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February 01, 2009

Guests: Sens. Durbin & Kyl, RNC Chairman Steele

Fox News Sunday

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

With the House approving an $800 billion stimulus plan, now the Senate takes its shot at jump-starting the economy. Can Democrats and Republicans reach a compromise? We'll find out from two Senate leaders, Democrat Dick Durbin and Republican Jon Kyl.

Then, Republicans begin the long climb back from election defeat and try to rebrand the GOP. We'll get a read on the party's future when we're joined by the new Republican chairman, Michael Steele.

Plus, from meetings on the Hill to parties at the White House, President Obama goes all out in the name of bipartisanship. Is it possible Washington will get more collegial? We'll ask our Sunday regulars -- Brit Hume, Mara Liasson, Bill Kristol and Juan Williams, all right now on "Fox News Sunday."

And hello again from Fox News in Washington. With the news about the economy bad and getting worse, all eyes will be on the Senate this week as it debates that $800 billion-plus economic stimulus plan.

Will Democrats change the package and will any Republicans vote for it? For answers, we bring in two Senate leaders -- Democrat Dick Durbin, who comes to us from Chicago, and Republican Jon Kyl, who joins us from Phoenix.

Gentlemen, you are the whips, the chief vote counters for your parties in the Senate, so let's start there.

Senator Kyl, as the Senate begins debate on the economic stimulus plan Monday, how many Republican votes at this point do you count for the Democratic package as it stands right now?

KYL: Chris, we haven't begun our counting yet, but I can tell you that I see support for this legislation eroding. I think the more people around the country see of it, the angrier they get, because it's very wasteful. It spends way too much money.

By the way, if you throw in the interest, it's over a trillion. It's about $1.3 trillion. And it's ineffective. I think the theory of it is if you throw enough money, somehow or other it'll trickle down to people and that will help stimulate the economy.

But the economists that we've talked to said that's not going to work. I think the people understand that. And so I see support in the Senate actually eroding.

WALLACE: Senator Durbin, I don't know how much of a count you've done, but how many Republican votes at this point do you see for the package? And picking up on what Senator Kyl just said, do you see any Democrat defections?

DURBIN: Well, of course, we're working to make sure the Democrats are supporting it, and some of them have concerns, will offer amendments. And I believe some of those amendments will be adopted.

I've talked to some Republicans on the other side of the aisle. We've said to them, "We're open about this. Come to us with your ideas, if you want to make changes and offer amendments. Let's move forward."

Now, four Republicans in the Appropriations Committee supported the bill initially, and I'll stress initially because they said they wanted to see the final product, and one Republican in the Finance Committee. But we still have work to do.

But let me just -- and commenting in general terms, I want to put this in perspective. This is not another bill. This is not another political debate. This isn't something that we can just dismiss at the end of the week and say, "Well, let's move on and do something else if this doesn't work."

We are facing one of the most serious economic crises in our nation's history. The numbers that come in every day are absolutely devastating. To think that our gross domestic product is shrinking more than it has in 25 years, that the unemployment rate is now higher than it's been in 16 years and getting worse -- we all sense this is a crisis.

We cannot delay this. We can't engage in the old political rhetoric of saying, "Well, maybe it could be a little bit better here and a little bit better there." We've got to pull together.

I think the American people are really counting on us. And President Obama has reached out in an unprecedented way to the other side of the aisle to try to engage them and ask them -- get beyond any specific small issues and let's look at the bigger picture here. America's counting on us.

WALLACE: Well, I'm sure that Senator Kyl would say they're looking at the big picture, too.

Since you guys both agree that you need to make some changes, let's see if we can work out a deal right here on "Fox News Sunday."

Senator Kyl, recognizing, as you must, that your side lost the election and the Democrats won, what is the minimum that you would need to see in changes in this package to get significant Republican support? And is there a possibility that if you don't get that that Republicans will try to filibuster to block this bill?

KYL: Well, first of all, of course, Dick Durbin is right, there is a crisis in this country. Republicans fully appreciate that. People are hurting. And that's why we don't want to see this opportunity wasted.

We're not talking about little things at the margins. We're talking about over a trillion dollars here, and it would be a shame to waste that money. In the first place, we don't have it. So there would be major structural changes that would have to occur.

The centerpiece of this is a $500 rebate to folks, about 27 percent of whom don't even pay federal income tax. That didn't work last year. It's not going to work this year. And so that's not a good place to start.

It creates 34 new government programs. It sends $84 billion to the states when about $10 billion would satisfy the so-called FMAP needs that they have. It wastes a ton of money.

I mean, there are so many different things that you can make fun of in this bill. Let me just mention one -- millions of dollars to World War II Filipino veterans in the Philippines. Now, that may be a good thing to spend money on, but not in a stimulus bill. It doesn't stimulate anything.

So I think you have to start from scratch and reconstruct this to -- start with the problem that created the entire cascade of events that have occurred here, the housing collapse.

And Republicans, I think, will come forward with ideas to start with housing first, let people keep more of their own money, and in that way really provide some stimulus and better hope for the future.

WALLACE: Briefly, Senator Kyl, I want to pick up on one thing you just said and re-press my question. Start from scratch? I mean, you're really talking about rewriting this whole bill?

And secondly, if you don't get those major changes you're talking about, will Republicans filibuster to try to block this bill?

KYL: I think that we would all agree there will be a 60-vote requirement for the bill. That's the end result of a filibuster.

Our effort is not to delay the bill at all. We understand the urgency of the situation. And when I say "start from scratch," what I mean is that the basic approach of this bill, we believe, is wrong.

