i'm shannon bream in for chris wallace. president obama makes bold moves on russia and israel in his final days in office. what does it mean for the incoming trump administration? >> i think israel has been treated very, very unfairly by a lot of different people. >> the vote in the united nations was about preserving the two-state solution. that's what we were standing up for. >> israel looks forward to working with president-elect trump to mitigate the damage that this resolution has done. >> today, an exclusive interview with senator tom cotton on the state of u.s./israel relations, the response to russian hacks. >> what russia has been engaged in over the last few months and years is unacceptable and the president is sending a message today to tell them to cut it out. >> and trump's pick for secretary of state. and a look ahead at some of

president-elect trump's potential first actions once he takes the oath of office. we'll break down his supreme court short list with a key advisor working with the transition. then trump's announcement of thousands of jobs coming back to the u.s. we'll get differing perspectives from austan goolsbee, a former economic advisor to president obama, and steve moore, an economic advisor to trump's presidential campaign. plus, as the new congress gets sworn in two days from now, we'll ask our sunday panel about the year ahead for trump and lawmakers on the hill. all right now on "fox news sunday." hello again and happy new year from fox news in washington. when president-elect trump takes office, a little less than three weeks from now, he'll have to deal with the fallout from a flurry of bold foreign policy moves from the white house in the waning days of the obama administration. first, rising tensions with israel after secretary of state john kerry defended the u.s. decision not to veto a u.n.

resolution condemning israeli settlements in the west bank. >> no american administration has done more for israel's security than barack obama's. >> and now new friction with russia as the obama administration reveals its punishment for what it calls interference in the u.s. election. that's where we'll begin as i'm joined here in washington by senator tom cotton of arkansas, a member of the senate armed services and intelligence committees. senator, welcome back. happy new year. >> happy new year. it's great to be on with you. >> let's start with the decision to take sanctions and actions against russia including expelling 35 operatives, closing two compounds in maryland and new york, sanctions or russian intelligence organizations, companies supporting them, individuals as well. is it enough? >> it's not enough, shannon, and it's certainly too late. vladimir putin is kgb. he always has been, he always will be. president obama has consistently looked the other way from russia's provocations and

aggressions. the dnc hack last year was just one minor item in what russia has done over the last eight years, to include things like invading and occupying crimea and supporting rebels in eastern ukraine as well as threatening nato air ships -- aircraft and ships and so forth. but what has barack obama done for eight years? in the very early years of his administration, he sent hillary clinton to push the reset button with the russian foreign minister. in the middle of his re-election campaign in 2012 he told the russian president that he would have more flexibility after the election. when mitt romney characterized russia as our number one geopolitical adversary, barack obama mocked him and said that the 1980s wanted their foreign policy back. i'm glad the president has finally realized the threat that russia poses to the united states and our interests but i wish he had recognized this eight years ago. >> russian president vladimir putin has responded. here's a bit of what he had to say. russia has reasons to respond in

kind. although we have the right to retaliate, we will not resort to irresponsible kitchen diplomacy but will plan further steps to restore russian/u.s. relations based on the paolicies of the trump administration. he invited all diplomatic children in russia to new year's and christmas parties at the kremlin. what does his response say to you? >> it's very heartwarming of president putin. i would recommend the kids not take their ipads to the kremlin. what vladimir putin needs is a sense of new boundaries. he's had free rein throughout the world over the last eight years. he needs to have a sense of boundaries and know that costs are going to be imposed if he crosses those boundaries. the administration has not drawn those boundaries and in fact they have gone farther than just being weak on russia action they have actively opposed measures to toughen up on russia. i proposed measures, for instance, that would enforce existing travel restrictions on

russian diplomats, by which i mean russian spies in the united states, that would force the government to crack down on these russian spies who are traveling all around america without the proper approvals. i got a call just weeks afoe from a senior administration official after the election, after the hacking, asking me to remove that from the bill because it would be too provocative. it's not just that the president and his administration has been weak on russia, they have actively stopped other efforts by people like me and other republicans and democrats in congress from trying to draw a firmer line. >> my understanding is you went to the white house with a concept of something more formal, putting together a number of representatives from government agencies to fight back against russian interference or coercion in our politics and what's going on here domestically. my understanding of that is that you got a response basically from the administration saying it was duplicative of what was already in place, it wasn't necessary. can you tell us more about the response you got. >> this is a second measure in the intelligence bill that the administration threatened to veto the bill over.

