WALLACE: I'm Chris Wallace. New protests and more violence in Iran -- we'll have the latest next on "FOX News Sunday."

The people take to the streets in Tehran. Will the demonstrations bring real change? And what does it mean for U.S. policy? We'll discuss what happens next in Iran with Senator Evan Bayh , a member of the Senate Intelligence Committee; Congressman Pete Hoekstra, a top Republican on House Intelligence; and Karim Sadjadpour, an expert on Iranian politics.

Then "Right Now," our series on new leaders of the Republican Party, continues with Wisconsin Congressman Paul Ryan.

Plus, is the mainstream media pushing the Obama agenda? Our Sunday group analyzes the sometimes cozy relationship between the fourth estate and the White House.

And our Power Player of the Week -- we'll celebrate Father's Day with Senator John McCain , all right now on "FOX News Sunday."

Hello again and happy Father's Day from Fox News in Washington. Here is the latest from Iran. According to state-run media, at least 10 people were killed and more than 100 injured Saturday when thousands of protesters supporting presidential candidate Mir Hossein Mousavi defied the country's top leader and demonstrated against last week's disputed election.

The government made good on its vow to crack down and it called the protesters who were killed terrorists.

Joining us to discuss the fast-moving developments are three experts on Iran, Democratic Senator Evan Bayh , a member of the Senate Intelligence Committee; Congressman Pete Hoekstra, the top Republican on House Intelligence; and Karim Sadjadpour, with the Carnegie Endowment for International Peace.

Let's begin with those pictures from the streets of Iran.

Congressman Hoekstra, what are we seeing in those pictures of the rioting, according to your intelligence sources? Is this a general uprising against the government or isolated protests? Are we witnessing the start of a revolution or another Tiananmen Square crackdown?

HOEKSTRA: Well, I think that you're seeing perhaps both of those, Chris. You are beginning to see this protesting to begin spreading and spreading across Iran and growing in Tehran.

At the same time, the real question here is what is going to be the response of the regime. It appears that since the Friday sermons, the intent of the regime is to be more violent and more repressive in cracking down these protests and stopping them.

We'll now have to see which side is going to be more successful and how they'll respond to each other.

WALLACE: And, Senator Bayh, according to your intelligence, what is it that the protesters want? Is this still about getting Mousavi president or new election, or is it about a more general broader challenge to the ruling regime?

BAYH: Well, they'd certainly like a fair and open election, Chris, and there are clear indications that that did not happen.

But what they really want is a better life. Unemployment is very high. I think it's about 30 percent inside Iran. Inflation is running in double digits.

If you're a young Iranian -- and they have a very young population -- and you look to the future, there's just not much hope for you, and particularly for women in that society who have been denied opportunity for a long time. If you're an educated woman, there's just not a very bright future.

So Mousavi is a -- is a way to achieve a better life for them. So a fair election, yes, but what they really want is more opportunity within a very repressive autocratic society.

WALLACE: Let's pursue this, Mr. Sadjadpour, about what's at stake here. Depending on which side wins -- Ahmadinejad and the supreme leader Khamenei and the Revolutionary Guard on the one side, or Mousavi and the protesters on the other -- what's at stake here in terms of the future of Iran and also in terms of relations with the U.S. and even Israel?

SADJADPOUR: Well, first, I would say, Chris, that the harrowing images of the last several days really underscore for you the brutality of the regime and the bravery of the Iranian people. And in a way, the regime could lose by winning.

What I mean by that is if they continue to clamp down with overwhelming force, they're losing legitimacy by the day. And what we may start to see is what we saw in the late 1970s with the shah. And that is that the main arteries of this regime are going to collapse.

We might start to see strikes from the merchant classes, the bazaar, strikes from the oil ministry, which could really cripple this economy.

WALLACE: And what does it mean if Mousavi were to win? Because he is a product of the -- he was the original prime minister with the ayatollah Khamenei. He is a product of this regime. So would he really represent a dramatic change? SADJADPOUR: Well, what I would say, Chris, is that the Mir Hossein Mousavi of pre-June 12th is different than the Mir Hossein Mousavi of post-June 12th. I think before the elections, he took a fairly tempered, moderate approach.

But now red lines have been crossed, and he's challenging the authority of the supreme leader, Ayatollah Khamenei. So I think that Mousavi and his supporters want a fundamentally different Iran than they did -- than they were asking for pre-June 12th.

WALLACE: Let me ask you about a different aspect of that. And is this the people versus the government? Because in fact, there are some very powerful people in the ruling regime, like Rafsanjani, the former president, who is backing Mousavi. A couple of ayatollahs have issued fatahs against cracking down on the protesters.

So is this the people versus the ruling clerical regime, or are there, in fact, splits within the clerics?

SADJADPOUR: Well, what's unprecedented about this moment, Chris, is that historically we have seen the people versus the regime. Now we have unprecedented fissures amongst revolutionary elites themselves.

And I think the vast majority of not only the Iranian people but also Iranian officials behind closed doors recognize that this "death to America" culture of 1979 is bankrupt in 2009.

WALLACE: Congressman Hoekstra, now that this has, as you say, become a full-scale crackdown on all the protesters, with a number of the leaders of the protests being arrested during the week and, we gather, overnight, what's should the U.S. do?

What should President Obama say and what should this country's policy be towards Iran?

