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MR. WALLACE: I'm Chris Wallace. Israeli troops, using overwhelming force, strike deep into Gaza. We'll have the latest next on "FOX News Sunday."

(Intro music plays.)

Congress heads back to Washington and the economy is job one. We'll find out about the Democrats' massive stimulus plan and what's ahead for the first 100 days of the new administration when we talk with House Majority Leader Steny Hoyer.

Then, the 41st president of the United States, George H.W. Bush, sits down for an exclusive interview. We'll ask the former commander in chief about his son's eight years in office, what he thinks of Barack Obama, and what he calls the last big event of his life. George H.W. Bush, only on "FOX News Sunday."

Plus, the embattled governor of Illinois picks a Senate replacement for Barack Obama. But will Mr. Burris make it to Washington? We'll ask our Sunday Regulars, Brit Hume, Mara Liasson, Bill Kristol, and Juan Williams.

All right now on "FOX News Sunday."

(Intro music ends.)

And hello again from FOX News in Washington.

Israel has launched a ground war deep inside Gaza, dividing the area and surrounding the largest city. Meanwhile, the U.S. has blocked approval of a U.N. Security Council statement calling for an immediate cease-fire between Israel and Hamas.

Joining us now is FOX News correspondent David Lee Miller on the Israeli-Gaza border. And David, what's the latest?

MR. MILLER: Well, it does appear that this ground incursion, Chris, is making a difference. The head of Israel's security service, the Shin Bet, told the weekly Cabinet meeting earlier today that Hamas appears to be softening its position when it comes to a cease-fire.

Meanwhile, though, the Israeli military continues to hammer Gaza, not just from the land, but from the sea and air as well. As I speak, you may hear artillery shells in the background.

They have now effectively sliced the main roadway in Gaza into three different chunks, making it almost impossible for anyone, including, of course, the militants, to travel from north to south.

And although Gaza City is effectively cut off from the rest of the strip, it is highly unlikely that Israeli forces are going to move into Gaza City. That's because it is so densely packed with civilians and extremely dangerous there to operate.

As for the casualties, so far 31 Israelis have been injured -- three of them, we are told, seriously. Twenty-five Palestinians have been killed. We are told that 10 of them are militants; the rest are civilians.

The military says that Hamas has taken a serious pounding, but nevertheless they still have some 2,000 rockets in storage, and today alone at least 30 of them were fired. Almost half were the Grad??? Style rockets; those are the long-range rockets that have been smuggled into Gaza from Iran and China.

And as for diplomacy, whatever is taking place behind the scenes, there's still a great deal of fiery rhetoric. Gaza is still dangerous for Israelis, Hamas saying that it is going to turn it into their graveyard.

Reporting along the Israeli-Gaza border, David Lee Miller, FOX News.

MR. WALLACE: David, thanks for that report.

Here in Washington, members of the Congress return to work this week, and we -- their top priority is passing a huge spending package to jump-start the economy.

Joining us to discuss that and the rest of the Democratic agenda is House Majority Leader Steny Hoyer.

Happy New Year, Congressman, and welcome back to "FOX News Sunday."

REP. HOYER: Thank you, Chris. Happy New Year to you.

MR. WALLACE: President-Elect Obama comes here to Capitol Hill tomorrow to meet with congressional leaders of both parties. How quickly can Congress get this economic stimulus package through and to Mr. Obama's desk?

REP. HOYER: Well, I think we have two criteria: do it as quickly as possible, but do it right and do it so the American people know what we're doing, do it so that members of Congress are confident of the action that we're taking.

So those are the two criteria -- do it as quickly as possible, but do it right. I think that time frame is, hopefully, certainly by the end of the month.

MR. WALLACE: Well, let's talk more specifically about that.

The Obama team is talking about a package of up to $775 billion. Is that your upper limit? Because there's talk that some House Democrats might want to make it even bigger -- closer to a trillion dollars.

REP. HOYER: Well, I think we've been talking in that neighborhood. And I'm not going to set a figure on it, Chris, but clearly it needs to be very substantial.

Every economist, from right to left, Republican, Democrat, advises that it has to be a very substantial package if, in fact, we're going to accomplish the objective -- which is, of course, to stabilize the economy and try to start bringing it back.

MR. WALLACE: Now, there are reports that House Democrats may push for a vote on this not this week, but the next week. Is that something that you have in mind?

REP. HOYER: We had talked about that. I think that's probably going to slip. It's probably going to slip because this has been a complicated effort, a cooperative effort between the Congress and the incoming administration.

And, again, we want to do this right. We want to have people know what we're doing, and we want to make sure that we can accomplish the objective as we see --

MR. WALLACE: So let me -- give me a little bit of a timetable.


MR. WALLACE: And I'm not going to -- obviously, you don't know exactly what's going to happen.

Do you think that the House can pass this before Inauguration Day?

REP. HOYER: Chris, I doubt that, frankly. In talking to Chairman Obey this week, it's going to be very difficult to get the package put together that early so that it can have sufficient time to be reviewed and then sufficient time to be debated and passed.

But we certainly want to see this package passed through the House of Representatives no later than the end of this month, get it over to the Senate and have it to the president before we break for the presidential break.

MR. WALLACE: And that's mid-February.

REP. HOYER: Early February, yeah.

MR. WALLACE: So you're talking about this going well -- I mean, well into February before you actually --

REP. HOYER: We're going to move quickly. We're going to move as quickly as possible, given our responsibilities to make sure that we're passing a package that will work.

MR. WALLACE: Your counterpart, House Republican Leader John Boehner, has laid down what he believes should be several markers for the way that this is handled. And let's put them up on the screen:

There should be public hearings; the plan should be available for the public to review online for one week; and there should be no special interest earmarks.

Congressman Hoyer, are you willing to agree to all of those?

REP. HOYER: Well, it's not a question of agreement. I think all of those are objectives that we'd like to attain. We've all talked about that this is not a bill for special interest earmarks or add- ons.

This is a bill to try to create jobs quickly and to invest for long-term economic development and recovery. So this is both a recovery package and an investment package for the future.

So the criteria that Mr. Boehner puts forward are certainly good criterias, and we hope to meet those.

