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December 07, 2008

Condoleezza Rice, Carl Levin, Richard Shelby, Roundtable

Fox News Sunday

CHRIS WALLACE, HOST: India and Pakistan in a stand-off over the terror attacks of Mumbai. Will the nuclear neighbors avoid a conflict? We'll hear from Condoleezza Rice who's just back from the region. The secretary of state, live, only on Fox News Sunday.

Then auto makers ask Congress for financial aid again. Is a government check in the mail? We'll ask two key senators, Richard Shelby, the top Republican on the Banking Committee who opposes a bailout, and Democrat Carl Levin, the top advocate for the auto industry.

Also, one month into the transition, what kind of marks has the president-elect earned? We'll get a report card from our Sunday panel, Bill Kristol, Mara Liasson, Charles Krauthammer and Juan Williams, and our power player of the week, sorting through 300,000 resumes, all right now on Fox News Sunday.

And hello again from Fox News in Washington. A week after terrorists hit Mumbai, the investigation into the attack continues. And relations between India and Pakistan threaten to spiral out of control. We're joined now by Secretary of State Condoleezza Rice, who has just returned from meeting with top leaders of both nations.

And Secretary Rice, welcome back to Fox News Sunday.

RICE: Pleasure to be with you, Chris.

WALLACE: Are you persuaded by the evidence you see that the Mumbai attack was launched from Pakistan? And are there signs the attackers were trained either by current or former Pakistani military or intelligence?

RICE: Well, we have passed information to both India and Pakistan. I think we do believe that there was -- there is evidence of involvement somehow on Pakistani soil. I believe that the government of Pakistan very much wants to do the right thing here, because they understand that Pakistan has a responsibility, even if these were non-state actors, which I believe they were -- non-state actors operating on Pakistani soil. It is still Pakistan's responsibility to respond.

WALLACE: So when you talk about responding, have you urged the Pakistani officials to arrest anyone they believe was involved and turn them over to India?

RICE: Well, the important thing is to make sure that the perpetrators are brought to justice, and that any information that they might have about follow-on attacks can be gleaned. And therefore, it is very important that these people be arrested. The investigation is still ongoing. And Pakistan needs to cooperate transparently. They've said that they will. But they also need to act, because clearly there are organizations that have long-standing operatives in this kind of activity.

This was a very sophisticated attack. It makes one concerned about follow-on attacks. And so I emphasized to Pakistan that they really must cooperate.

WALLACE: When you say cooperate, the Indians specifically have said: We don't want Pakistan to try them themselves. We want them to turn them over to our jurisdiction. Is that something that you support?

RICE: Well...

WALLACE: Or if Pakistan acted on its own, would that be enough?

RICE: I think the important thing is that Pakistan act, and that these people are brought to justice, and that any information that they may have is put to use in making sure that follow-on attacks don't happen.

WALLACE: Has Pakistan agreed to a 48-hour timetable to take action?

RICE: No. There's not a timetable involved here. Obviously, this is counterterrorism work. It's hard work. And it's not as if these people are sitting on the surface. But Pakistan, the leaders in Pakistan, were very clear with me that they understood their responsibilities. And now we're waiting. We expect things to happen.

WALLACE: Well, I want to ask you about -- a little bit about the nature of your conversations with Pakistani officials, including the president. Have you made it clear to Pakistan that failure to act and to act in a comprehensive fashion will affect U.S. relations with Pakistan, including the possibility of the millions of dollars we give them in military aid.

RICE: Well, I have made very clear that Americans also died in that attack, and that the United States expects the full and complete cooperation of Pakistan and Pakistani action; and that yes, it is a matter for our relationship.

WALLACE: When you say matter for our relationship...

RICE: Yes, it is a very serious matter that Americans were killed in that attack as well. And I made very clear to the Pakistanis that we are a friend of Pakistan. We're an ally of Pakistan. But when something like this happens, the United States expects Pakistan to act.

WALLACE: How dangerous would you say the situation is now, the potential threat in the relationship between Indian and Pakistan? And as a follow-on, does India have the same right that the United States believes it has to take action against threats on foreign soil?

RICE: Well first of all, the relationship between Pakistan and India is better than it was in 2001 and 2002, when we faced a similar crisis. And, in fact, the Pakistani foreign minister was in India at the time that the -- that this all happened. So the relationship is better. And that is serving us well. The United States also has better relations with each of those countries than we had in 2001, 2002. That is serving us well.

But there is no doubt that the Indian government, the Indian people are outraged. They feel vulnerable. And they expect, as we do, Pakistan to act. When it comes to something like this, it is important not to take steps that will make a situation worse. The regional circumstances here are such that any response should be focused on getting the perpetrators and focused on making sure that follow-on attacks don't happen. And I emphasized that to the Indian government.

WALLACE: So unilateral action by India would not be help.

RICE: Well, I just think that we don't -- they shouldn't do anything that will make the situation worse. And by the way, Chris, I didn't hear a lot of bellicose talk between -- by Indian leaders or with Pakistani leaders. This is a relationship between India and Pakistan that has improved. And they're trying to build on that. But India expects Pakistan to act, and so does the United States.

