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Energy Discussion & Russert Remembered

Fox News Sunday



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

$4-a-gallon gas -- what can Congress and big oil do to stop the record climb in energy prices? We'll ask two key senators, Republican Kay Bailey Hutchison and Democrat Byron Dorgan, plus the head of the American Petroleum Institute, Red Cavaney.

Then, McCain and Obama begin their run to November. We'll get an early readout on the general election campaign from Republican strategist Karl Rove.

Plus, the Supreme Court delivers a landmark ruling on the rights of foreign detainees. How will this affect the war on terror? We'll ask our Sunday regulars -- Brit Hume, Mara Liasson, Bill Kristol and Juan Williams.

And we'll remember the king of Sunday morning talk shows, Tim Russert, all right now on "Fox News Sunday."

And hello again from Fox News in Washington. Well, it has been a sad weekend for a lot of us. From presidents to political junkies, we are all mourning the loss of Tim Russert. We'll have more to say about that later.

But first, as Tim would want, let's get to the big issues. And there is no bigger challenge to the country now than the soaring price of energy. What can be done about it?

Well, for answers we've assembled a roundtable of experts -- two of the point people in the Senate on this problem, Byron Dorgan, Democrat of North Dakota, and Kay Bailey Hutchison, Republican of Texas, and Red Cavaney, president of the American Petroleum Institute.

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

HUTCHISON: Thank you, Chris.

DORGAN: Thank you, Chris.

CAVANEY: Thank you, Chris.

WALLACE: Let's start with the most obvious solution, domestic drilling. And as prices soar, public opinion is turning around on this subject. According to a recent Gallup poll, as you can see there, 57 percent now favor drilling in areas that are off-limits.

Senator Dorgan, if we started drilling in ANWR, the Arctic National Wildlife Refuge, if we started drilling offshore, if we started mining shale rock out west, over time we could dramatically reduce the price of energy and our dependence on foreign oil.

Why are Democrats blocking drilling as part of the mix of solutions?

DORGAN: Well, first of all, I don't believe that statement is true. I mean, we have opened up at least 181 in the gulf of Mexico, substantial oil and gas reserves.

I and Senator Bingaman joined Senator Domenici and then Senator Talent as the four people that offered the legislation to open that up.

You started with ANWR, which everybody always starts with, but even John McCain has voted against drilling in ANWR. He said, "We ought not drill in the Everglades, we ought not drill in the Grand Canyon, we ought not drill in ANWR."

I believe we need to do a lot of things, including additional production, including offshore production, but we also need to move dramatically toward renewable energy as well.

And one final point. In North Dakota we have just had the largest assessment -- North Dakota and Montana -- in what's called the Bakken shale field, the largest assessment of recoverable oil reserves that was ever issued in the lower 48 -- over four billion recoverable barrels of oil.

So there is a lot of drilling going on, and I hope that we see more in the right places.

WALLACE: I just want to follow up with you for a second before I bring in your colleagues here. ANWR -- and let's take a look, because we have a map of ANWR.

In a refuge the size of the state of South Carolina, we're talking about drilling in an area the size of Washington's Reagan Airport. ANWR contains 10 billion barrels of oil. Can we really afford to put that off limits?

DORGAN: Well, there's far more oil in the Gulf of Mexico than in ANWR, far more oil there. And I'm someone who believes we ought to be drilling in a portion of that.

But as I said, even Senator John McCain has voted against drilling in ANWR. Don't lay that just at the feet of Democrats. That is a large area set aside in legislation signed by Dwight Eisenhower. To suggest that ought to be the hood ornament for what we do in terms of solving our energy problem is just wrong.

We need additional drilling. We need renewables. We need conservation, efficiency -- all of those things in a very aggressive way.

WALLACE: Senator Hutchison, congressional Republicans are pushing for more drilling, but as Senator Dorgan pointed out, your presumptive nominee is against a lot of it.

He is against drilling in ANWR. He says that drilling offshore should be left up to individual states which in most cases, like Florida and California, have banned it. Is he wrong on such an important issue?

HUTCHISON: Well, let me first say that while Byron Dorgan has just said that he would support more drilling as part of a package, in fact, the Democrats are blocking any kind of increase in production. They are.

And if we don't increase the production in this country, we are not going to bring the price of oil down. We're not going to bring the price of gasoline at the pump down. And we're not going to become independent.

Now, Senator McCain has said that he believes ANWR should be off- limits, but he has embraced all of the other production areas, off the coast.

WALLACE: No, in terms of individual states, he says that it should be left up to the states.

HUTCHISON: Well, that's right. And that's what is in the plans. It is an incentive that Republicans put in the last piece of legislation, which many Democrats are trying to withdraw, for states to be able to get royalties if they explore and produce off their shores. It is a great incentive.

Let me just say that what we really must do if we are going to become independent, rely on ourselves, solve this problem and bring prices down, we have to have a myriad of proposals, including drilling in ANWR, drilling off the coasts on the outer continental shelf and the oil shale, which is - - all of those have more reserves than all of the oil in the Middle East.

And in addition to that, we can do it environmentally safely. It seems like the environmentalists have gone on vacation since 1950. We have the ability to drill in ANWR, in this very small area that you pointed out, completely environmentally safely, and the same on the coasts.

WALLACE: Mr. Cavaney, Democrats point out that for all the talk of drilling, the big oil companies currently hold leases on 68 million acres of federal land, onshore and offshore, that you're not developing. Why not start there?

CAVANEY: Well, we are developing. And there's a big misunderstanding. If they understood the industry, they would appreciate the fact that we bid for those leases competitively in the open market. We pay the government to get them.

