SCHIEFFER: And good morning again.

Washington has been fixated on the war on terror, but yesterday one of those weird stories cropped up that set Washington on its ear. A new book "Game Change" by Mark Halperin and John Heilemann reports that during the campaign last year, Senate Majority Harry Reid was telling people privately that Barack Obama 's campaign would be helped because he was, quote, "a light-skinned African-American with no Negro dialect unless he wanted to have one."

Reid spent all day yesterday apologizing to the president, who said he accepted the apology, and to a score of black politicians and leaders. But the episode does recall a very similar incident when then-Republican leader Trent Lott said that he -- had the country elected segregationist Strom Thurmond, we wouldn't have had so many problems. That caused such a furor, you'll recall, that Lott had to resign his leadership post.

So Senator Feinstein, who is in California this morning, I have to start with that. Is this going to have the same impact on Harry Reid ? Should he resign?

FEINSTEIN: I don't think so. First of all, all of us are imperfect. Clearly this was a mistake. Clearly the leader misspoke. He has also apologized. He has not only apologized to the president, I think he has apologized to all of the black leadership that he could reach. So the president has accepted the apology. And it would seem to me that the matter should be closed.

SCHIEFFER: Well, Michael Steele, the chairman of the Republican Party, said, had a Republican said this about a Democrat, Democrats would be all a-dither. And he today called for Senator Reid to step aside. You don't agree?

FEINSTEIN: Well, let me respond to that. In the first place when Trent Lott had a somewhat similar situation, I saw no Democrats jumping out there and condemning Senator Lott. I know Senator Lott. I happen to be very fond of him. And he made a mistake. There was no question about that. And he apologized for it. So I know of no statement by any Democratic senator criticizing Senator Lott.

SCHIEFFER: Congressman Hoekstra, you, of course, are a Republican. When your party chairman says that, already some people are saying, he probably should have just kept his mouth shut and let this play out, because when you step in front of someone who is sort of in front of a firing squad, that can be a tactical mistake. But what do you think the impact of this is going to be?

HOEKSTRA: I think that clearly this is going to be an issue that the Democrats are going to have to deal with internally as to whether these kinds of statements -- they believe these kinds of statements are appropriate from their leader in the Senate. And then it becomes a personal issue for Senator Reid. Does he believe that with this on his record he should still maintain his position as a leader in the Senate.

It is a Democrat issue. It is a personal issue. Republicans ought to stand on the sidelines and let the Democrats work through this process.

SCHIEFFER: All right. Well, let's turn to this whole week that we've just been through. And that is the terrorism threat. The big thing that happened. The president's response this week.

Senator Feinstein, did the president go far enough? What needs to happen now?

FEINSTEIN: Well, the Senate Select Committee on Intelligence is doing a review of the situation and will issue a report with findings and recommendations. We hope to have the staff work done by the 21st. We'll have our first hearing on this January 21st. I think there are a number of things. One, so much intelligence comes in today.

And I've been watching this and also in other instances and -- where there are missed opportunities because intelligence isn't transmitted properly and it results either in death of our people or the absence of appropriate action. So to improve the technology so that certain things as warnings jump out of this huge flow of intelligence, coming all over.

FEINSTEIN: Secondly, the no-fly list -- and I'm delighted that the president is taking action on this.

If you read the criteria to go on the no-fly list, it takes a Philadelphia lawyer to interpret it. It should be simplified that, if you have reasonable suspicion that an individual is connected to terrorism or a terrorist group, bingo, they go on the no-fly list.

And there's a reason. The no-fly list is our ability to protect and defend our nation.

Secondly, our visa revocation system. His visa should have been immediately revoked and it wasn't. So the question comes, why and what we can do.

I think these are three -- three things that can be -- that should be looked at right away.

SCHIEFFER: I want to just -- to underline what you just said about getting on this no-fly list. I mean, I agree with you. I think it would be easier to get into the Pentagon tank where they keep the secret war plans than it would be perhaps to get on the no-fly list.

Here's -- I'm just going to read a little of the language that this constitutes where somebody gets on it or not: "must meet the reasonable suspicion standard of review. Reasonable suspicion requires articulable facts which, taken together with rational inferences, reasonably warrant a determination that an individual is known or suspected to be or has been engaged in conduct constituting" and on and on and on. I won't even finish it.

I mean, how can anyone in the government even know what that means?

FEINSTEIN: Well, that's right. And there's another thing. When this father, a respected Nigerian family, came forward and gave information and said, look, I'm worried about my son; he said he's never going to see me again; he's gone to Yemen; I believe he's fallen in with the wrong people, that -- that ought to be bingo.