so in the days of the soviet you know up, the soviet union had something called active measures. they're influence operations, they're propaganda, covert activities trying to undermine western democracy. i proposed to create an interagency panel that would counteract these so-called active measures. the obama administration assured us that this was duplicative and they didn't need it. i would simply point out whatever they have in place right now must not be working given all that russia has continued to do. in fact just yesterday the administration acknowledged that russia has continued to try to hack u.s. information systems, even after barack obama reportedly told vladimir putin to, quote, cut it out. so whatever measures they have in place have not been working. i wish they wouldn't have gone to such great lengths to undermine the efforts of congress to take a tougher line on russia the last eight years. >> you mentioned a report we got from the department of homeland security and the fbi together point out credible links showing the tools and infrastructure

that intelligence operators were using to penetrate numerous systems here in the u.s. now, we got a response from president-elect trump to that saying it's time for our country to move on to pbigger and bette things. nevertheless, i will meet with leaders of the intelligence community next week in order to be updated on the facts of this situation. is that enough for you? do you think he needs to take a harder line when presented with the hard evidence that was outlined in this report? >> well, again, the hack of the dnc last year, which the intelligence community said publicly was the result of russian intelligence services or their affiliates is just one small example of russia's nefarious activities over the last eight years. now, many democrats and some of the media are trying to confuse that question, the action of the hacking, which russian intelligence services or their affiliates undertook, with the impact on the election. and unless vladimir putin hacked into hillary clinton's calendar and cancelled all of her rallies in michigan or wisconsin or cancelled her speeches where she

was going to lay out an effective agenda for the working class, that didn't have an impact on the election. it was hillary clinton's private server that had a much bigger impact along with her failure as a candidate. it's time for hillary clinton to look in the mirror rather than blaming it on vladimir putin or fake news or anything else. russia will continue to be an adversary. we need to impose firmer lines on their behavior and impose costs when they crossis allegin russia changed votes, changed tallies that would have a direct impact in deciding the presidency. i want to ask you about rex tillerson, the exxon ceo who has been nominated to be secretary of state. you've met with him. he has been criticized by those who feel he has too friendly a relationship with russia. are you convinced he can take a hard line? how do you think he's going to, or not make it through the

senate? >> i had a good conversation with rex tillerson about many of the issues that we face around the world as well as the challenges of managing the state department. i think it's a good thing when a secretary of state understands foreign leaders and understands the cultures and history of foreign peoples. i think it will help him take a firm line in defense of u.s. interests as secretary of state in the same way that he took a firm line in defense of the shareholders of exxonmobil's interests with vladimir putin when he was the ceo of exxonmobil. that's what we need. hard nosed, clear eyed, unsentimental statesmanship we haven't had the last eight years as president obama and his administration have continued to look the other way and continued to skill yat and appease adversaries like vladimir putin. >> the u.s. didn't veto or block the measure at the u.n. john kerry in defending that talked about the fact that no administration has been better to israel. he talked about a number of

times this administration has defended israel. you said this, though, about the u.n. vote. this cowardly disgraceful action cements president obama's richly deserved legacy as the most anti-israel president in american history. clearly a disconnect between the two views on the way you see his legacy. >> well, i think the last week has been a fitting punctuation mark on eight years of barack obama's presidency. first he abstained at the united nations in the same way he abstained from leadership in the world for eight years. second, he was much harsher on his allies than his adversaries. the problem that we face in the holy land is not israelites building new neighborhoods around jerusalem, it's the palestinians refuse to acknowledge israel's right to exist as a jewish state in the holy land. until they do that, there won't be a peace agreement between the two peoples. >> benjamin netanyahu reacted to secretary kerry's speech and he made a very specific allegation. here's a bit of what he said. >> we have it on absolutely

incontestable evidence that the united states organized, advanced and brought this resolution to the united nations security council. we'll share that information with the incoming administration. some of it is sensitive. it's all true. >> but you said that president obama is personally responsible for that u.n. resolution. quote, his diplomats secretly coordinated the vote. are you privy to evidence? what do you base that claim on? >> i'm not privy to what prime minister netanyahu is speaking about but anyone with an ounce of common sense knows how the real world works and the united nations security council works. senegal and malaysia don't call the shots there. if barack obama and john kerry and samantha power hadn't been speaking for months about the prospect of this resolution and had not been creating a climate inside the security council to let it come forward without firmly saying we will veto any one-sided anti-israel resolution, no country would have brought that resolution forward. it only could have been brought forward and passed with explicit

