Fox News "Fox News Sunday" - Transcript

Interview

Fox News "Fox News Sunday" - Transcript

MR. WALLACE: I'm Chris Wallace, and this is "FOX News Sunday." (Intro music plays.)

President Obama and Congress: What does the White House need from Republicans to get its agenda through on Capitol Hill? We'll ask Senator John McCain, the president's election opponent who may now be a key ally on tough issues. John McCain, only on "FOX News Sunday."

Then, what are congressional Democrats doing to fix the economy? And will they make good on their promise to work with the GOP? We'll ask a top Democrat, Senator Charles Schumer.

Plus, the curious case of Caroline Kennedy. Her Senate bid comes unglued, and some New York Democrats trash her. What happened? We'll ask our Sunday Regulars: Brit Hume, Mara Liasson, Bill Kristol, and Juan Williams.

And a look at the sights and sounds of the first days of the Obama presidency -- all right now on "FOX News Sunday." (Intro music ends.)

And hello again from FOX News in Washington.

President Obama has made it clear in his first days in office his top priorities are fixing the economy and changing how the war on terror is fought.

And for help, the new president he has signaled he will turn to his campaign rival, Republican John McCain, who joins us here today.

And Senator McCain, welcome back to "FOX News Sunday."

SEN. MCCAIN: Thanks, Chris. Thanks for having me on again.

MR. WALLACE: Let's start with a speech that you made on the Senate floor this week warning Republicans who were delaying a confirmation vote on Senator Hillary Clinton. Here it is:

SEN. MCCAIN: (From videotape.) The message that the American people are sending us now is they want us to work together, and get to work.

MR. WALLACE: Given that belief, what do you see as your role towards President Obama?

SEN. MCCAIN: I view it as the loyal opposition. I will help and work together where I can, and stand up for the principles and the party and the philosophy that I campaigned on and have stood for, for many years.

And again, I don't have to tell anybody in America this president faces probably greater challenges than any president, going all the way back to Abraham Lincoln -- that we are in two wars, we have an economic crisis of monumental proportions, we have the breakdown of financial institutions that Americans once had great trust and confidence in, we have scandals like the Madoff scandal, that you couldn't -- where you couldn't write a book; nobody would read it -- (word inaudible).

And so there is a very full plate. Americans have lost a great deal of confidence. To rebuild that trust and confidence, we have to work together.

But that does not mean that, as the loyal opposition, that I or my party will be a rubber stamp.

MR. WALLACE: Well, let's talk about the nature.

The president, the new president is clearly reaching out to you. The night before the Inauguration, he came and spoke and embraced you there at a dinner honoring your bipartisan service. The day of the Inauguration he sought you out at the congressional lunch after the ceremony.

Specifically, how do you think you can help President Obama?

SEN. MCCAIN: Well, I think I can help in devising a strategy for Afghanistan. The hard truth is that the Afghan war has deteriorated. The situation in Afghanistan is more complex in some ways than Iraq. It is very difficult; it's going to require a long-term commitment, and all of us working together.

There's the continued Russian -- belligerent behavior. We now have the North Koreans saying all kinds of bizarre things -- which is not unusual, but continue to be attentions there.

And, of course, as the world economy is affected, you will see more -- not governments in turmoil, but certainly pressures on governments and dissension at a very high level.

And so we've got a lot of work to do, particularly on the national security area.

MR. WALLACE: But let --

SEN. MCCAIN: And there was a long time where people worked together on national security issues.

MR. WALLACE: Let's talk about the economy. We'll get into national security in a moment.

The president is pushing an economic stimulus package of $825 billion that raises some of the issues that were at the heart of your campaign against Barack Obama -- $275 billion in tax breaks, including money for people who don't pay income taxes; $550 billion in spending, including $200 million to re-sod the National Mall, 360 million (dollars) to fight sexually transmitted disease.

As that package now stands, can John McCain vote for it?

SEN. MCCAIN: No. We need to make tax cuts permanent. We need to make a commitment that there'll be no new taxes. We need to cut payroll taxes. We need to cut business taxes. We need to have a commitment that after a couple of quarters of GDP growth that we will embark on a path -- (say, call ?) Gramm-Rudman, to reduce spending to get our budget in balance.

