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Sens. Graham, Feinstein; Fran Townsend

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace. A stay-the-course plan for Iraq, next on "Fox News Sunday."

As the U.S. commander in Iraq puts the final touches on his progress report, Congress debates what happens next in the war. We'll discuss the options on the table with two key senators, Democrat Dianne Feinstein and Republican Lindsey Graham.

Then the 9/11 attacks -- six years later. Are we winning the war on terror? Is the U.S. safer? We'll ask the president's homeland security adviser, Fran Townsend.

Plus, McCain gets a bump from the New Hampshire debate, while Thompson finally gets in. Where does the Republican race for president stand? We'll ask our Sunday regulars: Brit Hume, Mara Liasson, Bill Kristol and Juan Williams.

And our Power Player of the Week helps the frontrunner stay in front, 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. The Associated Press reports that General David Petraeus and Ambassador Ryan Crocker will warn Congress Monday that major changes to the president's Iraq war strategy will jeopardize the success made so far.

Also today, Mr. Bush said, in some parts of Iraq, quote, "life is returning to normal."

Meanwhile, the chairman and vice chair of the 9/11 Commission say six years after the attack, the U.S. is still not safe enough. They say the war in Iraq is a recruiting tool for Al Qaida and there are still holes in domestic security.

And in Kabul, a security scare today. Afghan President Karzai was forced to end a speech abruptly when gunfire was heard nearby. Authorities say the shots came from police trying to control the crowd outside.

With General Petraeus set to report tomorrow, we want to get a sense of the mood on Capitol Hill. Joining us now, two key senators -- Democrat Dianne Feinstein, who has voted to bring most of the troops home by next March, and Republican Lindsey Graham, who's just back from two weeks on Air Force Reserve duty in Iraq. He's in his home state of South Carolina.

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

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

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Thank you.

WALLACE: As we said, General Petraeus reports tomorrow, but there have already been all sorts of reports that have come out in the last couple of weeks, some of them contradictory.

Senator Graham, let me start with you. Is the surge working and should it continue?

GRAHAM: I think it's undeniably working. Security is better in Iraq than it's been before. Anbar has been retaken from the enemy. Al Qaida is on the run. We're now dealing with the militia groups on the Shia side. Iran wants to fill a vacuum. It is in our national security interest to make sure there is no vacuum.

So yes, I am very pleased with the results of the surge. There's local political reconciliation. The people in Iraq are war-weary. It won't be long till Baghdad politicians follow through with major reconciliation. In my opinion, I think it has worked.

WALLACE: Senator Feinstein, same questions. Is the surge working? Should it continue?

FEINSTEIN: Well, I think some areas are more secure. I think Lindsey is right about that. I think in terms of giving the breathing room to make the political accommodations, it has not worked to do that.

The front page of one of the major newspapers this morning says tensions are building up in Baghdad. You know, there are walls between communities. I think you've got a government that's basically a failure.

You've got a ministry of the interior that has a police force that's corrupt and ineffective. There are some improvements in the army, that's true. But there has been no progress with respect to the Sunnis. Ethno- sectarian hatred is certainly as high, if not higher.

The statistics are very questionable.

WALLACE: So, Senator Feinstein, would you end the surge?

FEINSTEIN: I think the surge, first of all, is not sustainable. Come the spring, they're going to have to return some people.

As you know, the Brits are pulling out. They've pulled out 25 out of -- 25,000 out of 30,000 troops, turned over four bases, will shortly turn over the fifth. They apparently know something.

I think that we ought to take a very close look, hopefully on a bipartisan basis, of setting a date to begin to have an orderly redeployment of our troops. If we can come together in the Senate and in the House on that one point, I do think it is an accomplishment.

We will listen to General Petraeus. General Petraeus is greatly respected. I had the privilege of talking with him in Iraq a while ago, riding out with him on a cargo ship, and there's no question that he is a fine and brilliant general.

But there is not a military solution to this problem. There's only a political solution.

WALLACE: Senator Graham, there are a lot of points there, but if I can ask you to respond to a couple in particular, one, that the breathing space that the surge was supposed to accomplish clearly has not happened, at least on the national level, and, two, there are these stories that indicate that a lot of the ethnic and sectarian conflict continues. Your response.

GRAHAM: I think sectarian violence is down because of better security. It is undeniable that the Anbar province has been retaken from the enemy called Al Qaida, and there is local reconciliation going on.

Three weeks ago today, the major players in Iraq came up with a framework to push forward. One thing we've learned -- you don't need a de- Baathification law to beat Al Qaida. You don't need a local election law to diminish Al Qaida.

So what I expect is that there's a lag between security and political reconciliation, and the one thing for sure -- that if you pull troops out now, politically -- I'm not looking for political redeployment.

If the general tells me down the road we can withdraw troops because of military success, we should all celebrate it. But if politicians in Washington pick an arbitrary date, an arbitrary number to withdraw, it's not going to push Baghdad politicians.

It's going to re-energize an enemy that's on the map. So I am absolutely, totally, 100 percent against a political redeployment or a political management of how you use the troops. I'm going to leave it up to Petraeus because I trust him. He has delivered.

And I think it would be foolhardy for this Congress to take away from him the ability to manage this war and to deploy and withdraw.

WALLACE: Senator Feinstein, we talked -- you were on the show last year, and we talked about the moment that we're at right now. And like a lot of Democrats, you said then that come September, largely with the help of Republicans, that you were going to be able to force the president to change policy in Iraq.

Let's watch what you said then.