united states coordination with other members of the security council. >> very quickly, we're just about out of time. you wrote an op-ed in "the new york times" about immigration saying president-elect trump has a clear mandate to stop illegal immigration, but also to finally cut the influx of low skilled immigrants that undermines american workers. you know there are going to be those who say he didn't win the popular vote, there's not a clear mandate. but also we need to slow legal immigration? >> absolutely. illegal immigration is a real problem. that was a big issue in the campaign as well, to build a wall and to crack down on criminals and drug dealers who are here illegally, but our immigration system for too long has brought in too many unskilled and low skilled workers which has undercut wages for working americans. we need an immigration system that focuses on the well-being and the needs of american citizens. whether they can trace back to the mayflower or are brand new citizens.

we're giving out a million green cards a year, a million more temporary visas every year, that undercuts american wanges. we need to focus on ultra high-skilled immigration that fits demonstrated economic lead. >> all of those reforms are heavy lift on capitol hill so we'll be watching. senator, thank you for up time and happy new year. >> happy new year. we'll bring in our sunday group to discuss the rising tensions with israel. plus, what would you like to ask the panel about the midwest moves by the obama administration before donald trump takes office. go to facebook or twitter@foxfusesunday and we may use your question on the air.

that's what we were standing up for, israel's future as a jewish and democratic state, living side by side in peace and security with its neighbors. >> israelis do not need to be lectured about the importance of peace by foreign leaders. >> secretary of state john kerry responding to israeli criticism of the u.s. abstention from a vote condemning israeli settlement construction, saying it was in the interest of preserving the two-state solution to which israeli prime minister benjamin netanyahu expressed disappointment. it is time now for our sunday group. lisa boothe, democratic strategist julie roginsky, daniel halper and charles hurt, opinion editor for "the washington times." we're going to get to israel, but i want to start with russia. lisa, we have this response from putin saying i could respond in kind, i'm not going to. we're going to wait and see what the trump administration does. >> i think because he's waiting to see what the trump administration does because essentially these sanctions are meaningless once president obama

leaves office. i think what's really interesting here and part of the reason why we've seen donald trump react the way that he has is because this is clearly very politically motivated by president obama. even "the new york times" has timid its hat to saying that they very much question the effect of these sanctions. and i think it's very much being done to, one, delegitimatize donald trump's victory and try to box him in on russia as well and foreign policy as he comes into office. you look at the fact that russia had hacked the joint chiefs of staff, 4,000 military and civilian personnel. also the fact that china hacked -- or compromised 22 americans' security information as well as opn and what was the reaction from the president. but this was what elicited a response from president obama. i think donald trump is looking at this and thinking that it's very much political. >> daniel, does it create an issue for his nominee for secretary of state, rex tillerson, in that he's been

very vocal against sanctions saying in many cases they don't work and lobbying against them where they would affect exxon's business interests where hes is the ceo. now he'll have to answer more questions about that going into a senate confirmation hearing. >> i think you can expect democrats to request all communications between him and his company and russia for the last ten years or something extraordinary where you're going to try to get as much information out of him as possible. this is going to be a real issue going forward. i think it's not just that president obama and president trump are positioning, you can see in the response by vladimir putin and boy benjamin netanyahu in israel, you're seeing world leaders really shift their attention. they no longer take president obama seriously. they no longer -- i mean with the israel action, there are real responses, of course, with the u.n. vote but they're no longer so concerned about that. you really see them shifting their attention toward president-elect donald trump and treating him as though he is the president. it's really altering foreign

policy and really handcuffing president obama at a time when he's trying to handcuff president-elect trump. >> and to that point, we have a couple of tweets that went out from donald trump talking about israel. he said we cannot continue to let israel be treated with such total disdain and disrespect. they used to have a friend in the u.s., but not anymore. the beginning of the end was the horrible iran deal and now this, u.n.! stay strong, israel. january 20th is fast approach g approaching! the prime minister tweeted back, thank you for your warm friendship and clear-cut support for israel. charles, also with an exclamation point. >> there's a new sheriff in town without doubt. i thought your interview with senator cotton was very interesting. he did a very good job of going through all of the transgressions that vladimir putin has committed against the united states the past eight years. and the timing of this is very curious. the fact that finally the

president has his dander up enough to do something about it. i think that the sanctions have very little to do with vladimir putin or russia and they have everything to do with donald trump and trying to set up something where, you know, when donald trump comes in, is he going to reverse this? if he reverses this, how much political capital does he have to spend to do that? how much does it hurt rex tillerson? how much does that give democrats sort of a political thing to use going forward against the trump administration. >> julie, what do you make of the criticism although a lot of folks are praising it, they say it's too little too late. >> first of all, it is too little too late. tom cotton was absolutely right in what he said this morning about how lax and how belated these actions are. i also would say this is not so much the democrats are driving, this the two biggest forces on the hill driving this are senator mccain and senator graham, neither of whom is a liberal or a democrat.

