Full Episode: Mitt Romney Bows Out of 2016, The Republican Congress Fights Old Fights, ISIS Hostage Situation Continues, and Obama Meets with U.S. Strategic Allies

GWEN IFILL, "WASHINGTON WEEK" MODERATOR: Mitt Romney shocks the GOP by dropping out before he dropped in. Plus, the Republican Congress and its favorite things -- Keystone, Benghazi, health care, and debating Eric Holder. Tonight, on WASHINGTON WEEK.

(BEGIN VIDEOTAPE)

IFILL (voice-over): Mitt's out.

MITT ROMNEY (R), FORMER PRESIDENTIAL CANDIDATE: After putting considerable thought into making another run for president, I have decided it’s best to give other leaders in the party the opportunity to become our next nominee.

IFILL: And the 2016 Republican competition grows even more intense, as hopefuls compete for cash, attention, and the chance to hone their arguments against Hillary Clinton.

GOV. SCOTT WALKER (R), WISCONSIN: You look at everything that people dislike about Washington, she embodies it.

IFILL: On Capitol Hill, Republican leaders retest arguments, on health care, Benghazi, and even outgoing attorney general, Eric Holder.

SEN. JOHN CORNYN (R), TEXAS: You're not Eric Holder, are you?

LORETTA LYNCH, ATTORNEY GENERAL NOMINEE: No, I’m not, sir.

IFILL: Meanwhile, the president courts old allies abroad.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: India and the United States are not just natural partners. I believe America can be India's best partner.

IFILL: As his foreign policy team struggles to defang new threats.

JEN PSAKI, STATE DEPARTMENT SPOKESMAN: We believe that when you make concessions to terrorists, it puts more American citizens at risk, paying ransoms and negotiating can do that.

IFILL: Challenges, foreign and domestic, on policy and politics.

We explore tonight with Dan Balz, chief correspondent for "The Washington Post", Jeff Zeleny, senior Washington correspondent for ABC News, Nancy Youssef, senior national security correspondent for "The Daily Beast", and Peter Baker, chief White House correspondent for "The New York Times."

ANNOUNCER: Award winning reporting and analysis covering history as it happens, live from our nation’s capitol, this is WASHINGTON WEEK with Gwen Ifill.

Once again, live from Washington, moderator Gwen Ifill.

(END VIDEOTAPE)

IFILL: Good evening.

Well, we got a little more clarity on the 2016 front today. Mitt Romney, who according to nearly every account was perched right at the edge of the presidential campaign diving board, stepped back.

Here's a bit of what he said to potential supporters on a conference call this morning.

(BEGIN VIDEO CLIP)

ROMNEY: I believe that one of our next generation of Republican leaders, one who may not be as well-known as I am today, one who has not taken a message across the country, one who's just getting started, may well emerge as being better able to defeat the Democrat nominee. In fact, I expect and hope that to be the case.

(END VIDEO CLIP)

IFILL: It was an interesting call to parse the words because during the course of it, Romney appeared to acknowledge two home truths, that polls show him out in front, for now, and that that could change in heartbeat.

Did you hear anything else in that, Dan?

DAN BALZ, "THE WASHINGTON POST" CHIEF CORRESPONDENT: Well, you know, Gwen, it was a huge surprise three weeks ago when he announced that he was going to consider this. And in many ways, it was almost as big of surprise this morning when he announced after only three weeks he's out of it.

In talking to his people over the last six or seven hours as we were trying to dig into this, there were a couple of things that came out. One was he didn't make this decision because he didn't still want to be president. He still would like to be president. He didn't make it because he didn't think he could raise the money. He thought he could do that. He didn't make it because he didn't think he was in a very strong position starting out.

Two people said that the reason ultimately that he made this decision was that he kind of looked at what it would take to win the nomination and concluded that by the time he got through that process, he was likely going to be beaten up by that process that he probably would have a very difficult time winning the general election and on that basis concluded he's better to stay out of it.

IFILL: Isn't that true for almost any Republican in a race this wide open and with this many participants? That in order to get to the point where you can challenge Hillary Clinton, you could be pretty much tarred?

BALZ: Everybody will go through the process is going to get hurt by it. Although in many cases, the ultimate winner comes out enhanced in people's eyes because they've gone through a difficult process. But what happened to Governor Romney is in the time between when he made this announcement a few weeks ago of his interest, until sometime late over the weekend, when he actually made the decision that he wasn't going to run, he got pulled back into that maw.