It may be that there could be some huge amendments that would redirect it, that would be adopted by our friends on the Democratic side. But every amendment in the Finance Committee was defeated. Every amendment we put forth in the Appropriations Committee was defeated.

I don't think there's a real effort here. As Speaker Pelosi said, we won the election, we wrote the bill. And I suspect that's pretty much the way it's going to end up.

WALLACE: Senator Durbin, let's take a look at the bill and where the money goes -- on the spending side, $15 billion for college scholarships; $1 billion for problems with the census, which doesn't take place until next year, 2010; $400 million to prevent the spread of sexually transmitted disease.

And on the tax side, the non-partisan Congressional Budget Office says that only 22 percent of the House plan is tax breaks, not the 40 percent that Mr. Obama promised.

Now, even Democratic experts like Alice Rivlin said as it now stands, a lot of this money is going to be wasted. So does Jon Kyl have a point that you need major changes in this bill to actually do what it's supposed to do, an emergency economic stimulus?

DURBIN: Let me correct a few things. Jon may not have been aware, but the biggest amendment in terms of dollar volume that was added in the Senate Finance Committee was sponsored by Senator Grassley and Senator Menendez.

It added about $80 billion for the Alternative Minimum Tax fix. So that amendment was bipartisan, and it was adopted in the committee, and it's the largest single addition to tax cuts. With that AMT, 36 percent of this bill goes for tax cuts.

Jon's first criticism was about tax cuts. That used to be the credo of the Republican Party -- cut taxes for working people and others. But now it appears that he has a different point of view.

I would tell you I think that we should be helping working families. We should reduce their tax burden so that they can meet some of the expenses they're facing in this terrible economic situation.

And let me say about the overall cost of it, it is around 800 to 900 billion since we've added in this new bipartisan amendment, and that represents about 6.5 percent of the gross domestic product of America.

We have to put enough water on this fire to put it out. Throwing a tea cup of water at it means it will return tomorrow to face it again.

WALLACE: Senator Durbin...

DURBIN: Just last year -- one last year -- one thing I want to add. Just last year, when President Bush came to us and asked for $150 billion in tax cuts from a Democratic Congress, and said this is the way to turn the economy around, we gave him the 150 billion.

Sadly, it didn't create the turnaround. It might have helped some families a little bit.

WALLACE: So very briefly, Senator Durbin -- then I want to move on to another subject -- how far are Democrats willing to go to try to get some Republican buy-in as we go forward over the next week?

DURBIN: We're very open, very open to this. For instance, some of the Republicans have been saying to us, "Put more money in infrastructure. Invest in the roads and highways and bridges. Make sure that we create good-paying jobs here in America that we can see, whether we're dealing with mass transit or local infrastructure or wastewater treatment."

You're going to see an amendment that does exactly that. And I think some of the Republicans who feel strongly about that aspect may be drawn to us, and we are open.

Some of the things -- you went through your litany there, Chris, and I added it up. It is a trifle compared to the overall cost of this bill. But each of those things deserve to be looked at carefully.

Keep in mind the bottom line. This stimulus package ultimately is going to have an oversight board to watch carefully that we don't make the same mistakes we did with the TARP program, where $350 billion was expended and there wasn't the oversight to protect taxpayers' dollars.

WALLACE: OK. Let's move on.

And in fact, you took me where I wanted to go, Senator Durbin, and that is the TARP program, the financial bailout for Wall Street.

The administration is working on how to spend the $350 billion that's left in the program. And this last week, the president blasted Wall Street for giving out huge bonuses at the same time that the government -- or, rather, that the banks are asking for government bailouts. Let's watch.

(BEGIN VIDEO CLIP)

OBAMA: That is the height of irresponsibility. It is shameful.

(END VIDEO CLIP)

WALLACE: But, Senator Kyl, there are reports now that the administration may not impose tough new restrictions because of concerns that if they do, some of the banks that most need the money won't end up accepting them. Is that a mistake?

KYL: Well, you do have to be careful about the kind of restrictions you put on there. They need to make sense. Nobody supports this -- the kind of bonuses that were given and so on. But I do think we have to be careful that we don't try to create some kind of a devil out of the business community here.

We're not going to create new jobs unless we have businesses. And so let's be careful about suggesting that all business folks are bad and they shouldn't make very much money.

The president seemed to suggest that it's wrong for them to make a profit in these days. Well, businesses won't stay in business. They won't create jobs. They won't hire people unless they think they can make a profit.

Only 2.3 percent of the Senate bill actually provides tax relief to businesses in the hope that they can create jobs. That's anemic. That doesn't do any good. And the tax relief that Dick Durbin talked about last year that President Bush asked for -- well, it was a combination of Democrats and Republicans. It didn't do any good. He's right. And the same thing is not going to do any good in this legislation.

WALLACE: Senator Durbin, very briefly, because I want to move on to another subject, how do you feel about the idea of putting as part of the TARP financial bailout tough restrictions on executive compensation?

DURBIN: I agree with that. And I think that should be the bottom line. It is sickening when families across America are making sacrifices and facing economic uncertainty that it's business as usual on Wall Street, even at firms that are losing money, that without a taxpayer subsidy wouldn't be in business.

And here they turn around and issue billions of dollars of bonuses to their people. Where is the spirit of sacrifice and unity? We're in this together. And you have to ask those captains of industry at the highest level to really pull with the rest of America to get us out of this crisis.

WALLACE: A couple of political issues I want to get to with both of you.

And, Senator Kyl, let me start with you. It now turns out that former Senator Majority Leader Tom Daschle failed to pay about $128,000 in taxes over three years until he was nominated for secretary of health and human services.

