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November 25, 2007

Chris Wallace Interviews Fred Thompson

Fox News Sunday

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

The Republican race for president took a surprising turn right here last spring.

(BEGIN VIDEO CLIP)

WALLACE: Question: Are you considering running for president in 2008?

FRED THOMPSON, FORMER U.S. SENATOR: I'm giving some thought to it. Going to leave the door open.

(END VIDEO CLIP)

WALLACE: Now, eight months later, Fred Thompson is running hard. In a Sunday exclusive, we'll find out what he's learned and what he needs to do to win the nomination, as we continue our series "Choosing the President."

Then, positive news from Iraq. Does recent success on the battlefield change the political stalemate in Baghdad and Washington? We'll ask two key senators, Republican Lindsey Graham, who's just back from the front lines, and Democrat Carl Levin.

Plus, the Bush administration makes a push for Middle East peace with a high-stakes summit. We'll discuss the prospects with our Sunday regulars: Brit Hume, Mara Liasson, Bill Kristol and Juan Williams.

And our Power Player of the Week, Ashley Judd, uses her fame to help stop a global epidemic, all right now on "Fox News Sunday."

And good morning again from Fox News in Washington. Well, today we continue our series "Choosing the President." Our guest, Republican candidate and former senator Fred Thompson.

And, Senator, welcome back to "Fox News Sunday."

THOMPSON: Thank you. Good to be with you.

WALLACE: Your campaign tells us you have a new tax plan you want to unveil today. What is it?

THOMPSON: Yep. Yep. It's maintaining the tax cuts that we had in 2001, 2003. It's eliminating the death penalty. It's reducing the corporate tax rate.

We have the second-highest corporate tax rate among our competing partners. It's hurting us competitively. We're probably losing revenue from it.

We have several other provisions in it, but another major one is an adoption, basically, of the approach that the House Republican study group has that would give taxpayers an option of continuing to file the way they do now or filing under a flatter plan where you only have two rates, but no exemptions past the personal exemption and no deductions.

So give that a try. And it would be a major move toward tax reform, which I think is greatly needed.

WALLACE: Now, one thing that you also do is you repeal the alternative minimum tax. It obviously...

THOMPSON: Eventually.

WALLACE: There's concern about the fact that now, because there's no indexing, that middle class families who weren't supposed to fall under the AMT are now being hit, but you're going to get it for rich people as well. Why repeal it for everyone?

THOMPSON: Well, it was a tax that never was supposed to be imposed on anybody except about 155 taxpayers, and now we're seeing about 23 million taxpayers.

At the current rate, the AMT will be collecting more tax revenue than the regular tax system. So what we're saying is that let's index it from year to year until we get a handle on spending, and then we'll eliminate it.

The government wasn't supposed to get that revenue in the first place, and it will not be the drag on the economy that I think higher taxes would be.

We're facing, after the end of 2010, a situation where a lot of revenue under current circumstances is going to fall right into the hands of the government.

Taxes are going to be high without anybody having to do anything -- automatic AMT increase, including millions of people who were not originally intended to be covered, income tax rates going up substantially for just about everybody in America. And that's bad for the economy.

We've known for years any time we have lowered taxes and any time we've lowered tax rates, we've seen growth in the economy. Growth is the fundamental underlying factor that we have to maintain in order to be able to generate the additional tax revenue that we're going to need in order to be fair to the American people.

WALLACE: But we've also got to pay for our government. We went over your plan yesterday, crunched the numbers, and the best we could figure, it would cut federal revenue by more than $2.5 trillion over the next 10 years. That's roughly 10 percent of the government's budget per year.

So how would you cut federal spending to offset this huge revenue loss? And be specific.

THOMPSON: Well, I will be specific. But first, I'll say I hope your estimates are better than the professionals who estimated that we would get so much less in capital gains revenue if we lowered the capital gains rate. They were totally wrong about that.

They were wrong as to the amount of tax revenue we would lose under the 2001 tax rate cuts also. They always overestimate the losses to the government.

We had one day in April this year where the government took in more tax revenue than any single day in the history of the country. So that's always missed...

WALLACE: All right. But you are going to have to...

THOMPSON: ... by the experts.

WALLACE: So give us three specific things you would...

THOMPSON: Well, let me give you one big one...

WALLACE: OK.

THOMPSON: ... that's worth about $4.7 trillion -- my Social Security plan. I have put out a Social Security plan, the only one among the Democrats or Republican contenders, that basically faces up to the fact that Social Security is going bankrupt and we're going to have to do something about it.

The comptroller, every economic expert who's looked at it, says that it's unsustainable. And indeed, it is. We're going to be going into the red in 2017. It gets worse from there.

I put out a proposal to save Social Security and save money for the government at the same time and allow individuals to set forth 2 percent of their payroll into a private personal account, with the government matching that.

In the long run, the government would come out ahead. A person would have a nest egg at the end of his retirement time.

And if you do that in conjunction with indexing the initial Social Security benefit to inflation instead of wages, at the end of the day you're going to save Social Security. You're going to put it on a sustainable basis.

A lot of experts have already looked at it and, I think, come to that conclusion. The National Review has reported on it. Investors Business Daily has reported on it. The Washington Post has analyzed it.

And it will save the government $4.7 trillion at the end of the day. So eventually you do have to address the spending side, but the spending is going to have to be addressed on the basis of our entitlement difficulties. WALLACE: Let's talk about another subject. Last week you were endorsed by the National Right to Life Committee, but you oppose a constitutional ban on abortion. You say you'd like to see it the way it was before Roe vs. Wade, with the decision up to states.