And he realized as somebody said today, the memories of what had happened to him the last time had kind of blurred. And in the last three weeks, he was the target of all kinds of criticism from across the board, whether it was Republicans, Democrats, pundits, whatever. And as somebody said, all those slings and arrows over the last few weeks were aimed strictly at him. And this notion of what it was going to be like suddenly became, you know, sharply etched in his mind again.

JEFF ZELENY, ABC NEWS SENIOR WASHINGTON CORRESPONDENT: As you know, Dan, he was the leader in the early polls, largely because of name recognition, with some of his rivals. But I’m told that he was looking at some of his own internal polling or different polling other than public polling.

What was he looking at specifically over the last couple of weeks? He's a numbers guy. He's -- he loves data.

BALZ: This is so interesting. There is a Romney donor unnamed, we could not find out the name of this donor yet who had convinced himself that Romney was not going to run as the story was told to me. And had therefore gone out and commissioned his own polling to try to get a sense of how people viewed the whole field, Romney included. And that he had done this I guess on his own. I don't know this for sure. He took polls in I was told almost 20 states.

IFILL: Wow.

BALZ: And shared this with the campaign. And the Romney people say in three of the four early states, Romney had a strong lead. The fourth one he was competitive in. And that in all of the other states, he was in very good shape, had double digit leads in a number of them.

Now, as we all know, polls taken at this time can change very quickly. But nonetheless, they looked at that, and one of the questions they said was: who has -- it's not going to be easy -- but who has an easier path to the nomination than Romney? And they weren't convinced that anybody had an easier path to the nomination.

PETER BAKER, "THE NEW YORK TIMES" CHIEF WHITE HOUSE CORRESPONDENT: That's a good question, right? What does this do to the race? Romney is out. Does that clear it more for Jeb? Does it bring Chris Christie in? Does it create a path for somebody else at this point?

BALZ: You know, Peter, I think the answer to that is yes, yes, yes. I mean, it's certainly good for Jeb Bush in the short run. He's now the person with the biggest name, probably the ability to raise the most amount of money. And he will be seen as the frontrunner. And he can try to consolidate that position in a way that would have been more difficult had Romney been in the race.

Everybody assumed that if Romney and Jeb Bush were in the race, the person hurt most was Chris Christie, because they were raising money from the same establishment donors. They were going after many of the same voters. So, the second assumption is Chris Christie is helped by this. And Christie's people clearly believe that today. They are quite happy at what happened.

But as Romney said in his statement, this opens up an opportunity for others who are less well-known to begin to shine. And I think we will see some more attention on some of them -- Scott Walker for being one, for example.

IFILL: Well, we're going to be able to talk about all of that. We're going to keep talking about this online in the webcast, because there are so many more dominoes to fall as a result of this decision. I can't wait to find out more.

So -- but as Republicans begin to sort out their presidential field, the party's congressional leaders are trying to sort out their own strategy. This week at least, the goal seems to be completing unfinished business. So, there were plans to vote once again on Obamacare, and meetings on Benghazi and a confirmation grilling for Loretta Lynch, the president's choice to succeed Attorney General Eric Holder.

(BEGIN VIDEO CLIP)

CORNYN: How do we know you're not going to perform your duties of office as attorney general the way Eric Holder has performed his duties?

LYNCH: I will be myself. I will be Loretta Lynch.

(END VIDEO CLIP)

IFILL: Is this focus on the past part of the GOP leadership strategy for the future?

ZELENY: No question it is. We're one month into the new Republican majority into the Congress and it does seem like back to the future and so much unfinished business, because they’re trying to do a lot of things here. And one of the things they're trying to do is keep their base unified and the best way to do that is thrown in "repeal Obamacare vote" every now and then, throw in something for the base, some red meat. But what also is going on, the Senate actually passed a bill the other night, which is kind of a big deal.

IFILL: Yes.

ZELENY: It was -- it was to call for the construction for the Keystone XL pipeline, but that came after pretty extraordinary few weeks of debate. There were 30 amendments debated on the Senate floor, which again doesn't sound like a big deal but it was more than all of last year combined.

So, what we saw, I was sitting in the chamber up there watching these vote-a-ramas, we call them, and sometimes, senators were voting on 12 or 15 amendments at a time. And the Senate was actually -- the senators were talking to one another, because they were locked on the Senate floor talking to one another, fascinating. We didn't hardly see any of that in all of 2013 or 2014.