Senator Kyl, how much trouble is his nomination in?

KYL: Well, we'll have to see. I just got the report. I'm on the Finance Committee, and I just got the report late Friday afternoon. So we'll have to question former senator Daschle and understand his explanation, and then have a conversation about it and see where it goes. I think it's too early to tell.

WALLACE: Are you troubled by it?

KYL: Well, sure, you have to be troubled by it. I just have to note, you know, with the problems that now Secretary Geithner had with his taxes, with these problems, with former senator Daschle, with the problems of Bill Richardson, the number two person brought into the defense department, I know that -- that President Obama wanted to have a very ethical administration starting out and so on, but I think he's seeing how hard it is to avoid these kind of problems.

And I just wonder if President Bush had nominated these people what folks would be saying about that.

WALLACE: Senator Durbin, one of the top Republicans in the House said, "Listen, no wonder that Democrats don't mind raising people's taxes, because they don't end up paying them themselves."

DURBIN: Well, that was a little joke, and I read it in the papers myself. But let me say this. If all you knew about Tom Daschle was that he used to be a senator, and he made a mistake and had to pay over $100,000 in back taxes, you have a right to be skeptical, even cynical.

But if you know Tom Daschle, you know better. This is a man who gave 20 years of his life to public service. He's -- even more -- 20 years in Congress.

And when he ended up losing an election, he didn't cash in and leave. He lost an election ending his public career. His net worth was less than a million dollars at that point. And here he went out in the private sector, and now he's found himself having made a mistake and admitted to it.

He took the steps necessary to start paying the taxes, make sure they're paid. Now, that's the right thing to do. I believe Tom Daschle's one of the most honest people I've ever known or worked with in public life.

And I really want to commend Senator Kyl for showing some reserve here when asked the question. I think he knows Senator Daschle and he wants to be fair, as I do.

WALLACE: OK. We've got...

DURBIN: The bottom line -- this administration has made more progress in appointments, in filling these positions to the cabinet, than most other previous presidents.

WALLACE: Gentlemen, we've got less than a minute left, and I want to ask you about one last issue.

Senator Kyl, your colleague, your trusted colleague, Senator Judd Gregg of New Hampshire, apparently is Barack Obama's top choice for commerce secretary.

But if he takes that job, then Republicans would lose their ability to mount a party line filibuster. They wouldn't have 41 votes. First question: Is Judd Gregg leaving?

KYL: I don't know. But I expect there may be an announcement on Monday. I will say this, that it shows a great deal of perspicacity on the part of President Obama to select a guy like Judd Gregg, who is just a phenomenal senator, very bright.

He's our ranking member on the Budget Committee, gives sage advice to us. And if he did go to Commerce, I would miss him greatly. On the other hand, he could make a significant contribution to the Obama administration.

WALLACE: And briefly, Senator Kyl, how troubled are you with the idea that you would lose your 41st vote? And are you putting any pressure on him to stay in the Senate?

KYL: I'm not sure that we would. I think that's been thought through. I suspect that Senator Gregg has thought that through very carefully and would not leave his Republican colleagues in a lurch.

WALLACE: You're suggesting that there might be a deal in which the Democratic governor...

KYL: No deal.

WALLACE: ... of New Hampshire would appoint a Republican?

KYL: No, I'm not suggesting a deal at all. I'm just suggesting that Senator Gregg clearly has thought this through. And if it does turn out that he's the commerce secretary, that events may unfold in a way that don't cause us the problem that you suggested.

WALLACE: All right. We'll have to read between the lines there.

Senator Kyl, Senator Durbin, I want to thank you both so much. Thank you for coming in.

DURBIN: Thank you.

KYL: Thank you, Chris.

WALLACE: And please come back, gentlemen, both of you.

KYL: And go Cardinals!

WALLACE: I knew you were going to get that in.

DURBIN: And go Steelers!

WALLACE: Anything you want to say, Senator Durbin?

DURBIN: Go Steelers!

WALLACE: OK. There you go.

Well, the Bears aren't in it, so I guess that the Steelers are close by.

Gentlemen, thank you both.

DURBIN: That's right.

KYL: Thank you.

WALLACE: Up next, Republicans pick a new and historic party leader. How will Chairman Michael Steele give a new brand to the grand old party? We'll ask him in a Sunday exclusive after this quick break.

(COMMERCIAL BREAK)

WALLACE: On Friday, Republicans elected their first black national chairman. That is big news for a party that has traditionally been seen as failing to reach out to minorities.

Joining us now to tell us how he plans to turn around GOP fortunes is the new head of the Republican National Committee, Michael Steele.

Chairman Steele, congratulations.

STEELE: Thank you, Chris. Thank you.

WALLACE: And welcome back to "Fox News Sunday."

STEELE: It's good to be back, yeah.

WALLACE: I want to start with something that you said in your victory statement on Friday just after you were elected by the RNC. And here it is.

(BEGIN VIDEO CLIP)

STEELE: We want you to work with us. And for those of you who wish to obstruct, get ready to get knocked over.

(APPLAUSE)

(END VIDEO CLIP)

WALLACE: Who were you talking about? Who are you thinking may want to obstruct?

STEELE: I'm thinking both inside and outside the party. I think it's an opportunity for us now to move this party forward on the ideas that matter to the voters, and so I'm not in the mood to have people stand in the way and say, "We can't. We've always done it this way. It's impossible to do."

I mean, I was told that in making this run. And I was told that when I decided to run for lieutenant governor of Maryland. So the idea that the opportunity presents itself and you fail to rise to it because someone is standing in your way to me just doesn't sit well.