MR. WALLACE: Public hearings?

REP. HOYER: I'm for public hearings and I hope we're going to have public hearings.

But let me say this, which Mr. Boehner ignores. We've had over 20 public hearings since October on this package -- not the package that's going to be ultimately put together, but on the elements that are going into this package. So we've had 20 -- over 20 public hearings in five or six different committees.

MR. WALLACE: Let's talk about this question of earmarks, because there is talk that some of the House committees have already passed some of this. In fact, the House passed a big spending package that didn't -- this fall -- which didn't get through the Senate.

Are you going to give the Obama team an informal veto, so that -- because everybody's idea of an earmark is different -- so that if you want to pass something and the Obama team says no, no, that would be an earmark, you're going to take it out of the bill?

REP. HOYER: Chris, it is our intention, the leadership -- the speaker and myself, Mr. Obey and others -- that we do not have a bill on the floor that has specific items. Money's going to be distributed largely on a formula basis, investing in the future and investing in short-term job creation. This is not a bill that we want to see loaded up with earmarks, and that's not our intent.

And we -- in terms of your question about will we give an informal veto to the Obama administration, we are in, and have been over the last few months since the election, extensive discussions with the Obama president-elect.

But we're not going to give informal vetoes, but in the course of discussions, obviously, both parties say this we can do and this we can't do.

MR. WALLACE: Let's discuss the rest of your agenda. There's talk that you want to move quickly on what's called low-hanging fruit, to pass some measures that could get bipartisan support and move through Congress quickly: expansion of the state children's health program, or SCHIP.

REP. HOYER: We're looking at -- we passed that bill, as you know, through the House handily. It passed through the Senate with two-thirds majority and was vetoed by the president. We think it's critical to move quickly on ensuring that children in this country have availability of health care.

So yes, that's going to be an early bill for us. I'm not going to put a time frame on it, but I expect to see that bill early.

There are some other things, obviously, we have to do. We're going to complete the '08-'09 appropriations process. That needs to be done early. We're going to address the Lilly Ledbetter and pay equity issues --

MR. WALLACE: That's to give women more time to sue for pay equity.

REP. HOYER: That's correct, so that women are not precluded, or others are not precluded from recovering damages simply because they don't know what their fellow employees are making, and that they're being discriminated against. When they find out, they ought to be able to have the opportunity to get redress of that grievance.

MR. WALLACE: Big labor. A top priority is what's called union card check, and that would be eliminating the right to a secret ballot in determining whether or not you're going to organize, unionize a working place. (Chuckles.) I love the way that you're smiling already. Are you going to move on that in the first month?

REP. HOYER: I'm smiling because of the way you phrased it. It's the Free Choice Act, of course. And what it does is --

MR. WALLACE: Well, union card check, free choice. Both sides have their euphemisms.

REP. HOYER: Of course. (Chuckles.) And you used one side. That's what I was smiling at, Chris.

MR. WALLACE: And you used the other, okay.

REP. HOYER: (Laughs.

) Well, my point being that we believe that one of the problems that has existed in America is that working people have had a very, very difficult time in getting represented by unions in the workplace. The workplace has resisted that; the NLRB has not been very vigorous in assuring the lack of unfair labor practice.

So we believe that employees, if over 50 percent of them sign and say we want to be represented by a union, they ought to be able to be represented by a union.

Let me say that many, many employers currently, under existing law, recognize such signatures right now and start to bargain and have a union --

MR. WALLACE: Whatever you call it, Congressman, are you going to pass it in the first month?

REP. HOYER: I don't know about the first month, but we're going to pass it early.

MR. WALLACE: You had talked about -- when we last talked about this in November, you talked the possibility of a compromise that would recognize the fact that there should not be unreasonable delays in giving an election, but on the other hand, maybe not taking away the secret ballot from workers in a company. Is there a compromise out there, or are you prepared to take away the secret ballot?

REP. HOYER: Again, let me stress, Chris, nobody's going to take away the secret ballot. The employees currently have and will have the opportunity to opt for a secret ballot.

They don't have to sign the card. They can say, look, we'll have an election and we may vote, but they have that choice right now and they will continue to have that choice.

MR. WALLACE: But you want to pass the bill -- just to be clear here -- that the -- that unions, that labor, AFL-CIO is talking about, the Employee Free Choice Act, which would create a one-step system, a public vote on whether or not to unionize?

REP. HOYER: Well, a public vote, you mean a signing of the card which says I want the union to represent me?

MR. WALLACE: Yes. Right.

REP. HOYER: What I have said, and I said on your program and will reiterate that that bill that passed the House handily is certainly going to be the base bill. Will there be discussions? There may well be discussions.

And again, I want to stress nobody is precluding having a secret ballot. What we are saying is that an alternative route will be available, and if employees choose to sign, over 50 percent of the employees sign a card saying we want to be represented by the union, that that will be effected.

MR. WALLACE: And give me a sense of the time frame. You said maybe not the first month. How soon?

REP. HOYER: Well, I think it'll be early. I think it'll be early in the year, certainly in the early spring.

Right now, obviously, our major, major focus is getting people back to work, getting our economy moving, making sure that working people can get back to work and we start creating those 3 million jobs that President-elect Obama has talked about. So that's a priority item for us.

MR. WALLACE: Let's move on to another item. Congressman Charles Rangel, chairman of the House Ways and Means Committee, which writes all the tax legislation, has come under new ethics allegations for trying to raise money from AIG, the troubled insurance giant, money to finance a government school at CCNY in his name, at a time when the company had business before his committee.

Now, Rangel has already come under ethical fire, and in fact the Ethics Committee is investigating. Why, Congressman, shouldn't he step down pending that investigation, with all of these charges against him (piling ?)?

REP. HOYER: Well, I think that that's not going to be necessary, and we haven't asked him to do that. The Ethics Committee is -- got this matter under consideration.

The speaker has indicated that she is hopeful that the Ethics Committee will complete its work in the very near term. We were hopeful that it could do it by the end of the last Congress; that didn't happen.