(BEGIN VIDEO CLIP)

FEINSTEIN: I hear even from some Republicans, "Well, September is an important month. We may well change. We know that this can't go on forever."

(END VIDEO CLIP) WALLACE: What happened? Why are Democratic leaders now pulling back, talking about not a deadline for getting out but a goal with Republicans? And would you accept that, a goal, not a deadline?

FEINSTEIN: Well, that's because it's a constantly changing theme. The surge was meant to be in place for only a few months. Now that's changed, and the talk is, "Well, you've got to continue to extend it." So it's a constantly shifting scene.

WALLACE: But why are the Democrats backing off and, in fact, saying, "Well, you know, we won't go for a deadline. We'll just accept a goal of trying to get out by next June?"

FEINSTEIN: Well, look. We feel the way we feel. I think that's been clearly established. Whether we can get the votes or not is a second subject. We had 53 votes on the resolution the last time. It takes 60 votes.

And so what we're looking for is how do you put together 60 votes in a bipartisan way that will change the policy and that will communicate to the Maliki government that they have to stand up, that they've got to clean up their department of interior, that they've got to begin to make the necessary accommodations, that they have to allow Sunnis a greater part of the pie, have the oil distribution, hold the provincial elections, carry out the major commitments that they made in terms of those benchmarks.

That's not going to be done as long as we maintain this presence, in my view. So I think there are two different schools of thought on this. I think Lindsey has very clearly espoused the position of the administration. That's not the position of the American people, however.

WALLACE: But let me just say that there may be...

FEINSTEIN: And that's a critical driver of all of this.

WALLACE: But let me say that there may be even more than two positions, because what you're espousing, which is, "Well, let's send a message," antiwar activists -- for instance, Code Pink, which had a sleep- in outside your house in San Francisco...

FEINSTEIN: That's correct.

WALLACE: ... they say that what you're talking about is caving in, the Democrats caving in, once again to the president. How do you respond to them?

FEINSTEIN: I went out and talked to hem and said, "You know, we can only do what we can do. We have to have a certain number of votes to get to cloture. That number is 60. And we can't move beyond it unless we have those votes. Ergo, if you want to make some progress, you have to find a way to get those votes." This mission is now in play. We'll see how it develops.

WALLACE: Senator Graham, how do you explain the turnaround in Democratic strategy? And in effect, as we come to this all-important September that we've been talking about, even before Petraeus testifies, hasn't the president won?

Isn't he going to be able to prolong his surge into next year?

GRAHAM: I think America has won, because -- is winning, but we haven't won yet. Any time that Al Qaida is diminished anywhere in the world, America is winning. Any time that moderation can trump extremism, America is winning.

And the reason they don't have the votes is because it's undeniably obvious that this new strategy is producing results the old strategy did not produce. Political reconciliation is going on all over the country. The Sunnis now want to play politics.

It is in our national security interest to make sure there is no vacuum created in Iraq that Iran can fill in and make sure that Al Qaida does not reemerge. Now's the time to pour it on. There will not be 60 votes.

In April, Harry Reid said the war was lost and the surge has failed. September is about trying to justify those statements in April.

We need to listen to this general, listen to this ambassador and understand that we have made progress. And if we pull back now any troops based on politics, you're going to allow an enemy to get off the map that's on the map and you're going to break the hearts of the troops that have brought about this success.

They believe they're winning. Let them win.

WALLACE: Let's talk about General Petraeus.

Now, Senator Feinstein, you were very complimentary about him a moment ago, but even before he testifies, some Democratic leaders are challenging his credibility.

Senator Reid says he's been spinning rosy scenarios for years, and Senator Durbin this week said this.

(BEGIN VIDEO CLIP)

SEN. RICHARD J. DURBIN, D-ILL.: By carefully manipulating the statistics, the Bush-Petraeus report will try to persuade us that violence in Iraq is decreasing and the surge is working. Even if the figures are right, the conclusion's wrong.

(END VIDEO CLIP)

WALLACE: Senator Graham, what do you make of the attempts by some Democratic leaders in the Senate to discredit General Petraeus?

GRAHAM: Very upset, because he's coming because we passed a law telling him he had to come. Now, this idea that he and Ambassador Crocker are going to cook numbers to continue a war where people are going to get hurt and killed because they have a political agenda is ridiculous. It's offensive.

This is a good man, General Petraeus, and I appreciate what Dianne Feinstein said about him. It is clear to me that he's going to give a balanced report.

We've got a long way to go in Iraq, but finally we're getting this right. We've got the team in place that's delivered results, and I don't want to look at this war from the next election point of view. I want to look at it from the next generation's point of view.

Once Harry Reid said the war was lost in April, how does he change? How does he back off? I wish he would back off.

I made mistakes. Right after the fall of Baghdad, I thought it would be easier than it was. I supported a failed strategy for about a year until I realized the old strategy wasn't working.

There's no shame of re-evaluating your position and changing your position to support a strategy that will make this country more secure. We are winning in Iraq finally, and the only way we're going to lose this war is to have politicians in Washington undercut the surge by political redeployment, not military redeployment.

WALLACE: Senator Feinstein, let me ask you, because you did say complimentary things a moment ago about General Petraeus.

FEINSTEIN: Yes.

WALLACE: How do you square that with the comments of your two top leaders in the Senate, Senator Reid, Senator Durbin, who have been very critical and somewhat diminishing about the integrity of General Petraeus?

FEINSTEIN: Well, there are many generals who do not believe the surge is all that Lindsey has just stated it to be, and that we can't win this war militarily.

And so the necessary accommodations, the reconciliation, has to be made, and this Iraqi government refuses to do it. Now...

