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April 30, 2006

White House Chief of Staff Josh Bolten, Roundtable

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace. Former Secretary of State Powell speaks out about the Iraq war, next on "Fox News Sunday".

With his poll ratings at an all-time low, President Bush faces tough challenges, from surging gas prices to stalled immigration reform. We'll talk with the man the president has asked to help save his second term, new White House Chief of Staff Josh Bolten, in his first interview and a Sunday exclusive.

Also, we'll dig into the week's political news and look back at the first decade of "Fox News Sunday" with our regulars, Brit Hume, Mara Liasson, Bill Kristol and Juan Williams. And our Power Player of the Week. There was only one possible choice. All right now on the 10th anniversary of "Fox News Sunday".

And good morning again from Fox News in Washington. Let's get a quick check of the latest headlines. Former Secretary of State Colin Powell said today that before the Iraq war, he urged Defense Secretary Rumsfeld and General Tommy Franks to use more troops.

In a British television interview, Powell said the Pentagon did not correctly anticipate what would happen after Baghdad fell.

And in Iran, a foreign ministry spokesman says his country would not take any sanctions from the U.N. lying down. The official said Iran would not give up its nuclear program.

Well, last night here in Washington at the White House correspondents' dinner, President Bush spoke about recent personnel changes in his administration.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Ladies and gentlemen, I'm feeling chipper tonight. I survived the White House shake-up.

(LAUGHTER)

(END VIDEO CLIP)

WALLACE: Joining us now for his first interview since taking on his new assignment, the architect of that shake-up, Josh Bolten, the new White House chief of staff.

Mr. Bolten, thanks for coming in and welcome to "Fox News Sunday".

JOSH BOLTEN, WHITE HOUSE CHIEF OF STAFF: Thank you, Chris.

WALLACE: You have made a number of changes in your first two weeks on the job. We'll get into the specifics later. But looking at the big picture, what are you trying to accomplish? What are you trying to change in the way this White House does business?

BOLTEN: What the change says, Chris, is simply that there's a new person in charge. I told the president that when he asked me to do this job that you can't trade up from Andy Card. He's one of the finest, most decent, honorable and effective public servants that this country has ever known.

But what the change does provide is an opportunity for the White House to step back, refresh, re-energize at a time when we're 5.5 years into an administration, normally a slow point, a low point, in many administrations, and a chance for us to get our mojo back, to go back more on the offensive and to get people within the White House to look at our operations, re-energize them for the next six months up through the election, the next 1,000 days through the end of this president's term.

WALLACE: Are there some things, as you've looked at this, either in terms of operations or in terms of policy, that you want to change?

BOLTEN: Yes, there are things that we want to change I've talked with the president about. We do want to have a more open environment to the press and to the public. We've already had that under way for a while.

You've seen the president out more in more casual settings, more free- flowing. He's very good in those settings, and we've taken advice from a lot of folks that we ought to put the president out more in ways that the American people can see what he's really like.

WALLACE: I want to show you the three latest polls on presidential approval. Take a look at them here. All three have Mr. Bush in the 30s, at all-time lows for his presidency, with disapproval up around 60 percent.

There's a new phrase here in Washington which I'm sure you have heard, the Bolten bounce, the idea that somehow you're going to be able to achieve a rebound in the polls for the president.

But given the deep concerns that the public has about Iraq, where in the month of April it was the highest death toll for Americans in the last five months, the concern they have about energy prices and other real issues, how much can a White House chief of staff do to improve the president's standing in the polls?

BOLTEN: Oh, I don't think very much. I mean, I don't give much credence to the Bolten bounce stuff. What my job is is to bring the best possible policies to the president, the best possible operations within the White House, and then let the president and the policies take care of themselves.

It's not about me. It's about me giving the president the most effective operation he can have. WALLACE: Well, you know, you talked about what basically was packaging, getting him out more, being friendlier to the press corps. What about policy?

I mean, in the end, isn't that what people are concerned about, policies, whether it's on energy or immigration or Iraq? Isn't that what you have to change?

BOLTEN: I don't think we need to change, but we do need to refresh and re-energize.

WALLACE: What does that mean, sir?

BOLTEN: Well, it means, for example, that when we get an issue like immigration, which is one of the toughest issues on the agenda today, that we are thinking actively and we're taking the president out in a leadership role on one of the toughest issues of the day.

WALLACE: Let me ask you -- we'll get to immigration in a moment, but I want to ask you about one of the top issues, certainly, in voters' concerns around the country right now, and that's energy.

On Friday, the president came out and talked about how strong the economy continues to be, the 4.8 percent growth in the first quarter of this year. But there's a cloud on the horizon, and the new fed chairman, Bernanke, talked about it this week. Let's take a look.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FED CHAIRMAN: The nominal price of crude oil has risen to new highs and gasoline prices are also up sharply. Rising energy prices pose a risk to both economic activity and inflation.