HOEKSTRA: Well, Chris, if we look back to the campaign last fall, you know, the -- there were those that said our president was going to be challenged in the first six months of his presidency. I think that's exactly what you're seeing.

The president is being challenged in a very different way than what many of us expected that he would be. And I think that the president has also prepared himself for this opportunity. He's gone to Europe. He's gone to the Middle East. He's made the speech at Cairo.

And you know, what he did is he polished America's image. Now what he has to use is he has to use that new credibility and to speak out on behalf of the Iranian people.

This is now about America. It is about President Obama. And it is about leadership. This is a real opportunity. This is potentially a game changer in Iran. It is an opportunity that the president and America have to leverage off of. WALLACE: So be a little bit more specific, Congressman Hoekstra. What would you like to see the president do, particularly when the fate of Iran and the situation there, which side is going to end up winning, hangs in the balance?

HOEKSTRA: Well, I think, you know, yesterday the president came out with a written statement. But this president is a great orator. This president needs to come out.

He needs to speak to the American people but, more importantly, he needs to speak to the people of Iran, the people of the Middle East, and he has to make a forceful statement on behalf of the people on the streets for freedom and democracy.

You know, this is a country that very soon is going to have nuclear weapons. This is a repressive regime. This is an opportunity to get some new leadership in here, because the question with Iran going into the future is not about whether they will have a nuclear weapon or not.

It is about what -- what regime will have control of those weapons and whether they will be integrated into the international community or whether they will be a pariah in the international community. This is the opportunity for the president to help shape this debate and get new leadership into Iran.

WALLACE: Senator Bayh, you have been a longtime expert on Iran and actually a proponent for a long period of time on tougher sanctions.

You've, in fact, even introduced resolutions that would call for sanctions against any companies that send gasoline back to Iran. You really want to tighten the economic screws. Is this the time to do that?

BAYH: Chris, it's been the time to do that for quite some time, to try and restrain their nuclear program, so I was for that long time before this election.

But let me say I think the president is handling a rapidly evolving, very complex situation about as well as you could expect. He has put us clearly on the side of the reformers, clearly on the side of fair and free elections, clearly condemned the violence.

But he's done it in a smart way, because as Karim was pointing out, this regime is rapidly losing legitimacy with its own people. There's some polling data from other countries in the Islamic world suggesting they're losing legitimacy in the rest of the Islamic world.

We should not let them change the narrative to one of being, you know, meddling Americans, American western imperialism, that sort of thing, because historically that sort of narrative has resonated that would -- might allow them to change the subject within Iran and in the rest of the Islamic world. Let's not let them do that.

So we've got to be smart about this. And I think the president is being smart. So I'm in favor of tough action. But if you just go out and say, "Look, we're for regime change," and you know, a lot of tough rhetoric, but you're not prepared to do anything, then we look impotent, and that's not a place for a great power to be.

WALLACE: Congressman Hoekstra, you know, one of the problems here is the fact that the president came into office with a diplomatic strategy -- what some people called the grand bargain -- the idea that he would take regime change off the table in the hopes that Iran would then agree to change its behavior on terrorism, on nuclear weapons.

How much is that diplomatic strategy dead because of the events that we've seen over the course of the last week? If the Ayatollah Khamenei and President Ahmadinejad prevail, should the U.S. continue -- can the U.S. continue -- to try to engage them diplomacy?

HOEKSTRA: Well, what the president is doing -- I think he's stubbornly holding onto this belief that negotiations with the current regime is the best way forward.

I really think -- and I do agree with Senator Bayh here -- that a combination of speaking out forcefully and at the same time maybe moving forward with sanctions will bring about the kind of change and will -- to let us take advantage or will let the Iranian people -- this is about the Iranian people -- let the Iranian people take advantage of this opportunity that is in front of them.

As to whether speaking out forcefully undercuts the voices of freedom and the voices of protest pretests in Iran, you know, I don't buy that for a minute. Us speaking out forcefully on their behalf -- you know, the regime is going to accuse us of meddling whether we do or whether we do not say anything.

But if we're going to do something, we should speak out.

WALLACE: Now, let's look backwards a little bit. President Obama came under heavy criticism all this week for his cautious statements, and I want to play a clip of perhaps his most controversial statement. Here it is.

(BEGIN VIDEO CLIP)

OBAMA: The difference between Ahmadinejad and Mousavi in terms of their actual policies may not be as great as has been advertised.

(END VIDEO CLIP)

WALLACE: Mr. Sadjadpour, first of all, is that true? The president went on to say either way, we're going to be dealing with a regime that's hostile to the U.S.

Do you believe that there is no great difference between what we would face with Mousavi as compared to what we have and would continue to face with Ahmadinejad? And how dispiriting was that statement to the protesters in the street?

SADJADPOUR: Well, Chris, I do believe that was a misstep by the president, and I think the White House acknowledges now in retrospect that was a misstep. And if you've noticed, the rhetoric has changed.

But I didn't get the impression that this had made a tremendous impact on the demonstrations in Tehran and elsewhere.

WALLACE: But going back to the original question, would there be a difference, Mousavi versus Ahmadinejad?

SADJADPOUR: Absolutely. And what we have to recognize is this movement is much bigger than Mir Hossein Mousavi. This is not about Mir Hossein Mousavi anymore. This is about the political and social and economic discontents which have been brewing in Iran for three decades now.

