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December 28, 2008

Laura Bush, Roundtable

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace. The latest on a second day of air strikes in the Middle East, plus a live interview with Israel's foreign minister -- all that and more on "Fox News Sunday."

First Lady Laura Bush reflects on her eight years at the White House in an exclusive interview. We'll ask her about some of the causes she helped champion, the role she played in President Bush's decision-making, and her advice for the Obama family -- First Lady Laura Bush, only on "Fox News Sunday."

Plus, what does 2009 have in store for the worlds of politics, sports and entertainment? We'll get some predictions from our Sunday group -- Bill Sammon, Jill Zuckman, Fred Barnes and Ceci Connolly, all right now on "Fox News Sunday."

And hello again from Fox News in Washington. We'll be joined in a few minutes when we'll get the latest on the situation in Israel from Foreign Minister Livni, but first we want to give you the situation on the ground in Gaza.

Israel has launched a second day of air strikes into Gaza, hitting dozens of Hamas security targets. More than 275 Palestinians have been killed and more than 600 have been injured.

Meanwhile, militants in Gaza continue firing rockets, one landing twice as deep inside Israel as ever before. As I say, we'll be getting to our interview with Tzipi Livni in a few moments, but first our interview with Laura Bush.

We sat down with the first lady this week, and she told us about the highs and lows of her eight years in the White House, about her partnership with the president and the causes she has made her own.

(BEGIN VIDEOTAPE)

WALLACE: Mrs. Bush, welcome back to "Fox News Sunday."

L. BUSH: Thanks, Chris.

WALLACE: You said recently that you didn't realize when you moved into the White House how much clout a first lady has, how much attention you could bring to a cause. How did that evolve over the last eight years?

L. BUSH: Well, I really didn't realize. I mean, I knew, of course -- I'd been first lady of a state. My mother-in-law had been first lady. I'd watched her. But somehow, I just never thought that I would have that much -- be able to shine such a spotlight on issues as I've been able to.

And I really first realized it after September 11th when I did the radio broadcast for the president about the women in Afghanistan.

And right after that I was in Austin visiting Jenna, who was at the University of Texas, and I went to a store there, a department store, and the women behind the cosmetic counters thanked me for talking about the women of Afghanistan.

And that told me two things -- first, that they knew, that they were listening, and that what I said mattered to them, and second, that they -- and I think this really speaks for American women in general -- had a real feeling for the women in Afghanistan, and that as we all looked at Afghanistan after September 11th and saw a country where women were forbidden to even leave their homes without a male escort or go to school - - the idea of a government that would forbid half of their population from being educated was just so shocking, especially to American women.

And so that's when I realized I had a podium. And did I act upon it that much? Then, probably not. I mean, it was really -- I grew and grew in my -- in both my realization that I had a podium but also in my expertise about some international issues that I didn't come to the White House with.

WALLACE: I want to pick up on Afghanistan, because I know it's one of your most heartfelt causes. It's not just women -- a lot of men feel very keenly about this as well.

There's been substantial progress over the last seven years. Women can now participate in the parliament. Little girls can go to school. But with the Taliban on the march again, do you ever worry that we could go back to the days of the burka and to that terrible oppression of women in that country?

L. BUSH: Sure, and the days of the burka aren't over. Many women in Afghanistan still cover because they want to, partly, because it's part of their tradition and their culture, and also because they'd be afraid not to.

But that is a worry, and I met with a group of parliamentarians, women parliamentarians, from Afghanistan last January or so, and they said they were afraid, that their -- that this is their only chance, and if they can't make it now, then they just don't know if they ever would be able to.

And I think that's all the more reason the international community needs to stay involved in Afghanistan and do what we can.

Afghanistan and Iraq both have the opportunity, if they can seize the moment, to build real democracies where the rights of every person in those countries is respected, and a lot of that is because of the United States, because of our policies of liberating them from the Taliban in one instance and the tyranny of Saddam Hussein in the other.

And it's very, very important for the people of these countries to stand up and to take this opportunity to build their countries. But let me say about Afghanistan, they don't have a lot of capacity. They've been in the conflict for 30 years, and most of their population is younger than 30. They don't have the human capital.

It's very important for the international community to stay involved, to try to make education as fast and as broad-reaching as possible so they can build the kind of human capital they need to build the infrastructure of laws and of civil society that they'll need to build a democracy.

WALLACE: I want to take this into the debate in this country, though, because some critics say that we gave the Taliban a second chance, and one of the reasons that they're on the march in Afghanistan is because we switched our focus to Iraq.

L. BUSH: Well, I don't know that I would agree with that at all. I don't -- I don't think that's true at all. We've stayed very, very invested in Afghanistan -- not as invested militarily, maybe, and maybe that's what the critics say, that it should have been more military.

But I think we've stayed very invested. We're invested both financially with tons of support to Afghanistan as well as every other way.

I've met thousands, literally thousands, of different people who are Americans who are invested in Afghanistan in some way -- women who are helping women there be educated, women who are helping with micro finance so that women can build small businesses and support themselves.

I just did a closed-circuit television into Afghanistan, a conference with women entrepreneurs. At the table in the Roosevelt Room at the White House were American women who had mentored women entrepreneurs in Afghanistan, and at the table in Afghanistan were these women who built these small businesses.

