>> chris: i'm chris wallace and this is "fox news sunday." leading the opposition against some of president obama's top initiatives. senator john mccain pushes back on taxes, financial regulation and dealing with iran. the arizona republican speaks out, only on "fox news sunday." then, what is happening in iran? as the u.s. military looks to bring combat troops home this summer we will get an assessment from general ray odierno commander of forces in iraq. it is a "fox news sunday" exclusive. the white house picks a fight with a tea partyer. >> you would think they would be saying thank you. >> chris: we will ask the sunday regulars about the presidential poke at the grass roots movement.

all right now on "fox news sunday." and hello again from fox news in washington. first, late news. large portions of europe remain under a no fly order because of the huge volcanoic ash cloud from iceland. some airlines are conducting test flights to see if it is safe to resume operations but normal service is not expected for days. president obama and other world leaders were forced to cancel their flights to attend the state funeral in krakow for the president and first lady of poland who were killed in a plane crash eight days guy. back here with washington as polarized as it has ever been. a senator who used to find areas of bipartisan agreement is now leading the charge against the obama agenda. we are joined by senator john mccain. welcome back to "fox news sunday." >> thank you, precipitation. and again thanks for having general odierno on. he is a great leader and he and general petraeus are as great as we ever had. >> chris: looking forward to talking to him. i want to start with a report

in the "new york times" today that secretary of defense gates sent a top secret memo to the white house in january warning that the u.s. does not have an effective strategy to deal with iran as it makes steady progress towards a nuclear weapon. your reaction? >> i didn't need a secret memo from mr. gates to as certain that. we do not have a coherent policy, i think that is pretty obvious. we keep threatening sanctions. we keep for well over a year now including the previous administration we keep threatening and obviously we have not done anything that would in any way be viewed effective. former secretary of state george schulz once told me, he said my old marine drill instructor said never point a gun at anybody unless you are willing to pull the trigger. we have to be willing to pull the trigger on significant sanctions and make plans for whatever contingencies follow if those sanctions are not effective. >> let me -- >> let me just add. i believe that the chinese and

the russians will not be particularly helpful. so why don't we get the european allies together and impose sanctions from that aspect. maybe that would embarrass or force the russians and chinese to act in a more cooperative fashion. >> chris: so forget the u.n. >> refine petroleum products is one. the other is stand up for the human rights of the people of iran. put the pictures of those people brutalizing and killing and torturing the demonstrators and the people standing up for their god given rights. make them famous. we did that in some respects in the cold war. >> chris: what about military action? >> i think every contingency has to be on the able. it is clear that the israelis cannot live with a nuclear armed iran.

we saw news reports that the syrians have moved scud missiles into southern lebanon. that is a serious escalatory move. now, jerusalem and tel aviv are within range of scud missiles. i think that we have to have contingency plans. but do i agree with most experts let's try to get the pressure on from all directions. tough sanctions and san stand p for the people that want and obviously are demonstrating in the streets and are being brutalized in the prisons. >> chris: president obama spoke at a fundraiser on tax day in which he noted that the white house over the past year has imposed or passed 25 tax cuts that he says benefit the american people and then he said this -- >> i have been a little amused over the last couple of days where people have been having these rallies about taxes, taxes.

you would think they would be saying thank you. >> chris: the president says tea partyers should say thank you. >> well, that is probably one of the more motivating statements for the tea partyers. the fact is that taxes have gone up and they are going to go up and they are going to violate the president's pledge as far as single people making $250,000 and $200,000. the taxes going up. we all know that. the healthcare bill has a broad variety of taxes that are going to be imposed including there will be increases in capital gains tax which obviously flies in the face of historical precedent when we increase capital gains taxes dividends go down. this is a big government expansion and you cannot expand government without increasing spending and over time increasing taxes. >> chris: what do you think just of the president's deminor there when -- demeanor when says the tea party rallies they

amuse me? >> i think he is not amused and that is the why he is reacting the way he is. he reacts to this network with frequency and you and others directly. i think the president has foregoaten one of the examples of how to handle these kind of things and that was ronald reagan when reminded of critics he would smile and pass it off and press on. but, i'm sure the tea partyers are encouraged to get into a direct confrontation with the president of the united states. >> chris: you introduced on tax day a measure that passed the senate by 85 to 13 opposing a value added tax. while some of the president's advisors have said maybe we have to consider it. the president has not proposed it. why offer the amendment? >> because there is talk around capitol hill with the democrats and others about the answer is in value added tax which we know is regressive.