WALLACE: Let's look at how the statements of President Obama and Secretary of State Clinton have evolved this week. Here's a series of clips.

(BEGIN VIDEO CLIP)

OBAMA: It's not productive, given the history of U.S.-Iranian relations, to be seen as meddling.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

CLINTON: Our intent is to pursue whatever opportunities might exist in the future with Iran to discuss these matters.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

OBAMA: The government of Iran recognizes that the world is watching.

(END VIDEO CLIP)

WALLACE: Mr. Sadjadpour, several questions. First of all -- and this speaks to something that Senator Bayh and Congressman Hoekstra were discussing -- what about this argument that if the president speaks out, it somehow empowers and gives more ammunition to the Iranian regime to say that these protesters are just puppets of the United States?

SADJADPOUR: Chris, that is a big concern I have as well, and that's why I think the president's rhetoric so far has been well calibrated.

And the historical analogy which concerns me, Chris, is Iraq in 1991 when George Bush senior encouraged Iraqis to rise up. Saddam slaughtered them, and then the rest of the world didn't criticize Saddam for the slaughter but they criticized George Bush for encouraging Iraqis to speak out.

So I think this regime is looking for the United States to step into this trap so they have the license to slaughter the Iranian people and accuse them, you know, of being American (inaudible).

WALLACE: But they're already saying this. In fact, you had President Ahmadinejad today say to the U.S. and Britain, "Stop interfering." So whether we do it or not, they're going to accuse us of doing it.

SADJADPOUR: Chris, I really defer to the leaders of these opposition movements themselves in Iran, the opposition leaders in Iran, and I have not heard from any of them who say that the United States should become directly involved.

They've all said that the United States should continue to denounce human rights abuses, and our plight should continue to be broadcast throughout the world, but none of them have asked the United States to play a more active, defiant role in domestic internal Iranian policy.

WALLACE: Let me try to wrap this up with all of you gentlemen.

And, Senator Bayh, let me start with you. Where are we headed? I mean, I know it's almost impossible, but your best guess and also obviously the intelligence you're getting -- where are we headed?

Will the regime be able to silence the opposition? Will it grow? And if the regime is able to hold onto power, will they become even more radical or more moderate?

BAYH: My best guest, Chris -- and this situation is evolving, you know, so quickly -- is that we're looking at a process of evolutionary change that's going to take some time.

I mean, we all hope it will be sooner rather than later and that we'll get a legitimate democracy that wants to engage with the rest of the world tomorrow.

But the forces of the regime -- the military, the secret police, the gangs that they employ in the street -- are such that it's -- they're just not going to go away overnight, so -- but they're starting, as Karim mentioned, to lose their legitimacy among the Iranian people.

And so if we stand in solidarity with the Iranian people -- don't meddle. They're going to accuse us of that no matter what. But give them no credible evidence they can point to so the Iranian people and the rest of the world know that we're handling this the right way.

Then I think over time those fissures will continue to grow within their government, and in the fullness of time we'll see a more legitimate Iranian regime.

But as much as I wish I could say that's going to happen tomorrow, I think this is a process that is going to take some time to unfold. They'll try and crack down. Regrettably, this is bad for the Iranian people, but it's also bad for the regime, because they're losing their legitimacy both at home and abroad through these repressive brutal tactics. WALLACE: Congressman Hoekstra, we have less than a minute left; why don't you share that with Mr. Sadjadpour -- your thoughts about where we're headed.

HOEKSTRA: Excuse me, Chris. I think we are moving forward. We need to stand with the people. We need to recognize that we need to focus on what our strategy is going to be in the future.

This is a regime that's going to have nuclear weapons soon. They are going to continue to be a brutal and a repressive regime.

We need to now start getting the international community prepared to deal with that reality and to deal with it much more effectively than what we had -- than what we've done over the last eight to 10 years to try to stop them from getting nuclear weapons.

WALLACE: And, Mr. Sadjadpour?

SADJADPOUR: I wanted to just echo Senator Bayh's comments. I thought they were spot-on. And I am hopeful. It's a moment of tremendous fear and tremendous hope, but I am hopeful that the will of the vast majority of the Iranian people will eventually be realized.

WALLACE: Gentlemen, we want to thank you all so much for coming in today to discuss the latest developments there, and we will stay on top of this story. Thank you all.

Up next, we continue our series "Right Now" with one of the rising stars in the Republican Party. Back in a moment.

(COMMERCIAL BREAK)

WALLACE: We began a new series here a few weeks ago called "Right Now" to take a look at the future of the Republican Party and talk to its new leaders, and there's no better example than our guest today, Wisconsin Congressman Paul Ryan.

He's a strong economic conservative and a leading voice on budget issues, and he's been called a rising star so often, it probably embarrasses him.

Congressman, welcome back to "FOX News Sunday."

RYAN: Thanks. Happy Father's Day, Chris.

WALLACE: Thank you. Same to you. Let's start with an overview. Where do you think President Obama is taking this country?

RYAN: Well, I think if you take a look at all of the things he's trying to do just in the first six months -- the budget that doubles and triples our national debt, this new health energy tax -- health care tax, energy tax -- I think the president is giving us an agenda that takes the American ideal of promoting equal opportunity in people's lives and replaces it with more of a European notion of having the government more involved in our lives and equalizing the results of people's lives.

And what I worry -- at the end of the day here -- is just in a few short years he's going to set the trajectory of the 21st century -- one where we basically have a European-like welfare state.