(END VIDEO CLIP)

WALLACE: How concerned is the president that high energy prices could cause a downturn in the economy?

BOLTEN: Oh, very concerned about the high energy prices, but one of the remarkable things about this economy has been how resilient it's been to the many shocks we've had during the president's tenure.

Remember, we came in with a recession on the doorstep, had the attacks of 9/11, corporate scandals, the war on terror, the worst natural disaster in this country's history -- by far the most expensive -- and now, on top of that, energy prices that are probably about three times as high as when the president came into office.

And through all of that, we've had a very resilient economy. That's a remarkable thing, for the economy to be as strong as it is today given the shocks and challenges we've had.

I credit to a large extent the economic policies of this president, especially the tax cuts, but we need to be cautious about it going forward, especially with these high energy prices. We need to make sure that we retain a competitive environment, and that means in particular a low tax environment for this economy.

WALLACE: But specifically on energy prices, because they've never been this high -- they're now up over $3 most places around the country and might go higher -- could a continuation of those kinds of prices threaten the economy?

BOLTEN: They haven't so far. And we need to do everything possible to make sure that they don't.

WALLACE: The president came out with a plan this week to deal with high gas prices, and I want to ask you about part of it, halting deposits to the strategic petroleum reserve this summer. I want to go back and show you what the president said about the strategic reserve back during the 2004 campaign. Let's watch.

(BEGIN VIDEO CLIP)

BUSH: We will not play politics with the strategic petroleum reserve. That petroleum reserve is in place in case of major disruptions of energy.

(END VIDEO CLIP)

WALLACE: Question, isn't the president now playing politics with the strategic reserve?

BOLTEN: No, no. All that we're doing with the strategic reserve right now is we're deferring some deposits that were planned to be made in the summer. We were planning to end the deposits in any event this fall, so we're just at a time when we've got especially critical crimps on supply going into the summer driving season.

We just decided to defer the deposits into the -- the policies that the president set back then are the ones that still stand.

WALLACE: But halting deposits to the reserve would add 10 million barrels of oil to the U.S. supply. That's half of what Americans consume in a single day. I mean, isn't that basically, in terms of dealing with this problem, meaningless?

BOLTEN: Oh, it's a modest step, and I think when the president announced it, he said it was a small step. What we've got to realize here, Chris, is that this is a very large problem. It's built up over many years -- decades, in fact. It's not going to be solved in the short run by some silver bullet.

There are a lot of policies that need to be put in place over the long run to wean ourselves from our dependence on foreign oil. That's the only thing that's going to make a difference in the long run.

WALLACE: In that sense, if everything the president called for this week went through, how much would it lower the price of a gallon of gas at the gas pump this summer?

BOLTEN: Oh, I have no idea, but I expect the effects would be relatively modest. The point of... WALLACE: Pennies, correct?

BOLTEN: I don't know what the price -- what the exact price would be. But the point is that there are some steps we can take in the short run, like dealing with the strategic petroleum reserve, like loosening up on regulations about the fuel mix that needs to be used in particular localities.

But what the president was also talking about this past week and what he's been talking about for some time are longer term measures to increase supply and reduce demand in this country.

Now, some of the things can have some effect in the short run -- greater encouragement for hybrid vehicles. But others are going to take a long time to have effect, like taking advantage of the supply we have here, shifting over to more alternative fuels.

All of those policies need to come together because we need to leave behind a legacy in which this country is headed toward weaning itself from its dependence on foreign oil. We've been going in the wrong direction for years, for decades. We have deepened our addiction to foreign oil. The president is determined to set that back on the right path.

WALLACE: Let me ask you about one other specific point. The president asked this week for authority to be able to raise the fuel economy standards for all cars, not just light trucks and SUVs.

Do you have a plan in place, if you were given that authority, as to how much you would like to raise the fuel efficiency of cars?

BOLTEN: The process itself would take some time for the secretary of transportation to work out. But we have a plan to proceed to arrive at the right kind of number.

Remember, it's not just raising the corporate average fuel economy. The system needs a reform so that it's based more on the size and weight of vehicles so that we get the efficiencies without sacrificing safety in our cars.

WALLACE: Let's talk about some of the changes that you have made. The choice of Tony Snow as the new press secretary -- you mentioned at the very beginning that one of the things you want to do is improve relations with the press. Why is that important?

BOLTEN: Well, it's very important because the way that we communicate, that the White House itself communicates, with the press is the way that the American people see us.

The most important thing in particular on the president's agenda right now is the effective prosecution of the war in terror in Afghanistan, in Iraq, around the world. If we're not communicating effectively about the importance of that task and the way in which we're carrying it out, we're not going to sustain the support of the American people. And without the support of the American people, this very difficult task can't be sustained. The president said before that we will win this war on terror. The only way we can lose it is if we lose our will at home.

