MR. WALLACE: I'm Chris Wallace and this is "FOX News Sunday."
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Terrorist attacks in Mumbai put national security back on the front burner just as President-Elect Obama prepares to announce his foreign policy team.
Will discuss both with two key senators: Lindsey Graham, a leading Republican voice on national security, and Democrat Claire McCaskill, top Obama ally in the Senate.
Graham and McCaskill, only on "FOX News Sunday."
Then, Tuesday is Election Day in Georgia again. Will Democrats be able to pick up another Senate seat and get their filibuster-proof majority? We'll ask Saxby Chambliss, the Georgia Republican who's trying to keep his job, in an exclusive interview.
Also, now that the president-elect's economic team is in place, how will they try to jump-start the economy? We'll ask our Sunday Regulars: Brit Hume, Mara Liasson, Bill Kristol, and Juan Williams.
And our Power Player of the Week shows us the new front door to our Nation's Capitol.
All right now on "FOX News Sunday."
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And hello again from FOX News in Washington.
As Indian officials try to discover who caused the carnage in Mumbai this week and why, President-Elect Obama is set to announce his national security team.
Joining us now to discuss both are two leading senators who sit on the Armed Services Committee: Lindsey Graham, Republican from South Carolina, and Claire McCaskill, Democrat from Missouri, who joins us from St. Louis.
Senator Graham, let me start with you. You were leaving today on a congressional delegation, along with John McCain and Joe Lieberman, to Iraq and Afghanistan. Now the State Department is talking about seeing if they can get you into Pakistan and India.
SEN. GRAHAM: Right.
MR. WALLACE: If you go to those two countries, what message are you going to try to send them?
SEN. GRAHAM: Well, I hope we can go to India just to show solidarity with the Indian government, the Indian people. You know, I don't think we've paid enough attention, as a nation, to India.
Just to express our sympathy, but also an understanding that what happens in India matters here, and try to make sure there's not an overreaction. Where did the terrorists come from? Who paid for their efforts? Where were they trained? And see if we can make sure that a dialogue between Pakistan and India takes place that's helpful, that gets to the root cause of the problem.
MR. WALLACE: Explain. What's the danger of an overreaction between India and Pakistan? And particularly, not just between the two countries, but in terms of U.S. foreign policy?
SEN. GRAHAM: Well, the danger is there's a lot of history of terrorism coming out of Pakistan to the region, and there's Indian elections. And it'd be very easy for an Indian politician here soon to start demagoguing their neighbor, Pakistan.
And so make sure that the -- when the intelligence chief from Pakistan comes to India, that's a major event to me. To be involved, to have us sitting at the table with the Pakistan-Indian government and intelligence officials, trying to figure this out so that we can get to the root cause of it.
Is it about Kashmir, or is it a al Qaeda-type effort that's not specific to geography, but just as an ideology they're trying to push? Who are these people and what was their agenda?
MR. WALLACE: The key is not to get any overreaction from either side.
SEN. GRAHAM: Yeah. You know, there's an element of trying to control Kashmir by violence. Then there's the al Qaeda agenda that really is not attached to Kashmir at all.
Who are these people? Where does their support network come from? And not let it bleed over and heighten Pakistan-Indian tensions at a time that Afghanistan is very much in peril.
MR. WALLACE: Senator McCaskill, one of the linchpins of President-Elect Obama's South Asia policy has been to try to get India and Pakistan closer together so that Pakistan can thereby focus on its western border and al Qaeda and the Taliban.
How much damage does the Mumbai attack do to that policy, and how should President-Elect Obama respond?
SEN. MCCASKILL: Well, Lindsey's correct, and the Obama administration is very focused on making sure that we do not have a full-blown conflict between Pakistan and India.
Obviously, the Kashmiri border has been a sticking point for these two countries for a long, long time. And they both have nuclear power. India is a strong democracy.
Pakistan, obviously, is struggling a little bit.
So the Obama national security team is going to be looking how we strengthen the entire region and continue to focus on where the terrorism threats are.
And this attack should remind everyone that what Barack Obama's been saying for 18 months is really ringing true right now, that the terrorist threat that our nation faces is really Pakistan and Afghanistan right now, as opposed to the single-minded focus we've had on Iraq over the last several years.
MR. WALLACE: But with the obvious tensions and at least the preliminary indications that whether they had any kind of official or rogue government sanction, the intelligence service sanction, it does appear that at least some of these terrorists came from Pakistan.
How does President-Elect Obama mean to avoid increased tensions and an overreaction from either Pakistan or India, Senator McCaskill?
SEN. MCCASKILL: Well, obviously, he's -- we've got to have aggressive and principled diplomacy between these two countries. Pakistan has been our ally and they need to continue to be our ally. Clearly, India is very important to us as a nation.