And that -- the problem with that is it takes people and it limits them from being able to reach their potential. It drains them from their ability and incentive to make the most of their lives and loads them into lives of complacency and dependency on the government.

And that really isn't who we are as a federal government. And that is why we as Republicans must offer spirited alternatives and better ideas.

WALLACE: All right. Let's look, though, at some specific policies that you seem to object to in principle but haven't always in particular.

You voted for the original $700 billion financial bailout plan, although you opposed releasing the second half. The major banks didn't collapse. Credit markets have eased. And just this last week, some of the major banks repaid more than $60 billion in their federal bailout.

So in fact, didn't that help us prevent an economic collapse?

RYAN: No, I agree. I still think that was the right vote to take at that time. I think we were on the verge of an economic meltdown. This was a once-in-a-generation kind of a crisis, and I do believe the TARP was necessary.

What bothers me is the way the TARP was deployed afterwards. The whole idea here was to go get these toxic assets to free up credit. What happened? Starting with the last administration, is we started buying banks. And now we've gone outside of the financial credit markets to owning auto companies.

This is why I and all other Republicans didn't support the second half of the TARP. But I do believe at that time we had an extraordinary moment that had to be met.

WALLACE: All right. Let's talk about the auto companies and the bailout there. Chrysler has sped through bankruptcy court. It looks like it's going to remain a viable company, maybe on a smaller scale, but something of a viable company.

You lobbied G.M. to reopen a plant that they had...

RYAN: Sure.

WALLACE: ... closed in Wisconsin. Would you really have let the -- if you were running the federal government, would you really have let these auto companies go under?

RYAN: G.M. was going into bankruptcy. They are already now going into bankruptcy. The only difference is we've now committed $87 billion of taxpayer funding to just two auto companies.

I would have done this before committing the $87 billion of funding to these auto companies.

WALLACE: And you don't think that what we have done -- and again, it was started by the Bush administration...

RYAN: Right.

WALLACE: ... eased the pain and has softened the landing of these companies?

RYAN: No, I think we've just now gone into the inevitable bankruptcy of these corporations, and now we've committed tens of billions of dollars of taxpayer dollars, but also we've set a precedence.

We have set here a precedence of industrial policy, of what I would call crony capitalism, of where you have the government now meddling in the affairs of private enterprise. And what about Ford? What about all these other companies that are not getting this kind of government taxpayer financing?

And so I worry we're committing a dangerous precedence where preferred companies that become too big to fail get access to cheaper money from the federal government and their competitors don't, and so we're stacking the deck and we're putting a lot of the problems into the free market season.

So I do believe that the TARP went way beyond its original intent, which is free up credit, buy toxic assets. Now we're buying stock and we're going outside of the financial system.

And that is why I think they have deployed TARP in the wrong way, and not just the Obama administration. I think the Bush administration got it off to a bad start as well.

WALLACE: Let's turn to health care reform. Can your party stop Democrats from the kind of major overhaul that President Obama and the leading Democrats are talking about? And is there a possible compromise here? Is there a confluence of interest between what the president wants and what you and other Republicans want?

RYAN: I hope so. I hope there is a kind of a compromise. But what the president wants and what his leaders in Congress are telling us is they don't want bipartisanship.

My favorite Democrat in Congress, Jim Cooper , has told us his party says don't work with Republicans. Chairman Dodd has told us he doesn't want bipartisanship.

So the kind of health care reform that the president and his party are trying to push is the kind of health care reform where the government ends up taking the entire system over.

WALLACE: Well, in fairness...

RYAN: We don't want to be part of that.

WALLACE: ... wait, wait, that's not what they say.

RYAN: I know it's not what they say.

WALLACE: They say they want a government plan that would compete with -- on a level playing field -- and I can see you laughing already -- but compete on a level playing field and offer real competition, and it would help get the private insurers to clean up their act.

RYAN: With 1,300 private insurers. Let me put it this way. Having the government compete against the private sector -- it's kind of like my 7-year-old daughter's lemonade stand competing against McDonald's.

It's the government being the referee and player in the same game. Don't just listen to me. Listen to all the actuaries -- and the actuaries -- that tell us that the government public plan option quickly becomes a government-run monopoly.

What happens is it is impossible for the private sector to be able to compete fairly with the public sector. And what ends up happening is that the public sector plan pays so much lower prices that it drives prices up for the private sector and it forces firms to dump their employees under the public plan.

One firm, the Lewin Group, is telling us as many as 120 million Americans in about three or four years will lose their private insurance and be dumped onto the public plan option. That's not what we want to see happen.

WALLACE: Let's turn to the GOP. I want to put up a recent poll by the Pew research center, and let's put it up on the screen. Forty- two percent say they approve of the job Democratic leaders in Congress are doing, while 45 percent disapprove.

But when it comes to Republicans, 29 percent approve while 56 percent disapprove. Why is your party in such disfavor?

RYAN: We definitely have our work cut out for us.

WALLACE: And what -- why is it in such disfavor, and what should you do about it?

RYAN: A couple of things. I think we stumbled in the past. We stumbled in the area of fiscal responsibility. I fought against earmarks and for entitlement reform, but we stumbled in those areas, and now the Democrats are repeating the same mistakes we made as Republicans.

