Transcript: Secretary of Homeland Security Michael Chertoff on 'FOX News Sunday'

WASHINGTON – The following is a partial transcript of the July 1, 2007, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Joining us now, live from Milford, Penn., the secretary of homeland security, Michael Chertoff.

And, Mr. Secretary, welcome back to "Fox News Sunday."

MICHAEL CHERTOFF: Good to be back, Chris.

WALLACE: What's the latest on the investigation into these terror plots across Britain? And what can you tell us about these five men now in custody?

CHERTOFF: Well, as you know, because of your report you just aired a few moments ago, this is rapidly unfolding. There are five arrests.

Obviously, from our standpoint our principal concern is whether there is any link to the homeland. And at this point in time, we do not see any linkage. We don't have any evidence of a linkage.

But that's the issue we're most carefully monitoring, to see whether there is any potential impact here in this country.

We have taken some precautions. You'll see some additional security measures at airports and transit points during this holiday week, but that's really a matter of prudence as opposed to a response to a specific piece of intelligence.

WALLACE: Mr. Secretary, any sense where these five men come from, whether they're homegrown Brits or whether they're foreign terrorists, and how big the entire terror operation is over there?

CHERTOFF: I think this is exactly what the British authorities are investigating. And I think it's, frankly, for them to determine when and what to say about the scope of this plot.

It's clearly serious and had the potential to cause a significant loss of life, and it's a reminder once again that we are in a very dangerous time and we are at war with some very dangerous people.

WALLACE: But the British officials are telling the British people that there are links to Al Qaeda. What can you tell the American people?

CHERTOFF: Again, I'm not going to go beyond what the British authorities have said. If they are comfortable in confirming that, then that's fine. I have no reason to disagree.

Our focus, of course, is to continue to look to see are there any suggestions that this is part of a specific plot that would be directed at the United States, and we have not at this point seen that.

WALLACE: FOX News has obtained a New York City government threat assessment, and I'd like to put it up on the screen and ask you about it. It says approximately 150 Britons have traveled to fight in Iraq. A number are believed to have returned and formed sleeper cells.

Now, whether that's related to this plot or not, is that true, sir?

CHERTOFF: Well, without confirming specific numbers, I think one of the issues we're increasingly concerned about is the movement of Europeans, including people with European citizenship, into areas of South Asia to get trained and get experience and then the prospect of these people coming back to carry out operations in Europe or in the United States using Europe as a departure point.

And that's one of the reasons I've been very outspoken in the last few months about the need to continue to raise our level of protection and information about who is coming into the United States from the European countries.

WALLACE: But do we have reason to believe that Iraq is becoming something of an incubator, a training ground for, in this case, Brits who then train over there and maybe fight over there against our forces and then go back to their home country?

CHERTOFF: I don't know that I'd go so far as to say that Iraq specifically is an incubator for training. I think there are training activities going on in a number of areas. We saw some people going into Somalia, for example, to support the jihadists there, too.

What I do think we see in Iraq is a laboratory for techniques where people experiment with sophisticated forms of explosive devices, and we do get concerned that that will ultimately lead to importing those kinds of techniques to the West.

WALLACE: Let me ask you a little bit about those techniques. Any idea why the bombs in London didn't go off? What does that tell you about the sophistication of this group?

And what do you make of the fact that the car bombers in London, apparently, clearly, were not suicide bombers?

CHERTOFF: Well, again, I want to be very careful to comment on an ongoing investigation. The British authorities ought to be the ones to give out information.

I would also caution against people who dismiss plots because they say they're unsophisticated.

I dare say, Chris, if on September 10th, 2001 someone had come up and said, you know, there's going to be a plot to hijack airliners with knives and put them into the World Trade Center, that would have been viewed as a very naive and unrealistic plot. And of course, we saw on Sept. 11 that it was quite realistic.

So we take all plots seriously. As you know, we've had a couple of cases in the last month or two in the United States with significant arrests, and we'll continue to treat this matter and these kinds of matters with the utmost gravity.

