Interview with General David Petraeus

Interview with General David Petraeus

By Fox News Sunday - May 10, 2009

WALLACE: Hello again and happy Mother's Day from Fox News in Washington. With troubling new developments this week in Afghanistan, Pakistan and Iraq, we thought the time was ripe for a firsthand assessment of where we stand.

Joining us from U.S. Central Command in Florida is General David Petraeus, who oversees American military operations in the Middle East and Central Asia.

And, General, welcome back to "FOX News Sunday."

PETRAEUS: Good to be with you, Chris. Thanks.

WALLACE: General, let's start with Pakistan. The military there has launched a new offensive against the Taliban in the Swat Valley. Is there any sign that this is different from earlier Pakistani military campaigns, which have not been effective?

PETRAEUS: There are a number of signs of difference, actually, Chris. First of all, the actions of the Pakistani Taliban pushing below the Swat Valley into Dir and Buner seem to have galvanized all of Pakistan, not just the president and the prime minister, but also even the opposition leaders, virtually all the elements of the political spectrum and the people, in addition to, of course, the -- the military.

So there is a degree of unanimity that there must be swift and effective action taken against the Taliban in Pakistan.


And this is reflected also, as has been announced by the Pakistani leaders, the shift of forces from the eastern part of their country faced off against India to the North-West Frontier Province areas where the fighting is already ongoing and where more presumably will be conducted.

WALLACE: But the fact is that -- and I know you have been critical of this. A lot of military experts in the past -- the Pakistani army tends to fight the war that they would fight against the Indians, with heavy artillery, with air ships -- you know, with war planes fighting.

Do -- do you have the sense that they have the counterinsurgency strategy that makes you confident that they can beat the Taliban in the Swat Valley?

PETRAEUS: Well, we did have some good conversations this past week in Washington as part of the trilateral process that you've reported.

And during that, it was very clear in discussions with everyone, from President Zardari through the other members of the delegation that there's an understanding that this does have to be a whole-of- government approach -- in other words, not just the military but all the rest of the elements of government supporting the military -- so that they can reestablish basic services, repair the damage that is inevitably done by the bombardment of these areas in which the Taliban are located, and to take care of the internally displaced persons.

And there's an enormous effort ongoing in that regard, our State Department, other countries, all trying to help the U.N., which is the agency on the front lines there, trying to take care of these refugees that are streaming out of the Swat Valley.

WALLACE: General, you reportedly told top U.S. officials recently that the next two weeks were critical to determine the survival of the Pakistani government.

If we're talking about something as existential as that, what are the chances that the Islamic radicals could get their hands on Pakistan's nuclear arsenal?

PETRAEUS: Well, first of all, the reports of what I said were a little bit more than what I actually said behind closed doors several weeks ago, at which time I said that, in fact, the next few weeks would be very important and, to a degree, pivotal in the future for Pakistan.

And I think that that has been proven accurate. Indeed, now the Pakistani government, military, people have all responded, and certainly the next few weeks will be very important in this effort to roll back, if you will, this existential threat, a true threat to Pakistan's very existence that has been posed by the Pakistani Taliban.

With respect to the -- the nuclear weapons and -- and sites that are controlled by Pakistan, as President Obama mentioned the other day, we have confidence in their security procedures and elements and believe that the security of those sites is adequate.

WALLACE: But -- but to press the point, if I may, because, as you say, you are talking about an existential threat from Islamic radicals, can you assure the American people and the rest of the world that the U.S. will not allow those Pakistani nuclear weapons to get into the hands of Islamic radicals?

PETRAEUS: Well, this is not a U.S. assurance that matters. This is a Pakistani assurance. And also, by the way, I should point out, Chris, this is not a U.S. fight that Pakistan is carrying out at this point in -- in this effort.

This is a Pakistani fight, a Pakistani battle, with elements that, as we've mentioned, threaten the very existence of the Pakistani state.

WALLACE: You also said this week that Al Qaida has reemerged in northwestern Pakistan as a centrally organized operation capable of planning attacks in other countries.

Is Al Qaida back in business, sir?

PETRAEUS: Well, Al Qaida has been back in business for years, Chris. There is not an enormous revelation here. What I was merely saying was that the location of Al Qaida's senior leadership is, indeed, in the Federally Administered Tribal Areas of that very rugged border region of western Pakistan just east of Afghanistan.

There's no question that Al Qaida's senior leadership has been there and has been in operation for years. We had to contend with its reach as it sought to facilitate the flow of foreign fighters, resources, explosives, leaders and expertise into Iraq, as you'll recall, through Syria.

We see tentacles of Al Qaida that connect to Al Qaida in the Arabian Peninsula in Yemen, the elements Al-Shabab in Somalia, elements in north central Africa, and that strive to reach all the way, of course, into Europe and into the United States.

And of course, there were attacks a couple of years ago in the U.K. that reflected the reach of the transnational extremist elements of Al Qaida and the other movements in the Federally Administered Tribal Areas.

WALLACE: And -- and, General, do you believe that bin Laden and Zawahiri are still in charge of Al Qaida?

PETRAEUS: We do. Again, I don't think anyone can give you any kind of accurate location for bin Laden or, frankly, for Zawahiri other than a general description of where that might be, but certainly, they surface periodically.

We see communications that they send out. And of course, they periodically send out videos in which they try to exhort people and to inspire individuals to carry out extremist activities.