But to keep Americans safe, we are going to have to make sure that we hold Pakistan accountable for the terrorist training activity that's ongoing in Pakistan.
We've been paying them a lot of American dollars to root out terrorism within their borders and, frankly, they haven't been as accountable as they need to be for those dollars.
And so we need to continue to strengthen these relationships and do everything we can to make sure these two countries work out these differences in a way that does not involve a full-scale military conflict.
MR. WALLACE: Mr. Obama is set to name his national security team this week, and let's take a look at what seem to be his nominees.
Hillary Clinton as secretary of State, Defense Secretary Robert Gates to stay on at the Pentagon, and former Marine Commandant James Jones as national security adviser.
Senator Graham, you were very critical of Obama during the campaign. You said that he has, quote, "terrible judgment" about Iraq and sitting down with foreign terrorists, and you also said this: "I would dread the day that Senator Obama took the oath and became commander in chief."
Senator, after seeing what appears to be his national security team, do you want to revise that opinion?
SEN. GRAHAM: Yeah. I think what I need to do now, as someone who fought hard against President-Elect Obama and lost, is do everything I can to help him be a good commander in chief.
As to the picks, Secretary Gates is a great choice. He led us through some difficult times in Iraq, and if Iraq had become a failed state, we would be talking about a lot more on this show than just Pakistan and India. We'd be talking about a region in chaos.
So Gates understood -- understands the need for the surge. He understood how it worked, and I think he's a great choice.
Jim Jones, known him for a long time. Former NATO commander. He opposed the surge early on, but he's a four-star general with a lot of national security knowledge.
Senator Clinton is a friend, is known throughout the world. Very smart. A little harder line than Senator Obama took during the campaign.
The one thing I would say to President-Elect Obama, you've got great people around you, but listen to General Petraeus.
MR. WALLACE: Who, of course, was the architect of the surge and now is the CENTCOM commander.
Senator McCaskill, back in 2007, you were very critical of Defense Secretary Gates, as he began to surge troops into Iraq. Why is he now the right man to pull troops out of Iraq?
SEN. MCCASKILL: Well, first of all, the SOFA agreement that has been executed --
MR. WALLACE: Yeah, we should say that's the status of forces agreement that allows U.S. troops to stay in Iraq.
SEN. MCCASKILL: Exactly. But the important part about the SOFA agreement is it embraces the kind of timetable that Barack Obama made a foundation of his campaign.
And let me say this about Secretary Gates: Even though there may have been times I disagreed with him, and maybe Barack Obama disagreed with him, this is a man who clearly holds the highest level of the military accountable for mistakes, which has been very impressive to all of us. He has solid relationships on both sides of the aisle.
And what these picks say about Barack Obama is that the kind of change that he's embracing is that you don't just pick the people who were on your side during a campaign; you pick the best you can find.
That's an important change for Washington. In the old days, only the people who supported the winning candidate were ever selected for important members of the Cabinet.
Clearly, what he is showing America is he wants the best and the brightest, and he doesn't care about their political stripes.
MR. WALLACE: But, Senator McCaskill, are you concerned because Bob Gates has been very open about the fact -- and yes, the status of forces agreement says that all the troops have to be out by 2011.
But Mr. Obama's timetable is much quicker than that. It's in --middle of 2010. And he wants a firm deadline for pulling them out. Bob Gates has talked about doing it based on conditions.
Are you satisfied that Secretary Gates will follow Barack Obama's orders?
SEN. MCCASKILL: Absolutely. And by the way, the SOFA agreement says also that the troops need to be out of major populated areas in 2009.
So this is really quite an agreement, from an administration that had steadfastly maintained that no timetable was ever going to be put in place.
This is clearly a timetable. The Iraqi people have demanded it. The Iraqi government has accepted it and we have accepted it. And now we've got to execute it.
And we all have confidence that if Senator Obama names Secretary Gates this week, that he is the man that has the confidence of the military and can execute it well.
MR. WALLACE: Looking at it from the other point of view, Senator Graham, are you convinced that Bob Gates will follow orders and has -- and how do you understand -- why would he agree to execute a timetable that he has opposed for years?
SEN. GRAHAM: Well, it's my hope that by picking Gates that President-Elect Obama understands that you have someone who has seen Iraq through difficult times.
And quite frankly, the campaign is over, but we would not have this agreement without the surge. In January of 2007, Iraq was in chaos. It was the addition of troops, called the surge, over time, that brought about political stability.
There is -- disagreement --
MR. WALLACE: I know, but I'm talking about the next year and a half.
SEN. GRAHAM: Well, here's what I'm saying. I think President- Elect Obama has seen in Secretary Gates someone who allowed the commanders to come up with a new strategy to get us to stability.
The goal is to leave where we're more (superior ?), not less. And I am hopeful, by picking Secretary Gates, that he will listen to him, Petraeus and Odierno, as to how we get out of Iraq.
