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Townsend, Sens. Bond, Bayh

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace. An escalation in fighting between Pakistan forces and militants, next on "Fox News Sunday."

The terror threat here at home. Amid new warnings that Al Qaida...


FRANCES TOWNSEND, HOMELAND SECURITY ADVISER: ... remains driven and intent on attacking the homeland.


WALLACE: Fran Townsend, the president's homeland security advisor, live, only on "Fox News Sunday," on the danger to the U.S.

Then Democrats see political advantage in the threat assessment.


SEN. HARRY REID, D-NEV.: Al Qaida's stronger, so says the report. The president disagrees. You can't have it both ways.


WALLACE: Is Iraq part of the war on terror or a distraction? We'll have a fair and balanced debate between two key members of the Senate Intelligence Committee, Democrat Evan Bayh and Republican Kit Bond.

Plus, critical campaign comments from Elizabeth Edwards about Senator Clinton and from Rudy Giuliani about the president. What does it all mean? We'll ask our Sunday regulars: Brit Hume, Mara Liasson, Bill Kristol and Juan Williams.

And our Power Player of the Week, a billionaire who's doing well and doing good, 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. Pakistan troops along the Afghan border fought with pro-Taliban militants, killing 13.

The region has seen an escalation in violence since the rebels recently tore up a peace agreement with the government.

There are conflicting reports that a second round of talks on Iraq security will take place Monday between Iran and the U.S.

A newspaper in Tehran says the meeting is set, but a U.S. embassy spokesman disputes the story.

And from Iraq, Prime Minister Maliki has urged parliament to either scrap or shorten its planned month-long recess in order to pass laws aimed at national reconciliation.

Well, joining us now to discuss the latest assessment of the terror threat to the U.S. is Fran Townsend, the president's homeland security adviser.

And, Ms. Townsend, welcome back to "Fox News Sunday."

TOWNSEND: Good to be here, Chris.

WALLACE: Two years ago President Bush said that we were beating Al Qaida. Let's take a look.


PRESIDENT GEORGE W. BUSH: We have put the enemy on the run, and now they spend their days avoiding capture.


WALLACE: But the new National Intelligence Estimate out this week says things have changed, quote, "We assess the group has protected or regenerated key elements of its homeland attack capability, including a safe haven in the Pakistan federally administered tribal areas, operational lieutenants and its leadership. As a result, we judge that the United States currently is in a heightened threat environment."

Ms. Townsend, why was Al Qaida getting weaker two years ago and now it's getting stronger?

TOWNSEND: Well, I think we need to step back for a moment, Chris, and understand what the NIE says in the paragraph just before the one you read is that the U.S. worldwide global counterterrorism operations have constrained Al Qaida's ability to attack and that Al Qaida believes that the homeland is now a more difficult target to attack.

That said, there's no question that as we keep them on the run, we've also gotten stronger. We have more capability now to bring them to justice, to capture them, and we've enjoyed quite a bit of success working with our allies like Pakistan.

There's no question that they've stepped back. They've been able to take advantage of the agreement between President Musharraf and the tribal elders in the federally administrated tribal area to find safe haven, to train, to recruit.

And we're working with President Musharraf to take action against that.

WALLACE: But I want to press this, because there was another intelligence report that came out the week before that tells the same story. Let's put that up on the screen.

It was titled "Al Qaida Better Positioned to Strike the West." The document reportedly says U.S. intelligence analysts have concluded Al Qaida has rebuilt its operating capability to a level not seen since just before the September 11 terrorist attacks.

Now, NIE, an intelligence estimate, last year reported a downward trend in Al Qaida. The NIE this week that you were talking about at the White House reports an upward trend. Why?

TOWNSEND: What it says is that it's rebuilt the -- three of the four capabilities that you mentioned -- top operational lieutenants, its top leadership, and the safe haven.

But let's not underestimate -- the safe haven is critical enabler to all those other things. And so the single most important thing that we are now working to act against is the safe haven. That's the thing that's different now.

WALLACE: If our enemies are regenerating their safe haven in Pakistan, under the Bush doctrine of preemptive military action to take out any threat, why aren't we doing everything we can -- special operations forces, pilotless drones -- why aren't we doing everything we can to take out that safe haven?

TOWNSEND: Well, Chris, just because we don't speak about things publicly doesn't mean we're not doing many of the things you're talking about. First and foremost, we're working with our...

WALLACE: Well, are we doing those things?

TOWNSEND: First and foremost, we're working with our Pakistani allies to deny the safe haven.

But let's remember that the federally administrated tribal area is an area of Pakistan that's never seen the writ of the Pakistani government. It's never extended that far.

President Musharraf has got over 80,000 Pakistani military troops in the FATA and working with us they've sustained hundreds of casualties in this fight.

We're working with them, but the president has been clear. Job number one is to protect the American people, and there are no options that are off the table.

WALLACE: Well, you say no options that are off the table. Have we, in fact, acted on those options?

TOWNSEND: Well, for obvious reasons, I'm not going to detail for you things that are classified and how we behave along with our Pakistani allies.

I will say to you there are no options off the table. The president's committed to the most effective action that we can possibly take in the FATA to deny them the safe haven. WALLACE: Now, you talk about, "Well, we're going to work primarily with President Musharraf," but as you point out, he agreed to this treaty with some of the militants because, in large part, hundreds of his soldiers were killed.