But they have employees and they're thriving, and they also, though, want our commitment. They want to know that the international community will stay with them while they work through all the things they're going to have to do, all the growing pains that go along with building a really good, safe country.

WALLACE: When the president was in Iraq recently, an Iraqi reporter threw two shoes at him, and a lot of people in this country acted as if it were a joke. I understand you were not amused.

L. BUSH: Well, no, of course I wasn't amused. It was an assault. And that's what it is. And it would be an assault to anyone for -- if anybody had been there.

And the president laughed it off. He wasn't hurt. He's very quick. As you know, he's a natural athlete. And that's it. But on the other hand, it is an assault, and I think it should be treated that way, and I think people... WALLACE: Well, let me -- let me...

L. BUSH: ... should think of it that way.

WALLACE: ... ask you about that. When you talk about treated that way, some crowds -- and I understand it's just a small group, but some crowds in Baghdad have acted as if this fellow were a hero and have demanded his being pardoned.

Do you think someone who attacks anyone, let alone a visiting head of state, should just be released?

L. BUSH: Well, I don't know about that. And that's going to be up to the Iraqis. And they'll do whatever. But I know that if Saddam Hussein had been there, the man wouldn't have been released. And he probably wouldn't -- you know, would have been executed.

So it is -- as bad as the incident is, in my view, it is a sign that Iraqis feel a lot freer to express themselves.

WALLACE: In preparing for this interview, I read that when Andy Card was White House chief of staff -- that he used to schedule a 90- minute meeting with you about every six weeks to talk about personnel and policy.

With both him and the president over these eight years, how openly have you weighed in on policy, on personnel?

L. BUSH: Well, not -- I mean, you know, I've certainly told the president things that I think and a lot of times about people, because that's what I know the most about. I don't know that much about the policy.

I'm not privy to the -- all of the policy discussions that go on in the White House, certainly the ones that have to do with national security.

But George and I talk about a lot of issues. You know, we talk about different things that are in the press. We talk about people who are in the White House and people who are outside of the White House, and -- but I would say that, obviously, I'm very free to tell George whatever I think, and that's the kind of marriage we have.

But I'm not going to tell the press what I tell him.

WALLACE: Well, let me ask you a couple of questions about that. I've wondered, would he tell you secrets, or would you sometimes have to read on the front page of the New York Times when they got a leak and decided they were going to -- you know, they were going to tell some national security secret? Would you suddenly read it and go, "Hey, what's going on here?"

L. BUSH: No, he would -- certainly, he tells me secrets. But do we go over, you know, national security programs? No, probably not.

WALLACE: Nancy Reagan once told me that she had a keen sense of personnel and that her antennae would go up and she'd have a feeling for who was serving themselves and who was serving the president.

How do you tell that? What's the kind of telltale signs as to who's in it for themselves and who's in it to serve the president?

L. BUSH: Well, I will say that our staff in general, most of them, are unbelievable. And they're serving the United States of America, and they're serving the president, too. But they are really, really fine people.

We had a big senior staff dinner, holiday dinner, and we had all the former senior staff members and current. And one of the things the chief of staff, Josh Bolten, said when he was presenting the holiday gift to the president and just making the toast to everyone there -- he said, "Look around the table. Look at your table." And it was a big, big dinner party in the East Room, bigger than the dining room would hold.

And I looked around at my table. And I know everyone looked around at their table. And he said, "Look around and you'll see some of the finest people you'll ever meet in your life." And he was right.

And that really -- I'm so proud of the people that have served in my husband's administration. I'm very proud of the way they've served the country as well as served him.

WALLACE: The president has also said publicly that you have no qualms about reining him in. For instance -- and this has been widely quoted, but I don't know that I've heard it from you -- when he would say in the aftermath, understandable, of 9/11, "Bin Laden, dead or alive," what did you say to him?

L. BUSH: Well, I just didn't like that. I mean, I just didn't like that he said that, and...

WALLACE: So you said, "Tone it down, darling?"

L. BUSH: Well, I don't know if I said, "Tone it down, darling." I might have said, "Tone it down, buster." Only kidding. Only kidding.

(LAUGHTER)

WALLACE: And also, there have been stories that when he would feel sorry for himself, you would say something to him then, too.

L. BUSH: That he volunteered for this job?

WALLACE: Yes.

L. BUSH: That's right. He doesn't feel sorry for himself very much. He really doesn't. And he knows that -- he's very aware that when you campaign like you have to campaign for this job, the campaigns are very, very demanding physically and mentally and in every way -- that when you get it, if you're fortunate enough to be elected, that you asked for it. And you know, can you predict what you're going to get? No, absolutely not. We would have never predicted that this would have been a wartime presidency. You know, we came into this job suspecting and expecting to work on education, and Social Security, and all the things the president mentioned in his campaign, and then September 11th happened and everything changed.

WALLACE: Well, all right. I want to go over the events of the last eight years. So let's take a quick break here.

And when we come back, up next, we'll talk with Mrs. Bush about her thoughts about 9/11 and the Obamas and some of the major events over the last eight years. Back in a moment.

(COMMERCIAL BREAK)

WALLACE: And we're back now to continue our conversation with First Lady Laura Bush.