WALLACE: President Bush made a major speech on Friday reviewing his policies over the course of his two terms in office in the Middle East. And I want to explore that with you. First of all, this statement.

(BEGIN VIDEO CLIP)

PRESIDENT GEORGE W. BUSH: We have made our bottom line clear. For the safety of our people and the peace of the world, America will not allow Iran to develop a nuclear weapon.

(END VIDEO CLIP)

WALLACE: Secretary Rice, for all the rhetoric, isn't the reality that Iran is close to a nuclear weapon today than it was eight years ago?

RICE: Well, Iran is still pursuing, quite clearly, the technologies that can lead to a nuclear weapon. But Iran also faces a heavy set of sanctions, not just through the U.N., that's one thing; but also through the companies and banks that will no longer deal with Iran, Iran's isolation has deepened. And indeed, Iran is more isolated. And there's a greater international consensus about the Iranian program than at any other time.

WALLACE: But forgive me. When the president says we will not allow Iran to develop a nuclear weapon, we're not stopping them from developing a nuclear weapon.

RICE: Well, we are working very hard with the international community to make certain that they don't get the technologies. Let's remember that we are talking about a country that is pursuing an enrichment and reprocessing capability that can either be for civilian affairs or for nuclear affairs. Our determination is that Iran is not trustworthy with that kind of technology. And there yet -- as to yet, the Iranians have not given to the demands of the international community. But we continue to put the pressure on. And the diplomatic course is really the best course at this time.

WALLACE: All right. President Bush also made this claim.

(BEGIN VIDEO CLIP)

BUSH: The most vexing problem in the region, the Israeli- Palestinian conflict, there is now greater international consensus than at any point in modern memory.

(END VIDEO CLIP)

WALLACE: But Secretary Rice, there's a complete split among the Palestinians between Fatah and Hamas. There's a sharp disagreement among the Israelis about the peace process. We're nowhere near a peace agreement.

RICE: Well, I simply don't agree with that, Chris. Since the Annapolis process, these parties, Israel and the Palestinians, have been negotiating seriously on all the so-called core issues -- borders, refugees, etc. They are moving toward that agreement. There is better situation on the ground with Palestinian institutions, security institutions beginning to take responsibility. And when the president says that there is an international consensus, he means the Annapolis process that brought 54 countries together, including by the way the leading Arab states -- Saudi Arabia, Egypt, Jordan, even Syria -- to back a particular process to get to this accord.

Finally, I would just note that Hamas is pretty isolated. It is true that there is Hamas in Gaza. But Hamas has few friends, with the exception of Iran and to a certain extent Syria. The major Arab states are backing Mahmoud Abbas, backing the Palestinian authority, in the Annapolis process to try to find a peace with Israel. And Israelis, since Ariel Sharon, the father of the settlement movement, said that it was going to be necessary to split the land, Israelis have been united -- more united behind the two- state solution than at any other time as well.

WALLACE: Then there is Iraq. The president said the other day that the biggest regret of his presidency was the failure of intelligence leading up to the invasion of Iraq. What responsibility -- at the time you were national security adviser. What responsibility do you feel for that failure? And if you had known then what we know now, that there were no weapons of mass destruction, would you still have recommended going into Iraq?

RICE: Well, this is a very dangerous regime. And we thought they had a more active weapons of mass destruction program than they had. And Chris, we can go back and try to do the what if. But the fact is, at the time, we believed that they were -- that Saddam Hussein had reconstituted this biological and chemical weapons program and was likely making progress on his nuclear program. And that was the assessment of the intelligence community. Now, we have reformed the way that information gets to principals. And if I had it to do over again, yes, I'd have the system in place that we have now, not the system that we had then. But this system of alternative views that are put forward in a more -- a crisper and clearer way is important to understanding intelligence. But across the world, people believed Saddam Hussein was hiding his weapons of mass destruction program. He had used weapons of mass destruction. We had found a nuclear program that was more advanced than we thought in 1991.

And so while it's fine to go back and say what might we have done differently, the truth of the matter is we don't have that luxury. And we didn't at the time.

WALLACE: The president does say, though, it is his biggest regret as national security adviser, somebody who was marshalling the intelligence -- I know you weren't in charge of it -- and was making recommendations, running the national security process. Does it pain you that we went to war under what turned out to be, not false, but mistaken premises?

RICE: Of course. I would give anything to be able to go back and to know precisely what we were going to find when we were there. But that isn't the way that these things work. And I still believe that the overthrow of Saddam Hussein is going to turn out to be a great strategic achievement, not just for the Bush administration, but for the United States of America; because now, in the place of a country that has long been at the center of Middle East politics, as a bulwark against Iran, the only problem was a murderous dictator who killed his own people and put them in mass graves, who attacked his neighbors twice, caused millions of deaths in wars in the region, dragged us into war three times and sought and used weapons of mass destruction.