two, the european scamsome not one that we want to -- the european example is not one that we want to follow and it clearly would be an addition to the present tax. in a way it is a hidden tax because only the end consumer understands the cost of it when they pay the final price. a value added tax would be a serious mistake. it is another backdoor way of increasing revenue. >> chris: how seriously do you think the white house and democrats are considering a value added tax after the 2010 election? >> i don't know because they don't take me into their confidence. i keep hearing from all over this town is value added tax is the way to go. >> chris: this is a preemptive strike. >> yes, sir,, we ought to be on record. >> chris: does the vote end the debate? >> doesn't end the debate but sends a signal. i think it was an important one at this time as it was coming

up into the national dialogue. >> chris: senate democrats may bring financial regulation of wall street to the senate floor this week or in the next couple of weeks and the white house has now told senate democrats to drop the idea of a $50 billion fund paid for by the actual financial industry to financial the liquidation of the big institutions. is there a deal to be made on financial regulation? >> i believe there is. i believe there could be. but it is also well known the white house sent out the word stop negotiations but i think conversations are still going on. there is a number of aspects this of proposal that are disturbing to me. and by the way, i believe the white house is right, do we need to spend more millions of dollars to bail out institutions? i thought the object was to make institutions too big to fail do away with them being too big to fail so therefore the taxpayers' dollars wouldn't have to be used. so i agree with the white house

hoorah, on this business of. >> chris: what is the holdup? >> leaving fannie mae and freddie mac out of it. they were two of the cat it lifts in the melt down. the indiscriminate lending of money to buy homes to people that never could pay it back. lending the money to people who were never going to be able to make their mortgage payments. and we have to look at a number of other aspects of this which increased the role of unelected unaccountable officials and i think a greater role of the congress of the united states. >> chris: so you are upset about the fact that the fed would have a bigger role in overseeing all of this? >> concerns me. because the fed didn't play a good role the last time around and i think there needs to be a lot more government involvement -- congressional involvement and oversight and

when we find out that goldman, sachs was betting against its own investors and playing the double game and i'm sure we will find out they weren't the only ones. things have got to change in the way that they do business and one of them, i think is really is to let bankers do the traditional banking of lending money and having them be backed by the federal government and the fdic. people want to engage in all this other stuff we have been reading about, just don't have the taxpayers involved. let them take their own risks. >> chris: you brought up goldman, sachs and the allegations that are they were putting out investments that they knew were going to fail and in a sense they were profiting from their failure but selling them to some of their customers. if they bring, if the democrats bring the bill to the floor, now especially that it has the $50 billion fund out of it. it will be in the position of them saying they are pushing for regulation on wall street

and republicans are filibustering it. does at any time look like they are trying to crack down on the fat cats and you guys are protecting them 12346789. them? >> that is their goal, the president and administration have articulated that. we have to make an argument that we can't see a regulatory scheme which would then allow a rendition of the meltdown that we have seen. that we saw a year and a half ago. so, our effort has got to be to say look, we will sit down but we want to see a scheme that ensures the fundamental principle that never again is any institution too big to fail. and this -- i don't think that this present legislation before us can guarantee that. >> chris: what a lot of people see in john mccain these days is a move to the right. a more aggressive posture towards president obama that they attribute to the fact that you face a tough challenge from former congressman j.d. hayworth in the gop primary. of course, you are running for reelection in arizona and they