But I'm sure this matter, along with the other matters that have been raised both publicly and privately will be under consideration, and we'll be receiving recommendations from the Ethics Committee, hopefully, in the near term.

MR. WALLACE: Well, let me -- you say the near term. This has been going on a long time. And I want to put up on the screen what you said last September. "There is no reason for him" -- talking about Rangel -- "to step down from his chairmanship. I think we need to find out what the facts are first."

Congressman, that was four months ago.

REP. HOYER: Well, yes, it was four months ago. There have been additional facts. We've had --

MR. WALLACE: Well, there've been more charges if you hadn't --

REP. HOYER: -- we've had Thanksgiving, we've had Christmas, and the Ethics Committee members are members of Congress focused on critically important matters. So it's not as if there hasn't been a lot to do. As I've said we've had over 20 hearings on the economic package alone.

So from that standpoint, Chris, four months, but that was November, Thanksgiving, and the Christmas holiday. So it's been kind of tough to get that work done.

MR. WALLACE: So can you give us a time line by which you're going to get a decision from the Ethics Committee as to whether these charges stand up against --

REP. HOYER: No, as you know, the work of the Ethics Committee is done in private. So I cannot give you a specific time frame.

I can tell you that both the speaker and I are very hopeful that this will be done very early on this year.

MR. WALLACE: Finally -- we've got about a minute left -- will you vote to release the second half of the $700 billion Wall Street, or financial rescue, package? And will you consider doing so, voting to release it while President Bush is still in office?

REP. HOYER: Yes, I will, personally. But I talked to Chairman Frank yesterday, and a lot of members who are all very concerned about two principal items.

First of all, I think we were all outraged that Merrill Lynch gets billions of dollars and then one of their executives goes out, after being with them three weeks, and buys a $27 million apartment on Park Avenue.

We need to make sure that we have appropriate constraints in any money that is authorized under the second tranche of the TARP.

Secondly, we need to make sure that we're focused on helping out in the mortgage area, which was the basis of this particular crisis, and the onset of this financial crisis.

MR. WALLACE: So do you think the $350 billion --

REP. HOYER: So we'll need to deal with those.

I think Chairman Frank will be bringing legislation to the floor very soon, perhaps as early as the latter part of this coming week, to address those two issues and give authority to the TARP to both give constraints, oversight, and mortgage relief.

MR. WALLACE: So real quickly, do you think this gets passed before or after President Bush leaves office?

REP. HOYER: I think it's possible to pass it before.

MR. WALLACE: Congressman Hoyer, I want to thank you so much for coming in. We did a lot of business today.

REP. HOYER: (Laughs.)

MR. WALLACE: Thanks for coming in, and please come back, sir.

REP. HOYER: Thank you.

MR. WALLACE: Up next, our interview with former President George H. W. Bush. Wait till you hear what he has to say about his son Jeb's political future. Back in a moment.


MR. WALLACE: Well, this promises to be quite a week for former President Bush. On Wednesday, his son holds a lunch at the White House for all three ex-presidents to welcome Barack Obama into their exclusive club. Then, next weekend, he'll attend the commissioning of an aircraft carrier bearing his name.

The other day we traveled to Mr. Bush's office in Houston to discuss those events, his family's future, and President-Elect Obama.

(Begin videotaped segment.)

MR. WALLACE: Mr. President, welcome back to "FOX News Sunday."

PRESIDENT GEORGE H.W. BUSH: Glad to be back.

MR. WALLACE: Next Saturday the Navy will commission the newest aircraft carrier in the fleet, the USS George H. W. Bush.

As someone who was the youngest pilot in the Navy back in 1943, who was shot down over the South Pacific and almost lost your life, what does this mean?

PRESIDENT GEORGE H.W. BUSH: Well, it's very emotional for me, and it's kind of the last big thing in my life. And it's just hard to describe it.

My daughter is -- is the sponsor of the ship, and she's the one that says, "Bring the ship alive!" and they'll come running down and then man the rails. And so that'll be an emotional moment.

It's just the -- just the vastness of this thing, and to think how far all that's come, you know, the technology of it. But this brings back a lot of memories.

I mean, my going into the Navy at a young age was probably the best thing I ever did in my life. And then now to be, you might say, rewarded -- certainly honored -- in this way is just mind-boggling. It's everything.

MR. WALLACE: I hear that you have been telling friends that this is the last big event of your life, as you just told us. Do you see it as the culmination of a life of public service?

PRESIDENT GEORGE H.W. BUSH: Well, I do. I really do. I'm going to make one more parachute jump at 85, but that's not a -- I don't see that as culminating anything.

But in terms of my own service and in terms, certainly, of a reward, naming this carrier after me is everything. Just absolutely everything.

MR. WALLACE: When you say -- put it into words. (Cross talk.)

PRESIDENT GEORGE H.W. BUSH: Well, it sums up, you know, my life. I believe very strongly in our military, and to have this vast vessel named for me, and it's just -- in itself means a lot.

And then the idea of service means a lot. And to see this crew that's going to be on this ship -- young guys, young men and young women, all serving voluntarily -- that says a lot to me.

And the idea of carrier -- carriers themselves, the importance of carriers. Used to -- people used to argue they aren't important anymore; they are. And I think this confidence that the U.S. has in building this vast vessel says that the Navy thinks they are; the Defense Department thinks they are.

So it's -- it's just hard to describe it, Chris. It's going to be a very emotional day for me.

MR. WALLACE: I'll be it is. You have -- you do -- you show your emotions, and I'll bet it'll --

PRESIDENT GEORGE H.W. BUSH: I sure do. This -- the tears'll be flowing.

MR. WALLACE: You're also, this week, having lunch at the White House with your son, President Bush, President-Elect Obama, and all the other former presidents.

If you have the opportunity to take Mr. Obama aside and talk to him from the heart, what is the key piece of advice you want to give him?

PRESIDENT GEORGE H.W. BUSH: Oh, at this juncture, it really would be gratuitous for me to be giving advice to Barack Obama. It'd be more to wish him well.

I talked to him right after -- after the election, and did -- did that then, assured him that he was my president. And I think it's more that than trying to figure out one thing or another. He'll be getting a lot of free advice, and some of it good, some of it not. But I get the feeling he can sort through that.

