CQ Transcriptswire

SPEAKERS: CHRIS WALLACE, HOST

LAWRENCE H. SUMMERS, DIRECTOR, NATIONAL ECONOMIC COUNCIL

SEN. CARL LEVIN, D-MICH.

SEN. CHRISTOPHER S. BOND, R-MO.

JUAN WILLIAMS, FOX NEWS

MARA LIASSON, FOX NEWS

BRIT HUME, FOX NEWS

BILL KRISTOL, FOX NEWS

[*] WALLACE: I’m Chris Wallace, and this is “FOX News Sunday.”

Stress tests for banks, U.S. car makers on the edge of bankruptcy, and a credit card crackdown -- we’ll get the latest from the president’s top economic adviser, Lawrence Summers, in a “FOX News Sunday” exclusive.

Then, the controversy over those interrogation memos deepens as the president leaves the door open to prosecute former Bush administration officials.

We’ll talk with two congressional leaders on national security -- Carl Levin , Democratic chair of on the Senate Armed Services Committee, and Kit Bond, the top Republican on the Senate Intelligence Committee.

Also, our Sunday regulars give us their take on Barack Obama ’s first 100 days in the White House. And our Power Player of the Week celebrating a century of caring for the nation’s wounded warriors, all right now on “FOX News Sunday.”

And hello again from Fox News in Washington. From the moment he took the oath of office, fixing the economy has been job one for President Obama. Now, as he nears the end of his first 100 days, that seems as big a challenge as ever.

Joining us to discuss where things stand is the president’s top economic adviser, Lawrence Summers.

Mr. Summers, federal regulators met with executives of the nation’s 19 largest banks on Friday to tell them how they did in those government stress tests. I know at this point you can’t reveal the individual results, but overall, what kind of shape is the system in?

SUMMERS: As Secretary Geithner said, the vast majority of the banks in the United States are well capitalized. There’s work that needs to be done. It can be done in many ways -- by raising private capital, through exchanges, backstopped by government capital where necessary.

But I think we’re going to be in a good position to provide the support and set the framework in which the banking system can move along the process of recovery.

We’ve got a long way to go, but in just three months we’ve taken a whole set of important steps -- mortgage relief for 9 million American homeowners that’s going to enable families who otherwise couldn’t have refinanced their mortgage to refinance their mortgage; substantial program of support for small businesses who have often been the group that bore the brunt of this credit crunch; measures to get the markets going so that you’ve got more of a flow of mortgage credit.

We’ve seen near -- extremely high levels of mortgage refinancing, a substantial reduction in credit spreads for consumers. We’ve got a long way to go. There are still serious problems in this economy.

But both with respect to the financial side and, what’s obviously crucially related, with respect to the income side, the measures we’ve taken I think are very strong and offer the prospect of containing a very serious situation.

WALLACE: Well, I -- that’s very interesting. When you say containing a serious situation, do you feel in that sense -- not that you’ve solved all the problems, but the sense of a financial crisis, the sense of an economic free fall -- that you now have that under control?

SUMMERS: I’d say this, Chris. Six or eight weeks ago, there were no positive statistics to be found anywhere. The economy felt like it was falling vertically.

Today, the picture is much more mixed. There are some negative indicators, to be sure. There are also some positive indicators. And no one knows what the next turn will be.

But I think that sense of unremitting free fall that we had a month or two ago is not present today, and that’s something we can take some encouragement from. But it’s going to be a very long road. There are going to be steps forward, and there are also going to be steps backwards.

Policy is going to have to persevere. We’re going to have to be determined. There are steps that everyone’s going to have to take to lay a foundation for a more responsible and a more enduring kind of economic expansion than the one that we had enjoyed previously.

WALLACE: Let’s talk about one of the problems, and it’s really right on the horizon. Chrysler’s deadline to come up with a viable business plan is this Thursday, just four days away. What are the chances that Chrysler is going to have to file for Chapter 11 bankruptcy?

SUMMERS: We’re hopeful that the negotiations which have been proceeding with great energy are going to conclude successfully. You never know with any negotiation until the very -- until the very end.

There are some issues that have been worked out. There are some issues that remain to be worked out. But it’s in everybody’s interest, we believe, to see these negotiations succeed, and we’re hopeful that they will.

It’s obviously a situation that we’re monitoring carefully, but it’s a negotiation between Chrysler, between its potential acquirer, to Fiat. There are important issues with creditors, with a range of stakeholders.

And as I say, we’re hopeful that that negotiation is going to work out successfully.

WALLACE: If it doesn’t work out, Mr. Summers, how do you view a Chrysler bankruptcy? How damaging would it be to the economy?

SUMMERS: As I say, we’re hopeful that it’s going to work out, and it’s not really right to get into answering hypothetical questions.

The president’s made clear his commitment to a strong U.S. automobile industry. It’s the backbone of the economy of a significant portion of our country, and it’s something that’s almost iconic for the United States.

So we’re bringing a lot of determination to this, and we will certainly do our part to support a successful negotiation.

On the other hand, the president’s made clear, and I think most Americans would share this view, that you’ve got to have responsibility, you’ve got to have accountability, and you can’t have a situation where companies proceed on the -- on a permanent basis relying only on cash from the government.

And that’s why he made clear that there needed to be a new structure in which Chrysler could operate that would make long-term viability possible, and that’s the end we’re all working towards.