point to a comment that you made to newsweek recently. i never considered myself a maverick. i consider myself someone who serves the people of arizona to the best of his ability. senator, i don't have to tell you we found dozens of examples from the 2008 campaign in which you talked about being a maverick. let's put them up. >> he is the original maverick. one is ready to lead. mcguane if you want real reform and change, send a team of mavericks and what maverick really means, what this team of maverick really means is we understand who we work for. >> chris: how can you say i are in considered myself a maverick? >> when i was fighting against my own president, whether we needed more troops in iraq or whether we -- the spending was completely out of control then i was a maverick. now, that i'm fighting against this spending administration and this out of control and

reckless healthcare plan then i'm a partisan. i have been called a lot of things and i will be glad to be called anything. but i'm a fighter and that is what i am. and i have fought against my own administration when i wanted to when i thought it was necessary to do so and i will fight against this administration when i think it is necessary to do so. >> chris: but if i may press it. >> sure. >> it isn't what other people are saying about you. it is what you are saying about yourself. you said i never considered myself a maverick. >> i have considered myself a person who is a fighter. i wouldn't be around today if i wasn't a fighter. i fight for the things that i believe in and sometimes that is called a maverick. sometimes that is called a partisan and people can draw their own conclusions. i prefer great american myself. >> chris: running away from the maverick title because somehow it indicates you are not a true blue conservative. >> i fight for the things i believe in and for the people are arizona hurting badly right

now. half the homes in arizona are underwater. we have real unemployment of some 17% and i continue to fight for them as i have ever since i was fortunate enough to serve the people of arizona. >> your race against j.d. hayworth is tightening. last january led by 22 points. in a poll this week you led by five and hayworth described your conservativism this year this way, to the extent that he can encourage amnesia in the electorate, that is that h whas aiming to do. >> i enjoy the race. i love a campaign. i enjoy traveling all over the state and i'm confident of a victory. if we want to talk about who is conservative and who isn't. i fought against ear mark and pork barrel spending and mr. hayworth still depends ear mark and pork barrel spending. that is the litmus test about who is really conservative and takes care of the taxpayer

dollars. i enjoy the fight. i believe that a fight not joined is a not not enjoyed and i'm enjoying every minute of it. >> chris: what do you make of the economic there has been an election year -- of his comment there has been an election year conservativism on your part? >> the record as i said i have one against wasteful and ear mark spending when it wasn't popular. i fought for the surge against my own president and secretary of defense. i have fought for the things against this obama care. i have fought against the wasteful spending now today. my record is very consistent and i'm very proud of it. >> chris: finally. >> but the people of arizona want to know what we are going to do for them and i think i could make a case that i could much more effective here in helping them out of the most difficult times they have faced. >> chris: we have less than a minute left. there is a lot of anger out there against washington, against incumbents, you have been in this town a long time you have been an incumbent a long time.

do you worry that in that kind of antiincumbent anchor you could get swept out? >> no, i don't worry about it. i know that i can outcampaign everybody and the people of arizona know me very well. there is anger and frustration at a level that i have never seen before and for those of us who work here and disregard that they are making a serious mistake. >> chris: senator mccain, thank you so much for coming in today. always a pressure to talk to you, sir. >> thanks for -- always a pleasure to talk to you, sir. up next, the top general in iraq on the situation there and plplplplplpl introducing the new oreck platinum pilot with a pivoting head, designed to fly through housework. it's 360-degree glide brings cleaning power wherever you need it, turning with a simple twist of the wrist to easily get to the dirt, even around tight corners. the pilot's powerful direct suction generates 102-miles-per-hour of airflow at the floor.... and oreck's brand new double helix brush

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>> chris: joining us from bagdad is the top u.s.