So I don't really think, at this age in my life, I can contribute much to his well-being in terms of governing. But if I saw something I thought was wrong, I'd like to have the feeling I could bring it up with him, just based on some experience in the past -- war and peace, Middle East, Europe, Germany.

I think one of the best things we've participated in doing, or facilitating, was the unification of Germany. And that's -- looks like it's very pacified now, and they're here to keep.

But if there's -- some problem came up of that nature and just needed some advice of an old guy, (hell ?) he -- pick up the phone and give me -- give me a holler.

MR. WALLACE: Is there any -- forget Obama, forget these times -- from your four years in the Oval Office, is there any piece of advice that you'd give any president coming into office?

PRESIDENT GEORGE H.W. BUSH: Well, I can't -- I'm sure --

MR. WALLACE: Less about the issues and more about how you -- how you handle the job and the pressures?

PRESIDENT GEORGE H.W. BUSH: Well, that's a very good question, and maybe that would come up, in that vein. But I can't -- I can't think of it.

I mean, I'd say get people around you in whom you have confidence. Get people around you in whom you are confident will not be out there talking to the press and painting -- building their own nests, you know, or --

And I think -- I think he's off to a good start in that, but he ought to be right on top of that so -- This is a tough game, as we all know, and I think he should, and will, get people around him in -- who -- he has their loyalty and to whom he can give his loyalty.

But that'll change. Something'll come up, somebody will err, something will come out of the -- unforeseen; this guy said that, he did that -- and he'll have to move quickly to straighten that out.

But I don't really think of --

MR. WALLACE: You're saying the honeymoon isn't going to last forever.

PRESIDENT GEORGE H.W. BUSH: Not forever, and I don't know how soon. He's facing such enormous problems that I don't know how long it'll last. But I think he's a good, strong guy and I think he can take it.

MR. WALLACE: I was going to ask you, what do you think of Barack Obama?

PRESIDENT GEORGE H.W. BUSH: Well, I wish I knew him better. I don't really know him. I met him; he came down here to Houston for a hurricane relief deal several years ago in the Katrina -- was it Katrina? I think it was. Yeah. And we met over here in the auditorium.

But I'm impressed with him. I was very impressed with his style on the campaign and his coolness and his articulate nature. I think he's -- he can give a sentence and it'll sound like it's been thought out by Shakespeare or something.

But I -- I started off with a very favorable impression. And after my little lunch there, with the -- with the president and two other presidents, I'll -- maybe I can fill you in more. (Laughs.)

MR. WALLACE: I look forward to that, sir.


MR. WALLACE: Your son is also making a big transition pretty soon, from president to private citizen.


MR. WALLACE: Having been through that, how tough is it, and what advice do you have for him?

PRESIDENT GEORGE H.W. BUSH: Well, it's very tough. I think it is, to actually get -- get under way as a private citizen. But it wasn't that hard for me, and I don't think it'll be that hard for him.

Your whole life style changes, because you're spoiled to death as the president. But I don't think the president has ever felt he's entitled to anything -- this comes with me; I need all these people helping me in the White House.

And so I think he'll -- I think he'll do well, and I'm sure glad he's coming home.

MR. WALLACE: I'm going to ask you about that, because you were quoted recently as saying we want to get our son home, we want to get him home from the rat race and all the unfair attacks.


MR. WALLACE: How tough has that been on him? How tough has it been on you?

PRESIDENT GEORGE H.W. BUSH: Well, I don't know about him, but it's been tough on his father and his mother. We're not very good sports about sitting around and hearing him get hammered, I think, unfairly.

Now, there are some things that fairly he deserved criticism for, but I think the idea that everything that's a problem in this country should be put on his shoulders, I don't think that's fair.

And I'm not trying to get back in the game by criticizing people -- for example, The New York Times. But --

MR. WALLACE: (Laughs.) I'm glad you're not criticizing The New York Times --

PRESIDENT GEORGE H.W. BUSH: You know, it's just -- it's just grossly unfair. But that's the game -- that game's over.

He'll come home with his head high that he ran a clean operation, having kept this country strong and free after an unprecedented-in- history attack, 9/11, and he'll have a lot to be proud of.

And he can start by his mother and father being very proud of him. And we always will be.

MR. WALLACE: You said earlier there are some things he could fairly be criticized for. Are you willing to tell me any of those?

PRESIDENT GEORGE H.W. BUSH: No. I don't need to go into that. (Laughter.) You can go back to your -- (chuckles) -- your -- what do you call it -- your Googling, and you figure out all that.


Your son spoke at the Texas A&M commencement last month, and he got quite choked up as he talked about you as a role model -- not just as a president, but also as a father and a grandfather and a husband. And then he said this:

PRESIDENT GEORGE W. BUSH: (From videotape.) Some of you will leave A&M with a degree that carries this good man's name, George Bush. I have been blessed and honored to have carried it for 62 years. (Applause.)


MR. WALLACE: That must have been --

PRESIDENT GEORGE H.W. BUSH: Very emotional and very rewarding. We're very close, and we remained close for many, many years. People don't quite get that, that we're a very close father and son. And his mother, Barbara, is as close as --

MR. WALLACE: Let me ask you about that, because you know that there's been a lot of pop psychology about you and --


MR. WALLACE: -- 43, I'll call him, in your presence. And I know you hate these questions, but I'm going to --

PRESIDENT GEORGE H.W. BUSH: Go ahead. Fire it out. It's a new year here. Shoot it.

MR. WALLACE: (Laughs.) What's the relationship?

PRESIDENT GEORGE H.W. BUSH: Like any other father and son that have a loving relationship, total confidence, one in the other. His word is good for me, to me, and I -- I -- the pride I feel is hard to quantify.

I feel unlimited pride in him and unlimited confidence in him. And it's -- it's very easy for me to sit on the sidelines doing absolutely nothing and speak -- speak up in that manner for him.

I've avoided a lot of these shows and all that stuff, trying to say, no, wait a minute, here's what the Kurds should have done or here's what the -- you know, should be happening in Germany or in Panama or something like that.

