Sens. Kerry & Graham on "Fox News Sunday"

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

The great debate.

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OBAMA: At the time when the war started, you said it was going to be quick and easy. You were wrong.

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MCCAIN: I'm afraid Senator Obama doesn't understand the difference between a tactic and a strategy.

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WALLACE: The men who would be president take center stage. Did John McCain and Barack Obama help or hurt their chances? We'll get answers from top advisers to both campaigns, Senator Lindsey Graham, McCain's closest ally on Capitol Hill, and Senator John Kerry, an Obama supporter and a veteran of presidential debates -- Graham and Kerry, exclusively on "Fox News Sunday."

Then, politics and the financial crisis. Will there be a bailout? And which candidate looked more presidential? We'll ask our Sunday regulars -- Brit Hume, Mara Liasson, Bill Kristol and Juan Williams.

And our Power Player of the Week takes us to the bottom of the sea, all right now on "Fox News Sunday."

And hello again from Fox News in Washington, where we had some big news overnight. After days of marathon negotiating, congressional Democrats and Republicans and top administration officials announced a tentative deal to rescue the endangered financial markets.

If all goes as planned, and that's always a big "if," the House will vote on Monday followed by the Senate, all of this while there are now just 37 days till you vote for president.

And with one debate in the books and three to go, we want to take a look at where the campaigns stand at this moment. Joining us, John McCain's avid supporter, Senator Lindsey Graham, and an early backer of Barack Obama, Senator John Kerry.

And, gentlemen, welcome back to "Fox News Sunday".

KERRY: Glad to be with you.

GRAHAM: Thank you.

WALLACE: Let's start with a tentative agreement on a financial rescue plan.

Senator Graham, what's better about this proposal than the deal that was rejected at the White House on Thursday?

GRAHAM: The House is on board. The best thing that could happen for all of us up here politically is to hold hands across the aisle and bicamerally.

If you can get House Republicans saying, "This is a good product for the country," then confidence will be built around the product. And having everybody inside the deal politically is much better.

I would not want my Democratic colleagues, quite frankly, to have to walk off a cliff in the House and have no Republicans on board. So I think it's a better deal for the taxpayer. There's an insurance component that didn't exist before. It's a phased-in product.

But the main thing is that the House is involved now. Then every corner of American political life is embracing this deal, which will help us as a nation.

WALLACE: Senator Kerry, let's talk about a little bit of the details. As Senator Graham mentioned, instead of buying all the securities, now the government will just insure some of them.

And there's also a provision that if the government doesn't get its money back within five years, a fee is imposed on financial security companies. Isn't that a better deal for taxpayers?

KERRY: Well, it's very important -- well, these -- the four principal components of this deal, Chris, represent the exact four principles that Senator Obama laid out two weeks ago. They represent the exact principles that we put forward and almost agreed on last Thursday before politics entered into this.

Now, I agree with Lindsey. Let's go beyond that now. It is important to have everybody there. But those principles are number one. We wanted to protect the taxpayers.

We were not going to turn billions of dollars over to any institution connected with Wall Street, given the experience of what had happened without protecting taxpayers. We have done that in this.

Secondly, we were going to limit executive compensation. We weren't going to turn money over and have millions of dollars paid out to executives. That's been done.

Thirdly, there's a very important concept here about helping homeowners. There had been no talk about the homeowners. We want to keep people in their homes. This specifically helps to keep them there.

And finally, oversight. The administration came and said, "Just give us $800 billion." And we said, "No, not given this experience," so we're going to give first the 250. There'll then be a letter from the president requesting another 100, and then there's another 350, depending on how it goes.

So I think we have accountability. We have the principles that Senator Obama offered leadership on.

WALLACE: Well, you have brought the presidential campaign into this, and in fact, it was always a part of this.

Particularly, there was a lot of criticism, you know, Senator Graham, after John McCain suspended his campaign, went back to Washington, then changed his mind, but then came back here and worked the phones.

Now that we've got a deal, let me ask you, how big a role did John McCain play in doing this deal?

GRAHAM: I think it was decisive in regards to the House being involved. John was challenged about four days ago by Harry Reid to say, "If you don't support this proposal," the original Paulson proposal that was being tweaked, "there'll be no Democratic votes for it." If John McCain doesn't vote for it, the Democrats won't.

Two days of hearings go by where it's just pretty much chaos. John understands this thing is going nowhere. He comes back, and agreement is announced right when he gets back that didn't have a snowball's chance in hell of passing because 20 percent of the profits were going to be given to an organization like ACORN, and there was no insurance component, which...

WALLACE: We should point out ACORN is a left-wing organization that has been involved in housing...

GRAHAM: Right.

WALLACE: ... and also in political organizing.

GRAHAM: It was a -- it was a direction of money away from debt retirement into organizations that are not part of the solution. And there was no option, in reality, about insurance being used so that taxpayer dollars would not be used.

He went to the House, and here's what he said, John, "Guys, I've listened to you. You're making some really legitimate points that this deal is not good yet for the taxpayer. Let's make it better for the taxpayer, but don't go too far. You cannot sit this one out. Make it better. Don't go too far. Get in the room and negotiate."

And that's what he did, and that's what they did.

WALLACE: Senator Kerry, at least McCain was here. Barack Obama never intended to come back to Washington.

KERRY: Barack Obama was in constant touch with Secretary Paulson almost every single day, sometimes several times a day, for the last two weeks.

Barack Obama was the first person to speak and lay out at that meeting at the White House, for about seven or eight minutes, the entire parameters of what we have resolved.

John McCain, when offered the opportunity to speak, passed. He didn't speak till the very end and, when he spoke, did not offer a solution and did not say what he would support.

