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Sen. McCain and Gov. Kaine on "Fox News Sunday"

Sen. McCain and Gov. Kaine on "Fox News Sunday"

Fox News Sunday - March 8, 2009

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

Republicans rally around a huge spending bill, and leading the charge, Senator John McCain . We'll talk with the former presidential candidate about runaway earmarks, how the White House is handling the economy, and foreign hot spots -- John McCain , only on "Fox News Sunday."

Then, is President Obama trying to do too much too soon? We'll ask one of his closest allies, the head of the Democratic Party, Governor Tim Kaine .

Plus, Mr. Obama suggests Americans should get in the market.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Buying stocks is a potentially good deal if you've got a long-term perspective on it.

(END VIDEO CLIP)

WALLACE: We'll ask our Sunday regulars if the president is doing all he can to boost sagging stock prices.

And why did our Power Player of the Week get carded as a member of Congress, all right now on "Fox News Sunday."

And hello again from Fox News in Washington. People who lose presidential elections deal with it in different ways. Some retire. Others lick their wounds. But our first guest has gone right back into the legislative arena, and we're happy to welcome Senator John McCain back to "Fox News Sunday."

As always, Senator, good to have you with us.

MCCAIN: Thanks, Chris. It's nice to be back with you. It's interesting times.

WALLACE: It's start with the interesting times, and let's start with the $410 billion spending bill before the Senate to fund the government through September.

Here's what Barack Obama said to you about this subject in a presidential debate last September.

(BEGIN VIDEO CLIP)

OBAMA: Absolutely, we need earmark reform. And when I'm president, I will go line by line to make sure that we are not spending money unwisely. (END VIDEO CLIP)

WALLACE: Now the White House says that this is basically an argument over the last Bush budget and, therefore, it's last year's business.

Is there a practical case to be made that with all the things that President Obama wants to get through Congress he shouldn't get into a fight over this?

MCCAIN: Well, first of all, he -- if -- if he wants to set a standard and wants to set a path, then absolutely he should be in this.

He absolutely should be in it, because we're talking about $480 billion of taxpayers' money loaded down with $8 billion worth of earmark pork barrel projects, and we could go into definitions of that, but the fact is they're unneeded, unwanted, unnecessary.

And it is not last year's business. It's money that's going to be spent as soon as the president signs the bill. And he shouldn't sign it. He should veto it and send it right back.

WALLACE: All sides expect that this bill is eventually, and sometime this week, going to get through Congress. Why hold it up over the weekend? Do you really think you can stop it?

And what do you think of Republican senators like Snowe and Specter who may provide the last one vote to get it over the top?

MCCAIN: Well, I regret their decisions, but I think that we've been able to garner great support throughout the country in the last week as we've engaged in this debate.

I think more and more Americans are against it, and several Democrat senators who were on the fence are now against it.

By the way, I Twitter the top 10 pork barrel projects. We have gotten incredible response from it, now from local media people in the area where these earmarks take place. It's really been a lot of fun.

WALLACE: Do you think it's going to get passed this week?

MCCAIN: I think it probably will. I'd like to say otherwise, but what's going to happen is that some Democrats are going to vote against the bill, but they'll vote for cloture, which means that we move forward with the final passage, but I think we fought a good fight.

And we have to -- if we don't stop this kind of spending, which is corrupting -- I mean, there's corruption. We have people, former members of Congress, in federal prison. We have people under indictment right now, one just last week, who were involved in this, one just day before yesterday.

This is a corrupting influence. We are giving money for 13 projects to an outfit called PMA, which was raided and shut down by the FBI. Now, they're the ones that got the earmark for different organizations out of defense spending.

Now, we're going to fund what an outfit got put in to this bill that are raided and shut down by the FBI that everybody knows are going to be on trial.

WALLACE: The stock market has dropped 20 percent since the Obama inauguration. Can this now fairly be called the Obama bear market?

MCCAIN: No, I -- I think I'd leave -- like to leave that up to the experts. But I do believe that a $1.2 trillion stimulus package -- add that to a $750 billion TARP, add that to this $480 billion supplemental, add it to another TARP that's coming down -- massive deficits, and we are committing generational theft. We are laying a debt on future generations of Americans.

And we had proposal of spending $410 billion for a stimulus, yet after two quarters of economic growth, positive economic growth, we would have ordered a path to balanced budget.

What we're doing is phenomenal, not only as far as the debt is concerned, but the transfer of what the free enterprise system does over the government. It's -- it's the biggest since Franklin Delano Roosevelt.

WALLACE: And do you think that is contributing to the decline in the market, the messages that the Obama administration is sending about its agenda?

MCCAIN: I think so, but I -- I'm always a little nervous about allowing short-term market activity to drive our conclusions.

But I don't think there's any doubt, talking to friends of mine on Wall Street and people that I know, that this is not a positive signal. All of this spending, all of this debt, all of the policies that will now, in the long term, cause us to have a negative G.T. -- G.B...

WALLACE: GDP.

MCCAIN: ... GDP of growth according to the Congressional Budget Office over time...

WALLACE: What do you think of Treasury...

MCCAIN: ... of GDP.

WALLACE: What do you think of Treasury Secretary Geithner? And how serious is it that seven weeks into this administration they still don't have a plan to deal with the banks and the whole lending crisis?

MCCAIN: I think they started off badly with a message that was not specific. I think that they are still not specific enough.

I don't think they made the hard decision, and that is to let these banks fail, to let General Motors go into bankruptcy and re- emerge and reorganize with new contracts with labor and others.

I don't think they've made the tough decisions. Some of these banks have to fail. AIG -- back, I believe, when we started bailing them out, I said, "We've got to let it fail." You can't have zombie banks like the Japanese had. And unfortunately, that seems to be the path.

Now, the latest housing proposal, which is somewhat similar to the one I made during the campaign -- I hope it will have a beneficial effect, and I will work as hard as I can to help that work.

