All-Star Panel: Inside look at US spy agencies' 'black budget'

This is a rush transcript from "Special Report," August 29, 2013. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PETER BROOKES, HERITAGE FOUNDATION: Intelligence is our first line of defense and it is very important that we protect sensitive information, including intelligence sources and methods. This is not helpful to our national security by any stretch of the imagination. It is going to undermine cooperation with friends and partners.

(END VIDEO CLIP)

CHRIS WALLACE, ANCHOR: Former Pentagon official Peter Brookes talking about a big story in the Washington Post today leaked by former NSA worker Edward Snowden that reveals the so-called "black budget" of U.S. spy agencies.

And we are back now with our panel. The Post story says that while the budget for the intelligence services have more than doubled over the last 10 years since 9/11, the agency acknowledges that there are still some serious intelligence gaps. And let's put that up on the screen. Among those intelligence gaps, chemical and biological weapons, homegrown terrorism, China's next generation jet fighter, and Pakistan's nuclear program. These are what the intelligence agencies themselves acknowledge are gaps in their intelligence -- things they are having things finding out about. Steve, that seem like some pretty important areas.

(CROSSTALK)

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: This is really an incredible, incredible leak. Leading up to the publication of some of this today, intelligence officials were very concerned they engaged in a long back and forth with the Washington Post about what should and should not be included in this publication. I think we have seen some of it. I believe there is more coming. So we may yet learn more.

But just in what we have learned today, this is like a greatest hits of U.S. intelligence community. It's what the agencies use to justify the spending and to basically ask for more. So it details virtually everything they are doing, and also, as you point out, the places where we have gaps which in effect allows them to ask for additional funding to fill in those gaps so that they can develop capabilities to it fill in those gaps.

If this entire thing were published without any restraint by the Washington Post, I think it would be one of the most significant leaks of anything ever. The Post seems to have been somewhat restrained right now. It will be interesting to see what happens in the coming days.

WALLACE: Mara, there is some irony to this story because the NSA, according to this report, planned to investigate at least 4,000 insider threats, cases where they said they were concerned that one of their own might have compromised information. The irony, of course, is the fact that this entire story was leaked to the Washington Post by one of their own Edward Snowden.

MARA LIASSON, NATIONAL PUBLIC RADIO: That's right. I wonder if he was on the list of 4,000 and they just didn't get around to him.

WALLACE: Probably not.

LIASSON: It is really extraordinary and tells, you know, just how much money we are spending on these security efforts, and also shows how the CIA, although had has been in trouble in years' past, really has gotten back on the strong footing and is the biggest recipient of this.

But this is something that was not meant to be public. And you just have to wonder how much more Edward Snowden provided information there is out there and that we are going to find out about.

WALLACE: I mean, we should point out, Mara, that the Post said that there is a treasure trove. They had the entire budget and they went out of their way simply almost to do chapter headings but not to do any of the details inside. So it sounds as if Snowden had the whole bill of goods.

LIASSON: Snowden had the whole bill of goods, which means that the Chinese government and Russian government have everything that he had had.

WALLACE: Because you would assume if he gave it to "The Post" it was on his drives.

LIASSON: It was on his drives and he didn't have to lift a finger to give it to them or to let them have access to it.

WALLACE: Charles, what do you make of the disclosure, what did you learn about the intelligence community?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It's criminal and traitorous. You could argue on the NSA stuff, well the guy was trying to protect individual rights. He thought there was a violation of the Fourth Amendment so he blew a whistle on this. There is nothing in here that is a way of protecting American rights. This is nothing but a disclosure of what we know, what we don't know, which is enormously helpful to America's enemies. Steve is right. If all of this had been published, if the Post had put it all out it, it would have been the worst leak in American history. And we can be sure there is zero chance that the Chinese intelligence agencies and the Russians don't have every -- every iota of this. So all of this is known.

LIASSON: Much more than we are reading in the Washington Post.

KRAUTHAMMER: Exactly. In the Post it's a redacted version. But even that is telling us a lot. This is a deeply harmful way to hurt the United States.

WALLACE: But what did you learn?

KRAUTHAMMER: And I don't see a redeeming feature in it.

WALLACE: I understand that point. What did you learn from the information?

KRAUTHAMMER: That list, you start with the list of deficiencies. And there are other lists, endless lists of other areas. Also areas where we are strong, would be penetrated, and we have assets on the ground, which the Chinese and the Russians now know. They also know where our emphasis is. Obviously, the CIA doubled in its size. It's now the major agency. It's essentially a paramilitary organization running the drone war and the other stuff. But there is detail in here which we can't even imagine which is now in the hands of our adversaries and, therefore, in the hand of any allies of theirs.

WALLACE: And briefly, we have got less than a minute left, Steve is our resident expert on the intelligence community. How badly, and again, not what the Washington Post says but the whole story, which as we suspect probably is in the hands of the Chinese and the Russians, how much damage to national security?

HAYES: Huge. I think it's absolutely huge. It shows how our resources are being used. It shows, as Charles suggests, not only our deficiencies and gaps but our successes. It shows areas where we have penetrated, areas where we have gotten intelligence, collection.

(CROSSTALK)

WALLACE: -- says to our enemies you have got to watch out.

HAYES: Here is where you need to shore up. Yeah, basically it tells them – it would be like giving them a playbook for a very successful football team to the opposing team, it tells them exactly what they need to do to be more competitive. And anybody who wanted to treat Snowden as a hero is delusional at this point.

WALLACE: That's it for the panel. But stay tuned for a marine promotion ceremony you won't want to miss. Bulldogs are involved.

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