WALLACE: Yes, but I'm asking about General Petraeus.

FEINSTEIN: Well, let me -- well, I don't think General Petraeus has an independent view in that sense. General Petraeus is there to succeed. He may say the progress is uneven. He may say it's substantial.

I don't know what he will say. You can be sure we'll listen to it. But I don't think he's an independent evaluator.

Now, you skim over the fact that you've had three other reports -- the Jones report, the GAO report, other report -- saying that the statistics are questionable, the progress is uneven at best, the things that need to be securitized are not securitized. Electricity in Baghdad is on but six hours a day. I mean, I can go on and on and on.

And you might -- there is no evidence that killings are down. It's estimated at least 2,000 people are killed a month. There is no Shia on Shia -- there is no Sunni on Sunni -- data kept. So all of the statistics are questionable.

WALLACE: Senator Feinstein, I've got less than a minute left, and I want to get into one last subject with you, if I can.

You're a member of the Senate Judiciary Committee. The president is expected to name a new attorney general perhaps this week. The leading name right now is Ted Olson, who represented the president in the 2000 electoral legal battle.

Back in 2001, when he was up for solicitor general, you voted against him because you said he was too partisan. Do you think that Ted Olson would make a good attorney general?

FEINSTEIN: Well, that remains to be seen. There are people that say yes and there are people that say no. You can be sure of one thing. He will receive a fair hearing.

WALLACE: But would you just as soon that the president doesn't name him?

FEINSTEIN: That's up to the president. I'm not going to say. I think it's his nominee. Whether we confirm him or not is another story, and that's based on our perception of whether he can be an independent figure, the attorney general for all the people, not the attorney general for the White House.

This has been indisputable in the case of Attorney General Gonzales, and it's created a lack of credibility, a department that's virtually rudderless at the present time, so we do need to get someone in there.

He will have a fair look. That's all I can say.

WALLACE: Senator Feinstein, Senator graham, we want to thank you both so much for talking with us.

FEINSTEIN: Thank you, Chris.

GRAHAM: Thank you.

WALLACE: And thanks for coming in.

Up next, with Osama bin Laden making an appearance on the sixth anniversary of 9/11, where do we stand in the war on terror?

We'll sit down with the president's homeland security adviser, Fran Townsend, right after this break.

(COMMERCIAL BREAK)

WALLACE: With us now to discuss that new tape from Osama bin Laden and an overview of the war on terror is Fran Townsend, the president's homeland security adviser.

And welcome back to "Fox News Sunday."

FRAN TOWNSEND, WHITE HOUSE HOMELAND SECURITY ADVISER: Good to be with you.

WALLACE: Let's start with the videotape. I know U.S. intelligence is studying it very closely, frame by frame. One, is it Osama bin Laden? And two, any clues as to when he made it?

TOWNSEND: Well, for sure, the intelligence community, having looked at it, believes it is bin Laden. The indications from the contents of the tape are that it was made recently, certainly in the last several months.

WALLACE: What about his appearance? Is the beard -- can you tell whether it's real or fake, which would indicate, if it is fake, that he's then going around Pakistan clean shaven?

And can you tell anything about his health or the wear and tear on him from looking at the tape?

TOWNSEND: Chris, these are all the sorts of things that the intelligence community will do a technical analysis to evaluate. Obviously, we're still going through that now.

But looking at issues related to his health, his whereabouts and, frankly, the content of the tape, to make sure that this is not a trigger for an attack -- these are things that the intelligence community is completely devoted to as we speak.

WALLACE: And do you have any answers?

TOWNSEND: No. I mean, we will obviously action any information that we find from that. But as you can understand, the particulars of the technical analysis are not something we're going to reveal. WALLACE: But let me ask you about the contents of this. Any hidden threats that you can see so far or any clues that it could be a trigger to his supporters out in the field to act? And just more generally, what is he trying to accomplish here?

TOWNSEND: Well, based on our experience, Chris, we haven't seen to date the use of an audio or videotape as a trigger for an attack, so we start from that premise.

There's nothing overtly obvious in the tape that would suggest that this is a trigger for an attack. Let's remember almost six years now since September the 11th, we have not seen much of bin Laden.

Remember, the last audiotape was in June of '06. The last video was just before the election in October of '04. This is about the best he can do. This is a man on the run from a cave who is virtually impotent other than these tapes.

WALLACE: And so what do you think he's trying to do with this tape, basically say to the world, "I'm still here, I'm..."

TOWNSEND: That's right. I mean, we have been, by a variety of measures, whether it's our operations overseas, our defensive measures here at home, successfully disrupt or avoided another attack.

We take the tapes seriously. Look at the activities recently in Germany and Denmark. So we know that Al Qaida is still determined to attack, and we take it seriously. But this tape looks -- appears to be nothing more than threats. It's propaganda on their part.

WALLACE: As we reach, on Tuesday, the sixth anniversary of 9/11, let's take a kind of overview look at where we stand on the war on terror. This week, CIA Director Hayden gave this chilling assessment. Let's take a look.

(BEGIN VIDEO CLIP)

CIA DIRECTOR MICHAEL HAYDEN: Our analysts assess with high confidence that Al Qaida's central leadership is planning high-impact plots against the American homeland.

(END VIDEO CLIP)

WALLACE: So the intent is still there. What about Al Qaida's operational capability to carry off an attack?

TOWNSEND: Well, the national intelligence estimate that Director Hayden was referring to says that they've regained some of their capability. They have regained some of their operational leadership. We do still have Osama bin Laden and Zawahiri at large.