We should do two things in the minority. Because we don't have the votes to stop such things, we need to do two things -- expose the facts and give the American people a choice with better ideas.

Take those principles that we believe in that built this country -- freedom, liberty, self-determination, free enterprise -- and apply them to the problems of the day and go to the American people with an alternative.

We've had too many elections recently where we've muddied the differences. We need to give the American people a very clear pathway that maintains this American ideal of equal opportunity, of giving people a chance to reach the most potential in their lives. And that is not what we have done lately. So I think...

WALLACE: I mean, but forgive me, Congressman, those are nice words, and I think everybody would agree with it. What does that mean in a practical sense? How do you tell the economically distressed family in Janesville, Wisconsin why the Republican Party's going to be better for them than the Democrats?

RYAN: So on the big issues of the day, we have to put up alternatives, which we have been doing -- on stimulus, on the budget, on energy, on health care. Each of these big issues...

WALLACE: Well, you did a budget...

RYAN: ... we put out...

WALLACE: ... and it kind of got laughed out because there were no numbers on it.

RYAN: No, that's not true. That's a marketing document that was put out by the House Republican Conference. We put a very specific budget out that had all the numbers in it that said here is how you get our debt under control, our taxes under control, and our spending under control. And we put a real budget on the floor of Congress.

So there's a misperception out there that we didn't put a budget out there. We did.

The point I'm trying to make, Chris, is in order for us to get back in favor of the American people, we have to be able to connect the policies of this administration and this Congress with the rhetoric, which -- right now there's a huge gap between the two. And then we have to go to the American people with better ideas.

WALLACE: Let's talk about Paul Ryan. Some Republicans say that you are this generation's Jack Kemp -- big tent, pro-growth, happy warrior, conservative. How do you plead?

RYAN: I would love to be anything close to being compared with Jack Kemp. Jack Kemp -- I worked for Jack Kemp in the ‘90s. He was my mentor. He's probably the reason I'm in politics.

I think the kind of spirited optimism that Jack had and the principles he applied are really what sort of shaped me in how I conduct myself these days.

WALLACE: What about the culture war over social issues? You are pro-life, but you don't focus on it.

RYAN: Well, look. I think the problems we have right now are we going to dip into a social welfare state or are we going to keep the American ideal of limited government and free enterprise. That, to me, is a huge challenge we have right now.

And this notion that we have to pick either social conservatism or economic conservatism is a faulty premise. They come from the same root. And so what I think we ought to do is go back to those principles that built our country and give the American people an inclusive agenda that is big tent.

We don't have to have a litmus test that you have to satisfy these 13 things if we want to let you in our party.

WALLACE: And finally -- and please don't give me the Sunday talk show answer -- the problem with a rising star is at some point you've got to rise. You've got to arrive.

RYAN: Yeah. Right.

WALLACE: What are your personal ambitions? Speaker Ryan? President Ryan?

RYAN: I don't -- my ambitions don't go that far. I have two higher ambitions right now -- number one, be the best husband I can be and be the best father I can be, and then work to save my country and advance my principles as a representative of the 1st Congressional District. That's the way these things are organized in my mind.

So I'm not one of these people who are just simply looking at the next big job I can get. I'm looking at the direction of our country, the policies I want to pursue, and I want to make sure I'm a good dad and a good husband.

WALLACE: Which is an appropriate message for Father's Day. Congressman Ryan, thank you so much for joining us. Please come back, sir.

RYAN: Thanks, Chris.

WALLACE: Up next, the latest from the streets of Iran. Is there a chance protesters can topple the Islamic regime? Our panel assesses the situation when we come right back.

(COMMERCIAL BREAK)

WALLACE: That was the scene in Tehran Saturday as thousands of protesters took to the street in defiance of the supreme leader and clashed with police.

And it's time now for our Sunday group -- Fox News contributors Stephen Hayes of The Weekly Standard, Mara Liasson of National Public Radio, Byron York of the Washington Examiner, and Juan Williams, also from National Public Radio.

So, Steve, what do you think we're seeing in the streets of Iran? How serious a threat is this to the continued control of the Islamic regime?

HAYES: Well, I think we'll find out in the next couple days. If we see continued protests in the kinds of numbers that we've seen to this point, if we see people defying the crackdowns that we've seen -- the bloody crackdowns that we've seen over the past couple of days, and if we see some of the security services sort of switching sides, moving from the side of the regime to the side of the protesters, or even just standing by and letting the protesters do what they're doing, I think this could be a turning point.

LIASSON: Yeah, I think that the regime looks more and more illegitimate in the eyes of not only the West but also the Middle East, and I think that Steve is right.

We've heard anecdotes of policemen standing down, or standing on the sidelines, or not wading into the crowd with their batons and truncheons, although plenty of them are. The more that happens, the more this could be a turning point.

But look. These are many, many thousands of people, but they're facing an entrenched theocracy with a very strong military arm. It's going to difficult.

WALLACE: Byron, I want to address with you the subject I was discussing in our first segment. What's at stake here?

If the Ayatollah Khamenei and President Ahmadinejad prevail, what's the future for Iran? And conversely, if they were to be overthrown and Mousavi and his supporters took over, what would that mean?

YORK: Well, there's the question of do they want to continue the Islamic Republic of Iran. And I don't think that that's going to be going away at any time very soon.

You know, when President Obama said there wasn't all that much difference between the two candidates, well, their differences were jobs and inflation and social strictures, so that sort of stuff could change. But in terms of its general view toward the outside world, not.