With just 23 days until you leave office, I'd like to revisit some of the major events of the Bush presidency, and we obviously have to start with 9/11. What stands out for you personally about that terrible day?

L. BUSH: Well, you know, the whole tragedy of it, obviously. I was - - I happened to be in Senator Kennedy's office when we realized it was a terrorist attack, not just an accident of -- you know, of one plane flying into a building. And so I remember that. I remember being with him.

I remember being worried about George, but as soon as I talked to him on the phone, I felt reassured. And then I remember going back to the White House late in the afternoon right before his helicopter was ready to land, and he couldn't land on the White House lawn because we had hundreds of picnic tables on the lawn for the congressional picnic which was scheduled for that day, and -- but I remember when he came into the room and the relief at seeing his face.

I also remember the very long period after that of anxiety that I had -- so worried.

WALLACE: Anxiety about what?

L. BUSH: So worried about another terrorist attack, and worried about our troops after we went into Afghanistan, and just -- I think it was everywhere. I think it was all over the country, but...

WALLACE: Now, in one of Bob Woodward's books, he says -- he recounts a conversation that you and the president are having with him in August of 2002, and you're saying to him, "Boy, I was so nervous and so anxious in those days after," and the president says, "You never told me that."

L. BUSH: Well, I didn't tell him, I guess, because I...

WALLACE: Why not?

L. BUSH: Because I didn't want to worry him, really. And I knew he was anxious, too, and he didn't tell me that either. But I think we could read each other and know that. WALLACE: Let me ask you about another event, Hurricane Katrina, seeing a major American city drown and having a lot of people blame your husband, not for the hurricane but for the response.

L. BUSH: Well, you know, I feel terrible about Hurricane Katrina, and I'm sad that the response wasn't faster than it was, although it's -- I think the -- in hindsight, the rescue of so many people by the U.S. Coast Guard off their roofs or in boats is unprecedented, and I don't think the Coast Guard gets the credit that they should for that. And that was really, really wonderful.

The other thing that happened right after -- it was really not true reporting. There was a -- the reporting was -- ended up being not really factual, but many, many people heard the first reporting, and that's what they think happened, that 10,000 people died or, you know, whatever the things were that were not true.

It's been a very slow rebuild, and it was very, very serious and devastating destruction, along -- not just New Orleans, but all along the Gulf Coast.

WALLACE: The troop surge in Iraq -- Democrats win in 2006. Everybody says, "Get the troops out." The Iraq Study Group headed by your friend James Baker says, "Let's get ready to begin pulling out."

And your husband stands up to everybody in Washington and says, "No, we're going to send more troops in." Where did that come from?

L. BUSH: Well, I think that came from his really tough inner core which he has and which we needed these eight years. That's why I think he was such a really good president for these times.

He didn't want us to lose. He didn't want us to give up on Iraq. He didn't want to think that the people who had died, the Americans who had died, our troops who had died, would just die in vain because we left. And he's right. We can't give up.

WALLACE: We're now learning that you and the president met with wounded soldiers, with the families of soldiers who had been lost, much more often in private than we were aware of.

What do you say to a soldier who's lost a leg or to a family who's lost a son or a husband?

L. BUSH: Well, I mean, you know, what can you say? It's a really very, very difficult moment. It's really more of a moment of emotion, I think, than conversation, although -- so it's a lot of, you know, holding hands and hugging and crying. And you know, it's very, very difficult.

But it's -- we're also always comforted by the families. They're so strong and they're so terrific, and they know that their loved one in most cases was doing what they wanted to do. They volunteered to serve the United States of America.

That's what's so terrific about our military, is that they are volunteers. These are people who volunteered to put their life on the line for the United States.

WALLACE: Mrs. Bush, is there anything that you'd like to get off your chest that you've had inside there for the last eight years?

L. BUSH: You mean about the press?

WALLACE: About anything.

L. BUSH: No, not really. I mean, I -- not really.

WALLACE: Anything you want to say about the press?

L. BUSH: No, no, not really. I mean, I'm just kidding. Do I think the press is fair? No, absolutely not. But you are, Chris, so thanks a lot.

WALLACE: Well, thank you. Thank you for that.

And how do you respond to some people -- and you know this is going to be true, because you look at the polls -- who are going to view this as a failed presidency?

L. BUSH: Well, I know it's not. And so I don't really feel like I need to respond to people that view it that way. And I think history will judge and we'll see later.

But my husband responded in a way that kept our country safe after September 11th, and I think that's very, very important.

He's liberated, because of our policies, the policies of the United States and our military, 50 million people in Afghanistan and Iraq from -- from oppressive governments and tyranny.

He's saved, because of our policies, the United States policies and taxpayers' -- over 2 million people in sub-Saharan Africa are on antiretrovirals because of his policy of trying to save people from disease as well as from tyranny.

And I think that the -- his inner core and his belief in freedom -- and that means not just freedom from tyranny, but freedom from disease and freedom from illiteracy -- is what really is the basic of American values, and that's what I think he's shown the whole time he's been president.

WALLACE: Since the election, you've had the Obamas in a couple of times to the White House, both Mrs. Obama and at least once the little girls. What are the kinds of practical questions they ask about living in the White House?

L. BUSH: Well, we really talked about the White House, about the layout of the White House, and which rooms are best for little girls to be in, and how we live in the White House that I think they would be interested in knowing when they try to build their life there and...

