Transcript: Sen. Jim Webb on 'FOX News Sunday'

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Well, joining us now, one of the intriguing new figures on the political landscape, Democratic Senator Jim Webb of Virginia.

And, Senator, welcome to "FOX News Sunday".

SEN. JAMES WEBB, D-VA.: Thank you. Thank you for having me.

WALLACE: You gave the Democratic response to the president's state of the union speech recently, and you laid out a few markers for Iraq. Let's watch.

(BEGIN VIDEO CLIP)

WEBB: Not a precipitous withdrawal that ignores the possibility of further chaos, but an immediate shift toward strong, regionally-based diplomacy, a policy that takes our soldiers off the streets of Iraq cities and a formula that will in short order allow our combat forces to leave Iraq.

(END VIDEO CLIP)

WALLACE: Senator, what's the difference between a precipitous withdrawal, which you reject, and getting our troops out in short order?

WEBB: Well, I think what we have right now, even with this so-called new strategy, is half a strategy — not even half a strategy, honestly. You cannot deal with Iraq simply as a military situation even inside Iraq.

We just finished a full month of hearings on the Armed Services and the Foreign Relations Committees. I'm on both of them. And the preponderance of the testimony was basically saying that we're not going to be able to fully deal with the situation without an aggressive diplomatic strategy that is in tandem with a military strategy. And we've not seen that for four years.

I was one of the people who were saying early on, before we even went into Iraq, that if you did not have aggressive diplomacy, the military component itself wasn't going to be able to work.

WALLACE: So in the absence of a diplomatic agreement — and we'll get to that in a moment. In the absence of that, is all this talk from Democrats about troop caps and withdrawals irresponsible?

WEBB: I don't think it's irresponsible. I think what has been irresponsible has been the administration coming forward with solutions or so-called solutions that simply go back to the well again and again to the military without addressing the elephant in the bedroom.

And the elephant in the bedroom is dealing with Iran and Syria. And we're getting that across the board. We even get it from the Baker-Hamilton report. We had them in front of us a few days ago, and I asked them about that.

What actually would be the procedure for the United States government to reach a point where there was a diplomatic umbrella so that we could then begin withdrawing our troops?

You're not going to do this simply by sending more troops in again and again, the way that we've been doing, and addressing a situation that even the National Intelligence Estimate has said is probably worse than a civil war.

This isn't even sectarian violence anymore. There are so many components to it that it's chaos. And if you're a military person on the street, there's only so much you can do.

WALLACE: But let me ask you about that, this idea of yours, of regional diplomacy. What makes you think that Iran or Syria would have any interest in helping us out in Iraq?

WEBB: I think they're — I think if you break those two countries apart and look at them, I think there are reasons for them to come to the table on both. And I'm not saying that we are — we should be going to them on our knees or that we should be giving up on certain conditions. But it is in their interest.

First of all, with Iran, if you look at what happened after the Afghani invasion in '01, Iran directly participated in the round of talks that resulted in the Karzai government. We had India, Pakistan, other countries in the region, and Iran was a direct player in that.

And then after the axis of evil speech, Iran was the one that kind of receded. With respect to Syria, it is not in Syria's long- term interest to be an ally of Iran. Syria and Iran have never been natural allies. They're different ethnically. They're different politically.

And if you can break Syria apart from Iran, then you're going to be able to affect other issues in the region in a dramatically different way — Hezbollah, the Palestinian situation — if Syria were a different player. I think you can get them to the table.

WALLACE: But let's talk about Iran, if I may, sir...

WEBB: All right.

WALLACE: ... because it would seem — I know it does to a lot of people — that Iran is thoroughly enjoying the fact that we're tied down and that our blood and treasure is being spent in Iraq.

You talked about the National Intelligence Estimate, the NIE, the considered judgment of all 16 U.S. national intelligence agencies. They disagreed with you. They came out with a report on Friday and said Iraq's neighbors are not likely to be a major driver of the prospects for stability.

WEBB: That's not really a disagreement.

WALLACE: Well, but they said it's primarily an internal...

WEBB: They also were saying...

WALLACE: Well, if I may, they said it's an internal problem and that these outside forces, the neighbors, cannot be the major driver.