But I've tried to stay out of his way on the issues, but I'm in touch -- telephone. Last -- yesterday evening, we got home to Houston, the telephone rings. It's the president. How's Mom? How're you doin', Dad? And it's -- it'd be like any family.

And that's important, I think, and especially in times of real difficulty for our country.

MR. WALLACE: Do you think there's ever been -- and I say this, quite frankly, thinking of my father and me -- ever been a sense of competition, him with you or you with him?

PRESIDENT GEORGE H.W. BUSH: You hear it, but there isn't any such competition. And it burns me up a little bit.

When the president first came in, I thought there were some people around him were trying to -- trying to, like, you've got to establish your own persona and all that. Well, he didn't have to establish anything. We -- I've known who he was and he's known that we know that.

But I don't -- I don't think there's ever been any competition of that nature, that I'm aware of. And I don't think he's ever felt it. And we'd be the only ones to know.

But I know what you're talking about. There've been a lot stories come out speculating on that.

MR. WALLACE: Let me ask you about -- speaking of other sons, the president has been quite open in saying that he would like to see his brother Jeb run for the Senate from Florida.

What do you think of that idea?

PRESIDENT GEORGE H.W. BUSH: I think if Jeb wants to run for the Senate from Florida, he ought to do it. And he'd be an outstanding senator.

Here's a guy that really has a feel for people, the issues of Florida and nationally, and his political days ought not to be over, says his old father.

Now, if he decides they should be over, I'm all for that, too. He needs to make a living, support his wife and family, and -- but he's a good man, Chris. He's a very good, strong man.

MR. WALLACE: So in terms -- I understand you're saying it's up to him, but in terms of public service and the ability to help the country, you'd like to see him run?

PRESIDENT GEORGE H.W. BUSH: I'd like to see him run. I'd like to see him be president some day.

MR. WALLACE: Really?

PRESIDENT GEORGE H.W. BUSH: Or maybe senator, whatever. Yes, I would. I mean, right now is probably a bad time because we've had enough Bushes in there. But --

No, I would. And I think he's as qualified and as able as anyone I know in the political scene. Now, you've got to discount that he's my son. He's my son that I love.

MR. WALLACE: But you'd really want, after all you've gone through yourself and your son, to have another son go through the --

PRESIDENT GEORGE H.W. BUSH: Absolutely. Absolutely. It's about service, service to the greatest country on the face of the Earth, and the honor that goes with it.

But not just to be president. Not to be something, but to earn it and to do something that makes you worthy. And I think -- I think Jeb fits that description.

MR. WALLACE: Now, finally, when we talked about a year ago I asked you if you planned to mark your 85th birthday the way that you spent your 80th birthday, by jumping out of an airplane. And you said yes, at that time. Is that still your goal?

PRESIDENT GEORGE H.W. BUSH: Still on. it's still on. It'll be on June -- right around June 12th. As you can see, I'm hobbling down the hall with my cane. People'd say look at this old idiot; does he think he's going to go out and make a parachute jump? I am.

But I do it with the, in this instance, with the Golden Knights. All the services have good parachute teams, but I've jumped with the Golden Knights and we've told them want to do this, and they've said they're game. And you're in the arms of a great, big strong guy.

People say what about your old hip? Your old body? He -- he does all the work. He opens the 'chute. You float majestically down to Earth after the 'chute is open. And then, as you go to land, he says -- and you hear him, easy -- pick up your feet. Pick 'em up.

And I'm in his arms with my feet up, and he lands with his feet down on the ground, and walk -- we both walk away. So there's --

MR. WALLACE: Hopefully. (Laughs.)

PRESIDENT GEORGE H.W. BUSH: (Laughs.) Yeah. There's no jarring or anything like that.

MR. WALLACE: Well, I have to ask you the same question, though, finally, that I asked you a year ago. Why?

PRESIDENT GEORGE H.W. BUSH: Well, the same answer I gave you. One, just because you're an old guy, you don't need to sit around sucking your thumb, drooling in the corner. Old guys can still do stuff, and that's -- that's the main reason.

And oh, there's a thrill with it, too. When you look out that plane, 13,000 feet, even though you're strapped to a big, strong guy, and you look down there, you -- ooh, wow. You get a thrill. There's a thrill that goes --

MR. WALLACE: I don't doubt that, sir.

PRESIDENT GEORGE H.W. BUSH: -- thrill with it. And then you feel you're setting an example for old people.

And I go to China or other countries and they say, oh, are you going to make another parachute jump? Or, you've just made a parachute jump. And it brings out the fact that old people can still do interesting things. Scary things, exciting things.

MR. WALLACE: Mr. President, Happy New Year. It's a pleasure and an honor to talk with you.

PRESIDENT GEORGE H.W. BUSH: Well, thank you, Chris.

MR. WALLACE: And congratulations on the carrier.

PRESIDENT GEORGE H.W. BUSH: Well, it's really exciting, as you can tell by the emotion I feel about it.

(End videotaped segment.)

MR. WALLACE: President Bush is understandably thrilled by the aircraft carrier bearing his name. He gave me a tie like the one was wearing with little aircraft carriers on it. I am honored to wear it.

And, Mr. President, congratulations on a life that has been lived so well.

Coming up, our Panel tries to figure out what happens next in the soap opera of the Illinois governor and President-Elect Obama's Senate seat. We'll discuss, after the break.


(Videotaped segment begins.)

GOVERNOR ROD BLEGOJEVICH (D-IL): I'd like to ask everyone to do one last thing. Please don't allow the allegations against me to taint this good and honest man.

ROLAND BURRIS (Illinois Democratic Senatorial appointee.): This is an appointment done by the governor of the state. And based on that, I have no relationship with that situation.

(Videotaped segment ends.)

MR. WALLACE: That was the governor of Illinois, and his choice to fill Barack Obama's Senate seat, defending the appointment.

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

So, Brit, will Roland Burris be seated in the U.S. Senate? Should Roland Burris be seated in the U.S. Senate?

MR. HUME: I would say yes and yes, eventually. And I continue to marvel at the mess that the Democrats in Washington and in Illinois as well have got themselves into.