Let's take a look at what one of your rivals, Governor Huckabee, had to say about that. Here it is.

(BEGIN VIDEO CLIP)

MIKE HUCKABEE, FORMER ARKANSAS GOVERNOR: It's the logic of the Civil War. If morality is the point here, and if it's right or wrong, not just a political question, then you can't have 50 different versions of what's right and what's wrong.

(END VIDEO CLIP)

WALLACE: Senator, I'm going to give you a chance to respond to that in just a second, but let me ask you two yes or no questions first. Do you believe that life begins at conception?

THOMPSON: Yes.

WALLACE: Do you believe that abortion is the taking of life?

THOMPSON: Yes.

WALLACE: So why leave it up to the states where, as you well know, before Roe vs. Wade, some states allowed abortion on demand?

THOMPSON: Well, in the first place, I guess over the next few weeks, we'll have an opportunity to analyze Governor Huckabee's statements. He supported the same thing that I've been saying as late as last year, a couple years ago -- said leave it up to the states, essentially.

What the situation is now is as follows. Because of Roe vs. Wade, all states are restricted from passing rules that they otherwise would maybe like to pass with regard to this area. If you abolish Roe vs. Wade, you're going to allow every state to pass reasonable rules that they might see fit to pass.

When we had control of the House, had control of the Senate, had control of the presidency, there wasn't a serious effort to put forth a constitutional amendment because people knew that it couldn't pass -- couldn't pass, wouldn't pass.

What I've been talking about is directing our energy toward something that was halfway practical, something that might could get done. That has to do with federal judges. It has to do with the Supreme Court. It has to do with Roe vs. Wade.

So now where we have no states with the option of doing anything about it, then we would have however many states wanted to. You could move from zero yard line, you know, to the 60- or 70-yard line instead of standing pat, which is what we're doing how, which is where we will remain if we don't abolish Roe vs. Wade.

WALLACE: But, Senator, I want to put up something that you said two weeks ago, and here it is. "I think people ought to be free at state and local levels to make decisions that even Fred Thompson disagrees with. That's what freedom is all about."

Senator, that...

THOMPSON: Exactly.

WALLACE: ... that is the essence of the pro-choice argument, not individual choice, but pro-choice for states.

THOMPSON: No, not really. I mean, how many pro-choice people say that they want to see the abolition of Roe vs. Wade? I don't know any.

What I'm talking about is abolishing Roe vs. Wade. If you can't carry the...

WALLACE: But you're saying that states -- even if you disagree with them, states could have abortion on demand.

THOMPSON: No, not abortion on demand. They could restrict. They would have the ability to restrict abortion more than they do now. They have limited...

WALLACE: But, Senator, pre-Roe vs. Wade, some states had abortion on demand. Here in D.C. they had it.

THOMPSON: Well, they would not have anything under that situation that they don't have now. I mean, the gain would be on the pro-life side. I mean, they have Roe vs. Wade and all of the progeny from that already.

WALLACE: But you'd allow states to have abortion on demand.

THOMPSON: I don't know of any states that have abortion on demand. Perhaps they do. But what I'm saying is if Roe vs. Wade passed, let's just say hypothetically...

WALLACE: You mean if you reverse Roe vs. Wade.

THOMPSON: I mean reversed it. Let's just say hypothetically that some states did that. You'd have an awful lot of other states that are restricted by Roe vs. Wade now. They could place restrictions on abortion that they can't do now.

I mean, you'd be making substantial progress. Ultimately, do I think a state ultimately has to have the right to maybe do something that I would disagree with? If you can't carry the ball in those states, yes. Yes. There's no question. We live in a democratic society.

But if we can't carry the argument, if we can't win the argument, which I think that we are winning nationwide now, we can never pass a constitutional amendment anyway.

We sit here and talk about the ideal which would be a constitutional amendment, two-thirds of the Congress, three-fourths of the states, and are basically saying that we could get that done, but we can't go state by state and win this argument?

I believe that's wrong. I think we could make substantial progress. And Governor Huckabee agreed with that same position until he started running for president.

WALLACE: Let me ask you about Governor Huckabee, because as you well know, I'm sure, he has moved past you in the polls in Iowa, especially among social conservatives.

You said recently that people don't know Huckabee's record and, quote, "that will be cured shortly." So help us out. What don't we know about Mike Huckabee?

THOMPSON: The process will cure it for all of us soon. And he'll be a part of that. Of course, his record will be examined. His record will be -- well, one of the things I just mentioned. I mean, he's talking about Roe vs. Wade and all of that and, you know, it's directly contrary to what he said in the past.

Taxes. The Cato Institute gave him a "D" rating, which is the same rating they gave Bill Clinton with regard to taxes. He was a very high tax governor. They gave him an "F" the last two years that he was there.

He did everything he could as governor to keep the state legislature from restricting illegal immigration. He was for taxpayer-funded scholarships, for illegal immigrants. He objected when they were arrested and things of that nature.

So on immigration he's, again, different from where he says he is today. So all those things will be examined, you know, over the next few weeks in a little bit more detail. That's the reward you get for doing well in a poll. That happens. Happened to me and happened to everybody else.

WALLACE: Meanwhile, Rudy Giuliani has fired back at your criticism that he talks too much about New York City. Let's take a look at that.

(BEGIN VIDEO CLIP)

RUDY GIULIANI, FORMER MAYOR OF NEW YORK: Well, Fred has no record to talk about, so -- I have a good record to talk about. And if he had no record at all, he'd want to attack somebody else's record, which is what I think some of my opponents are doing.