But we're going to lay an additional 2 trillion, basically, dollars of debt on future generations of Americans. Is there going to be a point where foreign countries such as the Chinese stop buying our debt?

Look, we've got to eliminate the unnecessary --

There's got to be some kind of litmus as to whether it'll really stimulate the economy and whether it will in the short term. Some of the stimulus in this package is excellent.

Some of it, frankly, has nothing to do -- those projects and others that you just mentioned -- 6 billion (dollars) for broadband Internet access. That will take years.

There should be an end point to all of this spending, as well; say, two years. If we need to stimulate the economy in a short period of time, let's enact those provisions which --

MR. WALLACE: But you're talking about a major re-write of this plan as it now stands.

SEN. MCCAIN: Well, the plan was written by the majority in -- a Democrat majority in the House, primarily. And so, yeah, I think there has to be major re-writes, if we want to stimulate the economy.

There's the Japanese --

(Cross talk.)

MR. WALLACE: As it stands now, though, you vote against it?

SEN. MCCAIN: Well, look. I mean, I am opposed to most of the provisions in the bill. As it stands now, I would not support it.

MR. WALLACE: Would you filibuster it?

SEN. MCCAIN: Well, let's -- I mean, I want us all to sit down and negotiate. The Republicans have not been brought in to the degree that we should be, into these negotiations and discussions.

So far, as far as I can tell, no Republican proposal has been incorporated. Maybe there has been; I just may have missed it. But clearly, we need to have serious negotiations.

We all recognize that the economy is in deep and serious trouble, but there's a Japanese example where they tried to stimulate their economy with the wrong kinds of projects and the wrong kind of spending. It didn't help their economy.

MR. WALLACE: So --

SEN. MCCAIN: We've got to stimulate the economy.

And jobs -- we're losing sight of what a stimulus is all about, and that is job creation. If they -- if it doesn't create jobs, then it's just another spending project.

MR. WALLACE: So given what you're talking about, which is a major re-working of the bill, is the deadline that the president is talking about of Presidents' Day weekend mid-February, is that unrealistic? That's, like, three weeks from now.

SEN. MCCAIN: Well, I think we can sit down in three weeks and work hard and negotiate and come to some agreement, hopefully. I will continue to hope that we will and will continue to dedicate myself to that proposition.

Republicans will have proposals as part of the stimulus package. I hope they are considered and I hope they're adopted -- if it's going to be truly bipartisan.

MR. WALLACE: Let's turn to foreign policy. President Obama also moved in that area this week, announcing that a process to start closing Guantanamo Bay within a year, to review all of the interrogation and detention techniques.

Some critics are saying that he is ending the war on terror and turning this into a law enforcement matter again. Do you think that's fair?

SEN. MCCAIN: No, I don't think that's fair. But I believe that announcing the closing of Guantanamo without addressing the other really difficult aspects of this issue --

Look, Guantanamo has become a symbol, and it should be closed, in my view. It's Abu Ghraib, it's mistreatment of prisoners, it's all the things that have damaged America's image in the world.

But we need to have a process that is -- replaces the military commissions. And by the way, the military commissions were finally beginning to function, and so I'm sorry that they're put on hold.

We need to decide what you do with people that we can't return to the countries that they came from. We need to decide what to do with people we know, if we release them, they will go out -- as we've just seen a recent example of a guy who became a high-ranking member of al Qaeda. We can't continue to release people who are going to be leaders of al Qaeda.

So we've got to work through that. And to just announce the closure of Guantanamo without addressing these other issues I think is not the best way to approach it.

But finally, where are you going to send them? Where are you going to send them? That decision, I would have made before I'd announced the closure. Because I don't know of a state in America -- (chuckles) -- that wants them in their state. It's going to --

You think Yucca Mountain is a NIMBY problem? Wait'll you see this one.

MR. WALLACE: I've got a couple of other issues I want to get through, and let's try and move through them --

SEN. MCCAIN: Sure. More -- shorter answers, is what you're saying. Yes.