WALLACE: But, Mr. Summers, the reason I want to pursue this -- there have been a lot of stories, as you well know, in the papers over the last few days that indicate the government is basically telling Chrysler to prepare for a bankruptcy, a lot of optimistic talk that if you had a pre-packaged bankruptcy Chrysler could survive perhaps in a deal afterwards with Fiat, where Fiat, the European automaker, could pick and choose what parts of it wanted to keep.

You sound like you really want to avoid a bankruptcy.

SUMMERS: No, the focus, actually, is not there because in certain circumstances a bankruptcy is not about a liquidation at all. It’s really about change in legal -- change in legal form that actually protects the company and enables it to function more effectively.

Really, the focus of our efforts is a focus on the American economy. It’s a focus on jobs. It’s a focus on communities. It’s a focus on the economy being able to move forward, and that’s what we want to see, and that obviously is going to require a whole set of decisions and judgments by the Chrysler company and by a range of its stakeholders.

And we believe that’s possible, and that’s something that’s going to -- that should -- that should take place. As I say, we’re hopeful that this is all going to work out in a successful way, but obviously, there are multiple -- multiple contingencies. WALLACE: Mr. Summers, at the very beginning of the interview, you talked about the fact that there are going to be a lot of hard days ahead, but that the picture is more mixed, as you said.

We’re not in a vertical free fall, but there certainly has been some bad news recently. The -- initial jobless claims are up again. The total number of Americans that are -- that are getting unemployment benefits is at an all-time record of 6.1 percent.

How much longer -- I don’t mean, you know, June 27th, but your sense -- how much longer for this recession? And are we going to dip into double-digit unemployment?

SUMMERS: Chris, there are two kinds of economic forecasters, those who know they don’t know, and those who don’t know that they don’t know.

We’ve recognized from the beginning that if you look at the pattern in the economy, it was clear that there were going to be sharp declines in employment for quite some time this year, that experience suggests that even strong policies, very strong policies like the ones we’ve enacted with the Recovery and Reinvestment Act, with the president’s financial stability plan, with the president’s measures to provide for refinancing of mortgages -- that even strong plans take time, take six months or more, to have their impact on the economy.

So I suspect that the economy will continue to decline for some time to come.

I do think if you look at the consensus of professional forecasters, that consensus suggests a somewhat better performance towards the end of the year.

You know, one indicator that economists watch closely is something known as the inventory cycle. Right now, the sales of businesses, their shipments, are running substantially ahead of their production. That means that inventories are being drawn down.

And when inventories are being drawn down, they eventually have to be built back up, and that will be a source of momentum in the economy, probably in the second half of the year.

There are other factors that suggest that there’ll be a cyclicality in the economy -- retirements of cars because they just wear out. To replace the number of cars in the country in normal times takes 13 or 14 million automobile sales. Automobile sales have been running closer to 9 million of late.

We’ve got about 1.5 million new household units that are formed, but the economy is running at a rate where we’re building only about 500,000 new residences.

So these imbalances can’t continue forever. And when they’re repaired, they will be a source of impetus to the economy. Just what the timing will be, no one can know. What I think is very clear -- very clear; and I think almost everyone would agree with this -- is that if we had done nothing, if we had not stepped up and provided substantial demand with the Recovery and Reinvestment Act, if we had not been prepared to support families on their mortgages, if we had not taken steps to rebuild trust and confidence in the banking system, then we’d be in a far, far worse situation right now.

We’re going to need to watch and monitor these economic developments and take appropriate steps. This...

WALLACE: Mr. Summers...

SUMMERS: ... these problems weren’t made -- weren’t made in a day or a month, and they’re going to take real time to fix. But I think we’re on a path towards containment and towards building a foundation for expansion.

WALLACE: Mr. Summers, I know this isn’t your specialty, but we’ve only got about three minutes left, and I’m going to try to do a lightning round with you of quick questions and quick answers.

The president said this week that he’s prepared to crack down on credit card abuses. Why not go for an immediate freeze on retroactive interest rate increase, as opposed to waiting -- as opposed to waiting until the Fed -- Federal Reserve regulation kicks in in July of 2010?

SUMMERS: We’re working to get legislation passed in the next few weeks, and that legislation would have provisions that protect the consumers, some of which would take place immediately. Some may take a little time for the computer systems to be adjusted, but we want to see relief come fast.

WALLACE: So you’d like to see an immediate freeze on retroactive interest rates?

SUMMERS: We’d like to see -- we’d like to see relief come fast. There’s a lot of complexity in the -- in the details, and that’s being worked through in the legislation process.

But if the legislation passes with the kind of leadership that Senator Dodd, Representative Maloney have shown, you’ll see benefits to consumers that will come very, very quickly.

WALLACE: The White House revealed the other day that last year you made $5 million working one day a week for the hedge fund D.E. Shaw. What did you do to make what averages out to $100,000 a day? And is there any possible conflict with the fact that you’re helping to oversee the economy?

SUMMERS: I was providing strategic advice on a range of economic -- on a range of economic judgments.

You know, when it comes to ethics, Chris, what we’re all asked to do is to disclose everything about our financial lives. A set of officials, not politically appointed officials, government officials, review those reports in great detail.

They ask us as a condition of working in the government to divest certain of our assets, and they instruct us that there are certain policy matters that we’re not to be engaged in -- for example, any specific matter that affected the firm that I was affiliated with -- and we comply with those rules.

So none of us make our own judgments about conflicts of interest. Those judgments are made by officials, career government officials, who are specially trained in that regard, who apply broad standards.

What this president has done is...

WALLACE: Mr...