The fact is that on a Monday of about a week ago, John McCain said, "The fundamentals of our economy are strong." Within a few days, John McCain was suspending his campaign because of the greatest crisis since World War II.

He suspended his campaign, and it took him 22 hours to get from New York to Washington, a one-hour flight, had time to go do Katie Couric in an interview, had time to give a speech to the Clinton Millennium.

And when he got here, he wound up -- I mean, end he was going to interrupt his campaign to come down and save the negotiations. Most people believe what he did was interrupt the negotiations to come down and save his campaign.

WALLACE: All right, let me...

KERRY: And he offered nothing...

WALLACE: I want to give the final word to Lindsey Graham, and then we're going to actually talk about the debate.

But go ahead.

GRAHAM: Here's the good news. We may be getting a deal, and the credit that can be shared is you maybe go to the bank, get a loan, buy a house, go back to school.

But here are the facts, and I'm not overselling anything. The fact is that the House Republicans were not in the mix at all. John didn't phone this one in. He came and actually did something Barack Obama did not do, went over to the House and sat down with the Republicans, talked with the Democratic leadership and said, "What are your concerns?"

He looked them in the eye. He actually listened to what they had to say. Then he tried to get everybody in a room finding a common solution. You can't phone something like this in. Thank God John came back. Thank God the Republican House...

WALLACE: Well, wait, wait...

KERRY: Can I offer what I think is really a more important perspective?

WALLACE: If it's very brief. KERRY: Let's not -- it will be very brief. The real difference here is the difference of their approaches on the economy. In the debate the other night, in an hour and a half, John McCain didn't mention the word "middle class."

WALLACE: May I? Because I'm about to -- I'm about to get to that, so...

KERRY: All right.

WALLACE: ... let me ask the question, because that's -- I wanted to get to the debate.

Before we get to the question of the economy, which we will, the early indication from polls are that the public, in these polls that were taken overnight, favored Obama, thought he did better.

According to a CBS News poll of uncommitted voters, 39 percent thought Obama won, 24 percent thought -- preferred McCain, and 37 percent thought it was a tie.

And while voters thought that Obama did better on the economy and McCain did better on foreign policy, here was the bottom line. Let's put it up. McCain's rating on being prepared to be president didn't change. Obama had a 16-point jump on that same question.

Senator graham, McCain keeps saying that Obama is not ready to lead, but according to the -- several polls, voters watching the debate thought he was.

GRAHAM: I think there's an 18-point difference between who is best able to do the job. We'll take that.

KERRY: Well, let me...

WALLACE: What you're saying is that even though Obama got more of a bump, there's still a lead?

GRAHAM: No, no, no. It's Sunday, and I'm tired. Senator Obama did well. Senator Obama helped himself, according to the polls.

WALLACE: You can't be tired on Sunday morning, sir.

KERRY: We've been working.

GRAHAM: Yeah, we have. Quite frankly, I thought he presented himself well, Senator Obama.

The difference between John and Senator Obama -- Senator McCain and Senator Obama, I think was displayed -- the depth of experience.

And Senator Obama kind of tangled himself up through the primary about some ideas that don't sound so good now, about sitting down with dictators and retrying the Iraq war in a way that really is not appropriate. How do you end the war? We all know John and I voted for the beginning. How do you end it? At the end of the day, I thought what John had to offer -- that he was better prepared to be president January 2009.

WALLACE: Let me ask you about that, Senator Kerry, because the fact was, as Senator graham pointed out, that although they thought that Obama did better, when it came to the question, "Who do you trust more on Iraq, who do you trust more on national security, who is better prepared to be president," people still prefer McCain.

KERRY: Yes, I understand that, Chris. But what's important is there are five weeks left here before the election.

GRAHAM: That's fair.

KERRY: And Barack Obama closed that gap very significantly on John McCain's home turf. This is not important for us to sit here and say who won, who didn't.

GRAHAM: That's right.

KERRY: You know what's important, is to look at the real difference between them. John McCain, I think, represented an old view of the world, and Barack Obama represents a 21st century view of how you make America safe, and I think that's what people began to see.

The test here is judgment. We're electing a president of the United States who will make the right decision. John McCain, with respect to Iraq, was a cheerleader for the wrong war, in the wrong place, at the wrong time.

John McCain was out there, even ahead of the Bush administration, saying that Saddam Hussein was creating in Iraq an assembly line for weapons for Al Qaida. He was saying that they were very aggressive in their creation of a nuclear program.

So the bottom line is Barack Obama got it right. Even Secretary Gates in the last days has said the real focus now is western Pakistan and Afghanistan, which Barack Obama, for a year, has been saying, and John McCain even today reluctantly says is a new focus of the war on terror.

WALLACE: But you wanted to talk about the economy. Let's...

KERRY: Well, I'll talk about both.

WALLACE: Well, do. So let's talk...

KERRY: I think they're important to leadership.

WALLACE: I understand. Let's talk about the economy, because...

KERRY: Sure. WALLACE: ... there were some big differences on the economy in this debate. Jim Lehrer asked, "How would you lead the country out of the financial crisis?" And here was the exchange.

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MCCAIN: He has asked for $932 million of earmarked pork barrel spending, nearly $1 million for every day that he's been in the United States Senate.

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OBAMA: Earmarks account for $18 billion in last year's budget. Senator McCain is proposing $300 billion in tax cuts. Now, $18 billion is important. $300 billion is really important.

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WALLACE: Senator Graham, McCain kept talking about earmarks. Isn't that a narrow focus when you're talking about how to revitalize the entire economy?

GRAHAM: I think if you believe that earmarks is a narrow problem, you don't understand what's happened because of earmarks.