WALLACE: General, let's...

PETRAEUS: It's important to note, by the way, Chris, that -- that these organizations, by the way, in the FATA have sustained some pretty significant losses over the course of the last six, eight, 10 months or so.

And there is a good deal of disruption that has taken place but, of course, that's transitory in nature, and we'll have to see how the security operations in the Federally Administered Tribal Areas -- different from, of course, the fight in the -- in the Swat and North- West Frontier Province areas go.

WALLACE: General, let's turn to Afghanistan. It has been widely reported that as many as 147 civilians, Afghan civilians, were killed after U.S. air strikes in western Afghanistan. I know you've been investigating the circumstances and the responsibility for that. At this point, what do you know?

PETRAEUS: Well, in fact, I should note, first of all, that I had a very good conversation with President Karzai about this, about some statements, of course, that he's made in recent days, and we're going to have to work our way through this.

I would point everyone to -- and we sent you a copy, of course, of the joint press release -- again, put out by the Afghan and U.S. elements in Kabul yesterday after their initial investigating team came back, which clearly described the sequence of events that took place, with the Taliban moving into these villages, seeking to extort money from them, eventually killing three of the citizens in that area, then engaging the Afghan police who responded, which led to the governor of that province, Farah province, requesting help from the Afghan national army and coalition forces.

It was in that response that, of course, this very significant firefight broke out, battle, that ultimately resulted in the dropping of bombs which clearly killed Taliban and some civilians that it appears the Taliban forced to remain in houses from which the Taliban was engaging our forces.

Now, we are going to do a very thorough investigation of this. I've appointed a brigadier general with extensive experience in conventional and special operations who will go out to Afghanistan and look at it more broadly as well, to ensure that our forces are very well acquainted with in -- in carrying out the directives that General McKiernan has put out so that our tactical actions don't undermine our strategic goals and objectives.

And that's essentially the conversation that President Karzai and I had yesterday on this particular topic.

WALLACE: General, you also say that the Taliban is mounting a surge of its own to protect its safe havens in eastern Afghanistan. President Obama has announced that he's going to send another 21,000 troops to the country.

Are you getting all the troops you need? And what kind of assurances are you getting from the president about his willingness to send more troops if necessary, his commitment to win in Afghanistan?

PETRAEUS: Well, I'd just state that every request for forces that -- that I've sent to the secretary of defense and that has gone to the president has been approved, and that carries all the requests through the course of this calendar year.

There are requests beyond that for which decisions don't need to be made for a number of months, and I'm confident those decisions will be made at that point in time.

We have gone so far as to shift some forces that just -- we don't have enough of in the inventory -- which, by the way, is why Secretary Gates' budget addresses these kind of so-called enablers, the low- density, high-demand units -- to shift some of these from Iraq to Afghanistan, in fact, to ensure that -- that the infrastructure is established and that the kinds of forces that they need to enable this significant augmentation of our forces is made possible.

WALLACE: There is also growing violence in Iraq, amid signs that the Iraqi government is dropping some of the counterinsurgency tactics that you introduced into Iraq. Jobs programs in Sunni areas are -- are being ended. The Sunni "Awakening" -- these are Sunni forces that are fighting Sunni insurgents -- some of those units have not been paid for most of this year.

Are we giving back -- is the Iraqi government giving back some of the gains that we worked so hard to establish on the ground in Iraq?

PETRAEUS: Well, first of all, I don't think it's accurate to say that the "Sons of Iraq," these Sunni "Awakening" forces, have not been paid this year. There is drama and emotion with every single payday, but the vast majority of these "Sons of Iraq" have been paid during the pay periods.

There's another one ongoing right now. Inevitably, names are lost, mixed up, or what have you. But over time, we feel quite comfortable with what the Iraqi government has done in taking care of these "Sons of Iraq" and on taking them all now onto their payroll rather than being on ours.

The level of violence, actually, has been roughly about the same for the last five or six months, which is quite significant. It has averaged between 10 and 15 attacks per day for that period, which equates to a level of violence not seen since the late summer of 2003 before the insurgency and well before the militia activities accumulated that led to, at one time, 160 attacks per day in Iraq in June of 2007. What we have seen and what is troubling, certainly, has been the incidence of sensational attacks, if you will, high-casualty-causing attacks. Particularly, we saw these in Baghdad a few weeks ago.

That did prompt a number of attacks with Iraqi conventional and special operations forces, together with our forces, to go after the reemerging networks of Al Qaida.

We should expect that Al Qaida will continue to try to reestablish itself in Iraq, even as the focus of Al Qaida's senior leadership appears to have shifted away somewhat from support of the activities in Iraq.

WALLACE: I've got a couple of...

PETRAEUS: But we will see this periodically. There will be periodic upticks in that regard.

WALLACE: If I may, sir, we've got a couple of more questions I want to ask you, and we're beginning to run out of time.

I want to follow up on this last point, because all U.S. combat troops are supposed to be out of Iraqi cities by the end of June of this year.

But General Odierno, the head of U.S. forces in Iraq, now says that 20 percent of our combat forces are going to stay behind in Baghdad and Mosul past that deadline. Why is that, sir?

PETRAEUS: Well, what we are in the process of doing and have been doing is withdrawing the bases of our combat forces from Iraq cities and large towns. That process has been ongoing. It's gone smoothly. We still do have some of those bases in Baghdad and Mosul, but we think that they will be out.