(END VIDEO CLIP)

WALLACE: Giuliani says you attack people with a record because you don't have one. THOMPSON: I think Rudy was kind of squealing before he got stuck there. Somebody asked me a question about gun control, and I said Rudy was mayor of New York and apparently felt like gun control was a great idea back then.

He says it was because he was representing New York. But I don't think New York necessarily -- New York City has necessarily the same values as the rest of America. And that's in reaction to that.

My experience has had to do with matters on the federal level, national level. I was on the Intelligence Committee. I chaired a committee dealing with nuclear proliferation. I was Republican floor leader for the homeland security bill.

I stopped an export legislation bill that I thought was too generous to China with regard to dangerous dual-use items. You know, I could go on and on and on.

I've dealt with those issues for almost a decade both in and out of government. And of course, Rudy has not, you know, five minutes of experience with regard to things of those nature.

So you know, we all have our assets. You know, we all have things that we can brag on. But when you say experience, the question is experience doing what.

WALLACE: I want to talk -- we have a couple of minutes left -- about your situation in the polls, because there is a buzz out there, and you know it, that your campaign has been disappointing.

And we have a poll that shows that you've actually dropped 10 points in the latest Fox News national poll since you came in in September. But it's not just the numbers.

THOMPSON: Well, you know how...

WALLACE: Well, can I just -- may I just finish my question? Then you can say what you want. It's not just the numbers. I want to show you what two conservative commentators had to say about your campaign this week. Here it is.

(BEGIN VIDEO CLIP)

FRED BARNES, WEEKLY STANDARD: It's the wrong message and a weak messenger. Other than those two things, it's a great campaign.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

CHARLES KRAUTHAMMER, COLUMNIST: Thompson offers the folksy manner of a consistent conservative, but there's not anything there. And in the absence of something, he can't win.

(END VIDEO CLIP) WALLACE: Senator, I suspect you've gotten a few bad reviews for movies or T.V. shows in the past, but that's pretty tough stuff. How do you respond?

THOMPSON: Yes. It's a lot of the same kind of stuff that I heard when I first ran for office, when I was 20 points down. And fortunately, I wound up 20 points ahead on election night.

This has been a constant mantra of Fox, to tell you the truth. And I saw the promo for this bill, and I think it was kind of -- for this show, and it was kind of featuring the New Hampshire poll.

Let's put things in context a little bit, to start with.

WALLACE: Well, I don't know that ---- I mean, I don't know that Fox has been going after you, and I certainly don't think Charles Krauthammer and Fred Barnes...

THOMPSON: From day one, they said I got in too late, I couldn't do it.

WALLACE: But there were a lot of people besides Fox who said that, sir.

THOMPSON: Well, but I'm -- these are the two you used.

WALLACE: Right.

THOMPSON: All right. Well, they said I got in too late, couldn't do it...

WALLACE: Right.

THOMPSON: ... wouldn't raise enough money, and that sort of thing. And that's their opinion. They're entitled to their opinion.

But that doesn't seem to be shared by the cross-section of American people. If you look at the national polls, you'll see that I'm running second and have been running second for a long time.

I'm running ahead of a guy who spent probably $50 million more than I have and been running for a year longer. If you look in South Carolina, I've either been leading or tied for the lead for a long, long time. I moved from fourth to third in Iowa, ahead of Rudy Giuliani, incidentally.

So you know, they're entitled to their opinion, but for you to highlight nothing but the negative in terms of these polls, and then put on your own guys, who have been predicting for four months, really, that I couldn't do it, you know, kind of skews things a little bit.

There's a lot of other opinion out there. National Review that I...

WALLACE: Do you know anybody who thinks you've run a great campaign, sir?

THOMPSON: It's not for me to come here and try to convince you that somebody else thinks that I've run a great campaign.

WALLACE: Well, but that's why I...

THOMPSON: I'm talking about -- no, let me ask you...

WALLACE: ... I'm just asking you the question.

THOMPSON: ... you know, you mentioned conservatives. Would you say National Review was a conservative magazine and a conservative...

WALLACE: As are Fred Barnes and Charles Krauthammer.

THOMPSON: They said that -- well, that just goes to show you there's more than one opinion.

WALLACE: Absolutely.

THOMPSON: You're showing one. I'm giving you the other.

WALLACE: Well, I'm asking you for the other. That's the point.

THOMPSON: Well, I'll give you an answer. They said that I had set the standard for policy in this campaign.

They pointed out that I had laid out all these policy positions as far as immigration is concerned, as far as the military was concerned, the only policy position in Social Security, and others, and said they wish the other candidates would do half as well as I have.

Investors Business Daily has pointed out that I have the solution on the Social Security plan that no one else has put forth that will solve a major financial problem that we're going to have in this country.

And as I go around the country, I get that kind of reaction. Now, other than opinion, which -- everybody's got one, the only thing I know to look at is the polls.

And if you get past New Hampshire and look at some of these other states -- states that I'm leading in in the south, for example -- and straw polls that I've won, endorsements that I've got -- I've got more endorsements in the state of Georgia than all the other candidates put together.

So I understand the game of build-up and I understand the game of take-down. And we all go through it. And I'm perfectly willing for you to do that with regard to me as you do the other candidates.

WALLACE: I was going to say, Senator...

THOMPSON: But you have the right to put in your one side, and put in the Fox side, and I have the right to respond to it. And thankfully, you've given me that opportunity.

WALLACE: I was going to say, Senator, I'm glad I asked the question, because I got a heck of an answer.

Thank you for coming on. Thanks for talking with us.