We have to pay annual lease fees on those particular leases. And at the end of the lease term -- five years, six years, whatever it may be -- if we haven't done anything on those leases, they go back to the government to be bid again. What's going on is they -- the first step in our industry is called exploration. In other words, the creator didn't put oil and gas on every plot of land. So we have to go and explore.

We're willing to put our capital at risk to find out whether or not there's oil and gas there. And there's been very few cases where there is oil and gas in amounts that are commercially usable. And those are the ones that you can develop.

The rest of them, why drill where you know there's no oil or gas? And let those things go back to the government.

WALLACE: Senator Dorgan, let me bring in another part of this equation, because the Democrats' big idea in this area is a windfall profits tax on Mr. Cavaney's employers, the big oil companies, to finance alternative energy as well as more conservation.

How does the government decide what's a reasonable profit and what is a windfall profit? And how do you answer the fact that back when this tax was imposed in the '80s, domestic production dropped and foreign imports increased?

DORGAN: Yeah. Well, let me talk about Exxon just for a moment. Last year, Exxon used $31 billion of profits to buy back their stock and only half as much for drilling and exploration.

I mean, you know, look. With respect to a windfall profits tax, it's constructed so if they're using that money to expand supply by drilling, they wouldn't pay it. I mean, that's the approach that makes sense to me.

But I want to talk about one other thing. This issue of production is a canard. We're producing more in this country. Some Democrats, including myself, have supported additional production as well.

But let me say this. There is nothing at this point that justifies the price of oil or gas in this country with respect to supply and demand. Every month since January our domestic crude supply has gone up. Demand is going down because the economy is slowing. And yet the price of oil and gas are going through the roof.

Why? Because there's an orgy of speculation going on in the futures markets, an unbelievable amount of speculation by hedge funds, investment banks and others, that are driving up prices for the American people.

And that ought to be one area at least where Democrats and Republicans can work together to say let's wring this speculation out of...

WALLACE: Well, let me just follow up directly on that, because there is talk you're blocked on -- you want a windfall profits. They want more drilling. You're not going to be able to pass either of those, it appears.

Are you willing to separate out some federal action to stop oil speculation?

DORGAN: Absolutely. Absolutely. I proposed that. I think others have proposed it. We ought to get at this. There's nothing with respect to supply and demand that justifies the current price. This is all about a lot of speculators.

Will Rogers talked about that eight decades ago, people buying things they'll never get from people that never had it, making money on both sides. These are people that don't want to take delivery of oil. They want to speculate in the market, and they've driven up prices in a dramatic way.

WALLACE: Senator Hutchison, how big a problem is oil speculation? And maybe we can work out a deal right here in this studio. Are Republicans willing to agree with Democrats, separate out and go after the oil speculators?

HUTCHISON: Well, let me say that I think all of us would agree that we need transparency. We need to understand this.

But the way that we can stop the speculation is to show that we are going to do what we can, using our own natural resources and our own creativity, to increase the supply of oil and gas and renewables in our country.

And all of the Democratic proposals don't produce one ounce of a barrel of oil.

WALLACE: But to answer my direct question, would you agree to -- legislation on oil speculation, separating it out.

HUTCHISON: Well, I think if you are talking about a cartel that speculates and fixes the prices, that is absolutely something that Republicans and Democrats would agree on.

But if you're talking about people going into the market of their own free will, not controlling anything, then it is a market issue. And I think transparency would be a good add, and I would work with Senator Dorgan on that.

I think we need to look at the whole issue and understand it. But if we bring up supply, we will bring down the price.

WALLACE: Mr. Cavaney, let me bring you into this, because Senator Dorgan brought up something that a lot of people talk about, and that is the huge amounts of money that big oil is making -- $36 billion, the five oil companies in the first quarter of this year.

And it's not just Democrats who are going after big oil. Let's look at what John McCain said recently. Here it is.

(BEGIN VIDEO CLIP)

MCCAIN: I'm very angry, frankly, at the oil companies not only because of the obscene profits they've made, but their failure to invest in alternate energy to help us eliminate our dependence on foreign oil.

(END VIDEO CLIP)

WALLACE: "Very angry," "obscene profits," and this is the Republican nominee talking.

CAVANEY: Well, there's a couple of facts that need to be entered into this. First of all, if you look at the last quarter, first quarter of this year, the profits the industry made was 7.4 percent. That's return on a dollar of sales. The Dow Jones industrial average made 8.5 percent. If you want to go back five years, 10 years, we make the oil industry average.

Now, our profits are large because over the last 30 years what's happened is the competitors, the publicly held oil companies, are foreign governments and they're national oil companies.

And these companies have to scale up to be the equivalent size to compete with them in order to get the oil on the global market to bring back to this country to run through our refineries. If we had more domestic production, we could reduce our reliance on imports.

And to the point we just discussed earlier, the problem we have right now globally is supply and demand are very, very close. That creates the platform for people to enter into these commodity markets on the expectation that other things are going to happen.

So just solving the speculation isn't necessarily going to take the price of oil where it could be. You need both production, which you get through access and refinery expansions, and then you need to look at the...

WALLACE: Senator Dorgan, let's look at what Barack Obama said last week about -- or this week, rather, about the spike in gas prices. Here it is.

(BEGIN VIDEO CLIP)

QUESTION: So could these high prices help us?

OBAMA: I think that I would have preferred a gradual adjustment. The fact that this is such a shock to American pocketbooks is not a good thing.