You now have a young democratic, multi-ethnic, multi-confessional Iraq that has just signed an historic agreement with the United States establishing a long-term relationship as well as a strategic forces agreement to allow American forces to help them finish the job, and is going to be friendly to the United States. That's a trade up.

And you now have an Iraq that is at the center of the Middle East, a bulwark against Iran without the tremendous down sides that came with the murderous and aggressive regime of Saddam Hussein. And so in terms of the strategic position in the Middle East, this Iraq is going to be at the core of a different kind of Middle East, and one that will be safer, ultimately, for the United States.

WALLACE: This may well be the final interview we do with you as secretary of state. And over the years, you've been a good sport about playing a lightning round with us where we ask quick questions and you give quick answers. So let's do it one last time. Did we misjudge Russia's Vladimir Putin?

RICE: We tried to give Russia a chance to enter the international community on 21st century terms, not 19th century terms. It was worth the choice. WALLACE: And did it turn out, though, to be a mistake?

RICE: Well, it wasn't a mistake to have that policy. But unfortunately, I think high oil prices and fears of the color revolutions led to a different Russian than we expected.

WALLACE: What would you tell Hillary Clinton is the biggest difference between her experience so far and the challenges of being the secretary of state?

RICE: Well, as secretary of state, you get to represent this great country. That's the good news. It's also a huge institution with more than 50,000 people worldwide. And the big challenge is to mobilize that great strength of the foreign service and the civil service in one direction. And these days, the challenge is that diplomacy is changed so much. It's not done so much in the halls of governments. It's really done in the field with military offices in places like Kabul and Baghdad, with aid workers in places like Mozambique. It's a great challenge. But it's tough.

WALLACE: I appreciate the answer. You're not observing the lightning round rules very well.

RICE: I'm doing my best, Chris. I'm doing my best.

WALLACE: Did -- this'll be a tough one to get a quick answer. Did Donald Rumsfeld mismanage the Iraq war in the beginning?

RICE: Well, I think the Iraq war in the beginning, we did very well.

WALLACE: I'm talking about the occupation.

RICE: Look, I don't think we had the right structure. I'll very, very blunt. We tried in Afghanistan to use a kind of U.N. structure with countries adopting ministries. We tried in Iraq to give it to a single department, the Department of Defense. That's why the president has now said that we need a civilian response corps that can do those activities. But clearly, we didn't have the right structure.

WALLACE: And is that Donald Rumsfeld's responsibility?

RICE: No. I -- look, I take responsibility for that too. We just didn't have the right structure.

WALLACE: Is it true that during the first term, he wouldn't return your phone calls as national security adviser?

RICE: No, absolutely not. Simply not true.

WALLACE: I mean, there have been reports that he wouldn't return...

RICE: I know. And I don't know where they -- where they come from. I talk to Don at least once or twice a day. And so...

WALLACE: It's probably more than you wanted.

RICE: It's all -- I just -- I just don't know where that comes from.

WALLACE: A couple of last things we want to get into with you. Last week, you asked for and got the opportunity to play the piano for the queen of England. Let's watch.

WALLACE: So how was that experience? How is it to play for -- play at the palace for the queen?

RICE: Oh, it's pretty special to play at the palace. And playing for the queen was really fantastic. David Miliband's wife, the foreign secretary of Great Britain, is a fine violinist. And she brought some of her friends from the London Symphony. It was -- it was really special.

WALLACE: I hear that she said, "I didn't know you were good." So she just expected...

RICE: Oh, no, no, no. She said "I didn't know you were so good," which was...

WALLACE: Well, that's...

RICE: ... was very kind.

WALLACE: Finally, you say that after you leave office, you're going to go back to Stanford and teach. And you're also going to write a book about your parents who brought you up in Birmingham, Alabama. I'd like you to take a moment or two, if you could, to reflect on the journey from the little girl in Birmingham, heavily segregated Birmingham, Alabama, to being secretary of state; and now to leaving as a new African-American president takes office.

RICE: This is an extraordinary country. It's a country that has started to overcome these old wounds, or has overcome these old wounds, in remarkable ways. But you know what it really says about America is that it's who we claim to be we are. I remember very well segregated Birmingham. I remember when you couldn't go into a restaurant. And now, after two back-to-back secretaries of state, you're going to have a Black president of the United States. And around the world, people say how could that be? And I say it's because we are America.

And I'll tell you, Chris, the most important thing in remaining that way is confidence in what my parents had confidence in, and that is that if you give people a chance, if you educate them well, then they can achieve great things. And it really doesn't matter where you came from. It matters where you're going. And it really doesn't matter if you came from modest circumstances, you can do great things.

And so that's really the part of America that's splendid. It's, yes, the racial issues that we're overcoming. But what we're really demonstrating by this is that that great national myth -- and a myth isn't something that's untrue. It's just outsized. That great national myth of the log cabin is very much intact.

WALLACE: Secretary Rice, I'm going to thank you. I'm going to thank you for coming in and talking to us over the years...

