This is a partial transcript from "The Journal Editorial Report," September 16, 2006, that has been edited for clarity.

STUART VARNEY, GUEST HOST: The new Army field manual released last week greatly restricts the interrogation techniques allowed against unlawful combatants, including several that have proven highly effective against top Al Qaeda operatives.

At the same time, the Senate Armed Services Committee defied the president by passing a bill that does not set up a separate legal category for CIA interrogation techniques and requires classified evidence given to jurors to also be given to defendants.

So in the fight to defeat terrorism around the word, have we become our own worst enemy? Joining me now is Victoria Toensing, the former Justice Department official who established that department's terrorism unit.

Victoria, first interrogations. In light of court rules and the Senate action, is America still capable of interrogating terrorist suspects effectively?

VICTORIA TOENSING, FORMER JUSTICE DEPT OFFICIAL: Well, the interrogation might be able to take place. But the problem is that all of the people who are interrogators might be prosecuted criminally if they violate the specific law. And that's the rub, Stuart. We have to clarify, as the president says, make legal clarify, so the people who work for us know when they will violate the law and whether they will not.

Now, there is no issue about you can't torture, you can't mutilate. But here is what the present law says basically. That there cannot be, quote, "outrages upon personal dignity or humiliating and degrading treatment."

Now, to an Islamic fascist, being interrogated by a female is degrading. So how do our people deal with that kind of situation?

VARNEY: Victoria, could you see the day, somewhere down the road perhaps, when the ACLU sues a woman who has interrogated a Muslim terrorist suspect? Is this wildly beyond the bounds of possibility or not?

TOENSING: It is wide. What's even wilder is the fact that one year ago, McCain agreed to the very language the White House wants today for another piece of legislation. And why he and all the Democrats won't agree to it today is beyond me. It makes no sense whatsoever. But it puts our people at risk. And we shouldn't do that to the people who are out there working for us during this war.

VARNEY: Next issue, tribunals of some sort for Guantanamo Bay detainees. Do we have a trial format that will be open, fair and effective?

TOENSING: Well, we don't have the legislation yet, so we don't know whether we are going to have it.

What the White House wants is a situation where if you have to have classified information to convict a detainee, that the detainee does not get the specific classified information but would only get a summary. However, his JAG lawyer, military lawyer, which everyone gets for free, and if he has another lawyer, and that lawyer is cleared, those lawyers would get it. But the detainee and any uncleared lawyer would only get a summary.

You know what? That's the procedure used on our U.S. citizens who are brought to trial when there is classified information. Why do we want to make it better for detainees?

VARNEY: But is it such a sticking point just to hand that information over to the detainee, the accused as well as the lawyers? It is not such a big deal is it?

TOENSING: Yes, of course it is. Let me give you a situation. What if we have a wiretap up in Iraq on "X" and overhear "X" planning to bomb the Army barracks. We have accurate information to present at trial but we don't want to give up the method or the fact of that wiretap because we want to get more information from this place. What do we do then? You don't want to tell the detainee, guess what, we tapped you on such and such a phone on such and such a date. That's one who of what the problem is.

VARNEY: Why is it then, that Senator Lindsey Graham opposes this? He opposes the president's proposal. I believe he is a retired former military judge himself. Why would he oppose it?

TOENSING: You are going to have to go to Lindsay Graham for that. It makes no sense to me whatsoever.

What they say is, the public statement from the handful of Republicans and the Democrats is, well, we want our soldiers to be treated well if they are captured. I don't ever remember any of our soldiers being given the Bible and allowed to pray during the day. I see our soldiers, when caught, get murdered and drug through the streets of Somalia. I haven't seen this kind of reciprocity that we already give today.

VARNEY: What are the president's options now then?

TOENSING: The procedure in Congress. I mean the Supreme Court decision said it is up to Congress to fix this problem. The executive can't. So here we are.

The House already passed legislation that agrees with the president's position. Now we have got the handful of Republicans and the Democrats in the Senate. They are going to have to pass some kind of legislation and go to some kind of a meeting and try to work it out if they pass different pieces of legislation.

VARNEY: Is it possible to work something out with these two extremes?

TOENSING: I am an optimist. We always have hope. If the American people put sufficient pressure on these people, we can work something out that protects the people who works for us, and does fought give detainees better rights than with our citizens have when they go to trial.

VARNEY: Victoria Toensing, thank you for joining us.

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