And I think what we may be seeing here actually is that repression can work, at least in the short term. We saw on Saturday a lot fewer protesters than we'd seen at the big things -- big demonstrations earlier.

Tehran is a huge, very spread-out city. You can keep people from moving from one place to another. And these -- it's entirely possible that these demonstrations will have less punch in the next few days.

WALLACE: Do you agree, Juan, that there would not be that dramatic a difference if Mousavi were to take over?

WILLIAMS: How do we know? What you have to think at this point is that Mousavi, who has now said that he is prepared for martyrdom, is taking a different view.

And I think that what we're seeing here is also much more of a divide among what I would call the Iranian elite, because right now we see that Rafsanjani, that Khatami, both former presidents of Iran, have said that they are supporting Mousavi.

The big problem -- I think the big difference that's happened this weekend is Friday's statement by the ayatollah in which the ayatollah said that he believed that Ahmadinejad had won the election even before a recount had taken place, and secondly said, "Get out of the streets, because my military arm is going to crack down, and if there's blood on the streets, it's the fault of the protesters."

I think that has incensed the middle class in Iran, people who are educated, people who are looking for change, people who may have responded to President Obama's entree -- he says open hand, by sending messages to the Iranian people and talking about not only having the U.S. meet with Iranians for direct talks, but allowing the U.S. ambassador, U.S. diplomatic staff, to meet with Iranian diplomatic staff.

WALLACE: Steve, as we saw the violence in the street on Saturday -- and those pictures were so striking, of people defying the will of the supreme leader and risking their lives -- the contrast to the carefully calibrated statements coming out of the White House was pretty striking.

HAYES: It was. I mean, I think it's good that the president finally, after a week, said something. That was an improvement.

But I wish that he would go back and read his own Berlin speech from just about a year ago where he talked about a dawn of a new Middle East. He talked about the need to support the Lebanese in the streets who are bleeding and fighting for democracy. I mean, these are his own words.

So I think one of the things he could do right now -- if he doesn't want to make the United States an issue, fine. Don't make the United States an issue. We've been told for six months now that he is the new leader of the world.

He could go and put together a coalition -- a broad, strong, international coalition -- come up with a strong statement of condemnation of the violence, a call for free press, a threat to not recognize the illegitimate government of Iran if these kind of crackdowns continue.

These are things that he can do that would not mean the United States is meddling. It would be a broad coalition, perhaps even including people from the region.

WALLACE: Juan?

WILLIAMS: How could that not be -- how could that not be meddling? I mean, George Bush called them part of the axis of evil, condemned them. I don't see that he got any farther. It's not that President Obama has a different policy.

HAYES: There's a huge difference between what I'm talking about, a broad international coalition with our European partners, who have been much stronger on this than President Obama has, and calling them the axis of evil.

WILLIAMS: With us -- with the U.S. taking the lead, the U.S. then gets positioned as, you know, the demon, the great Satan...

LIASSON: The U.S. can't take...

WILLIAMS: ... which is what they've been calling us for our past history of involvement in Iran.

We don't want (inaudible).

LIASSON: The U.S. doesn't...

HAYES: The problem was it took him a very long time to even acknowledge that it was the government that was doing the killing and the beating. And he only did that yesterday.

But I did speak to a lot of experts yesterday, before and after the president's statements, saying, "Well, what would you like to hear him to say?" After his statement in which he did blame the government for the killing, it was basically a matter of tone. "Well, we'd like for these words to come out of his own mouth. We'd like for him to do it in a very prominent way."

But now it seems that he has said what most people were wanting him to say all week.

WALLACE: Let me ask a different aspect of this, Mara. And that is that this president came in with a clear diplomatic strategy to engage the ruling regime in Iran. If, worst-case scenario, the ayatollah, the Revolutionary Guard, Ahmadinejad are able to hold onto power through violence, through fraud, can he continue to try to engage with them?

LIASSON: I think that's going to be very difficult. I mean, he -- his speech, his videotaped speech on the Iranian new year, was full of respect for the Islamic Republic and for the leadership. In other words, he was putting regime change kind of off the table.

It's not about the nuclear program anymore, even though, of course, that's still a big threat. It's all about the regime. And I think that events are going to dictate how he changes that policy.

I mean, one thing that Ronald Reagan and Margaret Thatcher managed to do is they did engage the Soviet Union while they still supported dissidents. Somehow they figured out how to do two things at once. And I think that's what the administration is going to have to figure out, too.

But I do think this is a clarifying moment. Everything is different now with Iran than it was when Obama came into office and formulated that policy. And I don't know -- number one, if they do crack down violently, it might be a clarifying moment, because Obama might be able to get the support from the Europeans for tougher sanctions that he always thought would happen if talks failed.

WALLACE: All right, panel. We have to step aside for a moment.

But when we come back, President Obama and the mainstream media -- is the cozy relationship the result of liberal bias or hunger for higher ratings? Our panel has a lot to say, and you won't want to miss it.

(COMMERCIAL BREAK)

WALLACE: On this day in 1989, a divided Supreme Court ruled burning the American flag is legal. The court said it is a form of political expression that is protected under the First Amendment.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: It wasn't easy coming up with fresh material for this dinner. A few nights ago, I was up tossing and turning, trying to figure out exactly what to say. Finally, when I couldn't get back to sleep, I rolled over and asked Brian Williams what he thought.