We need to be sure in particular on that subject that we are sustaining public support for the policies that I believe very strongly are exactly on the right course.

WALLACE: Very briefly, it sounds counterintuitive, but some people suggest that a way to improve relations with the press would be to end the televising of the press briefings and all the posturing by members of the White House press corps, and I say that as somebody who used to be a member of the White House press corps. Any thought of doing that?

BOLTEN: I'm sure, Chris, you never postured in the way that some people are talking about. It's worth considering. I think that will be a -- Tony Snow's first test to see what kind of power player he really is and whether he's able to establish the right kind of relationship with the press that we need going forward.

WALLACE: You say "worth considering." Would that be something that you think would improve relations with the press or hurt them?

BOLTEN: My guess is in the short run it would hurt them. The judgment would be, as we do in all things, is look at the long run and see whether it's helpful in the long run. I'm going to leave that judgment to Tony Snow to make a recommendation in concert with your colleagues in the White House press corps.

WALLACE: Taking the policy portfolio from Karl rove, a lot of people read that as a signal that you are the new sheriff in town.

BOLTEN: I'm the new chief of staff, and what that means is a new management style. But with respect to Karl, he remains a very important voice in our policy process. He's not only a brilliant political mind, he's one of the most brilliant policy minds as well that we have, I believe, in this country today.

And what I've done in the restructuring in White House responsibilities is passed off the day-to-day management of the policy process to my deputy, in whom I have the greatest confidence, Joel Kaplan, and freeing up Karl to focus more on bigger strategic issues. It's a refocusing of portfolios, but it's not a removal of voices in the policy process.

WALLACE: So he hasn't had his wings clipped.

BOLTEN: Oh, no, not at all. He's a terrific person. He's a dear friend. And he has the absolute confidence of the president and everybody else in the White House.

I think this restructuring that we're going through will, in fact, enhance his ability to serve the president. WALLACE: And how much does it weigh -- we saw him, of course, testifying for the fifth time before a grand jury this week. How much does that legal uncertainty weigh on this White House?

BOLTEN: Well, obviously, I can't comment at all on the case. But what I can tell you is that Karl Rove is as engaged as I've ever seen him in his work. He's always cheerful, optimistic and energetic. He gets more done in an hour than most people get done in a day. And I don't think anybody else in the White House feels weighed down by it at all.

WALLACE: We have to take a break here. But when we come back, I want to ask you about the possibility of more personnel changes. I want to ask you about other issues, especially immigration, and about your working relationship with your boss, the president.

And we'll be right back with more of our exclusive interview with the new White House chief of staff in a moment.

(COMMERCIAL BREAK)

WALLACE: And we're back now with White House Chief of Staff Josh Bolten.

Before we move to other issues, I want to ask you a little bit more about personnel. When Secretary Rumsfeld was under fire recently, the president said that he had decided what's best is for Rumsfeld to stay at the Pentagon.

Does he feel the same way about Treasury Secretary Snow?

BOLTEN: The president has full confidence in Secretary Rumsfeld, Secretary Snow, all the members of his cabinet.

WALLACE: Are there any plans at all to replace John Snow in the treasury?

BOLTEN: Well, we all serve at the pleasure of the president, including me. Maybe, as chief of staff, especially me. But the president's got full confidence in Secretary Snow. He's been doing a great job, as he has full confidence in all the members of the cabinet.

WALLACE: I mean, you can put all the rumors to rest right here. Are you shopping that job out? Are you talking to people about replacing him? Is that right or wrong?

BOLTEN: We're all serving at the pleasure of the president, and the president has full confidence in every member of his cabinet, including John Snow.

WALLACE: Is the shake-up basically over, and do you regard it as a shake-up?

BOLTEN: At the White House?

WALLACE: Yes.

BOLTEN: Yes, I regard it as a change. I mean, when you bring in a new chief of staff, you get some change. You get change in management style. We have a couple of more posts to fill. But we've got really good people. And I'm proud of everybody that I've been working with for several years. I'm proud of all the folks we have.

I'm hopeful that the change means an opportunity for everybody within the White House to look at their operations and gear themselves up for a very tough several months ahead. But I think we've got a good team in place, and I think we can serve the president well.

WALLACE: One of the hot-button issues that you've got to deal with now is immigration reform. Does the president worry that the immigrant boycott that is scheduled for tomorrow plus this whole development involving the Spanish Star-Spangled Banner -- does he worry that that could create a backlash and make it even harder to pass sensible immigration reform?

BOLTEN: I don't know what effect those particular events are likely to have, but in fact, the president does want to try to bring this very difficult issue to some kind of consensus. He said that to a bipartisan, and very bipartisan, group of senators in a meeting last week.

It's a very emotional issue. There are ways to solve the enormous illegal immigration problem that we have in this country, but I think only if we tone down the very emotional rhetoric on both sides of it and come to some consensus position in the middle.

