CEO of ACORN and Rep. Issa Debate

CEO of ACORN and Rep. Issa Debate

By Fox News Sunday - September 20, 2009

WALLACE: I'm Chris Wallace, and this is "FOX News Sunday." Today, the president is talking and talking. But we have a "FOX News Sunday" exclusive, the only place you won't see Barack Obama making yet another pitch for health care.

Our issues today -- ACORN under fire. The controversial community organizing group gets slammed by Congress after undercover videos show possible criminal activity.

We'll have a fair and balanced debate between the head of ACORN, Bertha Lewis, and one of the group's toughest critics, Congressman Darrell Issa .

Then, is the recession over? Is the economy on the rebound? We'll ask our blue-ribbon panel of CEOs -- Fred Smith of FedEx, John Chambers of Cisco, and Steve Odland of Office Depot.

Plus, the White House dismisses protestors and boycotts a news organization. Whatever happened to reaching out to all Americans? We'll ask our Sunday panel -- Brit, Mara, Paul and Juan.

And our Power Player of the Week, the legendary Hope Diamond, as you've never seen it before, all right now on "FOX News Sunday."

And hello again from Fox News in Washington. As you may have heard by now, President Obama decided to do five Sunday shows today, but the White House made it clear they had no interest in talking to us. We'll have more on that later.

But first, the nation's biggest community organizing group, known as ACORN, was caught in a hidden camera sting, then saw both houses of Congress vote to cut federal funding.

We're joined today by ACORN's CEO, Bertha Lewis, and by one of its toughest critics, Congressman Darrell Issa .

And we welcome both of you to "FOX News Sunday."

LEWIS: Thank you, Chris.

ISSA: Thank you, Chris.

WALLACE: Ms. Lewis, when those videos of ACORN workers who were helping what they thought were a pimp and a prostitute first came out, you said the following, and let's put it up. "We are their Willie Horton for 2009. We are the bogeyman for the right wing and its echo chamber."

Now the vast majority of Democrats in the House and the Senate have voted to cut funding for ACORN. Can you still say this is just about race and politics?

LEWIS: Well, we are the largest community organization of low- and moderate-income folks and mostly people of color. And of course, any organization is not entirely perfect.

I think Congress, you know, will be looking at doing an anti- ACORN amendment and just singling out one organization, but we continue to make sure that all of our employees -- if they're too stupid to understand that they are not reaching professional standards, we terminate them.

And we actually make sure that, you know, what we do internally is serving our constituents, 500,000 poor black and brown, Asian and white people in this country. So I was outraged by it. Everyone should be. And I can understand how the Congress was also.

WALLACE: Well, Congressman Issa, it's not just the videos. In July the Republican staff, your staff on the Government Oversight and -- or, rather, the House Committee on Oversight and Government Reforms, issued an 88-page report in which you charge the following. "Acorn has committed investment fraud, deprived the public of its right to honest services, and engaged in a racketeering enterprise affecting interstate commerce."

Briefly, explain why you think ACORN is a criminal organization.

ISSA: Well, one thing they did was they covered up an embezzlement, both internally and externally, and then glossed over the dollars, and the...

WALLACE: This was an embezzlement by the brother of the founder back in 1999 and 2000 of almost a million dollars.

ISSA: Of almost a million dollars. Basically, the founder stayed on the board until this became public eight years later. Now he's with affiliates doing the same work and able to say well, he's not with the company.

The bottom line is there's no transparency in ACORN. Any charity that you would look at -- and we've looked at them in our committee. It's a regular part of what we do. You normally find out who's paid what, where the money goes, what the collection costs are and so on.

Here we have literally hundreds of organizations tied under the ACORN umbrella, and you can't even find out what their incorporation is, whether they pay taxes, who makes what or, more importantly, whether corporations within the affiliates work in different areas -- political fundraising, getting candidates elected, voter registration, other community activities, whether or not those moneys are fungibly moved illegally.

WALLACE: That brings up, Ms. Lewis, the question I got most from our viewers in e-mail after we announced that you were going to be on the program, which was how can a nonprofit engage in political activity.

It turns out that ACORN, the parent group, is not a 501(c)(4), which would be tax exempt, but rather a taxable nonprofit. The Congressional Research Service says that you are the only taxable nonprofit that they could find in this entire country.

Is that so that your various subsidiaries can get federal funds and act as nonprofits while your parent group can engage in political activity?

LEWIS: We've made sure since I've become the CEO that affiliates have firewalls between them. I know that back last year we were outraged that the board didn't know about the previous chief organizer's activities.

I've completely overhauled all of our finances, all of our controls. And he was fired immediately, just as in this instance with these tapes we terminated folks immediately.

Under my watch and my leadership, I will make sure that we keep saving people's homes, making sure that people get paid good wages...

WALLACE: But -- but...

LEWIS: ... and making sure that our corporate structure is aboveboard, it is open. The "R" in ACORN stands for reform. And not only do we think we want to reform public policy, but internally let's have some reform.

WALLACE: But -- but, Ms. Lewis, if you're so concerned about serving the community, obviously being a taxable nonprofit means that you have to pay taxes.

LEWIS: Taxes, absolutely.