WALLACE: So, like, what's a practical question? L. BUSH: Well, we talked about closets. I showed Mrs. Obama some closets that I'd added that -- she said, "Good work," and was really happy about it.

And the girls showed them their rooms, the rooms that my girls had had that other children in the White House have had before them. And the little girls looked at the rooms and said, "I want this one," or, "I want that one."

So it was really very practical. It was about building a life there, building a home there for children. And I know that's one of her first priorities, and it's certainly the first priority, I think, of every first lady who's moved into the White House.

WALLACE: Your daughters gave the Obama girls a tour, and afterwards they seemed philosophical about gee, they're younger and cuter and hotter news than we are, and even their puppy's going to be cuter than ours.

L. BUSH: Than Barney.

WALLACE: Yes.

L. BUSH: They were funny about that. I mean, they were being funny and cute about that. But it was fun for them.

They remember coming to the White House when they were Sasha's age. They were seven when President Bush, George's dad, was elected. And so they've seen the White House both through those eyes of a 7- year-old and then, of course, now as 27-year-old grown women.

WALLACE: Come Inauguration Day -- and try to put yourself forward to January 20th -- when the Obamas move in and the Bushes move out, what do you think your emotions will be that day?

L. BUSH: Well, bittersweet, of course, but I'm excited. I'm excited about the next part of our life. I'm excited about our new home. I'm very happy to be returning home to our home state, Texas that we love. And so there'll be bittersweet moments.

But it's also just -- that's the way American life is and the American presidency is, and we know that very well from having watched President Bush and Barbara move home and have their life after the presidency. And so I look forward to it.

WALLACE: Well, I want to -- I want to ask you -- you know where I'm about to head now with this. Bret Baier asked your husband about life after January 20th, and this is...

L. BUSH: About cooking?

WALLACE: Well, here it is. Go ahead. Take a look.

(BEGIN VIDEO CLIP)

BRET BAIER: What's the thing you're most looking forward to post- White House?

G.W. BUSH: I know what I'm not looking forward to. That's my wife's cooking.

(END VIDEO CLIP)

(LAUGHTER)

L. BUSH: He's in trouble for saying that.

WALLACE: I mean...

L. BUSH: Actually, he's not. We can't -- I can't even remember cooking. It's been 14 years since we moved into the Texas governor's mansion. And I don't think I -- I love to read cookbooks.

I'm very interested in food, and I'm a reader, as you know. But am I actually a really good cook?

WALLACE: I hate to say this, but -- all due respect, Mrs. Bush...

L. BUSH: I'm afraid not.

WALLACE: ... reading doesn't actually get the meal on the table.

L. BUSH: I know it. That's what's been so great about being able to read a cookbook and hand somebody else a recipe.

WALLACE: Well, do you think you're going to cook, or do you think you're going to have somebody help?

L. BUSH: No, I'm going to cook, probably, when it's just us. I'll have to get help when we're at the ranch or someplace where we host a lot of other people.

WALLACE: Just as a former White House reporter -- and I covered the Reagan White House for six years -- it's so intense. Every day of the presidency is so intense.

So I can only imagine for you and the president, when you look ahead to a much more normal life, you know, and going from 100 miles an hour to 30 or 40...

L. BUSH: To zero.

WALLACE: Well, it's not zero in the normal life.

L. BUSH: Okay, five.

WALLACE: But in any case, excitement or anxiety, or what?

L. BUSH: Well, everything. All of those. I'm excited about it. I'm excited about having my husband to myself again and being in our home state with so many friends. But it's going to be very difficult. That's the hard part of the transition, and especially for the president, who's had every problem in the world come to his desk every single day for the last eight years -- to, you know, a cleaned-off desk with nothing on it.

And I think that -- that's going to be the really hard transition, really, for both of us, and the kind of camaraderie and conversation that we have with our staff every single day -- you know, that will end, and I think that will be hard.

WALLACE: And we just have less than a minute left, but you're obviously young. I mean, you're way too young to retire. So how active will the two of you be?

L. BUSH: We'll be active. We'll be very active. We'll build a presidential library and the freedom institute that George wants to build with it.

We'll continue to meet with dissidents like we have from around the world. I'll still work with the Afghan American Women's Council, and I'll still talk about Burma and work on those issues. And so we'll both be very active.

WALLACE: Mrs. Bush, I want to thank you.

L. BUSH: Thank you very much, Chris.

WALLACE: I want to thank you for being so generous and talking with us...

L. BUSH: Appreciate it.

WALLACE: ... repeatedly over these years, and we want to thank you for your service to our nation.

L. BUSH: Thank you very much.

(END VIDEOTAPE)

WALLACE: First Lady Laura Bush.

As we said a few moments ago, Israel is continuing its air assault into Gaza. And a few moments ago, we got this update.

(BEGIN VIDEOTAPE)

WALLACE: And we are joined now for the latest on the situation in Gaza by Israel's foreign minister, Tzipi Livni.

Foreign Minister, you are now into day two of air strikes on Gaza. What do you need to achieve before you can end this operation?

LIVNI: Israel attack all the headquarters of Hamas in Gaza Strip. And this need to be addressed since for the last years we never did something like this. It is needed in order to change realities on the ground and to give peace and quiet to the Israeli citizens who live in the south part of Israel.

