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Dianne Feinstein, Pete Hoekstra, Charlie Rangel, Roundtable

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace. U.S. forces launch a major push into Sadr City, next on "Fox News Sunday."

New concerns about U.S. intelligence on some of the world's most dangerous regimes -- we'll talk about what we know and don't know with top members of the intelligence committees, Senator Dianne Feinstein and Congressman Pete Hoekstra.

A tough week on Wall Street -- does the market tumble mean there's trouble ahead for the economy? We'll find out from influential Democratic Congressman Charlie Rangel.

Plus, two top Army officials are fired over shoddy conditions at Walter Reed Hospital. What's the political fallout for the Bush administration? We'll hear from our Sunday panel, Brit Hume, Mara Liasson, Bill Kristol and Nina Easton.

And our Power Player of the Week has turned a personal fight against breast cancer into a national movement, all right now on "Fox News Sunday."

And good morning again from Fox News in Washington. Here's a quick check of the latest headlines. U.S.-led forces in Baghdad have begun a major security sweep in the Shiite stronghold of Sadr City. So far no trouble has been reported from the Mahdi army of radical cleric Muqtada al- Sadr, which controls the area.

Also in Iraq, Prime Minister Maliki announced that the tough new security measures in Baghdad will soon be extended to the rest of the country. Maliki says he also plans to make changes in his cabinet soon to speed up reconciliation.

And from eastern Afghanistan, reports of a major attack by U.S. and NATO forces on a compound where so-called high-value targets may have been hiding. Al Qaida is thought to have used the area as a safe haven.

Well, joining us now to talk about what's really going on in some of the world's most dangerous countries are two key members of the congressional intelligence committees, Senator Dianne Feinstein and Congressman Pete Hoekstra.

And welcome back, both of you, to "Fox News Sunday."

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Thank you.

REP. PETER HOEKSTRA (R), MICHIGAN: Thank you.

WALLACE: Congressman Hoekstra, let's start with reports of this attack by U.S. and NATO forces in Afghanistan looking for high-value targets. What can you tell us about it?

HOEKSTRA: I can't tell you a whole lot. I mean, it's very plausible that what's being described is happening, but I think this is one of those things -- you don't talk about it while this action is under way.

And we'll see what the results are in the next couple of days. Then we'll hear more about it.

WALLACE: OK.

Senator Feinstein, this week, the new intelligence director, Admiral McConnell, told Congress that he is very concerned that Osama bin laden and Al Qaida are rebuilding in northwest Pakistan.

How serious is the threat? And what kind of job is President Musharraf of Pakistan doing in rooting out the terrorists?

FEINSTEIN: Well, I think it certainly is a threat. I mean, we've been hearing that for some time now. And I think the concern is that they can easily extend their terrorist arm into the European community and Great Britain. That's a deep concern, because then it's just the ocean for us.

And I think as Vice President Cheney went to Pakistan to talk with President Musharraf that the Pakistanis either have to let us go in or go in themselves when they have intelligence. And I think the kind of half measures that the Pakistanis have taken in that particular area don't stand us in good stead.

There's no question that there's going to be, I think, a spring offensive in Afghanistan, that they're trying to reach out, that training is going on, recruitment is going on, and we have to have some pinpoint attacks that produce some dividends. Hopefully, this will be one of them. We'll see.

WALLACE: Let me just ask, because, I mean, you're both -- and I can understand your sensitivity. Is something going on?

FEINSTEIN: Well...

WALLACE: Senator Feinstein?

FEINSTEIN: ... I think there's an ongoing campaign. More than that, I can't say.

WALLACE: OK.

Congressman Hoekstra, it's interesting, because a top Taliban leader, Mullah Obaidullah, was arrested this week the same day that Vice President Cheney met with President Musharraf. There has been a history when a top official goes to meet with Musharraf, suddenly there's a kind of show arrest.

How do you assess the threat from Al Qaida and the Taliban, and what Senator Feinstein mentioned, which is the possibility a lot of people are talking about of a very tough spring offensive against our forces in Afghanistan?

HOEKSTRA: Well, I think there's no doubt that we've degraded the capabilities of Al Qaida, but they are regrouping. You know, the activities that we've got in Pakistan and along the border -- I mean, we've got a full court press going on there. We may want Pakistan to do more things.

But you know, President Musharraf is facing elections in September. There are parliamentary elections next January. We need stability in the regime. We need this regime to survive.

And there's a reason that they've called this the ungoverned areas. No one has really been able to go into these areas and take control, but the Pakistanis have been doing a number of things to help us go after Al Qaida.