WALLACE: If you're so concerned about serving the community, why not be a tax-exempt nonprofit, stay out of politics, and then you could give that money -- instead of to the federal government, you could give it to your community?

LEWIS: I think what you would also agree with is the right of the people to come together not only to petition their government -- they have the right to do that. Poor people have the right to do that.

But you also need to be able to do lawful (c)(3) activities such as servicing the community, which we do. I think an organization can do both. Hundreds of organizations do the same thing that we do. We make sure that we service our 500,000 members.

WALLACE: Congressman Issa?

ISSA: But you know, in fairness, Bertha, I don't know of another organization structured the way you are where they're both a political wing, if you will, of the Democratic Party, and has close relations with the unions, and takes federal dollars, and takes charity money, and does not disclose in a way in which anybody -- your donors, the government when they provide money -- can actually get transparency.

If you're going to change this, will you come before Chairman Towns, a man who, by the way, voted not to cut off your funding, and get -- and give the kind of disclosure to where the Government Oversight and Reform Committee can know that you are doing work with firewalls, as you say, so the American people know that their dollars don't end up doing political activities prohibited by law? LEWIS: Here's the question that we really should be asking.

WALLACE: Well, no, no. Answer his question, if you will.

LEWIS: The question that we really should be answering -- you have an organization such as ours that absolutely pays its taxes and absolutely provides its services. It has firewalls up. We think it's up to the Congress to determine how they would handle some sort of anti-ACORN program or amendment.

There are poor people in this country every day that we're saving their homes, making sure that they have decent wages...

WALLACE: But why not go...

LEWIS: And so that is what...

WALLACE: I mean, could you answer...

LEWIS: So I think...

WALLACE: ... could you answer the congressman's...

LEWIS: ... it's not up to us. My job -- my job is to serve our 500,000 members. My job...

WALLACE: Ms. Lewis, could you answer the question directly?

LEWIS: And that...

WALLACE: Why not go...

LEWIS: And that's what we're going to do.

WALLACE: ... why not go before the committee? We've spoken about...

LEWIS: I have gone...

WALLACE: Please let me ask the question.


WALLACE: Congressman Towns, who's a Democrat -- it is a Democratic-controlled committee, but there obviously are Republicans like the ranking Republican, Congressman Issa -- are saying come before us and explain, because it seems you're merging charity, nonprofit, profit, political, non-political, and that it all gets jumbled up and you don't know which dollar is going where.

LEWIS: Well, that's Congressman Issa's opinion. Again, what -- anyone that asks us to come -- we will do whatever we need to do to make sure that folks understand the work that we actually do and that we've been doing for 40 years...

ISSA: Bertha, but... LEWIS: ... that we've been doing and we've been doing it well.

ISSA: ... Chris is asking a question. You're giving an answer that your own counsel, Kingsley, said is not true. You don't have firewalls. That's an internal memo that your counsel is saying you have these problems.

And if you had those problems then, and for 40 years have had these problems, and the American people have put $53 million into your organization and countless other dollars of other state, local and charity money, the question is will you allow, at least looking back, a review of these things so that people can have a confidence that you have those in?

There is no God-given right for any organization to receive a grant from the American people. The fact is there are organizations standing in line that wish they won instead of you, and they're giving us the transparency so we can have the confidence the money is spent only for the purpose of the grant.

LEWIS: Congressman Issa is right. You have competitive grants and you need to compete with a lot of other folks. You need to deliver those services. He's absolutely right.

He's absolutely right that his staff, who repeatedly talked to the lawyers at Harmon Curran that said we did an internal -- a lawyer kind of privileged confidential document. They gave advice. Since I took over, I have overhauled the entire system.

WALLACE: Well, wait, wait, wait. Wait. Wait.

LEWIS: And we took our advice.


LEWIS: And that's what we're doing.

WALLACE: You say that you overhauled...

LEWIS: And we're making...


WALLACE: You say you overhauled the whole system.


WALLACE: There are the videos which have happened on your watch.


WALLACE: I just want to put up -- there are ACORN workers...

LEWIS: That's right.

WALLACE: ... advising young men and women posing as a pimp and a prostitute how to buy a house and avoid paying taxes. Here it is.


(UNKNOWN): Your business is a performing artist.

(UNKNOWN): A performing artist.

(UNKNOWN): Which you are, OK?


(UNKNOWN): So you're not lying.

(UNKNOWN): It's kind of a (inaudible) ego.

(UNKNOWN): It's a little play on words. But you're a performing artist.

(UNKNOWN): Yeah.

(UNKNOWN): All right.

(UNKNOWN): OK? So stop saying prostitute.

(UNKNOWN): Got it.



(UNKNOWN): Day one, you earn X amount of dollars, find another name.

(UNKNOWN): Find another -- another name for...

(UNKNOWN): And don't say that you're -- you're a prostitute thing or whatever.


WALLACE: I want to point out, because you've also attacked FOX, FOX did not produce, did not make, did not buy those videos. We've just put them on the air like everybody else now has. You were brought in a year ago to clean up ACORN. Is this the new and improved ACORN?

LEWIS: Well, what did I do? Immediately these folks were terminated. Immediately...

WALLACE: Well, actually, first you attacked us and said it was a...

LEWIS: Immediate -- no.

