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Mitch McConnell, Joe Biden, Roundtable

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace. A new presidential vote of confidence for Attorney General Gonzales, next on FOX NEWS SUNDAY.

The president and congressional Democrats head for a showdown over the war in Iraq and the firing of those U.S. attorneys.

The West confronts Iran over the seizing of 15 British hostages.

We'll discuss all of it in an exclusive interview with Mitch McConnell, the Senate's Republican leader, and Joe Biden, presidential candidate and head of the Senate Foreign Relations Committee.

Plus, our weekly "You Decide '08" update. Two for the price of one. No, not this power couple, but this one. We'll discuss the latest in presidential politics with our Sunday regulars, Brit Hume, Mara Liasson and Bill Kristol.

And our power player of the week polices what you watch, talk into and hear.

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.

President Bush gave embattled Attorney General Alberto Gonzales another show of support Saturday. The president called Gonzales an honorable man and said there's no evidence of any wrongdoing in the firing of those eight U.S. attorneys.

The British government has toned down its rhetoric against Iran. The foreign secretary expressed regret over the seizing of 15 British marines and sailors and said her country is open to a dialogue with Iran.

And Matthew Dowd, a former top political advisor to President Bush, now says he has lost faith in the president's leadership. Dowd tells the "New York Times" the U.S. should withdraw from Iraq and that an isolated president has failed to build a national consensus.

Joining us now, two of the most influential members of the U.S. Senate, Mitch McConnell, the Republican leader who comes to us from his home state of Kentucky, and Democrat Joe Biden, presidential candidate and chairman of the Foreign Relations Committee, who joins us from his home state of Delaware.

Senators, I'd like to ask you both about those comments from Matthew Dowd, the first member of the president's inner circle to break with him publicly. He says that Mr. Bush has failed to reach across the partisan divide and is ignoring the will of the American people when it comes to Iraq.

Senator McConnell, your reaction.

SEN. MITCH MCCONNELL (R), KENTUCKY: Well, the war is a tough issue, obviously. I don't know Matthew Dowd, but obviously he feels very strongly about this and it's compelled him to speak out.

I wouldn't deny that the war is a very tough, difficult, emotional issue for everyone.

WALLACE: Senator Biden?

SEN. JOSEPH BIDEN (D), DELAWARE: Well, I think the thing is disappointment. I read the article. The thing that disappointed Dowd is, quite frankly, what disappointed me and that is that the president has squandered real opportunities to unite the country.

You look out there, there's been no call for accountability. The one guy I expected to call for accountability within this administration when he ran was President Bush.

I expected President Bush to call for shared sacrifice after 9/11. Instead, it was basically you do it my way or the highway and everything's a 51 percent solution. Just you get 51 percent, do it.

And I think that's the most disappointing legacy of this administration, not Iraq or any specific item. I think it's that sort of mindset.

WALLACE: Senator Biden, let's talk about...

BIDEN: That seems to be what Dowd talked about.

WALLACE: Senator Biden, let's talk about the partisan divide when it comes to Iraq. The White House has criticized congressional Democrats for going on Easter recess, where both of you are now, along with all of your colleagues, the House until mid-April, without sending him a war funding bill for our troops in Iraq and Afghanistan.

The Army chief of staff and the acting secretary of the Army issued a statement this week, and let's take a look at it, if we can. "Without approval of the supplemental funds in April, we will be forced to take increasingly draconian measures which will impact Army readiness and impose hardships on our soldiers and their families."

Senator Biden, should Congress cancel its vacation in the middle of a war and send a war spending bill to the president?

BIDEN: I think we should send a war spending bill to the president. We will do that. We'll do that very shortly. Mitch has more -- knows more about the timing of it than I do as the Republican leader. But the fact is that there is no doubt that the troops in Iraq and Afghanistan have everything they're going to need and we could -- unfortunately, this could go on until June and they'd still be all right, according to the budget office.

But the bottom line is still the same and, that is, are the troops going to get everything they need. And we have voted for every penny the president has asked for, plus additional money that he didn't ask for for the troops, like with these new MRAV vehicles, these new vehicles that will protect troops better.

And so I think it's a little bit of a -- you're going to see a little political dance coming up here that relates to a showdown, and the showdown relates not to the money for the troops, because everybody's there, but relates to whether or not the mission should be changed in Iraq in terms of how the troops are used.

I think that's what this is really all about.

WALLACE: Senator McConnell, before we get to the showdown, let's talk about this question of timing, because as Senator Biden said, the non- partisan Congressional Research Service said this week that, in fact, the Pentagon has enough money to keep the troops funded into May and that if they began to shift money around, and let's put it up, "The Army could finance the war program for almost two additional months or through most of July 2007."

So, Senator McConnell, is this talk about an April deadline for getting the funding bill to the president, is that something of a scare tactic?

MCCONNELL: Well, the problem is CRS is wrong. Sure, they could find the money, but it affects other things. It affects readiness. It affects the lives of the troops. Who do you believe here, the Army chief of staff or the Congressional Research Service, which is not an expert in these matters.