WEBB: No, what they were saying was that even though these countries may be meddling inside Iraq, that they were not the major players inside Iraq in terms of the military solution.

And what the administration is doing right now is playing up Iranian participation in order to try to drive the stakes up to the extent that we don't deal with Iran.

Now, yes, Iran's definitely, from everything that I can see, playing in some way inside Iraq. And tactically, as a former Marine, in the places where Iran is definitely playing, they should be dealt with.

China was playing inside Vietnam when I was in Vietnam. So was the Soviet Union. There wasn't a weapon that was used against me that wasn't made in Eastern Europe or China.

At the same time, that doesn't mean that we should have been isolating China and not dealing with them. In fact, the reverse was true. The Chinese situation is a direct parallel to the situation we have with Iran right now.

We had a rogue nation with nukes, with an American war on its border that it was assisting, and we aggressively dealt with them and brought them into the international community.

That doesn't mean you have to give up on weapons of mass destruction. That doesn't mean you have to give up on the Israeli situation. But we are not responsibly in the region if we don't deal with them.

And the situation that we have right now where we continue to talk only about the military side — again, it's half a strategy.

WALLACE: Okay. You, as you point out, fought in Vietnam where you won the Navy Cross. And back in 1985, you had this to say. Let's put it up on the screen.

"If I had one lesson that stands out in my mind, it is that you cannot fight a war and debate it at the same time." Senator, why not? What's the problem, especially for our troops, when we're trying to fight a war and debating it at the same time here at home?

WEBB: Well, the difficulty that we have right now — there are so many people trying to make a direct parallel between Vietnam and Iraq, on both sides of the issue, by the way.

You have the people who are opposed to the Iraq war saying this is just another Vietnam. You have the people who supported the Vietnam war, many of them — I supported the Vietnam war. I still support what we attempted to do in Vietnam — trying to draw direct parallels, and there are no direct parallels.

WALLACE: Let me ask you directly my question.

WEBB: Right, I'm getting to your question. But I need to be able to, you know, put my experiences on the table so that people can understand what I'm saying here.

The way that this war has been defined is a 20-year war. In fact, I got mail at the beginning of this war when I was opposing it, before we went in, basically saying you need to sit down and shut up because you're being disloyal to a president.

But when do you start talking? Twenty years from now? And particularly in a situation now where the — all the conditions that are being predicted if we withdraw from Iraq — and basically, by the way, they're saying precipitous withdrawal, and no one is saying that — are the conditions that those of us like myself were predicting would occur if we went in and are on the ground.

Empowering Iran? That's one of the reasons I said we shouldn't go in. Being less able to fight the war against international terror — we were saying that. Focus on international terror, don't focus on this. Loss of American prestige around the world — we had the world with us before we went in. Economic disadvantages — we're going to put, what, $800 billion more into this war if we keep going?

WALLACE: But Senator, if I may go back to my question...

WEBB: We have to be able to discuss this.

WALLACE: I understand, but if I may go back to my question of the dangers of debating and fighting at the same time, which you said was the lesson you took from Vietnam. Some people say that's exactly what's going on right now.

The Democrats, including yourself, voted unanimously a few days ago to confirm General Petraeus to lead all U.S. forces in Iraq...

WEBB: Right, right.

WALLACE: ... at the same time that they want to pass a resolution that would oppose the plan that he helped write for the troops he says are necessary to win.

WEBB: Well, you see, that's not an inconsistency. And I voted for General Petraeus. And I don't agree with the whole national — lack of national strategy that — this administration has not had a strategy. They continue to focus on the military side rather than diplomatic side.

WALLACE: But you don't see...

WEBB: Please, let me...

WALLACE: But if I might just — you don't see the inconsistency...

WEBB: I'm trying to answer your question, because there is not an inconsistency.

WALLACE: Why not?

WEBB: When the administration puts forward a general officer to fill a billet that exists, I will take a look at his qualifications and see whether I believe he is qualified to be a commander. That doesn't mean that I have to back a political strategy that impels him into motion.

It's the same question in reverse...

WALLACE: But what his military strategy that he is the author of?