WALLACE: ... it was a political and a racial conspiracy. LEWIS: They were terminated immediately. I know the sequence. Those folks were terminated immediately. And what did I also do? Make sure that we have an independent review, make sure that we suspended any walk-in activities so we could review what worked, what didn't work.

In instances those folks were thrown out. I have an obligation to my board, to my members and to my other employees that actually did practice professional, good high standards. Those folks cannot work for me.

WALLACE: But why is it still going on a year after you took office?

LEWIS: Well, here's the thing. I -- as I said, the first thing that we began to do was reorganize our board, make sure that we had financial structures and controls, make sure the way our offices were managed -- and in a -- in a way, it's indefensible what I saw there.

That is why I said, "You know what? We're going to terminate these folks immediately," even though I've been reviewing things and making sure that we look at an organization that has...


LEWIS: ... 71 sites. In a way, this was good for us, so what it did was show up to us what weaknesses we have, and we have moved swiftly...


LEWIS: ... in order to correct that.

WALLACE: ACORN has long ties to Barack Obama . He's done work over the years for various organizations.

LEWIS: Well, you say that there's long ties.


LEWIS: That's a matter of opinion.

ISSA: He was an attorney for ACORN on a couple of occasions, at a minimum.

WALLACE: You personally endorsed Barack Obama last year in a speech before ACORN. Do you hope that he will veto any measure that comes out of Congress cutting off ACORN funds?

LEWIS: First of all, President Obama was a young lawyer among many different lawyers that represented a whole host of...

WALLACE: Can I get an answer to my...

LEWIS: ... organizations, just not us.

WALLACE: Ms. Lewis, can I get an answer to my question?

LEWIS: Here's what we want. President Obama is a very smart, very thoughtful person. What he does is his decision. I would never presume to tell the president whether he should veto a bill or not.

WALLACE: He says that he believes that ACORN should be investigated.

LEWIS: Well, that's his opinion also.

ISSA: Well, it's also Chairman John Conyers' opinion, and he's asked his subcommittee ranking -- Chairman Nadler to pursue that. And again, this is not Republicans. This is about all the corporate structure, whether things have been violated.

You know, if you want to have an independent investigation -- and I've heard that expression used by Bertha many times -- you go to Pricewaterhouse or Ernst & Young and you -- you walk in and say, "I want an audit of our corporations. I want a -- and when we get done with it, make it public."

WALLACE: Let me -- let me interrupt -- let me interrupt you, if I may, because you said this last week that you would name an independent auditor by Friday to review ACORN. I looked at your Web site 20 minutes ago. There's still not a word.

LEWIS: You will have that announcement on Monday, making sure that when we hit the ground running that everything is in place, because it is important that we continue...

WALLACE: Is it going to be somebody...

LEWIS: ... to do that.

WALLACE: ... independent like Pricewaterhouse? Is it -- I mean, you're naming the auditors...

LEWIS: Well, it's not going to be...

WALLACE: ... so some people are going to...

LEWIS: ... Pricewaterhouse.

WALLACE: ... wonder whether or not...

LEWIS: You'll find out who that person is, and you'll also note that we brought in things last year, new auditors, new financial professionals, to make sure that they gave us sound advice, which I've been implementing, as well as making sure that what you just saw never, ever happens again.

ISSA: Bertha, if I could ask just one question from the standpoint of the government.

WALLACE: We're almost out of time. ISSA: Before we -- before we provide additional grants or make you eligible for additional grants, wouldn't it be fair for you to demonstrate to the federal government, to the agencies, that, in fact, you now have those separations, so that whether it's Pricewaterhouse or somebody else, will you assure us that that's the case?

Because my opinion continues to be you shouldn't get another penny of federal dollars until you demonstrate that those dollars are firewalled for only that use, and that has not been the history of the organization.

LEWIS: And I'm glad Congressman Issa said that is his opinion.

WALLACE: Are you willing to open your books up to...

LEWIS: I am willing to do the work that I need to do every single day, not be distracted, make sure that things that we do well we beef up, and things that we don't do so well that we change and we reform.

I have to work for poor people. I have to make sure I'm saving people's homes. I have to make sure that children don't get lead poisoning. That's my job.

WALLACE: Ms. Lewis...

LEWIS: That's what I'm going to do.

WALLACE: ... Congressman Issa, I want to thank you both.

ISSA: Thank you, Chris.

WALLACE: I want to thank you both for coming in and answering all of our questions.

LEWIS: Thank you.

WALLACE: Up next, with Fed Chairman Bernanke starting to talk about a recovery, three of the country's top CEOs give us their bottom line on the state of the economy. We'll be right back.


WALLACE: With some positive news on the economy coming from Washington and Wall Street, we thought the time was right to convene a group of top business leaders to find out where they think we stand.

We're joined now by Fred Smith, chairman of Federal Express; John Chambers, head of Cisco, who comes to us from California; and from Florida, Steve Odland, chairman of Office Depot.

Well, Federal Reserve Chairman Ben Bernanke said this week the recession is very likely over. We now hear that President Obama says that he believes the economy is beginning to grow again but that it's going to be next year before we see jobs picking up.

Fred Smith, FedEx stock is up 18 percent this year, but you announced this week quarterly earnings are down 53 percent. Where do you see things right now?