WALLACE: So when you say you'd let these banks -- but would you nationalize them?

MCCAIN: Well, you'd sell off their assets, and you have the -- unfortunately, the shareholders and others will take a beating. But to just keep them alive when -- and keep pouring billions and billions of taxpayers' dollars into them, when they clearly are not -- their situation is not improving -- these are tough choices.

I don't know if it's, quote, nationalizing, but it certainly is not continuing to -- propping them up with tens or 40 or $50 billion of taxpayers' dollars and their overall value continues to decline.

WALLACE: So you think that this administration is making a mistake by seeming to continue to keep the banks on life support, to keep General Motors on life support. You would -- you would let...

MCCAIN: I think the best thing that could probably happen to General Motors, in my view, is they go into Chapter 11, they reorganize, they renegotiate their -- the union management contracts and come out of it a stronger, better, leaner and more competitive automotive industry.

WALLACE: Meanwhile, unemployment -- up to 8.1 percent last month, 12.5 million Americans unemployed. Some people are beginning to say the stimulus package, the $787 billion stimulus package that you just passed, isn't enough and you may need to come back for another big dose of government spending.

MCCAIN: Well, I hope it's not like this. I hope that we can give people tax cuts. I hope we can give small businesses incentives.

There was very little in the stimulus package for small business, the prime generator of jobs in America. I hope that we would not announce that we're going to increase taxes on anybody at this time. That always has a negative effect.

And I would do whatever I can to help with tax cuts, with shovel- ready projects, with a lot of other things. But what we have done is made some fundamental policy changes as regards welfare, as regards our protectionism, our relations with Mexico in this latest bill as far as Mexican trucking is concerned.

So we're not only spending huge amounts of money, and a lot of it not the kind of spending that would have immediate results, but we are also having major policy changes that don't deserve to be on any money bill.

WALLACE: There's been quite an argument this week about Rush Limbaugh's role in the Republican Party. Over the years -- we went back and looked -- he's gone after you a fair bit. At one point in 2002, he said a maverick is somebody who is in it for himself.

And at the CPAC conference last weekend, here's what he had to say about why you show up so often on Sunday talk shows.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH: They invited Senator McCain because he happened to be the loudest at criticizing his own president and his own party, and that's what they want.

(END VIDEO CLIP)

WALLACE: Back in 2002, you compared Rush Limbaugh to a circus clown, and then you apologized to circus clowns...

(LAUGHTER)

... which I thought was a classic McCain line.

MCCAIN: I thought it was a pretty good line, yeah.

WALLACE: Yeah, not a bad line.

What do you make of Republican leaders, including the head of your party, Michael Steele, now apologizing to Rush Limbaugh?

MCCAIN: I think it's all a distraction. Very seriously, Mr. Limbaugh has his audience and his base of support. There's plenty around the country and around our party.

The important thing right now is what you and I have just been talking about -- job losses, health care unaffordability, the biggest economic crisis since the Great Depression.

Let's all work together with the president whenever we can, against him if we think we have to. But let's be the loyal opposition. Let's work together and -- and not get distracted by who's the leader of the party and who's not. And the Democrats have made a lot of hay out of this, and I understand that. Now let's -- let's move forward.

WALLACE: Let's turn to foreign policy. And there is some breaking news. Iran has announced this morning that they have launched a new long-range missile. Your reaction.

MCCAIN: It's not surprising, and it's not surprising that we continue to have information that they have the material to make nuclear weapons. Exactly where they are is not totally clear, but they're obviously on that trip.

This is a great threat to Israel, who they have threatened to, quote, "wipe off the face of the Earth," and this is going to be a -- I think a serious international crisis before it's over.

WALLACE: Really? The whole question of the Iranian -- let me ask you -- the Obama administration -- and apparently this was raised in a private letter from Obama to Russian president Medvedev -- this idea that if the Russians -- not a quid pro quo, but if the Russians get Iran to stop its nuclear program, then there's no need for an American missile defense system in Eastern Europe.

MCCAIN: Well, if I were the president, I would have tried to communicate that in other ways than a letter.

We want to explore every possible option that we can to bring about the cessation of this crisis, but time after time after time the Iranians have been belligerent and even very hostile in their reactions to our efforts to try to get that done.

The Russians -- you would think it's in their interests to have the Iranians not pursue nuclear weapons. So far, they have not been helpful.

I worry about giving the Iranians a signal that we're not going to take serious action according to their violation of a number of treaties if they continue with this development of nuclear weapons and the means to deliver them.

WALLACE: Along those lines, Secretary of State Clinton met with the foreign minister, Lavrov, on Friday and talked about -- and you can see it here -- hitting the reset button on relations between the two countries. Good idea?

MCCAIN: Turns out that it were the wrong Russian words.

WALLACE: Right, overcharge, not reset.

(CROSSTALK)

MCCAIN: This is a new administration. They're obviously trying new approaches.

Let's not forget the lessons that we learned from the last administration, and the aggression in Georgia. A lot of their behavior in many respects has obviously been anti-American in many of its aspects -- but most importantly, not a country that's dedicated toward a peaceful resolution of many of these issues.

WALLACE: So you can't just reset the relationship?

MCCAIN: I think we should try all the time to have a better relationship with them, to appeal to what's in their national interest, but it's also been very clear by their behavior and Putin's comments recently that it's going to be a very long and difficult process.

WALLACE: You know, we -- we've been talking through all of this and -- and understandably there are some areas I know that you have supported the president, some that you have not. How do you think he's doing so far?

MCCAIN: I think he's working very hard. I think he continues to have the support of a majority of the American people.

I think he is making a very serious mistake in this budget which would then transfer from the free enterprise system to the federal government many of the fundamentals of our economy, which I think is going to have very dangerous consequences in increasing taxes. No matter who it is, it's wrong at this time.

I do agree with him and work with him on defense procurement, on Iraq and a number -- any issue that I can work with the president, I will work with him.