WALLACE: Will this take days? Will this take weeks? Will this take months?

LIVNI: It will take the time which is needed in order to change realities and after the point in which Hamas understand that we cannot accept no longer the equation in which they target Israel and Israel shows restraint.

We need to change this reality. This is the benefit or the goal of Israel, as I believe that this serves the interests of all the moderates in this region, including the pragmatic leadership of the Palestinian people.

WALLACE: Do you want, Foreign Minister, a cease-fire with Hamas, a solution, or do you want to destroy the organization?

LIVNI: Hamas is not a legitimate organization. We are talking about designated terrorist organization who is not willing to accept the requirements of the international community, including to accept the right of Israel to exist, to stop violence and terrorism, and to accept former agreements.

So for the long run, Hamas is not legitimate and cannot be legitimate until it accepts the requirements of the international community. But now this is not the goal of this military operation. This is something that need to be addressed by us and by the Palestinians in the future.

Right now we need to change realities in order to give the Israeli citizens the possibility to live in peace and quiet in the region.

A few months ago Israel accepted the truce that was initiated with Egypt. That was violated by Hamas, including by firing at Israel, including by having more and more long-range missiles and building up an army, and including by keeping Gilad Shalit, the Israeli abducted soldiers in captivity, without accelerating the negotiations for his release.

So we face the situation in which we accept the truce, but it was violated. So now we need something which is more strong.

WALLACE: So to understand, you're not looking for a diplomatic solution. You're basically looking to so degrade Hamas' capabilities that they are unable to attack Israel?

LIVNI: We are looking to change the situation on the ground. Right now, the only way to change reality is to give the Hamas a clear message by Israel by using military force and by the international community by saying clearly that they are responsible to the situation, that this need to be stop, and this I mean by firing at Israel and by giving legitimacy to Israel and de-legitimizing Hamas. We cannot face another situation in which everything is stopped right now and we are back in a situation in reality in which they target Israel whenever they feel like it.

WALLACE: Finally, Foreign Minister -- and we have about a minute left -- your government today has approved calling up several thousand reserves. Are you launching a ground assault into Gaza?

LIVNI: We'll make this decisions according to the situation on the ground.

WALLACE: But you're leaving open the possibility of a ground assault into Gaza.

LIVNI: All the options are open and we are determined to change realities, and the last thing that I'm going to do now is to tell Hamas through the press what we are going to do the next day. Excuse me.

WALLACE: Incidentally, one more thing, if I may. Israeli elections are scheduled for February. In fact, you are a candidate for prime minister.

Is there a possibility, if this assault or the situation continues, that you would have to postpone those national elections?

LIVNI: We are not thinking now about elections or internal politics. Israel is now working together in order to make a better future to Israelis.

So I don't have a correct answer to your question. But this represent the majority of Israelis today, including other parts of the political -- of the political life in Israel.

WALLACE: Foreign Minister Livni, thank you so much for joining us.

(END VIDEOTAPE)

WALLACE: Up next, we'll have more on the Israeli air strikes in Gaza, plus our Sunday panel weighs in on the continuing saga of Caroline Kennedy and the U.S. Senate. Back after this quick break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

EHUD BARAK: For us to be asked to have a cease-fire with Hamas is like asking you to have a cease-fire with Al Qaida. It's something that we cannot really accept.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RIYAD MANSOUR: There is no justification for slaughtering hundreds of Palestinian civilians and injuring close to 1,000 people. There is no justification whatsoever.

(END VIDEO CLIP)

WALLACE: That was Israeli Defense Minister Barak defending, and the Palestinian U.N. observer condemning, Israel's decision to hit Gaza with the most intense air strikes in years.

And it's time for our Sunday group -- Bill Sammon, deputy managing editor of Fox News in Washington, Jill Zuckman of the Chicago Tribune, Fred Barnes of The Weekly Standard, and Ceci Connolly of the Washington Post, who's returned to us after two years living in Mexico. And welcome back. All is forgiven.

(LAUGHTER)

WALLACE: All right.

Not such a funny subject, Bill. We're now in day two of massive U.S. -- or, rather, Israeli air strikes on Gaza. Is this the normal cycle of violence in the Middle East, or is it something bigger?

SAMMON: I think it's bigger in the sense of scale. You've got several hundred casualties in a single day. So that makes it a bigger deal.

I think it's useful to remember that Tzipi Livni, who you just had on the show, actually supported the withdrawal of Israeli forces from the Gaza Strip a couple of years ago, saying that it would lead to a decrease in violence.

Well, the exact opposite has happened. And you know who predicted that? You know who predicted that the violence would actually increase? Benjamin Netanyahu, who is running in these elections you referenced coming up in February for prime minister. He, of course, is the conserve Likud candidate.

And you know, you asked Tzipi Livni whether the elections had anything to do with this, and I'm sure that national security was the primary reason for this counter attack.

But it's impossible to view this without thinking about the fact there are elections in six weeks, and Tzipi Livni is running for prime minister as the moderate Kadima Party candidate, and so is Ehud Barak, the current defense minister, so...

WALLACE: Of Labor.

SAMMON: So there's been a lot of public pressure building for Israel to counter attack. And the fact that they have now counter attacked six weeks before the election, I think, is a way for these two candidates to get in the game, because Netanyahu is leading in the polls.