You know, you had Pakistani-Americans coming forward. And that did result in a good result because we found the five youngsters, or young men, in Pakistan.

You've had 18 Somali-Americans go to Somalia to join training with al-Shahaab. And that should be taken care of immediately. So to listen to families, I think, is very important.

SCHIEFFER: I want to go right to Congressman Hoekstra on this.

A lot of people are already saying that this fellow, this Detroit fellow who was arrested, on the Detroit flight, should not have been charged in a civilian court and given a lawyer; he should have been designated a military combatant and left in the hands of the military so they could interrogate him.

HOEKSTRA: I -- I would agree with that statement. I mean, I think what the president now needs to do is -- the president, I think, came out last week, finally said we are at war with Al Qaida, recognized that, and I think has a better understanding of the threat and an appreciation for the threat that we face.

Not only should we now consistently charge these folks in the military court but I think the bigger issue -- and the senator was talking about that -- what signs were missed, but I think the big signs that were missed were the ones that happened and came out of Fort Hood.

Out of Fort Hood, we identified Awlaki, the American-born radical cleric in Yemen. After Fort Hood, what did we as an intelligence and a military community do to try to find this guy, either arrest him or potentially kill him?

Remember, he has the protections of an American citizen. I think that's going to be the big issue as we move forward. How are we going to deal with American citizens who go rogue?

The second thing that came out of Yemen was that this was -- you know, that the core of Al Qaida in the Arabian peninsula are people that have been released from Gitmo. Yet in December, the president released more individuals from Gitmo.

The president's absolutely right. No one that he's released do we have indications that they have found their way back onto the battlefield, but it takes a while for them to get there. We shouldn't be sending them back to Gitmo (sic).

SCHIEFFER: Well, they have said now they're not going to send anymore, that the last train has left Gitmo for Yemen.

But you have people like John McCain and Lindsey Graham saying we should not release people from Gitmo to any country that has an Al Qaida presence.

HOEKSTRA: I think that's exactly right. You shouldn't be putting them to Yemen. You shouldn't be putting them into Saudi Arabia. There's talk about this rehab program that they go through in Saudi Arabia.

HOEKSTRA: The results have been very, very mixed. You shouldn't be sending them back to Somalia, Afghanistan, Pakistan. Because the evidence is clear -- these people are released and a number of them go back onto the battlefield.

And again, the clearest signal is when these Gitmo detainees find their way back onto the battlefield, they're no longer focused on the conflict in Pakistan, Afghanistan or Iraq. Just like Awlaki, they form the core of people who want to attack the United States. It's a national security, homeland security issue.

SCHIEFFER: Dianne Feinstein , what about that, that we shouldn't release anybody to a country where there's an Al Qaida presence? Do you go along with that?

FEINSTEIN: Yes, I tend to agree with that, actually. And if you look at Yemen-- and we're taking a good look at Yemen-- what you see is I think at least 24 or 28 are confirmed returns to the battlefield in Yemen. And there are a number of suspected.

If you combine the suspected and the confirmed, the number I have is 74 detainees have gone back into the fight. And I think that's bad.

And here's the reason. They come out of Gitmo and they are heroes in this world. This world is the only world that's going to really be accepting of them. Therefore, the tendency is to go back. And I think the Gitmo experience is not one that leads itself to rehabilitation, candidly. I think it leads to....

SCHIEFFER: Let me -- let me ask, do you think that maybe we just ought to keep Gitmo open for a while and not release anybody that's down there, or at least put them in some other place but not release them?

FEINSTEIN: Well, I agree with those that have said that Guantanamo has really been a recruiting tool for Al Qaida, that it has not been helpful to us. And I think that, you know, the Senate is now engaged in a huge study on the interrogation and detention of the some 33 high-value detainees. What happened to them, how were they treated? What success did the interrogation have? Were the laws followed? That kind of thing. And we should have the report completed within the next three months or so.

SCHIEFFER: All right. FEINSTEIN: However, the problem is that this is very difficult. And I happen to know the prison system rather well, so I believe the safety of America is assured in the federal prison system. I don't worry about the safety element.

SCHIEFFER: It sounds to me like what you're saying here, Senator Feinstein, is that we ought to be very, very careful about releasing anybody right now. That seems to me your (inaudible).

FEINSTEIN: I think right now, until we sort this out, the answer is yes.

SCHIEFFER: All right. I want to thank both of you for being with us this morning. Very enlightening discussion.