Clearly, the Army chief of staff is correct. General Schoomaker sent me a letter just a couple of days ago indicating that severe consequences would follow not having the bill by April, by mid-April, mid to late April.

So what needs to happen here is the House of Representatives needs to come back a week early. We need to get the conference report on the money for the troops bill down to the president so it can be vetoed.

Why is it going to be vetoed? Because it's got a date specific in there when we're going to leave. It's like sending a memo to the enemy giving them the date that you're going to give up.

I think our Democratic friends have decided the war is lost. They don't have the courage to vote against the money which is the only way to end the war.

So, instead, what they do is try to make it more difficult for our troops to succeed by saying, "we'll send them the money, but we're going to put all kinds of strings on it."

WALLACE: Let me bring in...

MCCONNELL: If they think the war is over, they should vote against the appropriations bill.

WALLACE: Let me bring in Senator Biden, because let's get exactly to this point of the showdown. Congress is going to send the president the spending bill, but with some sort of timeline attached to it.

The president we know is going to veto it.

Senator Biden, what happens then?

BIDEN: I'm not so sure the president is going to veto it. Everybody says that. The timeline of the United States Senate...

WALLACE: Well, he says it, among other people.

BIDEN: No, no, no. But he'd said that before and he hadn't. So I'm not so sure of that.

If he's going to veto, he's going to veto a position that the vast majority of the American people hold.

And what we're saying to the president in the Senate bill is, "Mr. President, you're going to get the money. You can keep troops there, but you can't have them in the midst of a civil war. You have to have them doing what they're supposed to do, train Iraqi forces, provide for denying Al Qaeda territory, the same mission that the Brits just did."

The Brits just did exactly this with their troops in southern Lebanon. It said, "We're not going to be in the middle of the cities anymore. What we're going to do is use British troops to train Iraqis, to deny Al Qaeda occupational operational territory and we're going to do it that way and you need less troops to do that.

And this is exactly what the bipartisan commission called for and the date is not firm. The date says the target is March of '08. And that's no more sending a flag to the enemy than anything -- and let me ask you -- ask Mitch and others the other way.

Does anybody think we're going to have 150,000 troops in Iraq in March of '08 without a fundamental change in what's going on on the ground? The American people aren't going to put up with that.

So you've got to change the mission to get a political solution. That's what we're saying.

WALLACE: Senator McConnell, let me ask you about that and as you respond to Senator Biden, I mean, here is the battle joined.

The Congressional Democrats are saying you can get the money, but you've got to accept the timeline. The president's saying I want the money, I don't want the timeline. Who's going to blink?

MCCONNELL: Joe used to think a timeline was a bad idea. He used to be very vigorously opposed to setting a date after which the enemy would know that you were going to give up.

That's not the only outrage in this bill. Not only does it send a memo to our enemies telling them exactly when they can win, it also is porked up.

The Congress put in spinach, money for spinach farmers, peanut storage. They used this serious effort, what should have been a serious effort to fund the troops as an opportunity to send a memo to our enemy on when we're going to give up and to get pork for various and sordid products back home.

This bill is not salvageable. It needs to be vetoed. It needs to come back to Congress very quickly and we need to get serious about providing the funds for the troops so we can win in Iraq, not give up.

WALLACE: But let me ask you both, again, if I can press the question, who is going to blink? Senator Biden? I mean, is Congress -- after you get this veto, assuming, as Senator McConnell and the White House says you are going to get this vetoed bill, will the Democrats say, "All right, we've made our point and we'll give you a clean bill without the timeline?"

BIDEN: No, I don't think so. I think we'll end up doing what the Senate did, not what the House did, set a target date, number one.

The memo is not to the enemy. The memo is to the president. "Mr. President, get straight on this war. Get us out of the middle of a civil war and do what our troops are supposed to be doing."

Secondly, if it is porked to provide money for the consequences of Hurricane Katrina, if it's pork to provide money for the 9/11 report, if it's pork to provide money -- you know what happened here, Chris?

If the president had been honest with what he needed for this war in his regular budget, in 2007 budget, then we wouldn't be having this supplemental this way.

But it's this pea-in-the-shell game they played. They never put the money they know they're going to need for the war in the budget because it would send off alarm bills -- and come along six months later and say they need a supplemental.

WALLACE: Let me just step in here, because I want to move on to Iran. And I want to ask Senator McConnell just a -- so if you do get -- after the veto, if the president then gets a bill with a soft, a goal of a timeline, but not a firm date for withdrawal, would you say that the president still should not accept that even if that's the cost of getting this $100 billion for the troops?

MCCONNELL: Oh, I don't think the president's going to sign a bill that is supposedly for getting funds to the troops, which, in effect, says to the enemy, "We're going to give up on a certain date."

I think the president's going to veto that bill. I think we ought to get it on down to him and get the veto out of the way, get the veto sustained and get serious about providing money for the troops without a deadline that endangers our troops and gives the enemy a precise date upon which we're leaving.