What General Odierno was talking about were liaison elements, adviser elements, organizations that partner with Iraqi forces in the support of them, not in the conduct of our combat operations.

So certainly, there will be a presence, but there will not be the combat forces based in those cities as we have had in the past, and that is in accordance with the security agreement.

WALLACE: Finally, General, and we have about a minute left, let's turn, finally, to Iran.

President Obama has made several efforts to reach out to the Iranian regime. Whether it's its nuclear program or arming our enemies in Iraq, do you see any signs on the ground that the Iranian regime is moderating its behavior?

PETRAEUS: Well, I think there's probably been some small reduction in the assistance provided to Shia extremists in Iraq, although that continues, and again, it's very difficult to measure because sometimes you have to have some event that precipitates something to be able to determine how much is ongoing. Beyond that, we'll have to see as the weeks and months proceed. My deputy just accompanied Ambassador Ross in a swing through the region. There clearly -- enormous concern out there about Iranian rhetoric and actions, but we need to see how these diplomatic initiatives might be able to moderate and produce some openness and transparency in Iran, particularly with respect, of course, to its nuclear programs.

WALLACE: General Petraeus, we want to thank you for giving us a tour of all your responsibilities in that part of the world. Thank you for joining us, and please come back, sir.

PETRAEUS: Thank you, Chris.

WALLACE: Up next, there's some encouraging news about the economy. What does that mean for the Obama agenda and the future of the GOP? Former House Speaker Newt Gingrich provides some answers after the break.


WALLACE: Joining us now is the former speaker of the House, Newt Gingrich. He is also the author, along with his daughter, of a new book called "5 Principles for a Successful Life."

And, Mr. Speaker, welcome back to "FOX News Sunday."

GINGRICH: Good to be here.

WALLACE: House Speaker Pelosi continues to deny that she was ever briefed on the enhanced interrogation techniques that were actually used against Al Qaida operative Abu Zubaydah.

But a newly released list of congressional briefings -- and let's put it up -- says that Pelosi received, quote, "a description of the particular EITs," or enhanced interrogation techniques, "that had been employed," this just a month after Zubaydah had been waterboarded 83 times.

How do you explain the discrepancy?

GINGRICH: Well, I think she has a lot of explaining to do. I don't. She clearly -- she's now changed her story again and said well, she'd been reassured they were all legal. So initially she didn't know about it, had not been briefed. Then she had been briefed, but it wasn't clear. Now she'd been briefed and, in fact, had been told it was all legal so she didn't worry about it.

I think she has, you know, a lot of explaining to do. I think on national security matters, she has an obligation either to say nothing or to tell the truth. And it's pretty clear in this case she's not telling the truth.

But I think it leads to a much deeper issue, which is since 1993 when seven people were killed at the World Trade Center, we've had two cycles. We had a Clinton administration that thought this was a criminal problem, that issued -- that refused to allow the CIA and the FBI to cooperate, that refused to pressure Saudi Arabia or Yemen to go after people who were killing our folks. And then you had a bush administration that said this is a war. I think the administration -- if the Obama administration can release documents from the last eight years, they ought to go back and release documents from the previous eight years. I mean, what -- what were the legal rulings of people like Holder who, after all -- you look at this administration, they've got at least...

WALLACE: Attorney General Holder, who then...

GINGRICH: Attorney General Holder.

WALLACE: ... was the deputy attorney general.

GINGRICH: But you look at -- when you look at the Obama administration, the number of attorneys they have appointed who were defending alleged terrorists -- I mean, there's this weird pattern where the Bush people wanted to defend Americans and were pretty tough on terrorists.

These guys are prepared to take huge risks with Americans in order to defend terrorists. And you look at who...

WALLACE: Who is defending terrorists?

GINGRICH: Oh, I think -- well, Holder's firm has 17 alleged terrorists that they're representing on a pro bono basis, for no fee. It's the largest single thing they were doing for free -- was defending Yemenis.

I think there are five different attorneys in the -- in the Justice Department appointed by Obama who had direct -- their firms were defending alleged terrorists.

WALLACE: I want to ask you about one other aspect of this. Pelosi says even if she was briefed on this that there was nothing she could do because these were classified briefings. She and the Republican chairman of the committee got this information. There's nothing they could do.

You as House speaker received these kinds of briefings back in the ‘90s. If you objected to a secret operation, was there something you could do?

GINGRICH: Sure. I mean, the first thing you do is call the president and tell him you will feel compelled to pass a law cutting off the money. I mean, there are lots of things you can do if you want to do it. The Congress is pretty powerful if it wants to be.

And second, you know, they've had control since January of 2007. They haven't passed a law making waterboarding illegal. They haven't gone into any of these things and changed law. In fact, they've had several -- they -- recently, you find that Attorney General Holder's own Justice Department is saying, "Well, you know, some of these memos are actually right. They're not wrong."

So this is -- what we're seeing now in a very sad way is as bitter a partisan attack on the Bush people as we've seen since the McCarthy era. The degree that they're putting specific people at risk for criminal prosecution is unprecedented in modern America.

WALLACE: Meanwhile, the Obama administration says that it will close Guantanamo by next January and that some detainees who are judged not to be security risks will be released in this country.

Question: If you're going to try to get other countries to accept these detainees, don't we have to do our share?