SMITH: Well, I think the recession has bottomed out. We have a very unique view of the economy, Chris. We have our express company that operates all around the world, our ground company that's tied in with retail, our freight company that's tied in with the industrial sector of the economy, and we're really beginning to see some pickup in all three of those areas.

Asia is very strong at the moment, led by China. So there's no question in our mind that the economy at least has stabilized, albeit at a lower base.

WALLACE: John Chambers, Cisco stock is up 43 percent this year, but earnings are down 21 percent. Where do you think we are in this recession?

CHAMBERS: Well, I think Fred is probably the best indicator of especially small business and the consumer-type activity. We get to see what's going on in medium-size business and larger companies.

We saw the market for us level out in the first calendar quarter of this year. The second calendar quarter we began to see pretty good upturns in terms of sequential growth, good balance in the U.S.; Asia very solid, as Fred said; Latin America. Europe will probably lag by a couple of quarters.

But I think the key takeaway, Chris, isn't about the economy recovering, because it clearly is. It's do we put Americans back to work and have we made the changes during this downturn to position our country on the global basis from a competitiveness point of view, because that's what companies try to do during the downturns.

WALLACE: All right. We're going to -- we're going to get to that in just a second, but let me bring in Steve Odland.

Office Depot shares are up 111 percent this year, but second quarter earnings were down 22 percent. Are you seeing a turnaround, Mr. Odland?

ODLAND: Well, Office Depot's customers are small businesses, and so we've been a barometer of the health of the -- of the small business sector.

What we've seen is that this sector -- the small business customers have been hurt disproportionately in this downturn, because housing is a traditional source of liquidity for these people. They start their businesses with a second mortgage. They fund them with home equity lines of credit.

And as that credit has dried up, these businesses have not been able to recover. So we went off a shelf last year, and I feel like we're rocking around down here at a bottom, but we're not seeing a meaningful recovery at this point, and I'm worried that we're not going to until the liquidity returns to the small businesses.

WALLACE: All right. We're going to get into that. And actually, let me pick up with you, Mr. Odland, on that, because, you know, there was this credit crunch.

Have you seen the Obama policies -- I want to turn to what the president is doing now, both what he's done and what the Fed has done, both the stimulus, also the financial rescue -- has that eased the credit crunch?

ODLAND: Well, you know, the stimulus money has not gone to small businesses. This is an unusual recession in that it's been banking- led and housing-led. And so as these sources of cash have dried up for small businesses, they haven't been replaced by stimulus money or any other money.

The issue here is that every modern recession is led out by the small businesses as they create jobs. So all net job creation happens in small business. In this case, we're not going to see a job rebound until we see these small businesses get more access to liquidity.

WALLACE: Mr. Chambers, when you look at what the White House is doing -- because the president and his administration, while being cautious, has said that they believe their policies are responsible at least for the end of the economic free fall -- do you think they're making the kinds of changes that you talked about in your first answer, to build a solid and enduring recovery? And do you worry about government intrusion in the private sector?

CHAMBERS: Well, Chris, if you'd call me John, I'd appreciate it. That way I won't feel too old. In terms of the policies, I think you have to give the central banks and the Fed Reserve very positive marks on a global basis. And I do think you're seeing the trends going the right way that both Steve and Fred talked about.

In terms of the programs that they're spending money on, such as the smart grid capability, really making our country competitive from an electrical point of view and cost to the consumer, in terms of broadband, in terms of electronic medical records, they're steps in the right directions.

But much like the investments business makes, you won't know for 12-18 months were they the right steps. And a lot of them still have form to take in terms of are they positioning us for really sustainable job growth. But it is in areas that they're starting to spend that I'm cautiously optimistic.

WALLACE: Fred Smith, are the Obama economic policies helping or hurting?

SMITH: Well, I don't think they're hurting, Chris. I'm not sure they get to the heart of the fundamental problem. The economy got way too invested in finance and housing, and it did so because the tax policies of the United States favor debt, speculation in the financial services sector, as opposed to the industrial sector.

So if you want to improve the earnings power of blue-collar folks, you've got to stimulate the industrial sector. And our tax policies just don't -- just don't do that at the present time.

WALLACE: So give me one magic bullet. What would you like...

SMITH: Well, I think there are two things that need to happen. One, the tax rate in the United States at the corporate level is 38 percent. Other than Japan, it's the highest in the industrialized world.

Secondarily, interest is completely deductible, so if you borrow money to speculate on Wall Street, the government is basically helping you with that speculation, whereas an industrial company like FedEx that buys a new 777, that employs people building the plane in Washington and the engines in Ohio -- we get that airplane and put it in service, and we have to depreciate that airplane.

In other words, the capital investment in that equipment is taxed much greater than speculation in the financial sector. So expensing that capital would be a huge stimulus to the industrial sector of the economy.

WALLACE: Let me bring you all in to what is the big subject here in Washington, and that, of course, is health care reform.

Since you insist on it, John, I'll begin with you. Would the president's health care reform plan -- and I'm not talking the specifics, but the general outline of it -- would that be good or bad for the economy? CHAMBERS: Well, I think, Chris, you've got to find a way to get every American covered by health care capabilities. For us to be the richest nation in the world and not deal with that I think would be a problem for us.