RICE: Yes.

WALLACE: ... and answering our questions, good and bad, in tough times, in easy times. And we appreciate your always stepping up to the plate and answering them. Thank you. And we wish you all the best.

RICE: Thank you very much, Chris. And all the best to you and the great crew here at Fox News.

WALLACE: Thank you.

Up next, the Big Three auto makers ask Congress for a lifeline. Will they get it? We'll ask two key senators right after the break.

(COMMERCIAL BREAK)

WALLACE: With the Big Three auto executives driving to Washington this week with their hats in hand and pleading for a bailout, we're joined now by two key senators involved in the debate. Richard Shelby, top Republican on the Banking Committee who opposes a big government handout for Detroit, and Carl Levin, Democrat of Michigan whose a leading advocate for the industry.

And Senators, welcome back to Fox News Sunday. All right, Democratic congressional leaders, as we understand it, are negotiating with the White House this weekend to come up with something around $15 billion to see the U.S. auto makers through March at least.

Senator Levin, do you have a deal?

LEVIN: I think they're very close to a deal. I'm very confident there will be a deal, and that that'll happen within 24 hours. And the reason that that's true is that it will be bipartisan. Not every Democrat or every Republican is on board. But the White House Republican leadership in the Senate, the Democratic leadership in the House and the Senate will, I believe -- and I'm confident of this -- will achieve an -- a bill to be introduced in the next couple days.

And the reason I'm so confident of that is that there is, number one, the plans have been produced as requested by the Congress. Secondly, there's a common understanding that this is a global problem that has created the loss of sales by auto industries around the world. This is not just a unique American problem. And every other government that produces automobiles that I know of is providing loans to their auto industries. You can go all the way from Europe, where $50 billion has been requested, to Brazil, where $4.5 billion has been provided. So this is something which is not a uniquely American problem.

WALLACE: And you -- and you believe that you have the votes to pass this in Congress?

LEVIN: No, that's a -- obviously, that's a much more complicated question as to whether the votes are there. What I'm confident of is that the bill will be introduced, and that the bill -- because -- I'm confident of this also, Chris, because there's a consensus that there must be conditions attached. This is not something which divides people who support the loan program. Everyone who supports a loan program that I know of believes that there must be conditions attached. There must be an administrator of the program who enforces rules, makes sure that...

WALLACE: Well, let me -- let me -- let me -- let me ask you...

LEVIN: ... make sure that it's a new type of industry...

(CROSSTALK)

WALLACE: Let me ask you about a couple of specific things. As part of this $15 billion bridge loan, if you will, is there going to be a car czar appointed who will oversee the efforts of the auto industry to clean up their act and restructure?

LEVIN: There will be an administrator who's selected during the next 60 to 90 days, I believe, who will make sure that the promises that are made in these plans are kept, that the conditions of the money are met, that there will be real oversight going on, that there will be a leaner and a greener industry that comes out of this.

But there's also a consensus among the leaders of this country, including the president, president-elect, that providing those plans lead to viability. We cannot afford to lose the millions of jobs that would be lost if any of the Big Three go under.

WALLACE: Let's bring in Senator Shelby. You've been one of the leading critics of any bailout. From what you're hearing -- $15 billion, get them through until March, going to have an administrator who makes sure they keep their promises. Will you support that?

SHELBY: Oh, absolutely not. I think this is a bridge loan to nowhere. This is a down payment on many billions to come. This is not something that happened overnight. This is 30 years in the making. These companies basically are -- have failed, are failing. They probably need, according to some people, about 60 percent of the management to go, and about 40 percent downsize of the workers. They've got to compete. They can't compete today. And the question is, will they be able to compete tomorrow?

We would like to save them. But they've got to save themselves. And I don't believe they're willing to save themselves, because they could be restructured the right way. And they don't want to do that.

WALLACE: Are you and other Republicans prepared to filibuster this bill?

SHELBY: Well, I would -- I think we need to debate it. And that's what filibuster is about. And this week would be a good time to do it. I hope that we will be able to have an extended debate on it. We'll see what happens.

WALLACE: Do you think you have the votes to sustain a filibuster?

SHELBY: I don't know. It depends what happens, what the -- in the meantime, I know people want to get home for Christmas. They want to get out of here and come back, and -- but what I fear, Chris, the first...

WALLACE: Sounds like you want to hold Congress hostage here, Senator.

SHELBY: The first -- the first down payment is just the beginning. It's an installment plan of billions and billions and billions. And we don't know the end game.

WALLACE: Senator Levin, you said the other day that southern lawmakers, like Senator Shelby -- and you specifically mentioned his name - - have an agenda; because they've got foreign, non-union car companies in their states who will benefit if Detroit goes down. You really believe that?

LEVIN: I think there would be some companies that would benefit if Detroit goes down, sure. They're competitors. And a number of them have opened up plans in the South, which they have a right to do. But there will be winners and losers. The big -- the big losers, however, will be the American people here, Main Street in America that has the car dealers, 10,000 perhaps car dealers of the Big Three.