THOMPSON: Thank you. Appreciate it.

WALLACE: Please come back, sir.

THOMPSON: Thank you very much.

WALLACE: Up next, violence is down in Iraq, but are we actually winning the war there? Two key senators debate whether this is the right time to pull troops out or the worst time imaginable. You won't want to miss this.

(COMMERCIAL BREAK)

WALLACE: Joining us now to discuss the latest from Iraq are two influential members of the Senate Armed Services committee, the Democratic chairman Carl Levin, who's in his home state of Michigan, and Republican Lindsey Graham, just back from Iraq, in his home state of South Carolina.

Well, gentlemen, let's start with the military side.

As we said, Senator Graham, you went to Iraq over Thanksgiving. Is the surge working? And how different are things on this trip than they were on your last trip?

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: It's working amazingly well, beyond my expectations. I think history will judge the surge as probably the most successful counterinsurgency military operation in history.

Violence is down. Economic activity is up. It's not just about more troops. It's how the troops are used. So hats off to General Petraeus and all under his command. You're making military history and a phenomenal success. I was amazed, really.

WALLACE: Senator Levin, the U.S. military says the drop in violence is dramatic. Let's put up the numbers. Iraqi civilian casualties are down 60 percent since the troop surge reached full strength in June, 75 percent in Baghdad.

Doesn't that show, at least on the military side, that the president's policy is working?

SEN. CARL LEVIN (D), MICHIGAN: Well, it shows an improvement on the military side, but the president's policy very specifically had as its purpose -- the surge's purpose was to give the Iraqi political leaders the breathing space to work out a political settlement, and that purpose has not been achieved.

They're just as far apart as ever. And I think there's a growing frustration with the Maliki government, even among our own military leaders, for the Maliki government's failure to make political improvements. That growing frustration is reflected in a State Department bulletin that just came out which said that the greatest threat which now exists in Iraq is no longer Al Qaida, it is not the insurgency of the Sunni insurgency, it is not the militias.

The greatest threat to any success in Iraq is the failure of the Iraqi politicians to work out their political differences.

WALLACE: Senator Graham, let's talk specifically about that. That was the point when the president announced the troop surge in January, breathing space. The Maliki government, the national politicians in Baghdad, have failed to reach any of the major benchmarks.

Isn't that, one, a serious failure? And two, why can't we get them off the dime?

GRAHAM: Well, number one, it's hard to have democracy when people are getting killed in droves. And the better security is going to produce better political results. They've passed a budget, something we haven't been able to do.

But the four major benchmarks -- I predict and hope very much that by January of 2008, the de-Baathification law, which will allow Sunnis to come back into the government and have jobs, to be a full partner in Iraq, will be passed. I was told that by Maliki, by Abdul Mahdi, a Shia vice president. I expect that to happen.

The surge was necessary to bring about the conditions for political reconciliation. I think we're on track at the national level.

Local reconciliation is very robust at the local level. I think it will migrate to the national level. If it doesn't in January, then I will be very disappointed, sit down with Carl and see what we can do on the political side to push them.

WALLACE: Well, let me ask you about that, Senator Graham, because there's a story on the front page of the New York Times today that says that the Bush administration is lowering expectations for the Maliki government meeting any of these benchmarks.

GRAHAM: I'm not going to play that game. I've been on this show many times, and I was criticizing the old military strategy. It was leading to failure. And the Congress' efforts to take away from General Petraeus the ability to perform his mission I'm going to fight as long as I'm in Congress.

We're on the right track with the surge. We have the right commander. And we put benchmarks out there for the Maliki government to meet -- oil revenue sharing, which will be done through the budget, but it's not formalized; de-baathification; allowing local elections.

The Sunnis are ready to participate. So I saw the old strategy fail. I'm seeing the surge work beyond my expectation. And I think we will have political dividends at the national level in Baghdad soon.

But if they don't deliver, I will work with Democrats and Republicans to put more pressure on the Maliki government through changing aid, maybe making loans instead of grants. But we need to leave the military alone, not micro-manage what the military's doing, because it's in our national security interest to allow this surge to continue.

WALLACE: Senator Levin, what do you think about that idea of allowing them till January and then trying to put more pressure on them?

LEVIN: It was the Maliki government themselves that a year ago adopted the so-called benchmarks that they would have revenue sharing by a year ago, that they would have provincial elections by about a year ago.

They failed to meet their own benchmarks. And just to continue to say that if they don't do something by a certain date that then we'll take some action to put pressure on them is the mark of a lack of pressure.

You've got to put pressure on them now, and the way to do it is to set a goal, which is what we had in our last vote, just simply a goal for the removal of most American forces from Iraq.

That even got support from the former military commander, Governor -- I mean, General Sanchez, over the weekend, who supported the effort to set a goal -- not a binding deadline, but a goal -- for the removal of most American troops, leaving a number there for the limited missions.

That's what we must do to put pressure on the Maliki government and not to change the benchmarks.

That article in the New York Times was deeply disturbing. That the administration might consider eliminating these benchmarks that have been set by the Maliki government for themselves it just seems to me is trying to make something look successful which is not.

We need pressure on the Maliki government. Hang on to the benchmarks that they set for themselves and set a non-binding goal, at a minimum, for the removal of most American troops.

WALLACE: Senator Levin, as you point out, congressional Democrats tried to pass and failed to pass, at least in the Senate, a bill that would have funded the war for a few months but would have linked it to troop withdrawals and also some restrictions on deployment.

The question now is are you going to fund the troops to continue the surge, to continue fighting this war?