Does Musharraf have the capability to take out that safe haven himself? He hasn't up to this point.

TOWNSEND: Well, look at all the activity on the part of the Pakistani military since the seizure of the Red Mosque. There's been numerous offenses into the FATA. They've got troops there. They're taking casualties.

And as you just reported when we began, they killed 13 Taliban.

WALLACE: But having said all of that, the fact is, according to the NIE, Al Qaida and the Taliban have regenerated their powers, a lot of their capabilities in that area.

So he clearly hasn't put a dent in their operations. In fact, they're stronger than they have been in recent years.

TOWNSEND: I think we have to be clear that the NIE is a strategic look about what the intelligence community's assessment is about the threat over the next three years.

They point out that Al Qaida will be the principal threat to the U.S. homeland over the next three years, and we need to take action against it. We're doing that with our Pakistani partners.

WALLACE: I mean, I guess, like a lot of people, what surprises me is that we have intelligence that indicates -- and we're not just talking now about Zawahiri and bin Laden. We're talking about Al Qaida forces, training camps, Taliban forces, training camps.

I guess a lot of people are asking, "Why don't we take them out?"

TOWNSEND: Well, we are...

WALLACE: As we should have before 9/11.

TOWNSEND: We are taking a whole series of actions using all instruments of national power, whether it's military, law enforcement, intelligence, and we've got greater capability than we ever have in the history of this nation to take the most effective action, and we're doing that.

WALLACE: President Musharraf is now under fire not only from the extremists -- and we've seen an increase in suicide bombings in Pakistan -- but also from the pro-democracy movement, especially with the reinstatement of the chief justice of the supreme court of Pakistan.

Do we have an independent policy for Pakistan or are we joined at the hip to Musharraf? TOWNSEND: Well, there's no question, first and foremost, what we care about, what the president cares about, is U.S. national interest. That comes first.

But you've got to -- we can't be successful in the global war on terrorism without our partners and allies around the world.

That means we've got to be good partners and allies even when our partners aren't doing 100 percent of what we'd like them to do, because we need them. Even 20 or 40 or 60 percent of a partnership is better than nothing.

And what you do is you try to work with them to get them to do more and more of what you want, but you don't walk away from your partners, and it's not in our interest to walk away from them.

WALLACE: Let's turn to Al Qaida in Iraq. The NIE, the intelligence estimate, says -- and let's put it up on the screen -- "AQI, Al Qaida in Iraq, is Al Qaida's most visible and capable affiliate and the only one known to have expressed a desire to attack the homeland."

What evidence do you have that Al Qaida in Iraq has either the will or the capability to strike the U.S.?

TOWNSEND: Well, we go back to -- I would go back to the president's speech at the U.S. Coast Guard Academy in May where we declassified a whole series of intelligence reports going back to bin Laden, tasking Zarqawi, who was then the leader of Al Qaida in Iraq, to create a cell to focus on external operations; in particular, an attack against the homeland.

Zarqawi clearly welcomed that assignment, if you will, and indicated he had plans for such an attack. Zarqawi is now dead, but we know from the recent capture of Mashhadani that there continues to be contact between bin Laden and Zawahiri in the tribal areas and Al Qaida in Iraq.

WALLACE: But the number two U.S. commander in Iraq, the U.S. commander in Iraq, General Odierno, was asked about that this week. Let's take a look at his answer.


LT. GEN. RAY ODIERNO, U.S. ARMY: Al Qaida in Iraq, I think, is struggling with its mission here in Iraq. And currently I think it would be very difficult for them to export any violence outside of Iraq.


WALLACE: Which raises the question is Iraq, as the president says, the central front in the war on terror, or have we taken our focus off the central front which remains Al Qaida central in Pakistan? TOWNSEND: Chris, let me go back. General Odierno's remark suggests that they don't have the capability. I respect that. He's on the ground and he's in the best position to make that judgment.

But we've seen Al Qaida in Iraq export violence before, like the wedding reception in Amman, Jordan. So we've got to presume that they've got the capability and they have the potential to act on it.

Al Qaida in Iraq is not -- Iraq is not a distraction. We've heard from bin Laden's own words that he views it as World War III, a war of destiny for Al Qaida that they must win.

And so it is in no way a distraction. It's actually a critical enabler and capability for Al Qaida central, and we see them extending their influence not only in Iraq, but in North Africa, for example, where they now have Al Qaida in the Islamic Maghreb.

This is part of bin Laden's plan to try and extend the influence of Al Qaida.

WALLACE: President Bush, moving to a different area, signed an executive order this week putting new limits on CIA interrogation techniques, the interrogation of terror detainees.

Former CIA director George Tenet and current CIA director Michael Hayden are both on the record as saying that the old program -- the enhanced interrogation techniques that we had lived under up till this last year were irreplaceable and had saved lives.

I think Tenet in his book said it was the single most effective policy and program we had had to try to stop the terrorists.

Are we, with this new program, with new limits on interrogation -- are we limiting -- are we compromising our ability to get information from these very dangerous people?

TOWNSEND: Absolutely not. And what we did over time was look at what did we need for it to be legal, effective and sustainable. We need this program.