GINGRICH: This is nuts. I mean, this is just crazy. These are -- these are not American nationals. We have no obligation to keep them here. They ought to go home. Now, are their home countries saying, "I won't take my own citizen?"

The idea we're going to put alleged terrorists on welfare and have you pay for them and me pay for them, so they get to be integrated into American society -- remember, all these people were brought in on the grounds that they were trained in terrorist camps.

So we're now going to take a guy who we don't have conclusive proof and we're going to put him in American society paid by the American taxpayer because his home country won't accept him? Why is his home country not accepting him?

WALLACE: Well, let me get -- let' take one example, the Chinese Uighurs, Chinese Muslims...


WALLACE: ... who were arrested in Afghanistan, brought to this country. The Pentagon says they're not enemy combatants. At least one federal judge has said they're not a threat. But if they go back to China, they're going to be prosecuted.

GINGRICH: Why is that our problem? I mean, why -- what -- if the -- if the -- what -- what is it -- why are we protecting these guys? Why does it become an American problem?

WALLACE: So what, send them to China and...

GINGRICH: Send them to China. If a third country wants to receive them, send them to a third country. But setting this precedent that if you get picked up by Americans -- I mean, the Somalian who was recently brought here who's a pirate -- I mean, if you get picked up by the Americans, you show up in the United States, a lawyer files an amicus brief on your behalf for free, a year later you have citizenship because, after all, how can we not give you citizenship since you're now here, and in between our taxpayers pay for you -- this is, I think -- verges on insanity.

WALLACE: Well, let me give you something else that I think you're going to like. There are also reports that after suspending the military commissions in January, the Obama administration now intends to revive them, although with added protections, legal protections, for the suspects, for the defendants.

Is it good news that they at least recognize that they can't actually make cases against these people in regular courts?

GINGRICH: It's very good news that they're backing off from regular courts, but they still haven't come to grips with how hard a problem this is. You pick somebody up because you have a confidential informant who tells you this person is, in fact, a terrorist.

You may have gathered information out of wiretaps. You have a variety of other sources. Now, his defense attorney would like you to share with them all the ways in which you spy on terrorists, which they will then promptly give back to Al Qaida and other terror organizations.

I think the best case to look at is the Italians who used very, very strict methods in going after the mafia in Sicily after they killed Judge Falcone. And they found that if you share things with the lawyers, the lawyers take it right back to the organization, and -- and therefore, they adopted very strict rules.

WALLACE: Let's turn to the economy. The unemployment -- where there has been some good news. Unemployment appears to be slowing. If you believe the stress tests, the banks are more solvent than we had believed. Is the Obama economic plan working?

GINGRICH: I think it's certainly slowing down the rate of decay, and I think we have to recognize that this particular Mother's Day we have a lot of families that are in very difficult circumstance, and there are likely to be more over the next six months.

The challenge for the -- and frankly, when you spend as much money as Treasury has been spending and the Federal Reserve has been spending and the administration in general has been spending, if you weren't slowing down the rate of decay, it would be truly terrifying.

I mean, these folks have been pouring billions of dollars into the system. They paid one French bank $15 billion, for example. And you would think at some point that volume cash will have a short-term effect.

The challenge for the Obama administration is going to become when we finally level off at a much lower level than we were three years ago. And it's very hard to get economic growth with a trickle- down bureaucracy, a $9 trillion debt, and tax increases on people who are productive and create jobs.

WALLACE: You and Reverend Al Sharpton -- some would say it's an odd couple -- met with the president privately this week to discuss education reform. I don't want to talk specifically about that.

There were stories back when you were speaker that you would be very upset and then you'd get into the presence of Bill Clinton and he could charm you.


WALLACE: Can Barack Obama charm you? GINGRICH: Well, he's not charming in the same sense that Clinton is. I mean, President Obama is a very smart, very gifted person, a very good strategic thinker. He's a pleasant person.

The fact is Clinton was charming, but we got welfare reform. Now, he was charming, but we got a tax cut. And he was charming, but we balanced the budget. So I'm perfectly happy to be charmed by somebody who says yes.

In the case of President Obama, he made very clear that he is committed to eliminating the caps on charter schools, which is very good news for children around the country. He and I disagree about vouchers in D.C. for children, but he would like to -- but he's prepared to fight to lift caps on charter schools everywhere. That's good news.

And he made clear that Secretary Arne Duncan should work with Mayor Bloomberg and Reverend Sharpton and myself to try to arouse public interest in dramatic education reform. I take him at his word. I mean, we're going to disagree about tax increases, but we could agree on the need for dramatic school reform.

I think you ought to work with the president of the United States when you can.

WALLACE: A couple of questions I want to ask you before we run out of time. The last time you were here we talked about the fact that you have converted to Catholicism. President Obama is speaking at the commencement at Notre Dame a week from today. And this week, the head of the Vatican's highest court spoke out very sharply against that. Let's watch.


ARCHBISHOP RAYMOND BURKE: The proposed granting of an honorary doctorate at the Notre Dame University to our president, who is so aggressively advancing an antilife and antifamily agenda, is rightly the source of the greatest scandal.


WALLACE: Is Notre Dame wrong to honor the president?

GINGRICH: I think that to the degree that Notre Dame still thinks of itself as a Catholic institution, it raises real questions.