WALLACE: Senator Feinstein, we decided to tackle this subject of the quality of U.S. intelligence after it came out this week that the intelligence community has revised its estimate of the situation in North Korea, that they were very certain that North Korea five years ago was pursuing a program for highly enriched uranium. They are less confident about that now.

Question: How good has our intelligence been about North Korea? And what effect has that had on our relations with that regime?

FEINSTEIN: I think the gathering of intelligence with respect to North Korea has been very difficult. And the drop in the level of confidence on the uranium-based development I think is an indication of that.

I, for one, am very pleased to see this agreement. I don't think you can underestimate the value of China in keeping the North Koreans on track now in seeing that this plutonium-based program is disassembled and that North Korea is brought into the mainstream.

I think one of their ministers is due in the United States this week to begin discussing some normalization of relations.

I don't think we are well served by isolating countries. And the degree to which this isolation ends and it becomes productive -- and I think now you've got all the six parties looking very carefully at every development. This is a little different from the '90s. So I am very optimistic.

WALLACE: Congressman Hoekstra, some conservatives suggest that the administration is downgrading the level of confidence about its intelligence in North Korea because it is, quite frankly, hellbent on pursuing an arms control process with North Korea and it doesn't want to let anything get in the way.

First of all, what do you think about that theory? And secondly, do you believe that North Korea is or isn't pursuing a highly enriched uranium program?

HOEKSTRA: Well, I think the administration has sent out a clarifying statement on exactly what they meant to say this week. Let me say two things.

I think Congress needs to take a very close look at this agreement to make sure that it's not a legacy agreement. Legacy agreements cut corners. We need to make sure that there's verification in this agreement. We need to make sure that North Korea comes clean on whatever nuclear weapons that they have in place.

The other point that I want to make, building on what the senator said, is we still don't have the intelligence community overall to give us, as policymakers, the information that we need to make good decisions in North Korea, Iran and other places.

WALLACE: That's a pretty striking indictment.

HOEKSTRA: Well, it is.

WALLACE: I mean, if the intelligence community hasn't given you the information, how do you make policy?

HOEKSTRA: Well, you always make policy with imprecise information, but you know, there are some things that we've been disappointed with -- the stand-up from the leadership in the intelligence community.

You know, we've had the conflict between the Department of Defense and the intelligence community, you know, with Secretary Rumsfeld and Director Negroponte not giving us a quick start on intel reform. Now we're changing leadership in the intel community.

So we've had problems in standing this up and developing more bureaucracy, and it's a concern about the leadership in the intelligence community, not the folks who are working this 24/7.

FEINSTEIN: I think there's this point, too. We now do know that North Korea has nuclear devices. The question is how many. The question is where are they assembling these. Is it just Yongbyon, or is it other places?

And because of the underground nature of the facilities, it's very difficult. North Korea is a long way from us, and the intelligence infrastructure is not that good, to be very candid with you.

So it's a difficult problem to know with certainty. That's why it's so important that there be this agreement.

WALLACE: Let me move to another country, Senator Feinstein. What about Iran? How much do we really know about its nuclear program? And how much do we really know about whether the government is behind these efforts to supply Iraqi insurgents with these highly explosive and highly lethal devices?

FEINSTEIN: Well, we know that they're on their way to develop a nuclear program. The question comes how long would it be before they, too, had a nuclear device, and that there's some degree of sophistication in their work. Now, having said that, the question comes, is Iran really united that it has to become a nuclear power? I don't believe it is. I believe that there's a leadership split. I believe that the supreme leader is very different from the president of Iran in this respect, and that it may well be possible to work something out with Iran.

And so I am very pleased to see the shift in the administration. When Secretary Rice came before the Senate Appropriations Committee and talked about this regional summit in which the United States would take part and the G-8 nations, I think that's exactly the way to go, to bring the light of day and the preponderance of nations into this effort.

WALLACE: Congressman Hoekstra, just briefly, because we have to move on to other subjects, your feelings about Iran and how much you really know about what's going on there.

HOEKSTRA: Well, we don't know a lot about some of the specifics, but I think if you take a look at the bigger picture, their activities with the nuclear weapons program, their relationships with Hamas, Hezbollah, their activities in Iraq, Iran is clearly somebody that we need to be very, very concerned about.

This is not an ally in the war against militant radicalism. They're not an ally in getting us to be successful in Iraq. We need to focus on them and I think some of the changes and some of the steps that are being taken by the administration are very positive.

WALLACE: Senator Feinstein, you're also a member of the Judiciary Committee, and I know you're upset about the firing of these eight U.S. attorneys. The administration says that it's for poor performance, not politics.