You look at the NIE which we were just talking about. General Hayden tells me that nearly half of the references, what people might call footnotes, in the NIE came from detainee interrogations.

Nearly 100 people who have been through that program -- only one- third of them had had interrogation enhanced techniques used against them, and they generated 8,500 terrorism intelligence reports.

This is a critical, critical program. But let's be clear. We also wanted to make sure that it was effective. And so the individuals who implement the program at CIA -- they go through psychological and aptitude screening. They get 280 hours of individualized training before they begin the program.

It's a team concept. Any member of the team can stop an interrogation. There has to be an interrogation plan that is approved by the director of central intelligence, who gets daily reports on each detainee and each interrogation session. He approves the particular techniques that can be used.

There are individuals who are responsible for looking after both the physical and psychological well-being of the detainees.

WALLACE: But if I may, with all of those safeguards -- and we are told -- I know you're not going to answer -- that waterboarding is now off the table, some of the extreme use of either heat or cold to press them.

With all of those restrictions, are we not going to get the kind of information we used to get?

TOWNSEND: We believe based on our experience and all of General Hayden's listening, if you will, by -- with members of Congress on both sides of the aisle -- that we've built the most effective, legal and sustainable program.

After all, the people we ask to do the hard work at CIA deserve to know what the rules are and that they're protected as well.

WALLACE: Finally, and we have less than a minute left, the government this week announced that it's going to allow airline passengers to bring back lighters onto airplanes, even though -- and I know this -- you can't bring a bottle of water through the security still, and you won't be able to.

At a time when Secretary Chertoff is talking about gut feelings about terror attacks, why does that make sense?

TOWNSEND: Well, what we look at is what is the current threat, what are the tactical indications of things we ought to be concerned with.

This isn't about whether or not you bring a lighter. What we're looking for is to make sure that we're keeping off a plane potentially component pieces of an explosive device.

You mentioned liquids. Well, we knew from the August of '06 plot that certain liquids could be used as component pieces, and so that's why we're keeping those off.

We try to focus our screening measures based on what we understand to be the tactical methods of Al Qaida.

WALLACE: And real quickly, a lighter that can put up a flame -- that's not dangerous?

TOWNSEND: We don't believe that that will be part of a large explosive device inside an aircraft, no.

WALLACE: We're going to have to leave it there. Miss Townsend, thank you. Thanks for coming in and talking with us today. Appreciate it.

TOWNSEND: Thank you. Good to be with you.

WALLACE: Up next, the debate in Congress over how to fight and win the war on terror. We'll talk with two key members of the Senate Intelligence Committee when we come right back.


WALLACE: Joining us now to continue our discussion of how to win the war on terror are two key members of the Senate Intelligence Committee, the top Republican, Senator Kit Bond of Missouri, and Democrat Evan Bayh of Indiana.

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


SEN. EVAN BAYH (D), INDIANA: Thank you, Chris.

WALLACE: As we said in the last segment, the new National Intelligence Estimate talks about Al Qaida regenerating itself, getting stronger in western Pakistan.

Senator Bayh, what should we do about it?

BAYH: It's a tough problem, Chris. We've got to work with the Pakistani government, as Fran Townsend was indicating. They're in the best position to do something about this.

Thankfully, they're trying to get back into that area after having withdrawn for a year. That was a disastrous policy. Hopefully they've changed that.

But the real question is, "Are they capable of doing this even if they want to?" And as she was indicating, we can use some other means -- covert means, that sort of thing -- but you've got to be careful, because if it is clear that we're going into their national territory, we run the risk of undermining a regime that has been one of our allies in this struggle.

So we've got to be more aggressive, but we've got to do it in a way that doesn't undermine the Pakistani government.

WALLACE: Well, I want to pick up on that, Senator Bond, with you.

As a member of Senate Intelligence, first of all, do we have the information, not specifically about bin Laden or Zawahiri, but about where this growing Al Qaida and Taliban force is in western Pakistan? And should we consider a covert war to take out their safe haven?

BOND: Obviously, we'd be talking all about that on this show if we had a covert action, and Evan and I do know of many efforts going on. But as he indicated, we have to work with the Pakistanis.

WALLACE: Not by ourselves, not unilaterally?

BOND: We work in cooperation with them. And if we knew precisely where Osama bin Laden or Ayman al-Zawahiri were, action would be taken. And I am confident of that.

And when Evan and I were in Pakistan a year ago January, went up to Peshawar, which is right on the border, and we found out how absolutely treacherous and almost inaccessible that area is.

Just three weeks before we were there, they tried to establish a military outpost with 12 people. They were warned not to do it. The tribes came in, killed as 12. Twenty people came in to back them up.

It is not an easy place, even for the military of the government of Pakistan.

WALLACE: Senator Bond, President Musharraf, I don't have to tell you, is now being whipsawed both by violent extremists on one side and by the pro-democracy movement on the other.

How much trouble do you believe he is in? And should we have a more independent policy toward Pakistan and Musharraf, or should we try to put more distance between ourselves and the president?

BOND: Well, we work with our allies based on who is in power. While many of these countries are not our ideal Jeffersonian democracy, we can't expect them to meet all of our standards. We're pretty sloppy in some areas ourselves.

