This is a full transcript from "FOX News Watch," on March 10, 2007

E.D. HILL, FOX NEWS GUEST HOST: This week, on "FOX News Watch": Shocking stories and sincere apologies, as the Walter Reed scandal grows. It's a guilty verdict for Libby, and a guilty verdict for the press. America's mayor gets labeled.

(NEWSBREAK)

(BEGIN VIDEO CLIP)

JEREMY DUNCAN, U.S. ARMY SPECIALIST: Conditions in the room, in my mind, were just - it was unforgivable for anybody to live - it wasn't fit for anybody to live in the room like that. I know most soldiers have - who have just come out of recovery have weaker immune system. The black mold can do damage to people. The holes in the walls - I wouldn't live there even if I had to. It wasn't fit for anybody.

(END VIDEO CLIP)

HILL:That was Army Specialist Jeremy Duncan, who testified before a House committee on Monday about conditions at Walter Reed Army medical center. Later in the day, we also heard a round of apologies from top Pentagon brass. On Tuesday, President Bush put former Senator Bob Dole and Health and Human Services Secretary Donna Shalala in charge of a commission designed to turn the Walter Reed situation around. The media first brought the scandal to light. But now, are they also in danger of overdoing it? We turn that question to our scandal. And Jim, let's start with you. In danger?

JIM PINKERTON, "NEWSDAY": Well, it may - in the future, it may turn out that way. But I think right now, the media are - are playing perfectly adequately and perfectly fairly. I think that what we saw last week is two lessons for future politicians and health bureaucrats and so on. One is, the media love contrition. So General Weightman turning around that made every newscast - just the simple act of turning around and apologizing to the - to the woman.

And the second thing the media love is action. They admire Bob Gates for firing these people. They admire even - even the president for putting in Dole and Shalala as the co chairs. So if you are in a situation where you're in trouble, and clearly the Bush administration has been on the defensive on this, it's very important to do something. And they did.

HILL:Yes.

NEAL GABLER, MEDIA WRITER: But - but here is - here is something that that the media is not good at, and that is the larger issue. The larger issue is, how did we get here?

Lisa Myers had an excellent report on Wednesday's NBC broadcast about the privatization at Walter Reed, and how that contributed to both the cut in staff and to inferior treatment. And by the way, the - the company that was privatized at - at Walter Reed had botched Katrina completely in delivering ice. I think that media has not yet talked about how unprepared the administration was for the casualties. And I think that the media have really not discussed the budget cuts in - in Veterans Affairs that - these are major, major, major issues, and they ought to be discussed in the media.

HILL: But Cal - Cal, you know, I can't count how many members of Congress have been over at Walter - you know, Reed Army Medical Center, and not a one of them was able to find one person to tell them, on the side even, `Hey, conditions aren't so good here, I need some help.'

CAL THOMAS, SYNDICATED COLUMNIST: Well, that's a very good question, and it's part of a two-part answer. First of all, "The Washington Times" did an editorial over a year ago a full story - on poor treatment at veterans' hospitals in general, including Walter Reed. We've spoken on this show before about how Don Imus blew this several months ago as well.

GABLER: And Salon.

THOMAS: Yes, and Salon. It wasn't until the elite media, meaning "The Washington Post," put it on the front page, that all of a sudden they've got everybody excited. The other thing is, what about the oversight. The media haven't asked members of Congress, under Republican and Democrat administrations, and Republican and Democrat leadership - why weren't the committees that were responsible for these things out in front of it earlier?

HILL:But Jane, is all of this just slightly overdone? You know, as some bringing up right away, it's Hurricane Katrina, it's this, it's that, instead of - look, there - there is a - a section there that is dilapidated; it needs to be brought up to - to standard. There are - there are treatments that are going - that are being - you know, taking too long to get to. Our - our Army, our military, deserves much better. But are we sort of heaping it on?