SUMMERS: ... really raised the bar on that in setting higher standards for what’s going to be deemed a conflict of interest, what types of previous...

WALLACE: Mr. Summers...

SUMMERS: ... experiences -- lobbying and other things -- are inappropriate.

WALLACE: ... we have less than a minute left, and I do want to ask you one more question, and I suspect you figured this one was coming.

You were spotted at that meeting with credit card executives. It sure looked like you were falling asleep. Question: Do you find President Obama’s speeches less than compelling, sir?

SUMMERS: Chris, you know, it’s kind of like I was thinking about the fine print on some of those credit card disclosures, which is written boring enough to put you to sleep.

And President Obama wants us all to fulfill our American dreams, and I guess I was starting that day.

WALLACE: But you know, you’ve been -- you’ve been a serial dozer, because you were spotted at an earlier meeting -- are you not getting enough sleep, sir?

SUMMERS: We’re all working very hard in this administration, Chris, because we think that we want to support the president in what is a tremendous responsibility that he has to get this economy growing again and to again establish a period when family incomes are rising.

WALLACE: Did the president rib you?

SUMMERS: Oh, we’ve all joked about American dreams in various ways.

(LAUGHTER)

WALLACE: Mr. Summers, thank you. Thanks for talking with us. Work hard and please, sir, get some rest.

SUMMERS: Good to be with you, Chris.

WALLACE: Up next, the White House has a tough week as Washington chooses up sides over whether to prosecute former top Bush administration officials. We’ll have a fair and balanced debate right after the break.

(COMMERCIAL BREAK)

WALLACE: The debate over the CIA’s interrogation program intensified this week with President Obama opening the door to possible prosecution of top Bush advisers.

Joining us now, two men at the center of the debate -- from Detroit, the Democratic chair of the Senate Armed Services Committee, Carl Levin , and here in studio, the top Republican on Senate Intelligence, Kit Bond.

Well, the Pentagon now says that it’s going to release hundreds of photos of alleged abuse of detainees by U.S. personnel, this after, of course, the release of the interrogation memos.

Senator Bond, how serious is the threat of a backlash in the Middle East and the recruitment of more terrorists, possibly endangering U.S. soldiers in that part of the world?

BOND: I think it’s very great. I agree with Secretary Gates, the secretary of defense, who said essentially that this past week.

Any time we give them more information, particularly when we put the president’s stamp on it, it will have the same impact that the rogue criminal acts of our soldiers at Abu Ghraib had.

WALLACE: So you believe that this could endanger U.S. military personnel.

BOND: I don’t think there’s any question it would endanger all of us, because I think it will enhance recruitment for all kinds of terrorists willing could come after us.

WALLACE: Senator Levin, Defense Secretary Gates favored the release of the memos, but he, too, worries about the possibility that the release of this -- and he wasn’t asked, but I’m sure he would say the release of those photos next month could endanger U.S. troops.

LEVIN: What happened at Abu Ghraib is what endangers our troops. It’s the practices that were authorized by high-level civilian people in the Bush administration which endangers our troops. That’s why people like General Petraeus are so much in favor of using proper techniques when it comes to interrogation, and so the threat to our troops came when these techniques, these coercive and abusive techniques, were authorized by top-level administration officials.

Rumsfeld specifically authorized these kind of techniques of nudity, use of dog handlers. In Guantanamo, they went directly to Abu Ghraib. Our bipartisan report, 200-page report, directly connects the authorization for the use of these techniques in Guantanamo to Abu Ghraib. That is what endangers our troops.

WALLACE: Senator Bond?

BOND: First, Carl, I would say that there’s a very strong dissent from five members of your -- of your committee who said that your report was fallacious, it’s counterproductive, and your report itself is the one that offers the greatest opportunity for negative publicity and the high-level abusive techniques that you talked about -- standing for -- one detainee was -- authorized to keep him standing, put him on MREs. And I hardly think that has anything to do with the illegal acts at Abu Ghraib.

WALLACE: Well, in any...

LEVIN: I -- I’ve got to...

WALLACE: Let -- let -- wait, wait...

LEVIN: ... I’ve got to answer that. I’ve got to answer that...

WALLACE: Well, Senator, we can go back and...

LEVIN: ... because I’ve got...

WALLACE: ... forth. You already made the statement, and he -- let me ask you a question. You can answer it this...

LEVIN: No, no. I want to -- I’ve got to answer that specific thing, because I’m chairman of the committee. There was no objection to this report. Seven Republicans were there when we voted on it. Not one dissented. We had months and months of opportunity for any dissenting views.

That’s the report. It’s a unanimous report of the Senate Armed Services Committee. Senator McCain, Senator Lindsey Graham and other Republicans specifically were there when this was approved, had every opportunity to file a dissent, did not do that.

And it seems to me that it is clearly the action of a bipartisan Senate Armed Services Committee. And they now, a few Republicans...

WALLACE: Senator...

LEVIN: ... specifically say they disagree. They’ve got a right to do so. But they had an opportunity which they didn’t use. WALLACE: All right. Senator Levin, you praised the release of the memos, and you’ve called for prosecution of anyone found to have broken the law.

In the middle of a war on terror and two shooting wars in Iraq and Afghanistan, in the midst of a financial crisis, do you really think it’s good for the country to have trials of top Bush administration officials?

LEVIN: You know what I think is that that decision should not be made by politicians, by partisans, by Democrats or Republicans. It is made traditionally by a Department of Justice who is supposed to make these decisions independently.