And yet as long as Musharraf is the head of Pakistan -- and he is cooperating with us, in many areas. There are problem areas, as Fran said, but we're going to continue to work with him and we're not going to do anything to undermine an ally who has worked with the United States.

WALLACE: But, Senator Bayh, as you know, sometimes we get ourselves linked to some of these leaders in these countries and then when there's a popular movement to throw them out, we're on the wrong side of history in those countries.

BAYH: Well, Chris, it can happen, and it's a tough balancing act. As Kit was saying, for the moment, he's the constituted government in Pakistan. He's trying to work with us to deal with some of these problems.

We can't allow another safe haven to exist. But if we do things to prevent that safe haven from being created that undermine the government, we create a bigger safe haven with an unstable Pakistan. So, look. They've got an election coming up later this year. We'll see what happens.

Now that the chief justice is back in the supreme court, we don't even know what their supreme court is going to rule about whether he can run again. So let's work with the government we've got to try and secure that area.

If there's an internal change in Pakistan, even if it's one we might not like, we'll have to work with the folks who come to power then.

WALLACE: Senator Bond, all this raises the question, "Is the war in Iraq the central front in the war on terror, or have we taken our focus off the central front, which is Al Qaida in Pakistan?"

BOND: Well, it's both, because Al Qaida is the number one enemy. This is the greatest threat to the United States. The intelligence community has said that Al Qaida's top priority is attacking America, the homeland, the United States, attacking U.S. interests and allies abroad.

Ayman al-Zawahiri and Osama bin Laden say that Iraq is the focal point, as Ms. Townsend said earlier. That's where they're trying to establish the caliphate.

They thought they had it established in Ramadi until the Sunni sheiks in Ramadi started cooperating with us, and the very successful surge that General Gaskin waged, as I saw firsthand two months ago, in Ramadi.

WALLACE: Let me bring in Senator Bayh.

Your view of this issue? Is Iraq the central front, or should we be focusing more and have we been distracted from Al Qaida in Pakistan?

BAYH: We have a difference of opinion on this one, Chris. Iraq is not the central front in the war on terror. As the National Intelligence Estimate indicates, it's Pakistan and Afghanistan.

We've got to finish the job in Afghanistan. We were attacked from there. And Pakistan is where the Al Qaida leadership is reconstituting itself today.

So the unfortunate reality in Iraq is that it -- actually, many of the experts who have looked at this believe that we are actually creating more terrorists than we're killing because of our presence in Iraq.

About 95 percent of the insurgents we're fighting in Iraq are Iraqis fighting over the future of Iraq, not these outside jihadists who are coming in.

And I guess the bottom line, Chris, is, look, we've spent four years, close to $400 billion to $500 billion, we've got 165,000 troops in Iraq, and our National Intelligence Estimate indicates Al Qaida has gotten stronger.

The strategy is not working. We need to fight Al Qaida in Iraq, but do it in a smarter way.

WALLACE: Senator Bayh, I want to follow up on this because you had a very different view about this issue just two years ago, and let's put it up on the screen.

You said then about Iraq, "It really is a central front in the battle on the war on terror. And if we leave too soon, it would be a catastrophic event and it would be a major defeat for us, a major win for the terrorists."

Were you right then or are you right now?

BAYH: Well, I'd like to think I was right both times, Chris. And by the way, shame on you in having a politician have to see his own words. But accountability is important in all spheres, particularly ours.

Look, I think we've learned a lot over the last couple of years. And what we've learned most of all is the unfortunate and, in some respects, maddening inability of the Iraqi political leadership to get their act together.

And I think one thing that Kit and I would agree on here is that no matter how long we stay, no matter how brave our soldiers are, including his brave son, this ultimately is up to the Iraqis. They have to make the hard decisions to reconcile their differences or this is not going to work.

Now, two years ago we believed if we just stood by them, if we continued to encourage them, if we said, "Don't worry, we're here for you," that that would increase their security and they'd make hard decisions. That hasn't worked.

So what has changed my mind and many other people's minds, Chris, is that to give us the best chance of them making the hard decisions, we've got to take the crutch away. No more enabling of dysfunction.

We've got to tell them, "Look, you get your minds right, you make the tough decisions, or we're not going to do this for you anymore." That's what's changed.

WALLACE: Let me bring in Senator Bond, because everybody in Washington is waiting for this September progress report from General Petraeus, but this week two of his generals said that they're going to need well into next year or even beyond to secure their parts of the country. Let's take a look.


MAJOR GENERAL RICK LYNCH: We can over time, between now and about 15 months from now, which takes us into next summer, transition those areas to capable Iraqi security forces.



MAJOR GENERAL WALTER GASKIN: I believe it's another couple of years in order to get that to that, and that's not a political answer. That's a military answer. (END VIDEO CLIP)

WALLACE: Having said all of that, Senator Bond, even your own party leader in the Senate, Senator McConnell, talks about a new direction in September.

BOND: Well, first, I want to commend Evan on being right two years ago. I think he was right two years ago. We made mistakes.

BAYH: First time for everything.

BOND: No, we made mistakes. We followed the Bremer plan for three years. We will whack a mole. We'd make a foray in and leave, as General Conway said.

WALLACE: All right. But let's go to right now.