WALLACE: Now, this New York City threat assessment that I talked to you about earlier also says that an Al Qaeda leader in Iraq had called for attacks during the turnover of power in Britain.

Obviously, this past week Tony Blair stepped down. Gordon Brown became the prime minister. Is that true?

CHERTOFF: Well, there have been a number of high profile public statements by Al Qaeda leaders in the last several months pointing to all kinds of issues and reasons why there ought to be attacks. So I wouldn't single any particular one out and attribute special significance to it.

But it does tell us as we get into the summer -- and we've traditionally seen attacks carried out in past summers -- that we need to be ever vigilant, that this threat is not going away, and that one of the great measures we can take to defend ourselves is to have regular citizens be alert and call the authorities when they see something that's out of place or suspicious.

WALLACE: I'm going to get to the question of the threat in this country in just a moment, but I want to ask you one last question about the situation in Britain.

ABC News is reporting that U.S. law enforcement received intelligence two weeks ago warning of a possible terror attack in Glasgow and that U.S. air marshals were put on flights going into and out of that city. Is that accurate?

CHERTOFF: Well, I don't comment on intelligence matters, but there was a little bit of misinformation in terms of our deployment of air marshals.

We have since last August increased the frequency of our air marshals traveling to Europe, and we've continued to increase that over the last few months.

We haven't singled out Glasgow until a couple of days ago as a particular location for focus, but there has been a strategy of mixing up the deployment of these air marshals, sometimes more in one destination, sometimes more in another destination.

Going forward, we will be doing some enhanced air marshal work and similar types of activities with respect to U.K. travel.

WALLACE: Let's turn to this country. Why aren't you raising the threat level in this country, sir?

CHERTOFF: Well, let me remind you, Chris, that the threat level for aviation is currently at orange and has been since last August when there was the disruption of the U.K. airline plot. So that's already a very high level.

And we're at yellow with respect to the rest of the country. We do not have at this point specific credible intelligence that there is an attack focused -- a particular attack focused in this country.

We do, however, view the summer as a period of special vulnerability, again, based on past experience and what we've seen in terms of public discussion by Al Qaeda, and that's why we have taken some plans off the shelf to do some heightened security measures during this coming week at our airports and at our mass transit and train stations.

WALLACE: But again, no specific threats of any attacks, any terror chatter, involving the United States.

CHERTOFF: No specific attack -- no specific intelligence that's credible about a particular attack focused on the U.S. in the near future.

WALLACE: You were talking about the exporting of techniques. Do you have any information or have you heard anything that would indicate that terrorists would like to export the use of car bombs, which have been so deadly in Iraq -- would like to export the use of those weapons to this country?

CHERTOFF: Well, regrettably, Chris, they've already done it. In 1993 we had a car bomb in the World Trade Center which killed a few people. It didn't bring the towers down, but that was a car bomb attack.

And of course, looking beyond Al Qaeda, we have the Oklahoma City bombing which was a deadly car bomb.

Unfortunately, the technology for detonating cars has been well known in this country for well over a decade, and that's one of the reasons you see these concrete barriers and other security measures in cities all around the country, because we have learned some very tragic lessons in our own country.

WALLACE: Let's turn, sir, to immigration reform which the Senate killed this week. You had been lobbying for passage of this bill for months, and after it collapsed this week, you expressed your disappointment. Let's watch.

(BEGIN VIDEO CLIP)

CHERTOFF: I'm disappointed about the fact that there were some necessary tools which we needed to be able to do more than we can currently do in enforcing the law that were left on the floor of the Senate today.

(END VIDEO CLIP)

WALLACE: Secretary Chertoff, opponents of the bill say that you already have plenty of tools to enforce the border which you don't use.

CHERTOFF: Well, I just think that's plain wrong. First of all, in the last couple of years we have overhauled border security strategy.