One, it invites somebody who, as a state senator, voted to protect the right of abortionists to kill babies who were born -- who were still alive after the abortion. And I think the president's position has been the most radical pro-abortion of any American president. So I think there is a legitimate question there.

But look. I'm a new convert. I'll let -- I'll let the Vatican speak for the church. I'm just speaking for Newt Gingrich.

WALLACE: Wait a couple of years, and then you can start speaking for the pope.


Finally, there was a lot of talk this week about the future of the Republican Party, and I want to put up some of the comments.

Jeb Bush, former governor of Florida and, obviously, brother of the former president, said, "There was a lot of nostalgia and the good old days, but it doesn't draw people toward your cause."

Colin Powell said, "The party must realize that the country has changed. Americans do want to pay taxes for services. Americans are looking for more government in their life, not less."

Mr. Speaker, what...


GINGRICH: Look, if Colin Powell was right...

WALLACE: Pardon?

GINGRICH: If Colin Powell was right and Joe Biden was right, and paying taxes is a terrific opportunity, let the president propose a general tax increase on every American. Let's get every single American to pay taxes.

That's not what the president is proposing, because in fact, Colin Powell's wrong. The average American doesn't want to pay higher taxes. And at a time of a severe recession, raising taxes is very destructive of economic growth.

WALLACE: And is your party stuck, as Governor Bush seemed to suggest, in the past?

GINGRICH: I think that the party, for example, of Governor Jindal, who's doing a great job in Louisiana, of Governor Pawlenty, who's doing a great job in Minnesota, or Governor Barber, who's doing a great job in Mississippi -- I think that party's going to have a great future.

And I think people like Eric Cantor and Paul Ryan and Kevin McCarthy are going to have a great future in the Congress. We did -- Calista and I did do a film about Ronald Reagan, "Rendezvous With Destiny."

I have a deep belief that Reagan's principles, like Thatcher's principles, like Lincoln's principles, relate to the future. But I don't -- I'm not for nostalgia, but I am for learning from the past in order to create a solution-oriented Republican Party.

WALLACE: Mr. Gingrich, we're going to have to leave it here. Thank you for your insights. You really have to learn to get things off your chest here.

(LAUGHTER) Always good to see you.

GINGRICH: Good to see you.

WALLACE: Coming up, our Sunday panel weighs in on Nancy Pelosi , waterboarding and the pushback from Republicans. This will be interesting.



NANCY PELOSI: We were not, I repeat, were not told that waterboarding or any of these other enhanced interrogation methods were used.


WALLACE: That was House Speaker Nancy Pelosi a couple of weeks ago denying any knowledge of what was done to Al Qaida operative Abu Zubaydah. But documents released this week indicate she was fully briefed on exactly what the government was doing.

Time now for our Sunday group -- Bill Kristol of The Weekly Standard, Mara Liasson of National Public Radio, Kimberly Strassel from the Wall Street Journal -- a first-timer -- and Juan Williams, also from National Public Radio.

So, Bill, the list of congressional briefings -- I think it was 40 briefings -- is even more embarrassing for Speaker Pelosi, because it turns out a couple of months after her briefing that one of her top aides want to another briefing where it says that the waterboarding of Abu Zubaydah was explicitly mentioned. How big a problem for Nancy Pelosi ?

KRISTOL: I think it is a big problem. And there's more evidence yet that people haven't focused on. In June of -- in the Time Magazine of June -- June 3rd, 2002, Nancy Pelosi was interviewed for a story about how the war on terror was going.

And at that point, everyone was on board being tough with terrorists, and she talked about Abu Zubaydah. And she said he was very -- he's very skilled at avoiding interrogation, he's an agent of disinformation.

Nancy Pelosi , who was the ranking member on the House Intelligence Committee, knew enough to know who this person was. She knew that they had failed to get much information from him by regular techniques. And then she pretends -- then she knew, presumably, at the briefing on September 4th that they'd gotten a lot of information from him. The CIA says they explained how they got that information by enhanced techniques. And there's no reason to believe that they didn't.

So Nancy Pelosi , who knew enough -- who knew who this person was and knew that he wasn't giving up information, then knows later on he has given up information -- and now she pretends she had no idea how that happened.

LIASSON: I think that in the -- if in the context of Democrats going after Bush administration Justice Department officials in hearings or calling for prosecutions, this becomes a big problem, because it looks like the Democrats are being hypocrites.

On the other hand, if they can figure out a way to kind of end this chapter and close -- you know, already we're hearing there are not going to be prosecutions of the people who wrote the memos. Some of this might be referred to their state -- local bar associations for some kind of review.

But once that all is finished, then I think the Nancy Pelosi issue goes away, too.

WALLACE: Why? I mean, clearly, what the Republicans are trying to do here, Kim, is to organize a pushback, to say to Democrats if you want to pursue -- and Nancy Pelosi hasn't backed off the idea of a 9/11-style truth commission -- if you want to pursue investigations or prosecutions, you have some exposure here, too. Is that an effective pushback?

STRASSEL: Well, yeah. And that is why they are, for instance, asking not just for the list that came out this week but also asking, for instance, to have the memos released that talk about how effective these enhanced interrogation techniques were -- just what they might have actually prevented from happening in the United States.