BOND: OK. Right now, I -- it's always difficult to predict the future, as Yogi Berra said, but I see our future. Al-Maliki is not getting the job done. Politically, he's not going to succeed by September, by December, by next March, by next summer.

But we have a strategic interest. The United States interest is not just to see that a political government is democratically working in Iraq. It is to see that the place does not descend into chaos with great civil war and not to give a safe haven to Al Qaida.

Those are the two dangers. With the new Petraeus plan, the surge is working. I've seen it. General Gaskin, who was on, is one of the implementers of that in Al Anbar -- terrific job. They've driven Al Qaida out of Al Anbar and out of Ramadi. We want to...

WALLACE: So what are you saying, no matter what happens in September -- I mean, first, it's, again -- well, let me just say, your leader, Senator McConnell, and you know an awful lot of your Republican colleagues, say, "Look, September is the drop-dead day."

BOND: OK. Well, the drop-dead day, we're going to have to say that al-Maliki is not meeting the goals. What do we do then?

I will tell you -- and I spend an awful lot of my time looking at this -- the only option for us is to continue to train the Iraqi security, Iraqi army and Iraqi police, which are getting better. They're conducting missions on their own.

And then as they are successful, we draw down the U.S. troops, and there will be significant draw downs, but it will be based on decisions made by the commanding officers in the field, not some political timetable by 535 generals in the air-conditioned comfort of Congress. And that's the future for our safety.

WALLACE: Senator Bayh, you get the last word.

BAYH: Well, we all hope for success in Iraq, Chris. But the ultimate question is whether the Iraqis are able to do this and what will make them most likely to make the hard decisions. Continuing to support them in spite of their inability to do that has not worked. We need a better course.

We need a middle ground where we keep enough forces there to fight Al Qaida but to begin to draw back so they can't use us as a recruiting post around the Islamic world, they don't use us to undermine moderate Arab regimes that we have to rely on, and that we do a better, more effective job in focusing on those areas that are the central front, Afghanistan and Pakistan.

BOND: That's the Petraeus plan, and I agree with Evan. He's just outlined the Petraeus plan. That's the way we need to go.

WALLACE: You guys are like our panel. Gentlemen, thank you both so much for coming in, Senator Bayh, Senator Bond. Thank you both for coming in again, and please come back, both of you.

BAYH: We'll do it.

BOND: Just ask.

WALLACE: Up next, the political fireworks on the campaign trail: Democrats versus Democrats, Republicans versus Republicans. Our gang of Sunday regulars tries to sort it out after this break.



ELIZABETH EDWARDS: I think that it's important when you are asking to be a leader who is addressing women's issues that you, in fact, be that leader.


WALLACE: That was Elizabeth Edwards, wife of Democratic presidential candidate John Edwards, saying her husband, not Senator Clinton, is the real champion of women's issues.

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

Well, there was Elizabeth Edwards this week taking on Senator Clinton, not only saying that her husband has a stronger set of platform or proposals to help women, but also that Senator Clinton may be avoiding women's issues to, quote, "behave like a man."

Brit, what do you make of Mrs. Edwards' comments and also of her apparent decision in this case and also in taking on conservative commentator and author Ann Coulter to act as kind of the enforcer of her husband's campaign?

BRIT HUME, FOX NEWS WASHINGTON MANAGING EDITOR: It seems to me that Elizabeth Edwards, someone that is a very appealing person whom many, if not most, of us admire, turns out to be a pretty good partisan scrapper.

And this is, as you noted with the Ann Coulter case in mind, the second time she's tried on behalf of the campaign to pick a fight with somebody who is either bigger than Edwards is in terms of his standing in the race or somebody with whom a fight would do the campaign good.

And if you include in that -- you remember, it was Edwards who sort of led the charge when they were complaining that he didn't want to appear in a Fox News debate. Edwards doesn't have any problem with Fox News, really, but there are parts of the base that do.

So this is the -- I think the Edwards campaign is kind of flailing a little bit. And we've now seen three attempts to sort of pick fights that would, if engaged, benefit the campaign. I'm not sure that they've really succeeded, but it's interesting that Elizabeth Edwards was at the center of two of them.


I was going to ask you, though, Mara, do you think that Elizabeth Edwards' role is helping or hurting her husband?

MARA LIASSON, NPR: Well, first of all, I think that the Ann Coulter fight was a good one to pick, and it raised them a lot of money. I think that the...

WALLACE: We should say that Ann Coulter had said some pretty terrible things about John Edwards.

LIASSON: Pretty terrible things about John Edwards, and when Elizabeth Edwards actually called a show that Ann Coulter was on...

WALLACE: And told her to...

LIASSON: ... told her to back off, they did raise a lot of money. And look, defending yourself from attacks on the right is always good.

I think in terms of this particular line against Hillary Clinton, I think that even though Elizabeth Edwards is an interesting character -- she played this role in 2004. She was pretty tough in 2004 taking on her husband's adversaries, too.

But in this case, Hillary Clinton is doing everything she can to run on women's issues. She's got tremendous organizing support among women. I think if Hillary Clinton has a problem, this is not the one.

I mean, she has problems with voters thinking that she's too cold or too calculating, or people don't know exactly who she is. But it's not because she's not enough of a feminist.

WALLACE: Bill, let's talk about...