I do think technology has to play a much more aggressive role which I've not seen as much from any of the proposals that are in front of us in terms of reducing cost of health care at the same time you deliver the service.

So I think you can do an "and." I think you can provide the service, but we've got to do it much smarter and much more technology- based than before. The current plan or proposals -- I think we have a ways to go.

WALLACE: Steve Odland, what do you think of where the president and the Democrats are headed on health care reform? What's that going to mean to your business and to the economy?

ODLAND: Well, I think we've got to go back on health care and ask the question what are we trying to solve. What problem are we trying to solve?

We seem to have about 45 million Americans who are not covered. Half of them have access and choose not to buy it, which is, I think, an American choice. Half of the rest are illegal aliens. We have to debate that.

I think what we're trying to solve is access for about 5 to 7 million Americans out of 310 million Americans. So you've got 80 to 85 percent of the population which is fine with the coverage.

We have to be careful not to mess up the greatest system in the world in order to solve the problem for a few. So I'm a little worried about big government interaction here and the effect on small business and large business as well.

WALLACE: Fred Smith, there's been a lot of complaints from big corporations and small businesses that this is going to add to their costs.

SMITH: Well, there certainly has to be reform, as John said. And Steve mentioned there are about 46 -- I think it's 47 million people that are not covered today.

A hundred and sixty million people get insurance from their employers. About 80 million are covered in Medicaid primarily for the young and Medicare for the aged.

The problem is that the people that do provide insurance, like FedEx, for our employees, or Office Depot or Cisco, are actually paying for the medical care for the uninsured because we don't deny people medical care.

So if I were the czar, I would basically say what we need to do is to have a mandated coverage of catastrophic care. When I was young, there was no such thing as first dollar medical care or medical insurance. It was major medical.

And I think if we got to the point where our major or catastrophic medical expenses were covered and the market worked in between Medicaid and Medicare, you'd have the beginnings of a reasonable solution.

WALLACE: We're beginning to run out of time, and so I'm going to ask you, Mr. Smith, for a quick answer on this. The president announced tariffs on Chinese tire imports. Sensible response to predatory trade practices, or do you worry that we're headed for protectionism and a trade war?

SMITH: Well, I think we've got to be very careful about this. Twenty-five percent of the world -- of the United States economy is related to international trade, about 13 percent in imports which give us a much higher standard of living. About 12 percent of our economy are exports.

And we have to be very careful. There are 5.7 billion consumers outside the United States in excess of our 300 and some-odd (sic) consumers. Trade has built our standard of living. We have to be extremely careful not to bring in protectionism, because it will be a very catastrophic result if we do.

WALLACE: We've got about 30 seconds left for each of you, so let me start with you, John, and we'll go around.

Your thoughts about -- look a year out, in 30 seconds. Where do you see the economy? Where do you see unemployment?

CHAMBERS: I think the economy a year out will be growing between 2 to 4 percent. I think you'll start to see the unemployment pick back up. But, Chris, the real sustainability of this is based upon have we thought three to five years out about how competitive our business and how competitive our education and health care system is.

If we do it right, I think we'll build a base for the future, and I'm optimistic on America's future.

WALLACE: Steve Odland?

ODLAND: The economy started to go off two years ago and it has calmed down dramatically. I think we need to get the liquidity to the small businesses to start to create jobs. If we do that, we will have a slow, steady recovery in 2010.

But I think it's going to take two to three years to get back to where we were two years ago. So this is going to be a long haul.

WALLACE: And finally, Fred Smith?

SMITH: Well, I think in the fourth quarter this year, the economy is going to grow over 4 percent sequentially. Next year our forecast is for between 2.5 to 3 percent.

But remember, that's off a lower base that's come down because of the tremendous economic contraction we've had.

WALLACE: We're going to have to leave it there. Gentlemen, I want to thank you all. It's good to get some analysis from three people who have to meet a payroll every week. Thank you.

Coming up, President Obama's Sunday show media blitz which did not include everyone. Our panel reviews the White House strategy right after the break.



KATIE COURIC: Turn on your television Sunday morning and he'll be there.



BRIAN WILLIAMS: It is a presidential media blitz.



(UNKNOWN): On five -- count ‘em, five -- Sunday morning talk shows.


WALLACE: Well, there you have the lead story on the network newscasts Friday night, talking about President Obama's Sunday blitz.

And it's time now for our Sunday group -- Brit Hume, Fox News senior political analyst, and contributors Mara Liasson of National Public Radio, Paul Gigot of the Wall Street Journal, and Juan Williams, also from National Public Radio.

Let's start with the remarkable number of interviews that Barack Obama has given so far in his young presidency. Take a look at these numbers. As of late August -- and that is before today's Sunday show "palooza," Mr. Obama had given 114 interviews, compared to 37 by George W. Bush and 41 by Bill Clinton at the same point in their presidencies.

Brit, what is President Obama getting for all that exposure?

HUME: Less and less. I think that this presidency has proceeded from a kind of assumption that Barack Obama 's personal wonderfulness would be a major part of his success diplomatically and politically. And they have sought to deploy him, he and his aides, at every turn.