What they haven't seemed to be able to do is find a way to get the operatives inside the United States. The estimate, the intelligence estimate, makes clear Al Qaida views the United States as a more difficult target to attack.

And frankly, that's the result of the efforts of thousands of public servants who work very hard every day to stop the next attack.

WALLACE: Do you -- and I don't know if you have hard evidence one way or the other, but do you believe that Al Qaida has cells of operatives currently operating in this country?

TOWNSEND: Obviously, that is the number one priority for action by the FBI as well as the rest of our intelligence community.

To the extent we identify any possibility of that sort of activity, we investigate it and we disrupt it. We either arrest people, we deport them, but we take action against it.

I'm not going to talk about ongoing investigations, but obviously, this is the number one priority.

WALLACE: But do you believe that they have cells here?

TOWNSEND: I believe that they've tried. I believe they're trying. We look every day to see if there are connections between Al Qaida operatives overseas and here in the United States, and that's the sort of thing we work with our allies like our German counterparts, like our Danish counterparts, to make sure to look for connections.

WALLACE: Democratic presidential candidate John Edwards says that the war on terror is a bumper sticker. And this week he said we're actually less safe than we were before 9/11. Let's watch.

(BEGIN VIDEO CLIP)

FORMER U.S. SENATOR JOHN EDWARDS: Are we any closer to getting rid of terrorism than we were six years ago? And the answer to that is no. In fact, we're further away.

(END VIDEO CLIP)

WALLACE: Is Senator Edwards right?

TOWNSEND: I think Senator Edwards' comments are irresponsible and, frankly, unwarranted, unsupported by the facts.

We've been nearly six years now without another attack because we're safer than we were prior to September the 11th. Is there more we need to do? Absolutely. And we continue to take action to strengthen our country's defenses every single day.

But to suggest that we are not safer than we were six years ago and haven't made progress is just irresponsible and not supported by the facts.

WALLACE: But the chair and the vice chair of the 9/11 Commission are out with an article this morning where they say that we're still not safe enough. And let's take a look at their comments.

"No conflict drains more time, attention, blood, treasure and support from our worldwide counterterrorism efforts than the war in Iraq. It has become a powerful recruiting and training tool for Al Qaida."

And on the domestic front, they say, "We have become distracted and complacent." Ms. Townsend, your response.

TOWNSEND: There is no question that the war in Iraq is used as a propaganda tool by our enemies. But our enemies have also said that it's critical to them to win that battle.

There is no question that Al Qaida in Pakistan, in the federally administrated tribal areas, Al Qaida operatives in the Taliban in Afghanistan are connected to Al Qaida in Iraq. We take those threats very seriously.

Do they use images from the battlefield as recruiting tools? Absolutely, as enemies have historically in wars and conflicts. It is not a distraction. It is an integral part of the war effort.

And we know that because we know from Al Qaida -- intelligence that we've declassified that bin Laden watches and cares about what happens in Iraq, and he's tasked them to undertake external operations.

WALLACE: But on the domestic front, the 9/11 commissioners are saying that our efforts to try to prevent terrorism lack urgency.

And in fact, you had a report this week by the inspector general of the Department of Homeland Security who talked about the fact that government programs to keep bombs out of the cargo holds of airplanes are full of holes.

TOWNSEND: We have taken a number of measures -- Chris, when we talk about the progress that we've made, there's no question that that progress, the progress we've made to secure this country, is what's responsible for stopping the next attack.

Does that not mean -- the president has said it -- we're safer but not yet safe? There are additional measures that we need to take, and we work at that every single day, but that's not to suggest that we haven't made progress.

WALLACE: Let's talk about another aspect of the war on terror, and that is the fight in this country over civil liberties versus security.

This week a federal judge struck down part of the Patriot Act, saying that it was unconstitutional. You've got congressional Democrats who are already talking about taking back some of the powers that were given to you in the rewrite of the Foreign Intelligence Surveillance Act this summer.

Are the courts and Congress making it tougher for you and others in the administration to do your job fighting the war on terror?

TOWNSEND: I will tell you this -- and Director Hayden, in his speech, part of the speech that you didn't show, referred to it feeling like September the 10th. Congress and our overseers cannot walk back the vital tools that we need. The Foreign Intelligence Surveillance Act reforms that we got in August -- they're temporary, and they expire in February. We need those tools.

The inspector general for the Department of Justice, when they issued a report on the national security letters and the use of the Patriot Act, made the point that the Patriot Act provides vital tools. We need those tools to continue to win the war on terror.

And so we need FISA reform made permanent. We need the national security letters. We need the Patriot Act. We need all those tools.

WALLACE: So what do you think, trying so hard to keep America safe, when you've got the courts -- and here's a judge in New York who has twice now said that the same provision is unconstitutional -- and you've got the Congress talking about walking these things back?

TOWNSEND: Well, in terms of the court's decision, the Justice Department is looking at that and evaluating what their options are to appeal such a decision.

And when it comes to FISA, we need Congress in this session to extend and make permanent the reforms to FISA. You know, when we had those conversations in August, we've made compromises and we addressed the FISA reforms to the most critical gaps that we had. But we need it made permanent.

WALLACE: Let me just ask you -- and we've got less than a minute left. There's a story in the New York Times today that says that the FBI until recently -- they've stopped the program -- was surveilling the calls not only of Americans who were suspected of being terrorists but also all these communications of anybody they spoke to.

There's talk now about giving domestic law enforcement access to spy technology, finding more ways to surveille phone calls and e- mails.