FEINSTEIN: Well, what's strange about this -- never before in history has it happened that in a short given period of time, at least seven were called and told they should resign by a specific date in January. I think that's been pretty well established.

Now, the problem is that the Patriot Act had in it an amendment which gave the ability to the administration to appoint an interim U.S. attorney permanently, not subject to a limited period of time, pending confirmation.

We in the Senate believe it's very important that U.S. attorneys be confirmed by the Senate. That's really what's going on now. Some political things may well emerge. There are going to be a series of hearings. I think we'll have one in the Senate on Tuesday. I believe the House will have one on Tuesday. And we'll see what facts emerge.

But I think there's a lot of evidence that this was done in a way to bring in some bright young Republican operatives into these positions. We'll see.

WALLACE: But let me ask you about that, because one of the U.S. attorneys who is being fired is Carol Lam...

FEINSTEIN: Correct.

WALLACE: ... of San Diego, who was behind the prosecution of Duke Cunningham on official corruption charges.

Last June you wrote to Attorney General Gonzales about her failure to pursue immigration cases. Take a look. You said, "The low prosecution rates have a demoralizing effect on the men and women patrolling our borders."

Senator Feinstein, weren't you complaining about exactly what she's being fired for?

FEINSTEIN: Yes, but I subsequently found out that the cases in which she was engaged are major cases and very important cases, and that it was really a kind of prioritization, and that my understanding is that when this was discussed with her, she made changes.

The thing about Carol Lam is in the San Diego community, by the FBI, by the judges, this is a U.S. attorney that was very highly respected.

And therefore, to summarily say -- which is synonymous with firing -- you're going to be out of here, which can effectively end a career for a U.S. attorney, is very surprising to many of us.

WALLACE: Finally -- we've got about a minute left; I'd love for you to split it evenly -- a brief comment from both of you about the situation in Walter Reed and how you feel the administration's handling it.

Congressman Hoekstra?

HOEKSTRA: It's an appalling situation. Hopefully they're putting in place the leadership that will make sure that our troops get exactly the kind of quality care that they make. The sooner they get focused on this, the better.

WALLACE: Senator?

FEINSTEIN: Secretary Gates is a breath of fresh air. He's taken action, and not only low-level people but high-level people have been replaced, and I think that's welcome action.

WALLACE: Senator Feinstein, Congressman Hoekstra, we want to thank you both so much for coming in and talking with us today.

FEINSTEIN: Thank you.

HOEKSTRA: Thank you.

WALLACE: Up next, the stock market takes a hit. What does that tell us about the state of the economy? We'll talk with the most powerful member of Congress when it comes to taxes and the economy after this quick break.

(COMMERCIAL BREAK)

WALLACE: Wall Street just suffered through its worst week in more than four years. The Dow Jones industrial average dropped 533 points for the week, or more than 4 percent. So what does that tell us about the state of our economy?

For answers, we turn to Congressman Charlie Rangel, chairman of the powerful House Ways and Means Committee, who joins us from his home state of New York.

Congressman Rangel, how do you explain the drop in the stock market this week? Do you see it as just a blip or the start of a downward trend?

REP. CHARLIE RANGEL (D), NEW YORK: Well, of course, we hope it's a blip, and I feel good that there has been a recovery. But I think it really shows the vulnerability of a great nation like the United States when we owe trillions of dollars to foreign governments and how they can manipulate, if they wanted to, our own markets over here.

So it just seems to me that dismissing the monies that we owe to China and owe to other parts of the world is not a healthy thing for us to do as a nation. It makes us extremely vulnerable.

And we should not look at this thing as Republicans and Democrats, or the executive and the legislative, but try to come together and see whether we can get a handle on this. And I might currently add dismissing the trillions of dollars that we expect to spend in Iraq doesn't help the projection at all.

WALLACE: Treasury Secretary Paulson is on a trip to China right now. What should he be doing when he gets to Beijing?

RANGEL: I'm certain that the secretary already has his cue cards when he comes back. This is an ancient society. It's very difficult for them to understand our economy, that their pirating and stealing of our products is something they're working on. It's the same thing.

But the Congress, Republicans and Democrats, are going to start getting tough on China. We're going to expect our United States trade representative to enforce international law.

And the fact that they have an ancient history and that they have to learn doesn't mean that -- United States consumers are paying for the research and development that we have in intellectual property. And you steal from them, you are stealing from Americans.

WALLACE: Congressman, let's talk about the state of the economy, because there has been a sharp decline in business orders for durable goods. The manufacturing sector is in a slump. The housing market is weak.