JANE HALL, AMERICAN UNIVERSITY: Well, there's a tendency sometimes, once a news organization breaks a story, to pile on. I don't think you can pile on on this one, because it's not just Walter Reed. It's not just mold. It's not just putting a new roof on Walter Reed in this Ward 18. All through the Veterans Administration we're not finding people have had to find to get benefits. Veterans hospitals are not nearly adequate. There are so many casualties. And how they didn't know that, how you couldn't run the actuarial tables, God forbid, and say, `We're going to have all these people, we're saving all these lives.' I think the politicization of a lot of these agencies - I mean, people are comparing it to Katrina, because when Jim Nicholson, the head of the VA, was asked about a program two or three years ago on the evening news, that would have had computers allowing them to talk to each other among agencies, he didn't even know about it.

(CROSSTALK)

PINKERTON: Hold on - this is worth nothing, both Neal and Jane have both managed to work in Katrina..

(CROSSTALK)

HALL: But they're asking if it's being overdone, and I say no.

PINKERTON: OK, and I'm saying maybe - maybe I'm starting to agree with E.D. Maybe - and then they're - look, there's plenty of time to get the story all sorted out, including the fact that the dreaded privatization at Walter Reed began in the year 2000. Now who was president in the year 2000? It wasn't George Bush.

GABLER: I - I don't know the point exactly.

(CROSSTALK)

GABLER: You're absolutely right, but we weren't at war in the year 2000.

PINKTERON: OK. Well, fair enough, but the point is.

GABLER: .and we're at war now.

PINKERTON: Yes, and.

GABLER: And the media ought to have covered this story, actually, two and three years ago, and they didn't. And they failed. And now they're playing catch-up. And they ought to be playing catch-up.

PINKERTON: There have been abuses and discoveries and horrible scandals at veterans hospitals every five years for my entire life.

GABLER: Only from the right-wing media would we have someone attacking the media for dealing with our - with our troops.

PINKERTON: Nobody's - nobody's attacking the media.

GABLER: Unbelievable.

PINKERTON: We're just simply saying, this is a - this is a - there's a larger narrative here.

GABLER: That's what I said.

PINKERTON: And I agree with you.

HILL:And it is time for a break. We'll be back with this:

ANNOUNCER: The jury gives Scooter Libby a guilty verdict, and gives the news media another chance to show bias in their reporting. The details next, on "News Watch."

(COMMERCIAL BREAK)

HILL: This week, Lewis "Scooter" Libby was found guilty of obstruction of justice and perjury. Within hours of the verdict, editors at "The National Review" were calling on President Bush to pardon Libby. "The New York Post" and "The Wall Street Journal" have since joined the call to free Libby. Other publications had different views. Meanwhile, on Tuesday night, former ambassador Joe Wilson telling Larry King that his wife wept after hearing the verdict. And other outlets, a lot of them finger-pointing at Mr. Cheney, saying Libby was simply the fall guy. Talk about picking sides. We are joining by our panel again. And Cal, let's - let's start with you. It - it seems that a lot of people immediately piled on. And they either said, `Pardon him' or `What's - it's not him. Go to Cheney. Go to Rove.'

THOMAS: One of the most fascinating things about this to me, E.D., was this juror named Denis Collins, who was the only one who initially came out and - and talked to the press about this. Now, it was.

HILL: He's a journalist. Of course, he came out and talked to the press.

THOMAS: Well - yes, but that's what he said. I'd be hypocritical if I didn't do this. But look, within minutes after the verdict, he had a - a - almost a fully produced piece up on the left-wing huffingtonpost.com Web site. He's already talking about a book deal. And it was interesting that - his associations. Not only did he work with our good friend Bob Woodward at "The Washington Post," he was a neighbor of Tim Russert. He was up there with Matt Cooper, who's married to Mandy Grunwald, part of the old Clinton war room. The associations here are really interesting. And it makes you wonder this guy seemed to be the leader in the jury room. If you remember the movie "12 Angry Men," where Henry Fonda managed to get everybody to come from a guilty verdict to an innocent verdict - I'd like to know what went on that - in that jury room. I think the guy is compromised.

HILL: Well, you're not suggesting that, are you?

THOMAS: Yes, well, there's a movie about it.