WALLACE: You ever feel like saying, "I told you so"?

MCCAIN: No. Oh, I'm sure that that would be a pleasant feeling. But the point is we're in such a severe crisis, we've got to work together. We must. We've got to put away childish things.

WALLACE: Finally, on the area of childish things, your daughter Meghan wrote a blog -- excuse me; it's choking me up this week -- in which she said that your presidential campaign has killed her social life.

In fact, she writes one date said to her that she could be his Cindy. What do you have to say for yourself, Senator?

MCCAIN: I have to say I have a beautiful daughter. I have very bright prospects for her future both professionally and socially.

WALLACE: Do you plan a planned marriage?

MCCAIN: No. Look, I'm proud of all of my children, and from time to time they may do or say something that might be slightly not what I would do or say. That's what young people are all about.

WALLACE: Well, I just want to say, as the father of three daughters, I know I speak for many fathers when I say congratulations on slowing down her social life, sir.

MCCAIN: Thank you, Chris.

WALLACE: Senator, thank you. Thanks for coming in today. And always, you're always welcome. Please come back, sir.

MCCAIN: Thanks for having me.

WALLACE: Up next, Governor Tim Kaine , the new chairman of the Democratic Party, in his first Sunday show interview. Back in a moment.

(COMMERCIAL BREAK)

WALLACE: President Obama's standing in the polls is still strong, but his agenda is coming under increasing fire. Joining us now from his state capital in Richmond, the new chairman of the Democratic National Committee, Virginia governor Tim Kaine .

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

KAINE: Great to be back with you, Chris.

WALLACE: Governor, let's put some numbers up on the screen. The Dow Jones closed before the inauguration at 8,281. Now it's at 6,626. That's a 20 percent drop, which is the definition of a bear market.

Governor, how much responsibility does the president bear for the tumble in the stock market since he took office?

KAINE: Well, Chris, I think you have to look at where it was before it got to 8,200. I mean, it had slid dramatically in the months before the inauguration, and that -- and that decline is continuing.

But the president and his team are working very hard to put steps in place so that we can start to grow the economy again -- not going to happen overnight, but I think the -- the right elements are being put in place so that we can start to stabilize and then grow the economy.

WALLACE: Well, let's talk about the right elements, because the markets clearly have not been reassured by what messages the president has sent so far.

And I think it's fair to say that they're looking particularly to the issue of a financial rescue plan. Why is it that almost seven weeks...

KAINE: Right.

WALLACE: ... after the president took the oath of office he still has not come forward with a plan to deal with the banks and their toxic assets? KAINE: Well, Chris, there are -- there are a couple of elements of the plan that have been put out, sort of three elements and then there's a fourth that's coming this week.

First, you had to create a capital cushion for some of these banks to make sure that they have adequate capital.

Second -- very important -- the president's laid out a plan Senator McCain was speaking about, to try to mitigate the foreclosures. That's very important.

We have to get securitization going again, the ability of banks to have big chunks of assets securitized. That's been frozen up since October, and Secretary Geithner has laid out a plan on that.

And then the fourth element, and this is very important, is one that he'll be talking about soon, a plan that will use private investment to start to purchase bad assets, clear them off bank balance sheets, so that they can then go forward in a more healthy way.

This is complex stuff, and it's -- it's -- unlike, say, the stimulus plan, where we control it just on our own shores, this financial crisis is a worldwide financial crisis -- that we have to try to coordinate our actions in some degree with what's happening with financial regulation elsewhere.

Prime Minister Brown came from England this week to talk about that. So you just have to try to coordinate it with, you know, the effort to get this system going back on a worldwide basis.

WALLACE: But I think you would agree, Governor, that the key part of that, and the part that we've been talking about ever since September -- and the original financial rescue plan by the Bush administration was a way to get these banks not to be zombie banks, as Senator McCain said...

KAINE: Right.

WALLACE: ... but get these bad assets off the books to figure some way to deal with the billions and trillions of dollars of toxic assets.

I want to put some numbers up on the screen with the -- when it comes to appointments. There are 800 jobs in -- that the president has that need Senate confirmation. So far this president has nominated 44, and of those, only 28 -- 28 of 800 -- have been confirmed.

Now, in the case of Treasury, Treasury Secretary Geithner is the only Obama nominee to win Senate confirmation. There's not a deputy secretary. There are no undersecretaries. There are no assistant secretaries.

Isn't that a serious failure in the middle of a financial crisis? KAINE: Well, it's certainly tough, but let's just look at past history as an indication. If you look at history of earlier administrations, when folks were confirmed, it often takes a little bit of time, and there are a whole series of appointments that are not Senate confirmable.

There's about 50 political appointees that have been appointed, that are at work with Secretary Geithner in the Treasury. But again, this is, acknowledged, a very, very difficult situation.

We're dealing with a financial problem on our own shores and a decline in the stock market that started long ago. And we are trying to coordinate it with what's happening in the worldwide financial community.

There's going to be a G-20 summit, as you know, in April where the -- in November, President Bush had one saying, "We've got to come back in an international way to set up the framework."

And what we're trying to do is get our pieces in order so that we can walk into that summit with a leadership position and help other nations do the same.

WALLACE: Governor, you're exactly right, it is a very serious situation, but with the markets tumbling, with unemployment rising, the president is proposing this huge agenda, with health care reform, and carbon cap and trade, and increase in taxes on the wealthy.

Why not -- shouldn't he keep the focus almost exclusively to the degree possible at this point on what a lot of people think is job one, the economic crisis and the financial situation?

KAINE: Chris, I think that the reason the president is doing this is these problems are connected to our economic crisis.

So just to use one example, Senator McCain talked, for example, about we need to focus on controlling health care costs. G.M. -- we were -- we've been talking about G.M.

What is probably the most cited reason for G.M.'s difficulties -- or one of the most cited is the legacy costs on health care and retiree health care that G.M. has to carry that other automobile companies, particularly those in foreign companies, don't.