WALLACE: So, Jill, you know, I kept on going at the foreign minister on this subject -- what is it they really want to accomplish? Is it that they want to degrade Hamas, they want Hamas to say uncle in a way that means something, or do they want to destroy Hamas?

ZUCKMAN: Well, I think that they -- it's very clear that they want to stop the Katyusha rockets from coming into Israel and threatening people's daily existence.

And by launching this strike, they're really -- they're going after security targets, and I think they're going to prevent them from being able to go after Israel again, at least for a while.

It's going to take some time to eliminate their military arsenal and, of course, they're likely to restock. I mean, the problem is this may have the opposite effect of shoring up their will and -- against Israel, which, you know, is the age-old story there.

WALLACE: Your thoughts, Fred, on the question, because it is the question that is always asked, this cycle of violence. Does it end up solving anything and proving anything, or does it in the long run just make things worse?

BARNES: Well, look. I don't think Israel had any choice. It was a cease-fire that was broken by Hamas. They fired something like 300 rockets into Israel. I mean, this is an act of war. What are they supposed to do?

Well, they responded with strong air attacks, and I think they're designed to deter -- as Jill said and the Israeli government has said, they want to stop Hamas from firing these rockets into Israel, which they've been doing off and on for years now, and this is the only way to do it.

You don't respond in proportionate force if you want to deter. You punish them. And that's what the Israelis are doing.

Now, the U.N. -- the Palestinian U.N. ambassador said, "Oh, it's horrible. They're killing these civilians." Well, what Hamas does is locate their military and security forces in the -- all basically terrorists, in civilian areas. So you're bound to kill some civilians if you're attacking them.

WALLACE: Meanwhile, Ceci, Barack Obama and Secretary of State designate Hillary Clinton and Vice President Biden were talking about a new expanded peace process once they take office. What does all of this do to that?

CONNOLLY: Well, I think it's pretty clear that Hillary Clinton, assuming she's confirmed by the Senate to be secretary of state, is really going to have an incredibly full plate, when you think about what's going on around the globe -- Obama's promises with respect to Iraq, the Iran situation, Pakistan, which right now is so tense.

There are many Middle East experts who fear that this just really pushes back a timetable for any kind of serious long-term peace talks, because she has so many other things on her plate.

It does, though, also reinforce this idea that we've heard out of the Clinton camp about her having several envoys for different regions of the country. Dennis Ross' name has been mentioned -- he has a lot of experience in that region -- or possibly somebody else.

WALLACE: But you certainly can't have a peace process when the Palestinians are lobbing rockets into southern Israel.

CONNOLLY: Absolutely not.

WALLACE: All right.

Let's change subjects dramatically, Bill. Caroline Kennedy continued her, quote, campaign to replace Hillary Clinton in the Senate this week, beginning a bit of a media blitz.

She's done several interviews, one of them on television with a local T.V. station in New York City in which she talked about the mixed blessing of her name. Let's watch.

(BEGIN VIDEO CLIP)

CAROLINE KENNEDY: If my last name weren't Kennedy, maybe I would, you know, have run for office a long time ago. I don't know.

I mean, I'm proud of my family tradition. I -- you know, it means a lot to me. That's, you know, something that I want to live up to, and that's why I feel that I have been preparing myself to do this.

(END VIDEO CLIP)

WALLACE: How do you think she's doing in her campaign to persuade New York Governor David Paterson to appoint her? SAMMON: I think she's off to an inauspicious start. I mean, first of all, it's been revealed that she didn't bother to vote very much, including in an election for the very Senate seat that she is seeking.

Secondly, she's got $100 million and yet didn't bother to give very many donations to New York Democratic politicians whose support she now needs to get this seat.

The more I watch this Caroline Kennedy story unfold, the more I'm reminded of the Sarah Palin story. I mean, you've got two women, unconventional choices, thrust into high-profile candidacies.

Both initially tried to stonewall the press. Both then stumbled when they started to grant press interviews. And both had inexperience issues. The only difference is the way they were treated.

Sarah Palin was savaged as the next Dan Quayle, some unsophisticated rube, and mercilessly mocked, whereas Caroline Kennedy, aside from a few people raising eyebrows about her early stumbles -- are basically -- you know, were all swooning about the return of Camelot. The double standard is staggering.

WALLACE: Let me, Jill, bring in -- because in this interview with the New York T.V. station, Caroline Kennedy was asked about the fact that she failed to vote in more than a dozen elections over the past decade. Here's what she had to say to that.

(BEGIN VIDEO CLIP)

CAROLINE KENNEDY: I was dismayed by my -- by my voting record. And you know, I think, obviously, going forward, I would make sure to vote in every primary.

(END VIDEO CLIP)

WALLACE: You know, Jill -- and as Bill mentioned, it also turned out -- because obviously, people are doing some reporting now -- so it hasn't all been laying over for Caroline Kennedy, Bill -- reported the fact that for all the talk about how she could bring all this money into the New York Democratic Party in 2010, 2012, that she's given in the last decade a total of $1,000 to one City Council candidate.

ZUCKMAN: Well, I think the idea is that she could probably raise a lot of money. She's got such star power. All she has to do is show up. I mean, remember when she endorsed Barack Obama. It was a star- studded festival.