WALLACE: Let's move on, if we can, because we're clearly not going to settle this here today, to Iran, where the regime has seized 15 British naval personnel, marines and sailors.

There's now talk in Tehran of putting them on trial. This is just one more case of the Iranians thumbing their nose at the rest of the world.

Senator Biden, is there something that the U.S., Britain and the rest of the Western world can do to get tougher with Iran?

BIDEN: Yeah, I think there is. There's two things. One, we can all get tougher with them diplomatically and ratchet this up. By the way, I would argue that this is a product of the increasing success of the Bush administration's new strategy on Iran, and I mean that sincerely.

They have made Iran the world's problem. They have gotten the world together and continue to put pressure on Iran and they have taken the initiative away from the Iranians. And I think this is deliberately planned for the Iranians to try to regain the initiative and appeal to the Arab street, saying, "Look, we can take on, we can take on the Americans."

WALLACE: What do we do about it?

BIDEN: Well, I think you do two things. Number one, I think you continue to ratchet up, get the entire world to ratchet up further the pressure on Iran, but I think quietly you have to be preparing to be able to deal with Iranian oil and be prepared to, down the road, make the kind of -- take the kind of action that would cut off their importation of refined oil and affect their export of crude oil.

You can hit them very, very badly. But I don't think you talk about that publicly. Were I president, I wouldn't be talking about that. I'd be planning that while I was moving on every front diplomatically.

And there's those who think, as you know, that the Iranians are going to continue to try to string this out as long as they can, maybe another two to three weeks before it goes code red here, but they constantly have an ability to stumble over themselves.

So who knows what they're going to do. I don't think they really are fully in control internally as well.

WALLACE: Senator McConnell, if you get tough with Iranian oil, we could see a spike to $100 a barrel for oil on the world market.

That could be a huge economic dislocator for not only the United States, but the rest of the world economy.

MCCONNELL: Well, this is the kind of behavior you would expect from a regime that denies that the Holocaust occurred and would like to see Israel annihilated.

The Iranians, by their own behavior, have done something that's been pretty challenging for everybody else, which is to unify virtually the entire world against them.

Most of the Sunni Arab countries who are generally friendly with us, like the Egyptians, the Saudis, the Jordanians, are all appalled by Iran.

The Iranians' own behavior has made it more possible for us to get the kind of international cooperation that we need in order to have sanctions that actually bite.

WALLACE: We're going to have to leave it there, Senators. We're going to take a quick break here.

But up next, we're going to turn to domestic issues, including the growing controversy over those fired U.S. attorneys, as well as some presidential politics. Stay tuned.

(COMMERCIAL BREAK)

WALLACE: And we're back now with Senators Mitch McConnell and Joe Biden.

Gentlemen, this week, Attorney General Gonzales and his former chief of staff told very different stories about Gonzales' role in the firing of those eight U.S. attorneys.

Let's listen, first of all, to Kyle Sampson and then to Gonzales. Here it is.

(BEGIN VIDEO CLIP)

KYLE SAMPSON, CHIEF OF STAFF TO ALBERTO GONZALES: The decision- makers in this case were the attorney general and the council of the president.

ATTORNEY GENERAL ALBERTO R. GONZALES: I don't recall being involved in deliberations involving the question of whether or not a U.S. attorney should or should not be asked to resign.

(END VIDEO CLIP)

WALLACE: Senator McConnell, would Attorney General Gonzales be doing a service to the Justice Department and the president if he were to step down?

MCCONNELL: Look, U.S. attorneys serve at the pleasure of the president, which means that they can be removed at any time for any reason. But if there was any improper rationale, such as, for example, trying to interfere with cases, I suppose such a removal could become problematic.

That's why the attorney general is going to come up before the Judiciary Committee and tell his side of the story. But at least so far, he enjoys the confidence of the president and he works for the president.

We're all interested in what he has to say when he comes up. But U.S. attorneys being removed is fairly common and has been under administrations of both parties for a long time.

WALLACE: You know, Senator McConnell, there's another issue here and that is the credibility of the attorney general, whether he still has the confidence of the Justice Department and, frankly, of all of you in the Senate.

As we just saw, Gonzales now says that he doesn't recall ever discussing the resignation, the firing of these U.S. attorneys, but that's very different from what he said in "USA Today," when he wrote an article there about three weeks ago.

Take a look at that. In "USA Today" he said, "To be clear," defending the firings, "it was for reasons related to policy, priorities and management, what have been referred to broadly as performance-related reasons, that seven U.S. attorneys were asked to resign last December. They simply lost my confidence."

Senator McConnell, can you explain to me how they can have lost his confidence when Gonzales says he never recalls having discussed the firings?

MCCONNELL: Well, what I can tell you at the moment is that he enjoys the support of the president, for whom he works, and I think most Republican Senators are willing to give the attorney general a chance to come up before the Judiciary Committee and give his side of this story and are likely to withhold judgment about whether he can be effective in the Senate in dealing with us until after we hear from him before the Judiciary Committee.

WALLACE: Can you honestly say that you still have confidence in Attorney General Gonzales at this point?