I have recommended that the Department of Justice select one or two or three people outside of the department who will have credibility, perhaps retired federal judges, who will make a recommendation to the Department of Justice as to whether or not anybody ought to be prosecuted on this matter or any other action ought to be taken against lawyers, for instance.

But I’ve got to tell you what I deeply object to, and that is that so far the only people who have borne the brunt of these actions, particularly at Abu Ghraib, are some low-rank people in the military.

I object strongly when the president of the United States says that a few American troops dishonored us at Abu Ghraib. I -- when it was the policies and practices specifically approved by Secretary Rumsfeld after going to the National Security Council, which went to Abu Ghraib and authorized the use of these dogs, and the use of nudity, and the use of stress positions.

To lay that off on a few bad apples, as Judge Gonzales did for the Bush administration, for the president of the United States to say that a few American troops dishonored us at Abu Ghraib -- no. What dishonored us were the policies and practices that were authorized that went to Abu Ghraib, and there ought to be accountability.

But how that is done should be done by an independent person, not by elected politicians...

WALLACE: Well, all right. Let...

LEVIN: ... such as me or anybody else.

WALLACE: Senator Levin, let me get Senator Bond into this.

Let’s talk about this issue of accountability, the possibility of prosecutions of top administration officials. You’ve heard Senator Levin talk repeatedly now about Defense Secretary Rumsfeld -- and I’m not talking just about Abu Ghraib. I’m talking about the CIA interrogations.

You made the following statement this week, and let’s put it up on the screen. “Our terror fighters need to know whether the president has their back or will stab them in the back.” Senator, is that how you view any prosecutions, as a stab in the back?

BOND: I think that would be a stab in the back. I think he has already demoralized the CIA, put them in a CYA mode. I think we’re going to have a culture in the CIA which had access to very -- in very limited circumstances, to enhanced techniques.

And what’s worse, now the terrorists know that nothing can be done to them that wasn’t done to our voluntary military enlistees in the Marines, the SEALs and pilots who went through these same techniques, and that is -- has absolutely destroyed our ability to get further information from terrorists.

WALLACE: Senator Levin, let me just present a hypothetical to you. What if the next president decides that President Obama, in the decision he has made to continue these drone attacks over Pakistan, where they fire missiles on Al Qaida operatives and also innocent civilians -- what if the next president decides that that is a war crime? Should he go ahead and prosecute the Obama team?

LEVIN: I think an independent person ought to make assessments on all Americans as to whether or not we committed crimes or not.

I don’t think elected politicians -- I don’t care if it’s the president of the United States, or whether it’s me or any other senator -- we should not be making decisions on who or if anybody should be prosecuted. That’s why we have a Justice Department. That’s why we have offices in the Justice Department, to make independent decisions.

I don’t think it’s right for me to say -- look, I think these policies were an abomination. I think the legal opinions were abominable. But I should not make the decision. I should not say someone should or should not be prosecuted.

We should have independent people making those recommendations to the Justice Department. That’s what they’re there for.

WALLACE: OK. OK. Let me -- let me bring in Senator Bond.

Is that where we’re headed now, sort of what we’ve had in banana republics, where one administration sits there and says, “Well, I think these guys broke the law, and we’re now going to take them and put them in the dock,” and this will just go on from administration to administration?

BOND: Regrettably, what my colleague just laid out is that kind of action. We’re going to criminalize past political and policy decisions.

That’s why we have oversight to object at the time if we think they’re wrong. There were a number of actions in the previous Democratic administration that could have been prosecuted, like Sandy Berger could have been prosecuted, could really have...

WALLACE: This is the former Clinton national security adviser.

BOND: Who divulged secure information. We have not gone down that path.

We have oversight responsibilities, and the -- when moving to my area of intelligence, when the enhanced interrogation techniques were used, they were briefed to the chairs and ranking members in both intelligence committees.

And if Speaker Pelosi and Jay Rockefeller thought they were excessive, or should not have been done, they should have said something then. There was plenty of opportunity to do it, and they didn’t. That’s why we have continuing ongoing oversight by Congress. We take our role seriously.

WALLACE: Gentlemen, we only have a couple of minutes left, and I want to ask you about some other hot spots, and I’m going to ask you both to be very brief in discussing them.

Senator Levin, there’s been a spike in sectarian violence in Iraq. In 24 hours earlier this week, 150 people were killed just as U.S. forces start pulling out of major cities there. Will the U.S. timetable for pulling American troops out have to be slowed or stopped?

LEVIN: I don’t think so. I think the purpose of that timetable is to force the Iraqi political leaders to reach political settlements. They’ve only reached a few. Some of the key political settlements have not been reached.

This is going to be very difficult, but only the Iraqis can save themselves. So we cannot do it any longer. We’ve been there long enough. We’ve got to make them make the political decisions, which is the only way to avoid all-out civil war.

WALLACE: Senator Bond, when you see this real spike in sectarian violence, does it give you second thoughts about slowing down the timetable?

BOND: I’ve always said the decisions on how and when we withdraw should not be made by politicians inside the United States Capitol Building, or even 1600 Pennsylvania Avenue.

I think the commanders on the ground, in consultation involving our leaders and the leaders of Iraq, can decide how best to withdraw and when to withdraw. We’ve spent too much time, treasure and cost too many American lives to walk away and allow Iraq to crumble.

WALLACE: Meanwhile, the Taliban continues to spread its influence, Senator Bond, in northwestern Pakistan. Is there anything the U.S. can do to try to persuade, convince, force the Pakistani government to take the fight to the -- to the Taliban?