You hear people talk about federal spending going up dramatically in Medicaid and Medicare. These entitlement programs that are health- care-related are part of our economic challenge.

So the president was elected to try to deal with this health care challenge, which is -- can be a choker on the economy. And the ability to bring legislators together of both parties in the summit -- and discussions they had this week I think were kind of refreshingly bipartisan and included representatives from a lot of stakeholders.

If we can start to get that right, that can be part of growing out of these economic doldrums. And you can say the same thing about looking at our energy future going forward. There's not kind of the economy on one track and then getting energy right on a different track. They really are related.

WALLACE: Governor, part of the Obama budget that he has put forward is to reduce the tax deductions in the top tax brackets.

And even some Democrats are saying this is not the right time to create new disincentives for people trying to buy homes or to donate to charities.

I mean, is that reduction in -- the reduction in the deduction for top income owners -- are you really going to stand on that one?

KAINE: Well, Chris, the president has laid out a basic budget, and the goal is -- you know, it's trying to accomplish something very challenging right now, which is -- and he's very serious about it.

We want to get on a path to reduce the deficit, and reduce it in half by the end of the administration. And so there are a number of aspects to the budget that are basically geared to try to do that.

And that includes what he campaigned on and promised to do, which is let certain tax cuts from the Bush administration expire, but also this adjustment of the deduction, which is not an elimination of the deduction. It's just an adjustment slightly downward. As part of this...

WALLACE: But you don't have any problem with the idea of reducing the tax break that people get for buying a home when we're in the middle of a housing collapse?

KAINE: Look, I mean, I think you can -- you can argue about pieces of it, but the goal is if we're going to reduce the deficit in half, we're going to have to eat some spinach to do so.

And so he has laid out a plan that will get us there, which is what Americans -- you know, Senator McCain is a big proponent of deficit reduction, and in order to get there, there's going to have to be some painful choices, choices that, you know, if we weren't worrying about deficits, you know, we wouldn't worry about, but we're going to have to do a number of things to get to that -- get that deficit down.

WALLACE: Well, you talked about eating spinach. Let's talk about how much spinach you're eating in this $410 billion spending bill before the Senate which has...

KAINE: Sure.

WALLACE: ... 8,500 earmarks and an increase of 8 percent of spending.

Even one of the top Democratic senators, Evan Bayh , opposes it, and he wrote this in the Wall Street Journal. "The economic downturn requires new policies, not more of the same."

Why in this case is a reform president supporting business as usual?

KAINE: Well, I would -- I would say it's not exactly business as usual, and I agree that the earmark reform has to happen. Let's just put it in context again. Earmarks were at their high in 2005.

The number of earmarks, the amount of dollars in earmarks in this budget, are 25 percent of what they were in the '05 budget. So Congress has gotten the message, and I applaud Senator McCain and also the president when he was a senator saying, "We've got to reform this process."

The amount of earmarks has been dramatically dropping since '05. The president has made plain that he's going to continue to push it, push it downward. The recovery bill that was passed was passed at his direction...

WALLACE: But -- but -- but, Governor...

KAINE: ... with no earmarks included.

WALLACE: ... why not just -- why not just veto this bill? I mean, there's no time like the present.

KAINE: Well, vetoing an entire budget bill, an appropriations bill like this, you know, has consequences with respect to other programs, Chris, as you know.

And so the president's going to have to weigh that, the costs of vetoing an entire appropriations bill to run government, you know, with a set of earmarks that are being dramatically reduced from past years, with -- and he has made very plain that he is going to push for earmark reform just as he pledged to during the campaign.

WALLACE: Finally, Democrats have had a lot of fun this week poking at Rush Limbaugh and, in fact, the Democratic National Committee, the organization that you run, is planning to put up a billboard in Rush's hometown of West Palm Beach, Florida, and you're having a contest to come up with a slogan -- I assume it'll be a somewhat snarky slogan, Governor -- to -- to put on the billboard.

In the campaign, Barack Obama talked about changing the way business is done in Washington. And the other day he said this. Let's watch.

(BEGIN VIDEO CLIP)

OBAMA: We know the only way to solve the great challenges of our time is to put aside stale ideology and petty partisanship and embrace what works.

(END VIDEO CLIP)

WALLACE: Governor, isn't going after Rush Limbaugh a perfect example of the stale ideology and petty partisanship that the president was talking about? KAINE: Well, it's not -- it's not like Rush is a member of Congress or, you know, or anyone of that kind. He's a radio personality who has been saying that he wants the president to fail.

We wouldn't even be talking about Rush Limbaugh at all had he not said he wanted the president to fail, and then he's found others in the party and party leaders who have either echoed that claim or, in the case of Chairman Steele, denounced the claim, which I thought was courageous, but then apologized to Rush Limbaugh.

So I think there's an important point here. The billboard is a little bit of fun, admittedly, but there is an important point. At a time of crisis in this nation, no one should be rooting for the president to fail. Both this country and the world needs him to succeed.

Now, that doesn't mean that everybody has to agree with everything. I thought Senator McCain kind of said, "Look, we should be a loyal opposition working together, disagreeing when we need to but always finding areas of agreement."

If that is the spirit, then we're going to do fine. If we have people out there praying for the president to fail and trying to rally folks around that, we need to push back on that.

WALLACE: All right.

KAINE: It's just not the right message for the time.

WALLACE: Governor, we have to leave it there. I do want to point out, though, just as a -- as a point of information, that Rush Limbaugh says -- and I think if you read what he says, he wasn't saying I want the president to fail. He was saying I want his policies, his agenda, to fail, and that he disagreed with them and thought they were bad for America. But fair enough.

Thank you so much, Governor, for talking with us. Always a pleasure. Please come back, sir.

KAINE: I'll look forward to it, Chris. Thanks.