So I wanted to make it very clear from the very beginning, my goal is to move this party forward. We're in the business of winning elections. And so I'm expecting my grassroots, my state parties, the national organization to get on board, to get on the page that is a winning page and move forward.

And for those Democrats and others who want to put up roadblocks and do the crazy typical play that they normally do -- the name- calling and the obfuscation and the sleight of hand -- I don't have time for it, because there are important issues that we have to face on the economy, the war, and issues that affect the poor. And I want to have this party in a position to move on those issues.

WALLACE: All right. Well, let's talk about how you reach out, and that's part of the key to this, because at this point...

STEELE: Sure.

WALLACE: ... the Republicans, if you look at the last election, are a minority party.

Let's talk about how you reach out to some of the groups that may feel alienated from the Republican Party. In November, John McCain got 31 percent of the Hispanic vote. Four years ago, President Bush did 13 points better.

Does the GOP need to change its position on immigration reform, guest workers, path to citizenship, to reach out and say to Hispanics, "You have a home in the Republican Party?"

STEELE: No. Well, I think the GOP's position on immigration is very much the position of many, many Hispanics who are in this country.

WALLACE: Well, wait a minute.

STEELE: Well, hold up. Hold up. WALLACE: Wait. Is the GOP position the position of George Bush and John McCain, which is for immigration reform, or...

STEELE: The GOP...

WALLACE: ... or is it the position that was build the fence?

STEELE: The GOP's position is secure our borders first. Let us know and let us make sure the American people know that we've taken care of the important business of dealing with illegal immigration into this country.

You cannot begin to address the concerns of the people who are already here unless and until you have made certain that no more are coming in behind them.

WALLACE: So no change in the position of the party.

STEELE: No change in the position on the party on that.

WALLACE: You are one of the...

STEELE: How we messaged that is where we messed up the last time. We were pegged as being insensitive, anti-immigrant, and nothing could be further from the truth, because you talk to those leaders in the Hispanic community, they will tell you the same thing.

They understand the importance of making sure the United States' borders are secure.

WALLACE: You are one of the co-founders of something called the Republican Leadership Council...

STEELE: Yep.

WALLACE: ... which supports candidates who favor abortion and gay rights.

STEELE: Yep.

WALLACE: Does the GOP need to do a better job of reaching out to people who hold those views?

STEELE: I think -- I think that's an important opportunity for us, absolutely, because within our party we do have those who have that view as well as outside.

And my partnership with Christy Todd Whitman was an effort to hopefully build a bridge between moderates and conservatives in the party. I'm a pro-life Roman Catholic conservative, always have been.

WALLACE: You also support a constitutional amendment against gay marriage.

STEELE: That's right. And the reality of it is this, because I don't think we should muck around with the Constitution. We can deal with that at the state level, OK? That's my personal view.

But the reality of it is the party has to recognize the diversity of opinion that's out there. And we're not going to get everyone to agree with the -- Ronald Reagan said it best. If you agree with me 80 percent of the time, I think that's good enough. I mean, I think we can move forward on that 80 percent.

So there are some 80-percent issues out there that we can work with those within our party and outside our party and create a new bridge and a new opportunity. That was my involvement with the RLC, and I'm very happy about that.

WALLACE: But just to press on this...

STEELE: Yep.

WALLACE: ... if you believe -- if someone believes in a woman's right to choose, if someone believes in gay civil rights, where's the 80 percent agreement with the Republican Party?

STEELE: It could be -- it could be on our -- on economics.

WALLACE: No, but I'm talking about on those issues.

STEELE: Well, you know, see -- now, Chris, you've just defined -- you've just defined the world in which there are issues. You've just narrowed -- you've just narrowed my scope to two issues.

WALLACE: No, I'm just saying on those issues, is there 80 percent agreement?

STEELE: Well, if there -- if that's the 20 percent they disagree with us on, let's work on the 80 percent where they agree with us. That's my point.

I'm not going to allow anyone to define the issues for us and say, "Well, these are the only two issues that really matter." There's a whole range of issues out there in which we can address the American people and the American people can come to our table.

WALLACE: All right. On Saturday, you spoke at a meeting of Republican congressmen, and you congratulated them on voting as a group against the House stimulus plan. In fact, as you put it, "the goose egg you laid on the president's desk was just beautiful."

Mr. Obama has a 70 percent approval rating. Eighty percent of the country says they want Republicans to work -- not necessarily agree with, but to work with President Obama. Are you saying the GOP should just ignore that?

STEELE: No. I'm saying -- well, I'm just -- I'm saying the GOP did what the GOP had to do to protect the pocketbooks and the interests of the American people. That's a bad bill. It's not a stimulus bill. It's a spending bill. Let's call it what it is.

Don't tell me, "Well, I'm going to give you a third tax cuts, and then I'm to spend two-thirds of that." It's crazy. So I called it what it is. The Republican Congress did a great job in drawing the line.

I hope the Senate will follow. I hope the Senate members will follow with the House leaders in making certain that we do not spend the American people -- the money that's proposed. It is not a good plan.

WALLACE: But, Chairman Steele...

STEELE: Yep.

WALLACE: ... if you end up with a bill that is passed by the House and the Senate, and every House member, Republican House member, votes against it, and every Senate Republican member votes against it, you don't think there's any danger that they're going to be seen as obstructing?

STEELE: Why? If I -- if I think you've proposed something that is not in my best interests, why am I an obstructionist if I don't agree with it?

Why should I agree with something just because you proposed it? Why should I agree with it just because you have a 70 percent approval? You can still be wrong with a 70 percent approval rating.

WALLACE: Your party...

STEELE: And that's the reality here.