commander in iraq, general ray odierno. you had an election on march 7th. the alawi administration won 91 streets but prime minister mallky 81 seats and is demanding a recount. it could take months to see the a new government. general, how worried are you about the political disarray? >> well, first, i think those elections were historic, chris. and what it showed is iraqi people got to vote for who they thought they wanted to continue to move iraq forward. i believe it will take a couple months to form the government. i think, though, the iraqi security forces continue to do a good job and i'm confident that we many be -- that we will be able to provide the environment so they can elect a government that is representative of the people of iraq. >> chris: if the shi'ites succeed in disqualifying more members of the allawi sunni alliance, and also if they are

able to create a government without sunnies, do you worry about a possible return to sectarian violence in iraq? >> it has been clear from all of the political leaders and everybody understands they must include all major political blocs in the government and we think that is a very important point as we move forward because it is important that we don't alienate any of the major blocs, sunni or shia or the kurds and we believe that the conversation is focus on participation of all of the different blocs so we are confident that all will be included in the government and it will be very important because what we don't want is to have people that don't feel like they are represented and people that feel like they are alienated which then they could choose to go back to violence. >> the drawdown of u.s. forces was supposed to begin six weeks after the election which is

right about now. are you going to be able to ramp up the withdrawal of u.s. forces. you have about 99,000 and you have to get down to 50,000 by the end of august. are you going to be able to ramp up the withdrawal given the uncertainty about the political situation? >> chris, i think it is appropriate in time for us to get down to our transition force in order for us to conduct stability operations. we are about 95,000 today. over the last year, iraqi security forces have slowly taken over more and more responsibility. they did it through the elections. they do it today. we no longer conduct major operations in iraq. the iraqi security forces do and we support them while they do that. so i absolutely think it is appropriate. and what we will move to is we will move towards stability operations and that means we will train, advise, assist the iraqi security forces.

we will continue to provide, help the reconstruction teams and united nations and other governmental organizations to build civil capacity and still conduct partnered counter terrorism operations every day with the iraqis and i think that is what we are doing today and what we will continue to do post 1 september. >> chris: i was talking about the political situation. let's throw another opponent into the equation and that is the security situation. there have been a series of recent bombings which have killed dozens of people, you just successfully foiled a plot by al-qaeda in iraq sort of a 9/11 style plot to hijack airplanes and fly them into holy shiite shrines. are the insurgents -- is al-qaeda, are they becoming a new -- a renewed threat, more of a problem in the security situation in iraq? >> first off, al-qaeda continues to be significantly degraded. we have to put this in perspective, chris.

first quarter, fiscal year '10 was the lowest number of incidents we had in a quarter. the lowest number of high profile attacks injuries the lowest number of indent fire attacks. the lowest number of u.s. force casualties. the lowest number of iraqi security force casualties. the direction continues to be headed in the right way. they are still capable of conducting attacks against innocent civilians but the iraqis have rejected the ideology of al-qaeda. they are rejecting al-qaeda as a whole inside of iraq. we continue to make progress against them. there is still work to be done. there will still be bad days ahead of us but it is becoming more and more difficult. but the most important thing is the iraqi security forces are now in the lead in going after al-qaeda and they are now developing their own capabilities to do this. we support them now. we will continue to support them through 2011 but i feel confident that they continue to build their own capabilities and capacities. >> chris: so looking at both the political situation and the security situation, are you

prepared to say now, general, that you are going to meet the deadline all combat troops will be out and the total forces, u.s. force letts b forces willw 50,000 by the end of august? >> we are on target to be at 50,000 by august. we will still -- we will have formations here that are able to train combat formations. we will still be able to conduct counter terrorism operations. we will still be able to support provincial reconstruction teams. we are at about 95,000 today, chris. so i -- our plans are intact. i feel very comfortable with our plan and unless something unforeseen and disasterrous happens i fully expect us to be at 50,000 by the first of september. >> chris: general, this is another aspect to this and that is that there is widespread speculation in iraq that the u.s. will try to negotiate, renegotiate the status of forces agreement that calls for all u.s. forces to be out by