These are the suppliers that exist in over half of our 50 states. These are the people who produce the parts, the components, all over this country. The Big Three...

(CROSSTALK)

WALLACE: Yes. But a lot of those dealers under this business plan are going to lose their jobs.

LEVIN: They will. That -- but a lot more will... WALLACE: They're going to be shut down.

LEVIN: A lot more would be shut down if the Big Three goes bankrupt. And obviously, the competitors of the Big Three would pick up some of the slack. But the major -- the major losers here would be an economy which cannot afford the loss of 3 million jobs minimum. Also we -- this is a Main Street issue. Some people say it's just the Big Three. My gosh, this is every -- almost every major community that has car dealerships will be severely hit by this.

WALLACE: Let -- let -- let me bring in Senator Shelby again. Do you have, as Senator Levin has charged, an agenda to help your local foreign auto makers?

SHELBY: I don't have an agenda. But I'll tell you this. In the South, from South Carolina, Alabama, Kentucky, Georgia, Tennessee, Mississippi, Texas, we have about 124,000 people employed in the automobile industry. They are competing. General Motors, Ford and Chrysler can compete, but not under the model that they have. We don't want General Motors and Chrysler and Ford to go away. But it -- with the model, their management and their product, they're going away -- this didn't happen overnight -- if they don't do something about it. And we can't save people who can't save themselves.

WALLACE: All right. I want to change subjects on you. The Bush Treasury Department, Senator Shelby, is talking about trying to get its hands on the second half of the $700 billion bailout, another $350 billion, and spend it now instead of waiting and leaving it for the Obama administration. What do you think of that?

SHELBY: That'd be a horrible idea. I look at what they've done with the money. There's no accountability. I opposed it to begin with. We don't know who benefited from the first $350 billion. It certainly hasn't been the American people by the banks making loans as we were told that would happen. It has...

WALLACE: So you would oppose giving...

SHELBY: I opposed it to begin with. And I will oppose the -- loosening the money up for secretary of treasury. I think his plan's flawed. I think he's -- he doesn't know where he's going. And that's shown by the facts.

WALLACE: Senator Levin?

LEVIN: You know, there's been a real double standard here. $350 billion have gone out to the financial industry. We haven't brought their CEOs into Washington for grilling. They should be brought in for a grilling by the way. It's totally appropriate that Congress show greater oversight as they have with the auto industry. They ought to show that oversight with the financial industry prior to any additional funds being appropriated.

WALLACE: But would you -- but do you answer my direct question, which is would you agree, if you get that kind of oversight, to give Secretary Paulson the money? Or do you want to save the money and leave it for the Obama administration?

LEVIN: I would consider additional funds only if there is additional oversight hearings. And then I'm satisfied that they have the kind of plans which have been required properly...

WALLACE: You want them to grovel a little?

LEVIN: No, I don't want anyone to grovel. I want them to demonstrate to the American people that the people who live in houses who are being foreclosed are going to benefit, that the small businesses on Main Street are going to benefit. That was required, and properly so, of the auto industry. It ought to be required of the financial industry. And if they come through with those plans, then I would consider it.

WALLACE: All right. We've got less than two minutes left. I want to ask you about one last subject.

Senator Levin, you of course are chairman of Senate Armed Services. President-Elect Obama has named former army chief of staff General Eric Shinseki to be the secretary of veterans' affairs. We see him there. And the famous hearing at which he predicted it would take several hundred thousand U.S. troops to control Iraq after the invasion. And after that, he was not so ceremoniously ushered out of office. What do you think of the nomination?

LEVIN: I think it's a wonderful nomination. I happen to be the senator that asked him the question that produced the answer that got him shown the door. I thought it was tragic. It was -- it was wrong for the Bush administration to mistreat him the way they did. He gave an honest answer. He spoke truth to power. Obama I believe, the president-elect, will welcome and chose now, by appointing Shinseki, that he will welcome people who disagree with him to express those views to him.

WALLACE: And Senator Shelby, you got the final word on this.

SHELBY: I -- I will really support General Shinseki. He's a great soldier. He's a great leader. We should have listened to him when he testified for the appropriations defense as he did armed services. We didn't. And look where we are today.

WALLACE: And you think he'd be good in veterans' affairs.

SHELBY: Absolutely superb.

LEVIN: And by the way, our veterans deserve the kind of hero that we have in Shinseki.

WALLACE: Senator Shelby, Senator Levin, thank you both for coming in.

SHELBY: Thank you, Chris.

LEVIN: Thank you.

WALLACE: As always a pleasure. Please come back.

LEVIN: Chris, thank you.

WALLACE: Up next, our panel gives us their thoughts on an auto bailout and what Congress can and should do about the deepening recession. Stay tuned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RICHARD WAGONER, CEO, GENERAL MOTORS: We're here today because we made mistakes, which we're learning from; because some forces beyond our control have pushed us to the brink; and most importantly, because saving General Motors and all this company represents is a job worth doing.