He turns out, I think, in the end to be an exceptionally appealing and charming man, enormously likable, but oddly not persuasive. All of the speeches he's given, including the one to the joint session, which is a -- you know, a tremendous platform, have not in the end moved the needle on the policies that he's trying to put across effectively.

So he risks overexposure and I think, in addition to that, this isn't working.

WALLACE: Mara, I mean, you cover the White House. Is it their feeling that people just haven't heard the argument from the president yet, and that if they keep pounding it they'll hear it finally? And what do -- do they worry at all about overexposure?

LIASSON: No, they don't worry about overexposure, and they're asked this a lot. I mean, I think he is hugely exposed. There's no doubt about it. He's exposed more than any other president, by design.

But this notion that he's overexposed says that if somehow he was out there less, his policies would be doing better, and I don't think that's not true. If he doesn't get everything he wants in health care, it's not going to be because he was on TV too much.

I do think that we are in a different media environment now, and they believe strongly that the media environment is so fractured that he has to try to reach every single audience wherever he can, whenever he can.

And also, they believe that when he does talk in a big set-piece speech like the address to the joint session of Congress that it does help him. And as a matter of fact, we have seen in polling since then that some of the disparity in intensity between the people who were for his health care plans and against them has leveled off. So I think -- they think this does him good.

WALLACE: The White House has issued a statement this weekend about his decision to exclude Fox from the Sunday blitz, and we want to put it up. "We figured Fox would rather show ‘So You Think You Can Dance' than broadcast an honest discussion about health insurance reform. Fox is an ideological outlet where the president has been interviewed before and will likely be interviewed again, not that the whining particularly strengthens their case for participation any time soon."

Let me just briefly explain, for those of you who haven't been following this back and forth, the reference to "So You Think You Can Dance" is the fact that while the Fox News Channel broadcast the president's speech to the joint session, the Fox broadcast network ran the aforementioned show.

The whining, I think, refers to me and the fact that I called the White House on O'Reilly's show Friday the biggest bunch of crybabies I've ever dealt with in my 30 years in Washington.

Having now explained all of that, Paul, your thoughts about the statement and about the White House strategy. GIGOT: Well, of course, CNN has no ideological predispositions at all. So I mean, I think they're -- all White Houses play favorites. This one plays favorites, too. Sometimes Fox has benefited in the past. Sometimes other people benefit from when presidents are trying to make a case.

We benefit at the Wall Street Journal when the Treasury of any administration is trying to sell an economic issue.

I think that they're missing a big audience. They're missing a chance to come on here. But as -- so if I were this White House, I wouldn't play favorites like that. I think it does tend to make them look a little small-minded.

But in the end, they -- they think it's useful. Wear it as a badge of honor.


WILLIAMS: Well, in fact, they think Fox is an ideological outfit, as you just saw in the statement from the White House. They also think that there are Fox personalities who've called the president racist, that the network, in the president's view, is all about defeating President Obama and bringing down his administration.

Now, I think, as Mara said, we live in a fractured media universe and Fox, without a doubt, is more of a conservative outlet. We have more conservatives, especially in prime time on the cable channel.

I think that the wise strategy here would be for the president to make strategic outreach to people so that he can be heard across the ideological spectrum. I think if he was going to make news today, he'd make it here.

I don't think he's going to make news on any of those other channels. It's just that his face is out there.

HUME: Let's assume, Chris, for the sake of discussion that he were to come on this program and be interviewed by you. You would do, as you do with all guests, a searching interview with a lot of tough questions. He'll get some of those tough questions elsewhere as well.

He will do, as he does, well with those questions. He will field them. He will answer them. And he will reach a larger audience.

Mara makes the point that they think he ought to reach out to as many people as he can. Skipping a large outlet like ours, with a cable channel in addition to the broadcast outlet on which this appears, seems to me to be at war with that strategy.

WALLACE: Mara, I think it's fair to say -- and you've covered a bunch, and so have I -- every president is thin-skinned, but I wonder whether this administration, this White House, has a particular problem with criticism.

I want you all to watch a comment by top presidential adviser David Axelrod last Sunday when he was asked about that big demonstration against big government here in Washington. Take a look.


DAVID AXELROD: I don't think it's indicative of the nation's mood. I don't think we ought to be distracted by that. My message to them is they're wrong.


WALLACE: Not talking just about us, but just the attitude of this White House, whatever happened to reaching out to all Americans?

LIASSON: I think that -- look, I agree the White House would do well to reach out to all Americans in every possible venue, because I think the president does well, and especially -- he's trying to correct some of the -- what he considers to be misinformation and the myths about health care reform. He would do well to do it here.

However, I don't think they're any more thin-skinned than other White Houses I've covered. I mean, I've always got an earful of complaints about the media from every White House press department. So I don't know if they're more thin-skinned.

I just think that we are in a much more adversarial environment, and we're also at a particular point in this health care debate where the president's base needs reassurance and needs to be fired up, and I think that's driving a lot of it.

WILLIAMS: So do you think, Mara, they're going to demonize Fox in order to stir that base that you're talking about?

GIGOT: This is about reassuring Democrats, because they're going to have to pass this on a partisan vote almost totally. They know that increasingly.

This is about giving them cover and saying, "The president is going to be with you and fight for you if you have to walk out on a limb and vote for a bill that the majority of the people, American people, oppose," which is the case now.