MCCONNELL: I can honestly say the president does and I'm anxious to hear what the attorney general has to say when he comes up to the Judiciary Committee.

WALLACE: Senator Biden, as Senator McConnell says, there is still no evidence, no hard evidence that the attorney general or anyone at justice did anything improper or illegal.

Why do you say then that he can't stay on as attorney general?

BIDEN: Well, he's done things improper. Look, the U.S. attorneys serve at the pleasure of the president, not at the dictates of the president. There's a big difference, number one.

Number two, this attorney general has a -- I must admit to you, front end, I voted against him in the first instance because I didn't think he was forthcoming on the recommendations he made on torture, on Abu Ghraib, on Guantanamo Bay, and I believed that he would be a creature of the president, not the attorney for the people, as well as representing the president.

And I think his conduct has demonstrated that, at a minimum, he can not control the operation. Look at the FBI. Let's just look at it administratively. Look at the FBI screw-up.

The director of the FBI is under his jurisdiction with regard to the Patriot Act. Look at the way in which he's answered the questions you've just stated.

I don't believe he has the confidence of the Republican Senators. I believe they're going to give him an opportunity to come and make his case, but I don't believe he can make the case.

And as recently as today, there's an article in one of the major newspapers pointing out that this administration more than any other, and that covers a lot, including Nixon and others, went out and put U.S. attorneys in spots who were the cronies of -- wrong word. That's not fair - - who were the employees of the White House and the Justice Department, who were loyal directly to Gonzales and to the political people in the White House. That is highly, highly unusual.

This is, again, not about whether they serve at the pleasure of the president. Under the Constitution, they do. The question is do they serve at the dictates of the administration. They don't.

WALLACE: Senator Biden, let's go back in history here a little bit, as you just did.

Back in 1993, President Clinton, when he came in, summarily fired 93 of the 94...

BIDEN: That's right.

WALLACE: ... U.S. attorneys, including several who, at the time, were involved in politically sensitive investigations.

Now, at that time, Bob Dole, who was the Senate Republican leader, he had Mitch McConnell's job at the time, asked you, as the then chairman of the Senate Judiciary Committee, to hold full hearings on this because he said this was a, quote, "severe blow to the administration of justice."

The best we can look, and we've been looking through our records, Senator Biden, back in '93, you didn't hold a single hearing on this.

BIDEN: That's correct, because to make Mitch's point, the president has the right to appoint his entire -- entirely and everybody he wants when he comes in. There was no evidence that this administration went in and put any -- that the Clinton administration put any pressure upon any particular U.S. attorney.

It went across the board.

WALLACE: Well, wait a minute.

BIDEN: It went across the board and he fired everybody.

WALLACE: Senator Biden, you know that there was a controversy at the time about Jay Stevens and whether he was going to indict Dan Rostenkowski, then House Ways and Means.

I guess the question is, if this such a big deal now, why in '93, when Bob Dole was saying this is a severe blow to the administration of justice, why didn't you even hold a hearing on it?

BIDEN: Because there was no need to hold a hearing. He had the power. It wasn't a question of meddling, like is being argued now.

And by the way, Rostenkowski got indicted and convicted and went to jail.

WALLACE: But not by the U.S. attorney who got rid of him.

BIDEN: No, not by that U.S. attorney, who left, but the U.S. attorney who appointed him put him in jail.

WALLACE: Senator McConnell -- and let me bring in Senator McConnell here, because I have a little history for you, as well.

Back in 1996, you maybe remember there was a controversy in the Clinton White House about the fact that they had obtained FBI documents on hundreds of former officials from the Reagan years and the Bush, H.R. Bush, Bush-41 years.

Here on "FOX NEWS SUNDAY back in 1996, you demanded full Congressional hearings. Let's take a look.

(BEGIN VIDEO CLIP)

MCCONNELL: I think the testimony, obviously, ought to be sworn testimony and we ought to go all the way into this and take as much time as we can to reassure the American people that this sort of thing is not going to happen in the future.

(END VIDEO CLIP)

WALLACE: Given that same reasoning, Senator McConnell, shouldn't Karl Rove, shouldn't other White House officials be called before Congress, testify in public and under oath?

MCCONNELL: Well, first of all, with regard to Justice Department, there are going to be hearings. The attorney general's coming up. There was a hearing Thursday.

With regard to White House officials, it'll be up to the president to decide, frankly, whether and when and under what circumstances members of his own administration testify.

Sometimes -- of his own White House staff. Sometimes White House staff has testified, sometimes not. When presidents have dug in their heels, it's gone to court.

This kind of tug of war has gone under administrations of both parties for a long time.

WALLACE: Senator McConnell, my point is that back in 1996, you were saying those White House aides should testify in open hearing. These were White House aides of Bill Clinton, in open hearing under oath.

Why shouldn't the same rules apply for the Bush White House and people like Karl Rove?

MCCONNELL: And what I'm telling you is the president's going to make that decision. I was a senator. I was talking about an administration. The president made the decision in 1996, President Clinton, as to how that would be done, and this president's going to make the same decision and we'll see how it all works out.