This week, earlier in the week, former Fed Chairman Alan Greenspan said that it's possible -- not probable, but possible -- that the economy could slip into a recession by the end of the year. Where do you see the economy going at this point?

RANGEL: Well, I don't know. On the Ways and Means Committee, we have to respond to what our economists -- indeed, we have to respond to the administration and what they tell us.

But you know, when you have these economists and the chairman of the federal reserve, they tell you on one hand what could happen, and on the other hand it may not happen, so it puts us in the Congress the same place that it puts most Americans.

The thing that gets to most of us in the majority is that it doesn't seem to take into effect the number of Americans that already are on hard times, the number of middle-income people that have to have two jobs, the expansion of the poor into the ranks of poverty, and the fact that we still talk about protecting the richest people in this country.

It seems like we're living in two different worlds, one where they tell us -- the secretary of the treasury -- not to worry, that the economy is secure, and the other where we have 48 million people who don't know from day to day where they're going to get health insurance.

It seems like we ought to cut out the partisanship, come together as a nation. The president only has less than two years in this administration. I think we ought to stop fighting, sitting down and evaluate what would happen if the economy really does get hit hard.

WALLACE: But forgive me, sir, that seems to be more of a political answer than it is an economic answer. As the chairman of the House Ways and Means Committee -- and I agree with you, there's a lot of conflicting evidence out there as to strength in some areas, weakness in others -- do you have no sense of where the economy is headed, whether it is weakening?

RANGEL: Well, I don't know whether you're familiar, Chris, with the jurisdiction of the Ways and Means Committee, but it is true, as it relates to raising revenue -- that is our jurisdiction -- Social Security, Medicare, which is health care for the aged, and trade. These are the things that we have legislative jurisdiction over.

But we do not formulate the direction in which the economy is going. It is the president of the United States who is supposed to advise us as to what is needed legislatively, and we don't get much sound direction from the executive branch. So you share with me where you want your Congress to take you. WALLACE: Let me ask you, though, because you do now have a Democratic control of Congress, as chairman of ways and means, do you feel it's necessary to do anything over the course of this year to try to bolster the economy?

RANGEL: Well, one thing that we do want is to have a fair and equitable tax system and see what impact that would have on the economy. One of the things that we do know is that the president's tax cuts for the wealthy increase our debt to China and other parts of the world, and we're supposed to build our way -- grow our way out of that.

We also know that we can't control the war. Certainly, the hundreds of billions of dollars that we're spending in the Middle East at this point in time -- there's nothing that the Congress is going to be able to do.

And so we don't direct the economy. We have one government, one president, and what we do is try to help to give direction if it appears as though it's off keel.

But you cannot possibly think of an area in which the House and the Senate or both, especially with the president with the right to veto, that we could take claim for what is happening to us and what could happen.

You know, we only have one country, even though we have three branches of government. We could be in the majority, but it doesn't mean that we can redirect this president.

WALLACE: I just want to make one thing clear, because you talked about the fact that we have increased our debt and the amount of money that we are now having to borrow from foreign countries because of the president's tax cuts for the rich.

RANGEL: Yes, yes.

WALLACE: You're not talking about doing anything about that, are you?

RANGEL: Well, we certainly are, in terms of talking about pay as you go, a part of our budget.

WALLACE: But are you talking about specifically, sir, rolling back the tax cuts, the Bush tax cuts?

RANGEL: No, we're not talking about that, but we are -- we may be talking about redirecting those tax cuts. You know, we have 23 million people in this country that have Alternative Minimum Tax burdens, close to $1 trillion over the next 10 years, and that's not even on the president's radar screen.

And so within the system, there can be more equity without increasing the tax burden.

WALLACE: So you're suggesting that you might do something about the president's tax cuts for the wealthy before they expire in 2010?

RANGEL: Well, all I can say at this point in time -- that we in the majority and the minority on the Ways and Means Committee are working very closely with the secretary of treasury, Hank Paulson, not only on taxes, but on Social Security and trade and a lot of other areas, to see whether we can find more equity within the system without having partisanship.

So taxes is one of the issues that we're looking at, yes.

WALLACE: So it's on the table.

RANGEL: Everything is on the table. How much we can accommodate each other is something else.

But I think the American people have said in the last election not only were they against the war, but they were against the partisanship that has been building up in the Congress for the last decade.

WALLACE: Congressman, we've got a couple of minutes left, and I'd like to do a lightning round with you -- quick questions, quick answers -- if I might.