the end of 2011. is that something that you think we might have to do to ensure the long-term stability in iraq? >> well, i would tell you there is no move by the united states to renegotiate the security agreement. we are bound by that. we say we will be out by the end of 2011. if the government of iraq thinks it would be to their advantage to ask us to stay longer than that, then we will see. and then we will have to have a discussion in the united states whether we decide to stay longer or not. but that will be up to the new iraqi government whether they want us to stay or not and then we will make our own decision based on our own policies. >> chris: general, what role is iran playing these days in political instability inside your country? >> they still are very much involved. they still provide le shal thal

aid. they provide training for those that try to create inability in iraq and continue to try to influence and they are involved in attempting to influence the results of the elections. they do not respect iraq's sovereignty. in my mind the instability that it creates has impacted economic development in iraq so they are still a threat. we look at it very carefully. we work very closely with the government of iraq in order for them to take action against those who are trying to create this instability inside of southern iraq specifically. >> chris: is there anything more that the u.s. could do and specifically would you like authority to be able to cross the boarder to take out some of the camps where they train and arm insurgents who then come into iraq and kill americans? >> i don't -- chris, i really don't think that is necessary. i think what is more important is to build up the iraqi capability to protect their own

homeland and allow them to protect their sovereignty. and that is what i would rather see us do and that is what we are in the process of doing right now. i think that is the right strategy and i think that is more of a longer term strategy. the iraqis are nationalists, they will reject unwanted reigning influence. they want to have a good relationship with iran like they do all their neighbors but will to the tolerate a ma lined influence in iraq. we want them to be able to handle this problem. >> chris: the pentagon announced you will be rotating out of iraq around the time that we get all the combat troops out late summer early fall. you have served in iraq almost four years. longer than any another u.s. general. how do you feel about leaving the country? >> well, first, chris, the pentagon has not announced that. it is speculative in nature.

in fact, i have not been told yet i'm rotating out. so i would just say that is very speculative. i am very proud to continue to serve here with these incredible young men and women that are here. as far as i know, i will be here for the next several months at least and we'll wait and see. as far as i know, this has been no official announcement or nobody has contacted me yet about leaving so that said i would just say i have. >> chris: go ahead, sir. >> what i would say is that said, i would just say that i think we have an opportunity here in iraq. iraq is a critical country here in the middle east. i think it is important that we understand that and that we have an opportunity that we might never get again here and that it is important that we help to build iraq, we help to build iraq into a country that becomes a strong partner of the united states, a partner that brings stability to the middle

east. a partner that is able to grow economically, diplomatic atly and able to contribute to the security architecture trek regionally here. i hope we will be able to do that both 2011 with the security forces here in iraq and then after 2011 with continued significant engagement between the united states government and the government of iraq itself. >> chris: general odieron, we want to thank you so much for talking with us today and we thank you and the men and women in your command for your service, sir. >> well, thank you, chris. it is an honor to be on your show today. again, i feel blessed to be able to work here with all these great young men and women. they are true national treasures and heros. >> chris: hear, hear, to that, sir. coming up, tax day got the tea party out in full force this week. the president had an interesting reaction. you won't want to miss our

i have been a little amused over the last couple of days where people have been having these rallies about taxes, taxes. you would think they would be saying thank you. >> chris: president obama commenting on the tea partyers at a democratic fundraiser on tax day. time for the sunday group. brit hume, fox news senior political analyst and contributors mara liasson of national public radio, bill kristol of the weekly standards and juan williams also of public radio. brit, what do you make? >> he is talking about the fact it there are tax benefits that floated a lot of people from things in the stimulus people. it misses the point of what the people are worried about.

