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SEN. LINDSEY GRAHAM, R-S.C.: Thank you.
SEN. CLAIRE MCCASKILL, D-MO.: Thanks, Chris.
WALLACE: Let's start with Korea. The U.S. and South Korea began naval exercises today in the Yellow Sea, ignoring protests from both North Korea and China. You are both members of the Senate Arms Services Committee.
How should the U.S. deal with the growing threat of North Korea, from North Korea? And how should we respond to China's new call for emergency talks?
Senator Graham, why don't you start?
GRAHAM: Well, number one, you go forward with the exercises. You don't flinch. You know, this is a very unstable regime who stays in power through fear and intimidation. And there'll come a day where the people in North Korea are so frustrated they will act.
But what I worry about is South Korea. I worry about this democracy that we support in South Korea. How much more will they take? China has a chance to change the feature of the Korean peninsula. I'm looking at China to step up their game against North Korea and try to get -- bring them in the fold of a peaceful nation.
So I think we should push China hard and keep the sanctions on North Korea.
WALLACE: Senator McCaskill, really, the same questions to you. How should we deal with North Korea? And you know, China plays this game where they say, "Oh, let's have these talks," but they never really put any pressure on North Korea.
WALLACE: Is it time to give up, Senator McCaskill, on China ever restraining the regime in Pyongyang?
MCCASKILL: No, I don't think so. I mean, China obviously borders on this country, and I think China calling for a resuming of the six-party talks is important. Typically, we've been, you know, wanting six-party talks and China has not been as enthusiastic, so I think that's a good sign.
I agree with Lindsey. We need to continue the exercises. We need to take a very strong stand. This is brazen and it's belligerent and it's something that I believe that all of those six countries -- all of the people in the six-party talks need to get to work on, including Russia, I might add, which is why the START treaty is also important here.
WALLACE: Well, that brings me in to my next subject, which is kind of complicated, but Wikileaks. The Wikileaks Web site...
WALLACE: ... is expected to engage in another massive document dump, this time of State Department cables, within the next 24 hours.
Senator Graham, there is speculation that among the classified documents that are going to be released are embarrassing assessments of Russian leaders, possibly secrets from negotiations with the Russians on arms control.
Really, two questions. One, what do you make of this latest Wikileaks document dump? And secondly, what impact could it -- if it does have this kind of information about the Russians and arms control negotiations, what information could it -- or impact could it have on ratification of the START treaty?
GRAHAM: Well, one, leaking the material is deplorable. I agree with the Pentagon's assessment that people at Wikileaks could have blood on their hands. How they affect START negotiations, I really don't know.
I do know this, that it would be good for the United States and Russia to enter into the START treaty if it is a good treaty. The question for me -- are we sure, are we absolutely certain, that we can proceed with missile defense development apart from the START treaty.
It is my belief you cannot allow the START treaty to interfere with the missile defense of this nation. We are at risk here from Iran, North Korea and other actors. I don't know what the cables may say, but it's just we're at war.
I mean, the world is getting dangerous by the day. And people who do this are low on the food chain as far as I'm concerned. If you can prosecute them, let's try.WALLACE: Well, you talk -- you talk about missile defense. I mean, yes, there is some language in the preamble which...
WALLACE: ... is non-binding.
WALLACE: But the administration says that doesn't in any way bind the U.S. And you had all these Republican wise men like Henry Kissinger and former secretary of state Baker come and say that they think...
WALLACE: ... START's important. Why doesn't that persuade you?
GRAHAM: Well, Jon Kyl is a wise man, and he has brought up a very good point. The preamble to the START treaty negotiated with Ellen Tauscher and the Russians indicates that the Russians could withdrawal from the treaty if we develop the fourth stage of missile defense.
Here's a simple question. Are the Russians looking at that preamble as a provision that prevents us from developing strategic missile defense systems? If it -- if it's going to be interpreted by the Russians that way, I need to know before I vote.
If the Russians says -- say that they will withdraw from the treaty if we develop strategic missile defense systems, I need to know that.If they that it doesn't mean that, then I think we're a lot closer to the treaty being enacted.