LEVIN: We're going to fund the troops. We're not going to cut funding for the troops. The bill that we had a majority for in the Senate that was filibustered by the Republicans would have provided funding for the troops for the months that you indicated but also would have said that we would establish a goal for the removal of most American troops by the end of next year.

It was not a binding goal. It was simply a goal. And the refusal of this administration and the support of this administration's refusal by that filibuster by the Republicans in the Senate sends exactly the wrong message to the leaders of Iraq, that somehow or other, we're not going to put pressure on them to do what they promised to do.

I think that's a terrible message to them. It's the wrong message to our troops and to the American people, who say that we've been there now 4.5 years, it is time to at least have a goal.

Why in the name of heaven are we not willing to at least establish a goal for the removal of most of our troops that's not binding?

WALLACE: Senator, let me let Senator Graham answer that question.

GRAHAM: Why in the name of heaven would we undercut the most successful military operation in counterinsurgency in American history, maybe world history, because of this idea of putting -- capping troop strength, changing the mission, undercutting Petraeus?

If you want to bring back chaos in Iraq, pass the Levin-Reid amendment. If you want Al Qaida to come back, go back to the old strategy.

I cannot tell you how infuriating it is for me to sit here and listen to Congress trying to undercut a military commander and strategy that's produced results that are the precondition for reconciliation.

We'll never have reconciliation if the Congress runs this war. If we tell our enemy that we're going to start leaving at a date certain and start pulling troops out because of the next election here in America, they will come back.

We're on the verge of changing Iraq for the better, and the only way we will lose this war is to allow Congress to take it over, and we're not going to do that.

We should rally together as a Congress, push the Maliki government, stand by the military and quit playing this game of trying to undercut a successful military strategy by having the Congress set the mission, Congress determine the troop strength of that mission -- no sense to me.

WALLACE: Senator Levin, we've got about 30 seconds left. I'm going to give you the last word.

LEVIN: No one's trying to undercut the military. It's our military commanders...

GRAHAM: Oh, my goodness.

LEVIN: ... who are saying that it's the Maliki government's failure to work out the political settlement which is the greatest threat to the success of their mission.

We have supported our military commanders. We have given them the funding that they've asked for. And now they're saying it is the Maliki government's failure to reach a political settlement which threatens their success.

We are supporting our troops. We're supporting the military commanders. It is they that say put pressure on Maliki.

WALLACE: Senator Levin, Senator Graham, we're going to have to leave it there. Thank you both so much...

GRAHAM: Thank you.

WALLACE: ... for sharing your holiday weekend with us. And please come back, gentlemen.

LEVIN: Take care. Thank you.

WALLACE: Up next, how does this week's news of a stem cell breakthrough change the political debate? And the latest from the campaign trail. We'll hear from our Sunday regulars right after this break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MITT ROMNEY, FORMER GOVERNOR OF MASSACHUSETTS: The good news from the news this morning is we're going to have an ample supply of stem cells for research and for treatment without encountering these moral dilemmas.

(END VIDEO CLIP)

WALLACE: That was presidential candidate Mitt Romney talking about the announcement this week that researchers have turned human skin cells into stem cells without using embryos.

And it's time now for our Sunday group -- 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.

So, Brit, how big is this announcement of a breakthrough on stem cells, both as a scientific development and also as it filters into the political debate?

HUME: If no flaw is found in the claims for this, this is huge, because it will virtually eliminate the whole moral dilemma that was created by the use of embryos to generate stem cells.

Now we have, as you heard Governor Romney say, this large supply of them and it should mean that funding is now available not only from private sources, but from the federal government to advance this research.

This is a tremendously positive thing that everyone should be rejoicing over.

LIASSON: Yes, I think politically it helps all the Republicans who until now have been against stem cell research which is quite popular among the broad population.

HUME: Embryonic stem cells. LIASSON: Embryonic stem cell research, which is popular among the general election electorate, if not the Republican primary electorate.

WALLACE: So explain why it would help the Republicans.

LIASSON: It helps those Republicans who have been up until now against research on embryonic stem cells because that is a position that in the general election could hurt them.

Now, I would say Romney's first and foremost in that group, because he's someone who switched his position. He's someone who's been kind of under fire for his march to the right on social issues.

And I think if this, in fact, pans out -- and I bet in a year or two we'll know that -- or maybe that would be too late.

WALLACE: Well, we only have one year to the election.

LIASSON: That's too late. I'm trying to do the math in my head. But the point is we'll know pretty soon.

A lot of times when we've had these discoveries of a bunch of stem cells that are researchable, they turn out not to be so great. But this one I think we should know pretty soon, and it could help him.

WALLACE: Bill, I think it's fair to say that in the 2006 congressional races, embryonic stem cell research was an issue in a number of states. Missouri was one, certainly, in the Senate race there.

Do you think this will take that issue off the table?

KRISTOL: Yes, I think in the short term. But I think the broader issue of balancing the claims of morality and the progress of medical science remains.

And I think we need to give President Bush credit here before we get into all the 2008 politics. He made a serious effort to foster non- ethically problematic stem cell research.

Some of the stem cell research that we're celebrating today was, in fact, spurred on by NIH funding, which the president increased for stem cell research that did not involve the destruction of embryos, but he drew a moral line.

There are going to be many, many instances in this century where we're going to have to balance morality and science. And I think he deserves a lot of credit for making a serious effort to balance both, and it looks like it's going to have a happy ending.