WEBB: He has written some military viewpoints. I met with General Petraeus. I've talked with him about this. He has promised me he's going to give us continual feedback on what he's doing.

The reverse of that, by the way, in terms of the difficulty of being a military officer, is what we've just had to do with General Casey. He's up now to be chief of staff of the Army. There are many people, and particularly the people who support the administration's political policy, who are trying to hold General Casey as the scapegoat for the fact the Iraq war isn't working.

And as I said in the confirmation hearings when he was up, these people represent the anomaly of high-level military service. On the one hand, if you speak up too loud, you get fired in this administration. There's a string of people.

And if you speak too softly, when things go bad you get blamed instead of the administration and the civilians who put this policy into place.

WALLACE: In your response to the state of the union you also talked about the dangers of economic inequality. And this week the president spoke out and said that he agreed with you. Let's watch.

(BEGIN VIDEO CLIP)

PRESIDENT GEORGE W. BUSH: The question is whether we respond to the income inequality we see with policies that help lift people up or tear others down.

(END VIDEO CLIP)

WALLACE: Senator, don't Democrats want to, in the president's word, tear people down by raising taxes on the rich?

WEBB: The difficulty that we have in this country right now is this. Corporate profits are at an all-time high as a measure against national wealth. The average major corporate CEO, according to the Wall Street Journal, makes $10 million a year in compensation.

At the same time, wages and salaries for workers are at an all- time low as a percentage of our national wealth. And part of this is the internationalization of corporate America. Some of it's inevitable and some of it isn't.

But if you're an American worker looking at the situation in America today, you see three components working against you. One is that in the shift with technological expertise, white collar and blue collar people are seeing a lot of jobs going overseas where they can be done more cheaply. The corporation benefits. The worker loses the job.

The second is the manufacturing base is going away. We've lost three million manufacturing jobs during this administration. Take a look at the steel industry. A huge percentage of that has flipped into China where they have different environmental standards, different worker standards, so it's very difficult for an American worker to compete fairly even given productivity.

And then the third thing an American worker looks at — people will say well, you can't export infrastructure jobs, you can't export being a waiter. But we have this massive labor pool as a result of immigration here, so even in those jobs, the wages and salaries are being pulled down.

So there are ways, and obligations, I believe, from people who are in government who are representing those interests to do put them into play.

WALLACE: Well, I understand all of those aspects, and I think the president would agree with you on a bunch of those, but let me just ask...

WEBB: I don't see any evidence of that, by the way. I don't think I can let that one pass.

WALLACE: Well, but would you also like to raise taxes on the wealthy?

WEBB: You know, what I said during the campaign was that I would — and this was mischaracterized in ads against me. I would not raise taxes on anyone who is making a living by salaries, you know, on working people.

The major problem in this country right now is corporate America and the breaks that have been built into the system. And part of that is the tax structure, and part of it is, you know, other basic economic fairness issues.

For instance, we have a provision in the tax law right now where if an American corporation takes a plant and sends it overseas, we start off by losing the jobs, but they do not have to pay taxes on the profit from that plant unless they repatriate the profits back into the United States.

So on the one hand, we lose the jobs, and on the other, they're not going to reinvest the money in the United States because they don't want to pay taxes on it, and so we continue to have this bifurcation between the people at the top and the people at the bottom.

And you know, there are ways that that should be addressed.

WALLACE: Finally — and we've got less than a minute left — you have a reputation, and it has only strengthened since you were elected, as being — forgive me — combative.

You had that icy exchange with the president when he asked about your son who is serving in Iraq. During the Democratic response, you said if the president doesn't act, we will be showing him the way. Are you combative?

WEBB: I fight for what I believe in. I'm not ashamed of that. But I think that, you know, if people look at me, I've had eight years in government before now. And I know how to work with leadership. I know how to cooperate.

And I think Peggy Noonan said it right about this White House exchange, which has been vastly overblown, and that is we need more courtesy in government. And in that particular situation, I don't think the lack of courtesy was mine.

WALLACE: Senator Webb, we're going to have to leave it there. I want to thank you so much for coming in. Please come back, sir.

WEBB: Nice to be here.