There are people in jail. Make the budget pass. How do you make the budget pass that grows every year? Here's what's in it for you. We're going to need your vote, pal. If you don't vote with us on the overall budget, you're not going to get your project.

So it does increase the size of government.

WALLACE: But, Senator Graham, earmarks...

GRAHAM: And you know what? It makes people mad as hell, too. One of the reasons Congress is at 15 percent is the way we spend their money. You want to change this country? You want to get people in America buying into real change? They've got to trust you.

Nobody is going to trust a bunch of politicians who waste their money. That's the biggest message John has to send.

WALLACE: But -- but...

GRAHAM: If you won't buy in, Chris, you better start running this place more like a business and not waste $18 billion, $35 billion, or any of their money to get people to buy into the hard changes that are yet to come.

And of the two candidates, who do you really believe is going to shake this place up?

WALLACE: But let me ask you a question about that, Senator Graham. If earmarks are so bad, why did you ask for 71 projects totaling $305 million in the last fiscal year?

GRAHAM: I have been part of the problem. My earmarks have been authorized, number one. They're out there for you to look at. And I'm part of the problem.

I'd like to be part of the solution, because the good part of earmarks has been overwhelmed by the bad part. Let's just start over. Let's start over, because the $3 million to DNA -- to bear studies in Montana, the $250 million bridge in Alaska for 50 people, is drowning out some of the good things I've done and John's done.

So I'm willing to start over, but there's one guy in this town who hasn't gotten a penny. I'm willing to follow his lead, because he's convinced me that the greater good would be achieved if we'd all just have a time-out on this.

WALLACE: Senator Kerry -- and we're running out of time in this segment, but I want to address something that McCain went after Obama on, and that is proposing more than $800 billion in new spending.

Doesn't Obama have a government solution to every problem?

KERRY: No, absolutely not. If you look at his health care plan, which John McCain mischaracterized, calling it a government plan, you will see a plan that is entirely a market-based, market-oriented, free-choice plan, nobody mandated to do anything. So the answer is no, that's not true.

Secondly, if John McCain is so against government, you know, involvement in health care, does he vote against Medicare? That's a government plan. Does he vote against Medicaid? That's a government plan. Is he against veterans health care system? That's a government plan. So there's a lot of demagoguery here.

I'm going to finish this. You know, this whole earmark thing is demagoguery. We're all against earmarks that are put in in the dead of night that don't clear a committee. That's absolutely wrong, and everyone in Congress will vote to shut -- in fact, we already have, said that shouldn't happen.

But you know, he got $150,000 for a Greenville community center. He got $150,000 for a Florence community center.

GRAHAM: Absolutely.

KERRY: I'll tell you what. Those are good projects. And the people in Florence and Greenville deserve them.

Sarah Palin asked for $3 million for DNA of seals in Alaska. I mean, let's cut out this game. $18 billion -- John McCain offered a solution to the economy to freeze everybody's spending except for veterans and defense.

Now, guess what? He didn't ask those executives at the top to take a freeze. He didn't say that we would have no tax cut to the billionaires in our country. He didn't say the oil companies should give up their piece.

I think Barack Obama is the only person in that debate who talked about real people in America who can't pay their mortgages...

WALLACE: All right.

KERRY: ... can't pay their tuition, can't pay their health care, can't pay home heating costs. And John McCain has a hatchet...

WALLACE: Senator, I'm invoking cloture.

KERRY: ... or a scalpel...

WALLACE: I'm invoking cloture, and I apologize to you for attacking Lindsey Graham.

KERRY: Well, I just wanted...

WALLACE: No, no, I'm teasing. I'm teasing.

KERRY: ... I just wanted equal time, that's all.

WALLACE: Anyway...

GRAHAM: I deserved it.

(LAUGHTER)

WALLACE: We need to take a quick break here, but we have much more discuss, including this week's debate between Sarah Palin and Joe Biden. Back in a moment.

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WALLACE: And we're back now with Senators Lindsey Graham and John Kerry.

In their debate, McCain and Obama also differed sharply, as you suggested, Senator Kerry, on foreign policy, especially whether to sit down without preconditions with hostile leaders like Iranian president Ahmadinejad. Let's watch that exchange.

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OBAMA: The notion that we would sit with Ahmadinejad and not say anything while he's spewing his nonsense and his vile comments is ridiculous. Nobody's even talking about that.

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MCCAIN: So let me get this right. We sit down with Ahmadinejad, and he says, "We're going to wipe Israel off the face of the earth," and we say, "No, you're not?" Oh, please.

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WALLACE: Now, as a kind of truth squad, one of the issues in the debate -- and I don't quite know why it became so important -- was whether what former secretary of state and McCain adviser Henry Kissinger had said, whether or not he supports no preconditions.

Let's put up on the screen -- last week Kissinger said this. "I do not believe we can make conditions for the opening of negotiations."

Now, Senator Graham, Kissinger now says he's talking about at the secretary of state level, not at the presidential level, but he does support the concept, no conditions.

GRAHAM: Yeah. Ambassador Crocker has been talking to the Iranians in Iraq for quite a while. What started this? Senator Obama is trying to be president, running in the Democratic primary. It's music to the left's ears that -- I'll sit down with anybody, I am not George Bush, you name a dictator, I'll go tomorrow to sit down with him without any conditions, because George Bush is stubborn and he won't talk to anybody, I am not stubborn, I am open-minded, I will sit down with anybody anywhere without conditions.

And that's silly. And it's caught up with him. And he's a nice guy, but that was a silly spot to be in. You can laugh if you'd like, John, but that's...

KERRY: Well, a nice guy. That's...

GRAHAM: ... not what you'd need to do as president.