House Republicans are demanding a vote on the House floor about appointing Congressman William Jefferson, who's the subject of a federal bribery investigation, to the Homeland Security Committee.

If Speaker Pelosi felt that Congressman Jefferson couldn't serve on ways and means, how can you put him on homeland security, where he would have access to top secrets?

RANGEL: I don't know the thinking of Nancy Pelosi. She is the speaker. She makes the decisions. And you have to realize one thing, that even in the Congress, a person is innocent until they have been proven guilty. He's not been indicted of any crime.

And so the only thing that you and I have to talk about is what we read in the newspapers, what has been leaked by the FBI. The question should be why would the FBI leak all of this information and not indict. And if they can't indict, why don't they move on?

WALLACE: Let me move to another subject. Two of New York's top African-American politicians ripped Senator Clinton this week for her attack or the camp's attack on Barack Obama.

And they suggested that may be the reason that Obama has surged ahead of Clinton among black voters in at least one poll. Congressman, are they right?

RANGEL: I read that. I can't speculate as to why there would be an increase in the support, black support, that the senator would be getting. But I think it's good. I think it's healthy.

And voters are fickle and have different reasons for supporting or not supporting candidates. I think it's exciting. WALLACE: When you say it's exciting, as a New Yorker, are you committed to Hillary Clinton? And wouldn't it be tough for you to sit out the most serious candidacy ever by an African-American politician, and certainly the one with the most serious chance of winning? Wouldn't it be tough for you to sit that one out, sir?

RANGEL: I will not be sitting this one out, so I don't know where you got that idea.

WALLACE: Well, I meant not supporting him.

RANGEL: That's not sitting out an election. Senator Clinton probably will be the favorite daughter of New York State. I am the dean of the New York State Democratic delegation, and so there's no question that we will be coordinating a campaign for Senator Clinton.

I have to admit that I did encourage Senator Barack to actually get involved in the campaign. He's young. He's dynamic. And if he doesn't succeed, he gets another opportunity to run for it. But I told him that if he didn't run, he would hate himself for not testing the waters.

WALLACE: Congressman Rangel, we want to thank you so much for coming in and talking with us. And please come back, sir.

RANGEL: Thank you so much.

WALLACE: Up next, our Sunday gang on that controversy over conditions at Walter Reed Army Medical Center that led to the firing of two top officials. Stay tuned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DEFENSE SECRETARY ROBERT M. GATES: I am disappointed that some in the Army have not adequately appreciated the seriousness of the situation pertaining to outpatient care at Walter Reed.

(END VIDEO CLIP)

WALLACE: That was Defense Secretary Gates commenting on the controversy over the treatment of wounded soldiers at Walter Reed Army Medical Center.

And it's panel time now for 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 Nina Easton from Fortune magazine.

So, Brit, what do you make of the situation at Walter Reed and the decision of Defense Secretary Gates to get rid of, first, the commander at Walter Reed and then the secretary of the Army?

BRIT HUME, FOX NEWS WASHINGTON MANAGING EDITOR: I think it tells you a lot about the effect of the last election and the political atmosphere in Washington. This is an administration which is known or had been known for sticking by people even when they were embattled.

The idea that conditions at Walter Reed Hospital, a hospital that is on its way out of business, had deteriorated -- that's probably one of the reasons why they wanted to put it out of business. This is unfortunate.

It looks terrible, which is the problem. The problem is that it looks as if this administration, which has sent troops into harm's way, is now neglecting them when they're injured and need care and help.

But make no mistake about it, this was a -- a potential political firestorm on Capitol Hill began to brew about this. The administration did what it did to try to get it over with, and it may well have succeeded.

MARA LIASSON, NPR: Look, I think nothing shows that you're serious about a problem than firing people. And firing people didn't happen a whole lot before November's election, if you want to put a start on it. And I think that Secretary Gates wants to show that he's a different kind of defense secretary and he means business. And I think these are very dramatic moves.

Look. I think, you know, to say it looks bad -- it also is bad. I mean, those pictures were horrible. And these are people -- nobody who is being treated for any kind of injury should have to live in that condition, let alone people who just fought in a war for our country.

WALLACE: Bill, I mean, clearly, whether rightly or whether it's been overreaction or not, it is a toxic political combination when you have an unpopular war and then the perception, and to some degree the reality, that the patients, the soldiers who come back wounded from that war, aren't being treated properly.

A House committee is going to have a hearing on Monday at Walter Reed. How much liability -- how much vulnerability does this administration have politically on this?

BILL KRISTOL, WEEKLY STANDARD: It has some. I mean, it doesn't have the defense secretary who's been in charge for the first six years still as defense secretary, which helps.