(END VIDEO CLIP)

WALLACE: Senator Obama's gradual adjustment -- he seems to be saying that the rise in gas prices may actually be helping us form a better energy policy.

DORGAN: Well, it certainly forces some conservation for people that can't afford to fill their tank. Let me say this.

WALLACE: So he favors...

DORGAN: No. No, he does not. But let me say this. You just heard him. Let me say this. We've had people testify before the Congress that says there's -- excess speculation that's going on in these markets has increased the price of gas and oil by 20 percent to 30 percent.

We've got to wring that out. That's unfair to the American people to be paying this kind of a price because speculators are having a field day.

And one final point. We tap dance around this table talking about everything except that which we have to talk about, and that is change. We've got to address renewables in a very significant way. We can't drill our way out of this.

Yes, we should produce more. We should drill more. But you can't drill your way out of this. We have to have a different energy mix, because 60 percent of our oil now comes from off our shore. This is all about change.

WALLACE: Well, let me ask you about one aspect of drilling, Mr. Cavaney. There's a report this weekend that Saudi Arabia is prepared to start producing a half a million more barrels of oil a day. What would that do to prices?

CAVANEY: We can't say exactly, but clearly, more volumes of production is going to help put downward pressure on prices globally. And that's why increasing our access and production here in the U.S. would also help that equation.

WALLACE: And where do you see the price of gasoline headed over the course of the next year?

CAVANEY: It's difficult to say, but typically gasoline peaks right at the beginning of the driving season which we've just gone through.

And so if we get a regular pattern, hopefully, without any geographical or other problems like hurricanes coming in, we should see it, if it follows usual trends, taper down as we go through the summer.

WALLACE: But do you see it going down below $4 the rest of this year?

CAVANEY: We can't say because we don't control all those other factors.

WALLACE: And just very briefly -- we've got less than a minute left - - to the two of you, I've got to say, listening to the two of you, it doesn't sound like Congress is going to do anything about this in the rest of this election year.

DORGAN: I don't agree with that. I think that we are going to tackle speculation and get the speculators out of this market. And if we do, I think we will see reduction in prices.

And by the way, the Saudis, I think, are going to announce an 800,000- barrel increase a day. That should put some downward pressure on prices as well.

WALLACE: Senator Hutchison, you get the last word.

HUTCHISON: Well, I would just say if we're going to make a deal right here, it should be a balanced approach.

Yes, let's have more transparency on speculators, but the way to stop speculators is for Congress to act, for Congress to open up our own natural resources to produce. That would stop the speculators and it would bring the price of gasoline down.

WALLACE: Senator Hutchison, Senator Dorgan, Mr. Cavaney, thank you all so much for coming in today.

WALLACE: Up next, the McCain-Obama match-up gets under way in earnest. We'll get an early assessment from Karl Rove when we come right back.

(COMMERCIAL BREAK)










WALLACE: Now we turn to the never-ending campaign trail, and joining us is Fox News analyst Karl Rove.

And, Karl, welcome back.

ROVE: Great to be here.

WALLACE: Let's start with the brand-new electoral map you have prepared for us based on public polls.

It shows Obama leading in states with 245 electoral votes, McCain in states with 222 votes, and 71 electoral votes still toss-ups -- of course, 270 needed to win the presidency.

Inside those numbers, though, you say that Obama has expanded his lead in several states and also that the number of undecided is growing. So what does that tell you about the overall state of the race?

ROVE: Well, first of all, the bounce that Obama has received thus far is about half what the average is. And what happened in the math that was interesting was Obama strengthened in many states, but so did, apparently, McCain in his base states.

The only states that really sort of changed in the last couple of weeks have been a handful of states, primarily in the industrial Midwest. Wisconsin in the last week has been the state that's flipped from being up for grabs to being in the Obama column.

What I think this means is that people know a lot about both of these candidates, but there is going to be a lot of volatility in this, because they know a lot, but the number of undecideds ought to be shrinking, not growing, at this point.

WALLACE: I notice Obama is leading in Pennsylvania and is slightly -- within your margin of error, you still have it as an undecided state, but slightly leading in Ohio, two states that he lost badly to Hillary Clinton.

Is that any indication at all, or do you see from the polling, that he's starting to pick up the Clinton voters?

ROVE: Well, the one thing we do know is that if you look at the national polls -- and Gallup did a pretty extensive analysis of this -- his bump has come primarily from older white women, which was his problem in Pennsylvania and Ohio.

Now, I have to say the McCain people dispute where I put Pennsylvania. They think that he's ahead there, which is -- they're entitled to that. But there has been some movement among one important element of the Clinton coalition into his camp.

And the movement that Obama received was in the aftermath of Clinton's endorsement, not before.

Between the Tuesday and the Saturday -- between the Tuesday victory and the Saturday announcement by Clinton, there's very little movement, but there's good movement after the Saturday announcement by Clinton, primarily among older white women.

WALLACE: Perhaps the biggest news this week was that Obama was forced to dump Jim Johnson, the head of his vice presidential search team, after reports came out that Johnson got more than $5 million in favorable mortgages from Countrywide Financial, a company that Obama had gone after for being part of the subprime mess.

How does Obama walk -- I'm going to talk about the bigger issue, not just Johnson. How does Obama walk the tightrope between, on the one hand, trying to say, "I represent change, I'm going to clean up the way business is done in Washington," while on the other hand having to rely on people who do know how this town works?

ROVE: Yes. Well, it's one of the real problems he's going to have, because he -- this "I'm a different kind of politician" raises the standards for all of your activities.

