Transcript: Senate Minority Leader Mitch McConnell on 'FNS'

The following is a partial transcript from the Jan. 7, 2007, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" GUEST HOST BRIT HUME: Joining us now to discuss the new Congress and upcoming changes in the U.S. policy on Iraq is the new Republican leader in the Senate, Mitch McConnell.

Senator, welcome to "FOX News Sunday."

SENATE MINORITY LEADER MITCH MCCONNELL, R-KY.: Thank you, Brit.

HUME: Congratulations on your elevation to leader.

MCCONNELL: Thank you.

HUME: Let's assume for the sake of discussion that the president comes out now sometime this week and he says he's going to send something in the neighborhood of 20,000 troops — that's the number that seems to be out there now — additional troops, and that he would like something on the order of a billion dollars to spend on a jobs program in Iraq.

We're hearing, even from Republicans, increasingly skeptical sounds about the continuation of the effort in Iraq. Gordon Smith from Oregon, Norm Coleman of Minnesota, Sam Brownback of Kansas, Chuck Hagel of Nebraska have all expressed skepticism.

Will Senate Republicans go along, in your judgment?

MCCONNELL: Well, look, I think we need to keep in mind the goal there is to win. And the definition of winning is to have a reasonably stable government that's an ally in the War on Terror, that is stable enough to allow us to begin to draw down our troops. And clearly that's not the situation at the moment in Baghdad.

Senator Lieberman, for example, in the Democratic conference, believes that the surge is a good idea.

I think to basically begin to withdraw before the job is finished is a mistake. If the president recommends what we seem to believe he's going to recommend, I intend to support him.

HUME: What about your colleagues, though?

MCCONNELL: I think there will be some who will and some who won't. Congress' tools to micromanage the war are quite limited. About all the Congress could do, if it chose to do it — and I don't believe it will choose to do it — would be to cut off money for the troops.

Beyond that, we could pass resolutions, we can have hearings, we can debate the matter, which we will do. But I don't think Congress will have the ability to simply micromanage the tactics in the war, nor should it.

HUME: Well, it certainly could refuse to fund an additional billion dollars' worth of a jobs program, though, couldn't it?

MCCONNELL: It could.

HUME: That wouldn't be too hard to do — particularly, you'd have to get that through the House. We're going to talk to Steny Hoyer later about that, but what about that possibility?

MCCONNELL: Well, I think a jobs program makes a lot of sense. I mean, unemployment is clearly a problem there. I suppose they could refuse to fund that if they chose to.

Look, this will be a big debate. It's been a big debate in the country for the last two years.

At the end of the day, though, I don't think Congress will cut off money for the troops. Congress is incapable of micromanaging the tactics in the war. And even though this will be a controversial step, I think the president will be able to carry it out, and I hope he'll be successful.

HUME: Let's talk a little bit about the personnel changes we've seen this week. John Negroponte, director of national intelligence, moves from a job he'd less than two years to become the deputy secretary of state, or one of them anyway. Vice Admiral Mike McConnell has been asked to take the job of DNI. They both face Senate confirmation issues.

There's also reports that Zal Khalilzad, who's now our ambassador in Iraq, would go to the U.N. to be the ambassador there. General Casey is on his way out, to be replaced by General Petraeus, David Petraeus, a well-known figure. Ryan Crocker would be apparently named to go to Iraq as the new ambassador there.

So, question: What do you think about — taken together, this is a pretty sizable shake-up. I think Senator Rockefeller, for example, chairman of the Intelligence Committee, says he was not informed about the Negroponte move. He's upset about that.

How is this all likely to go down? Are any confirmation issues likely to occur here?

MCCONNELL: I don't think so. What this means is change. I mean, the president signaled the day after the election that he was certainly not happy with where we are in Iraq. He did that by changing the secretary of defense. And now he's changing the entire team and signalling we're going in a new direction.

He made it perfectly clear he wasn't satisfied with the progress that we're making, and if you're not satisfied with the progress and you're the CEO, it might argue for shaking up the team. I think that's what he's done.

You mentioned Dave Petraeus, General Petraeus, a really outstanding choice. I got to know him in Mosul up in the northern part of Iraq in 2003, where he did an extraordinary job, not only the military part of the exercise, but also in dealing with the locals and, actually, on a short-term basis up there, establishing a pretty solid local government.

HUME: General Casey and General Abizaid, who's also leaving, believe that infusing more troops into Iraq — you see his replacement will be Admiral Fallon; we've just had that up on the screen there — believe that infusing more troops into Iraq ran all kinds of risks, not the least being that you enlarge the impression of — indeed, the fact of occupation. You also give the Iraqis a way to do less because we're doing more.

The president seems to have overcome doubts about that. You were supportive of the way it was being done. What has changed your mind?

MCCONNELL: Well, look, this was one of the debates from the very beginning of the war, just how many American troops do you have there, how big is the footprint, whether it's a positive or a negative in terms of acceptance locally.

What we know for sure, Brit, is that, by this fall, whatever we were currently doing was not getting the result. So the president, demonstrating I think considerable flexibility, has decided to adapt the tactics and to try a different path to get to the result that I think everybody in America wants. Even the critics of the war would like to have a success.