it does box the president-elect in in the following way. it seems to be a bipartisan consensus that you'll have to do something much stronger than the obama administration did to retaliate against the putin regime. for the president-elect to say let's focus on other things, it's much harder to do when you have republicans and democrats, but specifically the senate chairman of the armed services committee, senator graham and senator cotton certainly, all of whom believe that these sanctions don't go far enough and you need to do something much stronger to punish putin and his inner circle. what does the president-elect do and potentially secretary of state tillerson do in response to that bipartisan pressure that's going to be put on him in january. >> i agree. and i don't mean to in any way downplay the importance of this, exempt that i wish the president had done more much earlier. but president-elect trump did make a key part of this election about this effort to work with

vladimir putin to combat terrorism. i agree that the guy is not -- he's an unsavory character and i would like it if we didn't have to do anything with him, but that was part -- that was a major part of his campaign was to do that. and if that's how he wants to focus that relationship, i don't know that that's -- it's been settled at least at the polls. >> can i say real quickly, you have the president-elect coming in saying he wants to work with vladimir putin. in 2000 george bush said i looked in his eyes, i saw his soul. you had hillary clinton with the reset. he will learn very quick loly, hope, this is a man that will exploit every weakness in order to further his own agenda economically, domestically and internationally. as a result, the faster the president-elect understands that this is not somebody you can work with to stem terrorism when he is implementing terrorism in places like syria by working with iran overseas, the faster that happens, the faster the

president-elect can get on with punishing putin. >> i want to touch on israel and what happened at the u.n. from facebook we have howell who said what possibly did the obama administration believe they could accomplish by taking this action less than a month before the newly elected president takes over. lisa? >> he's changing u.s./israeli policy essentially. that's what's happened from this u.n. resolution. it's going to be very difficult for the united states to try to reverse it. president obama is trying to leave a lasting legacy by the abstention from that vote. but i think what's deeply disturbing is secretary kerry had said during his speech that the abstention is representative of u.s. values. i think that really underscores sort of a distorted viewpoint of the obama administration and their foreign policy throughout president obama's presidency in the sense that even steny hoyer has said that the resolution tips the hand of the palestinians. so we are essentially tipping the hand of -- you look at the palestinian authority and 10% of the budget goes towards

supporting and paying terrorists and their families. the same to be said of the iran deal. lifting sanctions for iran, helping iran rebuild their economy. again, the largest state sponsor of terrorism. so i think the hamas spokesperson who is saying that they appreciate the resolution, who's praising the resolution, so i think it is deeply disturbing that president obama and this administration thinks that is representative of american values when we have repeatedly propped up and helped these countries that support terrorism around the country, but yet we turn our back on israel. we turn our back on our friend. and as benjamin netanyahu said, this was an ambush attack and he called it a declaration of war. i find that very deeply disturbing that somehow the administration thinks this is representative of american values because it is not. >> quick final word to you, daniel. >> the obama administration is not delusional enough to know this will bring about middle east peace. it is about repositioning president obama's leg aegs and repositioning the democratic

party going forward. >> and we'll talk about the democratic party with the panel when they return but we've got to take a break here. up next, who is on donald trump's short list for the supreme court and how could he reshape the judiciary with more than 100 federal court vacancies he'll inherit the minute he takes office. we'll discuss that with a transition insider, next.

