'Special Report' Panel on Impact of Federal Stimulus

This is a rush transcript of "Special Report With Bret Baier" from October 23, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

CHRISTIANA ROMER, COUNCIL OF ECONOMIC ADVISERS: Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009 and by mid-2010, fiscal stimulus will likely be contributing little to further growth.

We enter the fourth quarter of 2009 with the unemployment rate nearing 10 percent and likely to remain severely elevated.

(END VIDEO CLIP)

BRET BAIER, HOST: Well, Christina Romer, the president's top economic advisor, the chair of the Council of Economic Advisers, says essentially the stimulus will have done what it's going to do this year and that unemployment does not look good.

That, however, comes after many administration officials in recent weeks, actually in the past five days, have painted a little bit different picture. Take a listen:

(BEGIN VIDEO CLIP)

VICE PRESIDENT JOE BIDEN: We hope and we believe we can, with your help, use the Recovery Act as sort of jump starting an engine that creates jobs that are well-paying jobs that people will be able to live.

VALERIE JARRETT, OBAMA SENIOR ADVISER: We're fully on track with the Recovery bill and the stimulus going forward, but we've only spent a little less than half of the money. And so we still have a ways to go with the Recovery bill.

(END VIDEO CLIP)

BAIER: Well, here are the numbers, the flat numbers, unemployment numbers — Americans employed as of February: 133 million, roughly. Americans employed as of September 2009: 130 million. Jobs lost between that time — this is when the stimulus was passed until September — 2.7 million. Those are labor statistics.

What about all of this and the back and forth about the stimulus? Let's bring in our panel: Steve Hayes, senior writer for The Weekly Standard; Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer — Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, I think one of the interesting things that we have to look at is, you start from their benchmark, their original benchmark, which was 8 percent. This is not going to go above 8 percent. We are now about two points above 8 percent.

But I think to a certain extent the Obama administration is right. There are indicators that the recession is over. We have said that now for a couple of quarters. The question is how long will jobs lag behind, number one. And number two, what will Obama administration policies, which are largely, I think, growth-killing policies, what effect will they have often on that recovery?

Nobody knows. This is all guesswork. I think you can see that the Obama administration has differing opinions inside the administration. That's something that is not helpful if you're on the White House message team. But I think one thing that Republicans really need to be careful of at this point is spending too much time talking about jobs. You can do that now, but if the unemployment numbers improve, you're stuck and the Obama administration is going to be able to say, look, our stimulus worked.

BAIER: Technically a recession is when there is two quarters back to back of negative growth, the GDP is negative. So we haven't yet technically seen a way out of this recession yet. But when you hear the low expectation game out of Christina Romer, is she trying to paint the picture that, you know what, we're going to have to deal with this for a long time and it's OK, the economy is still going to recover despite unemployment numbers?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: I don't think there's any question. That that's the way I read it.

What struck me was the inconsistency in the message. The message for the longest time had been that the administration was careful with the stimulus money, not to roll it out too quickly.

Remember, there were arguments that it should have been put in place quickly to spur employment right away and they said, no, we don't want to risk that this money would be subject to corruption and spent on things that are useless. We want to know what we are doing and put it in place and it will really be rolling out during 2010.

So now to hear from Christina Romer, no, it has had its impact already, came to me as a surprise. I didn't know where — is she off message, or is she simply playing the expectations game?

I will say this: I think for people on Wall Street, one of the reasons that Wall Street has been climbing is the general expectation that, yes, unemployment is going to persist, but we're going to have the stimulus money. It is going to help with this issue in 2010.

She undercut that message at this point.

BAIER: Not only that message, but Valerie Jarrett, just four days before that, said we have only spent 40 percent and wait until you see what happens with the next 60 percent.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, look, the administration was trying to explain away for months why it spends almost $1 trillion and there is no effect. Our as numbers are showing obviously, increasing unemployment relentlessly.