WALLACE: All right.

WILLIAMS: And, Brit, that goes to your point that the speech that was given to the joint state may not have moved the needle in terms of public opinion, but I think it did solidify the Democratic vote.

WALLACE: All right. All right.

HUME: That's a good point.

WALLACE: We have to take a break here.

But when we come back, President Obama reverses U.S. policy on missile defense and gets a warning from seven former CIA directors. Stay tuned. (COMMERCIAL BREAK)

WALLACE: On this day in 1963, President Kennedy suggested a joint mission to the moon with the Soviet Union. The Russians praised Kennedy, but the proposal was abandoned after his assassination and the U.S. pushed ahead on its own.

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



DEFENSE SECRETARY ROBERT GATES: Those who say we are scrapping missile defense in Europe are either misinformed or misrepresenting the reality of what we are doing.



JOHN BOEHNER: I think it shows a willful determination to continue ignoring the threat posed by some of the most dangerous regimes in the world.


WALLACE: That was Defense Secretary Robert Gates and House Republican leader John Boehner differing over the president's decision this week to reverse U.S. missile defense strategy.

And we're back now with the panel.

So, Brit, President Obama decided to scrap the Bush plan, which was to put missiles and radar in Poland and the Czech. Republic, and to replace it with a -- with a lighter system that at least originally will be largely based on ships.

Is this a sensible response to a changing threat from Iran, or is it a cave-in to Russian pressure?

HUME: Well, I'm not going to gainsay Bob Gates and the others at the Pentagon who say this is militarily sound. But that's not all there is to it.

The problem is the context in which this decision occurred, with the Russians screaming in protest about this, the administration interested in a reset of relations with Russia, with the Poles and the people in the Czech. Republic having climbed out on a political limb to go along with the placement of equipment in their countries, and their wanting it, and Obama in a stroke now, by doing this at this moment in particular, cuts the legs out from under them and gives the world all the appearances of a guy who is caving in to pressure from Russia. That may be unfair. But in national security affairs, it's not just what you do. It's also what you are seen to do. Strength is a perception as much as it is a reality. This does not look strong.


LIASSON: Yeah, I agree with that. I actually think that technologically, it sounds like Gates has a very, you know, cogent argument about how this is -- actually makes more sense, and we want to focus on Iran, and we want to focus on short- and medium-term missiles, and we also want to focus on Israel.

WALLACE: And we can get these missiles up by 2011...

LIASSON: Faster, much faster.

WALLACE: ... as opposed to 2017.

LIASSON: 2017. But I don't know why it wasn't rolled out in a way that could have been -- provided more reassurance to the Czechs and the Poles that made it look like what it probably really is, rather than just trying to get something -- you know, offer something to Russia to get something in return.

I think the big question now is -- I mean, is Russia ever going to help us on Iran? They've already said pretty clearly they don't want to participate in any sanctions if these direct negotiations fail.

And I also think this was partly designed to reassure Israel that we're doing more to protect it against Iran, and we'll see what happens with its plans, which seem to be marching forward toward a possible military strike.

GIGOT: This only works, if the Russians do help us on sanctions, if those sanctions are tough enough to make a difference, and then ultimately if Iran does stand down. Otherwise, it will not deter Israel, which is, I think, moving ahead with this.

So this...

WALLACE: Deter Israel from an attack on Iran.

GIGOT: From an attack -- from an attack on Iran, so -- and the message that Brit points out this sends to the rest of the world -- I think this undermines the credibility of our nuclear deterrent around the world.

We want to have defenses, in part, so all of these countries of the world, our friends, don't need -- feel they need to develop their own nuclear weapons as North Korea develops theirs, as Iran develops theirs.

We don't want Egypt, Turkey or any of these countries -- if we now pull out from long-range missile defenses, this really hurts our deterrent and makes it easier for the world to spread nuclear weapons. WALLACE: But, Juan, as has been pointed out, I mean, Robert Gates was George W. Bush 's defense secretary before he stayed on. He's a guy who was -- has been known for decades as a hardliner against the Russians. Do you really see him participating in some kind of a cave-in?

WILLIAMS: No. I think as Brit pointed out, you know, Bob Gates is a responsible guy and he wouldn't do that.

What you have here is a situation where they've made a strategic decision about missiles, and I don't think you can argue that decision without greater information, without absolutely saying that Secretary Gates has somehow thrown in the ball and made this a purely political move.

It really is about perception. And that's why I think the point of this has a lot to do with START negotiations on strategic development of nuclear weapons that's to come in December with the Russians. And it also has to do with the fact that you have talks with seven nations starting with Iran in October in Turkey.

And so the Obama administration is trying to say, "We're working, and we're developing relationships, alliances, to try to isolate Iran at this time," and the Russians would be key to it if they would participate in the sanctions.

WALLACE: All right. Before we run out of time, and we're about to, I want to also talk about the continuing debate over the Justice Department investigation of CIA interrogations.

We had the extraordinary display this week, event this week, of seven former CIA directors, stretching all the way back, I think, to Jimmy Carter's presidency, sending a letter to President Obama -- and let's put up what it said on the screen -- urging him to end the Justice Department probe.