And the idiotic attempt to put back in charge the general who presided over Walter Reed during this time, General Kiley, has now been reversed by Bob Gates. And he's fired the secretary of the Army, who he inherited from Don Rumsfeld.

So I think they've done a good job of saying, "no more." But it is a disgrace. I mean, we shouldn't kid ourselves. They knew about this. This was reported up the chain of command. They weren't serious, I think, about dealing with it, partly because, as Brit says, this hospital is going out of business.

So they prioritized their base review findings and the fact they wanted to save money by not investing more in a building that was going out of business. They prioritized that above taking care of the soldiers.

And that, I think, is the problem with the last few years. We have not put -- the Defense Department has not put itself on a real war footing and said the war comes first, and who cares if the base review commission thinks this should go out of business.

Overrule the base review commission. We're fighting a war. We have a lot of wounded veterans. Upgrade the hospital and keep it in business for five years or 10 years.

NINA EASTON, FORTUNE MAGAZINE: That's right. And this General Kiley who they put back in charge was somebody who very much tried to downplay all of this.

WALLACE: Yes. He's now out.

EASTON: And of course, he's out, of course. But this was broken in the press, broken by the Washington Post at first. You're talking about brain damaged soldiers.

A lot of these folks, particularly in this building 18, were facing conditions of, you know, moldy, deteriorating -- roaches around, so forth, and also without any kind of support system to help remember their appointments. I mean, these are real human stories.

But I think Brit's right. I mean, you've got -- the political dynamics of this are not to be overlooked. You've got Democrats on the Hill who have tried to distinguish their opposition to the war from their support for veterans, whether you're talking about equipment for soldiers in Iraq and so forth.

They're trying to say we support the soldiers even while we oppose the war, and these are Democrats with subpoena power. Henry Waxman issued a subpoena last week. We've got this hearing coming up tomorrow on site.

There is an internal memo that will be disclosed looking at Army officials raising questions about this as long ago as last September. So it's a story that's going to continue, I think, to play out.

WALLACE: Let's turn to the subject that I was discussing with Senator Feinstein and Congressman Hoekstra, Brit, which is about North Korea.

Our intelligence community announced this week that it was -- had high confidence -- and there's no reason to think they weren't right -- back in 2002 that North Korea was seeking to get highly enriched uranium components.

They are less confident now that they're actually doing it. What do you make of that?

HUME: Well, not much, the reason being that North Korea has admitted that it is basically doing this, and it's resisted like mad any efforts to get it to stop.

It now appears that some fruit has emerged from the discussions over there and North Korea may be willing to abandon its nuclear ambitions. So it's not entirely clear to me what all the fuss is about.

If the idea is that our intelligence analysts, confronted with, you know, evidence that is hard to come by out of a place like North Korea, sometimes adjust their levels of certainty, well, I think that's kind of an interesting footnote to all this story, but I don't think it really tells us very much.

Intelligence out of places like North Korea and, to a lesser extent, Iran is very weak and is likely to remain so for some time.

WALLACE: Mara, do you understand what all the fuss is about?

LIASSON: Yes, look. I think that on the one hand, that's absolutely correct. It's really hard to get good intelligence. I just think that right now every piece of intelligence is under a cloud.

It's just very difficult since the intelligence community was so wrong about the weapons of mass destruction in Iraq -- and I don't mean just this administration's intelligence community. I mean, everybody was wrong about it. It's very hard to have confidence now, when every intelligence finding is being second-guessed.

WALLACE: You know, Bill, let me just say, a lot of conservatives are very suspicious about this reassessment of North Korea.

The Wall Street Journal especially is suggesting that, you know, this may be that the administration is so determined to begin what it calls an arms control process with North Korea that it doesn't want to do anything to get in the way and, in fact, that it almost invites the North Koreans to say, "You're right, we don't have a highly enriched uranium program."

KRISTOL: Yes, except they still have a plutonium program that produced a nuclear weapon, so I think we still have a big problem with North Korea.

I think what this reminds us of -- the intelligence community is broken. It has been broken. And the president, despite sort of trying to fix it, hasn't yet.

John Negroponte, first director of national intelligence -- he was going to fix it. He stayed there for what, less than 1.5 years. He's now been replaced by Mike McConnell -- two CIA directors since Tenet. Porter Goss went in to fix it. He's sort of eased out. And now we have General Hayden.

It would be important to improve our -- I mean, Brit is right that it is hard to get good intelligence from a place like North Korea, but it would good to improve our intelligence.