WALLACE: How active, and I mean not just in having a meeting, but getting into the legislative details, does the president plan to be in getting immigration reform passed by Congress?

And specifically, does he support the concept in the leading Senate bill, the idea that illegals that have been here longer, say five years, should get an easier, quicker path to citizenship than illegals who have been here a shorter period of time?

BOLTEN: Well, the president was deeply engaged even this past week when he met with the members. They were talking details. I won't try to negotiate on television about what the specifics might be.

But the president does believe in a temporary worker program that makes it possible for a willing foreign worker to be matched up with a willing American employer for jobs that Americans are typically not available to do. We need to do that on a basis that gives comfort to everybody concerned.

We need to make sure that the people who come in, for example, would - - into this program, if they've been here illegally, would, for example, pay a fine, pay back taxes, learn English, follow our laws, and then get in the back of the line for possible citizenship, if that's what they want to pursue, because the one thing the president doesn't want to do in this process is disadvantage the people who have been playing by the rules and are in line to try to come in here legally.

WALLACE: There's a report that your top priority on taxes is to extend the rate cuts for capital gains and stock dividends. True?

BOLTEN: It's a high priority, yes, it is. And it's been a very important element of the strong economic recovery we have in place right now. I mentioned all the shocks that our system has been through in the last 5.5 years. And yet we've still got an economy that this past quarter, as you mentioned at the top, Chris, is growing at 4.8 percent. That's terrific growth for any economy, much less one that's been through what we've been through.

So the capital gains cuts, the dividend cuts, are important. But also important are the rates in individual income taxes that the president put in place in 2001 and 2003. They've been an important part of our recovery as well.

WALLACE: What about the analysis that more than half, 53 percent, of the benefits from rate cuts and stock dividends and capital gains go to households making more than $1 million a year?

BOLTEN: You know, there's been a lot of criticism of the president's tax cuts as benefiting the rich. The truth is that the tax cuts that the president put in place in 2001, 2003, with the strong support of members of Congress -- those changes have made the tax code more progressive rather than less.

Let me give you one data point, and that is that the top 10 percent of income earners in this country, and that's people making, I think, about more than $130,000 a year -- the top 10 percent in the absence of the president's tax cuts would be paying about 64 percent of our total federal income tax take.

After the president's tax cut, that same group is paying 66 percent of the total federal income tax take. The tax code under this president has become more progressive, and we have the top 10 percent of income earners paying two-thirds of the federal income tax.

Now, it seems to me that that's a system that cannot be accused of being unfair to -- or skewed toward the wealthy. And it's also a system that's produced a lot of growth in this country and ought to be sustained.

WALLACE: Let's talk about your working relationship with your boss. There's some speculation in Washington that the president has misgivings about taking on a strong chief of staff.

And I want to play two statements that he's made since you took over, the first about Don Rumsfeld, the second about Tony Snow. Here they are.

(BEGIN VIDEO CLIP)

BUSH: I'm the decider. And I decide what is best.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

BUSH: My job is to make decisions. And his job is to help explain those decisions to the press corps and the American people.

(END VIDEO CLIP) WALLACE: How free a hand has the president given you?

BOLTEN: Well, first of all, I agree with him completely. He is the decider.

WALLACE: That's smart.

BOLTEN: Yeah. But no matter who the president is, you want the president to be the decider. Nobody elected me or Tony Snow or anybody else. The people elected George W. Bush to be president, and he knows his role, he understands his role, and he makes the decisions that are presidential decisions.

He's given me a very free hand to organize and run the White House staff. That's what I'm doing with the changes that I've made so far. And he knows that that's not the kind of stuff a president ought to be messing with.

He needs to work on the big policy issues of the day and make sure that he has the staff in place, including me, that can support him best in doing that.

WALLACE: The talk, and it's mostly from outsiders, is this president is stubborn, that he doesn't like to hear criticism. Are you prepared to deliver the bad news he may not want to hear?

BOLTEN: I am. And I think that's one of the benefits of going to a chief of staff who's been in his operation for a while, somebody in whom he's got -- with whom he has some experience and confidence.

So I do feel comfortable going in and telling the president bad news sometimes. And let me emphasize, the president welcomes internal disagreement. He prizes the people -- in my experience, he prizes the people who come in and tell him stuff that's different from what everybody else has been telling him or that's different from where he's headed.

He doesn't necessarily change his mind, but there's no penalty internally for disagreeing with the group or with the president. But I say internally, because he's very much a CEO, and when he makes a decision, then everybody within the White House should salute and get in line, at least publicly, with that decision.

We have our disagreements internally. They're vigorous, but they're civil, and they're, I think, well-policy-based.

WALLACE: Does the president have a nickname for you?

BOLTEN: He does. The repeatable one is Yosh.

WALLACE: What's that mean?