WALLACE: Coming up, our Sunday regulars look at the slide in the stock market. Are President Obama and his policies responsible? We'll talk about it right after this break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: If we act swiftly and boldly and responsibly, the United States of America will emerge stronger and more prosperous than it was before.

(END VIDEO CLIP)

WALLACE: That was President Obama during his weekly address expressing confidence in the country's financial future.

And it's time now for our Sunday regulars -- Brit Hume, Fox News senior political analyst, and contributors Mara Liasson of National Public Radio, Bill Kristol of The Weekly Standard, and Juan Williams, also from National Public Radio.

Well, as we've been discussing, the stock market is officially in bear territory, down exactly 20 percent since the Obama inauguration.

Brit, John McCain didn't want to answer the question, but I'll ask you. Is this the Obama bear market?

HUME: Well, it's kind of a bear market within a bear market. I mean, the market was already down tremendously over the previous year, and I think most people entered this period of the new Obama administration thinking that it probably was bottoming out and that he would give, by his very presence and by what he would offer, real hope, and that it would at least change the psychology a bit.

It has changed the psychology, it seems, for the worse. And I think, you know, he does bear responsibility for that, and the impression that he has managed to leave is that he's too busy with massive new spending and a scattershot stimulus bill, which was just reckless -- and on top of that, you have this budget with all these breathtaking new initiatives to reorder our lives in a multitude of ways.

In the meantime, first order of business, the unfinished business of the previous administration, first order of business for the new administration -- the financial crisis, the credit crisis -- and so far, no plan of any discernible shape for dealing with that -- a couple of pieces in place, as Governor Kaine pointed out.

But that's what the markets, I think, are looking for. It hasn't come. It's very hard. But that's the big problem.

LIASSON: Yeah, I agree with that. I think that it's impossible to say whether the market going down this much since he was elected is actually a reflection on him and his policies.

But it's true that the markets and most economists don't like the fact that he has not yet come forward, you know, seven weeks later, with a detailed plan for how to do something about these toxic assets. He promised one at one point. Tim Geithner said he'd be back with details after he laid out his basic concept. And they haven't done it.

Yes, I agree with Brit it's hard, but, you know, the White House response to this is usually, "Oh, Wall Street doesn't like it because they want us to come in and rescue them and pay for all these terrible assets at some inflated price." I think people just want some clarity. Markets usually respond to that.

I think that the White House itself clearly cares about what's happening in the markets, even though they say they don't pay attention to the day-to-day gyrations of the stock market, because Obama talked about it. He told people to buy. And that's something that presidents rarely, rarely do.

They usually avoid talking about stocks, interest rates or the dollar. And he waded into that, and of course, he took a big risk, because guess what happened right after he talked? There was a big sell-off.

WALLACE: Bill, I pressed a senior administration official, White House official, this week on why it is taking so long to come up with what I guess will be known as the Geithner plan, and he said basically it's really hard and it takes a long time to get it right.

Is it -- are we being unfair asking why seven weeks later they don't have it yet?

KRISTOL: Well, look. If they have a good plan in two weeks, and it comes out, and it solves the problem, and the markets see that the banking system is now, going forward, going to be healthy, I suppose we will all look premature in saying, "Oh, my God, they took too long," and, "Oh, my God, there's been a 20 percent drop in the markets."

On the other hand, Geithner and Summers were nominated or announced as the -- as the Treasury team, as the economic team, in -- what? -- early, mid- -- right after the election was the first announcement...

WALLACE: Mid-November.

KRISTOL: Mid-November in Florida, yeah, the first announcement President-elect Obama made. And it's -- you know, now it's mid-March. So are they going to learn that much more? Do they have the -- you know, the shape of this problem has been there for quite a while.

I think at some point in government, decisiveness really matters. You're not going to get it perfectly right. You've got to reassure the markets that they're going to deal with it.

And if you look at President Obama's interview with the New York Times just -- was it Friday? -- on Air Force One, he's still talking in a kind of conditional future tense. I don't know quite what the grammar is but, you know, "Well, we're studying this, and we're really going to be dealing with this. We're going to reassure people that we're going to make sure that the toxic assets are dealt with one way or the other."

He's been president for a while now, and it's about time to really deal with it.

WILLIAMS: Well, he's only been president for about -- I guess it's a month and a half or so. And my sense is he remains extremely popular with the American public. There's no question about that.

And if you look at something as key as, you know, right track, wrong track, do you think the country's headed in the right direction, you know, White House officials are right when they say that number keeps going up. More Americans have a sense of confidence because they feel he is doing something.

Now, what's going on on Wall Street is a different -- you know, different bunch of bananas there.

I think you're right, Brit, when you say that the numbers there are going down, that Wall Street, I think, lost, you know, seven -- down 70 points or something like that last -- how much again?

KRISTOL: Seven percent.

WILLIAMS: Seven percent just last week.

KRISTOL: We had a bad year. It wasn't Wall Street that lost that. It was the American public and, indeed, people around the world who lost real money last week.

WILLIAMS: Oh, sure. But there...

KRISTOL: It's not like polls. It's not like, "Gee, this is the right track, wrong track."

WILLIAMS: But I'm saying you can't just do one...

KRISTOL: This is real money.

WILLIAMS: You can't just do one measure and not another. I'm just trying to say there's a whole picture here, and the political picture includes the fact that the American people have not lost patience. Chris' original question was, "Do you think this is now Obama's problem?" Well, of course, he's -- but it's a problem he's working on and one he can legitimately say he inherited.

LIASSON: You know what about the polls? First of all, yes, President Obama is personally popular. His policies are less popular than him, which shows there is a danger here for him.

And also, if you go back and compare him to other presidents at this exact points in their terms, he's pretty much where they were. Guess what? Jimmy Carter was more popular than Obama is right now.

But he is pretty much where George Bush and Bill Clinton were at this point in their -- in their careers.

HUME: And which tells you that what we have here is an ordinary, garden-variety honeymoon, that this isn't...