So I don't think the president should be criticized for, A, recognizing that things were not going well and, B, making substantial changes in order to achieve the goal.

HUME: Let's talk about the situation here at home and here in Washington. It was quite a striking tableau this week when both Majority Leader Harry Reid came out and said that you and he were going to work together, and you said the same thing. And you guys sounded like the best of friends. I don't doubt that you are, at least behind the political scenes.

What is that a reflection of, Senator? Is that a reflection simply of the political realities of the Senate when it's poised on a knife edge, or is that a reflection of something deeper?

MCCONNELL: Look, you can always use the next election as an excuse for not doing much. And in the Senate, the minority can guarantee that not much is done. And what I've said to the new majority leader, "You won the election fair and square. You're in the majority. It is not my first goal every morning to get up and make you look bad."

So we want to see if we can't advance the ball on a number of significant issues down the field for the American people. And I don't think we ought to just constantly operate as if we're thinking about the very next election.

HUME: But you know you can stop anything.

MCCONNELL: We can, but we choose not to do that. We're going to be able to get off to a good start with ethics reform and probably craft a minimum-wage increase that's acceptable to both sides and see how far we can get on a cooperative basis.

HUME: Let's talk about ethics reform for a moment. The House has passed a package. It's fairly strict — a lot of things that you can't do anymore. You can't have lunch, you can't take tickets, you can't do a lot of things.

Is the Senate going to do the same thing?

MCCONNELL: Yes, I think so.

HUME: Roughly the same?

MCCONNELL: Yes, roughly the same.

HUME: Let's turn to the minimum-wage increase. The president seems prepared to accept that as long as it's coupled with tax relief and other ways to cushion the blow that it might be to small business.

Are you and Senator Reid on the same page on that? Do you think that will happen?

MCCONNELL: I think so. In his opening speech the other day, he indicated he thought that was a good idea. And it's important to remember the last time we raised the minimum wage, it was coupled with small-business tax and regulatory relief at that time, and President Clinton signed it. So that's the path to get a result. I think we will get a result pretty soon.

HUME: There's a system of budgeting or of dealing with spending issues called PAYGO; it's called PAYGO for short. It means pay as you go. That means an increase in one area or a decrease in revenue caused by a program in some area must be offset one way or another by either more revenue or less spending in some other area. It's an idea that's been around and tried for some time.

The House says that's how it's going to operate. How's the Senate going to operate on that?

MCCONNELL: Well, what PAYGO really means is you're going to have a tax increase. And most Republicans are not going to support the PAYGO provision. It almost guarantees that the majority, if it enacts it, will try to raise taxes.

We don't think raising taxes is a good idea. The tax cuts of '01 and '03 have clearly stimulated the economy. We've created 7 million jobs since 2003. Our economy is the envy of the world. We have 4.5 percent unemployment.

The last thing we need to do is to be raising taxes in this country, and PAYGO is the first step toward raising taxes.

HUME: Do you believe, then, that if it came to that, that this is an area where the filibuster might be the tool at hand?

MCCONNELL: Well, I think there will be very few, if any, Republicans who will support raising taxes.

HUME: One issue that the House Democrats haven't said much about but was an issue that at least on paper looks like one where a lot of business might get done is immigration. The House Democratic position on immigration issues, or at least some of them, is very close to what the president has been for. That's true of the Senate Democrats and many Republicans as well.

Do you think an immigration bill is possible this term?

MCCONNELL: I do. In fact, I've been challenging the new Democratic majority not just to do the easy things in the beginning of this session or some relatively easy issues that we were close to passing last year, but let's do some important things.

And I think there are two things, Brit, that are very significant that would make a difference for the country. Let's fix the immigration problem, and let's save Social Security. We can do that before this Congress is out.

HUME: Do you really think it's possible to pass a Social Security reform package?

MCCONNELL: I think it can only happen with divided government, that is, one party in the White House and another party in Congress. Divided government is the only way where you can kind of share the blame for doing big things that will sometimes become controversial.

Two examples: Social Security, when Reagan and Tip O'Neill brokered the deal in the mid-'80s; welfare reform...

HUME: That was a tax increase, though.

MCCONNELL: Well, we'll see what the substance is. I'm just talking about the process of getting there.

HUME: Right.

MCCONNELL: In the mid-'90s, welfare reform with Clinton in the White House and a Republican Congress.

We all know that the baby boomers turn 60 in 2006. Over the next two decades, 77 million people are going to be retiring. We need to fix Social Security, and the best time to do that is when you have divided government.

HUME: Will Senate Republicans, in your view, support a measure that would simply deal with the fiscal side of this, possibly by a benefit reduction and/or an increase in Social Security taxes, without private accounts or some other consequence of reform?

MCCONNELL: Well, we can't negotiate the deal here this morning. What I'm saying is that we ought to establish a process that will produce a result, and then sit down with everything on the table and talk about how to save Social Security.

HUME: You think it can be done.

MCCONNELL: I do think it can be done.

HUME: Do you think it will be done?

MCCONNELL: We'll see.

HUME: Senator McConnell, it's a pleasure to have you, as always. Thank you for being here.

MCCONNELL: Thank you.