And does it occur to any of these Democrats, many of whom exhibited an exquisite sensitivity to the rights of imprisoned enemy combatants at Guantanamo Bay, who have been convicted of nothing, does any of them notice that -- do any of them notice that this man, Rod Blagojevich, has not even been indicted, let alone convicted, of anything? And indeed, the prosecutor's now saying he needs more time to get together an indictment?

And why does he need the more time? Well, he says he's drowning in new evidence.

Prosecutors normally don't postpone indictments because they have too much evidence. (Scattered laughter.) You can always amend an indictment, if you need to, to add any new information that comes along.

And what was the whole effort here? The whole effort was to prevent Blagojevich from making a corrupt appointment. It does not appear that he has made a corrupt appointment. He's appointed a qualified man.

And whether you would vote for him or not, he's certainly entitled and, indeed, constitutionally obligated to do what -- Blagojevich -- to do what he's done.

I don't think the Senate has any grounds for refusing to seat him, and I think in the end that that will be the way it turns out.

MR. WALLACE: Mara, let me ask you about this, because, surprise, surprise, politics has reared its ugly head in all of this.

Republicans are already making an issue about ethics and the Democrats. If the Senate Democrats were to go ahead and seat Roland Burris, won't the Republicans make hay of the -- Rod Blagojevich's man in the Senate?

MS. LIASSON: Yeah, I think they're going to make hay out of it, no matter what.

I mean, don't forget, the grounds on which the Senate Democrats are now trying to deny Burris's seat is saying that the secretary of state hasn't signed off on this yet. Now, Burris is going to court to force the secretary of state to sign on it, but it's a technicality. So they're going to scream, no matter what.

I think the cleanest way to do this would have been to follow some of the Illinois Democrats, including Senator -- then-Senator Obama and Senator Durbin's -- instincts, first instincts, which was to have a special election.

Once they realized that they might not win that, they decided that they should impeach the governor. And they're racing for time now. They want to try to delay Burris's seating so that they can impeach the government -- governor, and have the lieutenant governor, Quinn, make the appointment.

I think the only sure-fire way right now that the Senate Democrats could not seat him is to let him take a seat and then expel him with a two-thirds vote, which seems pretty hard to do. But otherwise, it's a first-class headache.

MR. WALLACE: But how do you expel a man who's done -- Roland Burris -- who's done nothing wrong?

MR. KRISTOL: You don't. I'm totally with Brit on this. We're starting the D.C. chapter of the Rod Blagojevich fan society. (Laughter.) I mean, he's done a great job of -- the man's not been indicted and not been impeached, but his appointment is somehow not to be honored?

Bill Clinton was impeached, and ended up pleading -- taking a plea bargain to, I believe, a federal crime, and everyone thought his appointments were legitimate and they were dutifully confirmed by the Senate in 1998 and 1999. So I really think the Democrats have gotten themselves, foolishly, into a hole.

And also I just think, practically speaking, the man deserves to be seated. Blagojevich is the sitting governor of Illinois who has appointed this man with no corrupt -- apparent corrupt influence, to be a senator. Let him be a senator for two years.

MR. WILLIAMS: This is the fruit of a poisoned tree, to have Burris in the U.S. Senate. Burris was not under consideration by Governor Blagojevich or anybody else for this seat until Governor Blagojevich found himself in this terrible situation.

He has since asked people like Danny Davis, the black congressman from Illinois, if he would take the seat; Davis said no. And he has now gone to Roland Burris, who's 71 years old, former controller, former attorney general of the state, but someone with no political future.

And that's who he's chosen, because of his own circumstance. Because it's exactly -- as you and Brit have said, Roland Burris has done nothing wrong. So therefore, everyone feels somewhat sympathetic for Roland Burris, but the fact is that sympathy now carries over to Rod Blagojevich.

I think that the Democrats made a terrible mistake by not agreeing to a special election. But they feared the special election because of the thought that a Republican could win. Well, now they've got themselves in a terrible (trap ?).

But here's the thing: if this is to have any meaning, any substance in terms of government efficacy and ethics, you can't have Roland Burris and this man under this taint making this appointment. It's just -- (inaudible).

MR. HUME: So why is it that he's thought to be under a taint? He's thought to be under a taint because an accusation has been made against him, not yet an indictment, by a prosecutor who --

MR. WALLACE: Made against Blagojevich, not against Burris.

MR. HUME: Against Blagojevich, by a prosecutor who, for all of his success in court, has a propensity, as we saw in the Scooter Libby case, to say things in news conferences that he ultimately chooses -- or is unable to prove in court. That is all we have. We have his say-so.

Someone was saying on the air the other day, well, we have the tapes. No, we don't have the tapes. The tapes -- all we have is quotations from the tapes by the prosecutor, Patrick Fitzgerald, and it's not at all clear that -- when we'll see them, what they'll show, what the context was, or anything.

This man is innocent until proven guilty in America, and he has a constitutional right -- indeed, an obligation -- to make this appointment. There's no basis for a special election, really. That would have to be signed into law by him. He's not going to do that.

Why --

MR. WILLIAMS: So that's --

MR. HUME: The easy way out of this is for the Democrats to quietly and immediately seat Roland Burris, and that ends the controversy.

MR. WILLIAMS: Well, you know, I --

MR. HUME: The longer they keep this up, the more this guy is an ornament to the Democrats themselves, an unattractive one at that, and the longer this goes on. It's just political stupidity.

(Cross talk.)

MR. WILLIAMS: And you (don't think it's ?) wrong when Burris and Blagojevich are an ornament for Republicans who want to point out Democratic issues and --

MR. HUME: Well, they can do that --

(Cross talk.)

MR. WILLIAMS: Okay. I think that what we've got here is racial politics, pure and simple. I think that Patrick Fitzgerald, the special prosecutor, was trying to prevent Jesse Jackson, Jr., from being embarrassed. That's why he filed that criminal complaint when he did --

MR. HUME: That's politics.

MR. WILLIAMS: Okay, it's politics, but he was just trying to be a good public servant, in his own mind, at least.