they are worried about the levels of spending and see -- remember, what animated them in the first place is the $787 billion and now $862 billion worth of spending on stimulus, all of it borrowed money. they are worried about what they see as inevitable tax increases in the future and that is why they are worried about levels of taxation and they are preoccupied with the spending. i think it is gather to say they will not be amused by what he said and they will not be saying thank you for the comments by the president. >> chris: does the white house think it is good politics to mock the tea partyers or was this is mistake? >> i don't think that was the plan. i don't think you want to sound like you are mocking somebody. the fact is the white house has a problem which is they did give everybody a tax cut and most people don't think they got it. they have to remind people to look this their pay stubbs and 95% of americans can get $400

or $800 this year. was dolled out it tiny amounts which economists said was the right way to do it. but then people don't notice it as much. i think that the sentiment behind the tea parties which is this antibig government, antideficit debt, antitaxes, spending, is really important this year and the white house does have to figure out a way to answer it because it is such a strong sentiment and it is motivating so many voters. >> chris: and that wasn't it? >> i don't think so. >> chris: let me just ask you -- well, go ahead, bill. >> these people having the rallies are called citizens of the united states and they are trying to express views about the future of the country and president obama doesn't like that because they disagree with him. he hoped to be a transformative president into a european style social democracy with a larger government. he is entitled to advance that agenda and a lot of citizens think no we would preterritories to limit the federal government and

reconstitutionallize federal policy. he is not amused. he is worried. they have inadvertently given rise to a more powerful conservative movement. not in the sense of capital c official conservative a conservative in the sense of constitutional and limit of the federal government. the obama administration rise to a more powerful conservativism than existed for 20 years since ronald reagan in this country. >> people want smaller government. people want to cut the size of deficits. i think that is all true and i think that is the mainstream fervor that the tea party is able to capture. there is also a sense and i think bill clinton spoke of this when says he think the tea party people have to speak responsible and be aware of going over the line. when the new york times did a poll and found that tea parties are 20% of the american people this is no way to say they are not citizens, they are some kooky group. it is fair to say they are white male, older people who

are concerned about the medicare and social security payment and at times engage in language that is abusive, it is not just a pure caricature of president obama. he didn't say anything there except to say that you have to understand that taxes were cut last year. the american people should know that rather than going on about him as if he is some liberal tax and pender. >> you know, it is -- what is striking to me about this is bill clinton now makes a talk in which he talks about this tea party movement so some extent in the context of oklahoma city and how the hot language of that day he felt directly or indirectly gave rise to that. he would have a lot more credibility and so would the others who are complaining about the sharp language coming out of the tea party movement if they ever uttered a peep when the most vicious things were being said, the most astonishing signs were being

carried during the antiwar protests against president bush. these people were virtually unanimous silent on all of that. they didn't think it will lead to an okay city. a raging double standard. >> but it didn't lead to another okay city. what happened with timothy mcveigh and the militia groups. >> at time, though, if they believed that this kind of language could lead to that sort of thing they should have said something. >> it is ridiculous. millions of people at tea party rallies. i would make the opposite point. this has been one of the most peaceful civic, civil organizations of mass citizens in the united states. can you find one or two citizens in the recent history of the united states. i think attacking them in this way is really wrong. it is not just foolish. it is an attempt to demonize the movement. >> chris: let's put up the new york times poll. it is quite interesting. put it up on the screen.

they found 18%, 18% of americans now identify themselves as tea party supporters. other polls have it higher. and it also turns out that they are wealthier and better educated than most americans. i mean this is not a lu. in tic fringe. >> and that means they are more likely to vote. >> they are also older. >> they are older and the kind of people who turn out in mid term elections and they fit right inside the republican base and i think that that is how they are functioning. i'm not saying that is how they see themselves. some of them see themselves as slightly apart from both parties. they are an important energy part of the republican base. >> i think they are threat to the republicans in some ways. i think that is why the republican is not comfortable with the tea party folks because they are much more ferraro vent in their views -- fervent in their views and their anger. republicans have to figure out a way to channel that anger to

get theme into the voting box. >> the republican establishment the future of the republican party and conservatives is and the tea party is the guest thing that happened for conservatives and republicans. look at the contract from america. go online and look at it. half a million people chose these items. mainstream, sensible. reformist. limited government agenda. i think the notion that the left pretends to think the tea parties are a problem for the republicans. the fact is the left is terrified of the tea parties. president obama knows that they have done huge amounts of damage to his attempt to transform america in a left wing direction and therefore they don't want to debate the issues, they want to demonize them. >> juan, juan, wait a second. wayne to because there is another side -- wait a minute. because there is another side and making his comments about linking the tea party and the mood of the tea party to the mood before oklahoma city. the president pointed to comments that congress woman michele bachman made at a tea