(END VIDEO CLIP)

WALLACE: That was the contrite head of General Motors this week after he had driven, not flown in a private jet, to Washington. And it's time now for our Sunday group. Fox News contributors: Bill Kristol of the Weekly Standard, Mara Liasson of National Public Radio, syndicated columnist Charles Krauthammer and Juan Williams also from National Public Radio.

So it looks like the Big Three are going to get some government money to tide them over until early March and until the Obama administration takes office. Bill, is that because of anything they did? Or is it because of just deepening concern about this recession?

KRISTOL: I think more deeply concerned about the recession. I'm not sure -- I'm not sure they've helped their cause that much in the last few weeks flying to Washington in their private jets and then over-reacting and ludicrously driving to Washington in their allegedly, you know, eco- friendly, green cars. But I -- look, this -- they are a huge part of the American economy. And I don't think it's unreasonable to tide them over until people can figure out what -- what can be a longer term solution.

It is striking to me how everyone thinks $25 billion for Citigroup, no problem. Didn't we just do that a couple weeks ago? Necessary for the whole system. And then the auto industry says: Gee, can we get a little money too? And everyone goes no, no. They're terribly incompetently managed companies.

I think the auto industry would stand up pretty well against the banks. And I do think there's a kind of class snobbishness almost in Washington and New York. You know, Bob Rubin, he's a great statesman. He got paid $120 million to be on the executive committee of Citigroup. He doesn't get called up before Congress and humiliated. The CEOs of the auto companies, who admittedly deserve a little humiliation probably, you know, they're just treated as if you idiots, you fools. Couldn't you tell that you can't -- you know, you can't make better cars.

So I -- I'm -- I'm sort of sympathetic to the auto guys. They've gotten kind of a bum rap compared to the easy kid-glove treatment of the -- of the finance guys.

WALLACE: Mara?

LIASSON: Yes, I -- I think it was inevitable that they were going to get something. Of course, they did have to be kind of punished and humiliated by -- by -- they had to drive here. Although I do agree, it was kind of dumb to fly here in the first place. But really, they didn't make Bob Rubin hitchhike or any of the other financial titans.

But look, I think that some things have changed. Nancy Pelosi was willing to back off her original insistence that the money not come from that other pot of funds that was going to help them become more...

(CROSSTALK)

WALLACE: Yes, we should explain. There was $25 billion that Congress...

LIASSON: $25 billion that was going to help them retool and produce greener cars. She didn't want the money to come from that. She wanted the money to come from TARP, the big...

WALLACE: $750 billion bailout.

LIASSON: ... $700 billion pot. But she now agreed that she will take some of the money out. Of course, she wants it replenished at some later date. This is a -- this is a kind of a bridge loan. The Obama administration will have to do something more for them in March. But also, there are going to be a lot of changes in the auto industry. The UAW is going to have to make even more concessions than it already has said it will. And they've been a pretty willing partner in this.

I think eventually what you're going to have is an auto industry that looks a lot like the kind of wage scale and system that the foreign auto companies who produce cars pretty profitably in the United States have. That's what's going to happen in Detroit.

WALLACE: And I want to pick up on that with you, Charles. Did you hear from the auto executives this week an indication that they get it, and that with this lifeline thrown to them, that they really are going to change the way they do business?

KRAUTHAMMER: I think they gave an indication that the executives get it. They talked about a lot of symbolism, $1 a year, not having the bonuses. They talked about reducing the number of dealerships, which obviously has to be done. GM has 7,000, Toyota 1,500. And they sell the same number of cars. Obviously an incredible surplus that's going to have to be whittled down.

The one player that's been missing in action is the UAW. It's -- it offered concessions, which if you look at them are rather meaningless. The real issue is can they bring their wages to a level comparable with the foreign manufacturers in the United States.

WALLACE: Not only their wages, their benefits too.

KRAUTHAMMER: Exactly. And they haven't indicated anything on that of any significance. They've spoken vaguely about perhaps negotiating concessions in the future. But I think what's really interesting is how the Bush administration have fought ultimately over the manner in which the bailout and the loan would be done. As you said, not out of the TARP money, the original money, but out of the money that was appropriated for energy-efficient the cars.

The Bush administration understands that it set an incredible precedent of the most massive intervention in the American economy, probably in our history. And it's a conservative administration. It wants to at least leave behind a principle that you only do it in the case of the finance and credit-issuing companies, because it's a kind of a utility. The whole economy depends on it. And they want to draw a line and say it's not for everybody. Otherwise, we're going to end up as we likely will under the Obama administration of the money being promiscuously offered to every industry that has a lobby, a constituency and a lot of workers.

WALLACE: Juan, let me -- let me ask you about that, because it's a thing that you hear a lot from critics -- the seeming double standard. Now, Charles defends it, saying that the financial industry is different, because it isn't an industry as much as it's a utility that finances everything. Is that sufficient explanation for the very different treatment that the Wall Street big shots got as compared to the Big Three auto makers and their blue collar union workers?