EASTON: I think we'll know when the inspectors go in to what extent the intelligence we have is useful, because North Korea, of course, has agreed to let inspectors back in. We'll see.

WALLACE: Of course, that's if you trust that the inspectors really will get a sense of what's going on in North Korea.

EASTON: Exactly.

KRISTOL: Right. There's the secret sites. There were inspectors in before inspecting the other sites, but they didn't know about the uranium enrichment program.

EASTON: But I thought Congressman Hoekstra's comments about the leadership in the intelligence community still being troublesome was quite striking.

There's still a lack of faith among, you know, leading lawmakers on the Hill in the intelligence that they're seeing and the leadership.

WALLACE: Right, the policymakers not trusting or knowing whether the intelligence they're getting is solid. All right.

We need to take a quick break here. But coming up, our Sunday political roundup. The Republicans start going after each other and the Democrats keep at it. Who's up? Who's down? Some answers when we come back.

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WALLACE: On this day, the inaugurations of two famous presidents. In 1861, Abraham Lincoln became the 16th, while in 1933 Franklin Roosevelt became the 32nd. Inaugurations were moved to January in 1937.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MITT ROMNEY, FORMER GOVERNOR, MASSACHUSETTS: He is pro-choice and pro-gay marriage and anti-gun, and that's a tough combination in a Republican primary.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUDY GIULIANI, FORMER MAYOR, NEW YORK CITY: We don't all agree on everything. I don't agree with myself on everything.

(LAUGHTER)

(END VIDEO CLIP)

WALLACE: Those were Republican presidential candidates Mitt Romney and Rudy Giuliani disagreeing about who is the real conservative in the GOP race.

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

Well, first of all, there are several polls out this week that show that Giuliani has stolen out to about a 20-point lead over the rest of the Republican field. Now, we all say polls at this point mean absolutely nothing, but, Brit, is Giuliani now the frontrunner for the GOP nomination?

HUME: I think you'd have to say that he is. And the reason is that this presidential race, among the people who really care about politics, which embraces all the people who tend to vote and be influential in the primary season, are paying closer attention and are more involved than they have ever been at this early a stage.

We are at a remarkably advanced stage in this race. And Rudy Giuliani, who on paper looks like someone who wouldn't much appeal to the conservative base of the Republican party, still retains this lead despite all that any knowledgeable person would know about his record.

So I think you'd have to say yes, he has emerged now as the frontrunner, and his lead has been remarkably persistent. That doesn't mean it will last, but it has been remarkably persistent so far.

LIASSON: You know, the Giuliani question is an amazing question, because on the one hand, the conventional wisdom was, oh, yes, he's popular because he's the hero of 9/11. But as soon as people know that he's, you know, pro-gun rights and pro-choice, they'll change their minds.

Well, now every single article that has ever been written about Giuliani includes all of those positions. I think people are getting educated and he's still up there in the polls.

I guess the big question is, is the Republican party willing and ready to basically change its brand, to nominate someone who disagrees with them on the number one bedrock issue, which is choice.

And maybe the Republican Party is so demoralized and disheartened that it would rank terrorism so far above the social issues. We're going to find out. But I think it's a phenomenon, and I don't know if it's real yet.

WALLACE: That's a very good question. And we have right here the perfect man to answer it.

Bill Kristol?

KRISTOL: I think the Republican Party could nominate Rudy Giuliani. It could also nominate John McCain or Mitt Romney, none of whom is entirely in sync with most Republicans on some of these social issues. But it will not, as Mara puts it, change its brand.

They may be willing to make a deal. If Rudy Giuliani does not take on the pro-life cause in the Republican Party, if he commits to nominate strict constructionist judges, if he accepts the fact that he would be taking over a party that was pro-life and wanted things to continue in a pro-life direction, if he endorses the Hyde amendment -- no federal funding for abortion -- et cetera, then I think he has a chance.

But I think what's going to happen here -- what's very interesting here is a possible deal between the conservative base of the party and not just Rudy Giuliani, but the three leading candidates, all of whom look quite electable and none of whom comes out of that conservative base.

WALLACE: Nina, let me ask you about the other two. John McCain certainly had an interesting week. He went on David Letterman, of all places, to announce that he's going to formally announce that he's a candidate for president, while meanwhile turning down an invitation to speak at the Conservative Political Action Conference.

And meanwhile, at CPAC, Mitt Romney went after McCain by noting that he has co-sponsored bills with liberal Democrats both on immigration and campaign finance. Let's take a look.

(BEGIN VIDEO CLIP)

ROMNEY: McCain-Kennedy isn't the answer. As governor, I took a very different approach. If I'm elected president, I will fight to repeal McCain-Feingold.