party rally on tax day. let's watch. >> we're on to this gangster government and we are not going let them have their way. we need outages to take out some of these -- take out some of these bad guys and replace them with people who listen to you. >> bill, does that bother you? is that gangster government? >> please. come on, i'm terrified. she wants people to remove the people in washington, the elected officials in washington in november. >> but she wasn't shooting them. >> she is talking about defeating them at the polls. what is wrong with that? >> when the new york times asked the tea party people about their opinions, as i say i think the mainstream american upset, populist anger when it comes to the economy, 90% of them are down on america at this moment. america is headed in the wrong direction, over the cliff, obama is a socialist, obama cares more about black people than white people, obama cares more about poor people, i mean they have a self-interest in

terms of protecting their entitlement spending but don't have any interest in saying we may have to take cuts in terms of the retirements. people have to retire later or we have to pay more taxs. >> juan put his finger on an interesting question which is when it gets down to it, what will the tea parties and poll sixes that they support --le politicians that they support agree to do to address not only the current levels of spending but the tremendous burden of unfunded debt coming our way, social security and medicare and so farther. that is i think the question for the future. the fact that these people are concerned about social security and medicare and thing those programs are worth it doesn't mean that they are unwilling to see the programs reformed. >> chris: we have to step aside for a moment. the debate over financial regulation heats up and so does talk about a value added tax. our panel tackles both, after



we going to put in place new rules so that big banks and financial institutions will pay for the bad decisions they make, not taxpayers. simply put, this means no more taxpayer bailout. >> chris: president obama making the case for the democratic plan to put new controls on wall street. we are back now with the group. looks like we are headed for a fight in the senate perhaps starting this week over financial regulation. the white house and democrats say the plan will prevent any more taxpayer bailouts of wall street and the republicans say it will guarantee more taxpayer bailouts. who has the better argument in terms of substance?

>> on paper you think republicans resisting financial reforms, sticking up for wall street looks terrible. but the senate bill, the dodd bill has it n., it i don't know how long it will last, the fund by $50 billion bund which will be a reserve to bail out banks. the republicans are calling it the bill for perpetual bailouts. the republicans have been able to hold their own in the debate. the administration wants that provision out. my guess is it will come out and then we will find out who is for what. now, this is other deficiencies as senator mccain mentioned earlier. you have fannie and freddie excused from the provisions of the measure when they are among the biggest offenders. they are the bailout institutions that are not anywhere near paying the money back as many of the commercial banks are. that is a weakness as well. we'll see how it turns out. i think in the end if they are able to compromise, republicans, a lot will end up going along with it.

>> i think there will be a republican vote for this in the end. as far as the $50 billion fund. the white house never wanted it. i think it is a red herring and when it comes out the republicans bluff will be called and then they can come up with some reason why this leads to taxpayer bailouts. there is a critique from the left. >> chris: the $50 billion fund is paid for by the banks, it is not taxpayer money. >> fine, i think it will disappear fast. it is not something the white house wanted. there is a critique to be made of the bill from the left that it is not tough enough. the capital requirements are not high enough. that is not the critique that the republicans have been saying. they have been saying it leads to bailouts. they say it is the $50 billion fund is it and soon it will be googone. >> chris: you can get into the woods on this and it will be over my head and i suspect a lot of people's heads. we have the sec charging goldman, sachs with fraud for