And making the clean break with Jim Johnson was part of supporting this claim that "I'm a different kind of politician." But that problem still remains because the other two members of his vice presidential search committee are Eric Holder, who was the White House attorney under Clinton who green-lighted and...

WALLACE: Well, no, he was working in the Justice Department.

ROVE: Oh, I'm sorry, yes, right -- who green-lighted the Marc Rich pardon -- in fact, played an active role in helping make certain in the final days of the Clinton administration that this happened. That seems to me to present a problem.

In fact, you know, stepping back for just a minute, there are two ways to go about picking a vice president. You can do so with a committee of high visibility people who get you some publicity, which is what Obama chose, or you can go the McCain model, which is to choose the person who, while they're known to the political community, are much less visible, and pick one person rather than a group of three. Clearly, Obama's attitude was I'm going to get some oomph by having a guy who's respected by the Democratic political establishment -- Jim Johnson; I want to get profile for Eric Holder, who's purportedly on a list for a big appointment inside an Obama administration. And then Caroline Kennedy, who gives him a tie to the Kennedy name.

WALLACE: We asked you to give us what you think -- not what they think, but what you think -- the vice presidential short lists are for each of these candidates, and let's present them, starting with the McCain short list according to the gospel of Karl Rove.

ROVE: Well, let me say one thing.

WALLACE: Well, let me get them out first before you go ahead. ROVE: Yes, OK. OK.

WALLACE: I'll get them out, and then you can say why -- you said Mitt Romney, Governors Tim Pawlenty of Minnesota, Charlie Crist of Florida, and independent senator Joe Lieberman.

So give us all your caveats and handicap those four for us.

ROVE: Well, first of all, we are way before they get down to a short list. You know, most of the nominees are named either at the convention or the week before the convention, so we've got two months to go on this.

What I tried to do here is choose types of people. You've got the -- in Mitt Romney, you've got the defeated primary opponent.

In Pawlenty, you've got the -- you know, you've got a blue state Republican.

In Charlie Crist, you've got a strong advocate and ally from the primary process.

And then in Joe Lieberman, you've got the choice way out of left field -- you know, the real excitement.

Each one of these has their strengths and weaknesses, but each one of them ought to be thought of as an archetype rather than just an individual, because we are months away from them getting down to a short list.

WALLACE: I know, but what do we have to talk about for all those months? If you were today -- and I understand that -- if you were going to pick one of those four as the frontrunner, who would you pick?

ROVE: I'd pick Romney. Romney is already vetted by the media, strong executive experience both in business and in government, has an interesting story to tell with the saving the U.S. Olympics, and also helps McCain deal with the economy, because he can speak with the economy with a fluency that McCain doesn't have. On the downside, he's been a little uneven in his performance. In fact, that's being charitable. I mean, this is the guy who talked about environments and marching with Martin Luther King and so forth. And there's also the Mormon problem, which was really sort of astonishing to me.

When his father ran for president in 1967, there was not a single story on the front page of the Washington Post, New York Times, or a cover article in any of the major news magazines about George Romney's Mormonism.

And yet we've been subjected to a lot of that kind of coverage this time around, and as a result, there is -- and particularly in sort of evangelical and Baptist communities -- a problem with his Mormonism.

WALLACE: All right. Let's turn to the Democrats. And with the same caveats, here's your Obama short list -- Joe Biden, obviously, the head of the Senate Foreign Relations Committee; Governor Kathleen Sebelius of Kansas; Senator Jim Webb of Virginia; and Republican senator Chuck Hagel. Handicap those for us.

ROVE: Yes. Again, Biden is the -- fills the role of the person who ran against him. He's got foreign policy experience, which is turning out to be a weakness for Senator Obama, and has gravitas in Washington.

Governor Sebelius is the governor of a red state, Kansas, likely to be a Republican state in a fall but nonetheless an interesting choice.

Webb has been talked about. He's been the recent sort of "buzz du jour" in Washington. And he's got military credentials, crossover credentials, having served in the Reagan administration, and strong antiwar credentials, which helps Obama on his left.

And then, of course, Chuck Hagel, which is the sort of out-of- left- field choice. Senator Hagel's wife Lilibet has been an Obama contributor, and obviously Hagel has been a critic of the Iraq war. Despite his longstanding personal friendship with McCain, he has yet to endorse McCain.

WALLACE: And who would you say is the frontrunner in that field right now?

ROVE: Out of those four, I'd say Biden. But look. I think the Democrat field of vice presidential candidates is far more opaque than the Republican side, because I think it is -- this really comes down to -- when you make a decision about vice president, you've got to make one of two decisions -- who's going to help me politically or who's going to help me govern.

And this really gets to be a personal decision of the candidate. And the mix between the two -- how much of my decision is based on how much they can do for me politically, and how much has to do with the chemistry and their background and their abilities that I think will help complement me in governing -- these are intensely personal.

And as a result, you know, those of us now sitting on the outside watching it are not going to know how the candidates are going to go about doing this, particularly with Obama, who doesn't have a track record of these kind of relationships and having played in high stakes politics.

WALLACE: Finally, McCain and Obama have started this process of the debate over debates, and McCain wants 10 town hall meetings this summer, even before we get to the convention. Obama wants five debates through the entire process, through the election, with only one town hall meeting.

ROVE: On the 4th of July when we're all out at our picnics.

WALLACE: Well, we're not sure about that. That's what McCain said. But in any case, the point is -- what's the strategy behind the two of them? Why is each angling for what they're pushing for?