And now we have Governor Blagojevich playing racial politics by saying here are black people that I'm putting up because there are no blacks in the U.S. Senate, and why shouldn't we have these --

And -- (inaudible) -- he's now pointing a finger a Senator Reid, the Democratic leader in the Senate, and saying oh, Harry Reid didn't want to appoint not only Jesse Jackson, Jr., but he didn't want to appoint any black person to that seat -- Emil Jones and others -- but he was willing to appoint two white women.

MR. WALLACE: Now, explain why that was. And we should point out, what this is based on is the Blagojevich camp has leaked the fact that before Blagojevich was charged, that Harry Reid, the majority leader, called him up -- called Blagojevich up, and said don't appoint these blacks -- allegedly -- appoint a white person. Because?

MR. WILLIAMS: Because he thought that Danny Davis, Emil Jones, and Roland Burris and Jesse Jackson, Jr., can't win in two years and hold that seat for the Democrats. And that's why he was pointing to these two white women, Lisa Madigan and --

MR. WALLACE: And Tammy Duckworth.

MR. WILLIAMS: -- Tammy Duckworth.

But now that's become -- (inaudible). You're opposed to any black person.

MR. KRISTOL: So what about that -- (inaudible)? Can you imagine if a Republican leader, Mitch McConnell, called a governor, a Republican governor and said here are three -- two Democratic congressmen and the Democratic -- I think, what is Emil Jones, speaker of the Illinois Assembly, I think -- or president of the senate, I think -- and don't appoint those three. Appoint two white people, because we don't think the voters of Illinois are ready to elect a black from Chicago to the Senate.

Of course, the voters of Illinois elected a black from Chicago to the Senate in 2004. (Laughter.) His name was Barack Obama.

MR. WILLIAMS: (Laughs.) Yeah. Right.

MR. KRISTOL: I think there should be a little more outrage about that Harry Reid call to Governor Blagojevich --

MR. WILLIAMS: But you think it's just because they're black? Maybe it was because these are politicians who haven't succeeded at that level.

Clearly, the people of Illinois have voted for two blacks --

(Cross talk.)

MR. HUME: (Inaudible) -- Obama, when he was elected.

MR. WILLIAMS: Yeah. Exactly.

MR. WALLACE: All right. (Chuckles.) We have to take a break here. Some interesting alliances being formed here. (Laughter.) And I welcome Brit and Bill to the Rod Blagojevich fan club. You know, it may actually take up a legal defense fund.

All right, we have to take a break here, but coming up, Israel launches a ground assault in the Gaza, escalating its operation against Hamas. We'll discuss the latest developments after this quick break.


MR. WALLACE: On this in 1995, the Republican revolution took over Congress, becoming the first to be under GOP control since the 1950s. Newt Gingrich led the Party to victory with his Contract with America campaign.

Stay tuned for more from our panel.


ISRAELI DEFENSE MINISTER EHUD BARAK: (From videotape.) We are peace-seekers. We have restrained ourselves for a long time, but now is the time to do what needs to be done.

MR. WALLACE: That was Israeli Defense Minister Ehud Barak explaining Israel's decision to launch a ground assault into Gaza.

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

So, Mara, are you surprised that Israel finally, after several days of an air bombardment, decided to actually launch a ground invasion? And what are the risks and rewards here for both Israel and Hamas?

MS. LIASSON: Well, I'm not surprised, because they can't just do it from the air, as they learned in Lebanon. They say they learned a lot of lessons from that catastrophe and are going to do it right this time.

I think that the only good thing for President-elect Obama is that it's happening now instead of after January 20th. I think the bad thing for him is that he had promised a very aggressive early push, diplomatic push on the Middle East peace process, and he was going to use his kind of international honeymoon to see if he could get something done there.

I think this makes it a lot harder, unless somehow this Israeli offensive can delegitimize Hamas, which seems like a long shot. It certainly didn't work with Hezbollah in Lebanon. They actually ended up looking stronger.

But if it can do that, then I think the new Obama administration would have an opening.

MR. WALLACE: Bill, I want to pick up on the comparison to Lebanon, because as we saw with the Israeli invasion on Southern Lebanon, taking on Hezbollah two years ago, once you get in it's hard to get out, and it's very hard to get out on your own terms.

How does Israel ensure that it so degrades Hamas that they can stop the firing of those short-range missiles from Gaza into the neighboring Israeli villages?

MR. KRISTOL: Nothing is sure in war, but first of all, they haven't been fired -- it hasn't been fired across the border from Lebanon in the last two years, so even though that operation was messed up in many ways and maybe strategically didn't accomplish its objectives in that narrow sense, it has been safe in northern Israel for the last two years.

If they could accomplish that for southern Israel and stop the rocket firing, I think that would be a pretty real achievement.

Ehud Barak was not defense minister; he was a critic of the way Lebanon happened. He was a critic of the way it occurred. He's a serious military man who presumably has studied the lessons of Lebanon.

And I think the Israelis have a theory about how they can go in, take out some of the leaders of Hamas and especially destroy the tunnels which have been used to smuggle in especially these more advanced rockets from Iran, and really make it much harder for -- even if Hamas remains in control of Gaza, it'll be a more tenuous control.

Israel will have the ability to continue -- (inaudible) -- to go back in, and they may be able to pretty well suppress the ability to fire these longer-range rockets into southern Israel. And above all, they can defeat Hamas.

I think if you care about the peace process, you should want Israel to embarrass and humiliate Hamas. That's the only -- there would be no peace process if Hamas were governing Gaza. That would be the worst thing for Obama.

This is a favor for Obama, if it delegitimizes and weakens Hamas.

MR. WALLACE: But of course, that's always the problem, Juan, is how do you delegimitize? Some people would say that Israel ended up beating Hezbollah, and yet the Hezbollah leaders, Nasrallah, ended up appearing to be heroes because they had survived the Israeli attack.

Hamas could be empowered by all this.

MR. WILLIAMS: I think -- that's my theory, that by making them your enemy and legitimizing them as a real combatant, you in essence raise them up.

The challenge here, it seems to me, as we look forward towards next week and beyond, Ehud Barak said this is not going to be short, and it's not going to be easy. So what does he mean?