And look, too, remember, this is also beginning to snowball beyond Nancy Pelosi . There is questions now coming out about, for instance, Jay Rockefeller, the senator who ran the Intelligence Committee in the Senate. You know, as late as -- the end of 2008, he was saying, "Well, the Bush administration withheld some of this information from us. We didn't have it."

But now, based on what we know, he was briefed 12 times, or possibly more. And so he's got questions to ask -- to answer as well, too.

WILLIAMS: It sounds like everybody's running for cover, Chris. I think -- I think there are a lot of people here who are involved in a political game.

And I think the audience would be wise to ignore it as Washington politics, because if you are truly interested in whether or not Americans are comfortable with terror, let that be the -- the kind of enhanced interrogation techniques of terrorists, let that be the issue. Are we comfortable with what some would call torture?

If the Democrats are serious about it, if they're principled about it, they will go forward, and this pushback by the Republicans to say, one, that some of the Democrats knew about it and knew about it at the time, and then, caught up in the frenzy and the fear surrounding 9/11, did not object, well, then, let the Democrats be subjected to criticism from the far left that says you should have raised objections at the appropriate time.

But if they are truly about the principle of whether or not torture is not -- should not be allowed, then let that be the issue.

I mean, the larger issue, it seems to me, is that you -- Vice President Cheney has been on an offensive, saying, "You know what? American is more vulnerable to terrorist attack because the Obama administration is pulling back on the use of these enhanced interrogation techniques, and they're going back and they're revealing information that we used that we were able to gather, and they shouldn't be doing this."

It seems to me that this is all about saying that the Obama administration -- Democrats are weaker and the Democrats in the Obama administration saying, "No, we're going to say that you were offering rationalizations for using torture," and that they really didn't make America safer. That's the big argument.

WALLACE: Let me turn to a related subject, Bill, the closing of Guantanamo Bay. You saw this week some Democrats as well as some Republicans pushing back and saying -- you know, the famous NIMBY, not in my backyard -- not only not in my backyard to release them on the street, not in my backyard to put them in a prison. What's the fallout of all this?

KRISTOL: Yeah, but not just not in my backyard, but not in this country, as Newt Gingrich was saying.

Well, look. I mean, who started -- you know, why did Barack Obama commit to closing Guantanamo? Is that based on any policy analysis or was that just something that sounded good in the Democratic primaries? I mean, that's the fundamental question.

Juan says Dick Cheney 's been on an offensive. Dick Cheney 's defending the administration in which he served, the people with whom he served, against people throwing around charges of torture and illegality and war crimes. I believe he's entitled to do that.

I think that -- who released the memos? Who released the legal memos? That was President Obama's decision. He says he took it very seriously. He called on people who argued both sides. He didn't have to make that decision.

The Democrats picked this fight and now I think Republicans and others who think that these techniques were appropriate, that Guantanamo Bay was not a place of horror that we should be embarrassed about, are entitled to fight back. LIASSON: Guantanamo's going to be closed. The big question for the Obama administration is that it's a lot easier during a campaign to say we want to close this than to actually figure out what you're going to do with all the people that are there.

Some of them will be tried and incarcerated and maybe even put to death in America. The question is what do you do with that 100 or so, which I think is the number that Gates put on it -- 100 or so detainees who you can't release and you can't try for a variety of reasons? Where do you put them?

And do you keep them in indefinite detention?

WALLACE: There's also a question -- what do you do with the ones that you want to release...


WALLACE: ... but you can't get anybody to take.

LIASSON: Right, you can't get anybody to take them. But the ones that you want to keep, can the Obama administration find some legal justification that will satisfy everyone for indefinite detention? That's a big question. They haven't figured that out yet.

STRASSEL: And the fight he's going to have initially -- a lot of the attention this week was on this piece of legislation that the Republicans...


STRASSEL: ... put forward...

WALLACE: ... which e should say -- The Keep Terrorists Out of America Act.

STRASSEL: Yeah. I mean, who wants to be the congressman that votes against...

WALLACE: I vote against that.

STRASSEL: ... the keep terrorists out? But you know, I mean, the real struggle that he's going to have in the beginning -- the president is going to have -- is with his own party.

I mean, before the Republicans introduced this, you already had Democrats on the Hill who were saying, "We're not going to fund this closing of Guantanamo Bay until we actually know what you're doing," because they're already hearing back from their constituents about whether or not these people are going to be located in (inaudible).

So he's first going to have to get through his own party to get money and funding and support on this, and then -- and then deal with questions of Republican legislation.

WILLIAMS: Well, I think that's key. You know, Democrats are raising questions. I think the moment this week in Washington was Republicans are engaged in some rear-guard fights, but Democrats are the ones who are involved in everything from looking at how the banks are doing, which we'll discuss coming up, to everything in the Supreme Court nomination, to Arlen Specter . It's all about the Democrats.

And the Republicans, even on this issue, which they're trying to make their own, a national security issue, are really playing, you know, follow the leader in terms of what the Democrats are doing, because they're just -- they're just in the background.

And to respond to what Bill said earlier about torture, you know what? That's a -- that's a large conversation. And Vice President Cheney and the Bush administration are trying to justify their legacy at this point.

They're trying to protect themselves, and they're doing so by then, I think, throwing out this fear-mongering attitude -- America is in danger because President Obama is pulling back on the use of these enhanced interrogation techniques. And I just think it's a waste of time. But you know what?

WALLACE: The fact is nobody was using -- or has used enhanced interrogation techniques for years, right?