WALLACE: One thing that I think you will agree with me is that your party has had a couple of tough elections in 2006...

STEELE: Yep.

WALLACE: ... and in 2008. Let's take a look at the numbers. You've lost 14 seats in the Senate and, depending on Judd Gregg and Al Franken, possibly one or two more -- there we go -- 54 seats in the House, seven governorships. How much trouble is the GOP in?

STEELE: That's ugly, isn't it? That's some ugly numbers. And now we have an opportunity to turn that around. We've got a special election in the 20th Congressional District coming up in New York. We've got Virginia gubernatorial race. We've got New Jersey gubernatorial race.

We're going to be on the ground and engaged in all of those campaigns that are going to be important opportunities for us to re- establish the brand for the party, number one, but most especially, reacquaint ourselves with the voters and help them appreciate exactly what we stand for and what we believe, putting good candidates in a position to win.

That's my job, is to put good candidates in a position to win. Now, we're not going to win all of them, but we're going to start to win again in important races that matter, and we've got three of them coming up this year.

WALLACE: Here's where I'm a little bit confused. You say and other party leaders say, "Look, we are going to stick with our conservative principles," and I think you could make the argument this is still a center-right country.

STEELE: Absolutely, it is.

WALLACE: But the fact is, for whatever reason, people have moved away from the Republican Party. So is it -- is it a question of salesmanship or, without giving up your basic principles, do you have to change some of your policies?

STEELE: You don't give up on your basic principles, number one. And keep in mind the losses that you've displayed there had nothing to do with our value for life, our value for a sound economy, the hard work that we...

WALLACE: So what was it about?

STEELE: It was about the fact that we failed to lead. We grew the size of government. When we're saying we believed in less government, we grew government. When we said we believe in less spending, we spent more.

We had a contract with America, 1994, with the American people and the party bound together in agreement that these would be some 10 principles that we would follow. We moved away from that. And the American people...

WALLACE: So are you saying -- going back to 1994?

STEELE: No, I'm not saying we're going back to 1994, Chris. I'm saying that the principles that we espoused then are still true and good today...

WALLACE: But do you need new...

STEELE: ... and that's not what people moved away from us for. They moved away from us because we behaved badly.

We came to Washington, and we became like the people we were sent here to replace, and they replaced us.

WALLACE: But do you need to show Americans that you have new solutions...

STEELE: Absolutely.

WALLACE: ... to their daily kitchen-table concerns?

STEELE: Absolutely. Absolutely. It is taking those core principles of this party and making them relevant in the 21st century.

WALLACE: Such as? Give me an example of a new idea.

STEELE: Well, a new idea would be let's focus on poverty. Let's focus on how we can take someone who is being poorly educated in an American public school and how they are poorly trained for a job, and put in place those opportunities for them to get that education, give their parents choice in education, make it real for them.

We did it right here in my home town of the District of Columbia. The president of the United States, when he was a U.S. senator, blocked three times -- tried to block three times legislation that would enable poor black children in this city to go to the high school that I graduated from, what they otherwise wouldn't be able to afford to do.

So create those opportunities. Put people on a pathway to earn a job, earn an education, so they can empower themselves. I don't need the government to do that.

WALLACE: And real quickly -- we've got about 30 seconds left -- I don't mean this to be a complete list, but talk about the future of the party. Give me three names of Republican leaders under the age of 50, as - - who you see as new faces.

STEELE: Well, since I'm at 50, I guess I don't know, but...

(CROSSTALK)

WALLACE: ... include yourself anyway.

STEELE: I'd say certainly Bobby Jindal, Sanford -- Governor Sanford, Pawlenty, Palin.

We have a whole host of folks out there that are beginning to emerge on the scene and will over the next couple of years, I think, redefine this party in a way that will be very good for us long term.

WALLACE: Chairman Steele, thank you.

STEELE: Thank you.

WALLACE: Thanks for coming in. I have a feeling...

STEELE: It's great to be here.

WALLACE: ... you're going to be an assertive spokesman for the Republican Party. Good luck in your new job, sir.

STEELE: Thank you, Chris.

WALLACE: Coming up, President Bush (sic) makes a big push for GOP support, but so far has little -- did I say President Bush? President Obama makes a big push for GOP support but so far has little to show for it. Old habits die hard.

Can he break Washington's partisan gridlock? We'll ask our Sunday panel after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: I will continue working with both parties so that the strongest possible bill gets to my desk. With the stakes so high, we simply cannot afford the same old gridlock and partisan posturing in Washington.

(END VIDEO CLIP)

WALLACE: That was President Obama this weekend calling for bipartisan support to get his stimulus package through the Senate.

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

Well, President Obama took a number of steps this week to reach across the aisle. He went up to Capitol Hill and held separate meetings with the House Republican caucus and then the Senate Republican caucus.

He invited the leaders over to the White House for cocktails. And he's having a bipartisan Super Bowl party. And I've got to tell you, I can't think of anything better than sitting around with a bunch of congressmen watching the Super Bowl. That to me is an idea. "Hey, Senator, pass over the wings."

Brit, is Washington starting to get warmer and fuzzier?

HUME: Not really. Not yet. President Obama has reached out in form and sought to leverage his popularity and his winning personality to Republicans and with Republicans, but he hasn't really reached out in substance.

And part of that's a function of the fact that the administration made what I think was a very bad mistake in letting the House have its head, if you will, in writing this bill, because the bill really -- if you even go by the standards set by the economic ideas outlined by a whole group of Obama's own advisers about stimulus, this bill doesn't anywhere meet the test. It's really a terrible bill. And Republicans felt totally comfortable and confident in voting unanimously against it.