So the line was, well, it's kicking in next year, it will all kick in next year. And now we get the chief economist at the White House telling us that it's already had its effect and next year it will plateau and won't have any effect on unemployment.

And you can only conclude that the stimulus is a bust. There's no other conclusion. If it didn't have its effect next year and it's not going to have an effect next year, then it had no effect and we wasted $1 trillion.

BAIER: They say it saved jobs — saved 600,000 to a million jobs — and it could have been much worse. That's what the administration says.

KRAUTHAMMER: And that is angels on the head of a pin. This idea of saved jobs is completely unempirical. There's no way to show it in any way in any model. It is an invention.

What you do is you look at real numbers. The real numbers show a radical increase in unemployment, and we're told it is going to remain that way.

So look, it's obviously, what you want to say is that there are these mysteriously saved jobs. If there are any, they are almost entirely in the way the stimulus helped to bail out states that had overspent and were going out of business, especially large blue states, and kept bureaucrats in their jobs as the private sector was shedding its jobs.

And that's why it's not going to help our overall numbers.

WILLIAMS: But that's the argument to be made that it helped states, especially states over their Medicare spending, to compensate for that, so that people could stay employed, and that helps, of course, with consumer confidence.

BAIER: What about this, Juan — let's say we're only at 40 percent. So you have 60 percent that has yet to be spent. And you have your chief economist saying it's not going to make a difference next year.

Well, why not take the 60 percent and give a tax credit to businesses or do something else with that money instead of spending it on where they were going to spend it on?

WILLIAMS: Well, see, I'm not clear. Now I'm confused. I'm mixed up about this. One person is saying that it has had its impact, the money has been spent. I think that's what Christina Romer is saying.

And then you're hearing from Axelrod and Jarrett that no, really, we're not going to...

BAIER: No, she is saying the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009 and by next year, it essentially won't affect anything.

WILLIAMS: Well, I don't get that, because if you're rolling out projects and doing the infrastructure projects that were talking about, if you're doing the kind of things that are going to build the innovation economy, investment kind of research, how could it not have an effect?

BAIER: There is a huge disconnect here.

HAYES: They are just not on message. Now is as good a time as any to reveal to you and everybody in Washington that I either lost or didn't gain 30 pounds since June. You can't make that argument.

It is amazing to me that the president still makes it. He made it in his presentation the other day with small businesses. It is a phony number. People have ridiculed it forever. And it is one of the things that I think is really contributing to this lack of understanding of what the stimulus has actually done.

KRAUTHAMMER: One thing that we know it did do which is indisputable, it added $1 trillion to our deficit which will have an effect on unemployment in the future because it will increase our debt service.

BAIER: The lightning round is next, including your online choice for the first topic. We'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

FORMER VICE PRESIDENT DICK CHENEY: They seem to be pulling back and blaming others for their failure to implement a strategy that they embraced last March. It's time for President Obama to make good on his promise. The White House must stop dithering while America's armed forces are in danger.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: What Vice President Cheney calls "dithering," President Obama calls his solemn responsibility to the men and women in uniform and to the American public.

I think we've all seen what happens when somebody doesn't take that responsibility seriously.

(END VIDEO CLIP)

BAIER: Former Vice President Dick Cheney taking on the administration again this week, saying that the Bush administration had a plan — had a review on Afghanistan. They handed it over to the Obama team, and that's essentially what the Obama team, he alleges, took — signed on to in March when the president came out with a strategy.

Now, Vice President Joe Biden was overseas today. He called Cheney's remarks, when he was flying back on Air Force II and there you see him earlier in the week, he called Cheney's remarks and the whole plan as Cheney recalled it "irrelevant" because Biden said he traveled to Afghanistan in January and redid the whole review.

This is your choice for the first lightning round topic. We're back with the panel — Charles?

KRAUTHAMMER: The history of this decision is less important than the fact that the president is agonizing in public.