KERRY: Please, Lindsey. He's much more than a nice guy.

GRAHAM: He did that in the primary to get an advantage over his opponents. He used the war against his opponents. Now he's said some things that make no sense in the primary and he's trying to explain and parse his way out of it.

In truth, if you would ever consider sitting down with the president of Iran without preconditions, what he said twice, you would cheapen this nation and elevate the dictator, and that is a major mistake on Obama's part.

WALLACE: Senator Kerry...

KERRY: But...

WALLACE: Wait, wait. No. Let me -- let me...

KERRY: No, no.

WALLACE: ... ask the question. It will work better if I ask the question...

KERRY: All right.

WALLACE: ... and then you answer. Forget Henry Kissinger. You're the president of the United States. Ahmadinejad has shown capability of doing nothing other than vile rants.

KERRY: Absolutely.

WALLACE: What is the purpose -- what is the realistic possibility of success to have the president of the United States sit down with someone like Mahmoud Ahmadinejad? KERRY: Well, it doesn't have to be Mahmoud Ahmadinejad. First of all, if you heard Barack Obama clearly that night, he said and hinted very directly that it wouldn't be Ahmadinejad, because Ahmadinejad is not the most powerful guy in Iran.

WALLACE: So he's going to sit down with...

KERRY: No, no, no, no, no.

WALLACE: ... the Ayatollah Khamenei?

KERRY: Let me just finish. Let me -- let me finish, please. Lindsey gets to finish. I want to finish. Here's the deal. From the get-go here, from day one, Barack Obama made clear that he talked about adequate preparations for any such encounter.

And those preparations obviously involve either an ambassador, a back channel, a special envoy, a secretary of state, who would have laid the path for that sit-down. What he said was the principle here is what is important. He is prepared to engage and negotiate.

And this administration has not been, and John McCain has not been. In fact, George Bush today had -- has already done the very thing Barack Obama has said he would do. George Bush sent William Burns, assistant secretary of state, to go to Geneva to sit down with the Iranians without precondition.

And the fact is -- I mean, I sat with former president Khatami at a conference. We happened to be seated next to each other.

In the course of my conversation with him, as a United States senator and member of the Foreign Relations Committee, I must have heard six things that were opportunities to pursue on a diplomatic level that might have made a difference in what we're trying to do today.

Those are the kinds of things Barack Obama wants to do. And what he does is he reserves the right as president, which a president ought to, if he thinks he can make America safer and advance our interests, to sit down with any leader. That's smart.

And the policies that have stiff-armed Iran, stiff-armed North Korea, have led us to be less secure in the world, Chris. The fact is the administration is now sitting down with North Korea. They're doing the very thing I proposed in a debate with George Bush four years ago and he said, "Oh, no, no, no, we can't do that."

WALLACE: No, that's not true. You talked about unilateral -- I don't want to go back to...

KERRY: I talked about bilateral...

WALLACE: You talked about unilateral...

KERRY: I talked about bilateral.

WALLACE: Right, bilateral between -- and the fact is...

KERRY: And that's exactly what...

WALLACE: ... and the fact is it worked because we were in six- party talks and got the Chinese...

KERRY: There's nobody in the six-party talks who will tell you that. They always said, the six-party...

WALLACE: You don't think the Chinese...

KERRY: The Chinese will...

WALLACE: We should not -- let me just say, I don't think we want to re-litigate 2004.

KERRY: Chris, I'm telling you right now, the Chinese will tell you that the United States was the essential person and party to have to deal face-to-face with North Korea. And that's why Chris went to Paris and sat down with them.

WALLACE: I think the Chinese had a big role to play in this, which is what the president was saying. In any case...

KERRY: Well, they always have a role, but you didn't have to reduce it to only talking through six parties, which we did for five years.

WALLACE: In any case, let's move on to the next debate.

GRAHAM: I don't want to interrupt.

WALLACE: That's right. I'm giving you more time to wake up, Senator.

The next big campaign event is the vice presidential debate Thursday between Joe Biden and Sarah Palin, and both have had a rough couple of weeks. Let's take a look at Joe Biden's greatest hits.

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BIDEN: Guess what? China's building two every week, two dirty coal plants, and it's polluting the United States. It's causing people to die.

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BIDEN: When the stock market crashed, Franklin Roosevelt got on television and didn't just talk about the -- you know, the princes of greed. He said, "Look, here's what happened."

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WALLACE: Senator Kerry, opposing clean coal, putting FDR as president in 1929 on television -- what's the matter with Joe Biden?

KERRY: Listen, when you're running like a bandit, everybody knows that sometimes you have small slips of the tongue, and those are small slips of the tongue.

And the fact is Joe Biden has voted for clean coal technology his entire career. He supports clean coal technology. And Barack Obama is going to put a huge amount of money -- I think we've got something like $2 billion slated to go into clean coal technology.

WALLACE: But isn't it going to be a problem in the debate if he forgets that he's for clean coal technology?

KERRY: I think Joe Biden -- listen, Chris, please. Let's wait and see in the debate. I think what you're going to -- the important thing in this debate is that Joe Biden is one of the most experienced and one of the most capable people with respect to national security and foreign affairs.

And this is a very dangerous world we're living in, made more dangerous by the policies that George Bush has pursued and that John McCain has supported. Hamas is more powerful. Hezbollah is more powerful. Iran is more powerful. North Korea has four times the ability to build weapons.

I mean, you have to quantify this, and it's all happened on the George Bush-John McCain watch. I believe that what you need is the experience you'll see with a Joe Biden and, you know, he's going to talk about the real differences between Barack Obama's leadership and...