WALLACE: Well, you're still a senator. So the question is do you call on this president to do the same thing?

MCCONNELL: I'm calling on this president to do what he thinks is appropriate with regard to his aides testifying. What Fred Fielding, the White House counsel, has offered is, I gather, still under discussion as to how and when and under what conditions the White House aides will testify.

WALLACE: Gentlemen, let's turn, if we can, briefly, to presidential politics.

Senator Biden, the first quarter for fundraising for 2008 presidential candidates ended at midnight last night. You may not have the final number, but I'm sure you're pretty clear with it. How much new money have you raised in the first quarter?

BIDEN: Not nearly as much as Hillary Clinton.

WALLACE: Well, what are you talking about, do you think?

BIDEN: Well, I think we're going to talk about somewhere around $3 million for this quarter. I think we're on track to be able to raise what we need, which we think is $20 million to $25 million to compete.

But, Chris, if this gets down to just straight money, then there's only going to be one, maybe two candidates in the race. But I don't believe that.

I believe as long as Iraq and foreign policy and these big issues are in play, that my having enough money to compete in Iowa will allow me to win the nomination.

I don't think it's going to be won by money.

WALLACE: But, Senator, I mean, let's be realistic here. The estimates are that when the numbers do come out the next few days, that Senator Clinton may raise north of $25 million, maybe even north of $30 million. Obama north of $20 million.

Can you really honestly -- I mean, you're a realistic man. Can you compete at $3 million?

BIDEN: I'm not going to be at $3 million throughout this. I have enough money to continue to compete. We've raised over $8 million. I think that's the number.

And I'm going to be able to compete in this. And, look, this is going to get down to ideas. I read Broder's article today, you probably saw it, saying that 90-plus percent of the punditry talk about the status of affairs for presidential campaigns at this stage is worthless.

This is worthless. If people think we're going to pick a nominee based on how much money they have rather than based on their ideas, I think they vastly underestimate the Democratic electorate in these primaries.

WALLACE: Finally, Senator McConnell, you're not running for president. You're one of the few Senators, so I suppose I should ask you why not.

But a liberal group in Kentucky -- well, actually, it's not in Kentucky. It's a group that has started targeting you in Kentucky charging that you support the president at the expense of your own constituents and they've even started running an ad against you.

Let's put up a clip from that.

(BEGIN VIDEO CLIP)

UNKNOWN: The fact is we're already on the road to victory in Iraq. Tremendous progress has been made."

(END VIDEO CLIP)

WALLACE: Senator, they say that more than anyone else in Congress, that you lead the charge for this president. How do you plead?

MCCONNELL: Let me tell you about my state, Chris. We have two military bases, Fort Knox and Fort Campbell. Fort Campbell is the headquarters of the 101st Airborne, which has been in Afghanistan and Iraq.

We have a large number of military retirees. If ever there were a constituency that would resent totally an effort to discredit the efforts that have been made by our military in Afghanistan and Iraq, it would be the Kentucky people.

It's not exactly Berkeley that they chose to try to kick off an anti- war campaign. I don't think it works in the bluegrass state.

WALLACE: Gentlemen, we're going to have to leave it there. Senator McConnell, Senator Biden, we want to thank you both so much for sharing your Sunday with us. Please come back, both of you.

BIDEN: Thanks, Chris, appreciate it.

MCCONNELL: Thanks, Chris.

WALLACE: Up next, our Sunday regulars with the weekly "You Decide '08" update. The new talk about what role a president's spouse should play in the White House. We'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARBARA WALTERS, ABC: If and when you were president, would Mrs. Giuliani sit in on cabinet meetings?

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: If she wanted to. If it were relevant to something that she was interested in, that would be something that I would be very, very comfortable with.

(END VIDEO CLIP)

WALLACE: That was Republican presidential candidate Rudy Giuliani telling Barbara Walters the role his wife would play in a Giuliani White House.

And it's time now for our Sunday gang, Brit Hume, Washington managing editor of FOX NEWS, and FOX NEWS contributors, Mara Liasson of National Public Radio, and Bill Kristol of "The Weekly Standard." And we should say there's an empty seat right here. Juan has the day off.

Well, we've seen this before. Jimmy Carter had Rosalyn sitting in on cabinet meetings. Bill Clinton turned over healthcare reform to Hillary Clinton. It didn't turn out too well in those two cases.

Brit, what about for the Giulianis?

BRIT HUME, FOX NEWS WASHINGTON MANAGING EDITOR: I can't imagine it would work out any better, at least at this stage of the campaign in which he's trying to win the hearts and minds of Republicans to his banner.

In both those other instances, of course, it was Democrats. But I think Ms. Giuliani, who is an outspoken and highly spirited woman, and Rudy Giuliani seems head over heels in love with her, is going to be controversial.

And all of her views will then -- if she's going to be in on cabinet meetings and so forth, then there's going to have to be an exploration of all of her views and we'll find out what they are.