MR. WALLACE: It's amazing how you picked that up, Senator.

(Laughter.)

The president's choice for attorney general, Eric Holder, said the other day at his congressional hearing that waterboarding is torture, and he left open the possibility that lawyers or CIA officers who participated in some of these activities could be liable to criminal prosecution.

How do you feel about that, the idea of the possibility of investigations and even criminal prosecution of people who were doing what they were told to do during the Bush years?

SEN. MCCAIN: I think it's time to move forward. I believe that waterboarding is in violation of the Geneva Conventions, and I've said it for years. But it's time to move forward.

Let's -- let's enact policies that make sure that America's image in the world is never damaged again. But to go back and to prosecute people, in my view, who were carrying out the instructions that they were given --

Some of the toughest jobs in the world are being members of our intelligence services. People put their lives on the line every day. I would not like to damage the morale of those brave Americans who serve at not very high pay and not a lot of compensation, under the most difficult of circumstances.

MR. WALLACE: President Obama announced this first week tough, new rules on lobbyists, and then promptly announced a waiver for Bill Lynn, a lobbyist for Raytheon, to be deputy secretary of Defense.

Will you support an exception for Mr. Lynn?

SEN. MCCAIN: I don't like it. I think it's a bit disingenuous to announce strict rules and then nominate someone with a waiver from the rules that you just announced to one of the most important jobs in Washington, the number two person at the Defense Department.

I've asked to see which areas that Mr. Lynn will be recused from, but I think we need to probably move forward with his -- with his nomination.

MR. WALLACE: Finally, let's talk about John McCain.

And I'm going to ask you not for one-liners, which I know that you sometimes use, but for some straight talk.

SEN. MCCAIN: Yeah.

MR. WALLACE: After working so hard to become president, and believing that you could lead the country in a way only a president can lead, how painful -- (inaudible)?

SEN. MCCAIN: Oh, look. I know that it's hard to understand, for some people. I have been honored to serve this country, as President Obama pointed out many times during the campaign -- (laughs) -- for over a half a century.

Every day, I am humbled by the experience. Every day, I'm proud to have the opportunity to serve the people --

MR. WALLACE: But you're a -- (word inaudible) -- guy. It's got to hurt to lose.

SEN. MCCAIN: Of course it hurts to lose. And the easiest thing to do, and I enjoy it enormously, is to feel sorry for myself.

But the fact is, I am humbled and honored to have the opportunity to have served this country. I'm grateful for every day. I want to work with this president to address the challenges that face this country. And there is no time to look back and -- and -- with either sorrow or regret.

MR. WALLACE: What --

SEN. MCCAIN: I'm proud of our campaign and I'm proud of what we were able to achieve.

MR. WALLACE: I do want to ask you, and you may call this looking back, you were very honest in the last few years about saying that your one big regret about the 2000 campaign was trimming on your views about the Confederate flag in South Carolina.

What's your biggest regret about this campaign?

SEN. MCCAIN: You know, I don't have a lot a regrets about it. I think we ran an honorable campaign. I'm proud of the people around us. I'm proud of everything we were able to do, and -- and so --

I'm sure that, you know, there's a myriad of books being written right now. I'm sure they will point out the mistakes that we made.

MR. WALLACE: Any second thoughts about Sarah Palin?

SEN. MCCAIN: Oh, no. I -- listen, I think the world of Sarah Palin. She energized our party; she has a bright future in our party. I'm pleased to have known her and her wonderful family.

MR. WALLACE: Finally, after a lifetime of service, how do you view what lies ahead for you?

SEN. MCCAIN: A chance and an opportunity to continue to serve. And I think that there is one beneficial result of our campaign, and that is perhaps I can have -- be more effective here in Washington in these very difficult times.

I cannot overemphasize how difficult and challenging these times are for America and for all of us to try to work together.

MR. WALLACE: Senator McCain, thank you. Thank you for coming in today, and you are always welcome here, sir. Thank you.

SEN. MCCAIN: Thanks, Chris. Thanks for having me.

MR. WALLACE: Up next, we turn to the Democrats' plan to save the economy. We'll get the latest from one of their point men, Senator Charles Schumer, after this quick break.