WALLACE: Meanwhile, Governor Palin sat down with Katie Couric, Senator Graham, and she explained why living in Alaska, she has a better understanding of Russia. Let's watch.

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PALIN: Putin rears his head and comes into the airspace of the United States of America. Where do they go? It's Alaska. It's just right over the border.

It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to -- to our state.

(END VIDEO CLIP)

WALLACE: Senator Graham, what the heck was she talking about?

GRAHAM: Trying to show that she lives near one of the biggest threats we have in the world, Russia, run by Putin, who John said, "When I looked in his eyes, I saw KGB."

But the truth is Joe has said some things about FDR being on T.V. He's right. These are human beings. She'll get better. She's very talented at what she's been asked to do in the past. She's been a really good governor.

She filed an ethics complaint against her attorney general, who was a Republican, with a Democrat. She knows energy. And she shares John's world view.

Joe Biden is truly our dear friend, but Joe wanted to partition Iraq at a time when John wanted more troops to save the place from falling apart. If we'd adopted Joe's plan, we would have gone from losing one war to four wars. It would have been a nightmare.

Joe voted against the first Gulf War. So you're going to have an opportunity here to understand where these teams will take the country.

WALLACE: But let me...

GRAHAM: Let me finish, please. I haven't said a whole lot.

The McCain-Palin team is going to take the country in a fundamentally different direction on taxing and spending and reform.

Who better to take on Wall Street than the guy who took on campaign finance corruption, who took on the corruption of Alaska, Sarah Palin and John McCain? If you really want things to change, you better bring in agents of change.

Barack Obama is looking back into the '60s for his tax and spend policies, '70s for his energy policies, and '30s...

WALLACE: Wait, wait.

GRAHAM: ... for his trade policies.

WALLACE: Let me -- let me actually get back to Sarah Palin, which is what we were talking about.

GRAHAM: She's going to have to show she's a valuable part of this team, that she's capable of the job, that she shares John's philosophy...

WALLACE: But what do you make of conservative -- what do you make of conservative columnists who are now saying she was a good reform governor and is a good reform governor of Alaska, but she is showing or, to them, demonstrating that perhaps she is not up to the job of being a potential commander in chief?

And some are even suggesting she should drop off the ticket.

GRAHAM: How about this? Well, number one, they have no idea what they're talking about. If we're not going to judge Joe by one sound bite in one interview, which is fair to Joe, and we're not going to take a mistake that he's made and say that that's a death-defying blow, let's don't do it for her.

We're going to have a debate for 90 minutes, and she's going to have to do a couple of things, that -- I understand where the country needs to go under John McCain, and I can help him get there, here's my experience and here's what I add to the ticket.

And Joe's going to have to explain how he helps Barack Obama take the country where he would like it to go. And the reason we're going to win is where McCain-Palin will take the country is a different place fundamentally on foreign policy and domestic policy, a place that I think where the American people want to go.

Obama and Biden are very fine men who are very liberal and I don't think understand the threats that we face, because if you didn't understand you couldn't lose in Iraq and you didn't understand the need for the surge, and you would still vote against the surge, you're too stubborn to be president.

WALLACE: Gentlemen...

KERRY: No, Chris, I've got to have a chance. Come on, quick. I'll be very quick. Having a better plan...

WALLACE: 30 seconds.

KERRY: Having a better plan to make America safe, knowing how to fight a more effective war on terror, knowing that the center of the war is in Afghanistan and Pakistan, not Iraq, understanding how to put this country back into a place where other countries look to our leadership is not liberal. That's conservative.

And it's strengthening America. And that's what Barack Obama and Joe Biden are going to do.

WALLACE: Senator Kerry, Senator Graham, I want to thank you both for coming in and occasionally letting me have control.

(LAUGHTER)

KERRY: You've got to understand how it works, Chris.

WALLACE: Evidently. Please come back.

GRAHAM: I want your fee to be docked for this show.

WALLACE: And we'll -- and I'll share my hosting fees with the two of you.

(LAUGHTER)

Coming up, congressional chaos -- and also chaos here -- congressional chaos and presidential politics collide as all sides work to rescue Wall Street.

We'll bring in our Sunday regulars and try to make sense of the big overnight deal right after this break.

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PAULSON: We've made clear progress toward a deal which will work and will be effective in the marketplace and, you know, effective for all Americans.

(END VIDEO CLIP)

WALLACE: That's Treasury Secretary Paulson's comments from early this morning. The congressional leaders have a tentative deal to rescue our financial system.

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

So, Brit, from the outline, and that's really all we've got at this point, a three- or four-page outline of what's in the deal, has it been improved? Will it unfreeze the markets? And is it a better deal for taxpayers?

HUME: I suspect it will unfreeze the markets, and I do think that the -- the negotiations that ensued from Friday forward -- or Thursday forward, really -- made a difference in this plan.

There were some -- there were some howlers in the thing. I mean, the slush fund that you mentioned earlier that would have...

WALLACE: ACORN.

HUME: ... could have funneled money to a group like ACORN, which is a pretty disreputable group, all told, was pretty ugly.

And I think there are some additional taxpayer protections. The Congress will have to vote on some of this money instead of being able to - - instead of having to vote to stop it when you get into the second and third installments of this money that will be used to buy up these poisoned assets.

So my guess -- my feeling about it is that the subsequent negotiations probably strengthened the package politically, still leaving it sufficiently intact that it will have a big impact on the markets.

WALLACE: Mara, let's talk about the thing that held up -- in fact, there wasn't a deal on Thursday, as it turns out...

LIASSON: That's right.

WALLACE: ... but what became clear is that House Republicans insisted that they add this insurance policy, that instead of buying all of the bad debt that the government would also insure some of the debt.