WALLACE: I mean, because we have not had new...

WILLIAMS: (inaudible)

WALLACE: Well, I know, but the point is do we want to foreswear that for all time if we were to capture a new, high-value target.

STRASSEL: On the other hand, they're also advocating...


KRISTOL: ... the president going back and releasing memos from previous administrations, releasing -- releasing information about interrogation tactics, for the sake of saying, "Oh, our hands are now clean."

There's a very interesting article in the Washington Post today -- there's a May 7th, 2004 inspector general memo which may show that some CIA operatives went a little further than the very careful legal guidance they got from the Justice Department suggested.

And the Post article says the Obama administration's claim to release that top-secret document too soon -- as soon as the public debate quiets over last month's release of the Justice Department's interrogation memos. That's what the White House officials have told political allies.

And that is -- they are -- this is -- these have been political calculations by the White House, not national security calculations.

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

But up next, as Juan suggested, bank stress tests, new unemployment numbers. Is the recession bottoming out? Our panel's thoughts when we come back.


WALLACE: On this date in 1908, Mother's Day was observed for the first time in the U.S. in Grafton, West Virginia. Six years later, President Wilson signed a proclamation declaring the second Sunday in May to be Mother's Day and a national holiday.

Stay tuned for more from our panel.



OBAMA: We're still in the midst of a recession that was years in the making and will be months or even years in the unmaking.


WALLACE: That was President Obama Friday reacting cautiously to news the pace of unemployment in the country seems to be slowing down.

And we're back now with bill, Mara, Kim and Juan.

So, Kim, you, more than any of the rest of us, report on the economy all the time -- your sense of where we are in this recession now?

STRASSEL: Well, I mean, the market certainly looked at two pieces of news that came out this week, the results of the bank stress tests and the unemployment numbers, and seemed to hope that the worst was over.

I think if you look at those two particular pieces of information, it's a little bit more complicated than that. You know, on the stress tests, yes, they came out of this better than a lot of analysts and investors had expected.

But we've also been hearing that the administration -- the Treasury -- might have used a yardstick to measure this that wasn't necessarily as aggressive as they might have done. So you're going to have to look in the coming months to see how this turns out, in fact, in terms of how the banks actually fare.

And in terms of the unemployment numbers, yes, lower unemployment numbers than last month. But we also found out some interesting statistics -- for instance, that part of that drop was due to the fact that the government had hired 72,000 workers for the census. You know, those are short-term jobs, not long-term jobs.

So you know -- and even then, too, what you're talking about is not necessarily stability, which is what you're seeking in the unemployment market, much less growth. So I think we've still got a long way to go here.

WALLACE: Let me just quickly follow up with you. Why would -- and it certainly has been alleged and reported on in some cases. Why would the Treasury Department have gone easier than it should have on the banks?

STRASSEL: Well, the -- if you're being a big cynic, the argument is they've got $110 billion left in this bailout program, the TARP program, and they wanted to make sure they came in under that number, because they don't want to have to go back to Congress again and ask them for more money, especially in the wake of the AIG flap and everything like this.

So the question is if they went easy in order to make -- to make it politically more easy for them.

WALLACE: Juan, is it your sense -- and we don't really know, but is it your sense that this is a normal business cycle or that some of the efforts by the Obama administration, and especially the trillions thrown in by the Federal Reserve, are starting to kick in?

WILLIAMS: Well, I don't know the answer. I mean, I think no one knows, as you say, because it's too early. But what we can say is that -- and I would just add to what Kim was saying -- that if you look -- and Ben Bernanke, the Federal -- the chairman of the Federal Reserve said this week if you look at home sales, home sales are -- seem to be rebounding. You look at lending, the credit markets seem to be loosening up a little bit.

So -- and consumer confidence, which is absolutely key, seems to be going -- to be rising with consumer spending. So these are all good signs, and the market, as she said -- the market's now up to the point that it's erased all the losses for the year, so the market looks positive, and those are people who study it. Those are people who should know. They have money on the line.

To my mind, the issue now is what goes on. The Obama administration said they still have work to do not only with the banks -- and the banks have been bucking the administration because they want to get free of all the kinds of regulations that the Obama administration has in mind -- but they also have to deal with the auto industry still. They have to deal with the insurance industry.

So there's still a lot of work to be done, and we just don't know where that goes.

KRISTOL: The market's up 35 percent in the last two months, which is pretty amazing, and up for the year. My friend Larry Lindsay has been predicting, contrary to almost everyone else...

WALLACE: And we should point out he was the head of the Council of Economic...

KRISTOL: Bush's top economic adviser in the White House.


KRISTOL: (inaudible) been a good forecaster for the last 10, 15 years or so in my opinion -- has always predicted that the second quarter, the quarter we're now in, would be positive, actually, in GDP. This amount of liquidity coming into the system would cause a rebound.

He also thinks -- and he's got some analysis to back this up -- that we then sink back down a little or, at any rate, don't keep growing. I mean, so I think actually Republicans -- Obama will have a good couple of months here, in my view.

Republicans who were chortling over that 20 percent drop in the stock market the first month or two of his administration are going to be, you know, fairly enough, hoisted on our own petard by the fact that now Obama's getting this big stock market rally, some pretty good indicators. We may get some -- an up number.