It seems to me you're aiming, therefore, at Israel having to occupy Gaza.

(Cross talk.)

MR. WALLACE: Well, they -- no, they explicitly say they're not going to occupy Gaza.

MR. WILLIAMS: They say they're not, but how else are you going to, in fact, stop these folks from firing these rockets?

Now, these rockets some periodically. I think it's disproportionate to -- you have 440 Palestinians dead, you have four Israelis dead. But I understand the sense of weakness and vulnerability the Israelis feel that their neighbors are firing these rockets.

They go in there, okay. And I agree with Bill. If we could get Hamas out of the picture, that would be better. If you really want peace, you cannot have people who do not acknowledge the legitimacy of Israel.

But at the same time, then, to go in there, it seems to me you have to have a plan to get out, and I don't see that they have a plan to get out. And that's why I'm talking about the possible necessity for Israel to stay there for years to come. And I think that just makes the situation all the more volatile.

(Cross talk.)

MR. KRISTOL: But look, I mean, Barak has got -- to keep expectations down and say it's going to be very difficult, because it will be --

MR. WALLACE: You're talking about Ehud Barak, not Barack Obama.

MR. KRISTOL: Ehud Barak. And it may take a very long time. I'm not sure; I think they may have --

Look, everyone has the Lebanon analogy in mind. What about when Sharon went into the West Bank in 2002? Everyone thought that was a nightmare -- (straight ?) from the radicals, it couldn't happen.

They went in and they crushed the intifada. They got out, mostly, of the West Bank. They go back in at times, when they have to. Fatah controls the West Bank, not Gaza. The Arab nations are no more anti-Israel, probably less so, than they were five or six years ago. And this could have a successful outcome.

MR. HUME: Yeah. I think the danger that Bill's referring to is that Israel stops short of finishing the job. And I think the ground offensive is a sign that Israel is determined to finish the job, that -- to as great an extent as a military operation can, that Hamas will be crushed. And perhaps Israel will have some success in eliminating and cutting off the supply of the weapons that have been fired into Israel, something like 6,000 times, or more than 6,000 times since Israel ended the occupation of Gaza.

I agree, however, that at the end of the day you have to ask this question: Can they finish the job and leave, or will they have to stay and leave Gaza once more occupied and, to whatever extent, further radicalized. That's the worry.

MR. WALLACE: All right. Let's bring some politics into this, because there is some politics in this.

All this comes against the backdrop of Israeli national elections in early February, about six weeks from now. And three key players are all running for prime minister -- Foreign Minister Tzipi Livni is running for prime minister, as is Defense Minister Ehud Barak, and Likud leader Benjamin Netanyahu.

Mara, how does the attack in Gaza play into the election and Israeli politics?

MS. LIASSON: Well, clearly, if this incursion doesn't work, it helps Netanyahu. I think that's a symbol.

MR. WALLACE: Because he's on the outside looking in.

MS. LIASSON: He's on the outside looking in, he's hawkish, he is the one who will say that this government was weak or incompetent and can't do it. Otherwise, if it's successful, I think it strengthens the hand of the two ruling parties' candidates.

MR. WALLACE: He's also the only one who opposed the pullout from Gaza in the first place, when Sharon proposed that.

MS. LIASSON: Right, but you know, I don't know if the Israeli people are really ready for another occupation of Gaza. That's something that I don't think they have the stomach for right now.


MR. KRISTOL: Yeah, and I think the U.S. role we should talk about for a second here, and the U.S. blocked a Security Council resolution last night on the grounds that it would not have created a sustainable cease-fire.

Israel can fight its own fights. They never asked for U.S. soldiers, obviously. I do think the U.S. needs to stand behind Israel in the U.N. It's really -- Europe is hopeless; they have -- they believe that there's -- (inaudible) -- moral equivalence between terrorist groups lobbing rockets into a member state of the U.N. and a member state striking back to try to remove this threat, from a territory that they withdrew from.

It's -- you can read whole news articles about this and never know that Israel withdraw from Gaza in 2005. And then Hamas launched a coup in Gaza in 2007 and took it over.

So I think the U.S. has an important role to play diplomatically in allowing Israel to weaken Hamas, which isn't -- if you care about ultimately a peace in the Middle East, this is the best thing that could happen.

MR. WALLACE: And Juan, let's go back full circle to what Mara brought up in the beginning.

What does all this do to President Obama and Secretary of State Clinton, once they're both in office, and any hopes they may have had to reinvigorate the Mid-East peace process?

MR. WILLIAMS: Well, I think for the moment, all they can do is support Israel. I think politically that's all they can do here on the home front. And internationally, I guess it's the U.N.

I think that they could possibly say to Israel listen, looking -- going forward, unless you -- you have to do something (in sort of ?) occupation, that will not allowed. If the U.S. was to say that, I guess that would then put the U.S. in the position of saying we're going to make a greater effort to control and limit what Hamas is able to do to Israel.

Now, does that mean the U.S. would go in there and act as an agent? I -- that seems to be just an invitation to madness. So I hope that's not the case. And then again, you could say to Israel you're -- you control these borders and stop the importation of goods. You know what? That is an offense to the Palestinian people.

MR. WALLACE: All right. We're going to have to end it there. Thank you, panel. See you next week.

Time now for some mail about our discussion last Sunday comparing Caroline Kennedy's qualifications to be senator with Sarah Palin's qualifications to be vice president.

Bill Offky (sp) from Lake Jackson, Texas, writes: The only comparison of Caroline Kennedy to Sarah Palin is gender. If Caroline Kennedy had anywhere near the experience and qualifications that Sarah Palin has, she would immediately be appointed to the New York Senate seat.

Well, Chris Blakely (sp), from Maumee, Ohio, has a different take: Whether you think Caroline should be named the senator from New York or not, she is a serious person and is eminently more qualified to be a U.S. senator than Sarah Palin was qualified to be the vice president.

Be sure to let us know your thoughts by e-mailing us at And we'll be right back.


MR. WALLACE: Now, this programming note. Next week we'll have an exclusive interview with President George W. Bush. Our sit-down will include someone close to the president who has never done an interview with him before. Be sure to tune in.

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


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