BOLTEN: I think it's just a corruption of Josh. I'm not exactly sure where it came from.

WALLACE: And is there an unrepeatable one? BOLTEN: Yes, there are several unrepeatable ones.

WALLACE: Will you tell me about them during the commercial?

BOLTEN: Yes, during the break.

WALLACE: OK. Finally, let's talk a little bit about Josh Bolten, because the fact is this is the first opportunity a lot of people have had to get to see you. I understand one of the biggest problems you've got with your new job are the early hours.

BOLTEN: Yes. I'm not a morning person. I used to just barely make it to the senior staff meeting every morning at 7:30.

WALLACE: Andy Card got in at about 5:30.

BOLTEN: Andy Card got in often earlier than that, so I'm told. I was actually never there to see it.

WALLACE: So what time are you getting in?

BOLTEN: I'm getting in a little after 6:00 a.m. because my boss gets to the office at about 6:45. He's been up for a while, but he typically comes to the Oval Office at 6:45, and it's important for the chief of staff to be there to greet him and to talk over the business of the day.

But, Chris, as part of our outreach and openness to the press, I'm here with you this early on a Sunday morning. I've probably never seen this early on a Sunday morning before.

WALLACE: But you tell us you do TiVo the show.

BOLTEN: I do TiVo "Fox News Sunday", but I've never seen this early before except maybe from the other end.

WALLACE: Now, is it true that you used to date Bo Derek?

BOLTEN: We are friends from the 2000 campaign where she was a good supporter of the president. She...

WALLACE: Here we have a picture of the two of you. You look like more than good friends, Mr. Bolten.

BOLTEN: Yes. You know, the president once said that when he'd seen a photo like that or had heard about it, the president commented that between the two of us, we're a perfect 15.

But Bo Derek remains a good supporter, a good friend to the president. She's been very articulate on a number of important issues. And we're glad to have that kind of support.

WALLACE: Listen, at our age, I think being rated a five by the president is probably a compliment.

BOLTEN: I'll take it. WALLACE: Mr. Bolten, we want to thank you so much for coming in for your first interview. Please come back, sir.

BOLTEN: Thank you.

WALLACE: Coming up, our gang of Sunday regulars on the week that was in Washington, from gas prices to more changes at the White House. Our panel will tackle all of it after this quick break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. BILL FRIST (R-TN), MAJORITY LEADER: A plan that would give taxpayers a $100 gas tax holiday rebate check to help ease the pain that they're feeling at that pump.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D-NY), MAJORITY LEADER: Get tough on big oil. President refuses to do that.

(END VIDEO CLIP)

WALLACE: That was just a sample of official Washington running for political cover on the issue of high gas prices.

And it's time now for our Sunday regulars, Brit Hume, Washington managing editor of Fox News, and Fox News contributors Mara Liasson of National Public Radio, Bill Kristol of The Weekly Standard, and Juan Williams, also from National Public Radio.

Well, it was quite the week in Washington on gas prices. First of all, you had trouble even getting into a gas station because so many politicians were holding so many press conferences by the gas pumps. And then when you did, you heard all kinds of ideas.

I have to say my favorite was the Bill Frist idea of a $100 gas tax holiday rebate check for every American. I figured out that was going to cost us about $10 billion, so you could fill your gas tank up twice.

Brit, did any of it make any sense?

BRIT HUME, FOX NEWS WASHINGTON MANAGING EDITOR: No, not a bit of it. The idea of getting tough on big oil is at least as silly as the $100 rebate. We did some research and found that since 1979, there have been official investigations of oil companies, and gasoline prices and so on 11 times.

And you'll not be surprised to learn, Chris, that they all found essentially the same thing, that market forces and other external factors, and not collusion or corruption or monopolistic behavior among the oil companies, was responsible. It's just not there to be found, but it sounds good in an election year, just like a $100 tax rebate gas check sounds.

WALLACE: (inaudible) doesn't it?

HUME: Well, it's just laughable.

WALLACE: Is this just pandering, pure and simple, Mara?

MARA LIASSON, NPR: The only thing better than that -- the vast majority of it is pandering, pure and simple, although my best part of those press conferences is when they got in their big SUVs to drive the one block back to the Capitol.

Look, most of it is pandering, and Brit was quoting someone this week who says there's nothing -- the only thing worse than partisan demagoguery is bipartisan demagoguery.

HUME: Thomas Sowell.

LIASSON: Thomas Sowell.

But look, there were amidst all this -- and by the way, we should point out the president joined right in. I mean, he had a bunch of ideas just like that. And he wanted also to get tough on the oil companies and to find out if there was price gouging, even though they've been investigated numerous times.

But in the midst of all of this, there were a few glimmers of long- term solutions, like the president wants to take a look at CAFE standards, something that has been blocked regularly in congress by mostly Republicans, but some Democrats from the Midwest, from auto states. That would do something in the long term. In the short term, there really are no solutions.