LIASSON: But one last thing. I do think that the Edwards campaign is under pressure now, particular in Iowa. Obama and the Clinton campaign are both moving into Iowa in full force, and that's where Edwards had hoped to make his stand.

WALLACE: Let's talk about another dust-up involving Senator Clinton. She had written to the Pentagon asking to see their ideas about how they would eventually pull U.S. troops out of Iraq.

And Undersecretary Eric Edelman said that her request to see the military's ideas for pulling troops out of Iraq, quote, "reinforces enemy propaganda that we're going to abandon our allies there."

Who's got the better of that flap?

BILL KRISTOL, WEEKLY STANDARD: Well, she fought back and that will be good for the Democrats who like a fight with the Bush administration and...

HUME: And the Pentagon.

KRISTOL: ... and the Pentagon. I mean, just two points. The spouses in the Democratic race are so interesting. I think perhaps you should sponsor a debate among the spouses, you know?

WALLACE: Bill Clinton, Elizabeth Edwards?

KRISTOL: No, seriously. Right. Elizabeth Edwards is more interesting than her husband. Bill Clinton, with all due respect to Senator Clinton, is more interesting than Hillary Clinton. And I am a fan of Michelle Obama.

So you know, you guys should host that, Brit and Chris, the Democratic spouses debate. Mrs. Kucinich would be excellent.

HUME: Mrs. Kucinich would be great.

LIASSON: Oh, yes. Yes.

KRISTOL: Ratings would soar.

WALLACE: All right.

KRISTOL: And that's my serious thought on the Democratic wives.

WALLACE: All right, Juan. You take a swing at Senator Clinton and the Pentagon.

JUAN WILLIAMS, NPR: Well, first, I'd say if we're going to have a debate among spouses, I think you should get Jeri Thompson in here, the trophy wife, right? So I mean...

KRISTOL: That's unfair.

WILLIAMS: Unfair, unfair, I know, but...

KRISTOL: It is unfair.

WILLIAMS: No, look. I think Senator Clinton -- it's legitimate and absolutely right to say to the Pentagon, "Are you prepared in case of exigencies to have American troops, 160,000 people, leave?"

But you know, these are people who didn't have the troops fully prepared to go to war in the first place. So why not ask? They need some oversight.

And for him to come back and say, "Oh, this is feeding enemy propaganda," this is playing to the most base instincts of you're not patriotic, you're on the side of the enemy, instead of saying, "Let's think about what we're doing."

It was a legitimate and realistic rational request.

LIASSON: Look. You have to wonder whether that guy Edelman who wrote the letter back to her is on the campaign payroll of Senator Clinton. This was a complete gift to her.

I mean, why not just say, "Look, of course?" Everybody knows the Pentagon has plans on the shelf for withdrawing any troops they put in somewhere. And those plans are secret, and he could have explained that to her, but he didn't have the...

HUME: Presumably, Senator Clinton knew that as well.

LIASSON: Right, right. But look, he...

HUME: So what was the purpose of the letter, one wonders?

LIASSON: The purpose of the letter is to show that she's on the same side as everybody who wants to get troops out. She wants to know is the Pentagon planning. A simple yes answer, but we can't disclose that to you, would have been fine.

But I think to say that it serves the propaganda purposes of our enemy gave her a wonderful opening to, you know, complain about this and use it as an issue.

WALLACE: Let's turn to the Republicans and despite that slur against -- although I don't know. You know, saying that a woman is attractive is a nice thing.

But in any case, let's talk about Fred Thompson, who continues, Brit, to put off announcing his candidacy. First it was going to be July 4. Then it was going to be August. Now it's going to be Labor Day.

Having said that, while that delays, he continues to go up in the polls.

HUME: Is there anything in American law or the Constitution that says that you have to be a declared candidate in order to be a candidate and run?

He's running very effectively by not declaring. And my guess is that that is a big part of his appeal, that people are still able to sort of treat him as a blank canvas on which they can paint whatever vision they want.

WALLACE: Well, let me ask you, because this week some of his opponents tried to paint something on the canvas, which was to point out that in the '90s that he lobbied for an organization that was seeking to ease some of the restrictions on abortion counseling.

Brit, your reaction to that?

HUME: This is not abortion scandal, in my view. This is a billing scandal. And what I think this tells us is the extent...

WALLACE: Oh, here we go again.

HUME: ... it may tell us the extent to which clients are sometimes billed for work done by the people they engage -- lawyers, lobbyists and the rest -- that is so insignificant to the person doing it that they don't even remember.

I believe Thompson didn't remember this. And I don't believe he did very much for that abortion group.

WALLACE: I mean, he charged them 22 hours.

HUME: And you know, hours get put down in certain ways. I think that's -- if anything bears investigation, it's that. I mean, this did close the loop a little bit on Thompson.

My guess is that the longer he stays out, the better he'll do. And once he gets in and starts to appear on the stage alongside the rest of the pack and, you know, has whatever success or difficulty he may have in the debates, and seems a lot more like the others than he does now, it will be hard for him to maintain his standing, not that he's not a competent candidate.

I just think that this -- a lot of this has to do with people's imagination at the moment.

LIASSON: Yes, I think he has every reason to stay out as long as possible. Look how well he's doing in the polls not running.