WILLIAMS: Yes, hats off to President Bush on that, because he did put money into the idea of looking for an area where you could get stem cells that wouldn't come from embryos and wouldn't engage this whole argument about abortion, which -- I think this is a -- what we're seeing here is the president, the Republican Party, especially as it's wed to the forces that oppose abortion in American life, have sidestepped a difficult issue.

And the way that they have done it, I think, though, has delayed, potentially, innovation. And it has not obviated the need...

HUME: Oh, please.

WILLIAMS: Why do you say please?

HUME: Well, because look at what we've gotten out of this. This new process is infinitely less complex and difficult than the one involving embryonic stem cells.

WILLIAMS: Yes, but, Brit, wait a second.

HUME: Excuse me.

WILLIAMS: This does not match -- if you don't have a genetic match, which is what you require, which is why people were looking for research on discarded embryos -- discarded; not from any live person, you know, taking a fetus or something -- the idea was that the genetic material would have to match in order to perform stem cell therapy.

This may not work. You know, we don't know yet.

HUME: Well, everything in this -- this entire discussion is premised on the fact that what is said about this is true. Now, if you want to dispute that, your scientific knowledge may be so great that I can't argue with you.

But all I'm saying is if this is true, this is a tremendous breakthrough fostered by -- fostered in part, as Bill has just pointed out, by the resistance to doing it with embryos.

And it provides an unlimited series of -- set of stem cells to work with. And getting them is infinitely simpler and less complex than doing it the other way.

WILLIAMS: No one's arguing that, and I, with Bill and you, salute President Bush. He took a moral stand. I actually think that it was interfering, as Mrs. Reagan, as Governor Schwarzenegger and others have said, with scientific innovation.

But if that's his stand, he took it. And it's had some good outcome. But don't think that this then removes the need for continued research on embryos and the kind of stem cells that come from those lines.

WALLACE: All right. Let's move on to the campaign trail instead of the scientific campaign trail.

And one of the biggest developments this week -- and let's put it up - - is this new poll from the Washington Post which shows Obama now leading Clinton in Iowa 30 percent to 26 percent, with Edwards in third. Mara, how much trouble do you think Clinton is in in Iowa, and how big would it be -- and we've got big "ifs" and big caveats here -- if the so-called inevitable winner were actually to lose in the first contest?

LIASSON: I think that Iowa has always been Senator Clinton's weakest state. Her people acknowledge that.

However, since her whole campaign is built, as you said, on inevitability and being the kind of presumptive, prohibitive frontrunner, presumptive nominee and prohibitive frontrunner, I think a loss in Iowa would be a big deal.

Now, they believe they've built a firewall in New Hampshire, the Clinton people, that could withstand that. A lot of it will depend on what kind of loss it is. Is it by one point or is it by more than one?

I think what's interesting is no matter -- we had that debate in Philadelphia where Senator Clinton did poorly. Then we had the debate in Nevada where supposedly Obama did poorly. And it really hasn't changed the trend of the last couple of weeks, which is that this race is tightening.

It's now potentially not just a dead heat in Iowa, but that we have a new frontrunner in Iowa. We'll see if some more polls back that up.

I think Obama could win Iowa. I think that will be a very big deal. And then we're off to the races, because he has as much money as she does - - not as formidable an organization, but it will be a real fight.

HUME: Another factor in the equation, of course, is we now have the two dates, the caucus date for Iowa, which is, I guess, on the 8th, and the New Hampshire primary -- or 3rd, I'm sorry, and then New Hampshire is on the 8th.

They've never been so compressed before. And we don't really know whether this is a tremendous boon to the Iowa winner or whether it isn't long enough for all of that to take effect. Who knows?

WALLACE: In fact, I've heard it argued by equally brilliant people, I think at this table, that it, one, makes Iowa much more important and makes Iowa much less important.

KRISTOL: You know, what's wonderful...

LIASSON: The candidates think Iowa is very important. That is a fact.

HUME: Yes, that's for sure.

LIASSON: They're all there all the time.

KRISTOL: And what's wonderful about this is that the Iowa caucus goers -- you know, they think they should make up their own minds. They don't simply watch the national media and say, "Ooh, Hillary Clinton's the inevitable nominee, Rudy Giuliani or Mitt Romney is the frontrunner."

They're willing to change their mind. They're willing to look at these candidates. The Huckabee rise in Iowa is impressive. There could be yet another candidate rising, I think, in December on the Republican side.

I mean, we're going to have one or two more cycles here of surges and attacks and retreats. It's a real campaign, and I guess what the movement in the polls in the last two weeks tells me is we're now in the real campaign.

And in the real campaign, not in the pre-campaign, where there's stuff that only a tiny percentage of the electorate is paying attention to apart from us -- in the real campaign, voters will change their mind.

Most Democrats like Edwards and Obama and Clinton, and they're open to all three of them, and they're willing to be persuaded that one of them is more electable, or one of them is a fresher face, or one of them they prefer for some reason.

And the same is true on the Republican side. So I think the volatility on both sides now is going to be pretty impressive.

WILLIAMS: Well, I think we're anxious for volatility, because all of us want a great story. But the fact is that while Obama is, you know, a little bit inching ahead, he's still within the margin of error. And in the averages, Mrs. Clinton still holds the lead in Iowa.

But if Obama is able to win in Iowa, I think that he picks up momentum in a tremendous way. He's been running an incredible campaign. It looks like to me it's re-energized. He's supposed to go to Harlem this week.

You know, it's interesting to me that he's still trailing among black voters to Mrs. Clinton. And I guess it will be an opportunity for him to make some inroads, because if he can win South Carolina with the black vote, boy, then that would really put Mrs. Clinton at a disadvantage.