But it's going to be interesting.

MARA LIASSON, NPR: That and about 18 things about Rudy Giuliani.

WALLACE: But let me ask you, we'll get to some of the other things in a minute, the other 17 in a minute, Mara.

Do the American people, to the degree that you can speak for them, do they want two for the price of one or do they want to elect a president and let the spouse -- and now we have to talk about he or she -- give their policy opinions in private?

LIASSON: Well, I think getting two for the price of one is different than just having your spouse sit in on cabinet meetings, although I think for many American people, that does cross the line.

I don't think they mind having a prominent spouse who's involved in issues on his or her own right, but I do think at this moment in the campaign, where very few people know who Judy Giuliani is, it's a little bit premature to kind of announce this concept of her being in cabinet meetings.

Now the question arises, "Well, gee, what are her interests and what kind of policy advice might she give?" And I think those questions are going to have to be answered.

On the Democratic side, what's interesting is you've got Bill Clinton. Now, he is a completely different kind of political spouse and, of course, Senator Clinton is asked all the time on the campaign trail what role he would have and she's tried to answer by saying maybe he would have some kind of roaming ambassador or doing something, but certainly not -- she has not suggested that he be in cabinet meetings and we certainly know he's perfectly capable of being in them and running them.

HUME: Bill, what about, to broaden this out a little bit, when it comes to the Giulianis, the whole personal baggage issue? I mean, it now turns out that each of them has had three marriages. We all know and will know in even greater detail as the campaign goes on how nasty the last divorce was between Giuliani and Donna Hanover, his second wife.

How big a problem do you think their personal lives are going to be?

BILL KRISTOL, WEEKLY STANDARD: I think not a big problem. Generally speaking, the American people discount private lives quite rigorously, actually, and they try to pick someone who will be a good president and they separate public and private to a pretty great degree.

HUME: Would you say that's true of the Clintons?

KRISTOL: Yeah, because Bill Clinton got elected twice.

HUME: I understand that.

KRISTOL: And left office with a high approval rating after...

HUME: So you don't think that the Clinton connection is a plus or minus for Mrs. Clinton, Senator Clinton?

KRISTOL: Well, it's hard to say, actually. I mean, she's the front - - do you think it's -- I don't know.

HUME: It strikes me here that...

LIASSON: I think definitely in the Democratic primary a plus.

HUME: What I would say about that is I think Bill is essentially right about that sort of thing, unless the spouse is in the middle of the policymaking apparatus, which, in the case of Hillary Clinton, she was, and which the former mayor, Mr. Giuliani, has suggested that on certain occasions, his wife might be, as well.

Picture a cabinet meeting in which there's a real debate and you know that one of the people at the table has special access that you can't match.

KRISTOL: Let's hope they can't match it.

HUME: Well, exactly. And that's a potential issue. It makes people uncomfortable.

WALLACE: Mara, this seems to be Giuliani's turn at the barrel and every candidate is going to get it over the course of this campaign.

And there have been several stories this week about Bernie Kerik, who was Giuliani's police commissioner when he was mayor of New York, and in 2005, after Bush was re-elected, Giuliani recommended, as it turned out, disastrously, recommended Kerik to be the next secretary of homeland security. He had to withdraw his nomination because of personal scandals. Now there are reports that Kerik is going to be or may be facing indictment on federal charges, including tax evasion.

Giuliani's going to run, and rightly so, on his record in New York and there's a lot to brag about. On the other hand, there are some potholes in terms of that.

LIASSON: Yes, there certainly are some potholes. He might have filled many of them, but he's got some personal ones.

He himself has said now that he shouldn't have recommended Bernie Kerik to the president to be director of homeland security.

He even said in Florida recently, he said, "The voters have a right to question my judgment about this."

So I think that Kerik is definitely a liability for him. How big is it? I can't imagine it's going to be the one thing that would scuttle Giuliani's candidacy.

He's got so many other things that put him at odds with the voting base in the Republican primaries, this is just one of those things.

But I think we are at a new stage in the Giuliani candidacy. The first stage was this incredible improbable balloon really where he became the frontrunner by a wide margin and people thought, "Whoa, the conventional wisdom was" -- as soon as Republican voters know he's pro choice, pro gun control, and this, that and the other thing, they'll change their minds.

Well, a certain amount of education has gone on. People haven't -- Republican voters who respond to these polls haven't changed their minds. But now I think we are at a new level of scrutiny. We're going to learn a whole lot more.

WALLACE: I want to switch, because we're beginning to run out of time in this segment.

As I discussed with Senator Biden, midnight, the witching hour, was the deadline for the end of fundraising, political fundraising for the first quarter for the presidential candidates.

All week I was talking to top campaign insiders and they were low- balling what their candidate was going to raise and high-balling what the other side was going to raise.

Bill, separate the spin from the substance here, both from the Republican and Democratic sides.

What are going to be signs of surprising success or surprising weakness?