WALLACE: I was going to ask you about that, Bill. Is there anything in the short term that politicians could do to really affect the price of gas this summer and, if not, would it be political suicide just to admit it -- hey, folks, there's nothing we can do?

BILL KRISTOL, WEEKLY STANDARD: I think the price of gas will actually come down slightly, because inventories are very high.

WALLACE: But nothing that the politicians are doing.

KRISTOL: There's not much they can do over the short term, obviously. Look, if the price of the underlying commodity triples, or almost quadruples, which is the case with crude oil, the price of the retail product at the pump, which is gasoline for cars, is going to go up a lot. It hasn't gone up as much as the underlying price of crude oil. So that's going to happen. And long term, there are all kinds of things that could happen.

Bill Clinton vetoed when the Republican Congress passed in 1995 permission to drill in ANWR to get more oil from American soil. That was vetoed by Bill Clinton. He said well, that won't address the problem for the next five years or 10 years. If he had not vetoed that, we would now have more domestic oil coming online.

But all the energy solutions are long term. I think the politicians will get credit by telling the American people the truth -- short term, there's not much we can do.

JUAN WILLIAMS, NPR: Well, I'm glad to hear you saying that you know inventories are high this week, and so that you understand that there's no reason for the prices to keep going up except some kind of gouging or exploitation here by oil companies. I mean, I'm glad to hear you finally turn around this, because supply and demand -- I mean, there are certain basic rules that we should obey in the country.

But if you look at the profits this week, profits are soaring through the roof -- 50 percent rise in profits for these oil companies.

KRISTOL: What were Exxon Mobil's profits up?

WILLIAMS: I think Exxon Mobil...

KRISTOL: Seven percent. What were their sales up? Eight percent. Is that price gouging, sales up 8 percent, profits up 7 percent?

WILLIAMS: Yes. It seems to me there's no basis at this point for explaining this except that there's some corruption, and the corruption comes from people who are speculating and pushing prices up unnecessarily and, I think, hurting the economy and, by the way, hurting President Bush. That's why I think he's in such trouble.

WALLACE: I'm surprised to hear this week -- and you know, one of the good things that does come out of this is -- and I must say, it was on "Special Report" -- you actually learned some facts. And one of the facts, apparently, is that the return on investment in the gas industry, the oil industry, these big companies, is no higher than the industrial average.

HUME: And it has not been a great place to invest your money over time. And there's been a -- because of the run-up in petroleum prices, companies that had reserves of crude oil have made a lot of money on those things, because the demand is up, and the supply, while it has increased, has not kept pace.

And so you get more profit out of that, and that's the way that works. And you know, to argue that somehow this is collusion is -- we don't need to go there.

WALLACE: All right. Well, let's not go there.

Mara, let's turn to another subject, another event this week. The president and Josh Bolten made some more changes at the White House. Anything that you see or that you heard today that says they're jump- starting this administration?

LIASSON: Possibly. I think that changing the way that the communications operation works there could change things for President Bush. If more news is made in the briefing, if -- although I think the relationship between the press and the press spokesman is overrated. I don't know if it really matters how good that relationship is.

But I think to have a more aggressive, forward-leaning spokesperson, have more than one possibly, might help the administration. But the policies aren't going to change, and right now I think the president's low approval ratings are being driven by Iraq, by gas prices, by things that no new press secretary or chief of staff really can change.

WALLACE: Bill?

KRISTOL: Well, look. This insular, closed bad-at-communicating White House got itself reelected in 2004 and increased -- won an off- year election in 2002, when the economy was much less good, incidentally.

It's about the war on terror, not just the war in Iraq, but the global war on terror and the sense, not unjustified, that we have had setbacks in the last six months to nine months.

A year ago, even though Iraq was difficult, it looked like we were making progress more broadly in the Middle East and that we really had the forces of radical Islamic jihadism on the run. They've had a bit of a comeback.

Iran, I think, is a huge problem. Hamas' victory in Palestine -- and then, of course, the difficulty in Iraq. If we win the war on terror, Bush will be fine, and he should focus entirely -- he should let Tony -- Josh Bolten can restructure the White House staff, and Tony Snow will do a much better job in the briefings.

What the president should focus on is winning the broad war on terror, which includes, obviously, winning in Iraq.

WILLIAMS: I think part of it is that not only getting the message out, but the idea that the message gets in. And I think people haven't been convinced that the president hears and understands everything.

I mean, I think, for example, the conversation that we're having on gas prices I think is largely that the president and the Republican Congress have gotten the message that the American people are outraged over the rise in gas prices.

On Iraq, I think people for the first time have a sense -- and the president has, I think, exhibited this in the changing way that he goes about talking to the American people when he goes out. He's getting away from these very closed events that are prescribed in terms of who's Allowed in to ask questions.