So, who knows what will be? Of course, the president is likely to veto the Keystone XL pipeline, there is some progress. But there is un-detecting frustration by House conservatives more than anything. And Speaker Boehner even said, like, we've had some few bumps in the road here. A couple of bills that he thought he was going to bring up for a vote, haven't materialized and immigration is still unresolved. That's the new big fight.

IFILL: Even after all the questioning of Loretta Lynch, she came off swelling pretty good after it was all said and done.

ZELENY: I thought no question. I was in that hearing and watching the hearings. And she handled herself very well do all these questions.

She's not Eric Holder. And they're glad she's not Eric Holder and she's not Barack Obama. So, that's what so many hours, so many questions were about. It was about the questions much more than the answer.

You know, she was not really defending Eric Holder or defending the policies of the Obama administration. I would be stunned at this point if she's not confirmed and only takes two Republicans to vote for her on committee to send it to the floor. I think she's sailing to --

IFILL: Orrin Hatch --

ZELENY: Right, she’s sailing to confirmation, unless something comes out that we don't know about.

NANCY YOUSSEF, "THE DAILY BEAST" SENIOR NATIONAL SECURITY CORRESPONDENT: I’m curious how this is affecting her relationship with the base and how they're going to get their base in. What have you seen on that front?

ZELENY: Well, it seems like on the surface, that things are calmer than they actually are. So many House Republican members I talked to are still hearing so many phone calls from their constituents and districts largely because of what Speaker Boehner is doing on immigration. You know, we thought immigration was resolved. But that's the one key piece of the funding dispute still out there.

And by February 27th, by the end of this month, they have to resolve the funding for the Homeland Security Department. And Republicans want some aggressive pushback on the president's executive action on immigration. And it's not happening yet.

So, Speaker Boehner said this week, I’m going to file a lawsuit. The House will file a lawsuit against the president on this.

Well, these lawsuits are beginning to stack up like blue ribbon studies or commissions, so many lawsuits. That's not enough for some members. So we're going to see this confrontation, particularly on the House side from some people who really want some aggressive action against this president.

BALZ: How are Democrats handling the fact that they're now totally in the minority?

ZELENY: Some of them are still licking their wounds and others are planning for the future. I mean, nine Democrats voted with Republicans on the Keystone XL pipeline. That was interesting. You can see the ones who are up for re-election.

But it's fostering some bipartisanship. But I think the biggest thing this week, was on the -- sanctions for -- for --

IFILL: Iran?

ZELENY: Right, the Iran sanctions. Senator Menendez, the former chairman of the Foreign Relations Committee, he was bucking the White House initially but he and nine other Democrats signed a letter and said, OK, we'll go with you.

So, the Democrats are trying to find out if they should play with the White House entirely, sort of play with Republicans a little bit. And they're still finding their way. But largely, they're not as relevant as they would be in the majority.

BAKER: Where do you think it’s going to go with immigration? I mean, do we see a path that gets them someplace that makes them happy? And the president is not going to sign anything that limits his ability to enact the order he already signed.

ZELENY: I don't know what the path is. And Senator Mitch McConnell says he doesn't know, either. The Senate is not going to pass this House bill. They have to fund the Department of Homeland Security. So, I don't see what the options are. They backed themselves into a corner, in a box, kind of their own doing.

And I don't see anything they can do that will satisfy conservatives who are so furious at this president.

IFILL: And then, there's the Cuba issue which will come up before them, another challenge.

ZELENY: And the politics are so interesting. We saw seven Republicans sending a letter to the White House saying we support the lifting of the travel ban. We support the ending of the embargo.

The politics of this are not red and blue. They’re largely farm state versus Florida and other things. A fascinating, fascinating dynamic up there.

IFILL: Absolutely. Well, thanks, Jeff.

On the foreign policy front, the Obama administration is watching closely -- on the sidelines, but not really -- as the Islamic State group continues to flex its muscles. First, demanding money, then a prisoner swap in exchange for hostages from Japan and Jordan.

But it is the U.S. -- but is the U.S. really on the sidelines, Nancy?

YOUSSEF: Well, there's a lot of discussions going on privately, because the U.S. is in an incredibly tricky situation. The U.S. position would be that you shouldn't negotiate with the Islamic State. By doing so, you elevate them. We have the Islamic state negotiating with the government. Holding the government and some would argue captive in and of itself.

The other argument is they are encouraging more kidnappings like this and they are encouraging other governments to negotiate with the Islamic State. But practically speaking, Jordan and Japan have their own domestic politics at play. And they want their citizens back. And so, what we're seeing is the United States saying we wouldn't do it this way.