(Announcements.)

Job one for President Obama and congressional Democrats is jump- starting the economy, and our next guest is at the center of that effort. Charles Schumer is one of the Democratic leaders in the Senate and vice chair of the Joint Economic Committee. And he joins us from our FOX News studio in New York.

Senator Schumer, let's start with --

SEN. SCHUMER: Good morning.

MR. WALLACE: -- the Democrats' $825 billion economic stimulus package and President Obama's calls for bipartisanship. Have you heard anything from Republicans in these meetings over the last few days and weeks where you say, all right, we'll take that out, or, we'll put that in?

SEN. SCHUMER: Oh, yeah. I mean, the president-elect (sic) and many of us are trying to work very closely with the Republicans, and I think it's going to make -- I think we're going to have a very good package.

A third of the package is tax cuts. That's generally the way the Republicans prefer to jump-start the economy. We prefer -- we think that tax cuts are probably not the most efficient way to do it, but in an effort to compromise, there is a significant chunk of tax cuts in there.

I do worry, now every business group is coming to lobby for their little tax cut or another little tax cut, and we have to be careful about that. But overall, the air of bipartisanship is in the air, and that's been set by President-Elect (sic) Obama. But even Senator Reid last week said we're going to allow Republicans to offer amendments on the floor, as long as they're relevant and --

It's a different -- it's a different era. It's a much more bipartisan era --

MR. WALLACE: Well --

SEN. SCHUMER: And President -- the president deserves credit for that.

MR. WALLACE: Well, you say that, Senator, but you just heard Senator John McCain say that, yes, that Republicans got to vote, but the Democrats basically wrote the bill, and so far that it's primarily a Democratic bill that he says he can't support.

Let me ask you specifically about one part of it. The nonpartisan Congressional Budget Office did a review of the $355 billion that's going to be the spending -- that's going to be primarily for the infrastructure. And they say that less than half of that 355 billion (dollars) would actually be spent in the next two years while the recession is at its worst.

How do you respond to that?

SEN. SCHUMER: Right. But they do say -- they do say that 75 percent of the whole package, the whole 825 --

MR. WALLACE: No, they don't say that.

SEN. SCHUMER: Yes, they do.

MR. WALLACE: No, they don't. That --

SEN. SCHUMER: Of the whole package.

MR. WALLACE: That's what -- that's what Peter Orszag, the head of the Budget Office of the White House, says. The CBO only analyzed the 355 billion (dollars) and said more than half of it won't be spent in the next two years.

SEN. SCHUMER: Okay. I believe that the analysis that they've done, and everyone else done, because much of the other package is for direct spending.

And let's just talk for a minute. There are three goals of this package, each very important. And I think Obama has wisely put these together.

The first is to get the economy moving right away, to get money into the economy, because it's headed south.

It is in deep recession, and if we go over the line and head into a deflationary spiral downward, almost no one knows what to do.

So last week, we had a Democratic Caucus meeting and two conservative Republican economists, Martin Feldstein and Mark Zandi, said the package isn't big enough. So you have to get money into the economy right away.

The second part of the package is creating jobs. The president has wisely promised to keep or create 3 (million) to 4 million jobs, and that's very important at a time when we've been losing, over the last two months, half a million jobs a month.

But the third -- and this is the most interesting part of the package, and it relates to your question -- is to make sure we improve the efficiency of this economy so that, God willing, when we get out of the recession we have something to show for it.

So completing our power grid and making it more energy-efficient; having IT, information technology, in health care -- those are things that are not going to be spent immediately, but they're going to improve the efficiency of the economy in the long run.

And what we want to show, unlike the last stimulus package, after the package is over, we have something to show for it -- new roads, new bridges, IT.

So I think that it's a well-balanced package --

MR. WALLACE: But -- but here's --

SEN. SCHUMER: -- in terms of where it goes.

MR. WALLACE: Senator, if I may ask a question here.

SEN. SCHUMER: Please.

MR. WALLACE: Let's assume that the CBO is right when they say that $355 billion in spending, primarily for infrastructure, more than half of that won't come in the next two years.