We could on August 1st be sitting here and saying, "Gee, the second quarter GDP was positive." But I think over the longer run we have huge problems. Fannie Mae had a, what, $20 billion loss last quarter. They're not out of the woods. The banks aren't out of the woods. Commercial real estate is about to crash and that hasn't really hit the banks yet.

So I -- no one -- no one should base anything on this forecast. But my view is, short term, I'm actually surprisingly bullish. But I think medium and long term -- very worrisome.

LIASSON: Yeah. Look, I think the long term is worrisome. We're still waiting for the credit card implosion which people are bracing for.

But I think a question about the stress tests is if one of the reasons -- the purposes of the stress test was to buy some time, it worked, and it kind of calmed down animal spirits a little bit. People weren't so panicked. Look what's happened in the stock market.

But you still have at least two of these big banks, Citi and Bank of America, that are effectively nationalized and may be effectively insolvent. We don't know. We don't know how these stress tests priced those toxic assets on these banks' books. And we don't know what the government plans to do with them over the long term.

You know, in June and July, they're going to start this great experiment with these public-private investments that are supposed to buy the assets off the balance sheets of these banks. We don't know if that's going to work.

Are the banks going to want to sell them at an incredibly low price so they'll look even -- their balance sheets will look even worse? You know, are hedge funds going to want to invest? And in the end, will taxpayers just end up subsidizing the whole thing?

So I think there's still a lot of questions out there. But I agree, this week, they passed with flying colors.

WALLACE: Kim, is there a sense that we may be out of the economic free fall, we may be out of the idea of staring into the abyss in some sort of unprecedented way, and that this may be turning into more of a garden-variety recession?

STRASSEL: Well, look. I think what Bill just said about kind of short term -- look. Whenever you're pumping $787 billion into the economy, you've got to hope that it...

WALLACE: It's even more than that.

STRASSEL: Yeah. Well...

WALLACE: I mean...


STRASSEL: ... when you take the whole package together. So, yes. I mean, I think one of the questions, though, when we talk about whether or not, for instance, the economic plan is working is, as Bill said, the medium and the long term.

And -- and with regards to the stimulus itself, for instance, I mean, when you spend that much money, you've got to pay for it down the road. That usually, for instance, involves tax increases. We saw an instance of that come out of the Obama administration this last week in terms of what they want to do now in closing corporate loopholes for corporate taxes and how they earn their money overseas.

So -- and you're going to see that more coming out as Congress starts to begin on spending bills and starts looking at policy and tax policy. So the question then is are you actually creating a situation where you are making it impossible to have kind of sustained medium- term, long-term growth.

WALLACE: Meanwhile, Juan, it looks like -- because they're not only going to have to spend all this money on bailouts for the banks but also they're going to start to get some money back -- that there was talk this week that the Treasury may have $145 billion of our money burning a hole in its pocket, and they're talking about helping out municipalities -- as you mentioned, life insurance companies -- GMAC, the financial arm of General Motors.

So the bailouts -- they may not be of the banks but the -- but the government bailouts of private industry could go on for a while.

WILLIAMS: Oh, I think it will go on for a while. I mean, the other way to look at it from the -- from not the conservative point of view is to say, "Wait a second, it's too early to say it's over." No one's saying it's over. This is still a work of art, you know.

And Tim Geithner, who was the subject of humor last night, the president saying he's trained his dog not to take a leak on Geithner's leg like everybody else who wants to do that in this town -- you've got to understand that they're going after -- they've got to help cities out. They've got to help with Medicare spending. They've got to help schools out. They've got to help hospitals out.

All of this needs to be done to help shore up an economy that is still in crisis. WALLACE: Well, on that happy note, we're going to end it here. Thank you, panel. See you next week.

And don't forget to check out the latest addition of Panel Plus, where our group here continues the discussion on our Web site,, shortly after the show ends.

Up next, President Obama as standup comedian. We report, you decide, right after the break.


WALLACE: President Obama has faced a lot of challenges in his first weeks in office, but last night may have been his biggest yet. At the White House Correspondents Dinner, it was his job to make Washington officials, Hollywood stars and grizzled reporters all laugh.


OBAMA: I am Barack Obama . Most of you covered me. All of you voted for me.


Apologies to the Fox table. They're -- where are they?


Now, Sasha and Malia aren't here tonight because they're grounded. You can't just take Air Force One on a joyride to Manhattan. I don't care whose kids you are.


Joe Biden rightly deserves a lot of credit for convincing Arlen to make the switch, but Secretary Clinton actually had a lot to do with it, too. One day she just pulled him aside, and she said, "Arlen, you know what I always say, if you can't beat ‘em, join ‘em."


So I'd like to talk a little bit about what my administration plans to achieve in the next 100 days. During the second 100 days, we will design, build and open a library dedicated to my first 100 days.


It's going to be big, folks. In the next 100 days, I will learn to go off the prompter and Joe Biden will learn to stay on the prompter.


In the next 100 days, we will house-train our dog, Bo, because the last thing Tim Geithner needs is someone else treating him like a fire hydrant.


In the next 100 days, I will strongly consider losing my cool.


Finally, I believe that my next 100 days will be so successful, I will be able to complete them in 72 days.


And on the 73rd day, I will rest.



WALLACE: And that's it for today. To all those moms out there, especially mine, thank you. Have a great week, and we'll see you next "FOX News Sunday."



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