But -- but we're not going to get into fear with what these other nations are doing. But with great hesitation and anxiousness about where this is going and what it means for how the coalition of 60-plus countries deals with this problem.

IFILL: As we sit here tonight deadlines have past. With the threats of executing -- not only the Jordanian hostage but also for the swap, this whole plan. Does that -- does that mean that we are waiting like on pins and needles to see what Jordan does? What Japan does? And whether that will veer away from what the U.S. wants them to do?

YOUSSEF: Well, the challenge for both Jordan and Japan, particularly Jordan because one of the things that the Islamic state has said is they want the relief of a Jordanian prisoner in exchange for these two prisoners. So the pressure is really on Jordan.

And so, one of the challenges that they're confronting is it's not so much what they're going to do. They don't know what to do because they've been met with silence. We heard from Jordanian officials. They haven't heard anything.

IFILL: They don't even know if the pilot is alive.

YOUSSEF: They asked for proof of life. They said, "Look, we'll make the deal with you. But we want proof of life. And we will give you this prisoner." And they haven't gotten that.

And in Japan today, we heard the spokesman come out and just say, we have no updates.

So, everybody is on pins and needles but frankly, and it's painful to say this, but the ball is in Islamic State’s court to decide -- to announce what they’ve done.

BAKER: What do we know about this prisoner that they’re asking from Jordan? She was a female would-be suicide bomber but they hadn’t seen to express great interest in her before. So, why now?

YOUSSEF: Yes, that’s right. Her name is Sajida al-Rishawi. And we first heard of her 10 years ago, when she was -- attempted to strike a Jordanian hotel, in what was their 9/11, three hotels were hit that day, almost 60 people were killed and she was a failed suicide bomber.

And at the time, she was kind of considered a loser frankly because she was this illiterate woman who had failed to carry out the attack and who had run away and hidden. And Abu Musab al-Zarqawi, the head of the al Qaeda at the time, had boasted that they had a woman suicide bomber only to discover she had run away. And so, we hadn't heard about her for years and years.

But she has a relationship with that old al Qaeda that has now become the Islamic state. And she has emerged in the last few weeks if you will as a symbol for the Islamic state. And one other sort of old school member that suddenly that they want to see released.

BALZ: How much is this causing the coalition to fray?

YOUSSEF: Well, we'll see. It's causing great consternation, if you will, because how does -- if the Jordanian is killed, how does Jordan stay in the coalition? Or what if the Islamic State were to say, OK, we'll give you back your pilot as long as you leave the coalition? And so, it's hard to see how some of these states stay. Meanwhile, in Japan, there was great agitation that its government was entering into international relations only to have this happen.

So, it's -- the next few days are going to be critical. And we'll see how it plays out. How the domestic politics play within those countries and how the public reacts, and how these countries adjust themselves because right now, for them, it's caused great stress within their countries.

ZELENY: What about the domestic politics of a Jordan and Japan in this? I mean, there are like differences in how they’re dealing with it, and raised questions here about how should we negotiate? Should we give ransoms? What about their domestic politics?

IFILL: Well, in our domestic politics involving the families of these hostages.

YOUSSEF: That's right. Well, in Jordan, in particular, it's quite interesting. King Abdullah allowed people to protest in front of the royal palace, chanting that they wanted their son back and there was no arrest, which is sort of extraordinary and sort of speaks to their effort to kind of let the steam out a little bit.

Safi -- his father, the prisoner's father, has come out in front of the palace and demanded his release.

And one gets the sense that Jordan is getting quite agitated with the U.S. involvement in this. They're feeling when we get involved in the first Iraq invasion in 2003, our three hotels were hit. We get involved now, and now, we have a prisoner exchange. So, there's great, great pressure on King Abdullah, who has been a forceful voice in support of going against the Islamic State.

And in Japan, what we're really seeing as a debate happening, whether Prime Minister Abe’s push to get more involved in international relations, in fact, backfired.

IFILL: Our allies are in a tough position, which, of course, we’re going to see happen as well in our next story, because -- finally tonight, a White House travelogue that sheds light on foreign policy, in no way like a State Department briefing can. Human rights, climate change, even head scarves were all on the formal and informal agenda this week, as the president traveled to India, with a detour to Saudi Arabia to pay his respects to the Saudi royal family.

What were the goals for the trip, Peter? And what actually occurred on the trip?