WALLACE: Yeah, let's put -- let's put -- we actually -- thank you for anticipating a question I was going to ask you in the next segment, Mara. Let's put it up.

LIASSON: Oh, sorry.

WALLACE: We actually have...

LIASSON: Sorry about that.

WALLACE: We actually have a graphic that shows -- no, it's fine. You can see here this is the presidential approval ratings. At this exact point, six-plus weeks in, as you can see, Barack Obama is right there in the middle. And as you point out, Jimmy Carter was considerably more popular.

So it isn't like there's this huge wave of support for Barack Obama . He's enjoying the typical honeymoon.

WILLIAMS: Hang on. Hang on. We're in the middle...

WALLACE: Forget the polls.

WILLIAMS: We're in the middle of a financial -- huge financial crisis this -- you know, we haven't seen this kind of downswing except, I think...

WALLACE: But do you think...

WILLIAMS: ... two times since the Great Depression.

WALLACE: Let me ask you a simple question. Do you think...

WILLIAMS: So these numbers...

WALLACE: ... he can be held -- do you think he can be held responsible -- let me ask it a different way. Does the fact that the market keeps going down, not going up -- isn't that not some statement that they're not buying the cure that Dr. Obama is providing?

WILLIAMS: No. I think, in fact, what I see is that Wall Street has problems. Wall Street continues to come back to say, "We want more stuff."

HUME: Juan...

WILLIAMS: "We want marginal tax rates reduced. That's how we see solutions."

The American people, however, say, "Wait a minute. Foundational issues," talking about health care, education, putting in place jobs to help people who are out of work. You saw those job lines this week -- just terrible, all over the country, long.

People are saying, "You know what? He's in touch with these issues and trying to deal with it." So to me, that's an important statement, and it doesn't suggest that it's time to, you know, play Chicken Little and start running around, you know, with your head off.

HUME: I think what you may be missing, and Bill touched on it, Juan, is that Wall Street is -- used to be a term that referred to a bunch of rich people in New York who had all the money.

In modern America, Wall Street is Main Street. And when you're talking about a loss of wealth on this scale, which is on top of the tremendous loss of wealth that we had all through the last year, and particularly in the last part of last year, you're talking about pension funds for people who work in all the corners of this country. You're talking about a whole range of personal investments that people have made.

And so to say Wall Street, I think, as if that were some distinct small entity is misleading.

WILLIAMS: Well, I don't think it's...

HUME: It's everybody.

WILLIAMS: Well, I don't think it's a small entity, though. I think that Wall Street is a point of anger for so many Americans because Wall Street was so -- was so dysfunctional that it has, in fact, created much of this problem, and...

LIASSON: Wait. There's Wall Street, and then there's the stock market. Maybe we're -- you're confusing two things. The people who caused these problems are rightly excoriated by the American people.

WILLIAMS: The banks.

LIASSON: But the market is a reflection of something larger than just a bunch of bankers.

WALLACE: All right. We have to take a break here.

But when we come back, Rush Limbaugh and the debate over who is leading the Republican Party. Back in a moment.

(COMMERCIAL BREAK) WALLACE: On this day in 1983, President Reagan referred to the Soviet Union as an evil empire. He warned against a nuclear freeze and called for beatings in the arms race.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH: I certainly couldn't say I am proud of the Republican Party as I am leading the Republican Party. Right now, the Republican Party needs to be led.

(END VIDEO CLIP)

WALLACE: Rush Limbaugh raising the question of who's running the Republican Party.

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

So, Brit, what did this week's kerfuffle tell us, the kerfuffle about -- I just like saying that word -- about Rush Limbaugh? What does it tell us about the Republican Party? And who is leading the GOP?

HUME: Well, let's start with the last question. The fact of the matter is the GOP doesn't have the ball. The Democrats have the ball, and they have it in a way they haven't had it in a long time.

The GOP is leaderless, as parties tend to be after an election in which they lost everything. And they don't need -- and the truth is they don't need to be led right now. If anybody's leading, and I'd say at the moment the most conspicuous spokesman, the guy who's a player on all these issues right now, is your guest here today, Senator McCain.

Rush Limbaugh obviously is not a Republican Party politician. He's somebody listened to by a lot of Republicans, but he's not really leading the Republican Party, although it's worth noting that some years ago, I guess it was during the Clinton years -- wasn't it, Bill Kristol? You may remember this.

National Review had a cover with a picture of Rush Limbaugh -- and I think he was in sort of a period costume from an earlier day -- and it said, you know, the leader of the opposition.

So this is not a new idea, but I think it's -- you know, and it's kind of fun to talk about. And Rush had some sport with it this week. The Democrats, as Senator -- as Governor Kaine was talking about, have had, too. It is kind of a silly distraction. The Republican Party doesn't have a leader right now, and the truth of the matter is it doesn't need one. If anybody's playing the -- if anybody's leading the party right now, it's Barack Obama , and they're reacting to him.

LIASSON: Yeah. No, I agree with that. They don't have a leader. They have John McCain , and they have Mitch McConnell , and they have John Boehner and Eric Cantor , and they have, you know, Michael Steele, which is where a lot of this Rush Limbaugh nonsense started.

Look, I think the White House was acting like it was in a campaign. It was trying to do a head game on the Republicans, and kind of needle them about Rush Limbaugh, who they believe is a very unpopular figure, and at the risk of...

WALLACE: Nationally. Obviously...

LIASSON: Nationally.

WALLACE: ... very popular among his...

LIASSON: At the risk of rallying the Republican right, they felt it was a good idea to tweak Republicans and try to tie them to somebody who they felt was unpopular.

I think they took it a little too far. You had Robert Gibbs by the end of the week saying he agreed that this was counterproductive, because he lobbed a couple of the hand grenades himself from the podium in the White House briefing.

Look, there are serious, serious issues that the president has to be dealing with, and the White House chief of staff, and everybody else there, other than kind of fomenting a big argument about whether a talk show -- radio talk show host leads the Republican Party.