BOND: We looked -- I visited Pakistan and we looked in -- great deal into what’s going on. Number one, we need to convince India to move its troops off of the Kashmir-Pakistan border so we -- the Pakistani military, under General Kayani, can move them back to fight the terrorists. The president has announced the good framework for a policy for Afghanistan and Pakistan, but he has to make it clear that it’s going to be a full-fledged counterinsurgency strategy, where we don’t just go in with the Pakistani forces to clear an area, but we go in with them to clear, and hold it, and build. And that’s going to be...

WALLACE: I’m sorry, you’re saying that the U.S. should put troops on the ground in Pakistan?

BOND: We should have -- we should assist them if and when they want our troops. In the meantime, we have -- we have the resources, and we are already using USAID dollars through that, to build.

But we need to get the Pakistani troop over there. We can provide them whatever guidance, logistics or intelligence they want.

WALLACE: Senator Levin -- less than a minute left -- you get the last word.

LEVIN: Well, I basically agree with that. Only the Pakistanis can save themselves. They’ve got to make a decision what kind of country they want. We can be of assistance to them. We can support them. We can provide intelligence. We can provide other kinds of support, particularly economic support, providing it’s going to be effective.

But it’s kind of like Iraq. We can be helpful, but we can’t dominate. We can’t dictate. Only the Pakistanis, like only the Iraqis, can resolve their own political issues and save their own countries.

WALLACE: Senator Levin, Senator Bond, I want to thank you both for continuing this debate.

BOND: Thank you.

WALLACE: And, gentlemen, both of you, please come back.

WALLACE: Up next, our Sunday regulars take on the interrogation memos and their impact on the president’s first 100 days. Back in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: With respect to those who formulated those legal decisions, I would say that that is going to be more of a decision for the attorney general within the parameters of various laws, and I don’t want to prejudge that.

(END VIDEO CLIP)

WALLACE: That was President Obama changing direction on the possible prosecution of top Bush advisers involved in the enhanced interrogation program.

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

So I want to review in this segment the president’s first 100 days on the national security front, and let’s start with the continuing debate over those interrogation memos.

Brit, this White House, which is normally so disciplined -- did they let this whole issue of the interrogation memos get away from them?

HUME: Oh, yes. And your -- you said change of direction embodied in that Obama comment about leaving all this now up to the attorney general. That was very nice of you. This was an -- this was an absolutely out-and-out flip-flop.

And I think Obama’s instincts were not to have this occur. I think he wanted -- he thought that the mere release of the memos that detailed the practices would suffice to calm his -- the rages in his base and elsewhere that were demanding this, and that he could then move on, as he said he wanted to do.

Well, the base was not placated, and Obama -- boy, and it doesn’t seem to take more than the slightest breeze from his left to get him to change his mind -- changed his mind. This was weak. WALLACE: How did they miscalculate so badly, it would seem, Mara, in the sense of the impact that releasing these memos would have?

LIASSON: I actually think that they knew there would be a certain amount of storm that the memos would stir up, even that they keep -- even though, as they kept on repeating, most of this information is public. It’s quite different when the president of the United States makes it public.

But I do think that what happened on Tuesday, you know, after Rahm Emanuel , the chief of staff, had said flatly on Sunday the president does not want the people who formulated the policy to be prosecuted either -- and then when President Obama reopened the door to that, I think that’s what caused the storm to be stirred up much worse.

WALLACE: And why did he reopen it?

LIASSON: And here’s what I think happened. I think he was, as is his instinct, searching for common ground. He had this pressure from the left -- “You can’t let them get away, the Bush administration people” -- and then you had his instincts, which is, “We have to look forward, not back. Let’s not jeopardize our domestic agenda. Let’s not create this horrible partisan warfare.”

And I think what he was trying to do was say, “Well, Eric Holder will make that decision,” you know, and I think that sometimes there is no common ground to be found. Sometimes the president has to make a decision, like he did when he ruled out prosecutions for CIA operatives. He was very, very clear about that.

And I think that since those comments, the White House has tried to get back to putting this debate back inside a box. No, he’s really not for an independent 9/11-style commission. Harry Reid has also shot that down on the Hill.

And I think that if they had their druthers, there would be no prosecution.

WALLACE: So, Bill, having said that, because they don’t seem to have their druthers anymore, where are we headed? Congressional investigation? Independent 9/11 commission? Prosecutions?

And how much is this adding to the -- to the poison in the Washington atmosphere that President -- candidate Obama so much wanted to erase?

KRISTOL: Well, the president had his druthers and the key decision was the release of the memos. And after that, I think it was more or less inevitable. Once you release the memos, you’re setting up at least civil lawsuits. It’s very hard to then rule out the prosecution of anyone.

How can a president tell his Justice Department, “Well, on the one hand, we totally denounced these outrageous things that were authorized and done by the Bush administration, but, hey, lawyers in the Justice Department shouldn’t see whether crimes were committed?”

The release of the memos and the implicit and almost explicit embrace of the narrative that the Bush administration engaged in criminal activities -- torture is a crime, that is agreed upon -- that these memos are so crazy, so ridiculous in their legal analysis, that three instances of -- three people being waterboarded might not qualify as torture under certain circumstances, which is what the memos argued, then he opened the door.

And once he opened the door, they’re going down that road, and they’re still going down the road. You asked Carl Levin about the photos they’re going to release. They’re choosing to release all these photos. What was Carl Levin ’s response?

WALLACE: Well, in fairness -- you say choosing to release. There is a lawsuit...