Now, there's a chance the bill will be extensively rewritten in the Senate. How extensively, we don't know. I know Republican leaders in the Senate are thinking that what will happen is they will sweeten the bill with specific goodies to appeal to a handful of senators on the Republican side to overcome a possible filibuster and ram it through that way instead of extensively rewriting it. We'll see.

WALLACE: Mara, let me ask you about -- and we don't know what's going to happen in the Senate. We'll turn to that in a minute -- but how the battle over the stimulus package has played out so far.

Who's had a better week, President Obama, who got the bill through the House by large margin -- but, on the other hand, as Brit points out, there are more and more questions being raised substantively about this package - - or Republicans, who can celebrate, "Yeah, party unity, we were able to stop this bill -- or we were able to vote against the bill," but in opposing a popular president?

LIASSON: Look, I think given that this is only the first quarter, I guess, of this game, there's a lot of steps to go. Both of them did OK but emerged with some problems.

Obama made his point that we absolutely need a stimulus. Every single day there's more bad economic news and there are stories about these bonuses. And in that sense, he came out of the week fine.

But I do think he lost control a little bit on the message of what's inside the stimulus bill -- not on the need for it to happen and the need for it to be huge, but it's not looking as timely, temporary and targeted, which were Larry Summers' three principles for it, as it did in the beginning.

And you've got a chorus of economists, Democratic and Republican, who are saying, "This might not do the trick. This needs to be changed."

If it's going to have the most important effect -- and the most important effect is not how many votes it gets from Republicans, but whether it actually works or not, because that's what Obama is going to finally be judged by.

So I think he gets tremendous points from the public for reaching out. He even, I think, laid down -- got a lot of goodwill from Republicans that are going to help him down the road on other issues where you need bipartisanship a lot more than on the stimulus, like health care, and energy, and entitlement reform. But a little bit of problems. As for Republicans, I don't think there's any risk they take for opposing this thing in its current iteration. In the end, I think you're going to see some Republicans vote for it.

WALLACE: Bill, who has the high ground at this point, political high ground? Is it Obama backing any economic stimulus, or is it the Republicans and other critics who say there really are problems with this bill?

KRISTOL: Yeah, I think Republicans had a good week. I think, to some degree, they both had the high ground. Republicans were pretty careful not to be fighting with Obama.

They're fighting with the congressional Democrats. They're fighting with the bill -- $335 million for preventing sexually transmitted diseases. I don't know if that's stimulating or not. Maybe stimulate more romantic dinners. I don't know.

$50 million for the National Memorial Cemetery Commission -- I mean, there really is some ludicrous stuff in there.

Republicans did a very good job not just in being united but, more importantly, in winning the argument, I think, on the merits of the bill. And in that respect, they're very confident.

I was at the House Republican retreat on Friday and Saturday and spoke to them and mixed and mingled with a lot of them. And they -- they're essentially -- one Republican, a freshman, I think, congressman -- very pleased to be invited to the Super Bowl party at the White House tonight.

And he's a freshman, and suddenly he's going to be watching the Super Bowl at the White House with President Obama -- grateful to him. Looking forward to it. Going to bring his little, you know, camera on the phone to take a picture for his kids and all that.

And I said, "Were you at all nervous about voting against the bill?" He said, "Absolutely not." Not only Republicans were calling his office saying, "You did the right thing," he got people saying, "We voted for Obama, and this is not what we wanted. We didn't want a big pork bill, that isn't going to help the economy and just is throwing money at all these interest groups and ballooning the deficit to no good." So they feel very comfortable.

WILLIAMS: Well, I just -- I don't -- I'm a little bit stunned at this -- at this assessment, because in fact, if you look at the polls, not only the polls indicate that President Obama remains very popular, a Fox News Opinion Poll out this week had him up close to 70 percent, but the Democratic Congress remains very popular over the last week.

I think the difference in tone here is that we are focusing on how effective will the stimulative steps in the bill be. The fact is people are concerned about things like extending unemployment insurance.

They're concerned about making sure that health care is available for those who are unemployed and their children. They're concerned about job creation or saving jobs.

These are the -- another way of measuring the importance of what President Obama's doing. And I think Republicans, you know, and especially kind of the hard base, including Rush Limbaugh, are driving in another direction.

And I don't think that's going to pay off for Michael Steele and the Republicans in the future.

HUME: You know, Chris, it's interesting what the Republicans did this week. You know, they came up with an alternative of their own, and they did a very clever thing, and that is they ran it through an econometric model that was created by the president's -- the chairwoman of the President's Council of Economic Advisers, Christine Romer.

And the result of that was that it came out that it, you know, created twice the jobs at half the cost, or whatever. Now, these things are only worth so much, but the point is Republicans are not, at this instance, at least, simply opposing to oppose.

They have a set of ideas of their own. They advanced them. And as Bill pointed out, they didn't pick a fight with Obama about it. They picked a fight with an easier target.

WALLACE: So, Mara, what do you expect in the Senate? Do you expect - - having heard Dick Durbin and Jon Kyl, do you expect big changes to try to get a lot of Republican buy-in or, as Brit suggested some Republican leaders fear, a few tokens to pick up a few votes so you break the filibuster, but basically a party-line vote?

LIASSON: I think that you're already seeing the little changes like, "OK, give Grassley the AMT fix, and do a few things. Get Susan Collins and Olympia Snowe."

But I think that -- in the end, I think the changes are going to be big because I think they're going to have to be big, and not just in the Senate but also in the conference committee where traditionally presidents get to really weigh in.