a look at the supreme court here in washington where donald trump's pick to fill the seat left vacant by justice antonin

ska l scalia could seal the majority for years to come. joining me now, leonard leo, a lawyer who's been working on the trump transition evaluating potential nominees. thanks for joining us on "fox news sunday." >> thank you, and happy new year, shannon. >> and to you as well. the president-elect has talked a lot about the kind of person he would like to take that seat. he's talked about folks that are strong on gun rights, that are pro-life. some of his critics say those are litmus tests and i think they're inappropriate. your response? >> well, first of all, i think the president made very clear throughout the campaign that he was looking for justices who were going to interpret the constitution as the framers meant it to be. and so that i think first and foremost is what he's looking for in a justice on the supreme court. i think he's also looking for someone who's going to be extremely capable and bright. he said at one point during the third debate he wanted someone who was going to be widely respected by the legal and

judicial communities and by the public at large. he wants someone who has a deep record of commitment to the constitution. and those are all of the different factors that are being considered right now as the president and the transition culture the list of 21 people who he announced as prospects for the supreme court during the campaign. >> i want to give you a chance to respond to a new letter that is out signed onto by a number of pro-life groups that they are worried about his making good on a pledge to appoint someone who is pro-life. attempts to nominate a stealth candidate lacking in a record on abortion was a failed approach of the past. continui continuing, despite that, half a dozen candidates lack a pro-life record. several of these judges have written or spoken in ways that are at odds with the pro-life position. is the letter valid? how will a president trump assure pro-life voters and leaders that he'll make good on this promise? >> first of all, there are many very good groups and individuals right now who are weighing in on

the qualifications of quite a number of people on the list of 21 that mr. trump put out. and we appreciate that because the president is working very hard to get this right. these are people who have very deep records that have to be analyzed very carefully. lots of cases have to be read and there's no one particular statement or comment by any of these prospective nominees that can be viewed in isolation. so we certainly appreciate what the pro-life community and other groups are doing to weigh in on these various nominees and all that information is being taken into consideration very, very carefully. >> i want to talk through some of the names that keep bubbling to the top. judge bill pryor serves on the 11 have the circuit. he's called roe v. wade the worst abomination in the history of constitutional law but conservatives are saying they're worried about a 2011 decision seen as a landmark expansion of transgender rights. he supported an absolutely revolutionary opinion in 2011 holding that anti-transdiscrimination qualifies as sex discrimination

and is thus generally forbidden under the equal protection clause. pryor didn't write the decision but he did join in it in full suggesting he endorsed its logic and conclusion. you know that's an issue the supreme court is going to tackle very soon, even will touch on in a big case later in 2017. >> well, first of all, shannon, as you know, bill pryor is a u.s. court of appeals judge who sits down in alabama. he's been on the bench a long time. he has a very distinguished record of public service, having served as the attorney general of alabama before serving on the federal bench over a decade. bill pryor has a very deep bench of judicial opinions. the transvestite case you referenced is one of those opinions where he was bound by precedence of the u.s. supreme court, in particular a pricewaterhouse case that involves gender stereotyping kinds of discrimination. really that case is about applying supreme court precedent as faithfully as one can, which

is what a court of appeals judge has to do. they're bound by what the supreme court says. they have to apply those press dents to existing facts that come before them so i think that explains judge pryor's ruling more than anything else. >> i want to touch on judge thomas hardiman as well. he is on the younger side, which a lot of people think is a benefit when you put someone on a lifetime appointment on the bench. chatter around him is that he's a favorite of a lot of people out there. why is he on the list? >> first of all, he also has a very distinguished record of judicial service. he has the distinction of actually having served both as an appeals court judge and as a trial court judge in the federal district court, which is very valuable in the sense that we don't have many justices on the u.s. supreme court who understand how trial courts work. so that's, i think, very important. he's a person of tremendous distinction, having attended notre dame university and georgetown law school. he has an interesting personal story in the sense that he drove

a taxicab to support his way through law school. so he has a lot of those personal qualities as well as important intellectual qualities that i think make him a serious prospect for the u.s. supreme court among others on the list. >> and for those who are pushing mr. trump to consider appointing a woman to the bench, judge diane sykes, a bush 43 appoin e appointee. he's voted to uphold voter i.d. laws and in favor of gun rights but she has a couple of decisions that worry conservatives as well. she joined a decision for bidding the use of a church for a graduation ceremony. in a planned parenthood case she ruled in favor of the organization and against an indiana law that intended to cut off funding to planned parenthood. she's been criticized for a ruling against the pro-life choose life license plates. what's the case for her? >> well, first of all, judge sykes has a long, deep record of judicial service. she not only serves on the u.s. court of appeals there based in chicago, but she was also a

justice on the wisconsin supreme court, so she's got a very, very long deep record of service on the bench. she calls herself a textualist and someone who interprets the constitution according to its words and original meaning. sometimes you have to take the law wherever it brings you. in the case of some of these decisions that she's issued, she's interpreting statutes, she's interpreting the constitution in light of supreme court precedent that she's bound by. you can't always just look at the results. you have to look at the methodology that a judge uses in reaching a particular decision. she grounds herself in text and the original meaning of the constitution. those are the kinds of things that the president was hoping to have in a justice when he talks about a justice who is going to interpret the constitution and the laws as it was meant to be. >> can you give us any hint on a timeline as we tick closer to inauguration day? >> well, that's up to the president, of course. and as you know, the chief of staff and others have indicated that they want to move as quickly as possible.