BAKER: Right.

IFILL: You were there.

BAKER: Well, the president did head to India, first time an American president has gone to India twice in his presidency. And is part of a desire to lock India more into -- it’s not an alliance at least more of a partnership with the United States. India was not really on anybody's side during the Cold War. And always sort of suspicious of being too close to the United States and we had a big rupture about a year ago in a flap over one of their diplomats was arrested in New York after being accused of exploiting a domestic worker.

So, this is an attempt to strengthen this relationship. And he met with Prime Minister Modi, the new prime minister who was thought to be more skeptical of America.

It turns out in fact he's quite pro-American. And he greeted President Obama on the tarmac with a hug and warm handshake. He’s -- as against protocol. They spent two full days together. They spent so much time together. At one point, President Obama said what's another speech between friends?

And it was part of the effort to translate this friendship into -- this personal relationship they seemed to be building into a larger political change.

IFILL: But the detour to Saudi Arabia was completely different. It wasn't originally planned.

BAKER: No. And they probably didn't tell Michelle Obama until after the Air Force One took off. She really wanted to go to the Taj Mahal, I think, on this trip, so did he. That was one of the big goals of the trip and they had scrubbed all of Agra, but it got canceled because they decided to go to Saudi Arabia, pay respects to the late king's family and meet with the new king who is not really well-known by a lot of Americans.

And I think they want to take his temperature, get a sense of what he's like, and looking for consistency. But there are some questions about his own health.

ZELENY: Why was it that they -- that the White House decided to make this a last-minute decision? He was criticized for not going to Paris after the shootings there. Related at all or totally separate?

BAKER: Yes. Totally separate. You can see why the optics aren't great, right? You don't go to Paris to stand up against Islamic jihadism but you go to Saudi Arabia, the hotbed of extremism in some ways, to pay fealty to the family.

But, in fact, you know, it’s a different situation. The parade, the protest in Paris had come up in a way so quickly. They didn't expect it was turning into what it turned into. In Saudi Arabia, this is a change in leadership. And it was a change in leadership of a very close ally, one that we rely on a lot in that region, not just because of oil but because of their cooperation on terrorism issues. And fighting some of the very jihadists we're talking about in Paris. So, they did feel like it was worth the extra effort to go there.

He hasn't done that a lot with foreign leaders over the course of six years. I think President Mandela's funeral is the only one I can remember him going to but it speaks to the nature of the relationship, how much we rely on Saudi Arabia.

BALZ: Peter, you talked about the relationship between the president and Prime Minister Modi. Who's the instigator of that? Is it Modi himself who has decided that this is a relationship he really wants or just that they found the chemistry was special and does that translate into anything practical in terms of a U.S.-India relation?

BAKER: It’s a great question, because, obviously, there are two very different people from different walks of life. Prime Minister Modi been accused of human rights violations when he was a governor of a state. And yet they seek to find some common ground.

He's -- you know, prodigy or he's from a tea seller's family. And Obama, of course, is from an outsider's family in the American elite establishment. And both of them came to the highest office and they seem to have shared a passion for technology, for ambition. And Modi for the first time -- not for the first time -- but one of the few Indian leaders who wants to play a role on the world stage and I think he recognizes that China is not going to necessarily make that easy for him, whereas the United States wants to, help promote him as a world leader.

IFILL: Peter, has the White House acknowledged that part of the motivation for going to Saudi Arabia is there is so much stress right, so many of our ally relationships, in the Middle East, between Saudi Arabia, which thought we should have been in Syria and what we see Benjamin Netanyahu and Israel, even Egypt?

BAKER: Right. And Yemen right next door, of course, is Saudi Arabia the day before the king passed or the same day the king passed away, the president of Yemen falls in -- and a close ally of the United States. So, very much an unsettled situation right now in the Middle East. We don't really have a sense of how long this fight with ISIS is going to last, what the pathway forward really is and our allies are feeling quite uncertain themselves.

IFILL: We'll talk about that more in the webcast as well. We have so much else to talk about to fit in. But in the meantime, thank you all.

We have to go now. But as always, the conversation will continue online. On the "Washington week" webcast extra where we will also talk a little bit more about why Hillary Clinton -- remember her? -- is unlikely to pull a Romney. You can find it later tonight and all week long at PBS.org/WashingtonWeek.

Keep up with daily developments with me and Judy Woodruff on the "PBS NEWSHOUR", and we'll see you right here next week on WASHINGTON WEEK.

Good night.