A president ought to think long and hard about a strategy about war. There is nothing wrong with that. But agonizing in public, leaving allies hanging, as we saw in the NATO meeting today, where all the others are waiting to hear what the United States is going to do, leaving the Afghans hanging, leaving everybody in Pakistan hanging on this as the president thinks, is a mistake.

If you want to have a private consultation, do it, but it's Obama's own strategy and he's responsible and if he wants a reconsideration, it should be done in quiet and then have announcement.

BAIER: Juan?

WILLIAMS: I think what we're seeing here is a political battle. It's Vice President Cheney saying they had this thing under control.

You hear the argument coming from the administration that, in fact, it was eight years of drift. They didn't put the necessary troops in there while they were in the wrong war, as they call it, in Iraq, versus the necessary war, as President Obama describes what's going on right now in Afghanistan.

So you get people like Rahm Emanuel, the White House chief of staff, saying, you know what, the consideration of political, strategic, all of those issues have changed as issues have changed on the ground, and that's why we have this ongoing thing.

So dithering, waffling and then for Gibbs to come back and blame Cheney, that is really not worthy of the solemn, to use his word, the solemn nature of what is being considered here.

HAYES: The history here does matter. One person is right and one is not. Rahm Emanuel said last weekend the Bush administration never asked these questions. In fact the Bush administration did ask these questions. There was something that took two months from mid-September to mid- November called the Lute review.

I interviewed Eliot Cohen, who was a senior counselor to Secretary of State Condoleezza Rice. He was a key participant in this panel. He said they studied it intensively, they passed on the recommendations to the Obama administration. What Rahm Emanuel said is just flat wrong.

BAIER: Quick answers on Iran and what is happening with them, pushing back with this plan on sending enriched uranium to Russia and France.

HAYES: None of this matters. It would be nice if it did. None of this matters. We know what Iran wants because we have been watching them for decades. This is all details.

WILLIAMS: I think it's very disappointing unless they hold on to their promise to allow the inspectors in, to allow the world to see exactly what they are doing. They are saying this is for medical purposes, but once it gets back to them, it could be further enriched for weaponry.

KRAUTHAMMER: And the added uncertainty is we have no idea how much hidden in enriched uranium Iran has. This is a shell game. It's a way to extend negotiations and give them time.

BAIER: A lightning bring your own comment — Charles?

KRAUTHAMMER: Well, this airplane that overshot Minneapolis by an hour and a half, the speculation is that the pilots were asleep. Well, my question is, during that hour and a half, what were the flight attendants doing? I'm not an aviation expert. I'm just asking as an innocent and concerned citizen.

BAIER: Juan?

WILLIAMS: Former Alaska Governor Sarah Palin this week refused to endorse the Republican candidate in the New York 23rd Congressional district election, Dede Scozzafava.

And what is happening in that race is really intriguing because now all of a sudden the Republicans, Scozzafava, who is down to Bill Owens, the Democrat and because Palin's endorsement has gone to Doug Hoffman, an independent in that race.

And so what we are seeing here is literally people not meeting some kind of litmus test for how conservative you have to be to please Sarah Palin and stay inside a very limited tent. I think it is self-defeating.

HAYES: It is not a limited tent. Scozzafava is a liberal. She might as well be a Democrat and would be a liberal Democrat.

There was a bigger outrage associated with this race this week. Our reporter from our magazine, John McCormick, went up to cover the race and politely asked the candidate several questions at an open public meeting and the campaign called the police on John McCormick, something that I think even the Associated Press said was unwarranted.

BAIER: Two lightning round topics on one New York race. That's pretty interesting.

And, of course, your choice, you can vote Wednesday on the online show for next Friday's first topic in the lightning round. Panel, thank you.

Content and Programming Copyright 2009 Fox News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2009 CQ Transcriptions, LLC, which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, LLC'S and CQ Transcriptions, LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

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