The argument from civil libertarians is that you're spying on us, that you're removing our civil liberties. How do you respond to that?

TOWNSEND: You know, we now have a privacy and civil liberties officer in every single federal department. The FBI voluntarily suspended that program. But all it is is taking legally acquired data and applying analytic tools to it. They suspended it.

But it has been used to disrupt in the past terrorist plots. It's a tool that we don't use very often, but it's a tool that we need.

And they've put in -- the director of the FBI has created a compliance unit, and he has his department looking at the use of that tool to ensure privacy and civil liberties while giving us the benefits of the tool.

WALLACE: Ms. Townsend, we're going to have to leave it there. We want to thank you so much for sharing your Sunday with us and talking with us today.

TOWNSEND: Thank you.

WALLACE: Coming up, the race for the White House, Republican style. One big name gets in, another big name makes a comeback. We'll handicap the field with our Sunday regulars when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

FORMER NEW YORK CITY MAYOR RUDY GIULIANI: I think he's done a pretty good job of playing my part on "Law and Order."

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, R-ARIZ.: Maybe we're up past his bedtime.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

FORMER U.S. SENATOR FRED THOMPSON: It's a lot more difficult to get on "The Tonight Show" than it is to get into a presidential debate.

TALK SHOW HOST JAY LENO: Exactly. Exactly. All right.

(END VIDEO CLIP)

WALLACE: Well, there you have some comments by candidates already in the race, as well as Fred Thompson, about his decision to kick off his campaign on late-night television.

And it's time now 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, we were talking about this in advance last Sunday, but as it played out, Brit, did Thompson get away with ducking the debate in New Hampshire? And how do you feel in these early reviews the roll- out of his campaign is going?

BRIT HUME, FOX NEWS WASHINGTON MANAGING EDITOR: I think he did get away with it. Obviously, it remains to be seen whether New Hampshire voters were much offended by the fact that he didn't attend what is, after all, still a fairly early debate.

I thought he did well on "The Tonight Show." And I thought his first day on the campaign trail was certainly a better performance than he had been giving in what had been a kind of random and somewhat wandering series of speeches that he had given before.

So he think he got off to a reasonably good start now that he's finally started.

MARA LIASSON, NPR: Yes, I think he didn't lose anything by not showing up at the debate. It also gave all the other candidates an opportunity to kind of trot out their funny pre-planned Fred Thompson jokes.

But look. I think in about a month we're going to know if the Fred Thompson boomlet, or whatever we're going to call it, is real. He's been polling really well by not being in the race. Now he is going to be in the race, and the expectations are very high for him. And we're going to see if he can meet them.

I think that you do start the fall season of this campaign with three very formidable Republican candidates -- you know, Giuliani, Romney and Thompson, with McCain showing a very strong kind of -- I don't know if you want to call it surge of his own, but for somebody who was in as deep a hole as he was, he put in a very, very good performance and is showing some strength.

WALLACE: Bill, we'll get to McCain in a moment, but going back to Thompson -- and we all end up almost being drama critics in this first days -- how did his speech go?

The two criticisms you hear from people who are out on the campaign trail with him are that he generally is not firing up the crowds there and, I think perhaps more important, that he's failing to give people much of a rationale for his candidacy, that there's no particular initiative other than general conservative principles.

BILL KRISTOL, WEEKLY STANDARD: Yes. Well, general conservative principles aren't bad in the Republican Party, and he's a pretty conservative conservative. He's not a hard-right ideologue, but he was a pretty conservative senator, and he's going to say, "I'm a -- I've been a consistent conservative. I am a conservative. I'm a thoughtful conservative. I'm not a sort of mean-spirited one."

Yes, I agree with Brit. I think he got off to a pretty good start. And the idea that he was going to unveil a complicated health care plan in the first week, I think, was perhaps a little unreasonable.

JUAN WILLIAMS, NPR: Well, Republicans don't have a candidate, and you know, Fred Thompson, without announcing, was running second in most of the national polls, so he's doing pretty well there.

I think there's clearly a hunger for this kind of candidate, and it is for a conservative candidate, a true blue conservative.

The problem is that the man who's been leading most of the time, Rudy Giuliani, is socially pretty liberal. I think Mitt Romney flip- flops on some of these key issues.

And now they're back and forth firing at each other over immigration. And neither of these guys has been strongly anti- immigrant -- Giuliani, as mayor of New York, or Romney, as governor of Massachusetts.

But they're playing to the base, and I think doing so in a way that is less a matter of catering to the base, more patronizing, and I just -- I think it's unappealing politics, and when you...

WALLACE: Well, I'm glad to hear that it's the Republicans who are patronizing their base, because Lord knows that's not happening in the Democratic Party.

WILLIAMS: Well, not to this extent, not on...

WALLACE: Really?

WILLIAMS: I don't think so.

WALLACE: You don't think so, on the war?

WILLIAMS: On the war? No. In fact, the base has been very clear. They want the U.S. to get out of Iraq.

WALLACE: And you don't think that Obama and Edwards and Clinton have been falling all over themselves to satisfy that base?

WILLIAMS: They have been trying to -- let me just say something. That sentiment goes beyond the base, Chris, in terms of Americans wanting to get out of Iraq. If you think that's just the Democratic base, you're way off.

HUME: That takes care of you, buddy.

WALLACE: That takes care of me, pal.

(LAUGHTER)

Well, let's go back to McCain, because Fox News held the debate on Wednesday, and I think the general consensus was that McCain did pretty well.

Brit, have we been a little too quick to write off McCain?