(LAUGHTER)

(END VIDEO CLIP)

WALLACE: And that was President Obama at a dinner with reporters Friday making his own joke about what many believe is a sweetheart relationship between the White House and the mainstream media.

And we're back now with Stephen, Mara, Byron and Juan.

So let's go over the record, and let's put it up on the screen. CBS is running an interview today with Barack Obama , "An American Dad."

ABC is running coverage throughout the day on Wednesday of President Obama's health care plan including a prime-time town hall.

NBC just ran two specials, "Inside the Obama White House."

Tom Brokaw was named this week to a presidential commission.

And Newsweek has put Mr. Obama on the cover 19 times since 2004.

Steve Hayes, how do you explain all of that?

HAYES: A lot of people call Newsweek now "Obamaweek" because they've put him on so often. Look, I mean, clearly, his joke about rolling over and finding Brian Williams is more than just a joke. I mean, I think the sense is -- and you've provided evidence that it's true -- that he's in bed -- the media are in bed with Barack Obama .

I don't think there's any question that he's had better treatment than any president in recent memory, in decades.

WALLACE: And why do you think that is?

HAYES: Well, I think there are two reasons. One, I think people are genuinely cheering for him. I mean, I think this -- he is breaking barriers, and there's something genuinely exciting about that that journalists are not supposed to allow to affect their coverage, but they do.

And secondly, there's a clear ideological affinity for Barack Obama and his programs. And we've seen that in the discussions of -- in the debates that have taken place over the first six months.

I mean, think about the torture debate. There's a debate about the language to be used there. Is it enhanced interrogations or is it torture? And everybody, with unanimity, across the media call it torture. They've made a decision. There's a debate going on. They're not part of it. They're on one side of it.

WALLACE: Let me add something to this, Mara. It isn't just the amount of coverage. It's also the tone. And let's put up on the screen a recent analysis that was done of Obama's first 100 days in media coverage.

Forty-two percent of the coverage of Obama's first 100 days has been positive, as compared to 22 percent for George W. Bush in his first 100 days, and 27 percent for Bill Clinton. Again, how come?

LIASSON: Look, I think that there's definitely something to this kind of aura of incredible celebrity and excitement. And you know, you go to any newsstand, and it's a sea of Obama faces, and then there's a shelf for Bo and another shelf for Michelle, but -- and people are truly fascinated.

On the other hand, some of those numbers are reflective of -- look, Bill Clinton had an incredibly chaotic first 100 days. There was a pratfall every other day to cover. George Bush was the result of -- I'm assuming that was the first term -- was the result of...

WALLACE: Yes.

LIASSON: ... a contested election. And Barack Obama came in as a real majority winner. He has a big majority in Congress.

WALLACE: Oh, come on, (inaudible) some of it is because he's got liberal ideas?

LIASSON: Yes, there's Definitely some of it. But when he starts -- when his programs run into trouble, there was a headline in the New York Times next week, you know, "Obama's Plans Hit," you know, "Obstacles ," or, "Snags." I mean, when there is opposition, it should be and I think is covered by the media.

And it's hard to talk about the media as just one thing, because it's not. He is popular. And I think as soon as things turn for him, the media, like lemmings, will turn, too, unfortunately.

WALLACE: Byron?

YORK: You know, this has led to a certain undertone of contempt from Obama to the press. Did you -- I felt that in the Brian Williams joke and at the earlier White House Correspondents Dinner. Obama said, "Most of you covered me. All of you voted for me."

But the Pew poll that you mentioned earlier about the positive coverage said that in this case, in Obama's case, as was not the case with Bush or Clinton, an enormous amount of the coverage focused on the president's personal characteristics, his personal appeal, rather than his policy stuff, what he actually wants to do.

And the question and the test for the press is going to come this summer where we do have a huge debate over health care. I guess ABC has voted already. But we are going to have a huge debate over health care, and will they really cover specifically what it is he wants to do?

WILLIAMS: I think there have been a couple of changes that have taken place in the media universe -- for example, the Internet. I think the Obama team has made masterful use of that. I think their communication strategy has been terrific.

But what really, you know, strikes me is the celebrity nature of the treatment, the coverage of him as a celebrity versus the policy- maker.

And if you look at the NBC ratings -- and this is, you know, just the hard fact -- they got 9 million people to watch "Inside the Obama White House." Well, once they cash in like that, then everybody else is going to belly up to the table, too.

And similarly, the reason he's getting these magazine covers is apparently there's this great thirst. You look at the newspapers in the country -- on Inauguration Day, they all had special sections, and they continue to sell those special sections.

So you know, the problem here is he's not being treated as a politician. The press is not being sufficiently adversarial, which is its role, to hold him accountable. And part of this, I think, goes back to the campaign.

I think a lot of people think, "Well, he's a black man. He's the president of the United States. This is unbelievable. This is historic. We better get on the bandwagon. We better get on the right side of history."

But that's not the role that the press should play. And just the way that you can condemn someone because of their race or because of difference, I fear that they're now celebrating him and hold him -- holding him and Michelle up to unreasonable standards and that they will jump off.

WALLACE: Steve, I think that Juan puts -- raises a really interesting question. How much of this is liberal association, and how much is just pure greed?