We have had record numbers of removals. We have seen a significant decrease over the past year in the flow of illegals across the border. We've ended catch and release.

We're on our way to doubling the border patrol. We're building hundreds of miles of fencing and vehicle barriers. And for the first time, we're putting integrated high technology at the border.

But there's one thing we haven't been able to do. We haven't been able to require every employer to enter a system in which they check the work status of their employees and determine whether they're legal.

And without that, we don't really have the ability to enforce the law with respect to illegal work in this country in a way that's truly effective. And that would be the single greatest additional weapon we could use if we're serious about tackling this problem.

WALLACE: Mr. Secretary, let me try and clear up some of the contradictions between you and some of the critics of the administration's policy.

Congress passed the Secure Fence Act in October of last year, mandating construction of 700 miles of new fence along the southwest border.

Now, Congressman Duncan Hunter, who comes from that part of the world, comes from San Diego, says that, in fact, in the eight months since then, that the government has built only 13 miles of new fencing. Is that true, sir?

CHERTOFF: Well, what we've done is we are working on and will complete by September -- we'll be up to about 140 miles to 150 miles of fencing.

As anybody who's ever built a fence or a wall knows, Chris, you don't build it one mile at a time. You take a chunk, like, for example, the 35 miles at the Barry Goldwater range in Arizona.

You have to level the ground. You have to put a foundation in. You have to drive in the pillars. And then you put the fencing in. So in that case, for example, we're going to go from a handful of miles to 35 miles within a couple of months.

We're on track to get about 370 miles done by the end of '08. But I do have to say that for people who believe the answer is just fence, yesterday we discovered a tunnel. So fencing is not the cure- all for the problem at the border.

We've got 40 percent of our illegals coming through the ports of entry using legal visas and overstaying. We've got people concealing themselves in vehicles coming through the ports of entry. I've seen this myself.

I think the fence has come to assume a certain kind of symbolic significance which should not obscure the fact that it is a much more complicated problem than putting up a fence which someone can climb over with a ladder or tunnel under with a shovel.

WALLACE: Mr. Secretary, we have about a minute left. Clearly, what came out of this debate and the failure of immigration reform is that a lot of people in this country don't trust you, don't trust the government, to enforce the border.

So why not take the lesson from this failure and go for enforcement first, resubmit the president's agreement to spend $4.4 billion on new enforcement?

You say you don't have some tools when it comes to employer verification. Why not resubmit all of those and challenge the Democrats on enforcement first?

CHERTOFF: Well, Chris, first of all, anybody who says we haven't been enforcing is woefully blind to the facts. We have done more in terms -- and unfortunately, it's been some painful stuff in terms of arrests, 700 criminal cases against employers, raids involving thousands of people, unfortunate pictures of crying children. ...

WALLACE: But, Mr. Secretary, we're running out of...

CHERTOFF:... whose mothers are being...

WALLACE:I don't mean to interrupt you. I mean, are you going to submit the $4.4 billion? Are you going to resubmit the tamper- proof card? Are you going to resubmit the employer verification or not?

CHERTOFF: I think we're going to say to the members of Congress who think they have a better way that they should produce legislation and pass legislation, which they have not done for the past two years.

They've tried enforcement only. That didn't pass. We've tried comprehensive. That stalled. I think it's now time for Congress, which has the power to legislate, to make a determination about how it wants to help us solve this problem.

WALLACE: But the government, the president, is not going to submit his own plan.

CHERTOFF: Well, we've submitted a budget. We submitted a comprehensive immigration plan. We agreed on $4.4 billion which was going to be secured by the payments made by the illegals so it would not bust the budget.

In the absence of that plan, I think now those who have a better way ought to come forward with that better way. We're still going to work on our part to enforce the border using the tools that we have.

WALLACE: Secretary Chertoff, we're going to have to leave it there. We want to thank you so much for talking with us today and giving us an update on the very latest from Britain.

CHERTOFF: Good to be on, Chris.