LIASSON: There is a lawsuit.

WALLACE: ... and they’re...

KRISTOL: And they’re not fighting the lawsuit to the end. They’re saying, “Oh, we’re probably going to lose the lawsuit, so let’s just release the photos.” And Carl Levin said, “Well, the real sin isn’t the photos. It’s the Bush administration people...”

WALLACE: Juan?

KRISTOL: “... who authorized these things.” They’re still running against the Bush administration. Let’s stipulate that the Bush administration did a lot of things wrong. How does that legitimate doing something now that will damage our national security?

WALLACE: Juan?

WILLIAMS: How does it damage our national security? I think when you have a -- President Obama said, “Look, at some point here we lost our moral bearings.” I don’t think there’s any doubt about that.

KRISTOL: There’s a lot of doubt about that.

WILLIAMS: You said a moment ago torture is illegal. And you’ve got to remember, I mean, President Reagan was out there signing the U.N. convention on it, saying, “We will not participate in torture as an American people.” So something went wrong there.

Now, the question is whether or not it’s justified, which is why President -- Vice President Cheney is saying, “Give us additional documents that might indicate that there is -- there was some gain, some profit, for us to prevent additional attacks on the United States...”

HUME: Might indicate?

WILLIAMS: “... from using this.” Well, it might indicate it, Brit, because -- on the other hand, it might indicate that we didn’t use conventional methods to try to interrogate people. We went right away to these enhanced interrogation techniques...

HUME: Well, no, that isn’t -- that isn’t...

WILLIAMS: ... including -- let me just say -- including, incredibly, you know, literally hundreds of times putting people under waterboarding.

This is -- this is beyond the pale in terms of human behavior towards another human being, no matter if it’s your enemy. But certainly, it does indicate there was a problem.

But to answer your question about where do we go from here, it looks to me like you have to have -- at this point, you know, you have Senator Reid and others saying, “You’re not going to get Republicans and Democrats to set the -- set the terms for any kind of independent investigation,” so it’s really going to end up on Capitol Hill.

And that’s regrettable, because then it becomes so highly politicized. It doesn’t necessarily have to be politicized, but it’s going to be. And I say it doesn’t have to be politicized, because you had, in terms of the promise from this White House, no prosecutions of CIA officials.

They simply wanted to look at Justice Department officials who sort of, you know, said, “Oh, here -- here’s what we want to do, and we’ll change the law to make it happen.”

LIASSON: Well, wait a minute, Juan. You know, the big question is where do you stop. I mean, President Bush is the one who’s responsible for everything that happened on his watch.

To talk about -- Eric Holder said -- when he was asked this week by Congress, he said, “I’m not going to criminalize policy differences.” And you might think that the lawyers at the Bush Justice Department came out with a decision that was wrong, legally wrong, and morally repugnant, but it doesn’t mean that they committed a crime, that they said, “Ooh, we know this is torture and we’re just going to cook this up.”

The question is whether they did this in good faith or not. And if...

HUME: I predict, Mara, based on what you’re saying, that any prosecutions that come out of this will be a total farce. And I don’t think the prosecutions are the area to be worried about.

The area to be worried about is whether under one guise or another there’ll be a series of grand inquisitions in which all -- with show trials and stacked witnesses, and all of the -- all the kinds of things we’ve associated with this.

It’s possible that those lawyers who get hauled before Congress and do to any investigation there what Oliver North did to the 9/11 Commission, which was to render it the farce it always was from the beginning -- that would be a good outcome. But it would not -- but this whole airing of these -- this closed -- what should be a closed chapter -- I don’t see how it -- I don’t see any national benefit to it. Can anybody identify a benefit?

KRISTOL: Yes. I mean, that -- I mean, having opened the door -- of course, the Obama administration wants the best of all worlds. They’ve opened the door. They’ve trashed the lawyers who are unsympathetic figures compared to the CIA officers. They’ve trashed the Bush administration. They’ve totally confused everyone about what’s torture.

Khalid Sheikh Mohammed is arrested on March 1st, 2003. He says -- he’s asked are there other terrorist attacks imminent. He says, “Soon you will know.” But hey, we weren’t supposed to do any enhanced interrogation techniques on him. We were supposed to do a controlled social science experiment to see whether the regular techniques might have worked over two or three months.

Anyway, I think now that the door is open, I say bring it on. Let’s have a big national debate on this. Let’s have Steve Bradbury confront his accusers, who are one-tenth the lawyers he is, and who were not under the pressure he was under, and there was not a real threat.

Let’s have George Tenet testify. Let’s have Mike Hayden testify. Let’s have a serious debate. Let’s have Dick Cheney take on anyone the left wants to produce about whether we were responsible, whether this was a dark chapter in our history, something we have to be ashamed of, or whether the U.S. government behaved in a very fine way, I think in a very impressive way...

WALLACE: All right.

KRISTOL: ... from September 11th on.

WALLACE: We have to take a break here. It’s interesting to say this -- this debate has legs.

But when we come back, we are going to take a look at both the domestic and the foreign policy sides of the first 100 days, from saving the economy, to the war on terror, to the president’s ambitious agenda. Stay tuned.

(COMMERCIAL BREAK)

WALLACE: On this day in 1984, President Reagan traveled to Beijing to meet with top Chinese leaders. It was the first time a U.S. president had traveled to China since President Nixon’s historic trip in 1972.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

AXELROD: This town is the great echo chamber, and in this town every day is election day. Every day you’re being measured. This president has taken the long view.