HUME: Possibly. You know, he's now at a stage where he has some advantages that people like Romney are trying in one way or another to buy, if you will, by, you know, making themselves known.

McCain is already well-known, well-known in New Hampshire. He may be able to campaign successfully with a lot less money than, say, Romney can. So it's possible that he could get a foothold in this race again. And if that ever were to happen, you know, he might come forward.

I think the puzzling question that comes out of this week and the one that I'm still not sure I have the answer to is why does Romney not seem to penetrate more. Why is Romney not -- doesn't seem to break out?

Here's this extraordinarily attractive guy, has a great success record, was a Republican governor in one of the most Democratic states in the country, attractive family, managerial ability -- all of these qualities.

He's running as a conservative. He states conservative positions. Now, maybe they are not the positions he's always held, but most of the time when people see somebody come around to their own views, they like that.

And it certainly is true that he's ahead in these two states, Iowa and New Hampshire, and by a significant margin, but nationally he doesn't seem to have broken out.

And you see him in the debates. And while he does well enough, he doesn't seem to break out. It's hard for me to put my finger on why exactly.

LIASSON: Yes. Well, then the flip side of that question is why Giuliani, who is running ahead nationally, doesn't seem to be doing better in these early states.

Now, one of the answers that people have suggested to that is as long as Romney is on the air -- and he has spent more money than anybody else on commercials in these states -- his numbers have gone up, and that's one of the reasons he's taken a lead there.

And you can assume that as we get closer to the primary and caucus dates, the other candidates are going to start spending heavily, too.

But I think one of the other things that's been remarkable about this season is that Giuliani -- after everything that primary voters have learned about him and his socially liberal views, he is still running as strong as he is, and maybe that means that some of these issues aren't as important.

It also could be that the immigration issue, which is salient in states like Iowa, is not packing the punch against Giuliani that certainly Romney hopes it would.

WALLACE: Bill, let me ask you about Giuliani and immigration, because he may have inflicted a wound on himself this week. We'll see how big a wound.

He was interviewed and said that illegal immigration is not a crime but a civil violation and that it shouldn't be a crime. Now while technically correct, is that a door that he necessarily wants to open?

KRISTOL: Well, he answered a question and he correctly stated the law. It's a little hard to see how he's going to get beat up on that.

Can I come back to McCain for a second since they both walked away from McCain so fast? Look. The story of the debate was that McCain won it, and he won it by being a supporter of the surge and the most -- in everyone's view, the person who knows the most about it, the person who called for more troops way back in August 2003.

He is going to spend this month defending Petraeus, defending the war, saying we cannot afford to lose, we have a reasonable chance to win. He is right on the issue from the point of view of most Republicans. I think it will help him.

I don't know he can make it all the way back, but he is going to have a surge. The surge has worked. I mean, look. This surge would not have happened without McCain. Really, people don't appreciate that. Bush decided to do it. Others recommended it.

But if McCain hadn't stood up, then the leading Republican presidential candidate, and said, "I'm for it," if he hadn't attacked the Iraq Study Group, it wouldn't have happened. This is McCain's surge as much as Bush's. It's working. McCain deserves credit for it. And I think he's going to get some.

WALLACE: Juan, you have a minute. You can talk about McCain. You can talk about Romney. You can talk about Giuliani. Go ahead.

WILLIAMS: Well, let's just start with McCain. I think that McCain has been a supporter of the president, and I think he thought it was going to be what was going to boost him in the race, and it clearly has not overcome conservative apprehension about the fact that McCain is, you know, pro-immigration, that McCain is a guy who, on campaign finance, on taxes -- he's just someone that -- on torture -- the base does not feel comfortable with to that extent.

What he did in this debate, and I think he did it very well, was exceed expectations, because everyone, especially in the national media, thought he was a dead man walking, and too old at that.

So now they think, "Oh, you know what? Look. He's done pretty well. He looks presidential, looks passionate." And he did all that. I think he did fine. But to think that this is going to revive his campaign -- and it's got no money, no structure -- I think is going a little too far.

WALLACE: All right, panel. We need to step aside for a moment.

But when we come back, the new bin Laden tape -- where we stand in the war on terror -- and General Petraeus gets ready to testify.

We'll be right back.

(COMMERCIAL BREAK)

WALLACE: On this day in 1990, then-President Bush and Soviet President Gorbachev urged Saddam Hussein to pull out of Kuwait. The two leaders warned Saddam they were prepared to take additional steps if Iraq refused.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESIDENT GEORGE W. BUSH: ... take as a reminder about the dangerous world in which we live and it is a reminder that we must work together to protect our people.

(END VIDEO CLIP)

WALLACE: That was President Bush Friday commenting on the newly released bin Laden tape.

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

Well, Brit, besides the discovery that they apparently have Just for Men in Pakistani caves, what strikes you about the bin Laden tape?

HUME: Well, I am really excited that bin Laden has joined the cause on fighting global warming. I notice he's concerned about that.

He also seems to be concerned about the mortgage difficulties in the United States of America.

WALLACE: Yes, he talked about the subprime mortgages.

HUME: Yes, he's concerned about the -- so people who are struggling to deal with those issues now obviously have an important ally in this man, in this tape, which -- I think, you know, more seriously, these are the ravings of a madman.

I mean, this is crackpot stuff. That's what we're up against. The guy's a crackpot.

LIASSON: But he's still here. And that's a problem. And his networks, or at least networks that have been inspired by, him have expanded. And whether or not they can carry out an attack, they certainly can plan one, which we saw by the arrests in Germany.