WILLIAMS: Well, I think that it's really about the credit markets and the credit markets being stifled. And President Bush in his remarks, I believe, last Friday said that, along with the housing problem is the root of this economic crisis. Now, that's a very different approach than simply saying here's a major industry that would negatively impact our job picture, unless we save them; because we just saw, was it half a million jobs lost in the last month. So there's a crisis atmosphere there.

But to my mind, this is a man -- dog-bites-dog moment here on Fox News Sunday, because Bill Kristol is defending the auto companies? I mean...

WALLACE: Well, I was just about to say you are -- and you're defending Wall Street.

WILLIAMS: Well, I'm not defending Wall Street. But it seems to me what exactly is going on here? They want 15 -- as I understand it this morning, they -- they're going to get $15 billion? That's for what?

LIASSON: That's peanuts nowadays.

WILLIAMS: But I mean, but -- but for what, Mara? What -- what are they -- what do you think...

WALLACE: Well, that's going to...

LIASSON: To stay alive.

WILLIAMS: What is the future...

WALLACE: Because ultimately if they don't, they go out of business. And...

LIASSON: To stay alive.

WILLIAMS: Maybe they should go out of business.

KRISTOL: A lot of people -- are you aware of this -- work for the auto companies, work for...

WILLIAMS: I know.

KRISTOL: ... the suppliers to the auto companies. A lot of people who are not living in -- on the upper east side of New York and aren't well-connected with prominent columnists, but who -- and others. No, seriously, I mean I do -- look, I'm not defending the auto companies. I think Charles is right that you can make an intellectual argument about finance as opposed to the autos. But the way which they are being treated as if these are just sort of a stupid business, it's in the Midwest, and who cares about that.

WILLIAMS: Oh, that's not what we're saying.

KRISTOL: And then Citigroup gets money. I mean, nobody said -- they got an extra $25 billion themselves for one company.

(UNKNOWN): Yes.

KRISTOL: No one said a word about it.

WALLACE: So Bill Kristol is the working class hero. And you are with the fat cats.

WILLIAMS: No, I'm -- come on.

KRAUTHAMMER: Look, there's no question that the equities here are -- are -- are scandalous. You know, the guys who work in the factories work harder than the guys who push paper on Wall Street. But it's not about equities. It's about what holds up the entire economy. Without good credit, you don't have an economy. And you can live without American auto companies if you have other auto companies. It's a big difference.

WALLACE: Well, all I can say is I'm -- my head is still whirring at the -- at the odd coalitions we've got here. All right, we need to step aside for a moment.

But up next, some Democrats are saying President-Elect Obama should be more assertive now in dealing with the nation's problems. We'll discuss that with the panel when we come right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

FRANK: My problem is, at a time of great crisis, with mortgage foreclosures and autos, he says we only have one president at a time. I am afraid that overstates the number of presidents we have at the -- at the present time.

[LAUGHTER]

(END VIDEO CLIP)

WALLACE: That was House Democrat Barney Frank urging Barack Obama to step up with more direction for the country at a time when Frank sees a lack of leadership from the White House. And we're back now with Bill, Mara, Charles and Juan.

Well, Mara, it isn't just Barney Frank. A lot of other Democratic leaders, Chris Dodd, the aforementioned Carl Levin, have been talking about how there's a power vacuum in Washington. And Barack Obama needs to fill it. First of all, do you agree that there is a power vacuum? And how much can a president-elect do?

LIASSON: Look, I think that the Obama -- the incoming Obama administration is very aware of this. They've been trying to walk a fine line. Of course, they're repeating this mantra, only one president at a time. They don't want to take responsibility for what they think are the incompetent actions of the outgoing Bush administration. When Secretary Paulson wants them to kind of immediately bless spending the last tranche, for instance, the last bunch of the TARP money, they don't want to do that, until he actually presents a plan and lays it all out. And they get a chance to look at it.

I do think, however, that once we get past January 1, it's going to be just inevitable that he is going to become the president, in effect, sooner than he wants to or before he's inaugurated. Even in his radio address this week, he's already saying I'm going to have the biggest infrastructure program since the federal highway system of the '50s. He's starting to reveal more and more specifics. I think that's just inevitable. But they want to make sure that they don't do what Herbert Hoover wanted FDR to do, which is kind of bless the actions of the Bush administration.

WALLACE: Charles, let's take a step back for a minute and take an overview. It's been just over a month since the election. Barack Obama has named a lot of his team, all of his economic team, all of his national security team. He's made statements as he did yesterday talking about the biggest economic stimulus since Eisenhower and the interstate highway system with the infrastructure there. What have you learned about him? And what have you learned about the way you think he's going to govern?

KRAUTHAMMER: Well, his appointments have been interpreted as a man who's really a centrist. You saw that in the foreign affairs area, where he appointed Clinton. He stayed with Secretary Gates; Jim Jones, the former Marine commandant. I think it's not so much an expression of his centrism. I think it's an expression of the fact that he's not that interested in foreign affairs. He wants quiet on the eastern and western fronts. It's not like a Nixon or a Reagan who has ambitions in foreign affairs.

