him?

STODDARD: I think so, because the default debt ceiling debate of the summer, when he tried to say, I am the reasonable grown-up, didn't work for him at all.

WALLACE: We're going to have to leave it there. Thank you, panel. See you next week. Don't forget to check out "Panel Plus" where our group picks right up with the discussion on our Web site, on We'll post the video before noon Eastern time.

Up next, our "Power Player of the Week."


WALLACE: Here is a Thanksgiving riddle. How do you go from founding a tech giant to creating a successful cosmetics company to raising turkeys the way the Indians did? The answer is, it takes a unique kind of person like our "Power Player of the Week."


SANDY LERNER, AYRSHIRE FARMS: Farm with the seasons. Know your soil. Know your rainfall. Know your weather. Know your animals.

WALLACE: Sandy Lerner is talking about sustainable farming, raising livestock and growing vegetables without the chemicals that are so common in what she calls factory farming. Just days before Thanksgiving she took me out to see and yes, to dance with her 1,300 turkeys, heritage breeds that trace back to the Indians.

LERNER: Come on, raise your arms. Gobble, gobble, gobble, gobble, gobble.

WALLACE: Lerner is mistress of Ayrshire Farms, 800 acres in Upperville, Virginia. But as interesting as her business is how he got here. She grew up on a farm in California, making enough from raising cattle to send herself to college.

LERNER: What I learned was to love work. I am really happiest when I am engaged in working and thinking and striving.

WALLACE: She got into computers. In 1984 she and her then- husband started Cisco Systems that found a way to link networks of computers, the foundation of the Internet. But six years later, venture capital people were running Cisco.

How do you get fired from a company that you started?

LERNER: We just basically got taken to the cleaners, and part of that was, if you don't have an employment contract. I got fired by the same guy who fired Steve Jobs.


WALLACE: Lerner had a second act. She started a cosmetics company called Urban Decay, with edgy colors for women like her. And 15 years ago she bought Ayrshire Farm.

LERNER: It has historically been people who had disposable income who made strides in farming. Look at George Washington or look at Thomas Jefferson.

You're such a pretty girl. She says, pretty is as pretty does.

WALLACE: She raises Shires, war horses that go back centuries, Scotch highland cattle, and those turkeys which she says taste better because of the lives they lead.

How much does an Ayrshire turkey cost as compared to what I get in a grocery store?

LERNER: Well, our turkeys are expensive. They're between -- I think they're running this year about $160 to $200.

WALLACE: At those prices there are questions about how to make this kind of farming profitable. But while Lerner is determined to run a sound business, it is not just about the bottom line. There is a 40-room mansion on the farm.

What is it like living there?

LERNER: I don't know.

WALLACE: What do you mean?

LERNER: I live in a little log cabin and I love it.

WALLACE: Do you think you are a bit eccentric?

LERNER: I am now that I am rich. I used to just be weird.

WALLACE: And so just days before Thanksgiving, Sandy Lerner and danced with the turkeys. She grew up on a family farm and she wants to see those values live on.

LERNER: I am a cow girl. I can tell what cows are thinking. It's very much my success as a farmer, which is what George Washington was. He wanted be a really good farmer. And I think have become a good farmer.


WALLACE: Sandy Lerner has one more passion. She is a student of the great English writer Jane Austen, and has spent the last 26 years writing a sequel to "Pride and Prejudice." It's called "Second Impressions" and it will be in book stores in December.

And that's it for today. Have a great week and a happy Thanksgiving. And we'll see you on the next "Fox News Sunday."

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