WALLACE: But you know, Bill, this was not just a happenstance. This was something that was really started by Rahm Emanuel , the White House chief of staff, on another Sunday talk show when, unbidden, he decided to go off after Rush.

Was it -- was it smart politics? And how does it square with President Obama talking about, you know, we're going to put aside petty partisanship?

KRISTOL: You know, maybe Rahm Emanuel should spend a little more time getting a banking plan together with the treasury secretary and others . Well, I'm not kidding.

Isn't it a little distasteful? The market's down 20 percent. Unemployment is surging. We're in a serious economic crisis. The next election is almost four years away. They really don't need to worry about Rush Limbaugh and Michael Steele and other Republicans right now.

So I think it's -- I mean, I guess maybe they think they can get some credibly short-term political gains from it. It's not working, I would say. Republicans aren't spooked by this. Republicans understand that they don't need to have one leader. They shouldn't have one leader.

It is very good that the Republican Party is leaderless. Let a lot of people emerge from the grassroots. Let a lot of ideas compete.

And maybe the Obama team should worry more about governing the country and less about trying to score some clever, you know, double- bank-shot blow that will somehow drive six independents somewhere to be unhappy with the Republicans because Rush Limbaugh -- because they don't like Rush Limbaugh.

WILLIAMS: Well, I think you're right. There's a lot of pettiness out there. But politics -- this is politics. And at the moment, what strikes me is they...

WALLACE: But what happened to the new politics?

WILLIAMS: Well, look. There's always going to be politics, and part of new politics is the way that the Obama people deal with the Republicans.

And I don't think it's right to say that Rahm Emanuel started this. I think Rush Limbaugh saying that he wants the president to fail started it, because it was such an outrageous statement. People say, "Well, how can you want the president to fail? You don't want America to fail, do you? I mean, we're all Americans."

But if you look, I think the real issue here is the state of the Republican Party having lost so many seats, having lost control of the House and Senate, having lost all those governorships, and now, according to the polls, like the Wall Street Journal just this week said, 50 percent positive for Democrats in the minds of the American public, only 26 percent for Republicans.

They're not -- I mean, their positive approval rate is just so much lower. Why is it? Why is it that Republicans -- there are fewer Republicans right now than independents, much less Democrats in the country.

KRISTOL: You know, it's pathetic, this talking about polls. Barack Obama himself compared the stock market to a tracking poll. The White House is obsessed with polls. Juan is obsessed with polls.

This reality -- don't -- polls matter not at all right now. You showed earlier the poll of the president's approval rating at this time. It has no -- at this time in the term. It has no correlation with whether they were successful presidents. It has no correlation with whether they were re-elected four years later.

None of this has any...

WILLIAMS: And you saw after that some went up, some went down, and... KRISTOL: There's a reality out there in the world and in the economy and in the country, and the idea that the president and his chief of staff and their defenders are obsessing about polls is really pathetic.

WILLIAMS: But where -- shouldn't there be a key thing, though, Bill? Where are the ideas coming from? You see all this talk about is it Newt Gingrich that's going to deliver new ideas for Republicans.

Where do you see ideas, as opposed to simply being obstructionist, coming from a legitimate, smart Republican Party?

KRISTOL: There are a lot of ideas. I was in Colorado on Friday night speaking to their annual meeting of conservatives. I'd say there's a lot going on at the grassroots, a lot of activists, a lot of younger people running for office with their own particular ideas. Some of them clash with each other.

That's what happens with a healthy -- to a party when it's out of power. I think it's healthy to have lots of debate, lots of clashes of ideas.

WILLIAMS: I do, too. I would -- but I'm encouraged...

KRISTOL: Unfortunately, they can't govern for a while, but I'm not worried.

WILLIAMS: No, but I think great ideas are going to bubble to the top. So if they're great ideas about, you know, why should we keep putting money into AIG, why do we have to keep...

KRISTOL: Right.

WILLIAMS: You know, why is that? I just don't see that coming from the grassroots of the Republican Party.

KRISTOL: We should get out more to the grassroots of the Republican Party.

WILLIAMS: Thank you. I appreciate it.

KRISTOL: They'd be -- they'd be happy to have you.

(CROSSTALK)

KRISTOL: No, they would. They would. They're big fans of yours, Juan.

WILLIAMS: All right. All right.

HUME: Actually, I think one of the things that clearly is now beginning to happen is that Barack Obama has succeeded, by his policies as president, in uniting the Republican Party in Congress, to begin with.

And Republicans, I think, across the country are now united in a way that, you know -- I mean, they're arguing over different things, but they're basically united. And Republicans are finding that they run no political risk by opposing his policies.

WILLIAMS: But they're not...

(CROSSTALK)

WALLACE: Wait, wait.

LIASSON: Well, they also...

WALLACE: Mara Liasson, 10 seconds.

(CROSSTALK)

LIASSON: ... en masse against -- they voted en masse against the stimulus. But let's see if he can get some Republicans to work with him on health care or energy.

WALLACE: All right. We're going to have to leave it there. To be continued. Thank you. See you next week.

Up next, the return of our Power Player of the Week.

(COMMERCIAL BREAK)

WALLACE: He won his first elective office as a teenager, and he's been on the fast track ever since. Now, at the ripe old age of 27, he's our Power Player of the Week.

(BEGIN VIDEOTAPE)

SCHOCK: Well, I don't know if I'm so much in a hurry as I am focused on certain goals.

WALLACE: Whether it's in a hurry or focused, Aaron Schock is a man on the move. At age 27, he's the youngest member of the new Congress.

Of course, being young and looking even younger does present problems, such as when Schock went to see President Obama address a joint session of Congress.

(BEGIN VIDEO CLIP)

(UNKNOWN): The president of the United States.

(END VIDEO CLIP)

SCHOCK: One of the guards who was not typically there kind of stopped and said, "Excuse me," and so I had to show him my member's pin, and he apologized, and I said, "No problem."