I think comparing her to Sarah Palin is a little bit unfair, but it's clear that she's engendered a great deal of resentment among her fellow Democrats in New York, and I have to say it looks like it's backfiring.

WALLACE: All right.

We have to take a quick break here, panel.

But up next, our gang of four will be on the hot seat as we get their predictions for 2009. Back in a moment.

(COMMERCIAL BREAK)

(UNKNOWN): Join me in the Pledge of Allegiance to the flag.

WALLACE: On this day in 1945, Congress officially recognized the Pledge of Allegiance, which was written in 1892. The pledge is to be recited standing at attention, facing the flag, with the right hand over the heart.

Stay tuned for more from our panel.

(COMMERCIAL BREAK)

WALLACE: It's a tradition around here that our panel offers predictions for the new year on a range of topics, and our motto is "Often in error, but never in doubt." So with that as fair warning, let's hear from Bill, Jill, Fred and Ceci.

And let's begin with the area that we supposedly know best, Bill, and that is politics. Your prediction.

SAMMON: Much to the chagrin of big labor, Barack Obama and the Democrats will refrain from attempting to pass card check legislation in the first 100 days.

Now, they're going to do this because they're going to be worried they'll fall short of a filibuster-proof majority, and they're also worried -- they don't want to get hung up in some gays in the military-type debacle that Clinton got hung up on and kind of mired his first days in office.

So card check I think will be put on the back burner.

WALLACE: Which means -- which would be -- just briefly, it would take away the secret ballot and make it much easier for unions to organize a workplace.

SAMMON: Exactly. That's going to get put on the back burner, and big labor will not be happy, because they helped elect Obama and they want a payback.

WALLACE: Jill Zuckman, politics.

ZUCKMAN: Well, I believe that Eric Holder is going to be easily confirmed as attorney general, and I think this goes to some of the divisions among the Republicans right now, that there are some who want to give Barack Obama a hard time on everything.

But I think there's a greater majority of Republicans who want to show they can work with him, that they'll fight him when it goes to their principles, and that this isn't a battle worth fighting.

WALLACE: Now, are they going to try to dust up Holder over the Marc Rich pardon at the end of the Clinton term? ZUCKMAN: Oh, I think there are definitely some conservative Republicans who will dust him up a little bit, but I think at the end of the day, I think he's going to have an overwhelming vote in the Senate.

WALLACE: Fred Barnes.

BARNES: You remember in 2008 Obama won Virginia and Democrats won three House seats in Virginia.

WALLACE: And they also won the Senate seat.

BARNES: And they won a Senate seat. That was pretty easy, though. But my prediction is that Virginia will go Republican in 2009, electing Bob McDonnell, a Republican governor.

Virginia has always been counter cyclical. When you have -- whatever administration is in the White House, the opposite party wins the governorship of Virginia, which is in an odd year.

Now, if I'm wrong, and it's possible, it will -- and a Democrat wins, it will mean Virginia has become a Democratic state.

WALLACE: Do we know who the leading Democratic candidate is?

BARNES: No, there is not one.

WALLACE: But whomever.

BARNES: Yeah.

WALLACE: Ceci?

CONNOLLY: Well, Chris, we're getting ready for an enormous debate on health care reform here in Congress. And there are going to be three Republican senators worth keeping an eye on.

Two, Arlen Specter and Judd Gregg -- both are facing reelection in 2010. Fairly difficult races are expected for those two individuals, and they're on key committees.

And the third Republican senator to watch is Orrin Hatch. And I say that because of his close relationship over many decades with Ted Kennedy. And also, if you look at his record, he's been quite active with respect to health care.

WALLACE: OK.

Let's move on to entertainment.

Bill, I can't wait to hear what you have to say about that.

SAMMON: This is my most momentous prediction. Heidi and Spencer of "The Hills" T.V. show will divorce, and it will be revealed that their Mexican marriage wasn't all that legal to begin with.

I'm a bit of an expert on "The Hills" because I met their main star, Lauren Conrad, at the White House correspondents' dinner. Then I talked to a buddy of mine who's in his mid-50s and I said, "I just met Lauren from 'The Hills,'" and he said, "Who's Lauren, and what are 'The Hills?'"

I have three college-age daughters, so I watch "The Hills" a lot.

WALLACE: I don't have a clue what you just said.

(LAUGHTER)

WALLACE: Jill? Entertainment.

ZUCKMAN: I'll try to -- I'll try to bring it back.

WALLACE: Yeah, bring it back to us old farts.

ZUCKMAN: Well, I'm predicting that Heath Ledger will win an Oscar for his role as The Joker in "Dark Knight" even though he has passed on. I think that the judges will want to reward him for that incredible performance.

WALLACE: I can't say that that's a risky prediction. I think he's the chalk. But still, it counts.

Fred.

BARNES: He was very good in that movie.

WALLACE: He was good.

BARNES: My prediction is that "Slumdog Millionaire" will win the Oscar for best picture. Now, the -- you know, it's a movie. It's in English. It's set in Mumbai. And it's a hackneyed theme, you know. It's rags to riches, and it's boy meets girl.

But you know, I don't mean to be too literary, but I think it was Edgar Allen Poe who wrote that the real test of originality is how you handle hackneyed material. And this handles it brilliantly. I mean, it's a great movie, best I've seen in years and years.