But I think the abortion scandal, whatever we want to call it, was just a misstep on the part of Fred Thompson not yet campaign. I mean, they don't have their ducks in a row yet.

I mean, I think that it's not going to ultimately hurt him with pro- life voters, but I do think there seems to be a lot of evidence that he actually did meet with these people, he talked about working for them.

And I think that a campaign that was fully up and running and staffed and could do the kind of research that a campaign has to would never have handled it this way.

KRISTOL: You know, it's not quite right that Thompson is benefiting from people not seeing him. Thompson started off about four or five months ago when he came onto this show and hinted that he was going to run.

And he was around 10 percent or 11 percent or 12 percent in the polls. And everyone said, "Wow, 12 percent without any publicity."

People have seen him quite a lot over the last three or four months. They've read much more about him, about his Senate record, about his positions, and now he's at, what, 20 percent, 22 percent, 25 percent.

It strikes me that the more they see Thompson, so far, the more they like him.

WILLIAMS: Well, you know, the big poll this week was a quarter of Republican voters said not Thompson, not McCain, not Giuliani. They don't want any of them. They're looking...

WALLACE: Yes, none of the above.

WILLIAMS: None of the above. They're looking for a candidate. And I think that's very telling, in addition to the fact that Democrats have outraised Republicans now by a large margin in terms of money.

And by the way, I think that if we wanted to have, you know, Ann Romney or Mrs. McCain or anybody else, bring them on. I'm saying the spouses this time have stories to tell, and I think, in part, it's a function of the fact that Bill and Hillary are the dynamic duo.

Now it's a sense you get two people, two for the price of one, when they run for president.

WALLACE: So a spouse debate.

WILLIAMS: Bring them on.

HUME: Should it be Democrats versus Democrats or Democrats versus Republicans?

WILLIAMS: I don't know. At this point, it's -- an intramural debate, I think it's called.

WALLACE: All right. We need to step aside for a quick break.

But coming up, that all-night Senate debate on the Iraq war. Was it democracy in action or a meaningless political stunt, or a bit of both? Our panel tackles that when we come back.


WALLACE: On this day in 1987, Soviet leader Gorbachev, in a dramatic turnaround, indicated he was willing to negotiate a ban on intermediate- range nuclear missiles.

This paved the way for the INF treaty between the Soviets and the U.S.

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



REID: Because Republicans continue to block votes on important amendments to the defense authorization bill, we can make no further progress on Iraq and this bill at this time.



SEN. MITCH MCCONNELL, R-KY.: We were elected to legislate, not to strut across a stage. This isn't Hollywood. This is real life here in the Senate.


WALLACE: Those were the Senate's Democratic and Republican leaders reflecting the growing tension on Capitol Hill after the all- night debate this week over the war on Iraq.

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

So the Senate pulled an all-nighter on Iraq, and after Democrats failed to win a vote to start to pull troops out, Senator Reid pulled the defense authorization bill, blocking votes on any other ideas for how to deal with Iraq.

Brit, what do you think of this as both politics and policy on the part of the Democrats?

HUME: Well, they're doing the best they can to try to let their constituents know that they're trying as hard as they can to do something to end the war in Iraq. They are effectively blocked by the nature of the Senate.

You need 60 votes to do anything of any consequence in the Senate. This is no exception. So they probably can't do it at this time.

Now, they're getting more and more Republicans bit by bit, so maybe in some distant future time they'll be able to swing it. But they've got a very restive constituency out there that is not satisfied with what has been done. The congressional approval ratings are in the toilet. They're as bad as they've ever been. And so what you see is episodes like the all-night debate, which really accomplished nothing but was at least, I suppose, to some people, a visible evidence of how hard the Democrats in the Congress, and particularly the Senate, are trying.

WALLACE: Mara, it's interesting, because there were some measures out there that might have gotten 60 votes, particularly the idea of going to the -- adopting the Iraq Study Group plan.

And Reid wanted no part of that. He wanted to make it either you're for or against pulling troops out of Iraq. Is that an effective policy to position the Republicans and to pick up votes in 2008?

LIASSON: Look, I think that the Democrats clearly think this is good politics. They don't want to provide Republicans with a safe haven, and either of those legislative vehicles that you mentioned might have.

I think that it would have been very possible to get 60 votes for some version of Salazar-Alexander, a bipartisan measure that kind of enshrines the Iraq Study Group recommendations into law, or Warner- Lugar, which merely calls on the administration to make a plan for withdrawal, even if not an actual date certain, or some version of Reid-Levin.

But I think that the Democratic leadership has been very clear they don't want Republicans to have any cover in this debate. And I think it was good -- satisfied their base, good politics.

But on the policy question, if you think it's a good idea to have a bipartisan consensus on a strategy for Iraq, what happened in the Senate this week didn't get us any closer to that, and it could have.

KRISTOL: What's amazing is how far left the Democratic Party in the Senate has gone.

And they are voting, as you showed with Evan Bayh -- Evan Bayh is voting for something he said two years ago would be a huge mistake, a date certain timetable for withdrawal of troops from Iraq. The entire Democratic Party voted for that.

Maybe everything will fall apart in Iraq and they can say we wanted to get out earlier. Maybe things will continue to improve with the surge and with Petraeus' counterinsurgency strategy in Iraq, and the Democratic Party is going to look six months from now as if they wanted to pull the plug just as our military was giving us a real chance to prevail in Iraq.