They wrote this. "Attorney General Holder's decision to re-open the criminal investigation creates an atmosphere of continuous jeopardy for those whose cases the Department of Justice had previously declined to prosecute."


HUME: Well, I think it reinforces what is clear. This is a terrible idea to conduct this investigation, for all the reasons that were stated in that letter and were stated, as far as we can tell, by Leon Panetta, the current CIA director as well.

You don't want a chilling effect on CIA aides in the field. They were worried -- they were worried enough about possible future prosecutions as it was. This intensifies that. The president would be wise to put a stop to it.

WALLACE: Well, but having said that, Mara, in one of these interviews, the president said, "I'm not interfering..."

LIASSON: Yeah, and he can't...

WALLACE: "... with Attorney General Holder."

LIASSON: ... put a stop to it. No. I think that...

HUME: Of course he can.

LIASSON: OK. I think that at this point, the fact that this has already started and we've got a prosecutor -- I think the best possible political outcome for the president would be that they look into this and they decide there's no reason to prosecute, and they are able to say, "We gave this a second, third, fourth, fifth look," even though it had been looked at carefully, "and we are now completely determined..."

WALLACE: Well, we've got less than a minute left. And it is interesting, because there was a leak to the -- one of the papers yesterday -- I think it was the Washington Post -- that said well, now it's going to be a fewer number of cases they're going to review, much fewer than 10. Is the feeling maybe this will just disappear?

GIGOT: Well, there were some people who thought that that was the calculation here, that they would appease the left by appointing somebody who would look into it, and then they could get rid of it.

But the problem with special counsels is you can't control them. You can fire them, but with a firestorm. But you can't control them, and you never know where they're going to go. And this has really put the administration politically in jeopardy.

WALLACE: All right, panel. Thank you. See you all next week.

We want to extend our thoughts and prayers to our colleague Bill Kristol and his family. Bill's father, Irving Kristol, died Friday. Known as the godfather of neoconservatism, he helped start a movement for disaffected liberals like himself who had been, quote, "mugged by reality."

When Kristol was awarded the Medal of Freedom in 2002, President Bush praised him as a wide-ranging thinker whose writings have helped transform America's political landscape. Irving Kristol was 89.

And we'll be right back.


WALLACE: It's one of this country's national treasures. More than 5 million people visit it here in Washington each year, but none of them get to see it the way you are about to. Here's our Power Player of the Week.


POST: Beautiful thing to look at. The history is both mysterious and intriguing. WALLACE: Jeffrey Post is curator of the gem and mineral collection at the Smithsonian's Museum of Natural History, and he's talking about the Hope Diamond.

POST: Blue diamonds have always been very rare, and so it's hard to lose a blue diamond in history.

WALLACE: And what a history it's had. In the 1600s, the French gem merchant Tavernier found it in India and sold it to King Louis XIV.

POST: This blue diamond, then known as the French Blue or the Blue Diamond of the Realm, was one of his featured gemstones.

WALLACE: During the French Revolution it was stolen and, according to some accounts, ended up in the collection of King George IV of England. By 1839, British banker Henry Phillip Hope owned it and gave it his name. Only now the 69-carat diamond was 45.5 carats.

POST: We believe it ended up in London and there it was recut in order to disguise the diamond so that it can be now resold.

WALLACE: That's not just a guess. The Smithsonian did computer modeling to show the Hope Diamond fits perfectly inside the French Blue, which fits inside Tavernier's original gem.

In 1912, famed jeweler Pierre Cartier sold it to Washington socialite Evelyn Walsh McLain for $180,000 plus some diamonds she traded. And Cartier seems to have invented a curse to go with it.

POST: Evelyn Walsh McLean wore it everywhere. It's hard to find a picture of her after she purchased the diamond in which she is not wearing the diamond.

WALLACE: Gem merchant Harry Winston donated the Hope Diamond to the museum in 1958 where it now sits in an impregnable glass vault -- that is, except for this week when Jeff Post took it out and gave us an extraordinary look at it.

POST: Well, Chris, here's the Hope Diamond. And it's not often we have a chance to introduce someone as closely as we are here.


POST: Go ahead.

WALLACE: Ah, the Hope Diamond.

It is only one inch in diameter, but it has been an object of fascination for centuries. The museum is celebrating 50 years of the Hope Diamond by displaying it next week naked without its setting. Then people have voted on the Internet for a new setting it will be displayed in next spring. But no one will see it like this.

Speaking technically, how good a diamond is it? POST: It is a diamond with great clarity. It is a near flawless stone. The combination of the size, the color, and the clarity of it make it an unmatched diamond. It really is one of a kind.

WALLACE: And if you wanted to sell it?

POST: If there's anything in the world that one could point to and say it's priceless -- you know, take the U.S. treasury or, even bigger, the U.S. debt and try to take that money and go out and buy another diamond like this one. You literally could not do it. There is not one out there anywhere.


WALLACE: That was a treat. Jeff Post says when he sees a movie about a jewel heist, he often has a sleepless night worrying whether someone will find a way to steal the Hope Diamond and add yet another chapter to its remarkable history.

Now this program note. Next Sunday we'll focus on the Virginia governor's race, one of the biggest elections this November. Republican Bob McDonnell has agreed to debate. We're still waiting to hear whether Democrat Creigh Deeds will join him.

And 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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