WALLACE: Let me just interrupt to give my prediction. I'm going to predict that Kate Winslet will win not one but two Oscars for best actress and best supporting actress this year, two separate movies, not a split personality.

And, Ms. Winslet, if you'd like to discuss my prediction with me, you can reach me at Fox News here in Washington.

(LAUGHTER)

CONNOLLY: Give him a call, right?

WALLACE: Yes, exactly. Please.

Ceci?

CONNOLLY: Well, expect a White House and Washington renaissance of jazz music. We happen to know that President-elect Barack Obama -- some of his favorites include greats like Miles Davis and John Coltrane, and I think we may be seeing some jazz back in this city.

WALLACE: All right.

Let's move on to another subject that supposedly we know something about, sports.

Bill?

SAMMON: LeBron James from the Cleveland Cavaliers, my home town of Cleveland, will lead that team to its first-ever NBA championship this year. And more importantly, that will quell all of this disturbing talk about LeBron James leaving Cleveland once he becomes a free agent to go to some bigger, glitzier city like New York.

He's from northeast Ohio. He belongs in northeast Ohio. I think he's going to stay in northeast Ohio.

WALLACE: And be a lifetime Cavalier.

SAMMON: I think so.

WALLACE: You hope so.

SAMMON: I hope so.

WALLACE: Jill?

ZUCKMAN: Well, I'm predicting that Pittsburgh will beat Carolina in the Super Bowl, and I have to give credit to my brother, who came up with that one for me.

WALLACE: Do you even know who these two teams are?

ZUCKMAN: Yes, I know.

WALLACE: Or is it like Lauren and Spencer on "The Hills?"

ZUCKMAN: I know a little bit.

WALLACE: All right. No New York Giants, though. No Tennessee Titans. Pittsburgh-Carolina.

ZUCKMAN: Yes.

WALLACE: That's actually -- that's a good pick. Tell your brother he knows what he's talking about.

Fred?

BARNES: I think LeBron James' Cavaliers will give the Celtics a run for their money. But really, the Boston Celtics team, that I'm not a fan of, will win their second NBA title.

And the reason is, you know, sometimes good teams become great when they have a leader. And they got one when Kevin Garnett came there last year, and they're the best team in basketball.

WALLACE: Ceci?

CONNOLLY: I like the sound of that, being a Boston fan.

Gold medal king Michael Phelps has been so busy doing interviews and T.V. commercials and everything else that he is not going to have a very strong 2009. But, Chris, he's got time to get back in shape in time for the next Olympics.

WALLACE: I will say I heard that you had made this prediction a couple of days ago, and I noticed the fact that he brought a Las Vegas cocktail waitress home for Thanksgiving, which would be an indication that he's not thinking about his swimming.

CONNOLLY: Not been in the training pool too much.

WALLACE: Meanwhile, what about Tom Brady and Giselle Bundchen? Do we -- nuptials for them?

CONNOLLY: Beautiful children.

WALLACE: No, really? What a surprise.

Finally, the economy.

Bill?

SAMMON: I think that the economy, as bad as it is now, will actually worsen in the first part of 2009, but then we'll start to have an economic recovery before the end of the year because of all this massive multi- trillion-dollar intervention which will do some good in the short term, although I worry in the long term it will do damage to our capitalist system.

WALLACE: But you think initially that the stimulus package will be successful?

SAMMON: I think throwing that much money against the wall is going to shock this economy back to life, even if it does a lot of long-term damage to our system.

WALLACE: Jill?

ZUCKMAN: But despite that, and despite the fact that home mortgage rates have really dropped quite a bit lately, I think that home foreclosures are going to rise substantially in 2009.

I just think it's going to take a long time for that stimulus package to get down to that level and help people.

WALLACE: And you don't see the Democrats launching some kind of big bailout to keep people in their homes and allow them to renegotiate?

ZUCKMAN: I do. I do. I think they're very likely to do that, but I think it's going to take so much time. I mean, it's such a complicated effort that we're going to see people in 2009 continue to lose their homes.

WALLACE: Fred?

BARNES: The recession hits Major League Baseball with crowds down and losses up. There are a couple of things at play here beyond the recession. One is the sports bubble. You know, we've had sports team -- Major League teams have done -- been doing well in every sport, and ticket prices have gone up dramatically.

But if you sit at home now and watch -- and look, I go to lots of these games. But if you sit at home now and watch it, the game -- excuse me -- on a big screen HDTV, it is very, very pleasurable, and it's often easier and better to stay home than go to a game.

WALLACE: Well, let me just say, it isn't hurting the Yankees, who have spent a half a trillion -- no, half a billion dollars, $400- something plus million, on three players that they've committed in the last month.

Ceci, you get the final economy.

CONNOLLY: Well, Bill mentioned the stimulus package which the Obama folks have now given the fancy name of the American Recovery and Reinvestment Plan, but it's still an old-fashioned stimulus bill.

Expect that that is going to get quite large, but it will not hit one trillion, Chris. That "T" word is too scary for politicians. And it will be just under that.

WALLACE: So just like a sale at the mall, 999 billion.

CONNOLLY: Exactly.

WALLACE: Thank you, panel. Have a happy new year.

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