WALLACE: Senator McCaskill, I got, I guess, the two questions for you, one about the Wikileaks dump, and secondly about the new START treaty.
MCCASKILL: Well, you know, Lindsey's right. The people who are leaking these documents need to do a gut check about their patriotism. And I think they're enjoying the attention they're getting. But frankly, it's coming at a very high price in terms of protecting our men and women in uniform...
MCCASKILL: ... national security. And I hope that we can figure out where this is coming from and go after them with the force of law.
The second thing about the START treaty -- you know, this is really amazing to me. And you know, Lindsey Graham is a responsible senator who doesn't play these games. But there's some game-playing going on with the START treaty, and it's all about politics and it's all about trying to damage the president of the United States.
And this is a moment where we need to set that aside and look at what really this is. This is a treaty that's supported by our military. This is a treaty that's supported by our allies. This is a treaty that's supported by secretaries of state from both President Bushes, Henry Kissinger, Jim Baker, Colin Powell, along with almost every expert in the world, in terms of keeping our nation safe from strategic nuclear weapons.
We've now gone months without any verification of loose nukes. Look at Dick Lugar, who I think -- instead of playing politics and hiding behind the skirts of Jon Kyl, I hope that the Republicans look at Richard Lugar, the ranking member of the Foreign Relations Committee, who has said unequivocally, "We need to do this START treaty."
And look at what's going on in the world right now with North Korea, with Iran. And as Lindsey knows, our supply lines to our men and women in Afghanistan -- this treaty is important because our relationship with Russia is important so we can move supplies to our men and women in Afghanistan.
MCCASKILL: I just think it's time for us to do what we've always done...
GRAHAM: Can I...
MCCASKILL: ... in this country...
WALLACE: Yeah, real quickly, Senator.
MCCASKILL: ... and do this in a bipartisan way.
WALLACE: Senator Graham, real quickly, and then I've got...
GRAHAM: Well, can...
WALLACE: ... to move on to another subject.
GRAHAM: Well, here's the question. Does the preamble to the START treaty allow the Russians to opt out of the treaty if we develop the fourth stage of missile defense, as our Pentagon has said they want to do?
MCCASKILL: Absolutely not. The preamble is not binding. Everyone knows it's not binding. But there's all kinds of posturing...
GRAHAM: The Russians say...
MCCASKILL: ... that goes on around the treaty.
GRAHAM: ... that it is. The Russians say...
MCCASKILL: Well, that -- you know, that's just not -- first of all -- first of all, we absolutely went to NATO after this treaty had been inked and all of our allies signed the agreement to continue with missile defense. I can't find anybody -- I can't find anybody in any document anywhere that's saying that somehow that preamble has any...
MCCASKILL: ... impact. We are moving ahead with this missile defense, period.
WALLACE: ... with all due respect, we're not going to solve...
GRAHAM: Give me a statement from the Russians...
WALLACE: ... this here, and I want to...
MCCASKILL: Missile defense is going to happen.
GRAHAM: ... saying what you did...
WALLACE: Guys, if I can...
GRAHAM: ... what you just said.
WALLACE: ... move on to another subject, because I know this is something particularly you, Senator Graham, want to talk about, and that's about terror detainees and how we handle them.
Senator Graham, we had Secretary of State Clinton on "Fox News Sunday" last week. And despite the fact that Ahmed Ghailani, the alleged co-conspirator -- well, I guess he's now been convicted in the case of the bombings of the U.S. embassies in Africa.
Although he was convicted on one count, he was acquitted on all the other 284 counts. Despite all of that, here's what Secretary Clinton said last week about the handling of terror detainees in federal civilian trials. Let's watch.
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SECRETARY OF STATE HILLARY CLINTON: When you look at the success record in civilian courts of convicting, sentencing, detaining in maximum security prisons by the civilian courts, it surpasses what has been accomplished in the military commissions.
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WALLACE: Senator Graham, what do you make of Secretary Clinton's argument? And are you going to take action -- I know you have an amendment out there. Are you going to take action to block civilian trials especially of the non -- of the 9/11 conspirators?