perhaps having someone nominated around the time of the inauguration. the important thing to bear in mind is that we have one final sitting of the u.s. supreme court at the end of april, so ideally you would have someone that could be seated on the court at least by then to hear those final round of cases, perhaps even have some of the 4-4 decisions if there are any reheard by the court. and so you had a 50-day period for one of the most liberal justices on the court. ruth bader ginsburg. so hopefully we can have a nomination relatively soon and then a process of about 50 or so days within which to get someone confirmed. >> we know you will continue to guide the president-elect as he makes this very important decision and looks at filling more than 100 federal vacancies on the bench and the lower courts as well. leonard leo, thank you so much and happy new year. >> to you too, shannon. thank you. coming up, president-elect trump has the return of thousands of jobs to the u.s.

we'll look at the impact and the stock market's run since the election, next.

we have a combination of sprint for 5,000 jobs and that's coming from all over the world and they're coming back into the united states, which is a nice change. and also one web, 3,000 jobs. that's a new company. >> president-elect trump claiming another victory in a plan to bring back thousands of jobs to the u.s. joining me now from california, austan goolsbee, who is one of president obama's long-time economic advisers, and here in washington, steve moore of the heritage foundation. he was also an economic advisor for the trump campaign. gentlemen, welcome to "fox news sunday." >> hi, shannon. >> thank you. >> austan, i'll start with you. do you give the president-elect any credit for the jobs he talked about or the deal with carrier? >> well, look, i'm happy that the jobs are going to come back. i'm a little nervous that the fact that donald trump is currently reannouncing jobs that he already counted. so when soft bank said they were

going to move jobs and expand them in the united states, these were the jobs they were talking about. so he's like -- >> but if he had something to do with the first announcement. >> he's trying to change the goal posts and just quote it at a different number. >> either way, does he get any credit for whether it was announced weeks ago or for now? >> i mean i would give him some credit for it. you know, i would point out that under barack obama in the last seven years, we've added 15 million private sector jobs, so i think they're going to need to speed up the job creation if they want to match what has happened under barack obama. but i give president-elect trump some credit for that. >> all right, steve, to that point, you know that the united steel workers, one of the union leaders there at carrier, got into it with mr. trump saying he wasn't telling the truth about how many jobs were being saved. he told "the washington post" something i can't say on the air, but, quote, he lied his blank off. is this the kind of thing a president can be doing, though,

going around making these individual deals, getting into twitter fights with union officials? how is this going to work? >> well, i think the idea during this period between the election and his inauguration of going to companies and saying, look, don't leave the country now, good things are coming. we're going to change the tax laws in a very pro business way. we're going to get a lot of these onerous regulations off of your back, we're going to fix obamacare. he's sending a message, a, to businesses saying stay here, this is a good time to invest in the united states. b, i think he's sending a message to those voters in those midwestern states, shannon, like michigan, ohio, wisconsin, pennsylvania, indiana, saying i've got your back. for the first time -- president obama said you can't just wave a wand and have these jobs come back. i don't know if it's a magic wand, but so far he's persuaded a number of major companies to invest in the united states. i think it's the start of

something real big. >> well, you talk about taxes and there is optimism from all quarters and both sides of the aisle people hoping there will be some changes. steve mnuchin says tax reform is something that happens within the first 90 days of this presidency. let's touch on a couple of points that we've heard from the president-elect so far with regard to individuals reducing the number of tax rates, dropping the top from 39.6 to 33, eliminating personal exemptions and for businesses reducing the top corporate rate from 35 down to 15% and restructuring taxes on pass-through businesses as well. austan, is there anything that you hear in the tax plan that works for you? >> well, not really. it's not about me. i mean people should just go look at it themselves. donald trump ran a campaign that was largely policy-free. the broad outlines of what he's about to do are not understood by the american people. and they're in for a rude awakening. we're going to massively cut