ROVE: Yes. Well, McCain is behind, and he's the challenger. And what he's looking for is what kind of venues can he excel at.

And look. Obama gives a great set piece speech, but he's done less well in debates and is not as fluid in town hall meetings.

McCain -- that's his comfortable -- that's his comfortable venue. Loves doing them. Does them a lot. Wants to get there.

So the debate about the debates is a way for each one of them to sort of force the other into their favorable turf. McCain wants to get Obama in the town hall meetings earlier rather than later. Obama wants to have a shorter campaign and to force it into more formal and lengthy presentations.

In fact, he talked about recreating the Lincoln-Douglas debate where somebody would get 60 minutes, and then somebody would get 90 minutes, then somebody would get...

WALLACE: I don't know that he knows what Lincoln-Douglas was, because that would kill viewing in America.

What do you think we end up with?

ROVE: I think we end up with probably more debates and more public venues than Obama wants, but not 10 town hall meetings like McCain wants.

I, frankly, think Obama's making a mistake not by saying to McCain, "Yes, let's do 10 town hall meetings and let's do five." This thing about 4th of July and Soul Planet (ph) is not making Obama look confident and strong, which is what he needs to look at right now.

WALLACE: All right. We're going to have to leave it there. Thank you for coming in. We'll bring you back in a few weeks to see where things stand then.

ROVE: Great. Thank you.

WALLACE: Coming up, the Supreme Court once again deals a blow to the Bush administration on the handling of suspected terrorists. Was it a victory for civil liberties or a victory for the bad guys? We'll be back with our Sunday regulars in a moment.

(COMMERCIAL BREAK)










(BEGIN VIDEO CLIP)

MCCAIN: The United States Supreme Court yesterday rendered a decision which I think is one of the worst decisions in the history of this country.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

OBAMA: Basically, what it said was those prisoners that we hold in Guantanamo deserve to be able to go before a court and say, "It wasn't me," or, "I didn't do it."

(END VIDEO CLIP)

WALLACE: John McCain and Barack Obama with very different views about the Supreme Court's ruling this week on terror detainees.

And we may also hear some disagreements from our Sunday group -- Brit Hume, Washington managing editor of Fox News, and Fox News contributors Mara Liasson of National Public Radio, Bill Kristol of The Weekly Standard, and Juan Williams, also from National Public Radio.

So for the third time, the Supreme Court overruled the way the president and this time overruled the way Congress had been dealing with suspected terrorists, saying that they have a constitutional right to challenge their detention before a federal judge.

Mr. Justice Hume, do you concur or dissent?

HUME: I dissent, and strongly, on a couple of grounds. One is that the distinction that the court made to allow itself to make this ruling was that Guantanamo -- although the court acknowledged that legally it is not under the control of the United States, one would think these fellows, being judges -- men and women, being judges, that would -- legally would be what was most important. They then said, however, as a matter of fact, Guantanamo is really under full American control. That could be said, Chris, of any American military installation anywhere in the world. We control those places. We control them with our forces. They are, in effect, American territory.

So the writ that comes out of this opinion could run in many, many directions. And who knows where it will stop? The court insisted that this applies only to Guantanamo, but by its own reasoning it most certainly would not.

Secondly, the court in an earlier decision in this line of cases had told the president and Congress that they needed to come up with a system to safeguard the legal rights of these special defendants -- these special captives, not yet defendants.

The Congress and the president did precisely that. That system has just been put in place. It is only yet beginning to work. And the court threw it aside without any -- almost without discussion as being somehow inadequate.

It did not then call upon the president and Congress to come up with a new system. No, no. It simply said, "Well, everybody has access to the American courts as if they were American citizens." The reasoning is almost breathtakingly flimsy.

WALLACE: Well, whether it's flimsy or not, Mara, let's look at some of the opinions from the court. Writing for the 5-4 majority, Justice Kennedy said, "The laws and Constitution are designed to survive and remain in force in extraordinary times. Liberty and security can be reconciled."

But here's Justice Scalia's dissent, "The game of bait and switch that today's opinion plays upon the nation's commander in chief will make the war harder on us. It will almost certainly cause more Americans to be killed."

Can't get much sharper in difference than that.

LIASSON: No. No, and that remains to be seen. But what Kennedy is saying is go back to the drawing boards and figure out something where you can try these people and still have them have the basic rights of habeas corpus. They can challenge their detention before a federal judge.

Whether you're going to actually try them in exactly the same way as American citizens would remains to be seen. But this does mean that the administration does have to go back to the drawing board.

Both candidates who are running for president say they were going to close Guantanamo anyway. So that's going to happen no matter what.

Where exactly these prisoners are going to go and what you're going to do with them is unclear. They're not considered POWs, according to the Roberts court. KRISTOL: This is going to have immediate implications like -- first of all, I hope Senator McCain, when he becomes president, appoints Justice Hume to the Supreme Court. I think he's considerably superior to Justice Kennedy, I would say, based on his terse analysis here.

Look, this is going to create chaos. I mean, Barack Obama -- you showed the clip of him saying, "Well, all this means is that you get to go to federal court and say, 'It wasn't me,' or, 'I didn't do it.'"

OK. So the terrorist who's held at Guantanamo says that. The government says, "We have very good reason to believe it was him and he did do it based on intelligence provided by a -- that we acquired in one way or another."

Then what does the federal judge do? Does he have an evidentiary hearing? Does he judge whether the CIA's intelligence was correct, that their informant in Karachi was telling the truth, that the...

WALLACE: Yes. I mean, I think it's clear that he does have a hearing.