WALLACE: All right. Talk about getting ahead of ourselves. We need to take a quick break here.

But coming up, the Bush administration's new push for peace in the Middle East. Will this week's high-profile summit produce results? Some answers when we come back.

(COMMERCIAL BREAK)

WALLACE: On this day in 1973, President Nixon called for a voluntary end to Sunday gas sales. Responding to the oil crisis, it was part of a larger plan to achieve energy independence by 1980. Stay tuned for more panel and our Power Player of the Week.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

AMBASSADOR NABIL FAHMY: If you fail, the hope of peace will be severely damaged.

(END VIDEO CLIP)

WALLACE: That was Egypt's ambassador to the U.S. explaining just how high the stakes are for this week's Mideast peace conference.

And we're back now with Brit, Mara, Bill and Juan.

Well, President Bush convenes the Mideast summit in Annapolis, Maryland on Tuesday, including Israel and almost all of its Arab neighbors. It's just a one-day meeting, but U.S. officials hope it's the beginning of the process of serious negotiations.

Brit, what do you think of the prospects?

HUME: Well, sooner or later, every president, it seems, tries this. His father did toward the end of his presidency with Madrid.

Bill Clinton certainly tried more than once and ended his presidency still striving to strike a deal.

So now President Bush is having his go at it. If you think about it, if this succeeds, all it will do is restart the same process that has been in place but not very fully followed for a very long time. I don't think it's going to take much for it to seem to succeed.

There is one area, though, that's worth watching, and that is there's an Iran factor in these peace talks. There are countries that are coming to this -- Saudi Arabia, for example, is one; perhaps Syria may be counted as another.

WALLACE: They announced that they are coming.

HUME: Who are coming. Syria is coming. We don't know yet -- I don't think we know yet who they're sending.

But part of all of this is a reflection of the worries that some of these other Arab countries have about the rise of Iran and the desire to thwart Iran and its objectives of causing all kinds of trouble in places like Lebanon and in the West Bank and elsewhere. So that may be part of a shift in the political winds in the Middle East. It's very much worth watching and encouraging.

As for the likely specific results of this, it won't take much for it to have been seen to succeed, but it probably won't do that much, either.

WALLACE: Mara, I mean, let's talk about that, because all sides go in with serious problems. I mean, the Palestinians are split right down the middle with Fatah, which will be here, in control of the West Bank. Hamas, the terrorist organization, is boycotting it. They're in control of Gaza.

Israeli Prime Minister Olmert is, first of all...

LIASSON: Very, very weak.

WALLACE: ... being investigated, very weak in the polls. President Bush, a lame duck and not too strong in the polls.

And so are any of these parties strong enough to either make or to force a deal?

LIASSON: I don't think so. I think the deal that they want to get out of here is to say, "OK, we're going to go back to phase one of the road map," which is that Israel is supposed to halt settlement activity, and the Palestinians are supposed to halt terrorism.

The problem is -- they can agree on that. They've agreed on it before. The problem is can either of these leaders actually implement that, and that's the concern. Can Olmert actually -- is he strong enough to do his part? And Abbas doesn't even have control over all of the Palestinian territory.

So I think it's very unlikely that whatever is agreed on at this meeting can actually be implemented.

WALLACE: Bill, Secretary Rice -- I was going to say the Bush administration, but specifically Secretary Rice talks about the possibility of a deal by the end of the Bush presidency, which is, what, 13, 14 months from now.

Given all of these caveats, all of these impediments we're talking about, what do you think are the prospects of that?

KRISTOL: I think unlikely, and I think she'd be well-advised to keep the expectations down. And I think she would be well-advised, frankly, to remember that she's secretary of state of the United States, and we have a lot of things to accomplish in the Middle East.

Syria has to be prevented from killing Lebanese politicians and destabilizing Lebanon. Saudi Arabia could do much more to help in Iraq, where we're succeeding, but the Saudis still haven't opened an embassy and still haven't cut off the flow of the jihadists.

WALLACE: So what are you suggesting, that in our zeal to get this deal, that we may go soft on some of the other interests in the region?

KRISTOL: Well, I mean, have we -- you know, Hariri was killed over two years ago. What have we done about holding Syria accountable for that?

And I'm just worried that she's been so focused personally on this. Pakistan's kind of an important place. She's delegated that to the deputy secretary of state.

Iran's nuclear program -- that's been delegated to Nick Burns, the number-three person in the State Department. I mean, presumably...

LIASSON: What about Iraq?

KRISTOL: Well, and Iraq, the State Department...

LIASSON: I mean, that needs a lot of diplomacy, too.

KRISTOL: Well, luckily, Petraeus and Odierno have that under control, and Crocker -- and Crocker, to his credit.

But again, it's not as if Condoleezza Rice has been spending a lot of time -- there's a lot of diplomacy that can be done to strengthen the young government in Iraq, which now has a real chance, and which the neighbors could be doing a lot more to help with.

So I just hope she's not so obsessed with this hope for a legacy of an Israel-Palestinian settlement that she's ignoring an awful lot of other important diplomacy that has to happen in the Middle East.

WILLIAMS: Well, you know, President Bush is also invested in this for legacy reasons, because I think he wants people to not simply focus on what's gone on, the difficulties, if not failure, in Iraq.

And so what you move to then is trying to build this sort of moderate bulwark of Arab states who are willing to take on Iran, willing to translate Syrian -- what's been intransigency and willingness to support Hamas, and make it into something that's a more positive force in the Middle East.

I think that -- contrary to what Brit was saying, I think that President Bush has been late to the party. I don't understand why he didn't address this earlier in his term and put more personal capital at play so that people would understand how serious he was.