Then you've also got the budget chief for Barack Obama, Peter Orszag, who's saying 75 percent of the total package will be spent in the next 18 months.

SEN. SCHUMER: Right.

MR. WALLACE: That would seem to indicate that you need -- that the tax cuts are the part that's going to come out in the next 18 months, and it's the spending that won't come out. So maybe you need more tax cuts and less spending.

SEN. SCHUMER: No. In fact, what the economists say, Chris, is tax cuts get into the economy more slowly than spending. And in fact, the major criticism of the last stimulus package was it was only tax cuts, and it didn't have much of an effect.

So, for instance, money that gets the economy pumped up right away to make sure the states don't either raise taxes or cut back; money that goes into immediate programs, some of the infrastructure and helping increasing unemployment benefits and things like that, will get -- that's the number-one way to get the economy going right now, and that's not tax cuts.

The tax cuts probably kick in at the middle level. In other words, the first thing that would kick in would be the spending. The second would be the tax cuts, and the third would be some of the infrastructure that's long-range.

MR. WALLACE: Well, then, Senator, you're not --

SEN. SCHUMER: But I would say this, Chris. Just one point, here?

The long-range infrastructure, the energy stuff -- some of which, which is tax cuts, some of which is spending; the IT -- some of which is tax cuts, I proposed making it easier for middle-class people to keep their kids and put their kids in college.

That's a little long-term, but you don't want to see a kid drop out of college because even though they deserve to be in college, they can't afford it.

Those are getting broad, bipartisan support.

MR. WALLACE: Well, Senator, I mean, when we just heard from John McCain what you seem to be saying is sure, we're going to vote. We'll let you offer your amendments; we'll let you vote in mark-up of the bill.

And we're going to beat you, and we're going to put out, basically, the package that we have right now.

SEN. SCHUMER: I think you're going to find a large number of Republicans voting for this package. There has been a lot of input. I regret that Senator McCain has said he's not going to vote for it.

But, you know, bottom line is a package that is a third tax cuts and about a third infrastructure and a third pumping money into the economy, almost every economist that I have talked to says it's the right balance. And most -- as I said, some conservative economists say it's too little on the spending side.

MR. WALLACE: All right. I want to --

SEN. SCHUMER: Martin Feldstein said to us the other day --

MR. WALLACE: Senator? Senator, I want to --

SEN. SCHUMER: -- he said, spend quickly. That's your number-one goal.

MR. WALLACE: Senator, let's move on, if we can, to the financial bailout, the so-called TARP bailout.

SEN. SCHUMER: Sure.

MR. WALLACE: There's increasing talk that the $700 billion financial rescue package isn't enough, that the banks are in such trouble that you're going to need even more money.

Do you support that idea?

SEN. SCHUMER: Well, we'd have to see how the money was spent. Obviously, there's a lot of disquietude about the first TARP, the first 350 billion (dollars). And now the president has promised to put much more controls on how the money is spent, to have much greater transparency and, very importantly, to put a significant amount in -- in putting a floor to the housing market and dealing with the mortgage mess.

So if we need more money, it's something that we'll all give a careful look, but not without controls and conditions. That was the regret of the first -- the first part of the package, that those were not there.

MR. WALLACE: Let's turn, if we can, to foreign policy. We were talking with John McCain about this question about investigating what went on the last eight years.

Speaker Pelosi's -- told me last week that Congress doesn't have the right to ignore what went on the last eight years. If there was lawbreaking, as we said, the attorney general-designate is leaving that possibility open.

You heard John McCain just say that's the worst thing we could do, look back towards the last eight years and try to second-guess what a bunch of people in the intelligence field did.

What's your feeling on this issue?

SEN. SCHUMER: My feeling is generally that of President Obama, that we should be looking forward, not backward. How do we correct the mistakes of the past, and how do we keep ourselves secure and preserve vital liberty?

If they're egregious cases -- I don't think you can say, blanket, no looking back, no prosecutions.

If they're egregious cases, yes, you have to look at them.