KRISTOL: I think the fundraising will confirm what we know. On the Democratic side, there are two dominant candidates, Senator Clinton and Senator Obama, and one who is competitive, probably, John Edwards, and everyone else is way behind. And I think that's true in the polls and the fundraising.

WALLACE: I mean, there's talk and, again, this is just talk, and some of it, frankly, I'm getting from opposition candidates, that Hillary Clinton could raise north of $30 million and then with $11 million she has and money she would raise for the general election, she could have a $50 million quarter.

KRISTOL: She could, but Obama could have a $25 million, $30 million quarter. And that difference just doesn't make that much difference.

The difference between $25 million and $3 million is a huge difference, 35, 25, 20, they all have enough to compete.

And on the Republican side, McCain, Giuliani and Romney, I think will have the highest numbers, incidentally, in the first quarter, I think Romney will, will be the frontier. And if Fred Thompson gets in, he'll be able to raise enough.

And I think, basically, the fundraising will confirm the sense that we have the three-way race on the Democratic side and a three, possibly four, possibly five, if Gingrich gets in, way race on the Republican side.

You know, Mara mentioned that Rudy has had a very good first three months, which he has, but actually he's dipped a little in the last two or three weeks in the polls, before he made any comments about his wife.

And why? Because Republican voters did notice he was very pro gun control, that he's not committed to overruling Roe v. Wade. And that, I think, I don't think that's dispositive, but I think he will have to deal with the issues that are a problem for him.

Money's not going to determine this race. Personal stuff's not going to determine this race.

How well they handle -- they convince their respective primary electorates that they're right on the issues I do think will determine this race.

WALLACE: Brit?

HUME: I think Bill's got it right as to who will be able to keep going. You can run out of money and Tom Vilsack ran out of money early and he's gone.

So it's something you have to have. But it's a poor measurement of how a candidate is doing with the public, but it's -- we're in a situation now where we've got people out there running as if there's a primary next week or next month, when there's not one until next year.

And so we're looking for metrics. Well, here's one -- money and it's meaningful, but it's not dispositive.

WALLACE: All right. We need to take a break here. But coming up, Iran takes 15 British marines and sailors hostage. Should the West be doing more to gain their freedom?

We'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NATHAN SUMMERS, BRITISH SAILOR: I'd like to apologize for entering your waters without any permission.

(END VIDEO CLIP)

WALLACE: That was a hostage tape released by Iranian TV Friday of one of the British sailors who was seized after they allegedly entered Iranian waters illegally.

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

Well, it looks like we have another hostage crisis. The Brits went to the U.N. Security Council and, after the Russians watered it down, came out with a press release saying that they have grave concern about the situation.

Let me ask you, Brit, what I talked about with Senator Biden. Is the West -- can the West ever get tough with Iran?

HUME: Well, sure, there's plenty of time for that. I mean, this press release, laughable as it may seem and it may end up being something we all laugh at, is sort of the first thing that the U.N. does or can do.

The British apparently have decided on a step-by-step strategy where they do the first step, then they move on to something else, and something else, in an effort to increase the pressure diplomatically.

They seem quite content to be patient about this. In the meanwhile, the Iranians are over there saying one thing one day and something else the next and raising suggestions of trials and so forth, which does not gain them allies in the international marketplace.

So the British have some reason to hope that the force of world opinion may be brought to bear here. Certainly, it is not running in favor of the Iranian government over there.

So that's the approach. I mean, I have my doubts about whether it will work in the end. But then when all that stuff fails, remember, you're talking about economic pressure or some kind of military action, which is something that I don't think the British are anywhere near ready for that.

WALLACE: Mara, I mean, you can certainly understand, while they've got these 15 sailors and marines' lives at stake, that the British are going to be very cautious in what they do.

But, I mean, this is not -- let's assume that that ends. You've got the continued defiance of the world on the nuclear program, state sponsoring of terror, arming our enemies who are killing American soldiers in Iraq.

What are we going to do about it?

LIASSON: Look, this hostage crisis might have an ironic effect of helping the West ratchet up the pressure on all those other things, assuming, as you said, that it does get resolved, because this has put Iran in a bad light.

They have been issuing all sorts of contradictory messages about what exactly they want from Britain. They want an apology. Britain has already issued a statement saying they regret the situation.

I guess that isn't enough of an apology for Iran yet, but I think this does kind of unmask Iran and its leadership and that might, in the long run, help the West stay united on these other issues.

WALLACE: Bill, you know, it was very interesting, Senator Biden talked about if you have to, go after Iran's oil, don't let them have the exports and don't let them ship back refined oil back to Iran, which doesn't have a capacity to refine its own oil.

I don't have to tell you the price of oil has already spiked considerably. There's talk if you got a real showdown, it could go up to $100 a barrel.

Should the West be prepared to take on that kind of a hit?

KRISTOL: Yes, of course. It's really amazing how weak everyone has been, in my view.

Britain is one of the three European Union nations negotiating with Iran. Iran seizes British sailors in international waters on a U.N. mission, violates every Geneva Convention by humiliating them and putting them on -- parading them on TV.