So I think that, you know, on this sixth anniversary, terrorism is as much a threat as ever. Now, there hasn't been another attack on U.S. soil, which is good, but I do think you're going to see the -- the 9/11 hold on the American political debate has really changed.

And I thought you saw John Edwards this week talking quite, you know, dismissively of the administration's policy on terrorism. And I do think you see Democrats being more willing than they ever have to really break with the administration on fighting terror.

WALLACE: Bill, let's talk about that. Tuesday is the sixth anniversary of 9/11. Where are we in the war on terror?

KRISTOL: I think we're winning it gradually, as was to be expected. What's amazing about this tape is it's entirely addressed to the Americans, and bin Laden basically acknowledges he can't win unless America capitulates.

You know, there's not much talk in this tape about, "We're doing great." You know, everyone in America keeps saying Iraq has really emboldened Al Qaida and has made recruiting easier. That's not the tone of this tape, and it's not, incidentally, confirmed by any empirical evidence.

There are plots that are being disrupted thanks partly to our eavesdropping capabilities, which the Democrats want to lessen.

I'm very struck by one sentence in this tape. There's a message for you -- this is you, Americans -- and the mujahideen. The entire world is in pursuit of them. The entire world is in pursuit of bin Laden's followers.

So much for the notion that this is the wave of the future, that they're really benefiting from Afghanistan and Iraq.

Now, I'm worried that the tape might be a signal, a trigger, for an attack because classically, the -- you're supposed to, before you attack, give your enemy a chance to convert to Islam, and that's what he asks Americans to do.

So they are still plotting. And as you know from Germany, they are serious plots. But I'm heartened by this tape. He thinks that he can't win unless America collapses.

WILLIAMS: Well, I mean, I think there -- I was talking to people at homeland security just yesterday, and they're saying that there is no uncoded messages that they can make out so far.

But what this does strike me as is more the kind of propaganda bin Laden is after. I mean, the whole war, it seems to me, over ideas is one in which, ironically, bin Laden seems to be doing better than President Bush in the United States.

KRISTOL: Well, who is the propaganda directed at?

WILLIAMS: The propaganda is directed at the world.

KRISTOL: To his fellow Muslims?

WILLIAMS: No.

KRISTOL: No.

WILLIAMS: I think the propaganda is directed toward the West. And he goes after the U.S. and its European allies.

So in that regard, what he's doing, I think, is -- and this is where he's trying to reach out to the left, to the Noam Chomskys of the world, and, as Brit was saying, the people who are concerned about global warming and the like.

But he wouldn't be having this impact, one, if he wasn't here, and he's still here, and you know, that's a sad thing six years later. I think we should have gotten this guy, even at the cost of disrupting Pakistan. But I don't know. That's something to be weighed.

But the second point is that in terms of the war of ideas -- and this is what Tom Keane the 9/11 commissioners wrote about today in their op-ed. In terms of the war of ideas, because of our stand in Iraq, we continue to be posited as the bad guys in the world, despite the fact that we, as Americans, have the strong economy and the better ideas and the better...

HUME: Juan, look at what's happening in Iraq. Al Qaida is a Sunni organization. And which people in Iraq are turning against Al Qaida? It's the Sunnis.

WILLIAMS: Brit, this is one limited area in Anbar...

HUME: Well, excuse me.

WILLIAMS: ... and we can't even afford to pull our forces out of Anbar because the progress there is so tenuous.

HUME: It isn't just in Anbar. It is elsewhere as well. The problem that Al Qaida faces in any war of ideas is it is a gang of mass murderers. That's what these people are.

WILLIAMS: I agree.

HUME: They offer nothing to the people of the world. And that is why what he says in the tape is true. All these nations of the world are after them. They're on the run.

WILLIAMS: Right.

HUME: They're not winning. They're not winning any war of ideas. The truth is they really have no ideas.

WILLIAMS: Well, in fact, what we're seeing -- and this is something that even the 9/11 commissioners say this morning in the paper -- is that the war in Iraq is serving as a recruiting tool for Al Qaida, creating this group Al Qaida in Iraq, where it might not otherwise exist.

And so therefore what you're seeing is this propaganda effort continuing to grow...

HUME: No, that's the whole argument that you've heard all along, you better not go and take these people on in any way because it only stirs them up and creates more of them. I don't buy it.

WILLIAMS: Well, that's not why we went to Iraq. I mean, remember, we were going there after weapons of mass destruction. Remember, we were going there to spread democracy.

HUME: We also were going there because we believed there was a terrorist connection. And if the terrorists didn't care about Iraq, they certainly...

WILLIAMS: And we never proved the terrorist connection, Brit. HUME: Who are we fighting there now, Juan? Al Qaida in Iraq. They were there before we got there and they're there now.

WILLIAMS: We are overwhelmingly in the middle of a civil war between Shia and Sunni, and we have switched sides. Initially, we were supporting Shia. We thought that we could get a political structure of governance working, which is why we had a surge, to allow government to take place, a successful government, and to allow the army and the police to stand up, so we could stand down.

And guess what? There hasn't been any...

(CROSSTALK)

WALLACE: In the couple of minutes we have left, General Petraeus is going to testify this week, and you know, we all thought for months, coming up to -- now, this was going to be the decisive make- or-break moment.

Is the battle already over before it's been fought, Mara? I mean...

LIASSON: Well, I don't know about the battle being over. I just think the battle has changed. I think there is this kind of remarkable shift in the discussion to -- there's almost a consensus forming that everyone wants to be able to withdraw.

Even the president is dropping hints about being able to pull back troops. The question is when you do it, how fast, and should there be a deadline.