The fact is that Obama, whether you like him or not, sells magazines. He draws viewers. As Juan rightly points out, those two Brian Williams specials, "Inside the Obama White House," were in the top 10 highest-rated shows on TV that week. HAYES: Yeah, no question. I think it's actually both, and I would -- I would add a third category to that. I think there is, in Washington in particular, a huge "do something" bias where governments are faced with problems, and there's a push for politicians and particularly presidents to do something to solve the problems, even when the right answer might be for politicians to step back and actually do nothing.

Now, he is doing something on a level that we haven't seen forever. But I think one of the reasons that Mara can cite a New York Times headline that says he's having trouble is because it's the exception, not the rule.

And if you look at the first two months of coverage, the New York Times had 73 percent of front-page stories that were favorable. I mean, that is extraordinary.

WALLACE: So, Mara, you've seen presidents come and go. How long does the honeymoon last, and...

LIASSON: I think the honeymoon is probably going to wind down some time this fall. If he was -- if the media was in charge of everything, why has the public plan, you know, hit a road block? Why isn't his health care plan sailing through? His own Democrats can't agree. If everything was...

WALLACE: Well, I don't know that they're saying the media is in charge of everything, but they certainly seem to be supportive of a lot of his...

LIASSON: Well, but I don't think that the -- that the problems with his health care plan and the intense opposition to pretty big parts of it have been ignored.

YORK: Even with the positive coverage, the public has opposed some things. They opposed Guantanamo. They very much oppose what he has done with the car companies.

And when substance actually enters the debate and they can't just cover the dog and Mrs. Obama's arms, people will oppose that.

WALLACE: Having said that, they put up a picture of the dog, Bo. Pretty cute. As I've said, this is a no -- we don't slam Bo here. Thank you, panel. See you next week.

And don't -- we're in the tank to Bo -- forget the president. And don't forget to check out the latest edition of Panel Plus where our group here continues the discussion on our website, foxnews.com/fns. And for those impatient viewers out there, it will tell you this week when we are going to post the feature.

Up next, a special Father's Day Power Player of the Week.

(COMMERCIAL BREAK)

WALLACE: We were discussing this week who in Washington would have an especially interesting story to tell about the role of fathers. And then it came to us. Here's our Power Player of the Week.

(BEGIN VIDEOTAPE)

MCCAIN: Our life is accumulated memories, and so therefore days like this have more meaning than they did a long time ago.

WALLACE: John McCain is talking about Father's Day and all his memories as a son and father. We spent time in his Senate office this week, which is filled with pictures of his dad and granddad, both Navy admirals, as well as his seven children.

What do you see as the importance of fathers? What's their role?

MCCAIN: Support, understanding, and sometimes that support has to be a little tough love.

WALLACE: McCain's father was away for much of his childhood serving overseas. But his mother passed on his father's values.

MCCAIN: What I did know was that he was a man of integrity. He had his failings and he had his weaknesses, but he was a man who loved his country above all.

WALLACE: Did you always feel a sense of obligation to follow in the family tradition?

MCCAIN: Sometimes the obligation was pushed on me and I rebelled.

WALLACE: Still, part of that tradition was to go to the Naval Academy, just like two John McCains before him.

MCCAIN: From the time I was a small boy, I remember my father's friends saying, "What class will he be?"

WALLACE: And was that good or bad, or both?

MCCAIN: I don't think it's good. I think we should give our children choices. I think we should prepare them for those choices, but I don't think we should chart their path.

WALLACE: McCain can remember his father coming to the academy a half century ago to chew him out for some misbehavior. The wound is still raw.

MCCAIN: He said that he was not proud of me, and that was certainly the -- you know, it was the toughest thing he could say.

WALLACE: It was not until McCain spent five years in a Vietnamese prison camp that he came to terms with his family tradition.

MCCAIN: They had handed me a legacy, and if I embarrassed them by cooperating with the enemy or doing something that -- that, frankly, would tarnish our name -- that I think it gave me an extra ability to resist a little while longer.

WALLACE: McCain would later write a book about his time as a POW called "Faith of My Fathers."

What kind of father are you?

MCCAIN: I hope that I'm a good father.

WALLACE: He says his political ambitions often took him away from his children, but he always made time for them.

MCCAIN: I advise every parent, do something your son or daughter enjoys and do it with them rather than vice versa.

WALLACE: He says he and Cindy were careful never to pressure his kids to join the military. But he can't conceal his pride at his son Jack's recent graduation from the Naval Academy.

(BEGIN VIDEO CLIP)

(UNKNOWN): John S. McCain IV.

(APPLAUSE)

(END VIDEO CLIP)

MCCAIN: I put on my son's hat, officer's hat, and of course, it was incredibly moving. And his grandfather and great-grandfather are not that far away over here at Arlington, and I know they were proud, too.

WALLACE: On McCain's desk is a picture of his granddad during World War II. In the corner, you can see a photo of the senator as a little boy. McCain says treasure your children.

MCCAIN: If I had a message, because I'm not as young as I used to be, it's enjoy every moment with them. Enjoy every second, because they all grow so fast, and you'll have some of your best memories of the time you spent with them.

(END VIDEOTAPE)

WALLACE: With his children scattered around the country and the world, McCain says he will celebrate this Father's Day like so many of us, talking with his kids on the phone.

And that's it for today. We hope all you fathers, especially mine, have a great day, and we'll see you next "FOX News Sunday."