(END VIDEO CLIP)

WALLACE: That was the president’s senior adviser David Axelrod describing the media focus as Mr. Obama ends his first 100 days this Wednesday.

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

Well, the media set this 100-day milepost covering the first administration of FDR back in 1933 during the depths of the depression.

Using that as a comparison, Brit, how ambitious has this president, President Obama, been in his first hundred days?

HUME: I would say exceedingly ambitious. His actions to try to revive the economy have been large, staggering spending under the stimulus program, and his other domestic initiatives ranging from health care, to major changes in the way we get energy in this country, and so on down the line are broad, deep, and huge.

I think it’s fair to say that he’s made a good start legislatively in putting in place these programs. He’s got a long way to go yet, but he’s off to the -- off to a pretty good start.

Whether some of these things will pass -- cap and trade for energy, for example, being one where he may have trouble; there may be others as well. But he’s off to a pretty good start. In the end, though, the good start doesn’t really matter very much.

What matters is whether the policies, once put in place, are effective against the problems that they’re designed to combat, and there, I think, there’s really serious reason for doubt on the economy and much else.

WALLACE: Mara, passing an economic stimulus was certainly no surprise, and trying to bail out the banks and throwing more hundreds of billions there was not a surprise.

I think it’s his budget that surprised a lot of people, this extraordinary agenda to fundamentally redefine the government role in education, health care and energy. And I don’t mean this either in a positive or negative way -- is Obama a radical figure in American politics?

LIASSON: I don’t think he’s a radical figure. I think he’s a transformative figure and wants to enact a big transformation in American life, but not to fundamentally change our system, but to make it stronger.

This is how -- when he gave that speech about building a house upon a rock instead of upon sand, he says we can’t have a stable economy and a real growth model that’s not based on a bubble and bust cycle. We have to have health care costs under control. We have to have energy under control. We have to have a highly educated workforce so we’re more competitive.

All those things are not radical. You could say in a way they’re conservative, and he actually presents them in conservative language.

But I do think the budget was extremely radical, much more ambitious than people thought. He is -- he understands -- the White House gets that the first year is the president’s big window of opportunity. And after that, it’s unclear how much capital he’s going to have left.

And he’s going to try to do as much as he can as soon as he can. And on that count, I think he gets, you know, high marks for laying out his agenda and pushing it as hard as he can.

WALLACE: Bill, let’s take a look at the latest numbers from the Fox News/Opinion Dynamics poll which came out just this week marking the first 100 days.

As you can see there, the president’s job approval stands at 62 percent. That’s down just three points from his rating the week after he was sworn in.

And 46 percent of people say they are satisfied with how things are going -- that’s a basic sort of right-track, wrong-track -- compared to 20 percent as President Bush was leaving office.

Bill, those are strong numbers.

KRISTOL: I think he’s still on a -- basically on a honeymoon, and the American people wish him well. And as in honeymoons, things can go well for a while. But he’s using this honeymoon to run up an unbelievable credit card debt, if I can extend that metaphor further than it should go.

I mean, how can you say you’re building the -- a firm rock, firm foundation, for the economy when his own budget shows deficits above $500 billion forever -- forever? It’s ludicrous. It’s unsustainable, and I think it will catch up to him.

WILLIAMS: I think these are investments in the future -- is the way the White House would have you look at it, rather than simply frivolous spending.

And the argument would be, “Listen, if you invest in things like making sure that you have 40 more million children covered by health insurance, that’s a good investment. It costs money, but it’s a good investment.”

The big question, I think, going forward is on things like health care. You know, can the Congress get him something with -- by the -- I guess it would be the end of August, before the recess, so that he would have it on his desk to sign?

Can he really get something done on education? I mean, all indications are that he’s still bollixed by the unions, that he refuses to break free of them on the necessary work of really, I think, breaking eggs and saying, “You know what? The kids are first, and we’re going to make sure public education in this country works.”

So on those ways, I think the biggest problem for him has been bipartisanship. If you wanted to give him a bad score on something in this time, I think it’s been that, you know, despite his efforts to reach out to the Republicans, not -- I think it was, what, three Republicans voted for the stimulus package. None voted for that budget.

So all the efforts of trying to break the old poisonous, partisan ways of Washington have not come about.

WALLACE: Let’s turn, in the time we have left, to national security.

I think the biggest question, Brit, I think you’d agree, when this president came in is is he up to being commander in chief. In his first 100 days, how has he answered that question?

HUME: I think there’s real doubt about that, Chris, and I would cite as an example the attitude he took toward a lot of the leaders he met just at the Latin American summit of a week or so ago.

Asked about his chummy handshake and back slap, or whatever, with Hugo Chavez of Venezuela, he said, “I don’t think there’s any -- you know, I think we can only gain,” I think was the sense of it, “from a more constructive relationship with Venezuela.”

Now, how in the world does he think that we got into a destructive relationship with Venezuela? It wasn’t the United States’ fault. The United States wasn’t -- isn’t what’s wrong here. We have a tyrant down there who is behaving the way tyrants do -- mercurial, dictatorial, a serious problem and headache for this country. He does not...

WILLIAMS: Well, don’t you think that...

WALLACE: Wait, wait, I want to...

(CROSSTALK)

No. Wait, wait. Juan, Juan, wait.

HUME: No, I think there’s always...

WALLACE: Juan?

HUME: ... been a certain lack of attention in the United States toward Central America, and there probably always will be.