KRISTOL: Does he call the CIA agent in, the CIA agent comes into court and says, "I've got a..."

WALLACE: Not the trial as to whether or not the person's guilty, but whether or not they have right to detain him.

KRISTOL: But in fact, habeas is -- almost all the time, a habeas challenge is after a trial when there's new evidence, or there's something wrong with a man's detention, and you go to federal court and say, "Wait a second, we now know something we didn't know where this guy's being detained incorrectly prior to trial." That's based on established case law and statutes.

This is totally uncharted waters. It's utterly unmanageable. And I think what it means is Congress has to step in now and specify, "OK, if the court's going to make us do this, we need to set up a system of a national security court that can handle these trials."

And this has been proposed by Andrew McCarthy, the former federal prosecutor who tried the blind sheik in New York and has a very good book out on the problems of trying to do this through the federal legal system.

Anyway, but you could do it. You could have a national security court. Senator Lindsey Graham is working on this.

And I think you will see senator Graham, accompanied by Senator McCain, come to the floor of the Senate very soon, like next week, and say, "We cannot let chaos obtain here. We can't let 200 different federal district judges on their own whim call this CIA agent here, say, 'I don't believe this soldier here who said this guy was doing this,' you have to release someone,' or, 'Let's build up -- let's compromise sources and methods with a bunch of trials." I mean, it's ridiculous. So Congress has to act. Senator Graham and Senator McCain are going to insist on action. It will be interesting to see what Senator Obama's response is if the serious legislative proposal is introduced to set up a way of doing this consistent with the Supreme Court decision.

WILLIAMS: Well, I'm glad to hear you say that, because I think what you're saying is you're agreeing basically with the 5-4 decision, because you're saying there needs to be a structure, that you can't simply hold people for an undetermined length.

And remember, this Guantanamo has been open six years -- six years without resolving this. And they have only had plans to try -- I think it's 80 of the 270, and only 19 currently face any kind of court, have the opportunity to speak out and say, "You know what? It wasn't me that did it," or, "I was caught in the wrong way."

And the military courts have said that occasionally they have swept up the wrong people. In fact, the named litigant in this case was someone who was taken from Bosnia, not from Iraq, not from Afghanistan. Bosnia. So he's trying to make the case that he was in the wrong place at the wrong time.

So when you say, "OK, let's have a national intelligence court," that's fine with me. But it seems to me that you are confirming -- you're not agreeing with Brit Hume. You're saying, in fact, we need a structure that gives people the opportunity to come before the courts and say that I have been detained illegally and wrongfully.

And that's a good thing. That's protecting America's rights and liberties even in the time of terrorist war, because remember, this is not the Civil War.

HUME: Juan?

WILLIAMS: This is not World War II. This is something that's going to go on for all time. We're going to be constantly fighting terrorists. And are we going to sacrifice our civil liberties for all time? I don't think you want to do that.

HUME: Juan, the supposedly governing precedent in this case goes back to World War II and Nazi soldiers who were held in detention in American- occupied Europe in a camp not dissimilar to Guantanamo, although not nearly as nice.

And the Supreme Court held at that time that it did not have the jurisdiction and the American constitutional law did not apply there.

The distinction they're making here in order to allow the court to do what it was obviously bent on doing before it even heard the case was that somehow Guantanamo is different from that American- occupied area in Europe after World War II. That is a pretty lame distinction.

And moreover, Juan, you're talking about legal safeguards for these captives. The legal safeguards already in place for these captives are or were, as Chief Justice Roberts pointed out, the most extensive and generous ever yet permitted for captured enemy combatants.

WILLIAMS: Wait a second. Wait a second. You're confusing -- you're confusing your terms.

KRISTOL: Let me just clarify my position since you just...

WILLIAMS: OK.

KRISTOL: I just want to make clear I think it was a very bad decision. A large part of me wishes that President Bush would stand up and say, as President Andrew Jackson did almost 200 years ago, you know, "Justice Kennedy has made his decision. Let him enforce it."

On the other hand, that's not going to happen. And there's a real practical problem now with potential chaos and the release of either information that shouldn't be released or of terrorists who shouldn't be released. And that's why I think Congress has to act.

Congress has to now do the right thing, and -- but I very much agree with Brit. Congress tried to do the right thing before. There was a bait and switch by the Supreme Court. They've decided Congress didn't do the right thing.

But Congress has to act aggressively now to prevent chaos in the federal courts.

WILLIAMS: But what I was saying to you, Bill, was you have to understand habeas corpus was put in place literally to restrain what could be the unlimited power of the executive here.

You don't want the president deciding, "Gee, I don't like what Bill Kristol said the other day. Put him in jail." No.

KRISTOL: American citizens...

WILLIAMS: Come on. You don't...

KRISTOL: American citizens have a right to habeas corpus and anyone arrested in this country has a right to habeas corpus.

WILLIAMS: Right, and you...

KRISTOL: These are people arrested in Bosnia, as you said. And how is the federal judge going to decide whether the intelligence was correct?

WILLIAMS: Well, that's what you said. Let's set up a structure, a process. And in fact, I think Justice Roberts was right to say, "You know what? If you folks disagree with the current situation, you should, you know, outline exactly how you think it should be done."

Instead, they have sent it back to the district courts.

WALLACE: We've got less than a minute left. WILLIAMS: Just a second. Let me just say to Brit...

WALLACE: No, no, no, no.

WILLIAMS: OK.

WALLACE: No. I'm in charge here.

WILLIAMS: All right. I just wanted to respond.

WALLACE: One last question, because we have less than a minute left.