At the moment, I think to many people, it comes across as a last- minute effort to somewhat alleviate the problems that have come from failed intervention in Iraq.

KRISTOL: President Bush was busy liberating two countries from horrible dictatorships, the Taliban and Saddam Hussein, fighting a difficult war in Iraq, trying to deal with Iran's nuclear program, liberating Lebanon from Syria.

He's done a pretty good job, actually. WILLIAMS: I see, and what's going on between Israel and the Palestinians has not been part of that package, and that's absolutely central to trying to improve American standing and Middle East peace.

KRISTOL: No, it's not central to it. Israel pulled out of Gaza in 2005. Is that kind of a big deal? Did that work out very well?

WILLIAMS: No, because I don't think that it was complete, and I don't think that they have been willing to make the concessions necessary...

HUME: Oh, please.

WILLIAMS: ... to form a Palestinian state, which at the end of the road map would be...

HUME: Wait a minute, Juan.

WILLIAMS: ... a Palestinian state and a secure Israel.

HUME: Juan, we've been led to believe all these years that if the Israeli occupation just ended, all would be well. Well, the Israeli occupation of Gaza has ended, and look at that place.

It is run by a gang of hoodlums who not for one day stopped shelling into Israel after Israel got out, as they'd been urged to do all these years.

WILLIAMS: You have a short historical memory. And the settlements are not all gone. That would be part of what's on the table. And you've got to also consider what would happen in Jerusalem.

HUME: So if the settlements were all gone, Hamas would behave itself in Gaza?

WILLIAMS: Well, no. I think you have to have U.S. force, U.S. willingness to negotiate, and you have to have a complete and fair settlement.

WALLACE: All right, folks. I just want you to know you have just gotten a preview of what's going to happen in Annapolis on Tuesday at the summit.

Thank you, panel. See you next week.

Up next, our Power Player of the Week, Ashley Judd.

(COMMERCIAL BREAK)

WALLACE: It's not unusual for celebrities to come to Washington to push their latest cause. But it is unusual when a star seems more committed to doing good around the world than doing well in Hollywood. Here's our Power Player of the Week.

(BEGIN VIDEOTAPE) ASHLEY JUDD: Those of us who are in the arts have a certain amount of capital that we can spend.

(BEGIN VIDEO CLIP)

JUDD: How did he know he could do such a thing to us?

(END VIDEO CLIP)

WALLACE: Ashley Judd may be a movie star, but she says what she calls service work is now more important than her career in Hollywood.

(BEGIN VIDEO CLIP)

JUDD: So where would you go when you needed to find food for your mom?

(END VIDEO CLIP)

WALLACE: She spends three months a year working for YouthAIDS, traveling so far to 10 countries in Asia, Africa and Central America to fight the spread of the disease.

How do you handle your two very different lives, making movies on the one hand and going to the ends of the earth to save people's lives?

JUDD: I just do first things first. I do what's in front of me. I remember simple slogans like easy does it.

WALLACE: This spring, Judd went to India for three weeks trying to educate people at risk for HIV/AIDS. Her trip is the subject of a new National Geographic documentary called "India's Hidden Plague."

JUDD: Over three million people are infected. A million of them are children. Lots of children are being orphaned.

WALLACE: How near is India to a tipping point in whether you control the disease or it just spreads out of control?

JUDD: India is very much at the tipping point, and we have all the potential in the world to avert a crisis such as the one sub- Saharan Africa is still enduring. And how dare we not?

WALLACE: That sense of outrage was stoked when Judd visited 14- year- old Nila (ph) who works all day to raise her two younger siblings after both parents died of HIV/AIDS.

(BEGIN VIDEO CLIP)

JUDD: Oh, my goodness. Beautiful girl.

(END VIDEO CLIP)

JUDD: In addition to bearing this unbearable load of being a near child, yet having the responsibility of feeding her extended family, she's just in a state of grief. She's an orphan.

WALLACE: YouthAIDS markets its message like a company selling a product, using pop culture...

(BEGIN VIDEO CLIP)

BEYONCE KNOWLES: AIDS. Know your choices.

(END VIDEO CLIP)

WALLACE: ... in this case, puppet shows and games -- to reach its target audience.

When you go to these countries where HIV/AIDS is spreading in some cases like an epidemic, what's your message to young people?

JUDD: The A, the B and the C. Abstinence, being faithful to one partner, partner reduction, delay of sexual debut, correct and consistent condom use, both the male and the female condom.

WALLACE: Judd says it was Bono who got her into service work. They were both in Washington recently raising money for YouthAIDS.

(BEGIN VIDEO CLIP)

WALLACE: I have had a chance to hear the stories of the vulnerable...

(END VIDEO CLIP)

WALLACE: Judd has been YouthAIDS' global ambassador for five years, and she intends to keep at it as long as she can give the world's most vulnerable tools to help themselves.

JUDD: From being disempowered to empowered -- wow, that's really exciting. And at YouthAIDS, that's what we do best, and we do it cheaply and effectively.

(END VIDEOTAPE)

WALLACE: Ashley Judd's documentary "India's Hidden Plague" airs Friday, November 30th at 10:00 p.m. Eastern on the National Geographic Channel.

Now this program note. Next Sunday we'll feature a debate between former top White House advisor Karl Rove and the man in charge of holding onto the Democratic majority in the House, Congressman Chris Van Hollen, over the issues that will dominate the 2008 campaign. This should be interesting.

But that's it for today. Have a great week, and we'll see you next "Fox News Sunday."

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