What I’m saying is this business of personal diplomacy, as if by his own personality, the projection of his own magnetism, he can change the world, I think is almost unbelievably naive, but I think it’s at the core of what he’s doing.

WALLACE: As I was trying to say, Mara, what do you -- what strikes you more about this president’s foreign policy, the change from Bush -- and I’m talking particularly about the war on terror -- or the continuity?

LIASSON: No, I think the continuity in substance is striking. The change in approach and style -- that’s been big, and he wants to kind of re-brand America’s image, and he thinks that down the road that will get him more cooperation.

But in substance, he’s continuing on the same track in Iraq. They were going to pull out because the surge worked. He’s ramping up in Afghanistan, which was going to happen, which was going to have to happen, because that situation is deteriorating. The approach to Iran -- he’s added the idea of negotiations, but he’s still trying to get everybody to sign on to stiffer sanctions.

WALLACE: Let me just -- because we have 30 seconds left.

Bill, change or continuity?

KRISTOL: I thought when he announced the Iraq and Afghanistan decisions, continuity, but I now think change.

I think he’s fundamentally projecting weakness, and I worry about what our enemies are making of that.

WALLACE: How is he projecting weakness?

KRISTOL: Everything from the release of the memos, to the reaching out to governments and saying nothing about democracy, to dictatorial governments...

WILLIAMS: Well, but you’re focused on the short term.

(CROSSTALK)

KRISTOL: ... about democracy and human rights.

WALLACE: Gentlemen?

WILLIAMS: You’re focused too short. He’s a strong president.

WALLACE: We’ve got to go. You can continue this in Panel Plus. Thank you, panel. See you next week.

Up next, our Power Player of the Week.

(COMMERCIAL BREAK)

WALLACE: There is no place in Washington that makes you feel more humble or more grateful than the operation run by our Power Player of the Week.

(BEGIN VIDEOTAPE)

HAWLEY-BOWLAND: We take care of the wounded of all the services -- the soldiers, the sailors, airmen, Marines -- and so we call them warriors.

(BEGIN VIDEO CLIP)

HAWLEY-BOWLAND: It’s hard, but you’re doing great.

(END VIDEO CLIP)

WALLACE: Major General Carla Hawley-Bowland is the commander of Walter Reed Army Medical Center, which this week celebrates its 100th anniversary.

(BEGIN VIDEO CLIP)

HAWLEY-BOWLAND: It will all work. It just takes lots of practice.

(END VIDEO CLIP)

WALLACE: The general showed us the care they are giving now to warriors who lost limbs in Iraq and Afghanistan.

HAWLEY-BOWLAND: Instead of just, you know, the old wooden leg that people used to get in the old day, we now have power knees that assist them in going up stairs.

WALLACE: Wounded warriors walk around a track in a harness to get used to their prosthetic or learn to climb a moving wall.

HAWLEY-BOWLAND: The record on this wall is an hour and a half, which would tire me out.

WALLACE: What, somebody was able...

HAWLEY-BOWLAND: Able...

WALLACE: ... to climb it for an hour and a half?

HAWLEY-BOWLAND: ... with a prosthetic, and climbed it for an hour and a half.

WALLACE: And remarkably, 25 percent of the amputees return to active duty, some to the battlefield.

HAWLEY-BOWLAND: We send them with extra prosthetics so that if the prosthetic gets injured again, they’ve got a spare in the trunk.

WALLACE: That has been the tradition at Walter Reed since it opened in 1909.

HAWLEY-BOWLAND: It started out as a state-of-the-art hospital. It had an electric elevator, indoor plumbing, electricity and an x-ray room. That was state-of-the-art back then.

WALLACE: It was named after an Army doctor who discovered during the Spanish-American war that yellow fever, which was killing more soldiers than battle injuries, was transmitted by mosquitoes.

HAWLEY-BOWLAND: War is one of those catalysts to come up with new treatments to save the wounded. Vascular surgery -- the beginnings of that were in the Korean War as well as Vietnam.

WALLACE: During World War I, the hospital expanded from 80 beds to 2,500 by building long wooden barracks.

What is it like for a commander in chief when they come here and see the soldiers they’ve sent into battle back home?

HAWLEY-BOWLAND: They’ll come back teary-eyed out of the room. You know, we let them go in the room privately with the soldier and their families, but it’s always an uplifting experience for them, and they love to come visit the soldiers.

WALLACE: Two years ago, there was a scandal at Walter Reed when it was revealed that outpatients were in housing infested with mice and mold and were getting lost in the bureaucracy.

HAWLEY-BOWLAND: It was very painful morale-wise.

WALLACE: Hawley-Bowland took command later and says the problems have been fixed. As Walter Reed celebrates its first 100 years, one thing above all drives the staff -- the courage of the warriors recovering from their wounds.

HAWLEY-BOWLAND: I speedwalk for my P.T. test and these guys pass me. And then they’ll turn around and go, “Oh, hi, ma’am,” and I’ll go, “Yeah, carry on, carry on.” They are what we come to work for every day, and they’re the ones that create the memories that we will treasure forever.

(END VIDEOTAPE) WALLACE: As part of the Pentagon’s base closing program, Walter Reed shuts its doors in September of 2011, but it will combine operations with the Bethesda Naval Hospital, and it will keep the name Walter Reed.

Now this program note. Wednesday night you can watch President Obama’s prime-time news conference at 8:00 p.m. Eastern on Fox News Channel as he marks his 100th day in office.

And that’s it for today. Have a great week and we’ll see you next “FOX News Sunday.”