(CROSSTALK)

GABLER: (INAUDIBLE)

HALL: I think the only good news for the media out of this is the jury believed Tim Russert. I mean, otherwise, it's a bad day for the media. Because you see - you see testimony of the administration saying, `OK, now if we give this to Judith Miller' - we're talking about our case for war. I mean, somehow that kind of got lost in all the coverage. I mean, it became about Scooter Libby, not were they trashing someone who was - who was questioning our - our case for going to war. And - and you see them talking about this one and that one. And - and it is so cozy, and it is revealed so cozy. It does not look so good.

HILL:Yes, but doesn't - isn't this good for the American public? They finally saw what all of us know. And that is, that there is not a - there is not one secret in Washington, D.C. That if classified information is given to anybody, it's given to someone in the - in the media.

HALL: But they're - but the whole idea of being used, of being - you know, OK, we're going to give it this one. The fact that these people are.

HILL:We're used all the time.

HALL: OK, but I think - I think the.

GABLER: Knowingly being used.

HALL: The willingness to be used was what was also revealed.

HILL:Jim.

PINKERTON: This was a legal lesson and a political lesson. The legal lesson was a fairly narrow point of, `Look, if the FBI comes to you, don't lie to them.'

HILL:(INAUDIBLE) anything.

PINKERTON: Exactly. Peter - Peter Johnson makes the point, listen, Libby was under no obligation to say a word to the FBI. He could have taken the Fifth at the - before the grand jury.

HILL: Right.

PINKERTON: .and he'd be, obviously under a cloud, but he wouldn't be in the legal trouble he's in now. The - the political lesson, of course - and that's what we all talk about here - is huge. And that is, is it - is it Karl Rove's - Karl Rove's fault and - and - and Dick Cheney's fault, or is the Iraq war, you know, to blame? I mean, there's a - there's a - there's a huge - both the right wants to - and - and "The Wall Street Journal" wanted Bush to not only pardon Libby, but apologize to Libby, which strikes me as a little bit.

(LAUGHTER)

HILL:Neal.

GABLER: Well, you know, I - I think the media is one of the great losers in this. Obviously, so is the administration. But I - and I think Jane is right. They are - they are losers because, for once, they've been revealed to be very, very cozy with their sources. And for another thing.

HILL:I like the way you phrase that. "They" - it's not us.

HALL: Right.

HILL:You know, we all end up getting information like this.

GABLER: Well, not I.

HILL:And you - and you determine whether or not you're going to use it, and in what context.

THOMAS: Well, Jane brings up Tim Russert. One of the things left out of the trial, and probably because the - the judge was ticked because Libby wouldn't take the stand, was the video that the defense was ready to present, of - of Russert's poor memory in some other areas of this. So that didn't even make it to the jury. And the whole point of the defense was, that Libby couldn't be expected, as a multitasker, to remember everything he said to everybody.

GABLER: That's absurd.

THOMAS: Well, it may have been..

(CROSSTALK)

GABLER: Why are 12 reasonable people constantly tossed aside for the for the right-wing agenda here?

THOMAS: That wasn't a right-wing agenda.

GABLER: But it is.

(CROSSTALK)

GABLER: But the other point I want to make is that - that, you know, this also subjects the press to greater scrutiny by prosecutors, and this is something that a lot of people have said. And - and Fitzgerald has made a distinction between those who protect their sources as - as they're used as enablers for bad behavior, and those who protect their sources because they're serving the public interest. That's a very important distinction. And of all the things that come out of this trial in - in media terms, that may be the most significant.

PINKERTON: I suspect that distinction will get lost. I - I had concerns all along about Fitzgerald calling in reporters and grilling them like this. And I guarantee in the future, prosecutors will routinely subpoena reporters and journalists, which is to say all of us, and make them talk, or risk going to jail.

HILL:Jane.

HALL: Right. I mean, it used to be there was a kind of a truce, that they wouldn't come after you, that they would exhaust all other means. I think this has - has - the truce is over, and prosecutor - any kind of overzealous prosecutor is going to go after.