I mean, he did cede the first iteration of the bill to the House Democratic leadership, but I don't think that's going to be the case. I think there are going to be big changes.

And he's not only going to do it to get, quote, "big Republican buy- in," but also because this bill has to be made better because it has to work if he's going to succeed in the long run.

WALLACE: Let me ask you about that, Bill. If it doesn't work, does President Obama and does the Republican Congress -- do they get another bite at the apple? Or having spent close to a trillion dollars and, if you include debt, maybe more than a trillion dollars, is this their one shot at trying to fix the economy?

KRISTOL: Well, they'll do more things, but if you run up this amount of debt and it doesn't do any good, I think that's pretty bad, you know. But look, you print all this money, you give out all this money, it's going to have some short-term effect.

And maybe it will help a little bit towards the end of this year and early next year. But I think ultimately there has to be an economic recovery, and it's awfully problematic whether this bill will contribute to it.

The other thing is this bill is going to pass. There'll be all this money sloshing around, ludicrous amounts of money going to states and localities, amounts that they're not used to spending. The Republicans are going to -- and citizens and the media, hopefully -- are going to monitor that spending.

It's not as if -- the story doesn't...

(CROSSTALK)

WILLIAMS: ... Obama won.

(CROSSTALK)

WILLIAMS: Obama won (inaudible) accountability.

KRISTOL: Does he want a close accountability of...

WILLIAMS: Well, he does.

KRISTOL: ... of the $335 million...

WILLIAMS: I think he does.

KRISTOL: ... that's being spent?

WILLIAMS: And in fact, that's what...

KRISTOL: Incidentally, on sexually transmitted diseases?

WILLIAMS: Oh, no, he's going to -- they're going to take that stuff out.

But look, the point is...

KRISTOL: Oh, really?

WILLIAMS: ... Ronald Reagan's the only one who had any bipartisanship back in '81. You look at what Clinton did in the '90s, you even look at what George W. Bush did early in his term -- no bipartisanship.

This is not a good sign for Republicans. Republicans ultimately will be seen as not having given Barack Obama a chance. And that's not good in the mind of the American people when we're in this dire economic situation.

WALLACE: All right.

Brit, do you want a final word? HUME: I should say that when the economy recovers, the problem is we're not going to know what did it. We're not going to know whether it was just pent up demand, people finally started buying because they had to, or whether it was because of the injections, massive injections, quite apart from the stimulus bill, of cash into the economy by the Fed.

We're not going to -- we'll never really know, and the argument about whether this stuff works or not will go on forever.

WALLACE: I just hope it's "when" and not, at least in the short term of the next two years, "if".

Anyway, we have to take a break here.

But when we come back, another of President Obama's cabinet picks didn't pay his taxes. Is that nomination in trouble? Our panel handicaps his chances after this short break.

(COMMERCIAL BREAK)

WALLACE: On this day in 2003, the Columbia space shuttle disintegrated while re-entering the earth's atmosphere, killing all seven crew members on board. The accident was the result of damage to the shuttle during liftoff.

Stay tuned for more from our panel.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DAVID VITTER: $120,000 isn't a rounding error, isn't a minor mistake. And there needs to be a clear explanation of that. I would be very dubious.

(END VIDEO CLIP)

WALLACE: That was Republican senator David Vitter on former Senate majority leader Tom Daschle's failure to pay some taxes.

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

Well, we have now found out that former senator Tom Daschle joins the roll -- let's put up the figures. He failed to pay more than $128,000 in taxes, including -- guys, are we going to put that figure up there? I guess not -- involving unreported consulting fees -- there we go -- involving unreported consulting fees, questionable charitable contributions, and a car and driver that he had free use of.

And on another matter, he was paid $220,000 for speeches to health groups he would have impact on as secretary of health and human services.

So, Bill Kristol, is his nomination in trouble? And if not, should it be?

KRISTOL: It should be, and I actually think it is. I know everyone says, "Oh, senatorial courtesy, there's no way his colleagues will vote him down." This is really outrageous.

I mean, Geithner was outrageous but he persuaded people somehow that if he weren't treasury secretary the world would end.

No one thinks, with all due respect to Tom Daschle, that if he's not health and human services secretary the world would end.

I mean, he is now -- he's a limousine liberal who doesn't even pay taxes on his limousine. It's a perfect -- it is a perfect embodiment of inside-the-Beltway arrogant, you know, behavior, and I think the Obama -- President Obama, who ran on a rather different platform -- I wonder whether this nomination can survive.

WALLACE: And the interesting thing is, as opposed to Geithner, who let the Obama team know before he was formally named so at least there was -- they knew what they were getting, apparently Daschle delayed and didn't let the Obama team know until well after he had been named secretary of health and human services. That can't please them.

WILLIAMS: Well, but Obama has stayed steadfast in his support of Tom Daschle, who was an early political supporter. I don't think he's going to have any trouble, just in the way that Tim Geithner ultimately didn't have any trouble. And both of these cases, it seems to me, are extremely troubling.

The American people, when asked about Tim Geithner, said that they don't think he should have been confirmed. But again, the Republicans just got out of the way.

And I think on this one, there's more likelihood of some kickback from Republicans, and especially on the second point that you mentioned, Chris, which is that if he's giving speeches and has dealings with groups that he would now have some regulatory function to supervise, I think people are going to say, "Well, how can you do that? How can you approach something as controversial as health care reform and expect that you are going to be trusted by both sides, when these people have been putting money in your pockets?"

WALLACE: All right.

Let's turn to another interesting development this week, Brit, and that is there are reports, and they seem to be pretty solid, that President Obama's top choice -- he hasn't named him, but his top choice for commerce secretary to fill the job that was lost by Bill Richardson when he left is Republican senator Judd Gregg of New Hampshire.