(END VIDEO CLIP)

WALLACE: So with that as prelude, how are McCain and Romney doing at this point?

EASTON: Well, in full disclosure, my husband works for the McCain campaign, so take what I say with a grain of salt.

But I think coming off the CPAC convention, people talk about conservatives being disgruntled. I think the real story is that they're divided. Mitt Romney did win the straw poll. They were much more united a year ago when they had George Allen to rally around. He's not there. And so we're split.

And the big question is going to be are conservatives -- is this an abortion primary, which Mara touched on? Is this about social issues? Or is it a competence question?

And what struck me out of this CPAC conference was Phyllis Schlafly, a leading conservative voice -- her disgruntlement with Bush. You know, the war is a mess. I mean, there's a frustration with the base on the competence issue.

And so is it going to be about who is more competent, who can govern better, or is it about who is more in line with them on social issues?

KRISTOL: Look, I'm a conservative. Conservatives are cheerful. Some of them are disgruntled, but they're professionally disgruntled. They were disgruntled when Reagan was running.

HUME: They're perennial malcontents.

KRISTOL: Nina thinks conservatives should have been more cheerful when George Allen was allegedly their horse?

We've got John McCain, Rudy Giuliani and Mitt Romney, three very impressive people all of whom can win a general election, all of them coming towards the conservative positions on those issues on which they're not conservative. That's a victory for the conservative movement, not a problem.

HUME: And you know, Bill, I think one of Giuliani's assets is that he seems so cheerful. You know, I think people see in him this combative, sort of happy warrior figure, and their view is, you know, he can win. He's a tough guy.

And I think that in that sense, Mara, the war on terror and the whole approach there is what ranks very high in people's minds.

WALLACE: Let me switch, Mara, to the Democratic side. There's an interesting development that's unfolding today.

Barack Obama announced several weeks ago that he was going to be in Selma today, where he is, to commemorate the march from Selma to Montgomery in 1965. He's going to deliver the keynote address.

It came out a little bit later that Hillary Clinton was going to go down there, and it came out in the last couple of days that now Bill Clinton is flying down there to be there alongside her.

LIASSON: Well, there's two things going on. One, obviously, the Clinton camp sees Barack Obama as a tremendous threat and is doing everything it can to either match him, as in Selma, or attack him, re. the David Geffen comments a couple of weeks ago.

But there's also something else happening, which is that Senator Clinton is talking more and more about her husband on the campaign trail. He's very involved in her campaign. That's no surprise. But he is making calls for her.

And I think that is both a tremendous strength, because he is incredibly popular with the Democratic base and with black voters, which, of course, is what she's competing with Barack Obama for.

But it's also a potential double-edged sword. I mean, I think that Bill Clinton comes with some problems potentially for her.

WALLACE: Bill, take a look at a Fox News/Opinion Dynamics poll which came out this week. It shows that a month ago, Clinton led Obama by 28 points. Now that's down to 11.

Bill Kristol, is this going to be a real race for the nomination?

KRISTOL: Oh, sure. Obama is closer to Clinton. He's less behind Clinton than McCain is behind Giuliani.

Hillary Clinton, prohibitive frontrunner, she swamps every else -- she's only 10 points ahead of Barack Obama, and she's only at 34 percent herself, which means that, you know, two-thirds of the electorate, the Democratic primary electorate, is available for Obama or conceivably for Edwards or others.

So I think she is turning out to be a weaker frontrunner than people thought.

WALLACE: And why do you think that is? KRISTOL: She's not a very good candidate. She's been in the Senate six years. She doesn't have much in the way of distinctive accomplishments. The one issue with which she was most associated was the health care fiasco of '93-'94.

And I do agree with Mara. Pulling out Bill Clinton this early to come stand with her is very problematic. She has to make the case that she should be president of the United States, not that we're getting two for the price of one.

WALLACE: Nina, we have less than a minute left. Your thoughts about Obama-Hillary?

EASTON: Obama, Hillary and I keep saying John Edwards -- I mean, he's off the radar screen building a very strong organization. He's come out swinging. He's been through a presidential race before. And he has very close ties to labor, which is the other important segment of the Democratic primary, not just black voters.

HUME: You know, I think Edwards will have his moment in all this, but one of the most striking things about one of our recent polls was -- we asked people how many people felt that they could never vote for a particular candidate. Forty-four percent said that about Hillary Clinton. Forty-five percent said that about Edwards. High negatives.

WALLACE: We've got to leave it there. Thank you, panel. See you next week.

For more visit the FOX News Sunday web page.

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