GABLER: Well, Fitzgerald did exhaust all other means. So let's not call him overzealous.

HALL: No, but wait - but - but I think you have to distance.

GABLER: He was appointed by Republicans, first of all.

HALL: The problem is, legitimate whistleblowers - you know, that's one thing. The other is somebody deliberately leaking to you to trash to somebody.

GABLER: And that's exactly what Fitzgerald said.

HALL: As a journalist, you ought to be able to tell the difference, and I don't think these people could.

THOMAS: Kudos to "The Washington Post" editorial page, which did the best balanced editorials. "New York Times" totally in the tank, anti-Bush - Bush can't do anything right. "Washington Post," very balanced editorials. They did a good job.

HILL:OK. Time for another break. We will be back with our "Quick Takes" on the media.

ANNOUNCER: Rudy Giuliani's bond with Americans grows strong. But the bond with his son has gone south. Are some in the media exploiting the story? Answers next, on "News Watch."

(COMMERCIAL BREAK)

HILL: Time now for our "Quick Takes" on the media. Headline number one: "Father and Son Need Face Time." Andrew Giuliani, the 21-year-old son of GOP presidential frontrunner, former New York City Mayor Rudy Giuliani. Now last weekend, he told "The New York Times" that he's been estranged from his dad after not speaking to him for - quote - "a decent amount of time." Father and son have been trying to reconcile. His admission sparking a round of media coverage this week focusing on Giuliani's family relationships, prompting the mayor to defend his third wife and son's stepmother, and to ask the press for privacy. So this headline, is it fair? You know, everybody with a teenager or someone with a young adult goes through this kind of thing - Jane.

HALL: Well, you know, I think it's fair, because when his children were little, they were part of his campaign, when he first ran. He had an incredibly.

HILL: So he made the chance, therefore he opened it up.

HALL: He made the choice to put his children out there. I think "The New York Times" sought the kid out at Duke University. I doubt if he called "The New York Times." I think most people are going to be pretty sympathetic to Giuliani, except it's going to bring up the incredibly messy divorce he had, which if you're on the conservative family values side of things, is not going to be good for him.

THOMAS: Let me follow up on that, because it's really interesting what's happening in the conservative family values mode that the media haven't really explored yet. Here you've got a lot of social conservatives who are flirting Giuliani, married three times; John McCain on his second wife; possibly Newt Gingrich, who has been married third times - three times, and now has kind of done a confessional on James Dobson's radio program - "I didn't live up to my standards or God's standards." Now before, it was - we're focusing on the family. It's - we need - we need family values and heterosexual marriage, presumably just once, not trying it several times. But I find this to be an uncovered story right now, is how quickly the social conservatives their own values in pursuit of political power.

HILL:Is that what's going on?

GABLER: I'm - I'm with Cal on this one. Ordinarily, I think that your private life is off bounds. But if you're going to make family values part of the - the centerpiece of your campaign - and almost every right-wing Republican does - then you've got to look at their family values.

HILL:But had Giuliani?

PINKERTON: Well, no, Giuliani hasn't at all. It just - it just came to him. But look, it - look, the Democrats said in the 90s, that if Clinton - your private performance - aka Clinton - doesn't matter.

GABLER: And I'm with you on that.

PINKERTON: OK, fair - fair enough.

HILL: But I'm always interested about the private performance.

(LAUGHTER)

PINKERTON: And so's everybody else, and that's why the stuff keeps coming up. And if - so if Giuliani survives this, and it's obviously pretty sticky and mess, it's - he can thank Bill Clinton for establishing the precedent that there ought to be a private life off limits to the press.

HALL: You know, it's really interesting - I mean, I think unfortunately, or fortunately, this is something everybody's interested in. You know, there's a "Newsweek" cover story that is so full of myth making, how wonderful he was after 9/11. What are people talking about? Not 9/11; they're talking about something every family has some connection to. I think it's going to be hard for this to go away.