With the Supreme Court now saying -- and you don't agree with it, but you certainly agree that's what they're saying, Brit -- that the Constitution does apply to Guantanamo Bay, does this really remove the last remaining rationale for keeping this facility open?

HUME: Well, possibly, but if it isn't this facility, it will have to be something similar to it somewhere else which would be outside of the reach of this court so this kind of mischief and recklessness would not obtain. However...

WALLACE: Well, the court doesn't seem to think there's anything that's outside...

HUME: Well, that's exactly the point that I'm making here -- is the reasoning behind declaring Guantanamo within the court's jurisdiction and the application of habeas corpus to it would extend very far in many places around the world.

So I am at a loss to be sure that there's -- that you could close Guantanamo and solve the problem. I think that would not solve the problem.

WALLACE: But I'm not sure that putting it anyplace else is going to solve the problem either.

We have to take a break here. But up next, we'll turn to the presidential campaign trail and also some thoughts about Tim Russert. Back in a moment.

(COMMERCIAL BREAK)

WALLACE: On this day in 1864, Arlington National Cemetery was established by Secretary of War Edwin Stanton, setting aside 200 acres for a military resting place. Today more than 300,000 people are buried there.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: Senator McCain wants to add $300 billion more in tax breaks and loopholes for big corporations and the wealthiest Americans, and he hasn't even explained how to pay for it.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

MCCAIN: Under Senator Obama's tax plan, Americans of every background would see their taxes rise -- seniors, parents, small business owners and just about everyone who has even a modest investment in the market.

(END VIDEO CLIP)

WALLACE: And so the battle has been joined about who really is the big taxer this year.

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

Well, a nonpartisan group called the Tax Policy Center analyzed Obama's tax plan and McCain's tax plan this week, and they say Obama's plan, Mara, redistributes income to lower- and middle-income people, while McCain's gives most of the benefit to the wealthy. Is that an advantage, Democrats?

LIASSON: I think to a certain extent it's an advantage to Democrats, unless and until McCain can actually make the case why his tax plans are pro-growth, because that same group also said that Obama might add more to the deficit because it's unclear how he's going to pay for these than McCain would add to the deficit.

I think what's interesting is these two candidates who are trying to be post-partisan figures are -- at least in this debate, are really reverting to kind of old-fashioned Democrat-Republican -- pre-Bill Clinton, almost -- this is not new Democratic arguments about the economy from Obama.

These are old Democratic arguments. It's pretty populist -- you know, tax the rich; and on McCain's side, much more standard, boilerplate, Republican talk about taxes.

I think for McCain, if he wants to have an advantage on taxes and the economy, he has to kind of put it into a reform agenda and talk about why what he's doing would actually help the economy.

KRISTOL: Even the Tax Policy Center, which the McCain people think is sort of a liberal nonpartisan group, acknowledges the following. On net, Obama is a tax raiser. Obama's plans would hike taxes in sum. And McCain's would cut taxes, cut the overall tax burden. And I think that's good for McCain.

This week actually was a -- beneath the radar screen of all the other political news, an important thing emerged this week. Obama wants to raise taxes, and he wants to raise them pretty considerably, actually -- a 12 percent payroll tax for everything above $250,000, the increased taxes on dividends and interest for anyone who has investments in the stock market.

You know, he can say it's only a tax on the wealthy, but I think a lot of voters think we've been down that road with the Democrats before, and if there's a Democratic president and a Democratic Congress, will they keep that to $250,000, or will they creep down, trying to get more revenues?

I think the tax issue is now setting up well for McCain. He's got to tie the tax cuts to the pro-growth agenda, but I think it's a good contrast for McCain.

WALLACE: Juan, let's talk about other political news this week. And that was the fact that Obama had to dump Jim Johnson as the head of his vice presidential selection team, as we pointed out with Karl Rove, because of his involvement and the fact that he got about $5 million in mortgages below rate from Countrywide Financial that Obama had been going after.

You've got that. You've got McCain getting rid of all of his paid lobbyists. First of all, does the public care about any of this? And secondly, is it damaging one side more than the other?

WILLIAMS: Well, I think it was damaging to Senator Obama because he was trying to get started this week and he wanted to deliver the economic message that we were just debating here.

And instead, he got caught up in this business about whether or not he was a hypocrite, whether or not, in fact, while he was pointing fingers at Senator McCain's campaign for having so many lobbyists in charge at the very top of the campaign, his own campaign, in fact, was filthy with lobbyists and sort of inside people who get sweetheart deals from Countrywide and arrange lavish executive pay packages for their pals, which is what Johnson is charged with doing. He did nothing illegal, but that's the charge.

And so for Senator Obama, it was -- you know, I'm the change agent, I'm the one who's going to bring a new breath of fresh air to Washington, and suddenly here he is now playing games with Jim Johnson. And it didn't look right.

Now, I think this blows over. I think it's forgotten quickly. But it wasn't the kind of start that he wanted.

One last point on this economic thing. I think if you say to most Americans that the tax cut is going -- is simply a matter of not continuing President Bush's tax cuts in 2010, they don't view that as raising taxes.

That's the wealthy who might say that, but it's not on average people who are feeling higher gas taxes. It's not on average people who have to pay more for food.

It's almost like you guys are out of touch with what ordinary Americans are going through in this country at this time. People want government to respond to need and not simply to talk about more tax breaks for the rich and for big corporations.

HUME: That's what McCain's doing, for sure. He's saying, "I want more tax cuts for big corporations, and I want the rich to get richer off the tax code." Oh, what baloney. That's not what it's about at all.