Now, this would not only take away one of the GOP leaders in the Senate, but also its 41st vote, which means that the party would not be able to filibuster, although Senator Kyl said something interesting about that. What are your thoughts about the Gregg appointment?

HUME: I saw Judd Gregg last night and asked him about it, and I said, "So are you going to do it?" And he said, "I really can't say anything about it." But I also talked to Senator McConnell, who I saw last night.

WALLACE: The top Republican in the Senate.

HUME: The Republican leader in the Senate. And he's very worried about this. He's very worried, first of all, that they lose Gregg, who is a very important figure in the Senate -- very smart guy, very able. This is a very shrewd move by the Obama team to reach out to him.

But he did say that it would be his understanding that if Gregg were named that a Republican would be named from New Hampshire to fill out his unexpired term. He still says no matter who it is, it's going to be a huge loss to the Republicans.

And it remains an open question whether -- if it's not Gregg running for re-election, whether the -- whoever is named would be anywhere near as strong a candidate. So it's...

WALLACE: And let me just make it clear that the viewers understand this -- so Gregg is a Republican. He leaves to become a member of the cabinet. There's a Democratic governor in New Hampshire, Lynch, and he would, according to this arrangement -- Senator Kyl didn't want to call it a deal -- name a Republican, not a Democrat?

LIASSON: Look, the White House knows exactly what they're doing. They know that they are, in effect, decapitating the House Republican leadership team -- the Senate Republican leadership team, because Gregg is -- he is really smart on the budget, on all fiscal issues. He's a real leader.

They know exactly what they're doing. They want another -- they get a two-fer or three-fer. They get a Republican in the cabinet. He's a very able guy. They absolutely set that seat up to become Democratic, if not right away, maybe in 2010.

And I agree with Brit, this is one smart hardball political move.

WALLACE: All right.

I want to switch -- no, I want to switch to one last subject here, and you will want to talk about it, Bill.

KRISTOL: I will.

WALLACE: And that is the elections, the provincial elections, in Iraq yesterday. And it is amazing that the situation has gotten so much better there that an election in which millions of people voted, in which there was very little -- almost no incidence of serious violence we're talking about in the final moments of the show.

We don't know the results yet. There are early reporting that al- Maliki -- the prime minister's party has done well. But just the fact that this vote was held, and held so peacefully, and with the Iraqi security in the lead, not U.S. security -- how important in terms of the development of Iraq in its political stability?

KRISTOL: Oh, it's awfully important. Every brigade commander I've talked to who's come back from Iraq has said the key -- now that we won the war, basically, now that the surge succeeded -- and let's just remind everyone this would not have happened if the Democrats had had their way in 2007. We would have chaos and terror in Iraq, not a peaceful democratic election.

But let's not look backwards. It's the age of Obama. We're looking forward. This is awfully important to get buy-in throughout the country in these provincial elections. The Sunnis didn't vote in 2005. They voted this time. There was wide participation among the Shia. There'll be some new people coming into the government.

It's very hopeful. And I think it puts the lie to those so- called realists who always mocked the notion that -- "Can you believe it, democracy in the Middle East, voting?"

This is actually -- democracy is actually the thing that's been best for Iraq. And if they can be a stable, representative government, it really offers the prospect of a happy outcome to this very difficult war. It's awfully important...

WILLIAMS: You know, I...

KRISTOL: ... and it will have an effect throughout the region.

WILLIAMS: Let me -- I don't -- I don't want to be the skunk at your garden party, but I must say that's not the reason that Americans went into Iraq. We went in there thinking there were weapons of mass destruction.

But I just want to celebrate the good that's come of this election. I think it is a tremendous step forward. And given the amount of loss of life and the amount of money we poured in, it's tremendous.

Now, you say this could not have happened without the surge. But you know what? Don't you think the Iraqis have to take control? And that's what we're seeing here, is Iraqis are finally taking control.

I hope they take financial control and start putting their own money in so that we can put our money elsewhere and, as President Obama is thinking, invest more energy in actually fighting Al Qaida either in Pakistan or in Afghanistan.

WALLACE: Bill, we have less than a minute left. President Obama promised during the campaign, first day in the White House, he was going to bring in the generals and give them a new mission, get out in 16 months. He's had two meetings with the military brass so far, hasn't given the order. Why not?

KRISTOL: Because I think he's a responsible man and knows that that would be a terrible disaster to fritter away all the success that's been so hard-earned. So I give him credit. If he hasn't given the order, he's right not to have given the order.

WILLIAMS: Well, he didn't say he was going to give the order, Chris. He said he was going to start the planning. Now, I took it as he was going to give the order.

WALLACE: I thought he said he was going to give them a new mission. WILLIAMS: Well, he has given them a new mission, talking about how you properly exit.

LIASSON: Sixteen months is out the window, because you need to have started right away if you were even going to meet that deadline. That's not going to happen.

WALLACE: All right. We have to leave it there. Thank you, panel. See you all next week.

When we come back, you'll get to see that personal note that former President Bush left for President Obama -- only here. Stay tuned.

(COMMERCIAL BREAK)

WALLACE: It's a custom among presidents that when their time in office ends, they leave a note for their successor in the Oval Office. But the public never gets to see the note, until now.

Last night, we found out what President Bush wrote President Obama.

(BEGIN VIDEOTAPE)

ACTOR PLAYING PRESIDENT OBAMA: And as tradition dictates, he also left me a note from 44 to 43. He was president. A president wrote that.

(END VIDEO CLIP)

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

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