Germany, one of the other three European Union nations negotiating with Britain, with Iran on the nuclear program, does nothing.

Germany is the biggest trading partner with Iran. Germany provides export credits for most of its trade with Iran.

Britain went to Germany and to the rest of the E.U. and said, "Could you, at least for now, suspend the export credits?" "No, sorry, trade first."

It's really terrible and people should just not assume the Iranians are just being silly. They took these hostages for a couple of reasons. They want to humiliate Tony Blair on his way out. This is the message to a Western leader. If you stand with Bush, if you stand with the U.S., if you send troops to Iraq, you will be humiliated and you can't do anything about it.

And, secondly, the smoke screen for their moving ahead on the nuclear program. This is a very delicate moment. There was a second U.N. resolution which passed, what, the day they took the hostages, I think, or the day before or after, right around then.

The U.N. Security Council looked like it might be getting serious. They're going to pull out of the international inspection regime and they took hostages and they're holding the hostages and that may prevent us from being -- they think it will prevent Britain and the Europeans from being tough in dealing with the nuclear program.

WALLACE: Let's move on to the showdown between the president and Congress over Congress' decision this week, and it seems clear that after they work it out on a compromise in conference, to add a timetable, some sort of timetable or goal for withdrawal to that emergency spending bill for conducting the war.

Here's what the president and Speaker Pelosi had to say about it this week.

(BEGIN VIDEO CLIP)

PRESIDENT GEORGE W. BUSH: I'll veto a bill that restricts our commanders on the ground in Iraq, a bill that doesn't fund our troops, a bill that's got too much spending on it.

REP. NANCY PELOSI, D-CALIF.: Calm down with the threats. There's a new Congress in town.

(END VIDEO CLIP)

WALLACE: At some point, the Congress is going to send the president the spending bill with a timetable attached. The president, I believe, despite what Senator Biden said, is going to veto it.

Then what happens?

HUME: Well, the question then becomes whether the Democrats really have two ways to win here. One way is with the timeline and the other way is with the additional money that was put into the bill.

A lot of Democrats want those projects to be enacted. The president has said that he would veto it for two reasons. One is the timelines and the second is all the extra money.

So let's assume, for the sake of discussion, that the bill is vetoed, comes back to the Hill, they report the same bill, in effect, as this last one, with the timeline stripped out of it, but with $24 billion or whatever it was, which has variously been described as pork by some and necessary projects by others.

Would he veto that on the strength of the pork alone? Good question. He hasn't cast any vetoes. Many in the Republican Party would like to see him do so. He has indicated he will cast vetoes on spending bills.

Here's one. Will he do it?

WALLACE: Let me ask you a different question, Mara, which is if they get the pork, but they give up the timetable, that isn't going to satisfy the left wing of the Democratic Party.

LIASSON: Look, this is very interesting, because right now the Democrats have achieved a great victory. There was some doubt about whether they could even pass this, but they put all the necessary sweeteners and they did get it passed.

And I think now the bazaar is open, the negotiations will begin. There's other things in there that the Democrats can claim victory on, their benchmarks.

Now, they're based on the president's own benchmarks. What if the date certain was taken out, but the benchmarks stayed in and so did all the pork? Maybe that's an acceptable way to get this passed. But I do think what's interesting is, is this standoff going to resemble the standoff between President Clinton and a Republican Congress over the shutdown of the government, where, over time, even though the Republicans had the upper hand in the beginning, over time, the president used the bully pulpit to blame them for shutting down the government.

Over time, can President Bush blame the Democratic Congress for depriving troops in the field of what they need? And that will happen over a period of weeks.

WALLACE: So, Bill Kristol, who blinks first?

KRISTOL: I think Bush can win if Bush fights. I think he's been so passive, I think, and weak and Iraq is the one issue he's been tough on and everything else he's getting steamrolled.

He needs to be tough and say that this is a total disgrace. The pork is really a trivial issue compared to undercutting our war effort in Iraq.

I think it's a tactical mistake for Bush to talk about the pork. When you're undercutting troops in the field, the idea that it's equally important that they're throwing some extra federal spending at stupid programs, is itself I think -- in a way, it diminishes really the gravity and I think the disgracefulness of what the Democratic Congress has done.

Nancy Pelosi, having undercut our troops in the field, is now going off to Syria to pay her respects to Bashar Assad, who's allowing terrorists to come across the border to kill American troops.

I think the president needs to be very tough on this. I think he can win if he is. Clinton was tough against Gingrich. Clinton didn't sit back and say, "Well, they have their views, we have our views. We'll try to work it out."

HUME: The one thing the president can't count on if it comes down to a confrontation of the kind that Mara describes is he can't count on winning because he has a bully pulpit, because the Democrats will have what Clinton had in that, and that is the press on his side, and it certainly was indispensable to Clinton's looking as good as he did in the end of that fight.

WALLACE: Well, we're going to have to leave it there. We're not going to give Juan the last word. Brit, you got it this week.

Thank you all, panel. See you next week with Juan.

For more visit the FOX News Sunday web page.

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