GRAHAM: I believe in all-of-the-above approach to terrorism trials. There's a place for Article III civilian courts in some cases, like the Christmas Day bomber, a guy caught fresh off the plane, probably low-level Al Qaida operative.
I will do everything in my power to make sure Khalid Sheikh Mohammed and the co-conspirators of 9/11 who attacked our country nine years ago never see a civilian court. I think it is a big mistake to criminalize the war, to take someone you've held under the law of war as an enemy combatant for six or seven years, then put them in civilian court. It is a disaster waiting to happen.
I believe I got the votes to block it. I don't think Khalid Sheikh Mohammed will ever get congressional approval to see a civilian court. He should be tried at Guantanamo Bay. He should be tried now. He was ready to plead guilty before the Obama administration stopped the trial. We should have him in a military commission trial beginning Monday and get this case behind us.
WALLACE: Senator McCaskill, at various points you have supported closing Guantanamo and moving all of the prisoners from Guantanamo to U.S. prisons. In the wake of the Ghailani verdict, in the wake of what you just heard from Senator Graham on Khalid Sheikh Mohammed, isn't that idea dead?
MCCASKILL: I think -- I think that Lindsey and I both have spent time as prosecutors, and he's right, all of the above needs to be available. We need to have every kind of trial available. And each case should be dictated by the facts, the evidence and the circumstances.
I agree with him that the very highest level operatives of 9/11 should be -- those trials should be in a military setting. But that doesn't mean that the civilian courts should not be available, as Lindsey has indicated, in some instances.
So I think this has to be done on a case-by-case basis. And I think largely Senator Graham has done some yeoman's work trying to move us to upgrading our military commission trials and to working in a reasonable way to make sure.
And here's what the president, I know, is most concerned about, making sure that none of these terrorists ever see the light of day.
WALLACE: Let's move on to another big subject. As I say, this is going to be quite a week in Washington. Your Senate Arms Services Committee is going to hold a series of hearings this week on the question of whether or not to repeal "don't ask, don't tell."
Senator McCaskill, the Pentagon will formally release at your hearings this study which reportedly says that most military troops do not object to repeal of the policy. And yet Senator Graham and Senator McCain are saying they want another study. Are they in the process of moving the goal line?
MCCASKILL: Well, I don't know. I do know this, that gay members of the military have served for decades, and there hasn't been a problem with our military being the finest in the world.
The question is can they serve with integrity. And I think our military is the kind of organization that wants to make sure that everyone can serve with integrity. So I'm looking forward to seeing the study. I'm looking forward to seeing the results of the study.
And I think that we should move forward to make sure that any person who stands up and says, "I'm willing to die for our country" can do so with honor.
WALLACE: Senator Graham, the Pentagon has been studying this issue for months. The secretary of defense and the chairman of the Joint Chiefs both say they favor repeal. Why isn't that enough?
GRAHAM: Well, there are service chiefs who object to repeal, particularly the Marine Corps. And the question that was asked of our military members is how would you implement "don't ask, don't tell" once it's repealed. They didn't ask the question, "Should it be repealed?"
This is a political promise made by Senator Obama when he was running for president. There is no groundswell of opposition to "don't ask, don't tell" coming from our military. This is all politics.
I don't believe there's anywhere near the votes to repeal "don't ask, don't tell" on the Republican side. I think we'll be united in the lame duck. And the study I would be looking for is asking military members should it be repealed, not how to implement it once you as a politician decide to repeal it.
So I think in a lame duck setting, "don't ask, don't tell" is not going anywhere.
WALLACE: Let's turn to domestic politics. The president is going to be meeting with congressional leaders of both parties on Tuesday at the White House. This is the first meeting since the midterm elections. And they're going to discuss a number of issues, and let's go through a couple of them.
Senator McCaskill, would you support a temporary extension for several years of the Bush tax cuts both for the middle class and for those making more than $250,000 a year?
MCCASKILL: Well, I think we should draw the line in the sand for millionaires. Honestly, with all the talk and the righteous indignation about the deficit, are we really going to hold up tax cuts for all of America just for the millionaires? And I think that's where we should draw the line.