corporate taxes by trillions and it's going to be paid for by a value-added based national sales tax. i don't think anyone that voted for donald trump understood that's what he was planning to do. i'm not sure donald trump understood that's what he was planning to do. and if they now propose it, i'm going to be very interested to see how people react to that. >> steve, you were advising him along the way. did he understand -- what did he understand of this plan? >> look, i helped donald trump with larry kudlow and steve mnuchin put the plan together. i disagree with austan. i think we were very, very specific about what that plan is, what we intended to do on the business taxes, what we intended to do to simplify the tax system. the hardeart of the plan is the business tax cut. we have the highest business tax rate in the world. it just doesn't work anymore for the united states to be competing against china, india, germany, mexico, all of these countries, and we're putting all

of our companies at a disadvantage with respect to our taxes here. i described our corporate income tax as a headstart program for every country that we compete with. so we're going to go from being the highest tax rate country in the world to the lowest. and if you do that, i think it's going to be a magnet for businesses and companies and capital to move back to the united states. tax rates do matter. the rest of the world has been cutting them, we haven't. i think it's going to make a significant change in terms of employment in this country. you can't have good jobs without healthy businesses. >> austan, could we negotiate a little bit of a kumbaya moment? is there anything that you agree with? >> if you believe those are magic beanstalk beans then i think, a, look around the world and say, well, who has the lowest corporate tax rate in the world? they must be doing great. it's uzbekistan. >> wow. >> i don't think that just cutting corporate tax rates

alone, especially if you don't pay for them or you try to pay for them with a national sales tax makes any sense. and i think if you look at what the trump administration is proposing, it's going to blow up the deficit in the united states. it was promised to give us massive growth and massive job creation by george bush when he did almost identical procedures as what donald trump is proposing. and it didn't work. the very same people who said it was going to work in 2001 are saying it now. and i would just remind everybody to go back and look at history. when they gave a massive repatriation holiday to companies in 2000 so they could bring the money back, it didn't create jobs. >> steve, is that accurate? are we talking apples and apples? >> i believe that this economy is very fragile. i think this has been an incredibly weak recovery and that's just not my opinion, every economist agrees that it's

been a very filmsy recovery. we've borrowed $10 trillion over the last ten years. what we've done in the last decade just hasn't worked in my opinion. we do need a new approach. now, the tax rate reductions we're talking about are very consistent with what john f. kennedy did in the 1960s, with what ronald reagan did in the 1980s. those were two big boom periods in the united states. i think we can do it again. it's not just taxes, though. we do want to get the regulations off of businesses. we do want to fix obamacare so you can reduce health care costs. we do want to have a pro america energy policy. i believe if we do all those things, shannon, we can go from 2% growth under obama to 4% growth under trump. if you have 4% growth, that deficit starts to decline very rapidly. >> part of that equation is cutting spending. i think we'd all agree that is a tough thing to get done on capitol hill. thank you both for joining us, happy new year. >> thanks, shannon, happy new year. >> thank you. up next, we'll bring back the panel for a look ahead at the future of the democratic party and president obama's claim that he could have defeated donald trump for a

third term.

i'm confident that if i -- if i had run again and articulated it, i think mobilized a majority of the american people to rally behind it. >> president barack obama in an interview with david axelrod, a friend and former advisor this week, expressing confidence he could have defeated donald trump in a hypothetical third race for a third term. we're back with the panel. charles, what do you make of that? >> well, you know, it's another example of the president saying basically the problem here was that the american people weren't listening enough to me. of course he did campaign. he campaigned very hard and it was a referendum on him. and it was a rejection of not only -- i mean a rejection not only of hillary clinton, but of eight years of president obama's policies. you know, he will always go down as a successful president in his mind because he won re-election and that was great. but it was at a grievous cost to his party and i think the things that he was pushing.

>> well, the vice president in an interview with the "l.a. times" had some interesting thoughts on exactly what happens with the democratic party, where they may have missed it on this. he said, quote, i believe that we were not letting an awful lot of people, high school educated, mostly caucasian but also people of color know that we understood their problems. he talked about a bit of elitism that's crept into party thinking. >> he also talked about how equality doesn't actually feed people so i think he really gets at the heart of the democratic problem. what barack obama has never -- he has never lacked confidence in his own abilities, obviously, and that's helped him tremendously in a certain way put himself forward. but the recognition of what happened to his own party, what limitations their agenda and how far left they went and how it prevented americans from actually -- from their policies addressing americans' needs, i think really needs to in their comeback, and there will be a comeback on the democratic side,