And the idea that Senator Clinton -- Harry Reid is making Senator Clinton and Senator Obama vote for losing in Iraq. I think that's fine if you're a Congressional Democrat, if you're Harry Reid catering to the left wing of the party.

For a presidential nominee to be voting against the war in Iraq after, in the case of Hillary Clinton, she voted for it -- I think it's a problem for the Democrats in 2008.

WALLACE: Well, but he's not making them do it.

LIASSON: He's not making them.

WALLACE: In fact, they're scrambling to do it.

KRISTOL: Well, but if they...

WALLACE: But let's ask Juan.

KRISTOL: But let me just say one more word on that. You know what? It is striking, though, they are scrambling to -- every Democratic presidential nominee is going to the Daily Kos convention.

That's the left-wing blogger who now -- who was not respectable three years or four years ago, the Howard Dean kind of sponsor. Now the whole party is going to pay court to him and to the left-wing blogs.

Not a single Democratic presidential candidate is going to the Democratic Leadership Council meeting in a couple of weeks. That's the organization that Bill Clinton was head of in the early '90s.

That was supposed to be the new, more moderate Democratic Party. The Democratic Party has gone left and it's going to hurt them presidentially in 2008.

WILLIAMS: Well, what you describe as left is now kind of center, I think. It's the majority of the American people, 70 percent that want us out of Iraq.

In fact, if you asked Iraqis, Iraqis -- I think it's 60-some percent of Iraqis say we're doing more harm than good in Iraq.

So I mean, there's a center here, and I think what you're saying is they're playing somehow to the left. In fact, what has happened is that people are frustrated, and frustrated -- when you see this week that the administration has already started spin control on the upcoming September report.

Now, all of a sudden, November is the new September. We're supposed to wait until November to hear. And when you say, "Well, her vote is wrong," wait a second. You said this two years ago, you said this five years ago, you said it before 3,600 people were dead, that, "Oh, this is the wrong vote."

When are we supposed to say enough is enough in terms of Iraq?

KRISTOL: Enough is enough is not a serious policy when you're at war, Juan.

WILLIAMS: How long do you want to go on there? So we should just go on there indefinitely, Bill?

KRISTOL: No. We have a new strategy. Can we talk about what's actually happening in Iraq?

WILLIAMS: Go ahead. Tell me.

KRISTOL: I'm frustrated, let's get out.

WILLIAMS: Well, most Americans...

KRISTOL: I'm frustrated, let's et...

WILLIAMS: When most Americans are asked about the surge, what do they say? It hasn't made a difference. And we've been...

HUME: No, no, Juan, that's not true.

WILLIAMS: ... building up since January.

LIASSON: No, we already say wait till September.

KRISTOL: So are we allowed to talk about what's happening in Iraq or what most Americans, based on very incomplete reporting so far -- most Americans are frustrated.

Leaders are supposed to rise above saying, "I'm frustrated. It's been difficult. Bush has made mistakes," and say, "What is the right policy going forward in Iraq?"

And Senator Clinton knows that what she voted for is not the right policy. And in fact, if you read down into her speech in paragraph 62, she says, "Of course we're going to have to leave troops in Iraq and of course we can't let it be an Al Qaida base."

But publicly, the Democratic leadership is now pushing the Democrats...

WILLIAMS: Some troops. But, Bill, that's a big difference between saying stay the course and wait until November or wait until years from now to make a call and she's voting for defeat.

What we heard this week from the national intelligence report, in fact, is that's not the key front in battling Al Qaida. And that's the real challenge that we face in fighting terrorists -- Al Qaida, Taliban -- not the remnants of some civil war that we have our young men and women dying for.

WALLACE: Let me throw something else into this, Brit, and ask you about it, because you did see this week clearly, not only with General Odierno but also, as we pointed out, with General Lynch and General Gaskin -- talk about it's going to take into next year, well into next year, for us to secure the gains.

Otherwise, we will have fought, some of our troops will have died to clear these areas, and the bad guys will come right in.

What do you think is the possibility that Congressional Republicans will stand firm not just till September but into November or next year? HUME: That depends upon what level of military progress will be reported in September. My guess is that there will be noticeable, notable military progress to report in September. There's already some now.

And the question will then become how seriously do we take the objectives we set for the Iraqi government and how important in the face of Al Qaida beginning to lose ground and the terrorist violence subsiding in Iraq are we going to take those benchmarks and are we going to then think about pulling the plug as we're beginning to win on the ground militarily on the effort because of the failure of the Iraqi government to function properly.

WILLIAMS: How many years have you been saying this?

HUME: I just said that just now.

WILLIAMS: No, but you've been saying this for a long time, you know, "Oh, more time." Bill says, "Oh, what's wrong with the strategy now?"

Come on, guys. I mean, acknowledge there's a problem here. We're not winning in this thing. And if you say to me, "Don't encourage the terrorists," OK. We don't want to do that. We want stability....

HUME: Juan, you need to read the news more carefully and recognize that when you say we're not winning that we may now well be winning.

WALLACE: Got to go. Thank you all, panel. See you next Sunday.

For more visit the FOX News Sunday web page.

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