And on that last criteria, the Democrats seem remarkably willing to at least put that aside, the hard-and-fast deadline, and talk about how fast would you do it, how many troops would you take out.

But I think there's no doubt that after the first of the year, we're going to be looking at a smaller footprint in Iraq than we are now, at least by the spring.

KRISTOL: Well, we're going to look at it. We're going to draw down one brigade. We're going to keep a lot of troops in Iraq. We are winning the war in Iraq. We are crushing...

LIASSON: But that might be a way to forge a consensus if troops are starting to come down. If Republicans had not...

WALLACE: Is it a consensus that's forming? Or basically, has the president has won and the Democrats have lost?

KRISTOL: The president is winning, and sober Democrats who want to be serious about the fact that we are fighting Al Qaida in Iraq, and we are fighting Iranian proxies in Iraq, and serious people who want to think about the consequences of losing to Al Qaida in Iraq or the Iranian proxies in Iraq, are coming to the view that of course you can't just pull out. And Hillary Clinton knows you can't pull out. And some of them want to draw down a little more quickly than Petraeus is going to draw down, and then the surge is going to unwind.

But the truth is we are going to have over 100,000 troops in Iraq when George Bush leaves office, and we are going to be winning the war in Iraq. And the next president is going to continue fighting the war in Iraq.

WILLIAMS: Well, you speak the truth. I mean, I think what you just said is absolutely right. We're going to have 100,000 troops in Iraq for I don't know how long.

I think if we ask the American people, "Are you willing to have -- to sustain that amount of commitment for what? Exactly for what? Tell me why," I think most Americans are going to say...

WALLACE: So why are the Democrats going to sign on?

WILLIAMS: Well, at this point -- what you have had over the last several weeks is a campaign by the Bush administration -- it's going to be capped off Tuesday by Petraeus' report. He's in an untenable position, damned if he does and says, "You know what? This is hurting the Army," and damned if he doesn't.

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

Up next, a special campaign Power Player of the Week.

(COMMERCIAL BREAK)

WALLACE: With Labor Day come and gone, it's not just pro football that's in the regular season, but also presidential politics.

We're profiling some of the key advisers who work behind the scenes for the leading candidates. Here's another You Decide '08 Power Player of the Week.

(BEGIN VIDEOTAPE)

MIKE DUHAIME, RUDY GIULIANI'S CAMPAIGN MANAGER: ... the candidate's schedule, to fundraising, to overall strategy and how to win the campaign.

WALLACE: Mike DuHaime is Rudy Giuliani's campaign manager, which means he's got all the pressure of making sure the frontrunner for the Republican nomination stays in front.

Experts keep saying as voters get to know where Giuliani stands on abortion and guns, he'll start to fade. DuHaime says he's never bought that.

Why haven't the social issues killed him, as a lot of people thought they would?

DUHAIME: One, Rudy Giuliani governed very much as a conservative in a place that's very difficult to do so.

WALLACE: But even more important, DuHaime says, voters have seen for themselves what Giuliani did after the attacks on 9/11.

(BEGIN VIDEO CLIP)

GIULIANI: The city is going to survive. We're going to get through it. It's going to be a very, very difficult time.

(END VIDEO CLIP)

DUHAIME: When people are looking for a president, they're looking for a leader. And they've seen Rudy in action already, and they know what kind of leader he is.

WALLACE: DuHaime is only 34. But as political director for the Republican National Committee, who ran the get-out-the-vote operation last November, he was a hot property for all the GOP presidential candidates.

He says Giuliani was the only choice.

DUHAIME: I lived in New Jersey right across the Hudson River during September 11th, and 56 people from my town were killed on that day, and seeing what happened that day and how he responded, there was -- to me, it was a no-brainer who should be president.

WALLACE: DuHaime grew up in a political family. His mom was mayor of their home town. His father was a county commissioner. But when he went to college at Rutgers, all he wanted to do was play on the hockey team where he became captain.

Have you found that your skills as a hockey player have stood you in good stead in politics?

DUHAIME: Hockey players are kind of scrappy and like to fight and like to kind of get into it a little bit, so I guess there's an element of that that's similar in politics.

WILLIAMS: Two years out of college, he got involved in a local race where he says a campaign consultant told him he had an instinct for politics.

DUHAIME: I do remember that he said, "You get the joke." And I said, "What do you mean you get the joke?" He said, "Some people get it or they don't get it."

WALLACE: Now DuHaime's running a national campaign, talking with Giuliani several times a day.

DUHAIME: I guess there's no such thing as an average day. That's probably the best way to describe it.

WALLACE: And is it basically non-stop from now at least through the nomination?

DUHAIME: Yes, absolutely.

WALLACE: He says he learned a lot from Karl Rove.

DUHAIME: He's won the Super Bowl twice, as they say. You know, you win -- a presidential campaign is as big as it gets in this business, and when you win it, and you win it back to back, there aren't too many people who can compete with that.

WALLACE: Can you imagine doing this, this amount of pressure, this amount of stress -- can you imagine doing this for another 14 months?

DUHAIME: If you're involved in politics, you love it. It's not -- the intensity is really what helps feed you and you get an awful lot of adrenaline from this, so it's enjoyable.

The next 14 months, you know, in many ways will be the greatest 14 months of my life. So I'm going to enjoy it.

(END VIDEOTAPE)

WALLACE: I asked DuHaime if he's worried about movie star Fred Thompson getting into the race. "No," he said, "not when you've got a real hero."

For more visit the FOX News Sunday web page.

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