LIASSON: Right.

WALLACE: And these financial institutions would pay some premiums. Is that just a fig leaf, or do you think, in fact, that will have some effect and will, as a result, protect us, save the taxpayers some money?

LIASSON: Well, that's unclear and I don't think -- won't be clear until we see how much of this gets paid back. But yeah, I think it's important. I think it is important politically but also substantively.

Obviously, you couldn't have gotten the House Republicans on board without it. That's what they contributed to this. And it's just one more measure of taxpayer protection that went into this bill.

Don't forget, when this was presented last week -- I can't even -- it seems just like a -- you know, it seems like a long time ago, but it was only a couple days ago -- it had no oversight, no equity for taxpayers, and it didn't have all the safeguards that have been put in it. So yeah, I think it makes a difference.

KRISTOL: The insurance thing is basically a fig leaf, but God invented fig leaves for a reason, I suppose, and this is a useful one, to make House Republicans feel better. Most economists I've talked to didn't think much of the insurance proposal.

I wasn't a big fan of the Paulson deal, but it's been improved, and obviously they have to pass it now. It would be totally irresponsible not to pass it as soon as possible.

They shouldn't oversell it. I think the administration needs to be careful. The Paulson deal does not deal with a lot of problems that are out there in the markets, particularly the possibility of a bank run.

I mean, this Paulson deal -- going to sell off assets over the next weeks and months. But we are having -- a bank is being closed in the United Kingdom -- in Britain today. There's the possibility of a failure of a huge European bank. There may be things they have to do with FDIC insurance limits and the like in the very near future.

And the markets may rally or they may sell off. They may rally and then sell off. You never know with markets. So I think the administration has to be careful to say, "This is the right thing to do. We need to do it as soon as possible. We are still in very perilous times. There may be more things we need to do," and not make it seem like, "OK, we've done this. Everything's done. Congress can go home and possibly not have to come back."

Congress may have to come back in a week and do a couple of other things.

WALLACE: Juan?

WILLIAMS: Well, I think the thing that struck me this week is the tremendous anger at Wall Street. When we were having this conversation last week, Bill Kristol and others were saying, "You know what? There's got to be oversight. How can we -- this is like a giveaway to Wall Street."

And I had thought, "You know what? We have to be responsible," because the fact is that if you're a small business, you're going to have your ability to go out and get a loan freeze up, and so this is a necessary step by the federal government, as unpopular as it may be.

But just out and around this week, I was amazed at how angry people were, and I think -- you know, it's not just the House Republicans -- conservative Democrats.

And you know, in fact, Nancy Pelosi and her team had to insist on not only transparency but the idea that, you know, if this doesn't go through in five years, there's some payback for the federal government from Wall Street.

And I think people are going to have to become comfortable with it because it's just necessary.

I don't know, Bill, that it's possible to do anything about the idea of the possible bank run that's to come. I just hope that doesn't happen. But I don't know what the government could do more than they're doing.

WALLACE: Let's switch to the McCain -- excuse me -- the McCain factor, Brit. Obviously, this was one of the running soap operas this week. McCain suspended his campaign, came back, changed his mind, went out to the debate, came back on Saturday and was very involved over the phone.

In the end, how much do you think he either helped or didn't help to make this deal?

HUME: Well, in the beginning, the first day or so, he didn't make any difference. What happened, I think, is, Chris, that when he announced he was going to do this, Democrats in Congress got sort of paranoid about the idea that he would come down to Washington and would be effectively instrumental in negotiating a deal and then would get a lot of credit for it.

That is, I think, what impelled them to hurry out that 1:00 p.m. Thursday announcement of an agreement that wasn't an agreement, that the House Republicans were nowhere near on board with, so that -- and yes, the other thing that hurt McCain was that there was a compliant media -- the announcement of a deal, but by -- within an hour it was clear that there really was no deal. Nonetheless, the story was played as one in which they had this great deal, and they all trooped down to the White House so they could get together an announcement, and McCain showed up on the scene and blew the whole thing up.

Well, it was -- he hadn't even arrived when the deal fell apart, such as it was. But because the media played it that way, he looked bad. And then, of course, it didn't look like the next day there'd been that much change when he went down to Mississippi and participated in the debate.

I actually think when all is said and done he will be seen as having played an important role in bringing House Republicans around, but it remains to be seen, Chris, how many of them will actually vote for this. I think it's important for McCain that a lot of them vote for it.

WALLACE: So as we look at the whole thing -- because obviously, it was terribly important a couple of days ago, it's going to be less important as we go forward -- Mara, is the bailout and is the role of the various candidates in it -- is that a big issue or is that going to be forgotten as the campaign goes on?

LIASSON: I think that we're in this kind of campaign where almost every event gives the candidates a chance to reboot or reset the dialogue.

It's amazing how the previous 24 hours can be wiped out by what happens in the next 24 hours. I think by the time they meet again, which is October 7th...

WALLACE: You're talking about in the debates.

LIASSON: Yeah, the next time the country is focusing on the two of them side by side, maybe the markets will have rallied. Maybe the House Republicans will be hailing John McCain as the guy who helped bring them into this deal. You know, it might look a lot different.

And I think that the candidates, for the most part, were irrelevant. John McCain tried to buck against that. But I think a lot of it will have to do with what the markets are doing in two weeks from now.

WALLACE: All right. We need to take a quick break here.

But up next, we'll find out what our group thought about the first debate. Were there any game-changing moments? We'll poll the panel right after this break.