Our deficit is serious. Anybody who believes that that small tax differential for militaries is going to make a big difference on job creation hasn't been paying attention. There's many things we can do that's much more stimulative to the economy than taking care of the millionaires.
And by the way, we've done a net tax cut of $300 billion in the last 18 months, most focused on the middle class and small businesses, and that's where we need to keep our focus.
WALLACE: So let me just make sure, real quickly, I understand. What you're saying is that you would back off the idea of making the cutoff point $250,000. You say extend the Bush tax cuts for everyone who's making less than a million dollars a year?
MCCASKILL: That's what I think is the right approach. That's the approach I'm going to be working for.
I can't speak for the rest of my caucus. I certainly can't speak for the president of the United States. But I think it is ridiculous, with the deficit looming, that we could actually be held hostage -- the middle class could be held hostage -- by trying to get tax cuts to families, frankly, like mine and others that the last thing in the world that 3 percent differential is going to mean is more jobs.
WALLACE: Senator Graham?
GRAHAM: I'm not going to vote to increase taxes on anybody in America, millionaires included. We're in a very weak economy. If you want to make it weaker, raise taxes on anybody is a bad idea.
There will be bipartisan support in the lame duck to extend all the tax cuts for two or three years, and I think that vote will be had before the end of the year.
And if the president doesn't support that, I think he's running a risk of making the economy weaker at a time where he could help make it stronger through bipartisan support by Democrats and Republicans to extend all the tax cuts. And stop playing class warfare. Let's get the economy going.
WALLACE: All right. Meanwhile, the debt commission is going to finish its work this week. It has a December 1st deadline.
And few people, Senator Graham, expect it to get the super majority, 14 out of the 18 votes of the members of the commission, to pass...
WALLACE: ... anything. Does that mean deficit reduction is dead?
GRAHAM: Well, I want to say something positive about Claire. She said some nice things about me. She's been working with Jeff Sessions to reduce spending, I think, to 2008 levels or freeze it to last year's budget -- would save about $100 billion. I want to applaud her and Senator Sessions.
The commission probably is dead. We're not going to have a national sales tax. No Republican's going to vote for that. But I'll make a challenge on your show to any Democrat, particularly my friend Claire.Let's see if we can do anything about entitlements.
The game really is entitlement reform. Let's see if we can come up with a way to increase the age for people under 55 who are about to -- for Social Security and Medicare purposes. Let's see if we can recalculate benefits for Social Security recipients and our income levels to save Social Security from bankruptcy. That's where the game's at.
Let's see if we can do something next year on Social Security to save it from bankruptcy and get away from all this partisanship about the rich and the poor. We're all in -- we're all in this together in terms of Social Security.
WALLACE: Senator McCaskill, would you accept benefit cuts? And that was certainly one of the things that the co-chairs agreed to. Would you accept benefit cuts in entitlements?
MCCASKILL: I think we need to look at means testing, and I think we need to look for the next generation and the generation following what is the appropriate age for retirement. Do we need to tweak that slightly -- which is all we'd need to do, frankly, to make Social Security safe and secure for generations to come.
And do we really need to be buying prescription drugs for billionaires in this country with tax dollars?
GRAHAM: There you go.
MCCASKILL: Can we afford that? Can we afford that?
GRAHAM: I agree with you.
MCCASKILL: I don't know. And so I think Lindsey -- if he's willing to sit down and talk about this, I'll be there, and I'll buy the coffee.
GRAHAM: Well, let me tell you...
MCCASKILL: And let's try to figure out a way that...
GRAHAM: ... can I -- can I...
MCCASKILL: ... we can go forward that's is politically responsible.
WALLACE: But, Senator Graham, let me ask you...
GRAHAM: Can I just say just one thing, Chris?
WALLACE: Senator Graham, I'm going to give you an opportunity to respond. But I want you to...
WALLACE: ... because one of the other things -- because you're talking about what Republicans particularly want to see, which is cuts in spending. But in its report, the debt commission also said, "Let's have a formula, 3 to 1, spending cuts to tax increases."
And they were willing to -- they said there have to be some revenue increases as part of this deal. Would you accept that?