WALLACE: It's sort of like being carded at a bar.

SCHOCK: Right. Yeah.

WALLACE: But the congressman got a seat on the aisle to see all the dignitaries.

SCHOCK: The Supreme Court justices are walking right by. I'm shaking hands with, you know, the chief justice and Ruth Bader Ginsberg. And then of course, the president. And it was an awesome experience to be there, and -- truly grateful every day, and I mean it sincerely, to be able to serve here.

WALLACE: Schock has had a lot of presidential face time in his short stint in Congress. When Mr. Obama flew to Schock's home district in Peoria, Illinois last month to lobby for his stimulus bill, he brought the young Congressman along. And inside Caterpillar, the president called Schock out.

(BEGIN VIDEO CLIP)

OBAMA: Aaron's still trying to make up his mind about our recovery package.

(END VIDEO CLIP)

WALLACE: But the next day Schock was back on the House floor, and the fiscal and social conservative said he would still vote against the bill.

(BEGIN VIDEO CLIP)

SCHOCK: Not one employee at that facility approached me and asked me to vote for this bill.

(END VIDEO CLIP)

WALLACE: But Aaron Schock has always followed his own path.

You opened an IRA at the age of 14.

SCHOCK: I knew that if I wanted to retire some day that the beauty of compound interest would suggest that the sooner I started, the sooner I could quit.

WALLACE: After the school board refused to let him graduate from high school a year early, he ran against and beat the board president at age 19.

Was there no thought, "Gee, maybe this is biting off more than I can chew?"

SCHOCK: Well, my parents suggested that.

WALLACE: Forgive me.

SCHOCK: But you know, I really felt compelled to step up and contribute.

WALLACE: By 23, he was a state representative. (BEGIN VIDEO CLIP)

(UNKNOWN): Speaker, I yield one minute to the newest member of the House, Aaron Schock of Illinois.

(END VIDEO CLIP)

WALLACE: Now at 27, he's in Congress.

(BEGIN VIDEO CLIP)

SCHOCK: Thank you, Mr. Speaker.

(END VIDEO CLIP)

SCHOCK: I think our governor would look a lot different if there were a few more people my age, in their 20s, in the Congress. How different would our social System operate?

These are programs that, quite frankly, I'm not interested in for the next five or 10 years, but I'm concerned about them for the next generation.

WALLACE: And what about Schock's future? Governor Schock, President Schock?

SCHOCK: I don't know what kind of opportunities there will be down the road for me. In politics, you never know who's going to die. You never know who's going to retire. Or, in Illinois, you never know who's going to get indicted.

(END VIDEOTAPE)

WALLACE: And Congressman Schock is already pushing his first piece of legislation, a bill that would mandate special elections for all U.S. Senate vacancies.

Now this. Please, don't forget to check out Panel Plus on foxnews.com/fns, where our group here keeps arguing right after the show.

But that's it for today. Have a great week, and we'll see you next "Fox News Sunday."

END

.ETX

Mar 08, 2009 11:05 ET .EOF

SCHOCK: Right. Yeah. WALLACE: But the congressman got a seat on the aisle to see all the dignitaries.

SCHOCK: The Supreme Court justices are walking right by. I'm shaking hands with, you know, the chief justice and Ruth Bader Ginsberg. And then of course, the president. And it was an awesome experience to be there, and -- truly grateful every day, and I mean it sincerely, to be able to serve here.

WALLACE: Schock has had a lot of presidential face time in his short stint in Congress. When Mr. Obama flew to Schock's home district in Peoria, Illinois last month to lobby for his stimulus bill, he brought the young Congressman along. And inside Caterpillar, the president called Schock out.

(BEGIN VIDEO CLIP)

OBAMA: Aaron's still trying to make up his mind about our recovery package.

(END VIDEO CLIP)

WALLACE: But the next day Schock was back on the House floor, and the fiscal and social conservative said he would still vote against the bill.

(BEGIN VIDEO CLIP)

SCHOCK: Not one employee at that facility approached me and asked me to vote for this bill.

(END VIDEO CLIP)

WALLACE: But Aaron Schock has always followed his own path.

You opened an IRA at the age of 14.

SCHOCK: I knew that if I wanted to retire some day that the beauty of compound interest would suggest that the sooner I started, the sooner I could quit.

WALLACE: After the school board refused to let him graduate from high school a year early, he ran against and beat the board president at age 19.

Was there no thought, "Gee, maybe this is biting off more than I can chew?"

SCHOCK: Well, my parents suggested that.

WALLACE: Forgive me.

SCHOCK: But you know, I really felt compelled to step up and contribute.

WALLACE: By 23, he was a state representative. (BEGIN VIDEO CLIP)

(UNKNOWN): Speaker, I yield one minute to the newest member of the House, Aaron Schock of Illinois.

(END VIDEO CLIP)

WALLACE: Now at 27, he's in Congress.

(BEGIN VIDEO CLIP)

SCHOCK: Thank you, Mr. Speaker.

(END VIDEO CLIP)

SCHOCK: I think our governor would look a lot different if there were a few more people my age, in their 20s, in the Congress. How different would our social System operate?

These are programs that, quite frankly, I'm not interested in for the next five or 10 years, but I'm concerned about them for the next generation.

WALLACE: And what about Schock's future? Governor Schock, President Schock?

SCHOCK: I don't know what kind of opportunities there will be down the road for me. In politics, you never know who's going to die. You never know who's going to retire. Or, in Illinois, you never know who's going to get indicted.

(END VIDEOTAPE)

WALLACE: And Congressman Schock is already pushing his first piece of legislation, a bill that would mandate special elections for all U.S. Senate vacancies.

Now this. Please, don't forget to check out Panel Plus on foxnews.com/fns, where our group here keeps arguing right after the show.

But that's it for today. Have a great week, and we'll see you next "Fox News Sunday."

For more visit the FOX News Sunday web page.

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