But the idea is that he hears the American people are dissatisfied with this policy, so the way he goes about making a decision, which has tended to be very insular, and then simply repeating it time and again to everybody -- that has to change, and hopefully that's what Tony Snow will do by coming in and saying here's what actually took place, here's how a decision was made.

And then hopefully, as Josh Bolten told Chris earlier, the rationale will appeal to the American people.

WALLACE: I want to hit on one other piece of news this week, Brit. Karl Rove testified for the fifth time before a grand jury in the CIA leak case. Any sense whether that's good or bad for Rove?

HUME: Well, I think not much has changed. He is not yet a target of the investigation. It seems to me probably unlikely that he will become one.

What I understand from sources about this particular round of testimony is that it grew out of the so-called Viveca Novak chain of events. She, of course, was aware that he, Rove, had had a conversation with Matt Cooper of Time, where she then worked, and Rove hadn't remembered it, said he hadn't had such a conversation.

WALLACE: In his first testimony...

HUME: In his first testimony.

WALLACE: ... in front of the grand jury he didn't mention it.

HUME: And she said to Rove's lawyer, who is a personal friend of hers, at a lunch -- she said you know, he thinks he doesn't have a Cooper problem, but he may have a Cooper problem.

That is what triggered the research by Rove and his lawyer of the presidential -- the White House records that turned up the e-mail which affirmed to Rove that while he didn't have any memory of it that he had had this conversation with Cooper, and they took that to the grand jury.

And as I understood it, at the end of this whole sequence of questions about that, there was a question from the prosecutor, something to the effect of so, when you first said you hadn't had any conversations with Cooper, you were not trying to deceive the government or the grand jury, whoever. And the answer was something like no, I certainly was not trying to -- I just didn't remember it.

And the final remark was something like well, I think we're done here. And he turns to the grand jury and says any questions, and the grand jury at that moment had no questions, and that was the end of the testimony.

Now, you never know what a prosecutor is going to do, but if it were I walking out of the grand jury after that, I'd have felt reasonably comforted, as he seemed to, by the way.

WILLIAMS: Well, the thing is, it's four hours. It was a long visit. And I think it's caused concern, and I think it also -- combined with what's going on in the Libby case, there's concern that the president, the vice president, everybody -- the whole thing just continues to snowball.

WALLACE: Okay. We need to take a break here. But coming up, we're going to talk about the past decade in politics on this 10th anniversary of "Fox News Sunday". Stay tuned.

(COMMERCIAL BREAK)

WALLACE: On this day in 1789, the first presidential inauguration took place. George Washington, the leader of American forces in the Revolution, took the oath of office in New York City.

Stay tuned for more from our panel and our Power Player of the Week.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TONY SNOW, WHITE HOUSE PRESS SECRETARY/FORMER FOX NEWS ANCHOR: Welcome to the beginning of something new, a Sunday show that lets you do the talking.

(END VIDEO CLIP)

WALLACE: And with those words on April 28, 1996, Tony Snow launched "Fox News Sunday". Of course, since then, we've done a lot more talking than you have. And we're going to continue that now with Brit, Mara, Bill and Juan.

Well, we have a special anniversary show on Fox News Channel tonight, and we'll tell you all about it in just a moment. But as we put together the history of the show, it was fascinating, because it's really the history of the past decade in American government and politics.

Brit, what strikes you about the last 10 years in this town?

HUME: This has been an amazing time, just the turbulence of it. I mean, think of what has happened since that show began. We have had the impeachment of a president in the midst of a scandal which I think any of us, if somebody outlined the scandal to us ahead of time -- you know, president in Oval Office, intern, sex...

WALLACE: Yes, we know.

HUME: ... would say that's the end of that guy. Instead, the guy's now being voted president of the world, and although he was impeached, he came out of it about as gloriously as anybody could possibly imagine.

In addition to that, we had the extraordinary election in 2000, the unprecedented near tie, the recount, which dragged on for what, nearly 40 days. And then we had the terrorist attack in 2001, an amazing development. You know, who would have imagined that? I mean, I suppose you can imagine it, but whoever thought it was going to happen?

And then two wars, another close election, and the thing goes on. These are amazing times. This show's been there for all of it.

LIASSON: Yes, there's been nothing placid about the history of "Fox News Sunday" or at least the 10 years that it's spanned. I mean, when you also just think about just the stuff we're covering now, I mean, in 1996, the Republican revolution was in its, you could say, infancy, two years into power, at least in the House.

And now those big dreams of Karl Rove, which seemed very realistic after 2000 and 2004 of making a permanent Republican majority -- now you see a White House and a party that's pretty much struggling for survival in the next midterm.

So the reversals of fortunes have been extraordinary and I think pretty unpredictable.

WALLACE: Bill, as we were working on the show and looking back over the events of the year, it seems like there was this one -- tough to say, because it came out of the tragedy of 9/11, but there seemed to be this one oasis of bipartisanship and national unity for a year, 1.5 years, after 9/11. But other than that, from '96 to 2006, it just seems to have gotten meaner and more polarized.