developing an investment security that it knew was going to fail so it could make some money allegedly. on the simplest level going back to brit's original point, if the democrats are pushing crackdown on wall street and the republicans are blocking it, isn't that bad for the gop? >> if one has the view of the voters that they are really simple minded and the democrats get to say over and over again and president obama says over and over again wall street bad, this is antiwall street, you should be in favor of the bill. it is the same that we talked about with the tea parties, hey, you got a tax benefit, be grateful to me. hey, wall street bad. the serious critique of the bill is fannie, freddie, aig, the five big banks, all too big to fail. it does nothing about that. this is good things and bad things in the bill. it doesn't address the problem that led to the financial melt down and that problem can be

addressed in conservative ways through bankruptcy law and possibly through breaking up the banks. i think the republicans need to be a little radical in thinking through what the right solution is. i'm not so convinced that president obama gets to say goldman, sachs bad and this bill antiwall street and everyone support this bill. >> republicans breaking up the big banks? that would be a truly -- then they would join with bernie sanders and the left wing of the democratic party. >> i don't think americans are simple minded when 80 plus percent of americans think that wall street is greedy and that they contributed to the financial collapse that we are experiencing as a country and they want some reforms. what is curious to me is in addition to the fact that they think that we may have another collapse because of wall street excesses within the next three years is that they really want reform without even looking at the content. americans sore concerned about what is going on -- are so concerned, they want some reform they don't care what the content is.

>> and that is the american public. don't agres address too big to. american public will go along like sheep. >> that is people taking responsible action in response to the fact we have been in a recession because of what happened on wall street and in response to the sec -- >> chris: i don't want to let this week pass without discussing one other issue and that is there was a lot of talk in washington about the value added tax. the vat as it is called, the sales tax leveled at each level of production of a good. it has been called a stealth tax because it is not as visible as for instance an increase in income taxes. do you think that the democrats are really headed perhaps after the election to a vat? >> i think that a lot of people on that side of the political divide like this idea because it is to a great extent hidden

and easier to raise and on paper at least raises a tremendous amount of money and would provide a kind of perpetual funding mechanism for democratic loved programs going on for a long time. the problemcy think is in this election year atmosphere this kind of a new tax might be so toxic that they couldn't get it done and if they don't get it done the majority is likely to be shrunken to the point that they couldn't get it done this year. likely not to happen but the idea is out there. >> chris: and one of the people who put it out there was the former fed chairman and obama voelker.advisor paul >> speaking for himself. >> chris: he said it is not as politically toxic as it one was. is he right? is it politically feasible and how would the president square that with his pledge not to raise any taxes on any one making less than $250,000 a year? >> he couldn't. but if you are looking at the

vat as something put on top of the existing income tax structure, no. the president is now taken to saying that he is not going to raise income taxes to people under 250. >> chris: that is now what he said during the campaign. >> in the last two speeches or so -- i'm not saying it is okay. i'm pointing it out. that is a cash machine and regressive. which gives both sides something to like and hate about it. in a grand bar gain with extremely deep income tax cuts. you cannot put it on top of the existing system politically and couldn't happen until we have the huge debate about tax reform and entitlement reform. the vat tax is not going to be plopped in somehow on top of what we already have go. >> one of the items of the contract with america. it as very good contract is tax reform. let's have a serious tax reform debate and a kind of profamily reduction of taxes type tax reform and a vat which is a perfectly respectable european

style. i think it would be great to have a national debate on this the next two years. >> how about spending cuts? >> that is also in the contract for america. >> the president has the fiscal responsibility commission supposed to meet and come forward with ideas including possible tax increases and spending cuts. were the republicans joining in, republicans have to be constructive. >> chris: where are the republicans. thank you, see you next week. check out the latest edition of panel plus where the group continues the discussion on our website and we will do that at fox news sunday.com and we will post the video before noon eastern time. up next, we hear from you.

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>> chris: but bruce disagreed. i just don't get bachmann. government doesn't want to take over corporate america. if president obama had done nothing the country would have been headed to the worst financial disaster in its history. >> many of you were skeptical of the gathering of world leaders to discuss nuclear security. >> chris: please keep your comments coming. you can find us at fox news sunday.com. congratulate the washington capitol for courageous win last night. we'll see you next fox news sunday.