We've gotten an agreement that says 2011. There's a likelihood we'll renegotiate to have some footprint past 2011. Even President- Elect Obama mentioned that.
MR. WALLACE: So you see it as a --
SEN. GRAHAM: So picking him and listening are two different things. I hope the pick is an acknowledgement that the man that he picked saved Iraq from chaos, and he will listen to this man and his team as he tries to get us out of Iraq.
MR. WALLACE: So you're suggesting that the pick of Gates might mean that Obama would reconsider his deadline?
SEN. GRAHAM: Well, the point -- I think it means he acknowledges that he was successful in turning Iraq around from a failed state to a stable state. I hope he will listen to the commanders and Secretary Gates and get our troops out in a way that we leave behind an Iraq that's aligned with us in the greater war on terror.
History will judge us not on the day we all left, but by what we left behind. And I think Bob Gates understands that better than anybody I've met.
So I want to applaud President-Elect Obama for these picks. These are good people. But it's one thing to pick them; it's another thing to listen to them. I think he's going to do both. At least I hope he will.
MR. WALLACE: And Senator McCaskill, I guess the question a lot of people are going to be asking now is, is Bob Gates going to be listening to President Obama, or is President Obama going to be listening to Bob Gates?
SEN. MCCASKILL: Well, I think, obviously, Barack Obama is going to set the policy. But clearly, he's going to listen to different views.
If you look at -- whether it's his economic team or whether it's the conversations we've had about the potential national security team, we're talking about a variety of opinions. We're talking about different kinds of backgrounds, different kinds of political alliances.
This is someone who really does lead by listening to different points of view and finding the best course forward. He is not afraid to be challenged by people around him. He wants to be challenged, and that's how he finds his way to the strongest policy for the Americans.
I think that his listening ability is shown by the way he is picking his Cabinet, and I think America should be very proud of that.
MR. WALLACE: Senators, we've got less than three minutes left and I want to talk about one other area.
Senator Graham, the Big Three automakers are supposed to come back this week with a plan, a better plan as to how they would spend $25 billion in a government bailout.
You've got BMW making cars in South Carolina. Is there --
SEN. GRAHAM: Very good deals this summer --
MR. WALLACE: Say again?
SEN. GRAHAM: (Inaudible) -- very good deals --
MR. WALLACE: Yeah? Well, I'm glad to hear that.
Is there anything that U.S. car companies could say in expressing a plan that could convince you to vote for giving them billions of dollars in taxpayers' money, when BMW is going to get nothin'?
SEN. GRAHAM: To be honest with you, no. I don't believe this is a good idea, to take $25 billion and give it to the three major car companies, with -- which I think have a business plan that's doomed to fail.
I think they either need to consolidate, go into bankruptcy, come out stronger. But at the end of the day, I -- what do I know about running a car company?
The idea that you would take three failed car companies, bring it to 535 members of Congress and let us pass judgment on it doesn't make a lot of sense to me.
I don't know how to run a car company, but I do know that the model they've created will not sustain itself in a global economy. And that model needs to change, and I shouldn't be the one having to figure out how to do it.
They need to do it in the private sector.
MR. WALLACE: Senator McCaskill, I want you to weigh in on this. What do you need to see from the Big Three? And give us the kind of specifics -- not just we need to see a plan -- the kind of specifics you need to see that would convince you to vote for this bailout.
SEN. MCCASKILL: Well, we obviously have to see cash flow. We have to know what the financials are internally, particularly Chrysler, since it's a private company.
We need to understand what this money is going to be used for and why it makes sense for the American people to invest in these companies. I've got no problem with investing in American manufacturing, as long as it's a good investment.
And we need to behave like a bank, and we need to make sure that we get all those internal financials and that we feel comfortable that this is a good investment for the American taxpayer.
I'll tell you, I just went out and bought a new American car this week. I'm not sure how many Americans would be excited about buying a car from a company in bankruptcy. But I'll tell you, I bought a new hybrid Tahoe, Chevy Tahoe, and it's a terrific car.
And what America needs to do is take a deep breath and say shouldn't we be buying American products right now? And I hope a lot of people in America -- we build a lot of good American cars in Missouri. A lot of jobs are at stake in my home state.
I hope that a lot of people think about Santa Claus and American cars this year.
MR. WALLACE: I just want to say, first of all, I'd like a Christmas present from you, Senator McCaskill --
SEN. MCCASKILL: (Laughs.)
MR. WALLACE: -- and secondly, that Chevy Tahoe and BMW approved this message.
Senator Graham, Senator McCaskill, we want to thank you both so much for joining us this holiday weekend.
It's always a pleasure, and both of you, please come back.
SEN. GRAHAM: Thank you.
SEN. MCCASKILL: Thank you.