(COMMERCIAL BREAK)

WALLACE: On this day in 1964, the Warren Commission concluded there was no conspiracy in the assassination of President Kennedy. The commission found Lee Harvey Oswald acted alone when he fired three shots at the president.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCAIN: Senator Obama has the most liberal voting record in the United States Senate. It's hard to reach across the aisle from that far to the left.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

OBAMA: John mentioned me being wildly liberal. Mostly that's just me opposing George Bush's wrong-headed policies.

(END VIDEO CLIP)

WALLACE: That was just one exchange in the Friday night fight at Ole Miss as McCain and Obama argued over who is the real centrist in this campaign.

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

So, Bill, who won the debate, and who helped their chances of winning more, which isn't always the same thing?

KRISTOL: Right. I thought McCain won the debate when I watched it Friday night, and I still think so, having re-read the transcript.

And I actually think, contrary to conventional wisdom, that McCain helped his chances more. I think he's laid the predicate that Obama is a very liberal Democrat, which he is, and now McCain can make this point over and over, over the next two debates.

WILLIAMS: Boy, I thought Obama won the debate, and I think he was on the offensive for most of the night. And I think, you know, there are a couple of things that will be remembered out of this debate.

I think McCain's line where he says about Obama's willingness to sit down with people who are our enemies, you know, you're going to sit down with Ahmadinejad, and say -- oh, he's going to say he wants to wipe Israel off the map, and you're going to say no -- oh, please. I think that was pretty mocking and ironic and will be remembered.

But also, Barack Obama saying, "You were wrong on weapons of mass destruction. You were wrong about being greeted as liberators. You don't know what you're talking about," you know, I think that will be remembered.

And so overall, if the audience was a swing-state, suburban white female who will decide this election, I think that Obama's approach on the economy, where he was the strongest, talking about kitchen table issues, and the fact that he looked so commanding and presidential, really helped him.

WALLACE: Let me ask you, Brit, because one of the things that struck me in the room was I thought McCain missed a lot of opportunities.

For instance, in the whole economic debate, McCain kept talking about earmarks. He never really went after Obama on taxes, which has been one of the central pieces of his campaign. I mean, he could have laid out you want to increase this, you want to increase this.

HUME: And I don't think that was the biggest opportunity he missed. Obama said in one of his answers when they were talking about the Wall Street situation and the toxic assets that are out there, that, you know, he had been -- he, Obama, had been for more regulation.

Well, in fact, the critical moment in that, if there was one in the development of this whole crisis, was when the administration and Fed Chairman Greenspan and some others, including McCain, were pushing for a new regulatory framework for Fannie and Freddie, which most experts believe would have prevented all this from happening.

And Democrats, led by Barney Frank, Chris Dodd -- one key Republican, Bennett of Utah, but it was mostly Democrats -- Fannie in particular had been their little place to go and get rich after they were in office. They protected Fannie and Freddie, effectively, politically from being further regulated.

That was kind of a seminal moment in all this. McCain was on the side of the angels, if you believe that regulation would have done the trick, and all he said in answer to that was, "Well, you know, I, too, was for that," and then he moved on to something else.

That was a fat pitch down the middle of the plate. Obama had been totally silent on this. He was not a part of any effort to impose those new regulations. And McCain just whiffed on it.

WALLACE: The other thing that surprised me about McCain -- and this is something the Obama camp is making a big deal about, Mara -- is for all of the fight over the change mantle, he didn't mention change almost at all in the debate -- McCain.

LIASSON: No. No, he didn't, and he didn't talk about reform, which, of course, is his version of change.

But look. They each came in with the task that they thought they needed to accomplish to win. Obama wanted to be reassuring. He had a pretty safe debate. Yes, he was crisper and less professorial, but that's what he thought he had to do -- just be reassuring, look like a commander in chief, and that's all. He succeeded in that.

McCain, I think, as Bill said, needed to lay out this argument against Obama -- he doesn't understand, he's naive, his views are dangerous. I think he succeeded in that, but the problem was that it was half on the economy, and it was the first half, the crucial half where more people watch, and on that one I think McCain did leave a lot on the table.

WALLACE: Bill, the next big event -- I mean, the one thing about these debates is we don't stay on them very long, because there's another event coming quickly.

This Thursday, the big vice presidential debate between Palin and Biden -- how nervous are the two camps, both camps, about their -- the people they're putting up in this debate?

KRISTOL: Some in the McCain camp are nervous about Governor Palin, but they shouldn't be. They've totally mishandled her for the last week or two. Free Sarah Palin. Free Sarah Palin. That's what I say.

They have -- look, McCain picked her because she's a good governor, a good politician, a good communicator. Let her be a politician. Let her communicate. Put her on T.V. Put her on radio. Let her relax. Let her go into the debate and try to win the debate.

They have surrounded her with former Bush White House aides who, if I might say, in a way typical of the Bush White House have gone into a total defensive crouch, "Ooh, let's not make mistakes, be very careful." Katie Couric, nine thousand part interview -- don't talk to any conservatives on talk radio or on television. That would be just talking to the people who might vote for you. Go get quizzed by Katie Couric and don't make a mistake.

They're really -- I hope -- I think she's strong enough to overcome the very bad advice and very bad staff work that's surrounded her recently. I gather that Senator McCain isn't happy with the way his own team has been sort of dealing with Governor Palin.

I hope they free her over the next few days and tell her, "Go win the debate with Joe Biden. Don't be defensive."

WALLACE: And what about Joe Biden, who -- I mean, you don't know what he's going to say.

WILLIAMS: I don't have any worry about Joe Biden. Joe Biden is a pro. I mean, Joe Biden shoots off the top of his head...

WALLACE: 1929 and FDR on television?

WILLIAMS: These are minor mistakes, and what, you know, I'm going to hear from Brit in a minute is, "Oh, different level of scrutiny for Biden than for Sarah Palin." You're right. That's right.