GRAHAM: Well, when you look historically, when we raise taxes, the economy slows, and we don't get any more revenue. When we cut taxes, the economy grows, and we maintain the same of revenue, generally whether or not we've raised or lowered taxes. So let's keep taxes low to create jobs. Here's what I say to upper-income Americans like me, you and Claire. Why should the government buy our prescription drugs? This is a way for people in the upper incomes to help their country become solvent without raising taxes, which kills jobs.
Let's look at my benefits when I retire. I'm going to have a military retirement. I'm going to have a congressional retirement. I'm willing to give up some Social Security because we can't afford to pay me what's promised. I'm willing to do that, and I bet you and Claire would be, too.
That's a way to get upper-income Americans to help solve our debt problems without raising taxes, which kills jobs.
WALLACE: OK. Finally, I want to talk -- and some would say we've already been doing this, but let's talk some pure politics.
Senator McCaskill, you're up for election in 2012, and I don't have to tell you Republicans say you're one of the most vulnerable Democratic senators. You're now touting your independence from President Obama.
But looking back at your record, over the last two years you voted for the stimulus. You voted for health care reform. You voted for financial regulation. So where is your independence from this president and his agenda?
MCCASKILL: I'm opposed to cap and trade. I voted against the omnibus. I voted against the second round on "cash for clunkers." I voted against a number of -- in fact, I voted against every omnibus bill. I voted against comprehensive immigration reform. There's a long list of things where I've separated.
In fact, when he was a senator, he and I didn't always vote together. My record of independence stretches back, frankly, for a long time. And I've got to make sure Missourians know about that. And I'm used to being an underdog. It's not an uncommon place to be if you're from Missouri in elections.
And so I am anticipating being an underdog in this election. And that means I'm going to have to work twice as hard, which is OK with me.
WALLACE: I mean, beyond these specific issues, is there a conceptual area in which you think this president is wrong?
MCCASKILL: Well, I think that there have been -- I think, frankly, there has been not enough focus in terms of the job creation at a point in time -- we did the stimulus. We did -- we did what has been, by the way, wildly successful, the TARP.
And especially look what's happened with General Motors. We saved "made in America" for domestic auto production. We saved thousands of jobs. We saved entire communities...
WALLACE: Yeah, but my question is where has he been...
MCCASKILL: ... because of what we did with General Motors.
WALLACE: ... where is president wrong.
MCCASKILL: I think that at the point in time that we did those big things, moving into health care at that particular time, I think, was very difficult, because the American people were just beginning to feel this economic slump.
And they were going, "Wait a minute, you guys are arguing about a lot of policy that is complicated in health care, and I'm worried that my son just lost his job and is moving back in the house, and I can't pay for my kid's college." I think that many of those things didn't get the focus they should have at that point in time.
WALLACE: Senator Graham, you're safely not up for re-election until 2014, but I do want to ask you about the tea party. What role do you think they'll play over the next two years? And what do you think of this talk from some, to the degree that there are leaders in the tea party, who are now saying, "Let's get into social issues, not just fiscal issues?"
GRAHAM: Well, I think every American should be involved in issues that matter to people. And the tea party can be hugely helpful. I talked to Rand Paul and Mike Lee about adjusting the age on entitlements and about recalculating benefits, and I was very pleased with the reception I had. So these are two new members of Congress that I think are serious about getting our fiscal house in order.
If the tea party would get behind adjusting the age for Social Security and Medicare recipients in the future, recalculating benefits based on income, a means test, they would have done the country a great service. But from this discussion, the one thing I can tell you is not going to happen, the DREAM Act.
She's talking about voting against comprehensive immigration reform. I support it done right. But if we bring up the DREAM Act in the lame duck, that's going nowhere, because why would you give legal citizenship to 2 million people without securing the border first?
WALLACE: Senators, we're going to have to leave it there. I said we were going to give you a workout, and we did. We want to thank you both for giving us your insight into a number of issues you're facing here in Washington. Enjoy the rest of your holiday weekend.
GRAHAM: Thank you.
MCCASKILL: Thank you.
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