WILLIAMS: Well, where's the pro-growth? If we have 5 percent -- the other day we had the biggest jump in unemployment in this country in 20 years.

HUME: Juan, right. You know what that came from? People coming out of school for the summer, and they're going into the job market.

WILLIAMS: Oh, come on.

HUME: We're at 5.5 percent unemployment.

WILLIAMS: Right.

HUME: By historical standards, that is remarkably low. The growth policies and particularly the tax cuts that were passed in this administration have, I think, unquestionably helped this economy through some severe blows -- 9/11, Hurricane Katrina, and so forth -- to the point now where despite a predicted recession the economy is still managing to eke out a little bit of growth.

That's a strong economic performance, on balance, and not a particularly good argument for allowing the tax cuts that were...

WALLACE: All right.

WILLIAMS: Nobody's saying that. Justice Hume thinks that ordinary Americans aren't feeling any pain.

WALLACE: I'm going to gavel you down.

WILLIAMS: Please.

WALLACE: We've got less than two minutes left, and I know that all of you worked with and admired Tim Russert. And I just want to give you all an opportunity for some thoughts.

Mara, let's start with you.

LIASSON: First of all, I think he's absolutely irreplaceable. I mean, when I heard the news, I just thought, "Who's going to ask the tough questions in the way that he did?"

I mean, one of the things that was his hallmark, that he did better than anyone, is he did this incredibly close analysis of the politician's own words and he married that with a real in-depth knowledge of policy, and he grilled them like nobody else.

And you know, a poor performance with Russert was a disaster. On the other hand, not showing up, not being willing to go in for an interview with him, showed that you weren't in the big leagues. I think he was really irreplaceable.

WALLACE: Bill?

KRISTOL: Well, there are a lot of big shots and famous people in Washington, and not all of them are very nice and considerate people. And Tim was, I mean, really, throughout.

I met him first when I was 23 and he was 26. We both worked for Pat Moynihan in 1976. I went back to grad school. He went on to fame and fortune, working for Moynihan and Cuomo and then, obviously, to NBC. Really a fine person, though.

WILLIAMS: Well, I mean, you can't say anything but nice things about a guy who had such great seats for the Wizards and the Nationals.

But I also think he was a hard-working journalist. I think that there are lots of people who can ask tough questions, but when you think about the way that he built that show and built it to really come to personify him and his relationship with his dad, it was very special.

HUME: When my son died 10 years ago, one of the first people I heard from was Tim Russert, who advised me to keep in mind not the years I might have had with him, but the years I did. It was a powerful thought and an act of characteristic kindness from Tim.

And I must say, it's something we might all keep in mind now that he's gone at such -- in looking at it, such an early age. It's a great loss.

WALLACE: Thank you all. See you next week.

Up next, we lose a tough competitor and a treasured colleague. (COMMERCIAL BREAK)

WALLACE: Before the terrible events Friday, I never would have said it in public, but Tim Russert was the king of Washington reporters.

He reinvented Sunday morning talk shows, and he had an authority and insight in covering politics that the rest of us could only aspire to.

Many people have paid tribute these last two days, but none of it captures Tim's cross-examining style of interviewing or his blue- collar Buffalo charm better than just watching the man himself.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP)

RUSSERT: White House Chief of Staff John Sununu may be gone, and the president indeed has a new campaign team, but the economy remains sluggish.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUSSERT: A few weeks ago, Senator Ted Kennedy of Massachusetts was on this program, and he said that in his entire career in the United States Senate, spanning 40 years, the vote he cast on the war in Iraq was the most important.

Do you agree it was the most important vote you cast?

(UNKNOWN): Yes.

RUSSERT: And in your mind, you got it wrong.

(UNKNOWN): I did.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUSSERT: But if Iraq is a sovereign country and this is a sovereign elected prime minister, and he's saying he can secure his own country, why do we reject that notion?

LINDSEY GRAHAM: It is my belief that he's not asking us to leave.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUSSERT: I'll tell you the intensity of this campaign. Even Upper Deck Baseball Cards is involved in this campaign. Here's how they captured yesterday. You will get out, you will notify Canada and Mexico, NAFTA is gone in six months.

CLINTON: No, I will say we will opt out of NAFTA.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUSSERT: If you just stayed with these simple boards, you wouldn't have those problems with those highfalutin' computers, Tom. This is the answer.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUSSERT: You said that part of your...

ROSS PEROT: I also told your program...

RUSSERT: ... is $180 billion.

ROSS PEROT: Yes. May I finish?

RUSSERT: May I finish? It was a simple question.

ROSS PEROT: Well, you've already finished. Go on, finish again. It's your program. It's your program. You can do anything you want.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUSSERT: Two blocks away, he goes into the Ford dealership. Charlie comes in with a Buffalo Bills windbreaker. "Tim, show him the car," a black Crown Victoria. I said, "Dad, it's a cop car." He said, "Charlie, open the trunk." Two cases of beer, two suitcases can fit in there. A real spare, no donut.

And so we're driving home. And I said, "Dad, why didn't you want a Lexus, a Mercedes? I'm paying for it." He said, "We beat those guys in the war."

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUSSERT: If it's Sunday, it is "Meet the Press."

(END VIDEO CLIP)

WALLACE: As a competitor, Tim's sign-off used to drive me nuts. But like all of you, oh, how I would love to hear Tim say it again today.

And that's it for us. Happy Father's Day to all you dads out there, especially mine. And we'll see you next "Fox News Sunday."

For more visit the FOX News Sunday web page.

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