When a guy's been in Washington this long, when he's headed, you know, Foreign Relations, when he's been around the track, you know, you have a certain level of comfort. Sarah Palin hasn't been around the track.

WALLACE: Brit, did he anticipate what you were going to say?

HUME: Well, I would say this about him. And the truth is that Biden has been an absolute gaffe machine. Some of them have been perfectly hilarious, the things he's said. And to some extent, he gets a pass.

But if Juan thinks that's because he's been the chairman of the Foreign Relations Committee, he's wrong. He gets the pass because he's the Democrat.

WILLIAMS: Oh, no. No, come on. People -- why do you think...

HUME: Absolutely the case.

WILLIAMS: ... they're going after Obama as young, dangerous, inexperienced, reckless? That's -- and in fact, that's what we just heard from our colleagues here this morning. That's what McCain is doing. That's what he did in the debate.

HUME: I understand that.

WILLIAMS: But with regard to Palin, let me just say, they wouldn't even put Palin in the spin room after the debates. Joe Biden was out there in the spin room.

HUME: Right.

WILLIAMS: And I think that, you know, when Bill says that they're mismanaging her -- the idea they put her out there with the world leaders of the U.N. -- she looked bumbly. She wouldn't even talk to reporters then. She goes on with Sean Hannity, our friend.

And what happens? She can't even talk about the bailout effectively. And with Katie Couric, it was an implosion.

LIASSON: But for this debate, no one is going to benefit more from low expectations than Sarah Palin. She has got about the lowest expectations. People think she's going to come on and babble incoherently, and I think she's going to do just fine.

WALLACE: Brit, you get the final word about Sarah Palin.

HUME: My guess is she'll do fine, but I think Bill's right. They've got to let her be herself, and she'll do fine.

WALLACE: And what about the whole question of foreign policy? I mean, obviously, look. She wasn't thinking about this six weeks ago, no reason she should have. So how does she deal with her inexperience on the foreign policy issue?

HUME: It seems to me that she needs to be -- to say something perfectly true and perfectly candid, which is, "Look, I've been the governor of Alaska. Yes, I've had some matters before me that have related to foreign policy. I'm not a leading expert on that subject now. But in the fullness of time I will be, and as much as I need to be."

And you know, the key issue in this campaign is supposed to be the economy anyway. She might -- you might think they'd want to ask her a few questions about that. I think that's the subject the Obama campaign claims it wants to talk about.

WALLACE: All right. Thank you, panel. See you next week when we'll have the Palin-Biden debate to review.

And up next, our Power Player of the Week.

(COMMERCIAL BREAK)

WALLACE: I have a confession to make. I don't like natural history museums. I've always thought they were old and dusty and boring. But then along came our Power Player of the Week.

(BEGIN VIDEOTAPE)

SAMPER: Stuffy, old, dark, right?

WALLACE: Well, not this.

Cristian Samper, director of the Smithsonian's Museum of Natural History, was destroying my preconceptions this week as he gave me a tour of his newest and biggest exhibition ever, Ocean Hall.

SAMPER: This is, after all, an ocean planet. We talk about it as earth. The real name of this planet should be ocean.

WALLACE: It is an astonishing project, a $49 million display that uses cutting-edge, interactive technology to explain our close relationship with the ocean.

There are hi-def screens at the top of the hall that make you feel as if you're in a diving tank.

(BEGIN VIDEO CLIP)

SAMPER: There you go. There's Phoenix, my friend.

(END VIDEO CLIP)

WALLACE: There are dramatic displays like this precisely accurate model of a whale scientists have been tracking its whole life.

SAMPER: She is 21 years old. She has had three calves. And she has been tracked by satellite for the last 21 years. Because of the history of whaling and ships and collisions, there is less than 400 whales of this species left. That's it.

WALLACE: And there's a fascinating replica of a coral reef off the Philippines with all the fish that swim there, including the star of the hit movie.

SAMPER: And we bring a little of the coral triangle here to Washington to share with the visitors. That's really pretty. And yes, we have Nemo, of course.

WALLACE: By the time Samper showed me the giant globe with all kinds of information, he was gloating.

(BEGIN VIDEO CLIP)

WALLACE: Now, this is my kind of natural history museum.

SAMPER: I'm so glad you changed your perception.

(END VIDEO CLIP)

WALLACE: But behind the bells and whistles, there's some serious science being taught here.

SAMPER: Every major life form that we know of is found in the ocean or comes from the ocean. Half the air that we breathe comes from the ocean. So you and I wouldn't be here if it weren't for the ocean.

WALLACE: Last year, 7.2 million people came to the museum, making it the most visited in the U.S., and Samper says one big reason is they are changing with the times.

SAMPER: The old classical museums from a century ago or 50 years ago in many parts were this collection where you've got one of every species, and you saw the hall of fish. And I think we're turning that around, around concepts and ideas.

WALLACE: One way is by putting an encyclopedia of life on the Internet, with one page for each of the 1.8 million species alive today.

Samper grew up in Colombia, where he developed a fascination with biology.

SAMPER: I think you can't help but when you grow in Latin America not love nature. You're surrounded by it day in and day out.

WALLACE: Now he wants to instill that same love of nature in the next generation.

SAMPER: When you're a scientist, you're a child that never grows up. You're always asking new questions about everything that's around you. And then being able to tell that story to a school child that's walking through our doors and seeing their eyes open up -- and that makes my day.

(END VIDEOTAPE)

WALLACE: The new Ocean Hall opened to the public yesterday. Next time you're in Washington, be sure to check it out. And that's it for today. Have a great week, and we'll see you next "Fox News Sunday."