they really need to recognize those shortcomings and provide and offer a solution to the american people. >> and a lot of folks look at the lobbying and jockeying for the head of the dnc, julie, and they look at some of the people who have been in that mix, representative keith ellison, secretary tom perez, and say those are not the most moderate people in the party. does the party not get that maybe average americans don't want the far left progressive agenda. as daniel referenced, they want to feed their families. >> to me the chairmanship. dnc is only important in that it has to be somebody that understands the mechanics of how to campaign and get out the vote. what the dnc is to me is largely irrelevant in the face of that. what is relevant to me is the message democrats are putting out to the extent that the vice president talked about, that democrats for lack of a better description feel the pain of the people out there. i took some onous on myself as well. it's very easy for me sitting in new york or washington to say, look, so many people have health care thanks to obamacare, not

understanding that many of those people are also paying a lot more money out of pocket for that health care. very easy to say millions of jobs have been created, despite the fact people are saying these are not the kinds of jobs we want. so there was a failure of communication and to some extent he is right, some elitism when it comes to being condescending in trying to tell people that their life is great when they personally did not think their life was great. i took responsibility for that right after the election and i think more democrats need to look in the mirror and do the same. going forward, what's what the party needs to communicate. there are people in places like west virginia and kentucky who are about to lose a tremendous amount of health care if they repeal obamacare and those are people that voted for donald trump. the democratic party needs to explain why those policies are harmful to their own interests. we can't keep talking about the mirror about how great things are when for a lot of people they aren't that great. >> i want to play a little bit of what house minority leader nancy pelosi had to say because

we know this is one of the big upcoming fights on the hill. >> always listening but it's not to dismantle. it's an existential threat to the access to care in our country, that would be a problem. >> lisa, she says they'll be listening but not going to get on board with dismantling. >> we'll see. there's ten -- at least ten senators that are running for re-election in states that donald trump won. five states in which he won by double digits. but what's interesting, if you remember, senator chuck schumer before the 2016 election had alluded to the fact that obamacare was a mistake because they should have focused on middle class voters and policies that bettered their life. before 2016 he had made that comment that that was a mistake. to president obama's point, i think his comment came from a place of insecurity. for a guy who's been so focused on his legacy and someone who has done the most of his legacy boy executive fiat, whether it's the paris climate deal or the iran deal, a lot of it is going to be eradicated. so the great irony here is the fact that we have a president who's been so focused on his

legacy and done so much in the name of legacy, whether it's guantanamo bay, whether it's the withdrawal of troops from iraq, much of what he's done is simply going to go away because he lost the election. the only lasting legacy that he really has, obamacare, was done on a strictly partisan basis, which we've never seen before with a major entitlement, whether it's medicare, social security, even medicare part d. i found that to be really interesting from his comments. but i do think that the democratic party needs to refocus its message more largely speaking. >> and daniel, to the point of that, so much of this was done through executive action and fiats and things that can be undone, it's much tougher business to get out there and legislate and make the sausage on the hill. will president trump be different in that respect? >> republicans have gotten very good in being opposition and very good at sniping, can they actually govern. when they repeal obamacare, and i think they will as they promised to do, they then take responsibility for the entire health care system, much in the same way that president obama

did when he implemented obamacare so it's going to have the reverse effect with people losing their current health care plans, huge upheaval in a massive sector of the economy and really creates a huge problem that's looming ahead for republicans. >> raise your hand if you really think they're going to repeal it. >> i do. >> to replace it, they're going to need democratic support. >> panel, thank you very much. we will see you next sunday. finally, we want to thank you for watching each week throughout this very busy news year. as we say good-bye to 2016 and look ahead to 2017, we want you to see these names. they're all the people who work so hard every week to put this program on the air. chris will be back next week. in the meantime from all of us, happy new yoear and we'll see yu next "fox news sunday."

the following is a presentation of fox 29 sports. week 17 of the national the football league season. as we ring in the new year and say good bye to the the 2016 regular season. >> as we watch the tape we're not far from where we need to be that margin of error has been pretty tight, especially with all of the adversity we have had. >> chapter closes on 2016, as we look forward to a bright year ahead. for the eagles, the final chapter in year one of the doug pederson and carson wentz due it hoping to sing a happier tune in 2017, today once more with feeling for the birds, against jerry's boys from dallas. insights and analysis as the eagles and cowboys bring in the new year at