But overall, the tone of Barack Obama and of Attorney General Holder -- I've spoken to him privately on this, as well as what he said at the hearing -- is not to spend too much of our time, a lot of our time, looking backward and pointing fingers. It's, rather, going forward and making the policy better in the future.

MR. WALLACE: Senator, what happened to Caroline Kennedy's bid for the New York Senate seat?

SEN. SCHUMER: Well, the bottom line is, first, I would say we have a very strong candidate in Kirsten Gillibrand.

Caroline Kennedy would have been a very good candidate; I thought so. She's a smart, hard-working person. She'd be an excellent senator. She would have been an excellent partner --

MR. WALLACE: What happened?

SEN. SCHUMER: What happened was that she decided, as she said at the last -- at the end of the day, not to run because of personal and family reasons. And I think we ought to respect her privacy and leave it at that.

MR. WALLACE: You know that there's a big difference -- and we're hearing different things from the Democratic governor of New York, Governor Paterson, and from Caroline Kennedy's camp.

Did she drop out, or did David Paterson decide, for a variety of reasons, including taxes and nannies, that she wasn't up to the job?

SEN. SCHUMER: No. I believe she dropped out, but I think the specifics of the conversation you ought to leave -- you ought to talk to Governor Paterson and Caroline Kennedy.

I'm not going to get into the details of their conversations between one another.

MR. WALLACE: Are you satisfied with the way that Governor Paterson handled this process?

SEN. SCHUMER: Well, I think you can take the governor at his word. I know, because I talked to him regularly through this process, he was really -- it was a difficult decision, a weighty decision. And just about all of our discussions were the merits -- who would make the best candidate, what are the pros and cons of each.

I think the one -- and that's a difficult decision and, you know, you don't always say, well, on day one, here's what I think and it's going to be the same on day 20 or day 40.

The one thing he said he did wrong is, he called it the wrestling match, wrestling in his own mind with what -- who was the best candidate. He shouldn't have talked about that wrestling match publicly, and I think we can leave it at that.

But that's hardly the most venal of sins.

MR. WALLACE: The new senator, Kirsten Gillibrand, gets 100 percent rating from the National Rifle Association. She was the only Democrat in the New York delegation, congressional delegation, to vote against the $700 billion bailout.

Is she really the best choice to be the senator from New York?

SEN. SCHUMER: Well, I believe she's a great choice. There were many good candidates and, in my conversations with the governor, I never said there ought to be one. We went over the pros and cons, and we had a very good and deep bench.

I'm very happy with the choice of Kirsten Gillibrand. First, she's a hard workers. She's a good legislator. She's sort of a go-to gal; in other words, you have a problem, you go to Kirsten and you know there's going to be a lot of hard work, intelligence and, ultimately, success.

The district she represents is quite different than much of the state. It's very rural. In some ways, it's more like Montana than New York City. It has no large cities.

And yet even there she has a very Democratic record. Her ADA rating, I think, was in the high 90s; strongly pro-choice, strong on gay rights.

There are some issues where she would disagree with the majority of New Yorkers, certainly with me. Gun control is one of those. As you know, I was the sponsor of the Brady Law and the Assault Weapons Ban.

But let me say this: As Kirsten begins to represent the whole state -- and she's already downstate, listening -- you learn that the -- you learn the damage that gun violence, for instance, causes in cities and that many of those guns come from out of state. So nothing the city or state can do on its own can stop that.

MR. WALLACE: Senator Schumer?

SEN. SCHUMER: So let me just say this. She's --

MR. WALLACE: Senator Schumer, let me ask you a question, because we've got about 15 seconds left.

SEN. SCHUMER: Yeah.

MR. WALLACE: Just real quickly, can you say at this point that you would support her when she runs for election in 2010?

SEN. SCHUMER: I think she's going to be a great, great candidate, and we're going to work very hard in the Senate. I don't make endorsements in primaries two years in advance. (Chuckles.) But I have every expectation of supporting her.

And I think she's going to be very well received throughout New York state.

MR. WALLACE: Senator Schumer, we want to thank you, as always. Please come back, sir.

SEN. SCHUMER: Thank you. Nice to talk to you, Chris.

END.

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