Obama, I think, is a man who sees himself as a man who will change American internally and domestically. And that's his mission. And when we heard him yesterday speak about this unbelievably huge public works program he's going to institute, he -- he sees himself in the mode of FDR, a man who comes in in the crisis, uses all the resources of the federal government and changes America.

So I think he's a man who is less centrist than everybody is saying. But because his -- the focus is domestic. In the team he appointed, the Geithner and Summers and Volcker, I think that's also a team in which he sees them as addressing the financial crisis. He wants it also under control. But he's the one who will direct this, sort of, new New Deal. And that, I think, is his ambition here.

WILLIAMS: Well, I don't think he has an option, because we're in the midst of a tremendous economic crisis. When you ask, Chris, what have we learned though, I think we have learned that he's a centrist, that he is not the left winger that many people thought. My sense is here that, you know, you're going to have more liberal-type appointments coming down the line. I think Shinseki, for example, is very pleasing to liberal ears, given the fact that he...

WALLACE: He's also pleasing, though, to a lot of flag officers...

WILLIAMS: Oh...

WALLACE: ... who felt he was very poorly dealt with my Don Rumsfeld.

WILLIAMS: Correct, by -- and for the same reason that people on the left, since they hear someone who was an early critic of the way the war was being handled, and then was, you know, dressed down in public and treated badly. My sense is that he's got to do better now -- I mean, Shinseki's Asian. That helps somewhat with the diversity argument. I think that we're going to see more people who are going to take more action.

But the hallmark of the Obama administration, I think we can say right now before it begins, is going to be dealing with this economic crisis. The question is how big is the debt he's willing to run up? And what's the consequence of that debt for the future. He's talking about things like putting smart meters in people's homes to measure their energy consumption as well as building highways, rebuilding schools. All of that's very interesting.

I'm -- I'm waiting to see what he does on the education issue. Who's he going not name as education secretary? Is it going to be a reformer or not? I'm interested in what he does with CIA. I think the whole intelligence structure is up in the air right now, because the Obama people are very concerned that, as President Bush said in his interview this week, he got bad intelligence. And it really was the ruination of his time in office. And so now, the Obama people are saying you know what? We think there may be need for restructuring. All the veterans they're looking at to run CIA, to be national intelligence director, they want to have somebody up there who's willing to engage in restructuring without demoralizing the people on the ground.

WALLACE: Bill, I want to go back to Charles' notion of the new FDR and the new New Deal. With an increased Democratic majority in Congress, and this growing sense of concern, some might say even panic in this town, about just how bad this recession is going to be, doesn't he have the opportunity to get a lot of legislation passed in a hurry by this Congress?

KRISTOL: Yes. I think he is the most powerful incoming president, certainly since Ronald Reagan in 1980 and maybe a little more powerful. Reagan didn't -- the Republicans didn't actually control the House of Representatives when Reagan became president. So he could be as strong as Johnson, let's say in '65. And there was a heck of a lot of legislation passed then. And we could have a year like that.

I very much agree with Charles that Obama intends to be a domestic policy president. So did George Bush. Bush said that in an interview this week, that he didn't expect to be a war president. I think he's been a pretty good war president, actually. But that's certainly what's defined his presidency and the debates about the war. Roosevelt we keep talking about. He ended up being a war president too, you know? So never underestimate the cunning of history.

And we -- you know, the world is a very dangerous place. And Obama may think that he can sort of, as Charles said, keep thing -- you know, have these professionals handle the foreign policy side while he focuses on the economy. But God knows what happens in, you know, Pakistan and India, or in the Middle East, or with Iran, I wouldn't be surprised to see Obama, after an initial focus on the economy ending up being, given the way the world is, a foreign policy president too.

WALLACE: But -- but -- but Mara, with the economy as bad as it is, it's not like that's going away. I mean, that's a huge crisis right now. And he has to deal with that.

LIASSON: Oh, yes. And he plans to. And they have plans. And they're moving full steam ahead on this. And I agree with Bill. this is a president who is -- the environment has given Democrats what they always said was the absolute prerequisite to passing the dreams and visions that have been on hold since whenever, 1950. That, you know, Democrats have always said: It will take a depression for us to get universal health care. It'll take a depression for us to do big, sweeping, progressive change. And they have one now. And they have a majority. And they have a president.

WALLACE: And do you expect just a flood of legislation? Just talk about...

LIASSON: I don't know about a flood.

WALLACE: ... that -- that an economic...

LIASSON: They're going to have a humongous stimulus package right off the bat.

WALLACE: Just hope that that might be passed by Congress and on his desk on inauguration day?

LIASSON: It could be on his desk by the end of the first week. It could be $700 billion. Then they're going to move on to health care and energy, not maybe right away, but in the first year.

WALLACE: All right. We're going to have to leave it there. But exciting times ahead. Thank you, panel. See you next Sunday. Plenty for us to talk about in the weeks to come.

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