KRISTOL: Well, and social scientists studied this, and the parties are more different from each other than they used to be. They've sorted themselves out into a liberal and conservative party. There's red America, blue America. The country is more polarized.

And for me, the event of the last 10 years, obviously, is 9/11. We were at peace, and subsequently we've been at war. And now we are being tested as to whether we are serious enough and capable enough and committed enough to fight a global war against jihadist Islam and against the dictatorships that sort of back them up, which include China and now Russia.

So the notion that history was ending, liberal democracy was triumphant, everything is going to settle down to business and an easy life -- not so. We're back in the same kind of struggle between liberal democracy and its enemies that we were in for the 20th century and for much of the 19th century, and that's the big development.

WALLACE: Juan, are you struck by how much 9/11 and the war changed this town or how little it changed this town?

WILLIAMS: Well, I think it's -- I'm struck in some sense by how little it changed, because I thought that 9/11 was a real opportunity for the country to come together.

In fact, one of the big complaints about President Bush is that all of the sort of emotional capital that he had to -- you know, people wanting to help, wanting to contribute, wasn't taken advantage of, and the country has continued down this path to increased partisanship.

I think, you know, Brit gave you a pretty good list of what's happened over these last 10 years, but what strikes me in a sense is also the people stories that we've been here for. I think of everything from Hurricane Katrina to tsunami as events that, again, changed the way -- you know, and brought out, I think, the best in the American people, the sense of willingness to respond in a moment of crisis. And part of that, I think, is -- you know, we've seen it in the headlines over that 10-year period. The arguments we've seen with an aging society over things like the cost of prescription drugs, Medicare, and the current argument that we have over immigration, the kind of changing racial picture in the country and the impact that's had on our politics as well.

WALLACE: Juan, you are the senior member of this august panel. You were on the second show in May of 1997. And I think we actually have a picture of you that we can put up there. You haven't -- well, actually, you have aged a little.

WILLIAMS: A little more gray, Chris.

WALLACE: But is there a favorite moment or an indelible moment that stands out for you?

WILLIAMS: Well, obviously, we were here the Sunday actually when the news magazines were breaking the impeachment story. And I think lots of people really were first told that story here on "Fox News Sunday" in some ways.

And then secondly, 9/11 -- 9/11, no question -- the shock, the idea that you know, family members, friends of mine had died -- it was an emotionally draining time.

WALLACE: Mara, you came next, also in 1996, the first year. What moment stands out for you?

LIASSON: Well, I think the -- clearly, impeachment and 9/11 are the big moments. Oh, my goodness. Ah, a lot of hair.

HUME: Big hair.

LIASSON: I'm glad I got rid of that.

HUME: It looked good to me. LIASSON: Help, help.

WALLACE: I think you look better.

LIASSON: Take that picture off. Thank you.

Obviously, impeachment and 9/11 were the biggest. And one, when you think about it, were about things that were so inconsequential, I mean, the events themselves, and the others so consequential. But look, the show has been great fun.

And I'd like to say just in recent times one of the best parts of the morning is sitting back and watching the Power Player.

WALLACE: Well, thank you. Thank you, which we will do in a moment. We have about two minutes left, so you guys are going to have to share it.

Brit, you started in January of '97. What stands out for you in the almost 10 years you've been on the show?

HUME: Well, on this program, what stands out for me is that when I came to this show, we had -- although people like Juan -- look at that, would you? Geez. I'm not sure it was better then. Tough choice.

People like Juan and Mara had made occasional appearances on the show. I thought they were exactly the kind of people we needed, journalists all, and we instituted kind of a policy that the panel should be working journalists, you know.

And I think that's been -- the reason being that journalists, for better or for worse, will tell you what they really think, and I think you'll agree, Chris, that particularly with the addition of Bill, who's been so valuable, this is a group of people who will tell you -- we'll tell you what we really think.

WALLACE: Yes, you guys don't hide it.

Bill, you were the new kid. You started in 2000. You've got 30 seconds. What stands out for you in the six years you've been on the show?

KRISTOL: The first time I did the show was two days before election day in 2000. I said that I thought Gore was closing and that it would be (inaudible) election. I think that was a good prediction, and I'm going to rest with that one good prediction and forget about all the ones that were wrong.

WALLACE: Oh, but I also remember -- and we've got about 15 seconds left -- Iowa in 2004. You were the only person at this table to say...

KRISTOL: Thank you, Chris. That was nice of you.

WALLACE: ... (inaudible) is going to win.

WILLIAMS: You have a lot of winning predictions.

KRISTOL: Two in five years, that's good.

WALLACE: And of course, you helped force Harriet Miers out, but we won't talk about that.

Thank you all very much. See you next week.

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