HILL: All right. Let's take "Quick Take" headline number two: "2000 Reasons To Question His Ethics." Kurt Eichenwald is a former "New York Times" reporter who wrote a lengthy article in 2005 about Justin Barry, a young man caught up in the world of teen pornography and prostitution. Well, the article led to a congressional investigation into the illegal world of child porn sites. Now the paper acknowledges that Eichenwald loaned Barry $2,000 to - quote - "win his trust." Six months after the payment, Barry was the main subject featured in the article. "Times" editor say they did know that Barry received money from the paper's reporters. So, is this starting something completely new?

THOMAS: Yes. Well, this is bad, bad, bad in every way. This didn't come out, of course, until the trial, and the "Times" had to play catch-up. I called Nick Kristof, the Pulitzer Prize-winning columnist for "The New York Times" this week just to make sure I got this right. He bought two women - prostitutes - out of a brothel in Cambodia. But before he did that - to rescue them and write about them - he checked it with "The New York Times" legal department and his editor for permission, and then put it in the first column that he wrote about it. That's the way to do it. This didn't happen this way.

HILL:But he - but he says, `Look, I wasn't buying an interview. I was trying to help a troubled young man.'

THOMAS: That's fine. But it's going to - you've got to tell about it upfront.

PINKERTON: I think this was a terrible violation of journalistic ethics. However, it was in a good cause. And I was - my - my first reaction was negative, and my second reaction is to salute the guy for saving this kid's life.

HILL:So who decides what the good cause is?

PINKERTON: We do. And we did. We - he should have disclosed it, but I'm glad he did it.

HALL: Well, you know, if you read the stories, the stories were unbelievable. Eichenwald got into this whole world. He contacted this guy online. I still don't think it excuses it. I think he should have disclosed it, and said, `I did this' - I mean, it's still strange to me, "to gain his trust." I mean, was he trying - you know, trying to get him on board, and then to write about him? I believe that he did a good thing ultimately, but he should have disclosed it as part of the story at the time.

HILL:And it - and it leads you to think or wonder if the only way he could get the story was to in essence kind of pay for it, even though I believe that those - his article was a great community service.

GABLER: But that's not what he said.

HILL:It benefited everybody.

GABLER: I - I think the difficult call here is, that he's saying, `I did this as a human being. And I also was a reporter.' And the problem is finding out the line between being a human being and a reporter.

PINKERTON: Every now and then, being a human being ought to supercede being a reporter.

GABLER: You're - you're right. You're right.

HILL:But isn't it nice to know reporters can be human beings?

(CROSSTALK)

GABLER: But sometimes, it compromises your journalistic ethics.

HALL: It actually.

PINKERTON: It - it does, but it makes me feel better about him as a person.

GABLER: That's why it's a tough call.

HALL: It doesn't make me feel better about him as a person, actually.

HILL:Why?

HALL: It makes me wonder if he was buying the story. I don't think it makes me feel better about him. I think it was bad judgment.

PINKERTON: So if he was buying it, so what? So - so what? People buy stories all the time. That's checkbook journalism. That's a standard part of the business. And I'm - but better this than - than Anna Nicole Smith.

HILL:But I think it's the source. It's - it's the - it's the company that he works for, and that's - or worked for, and that's why you really wonder.

HALL: And blindsiding your - your bosses is never a good thing to do.

THOMAS: Well, he wouldn't have gotten the story if he hadn't paid for it, and that's why it needed to be part of the story.

HILL:So the ends justify the means?

THOMAS: Well.

PINKERTON: In this case. In this case.

THOMAS: He thinks so; I don't.

HILL:OK.

GABLER: Should have been upfront no matter what.

HILL:Well, we have one more break. And when we come back.

ANNOUNCER: From primitive pitchmen to primetime comics, the new phase in the evolution of Geico's famous cavemen, next on "News Watch."

(COMMERCIAL BREAK)

HILL:You know them by now: Geico's cavemen, dealing with prejudice as they live their modern-day lives in the century. Apparently, you and I aren't the only ones amused by the commercials. This week, executives at ABC announced that they'll take a look at a comedy pilot featuring the cavemen. The pilot will be produced by Touchstone television, and feature them as they strive to live the lives of normal, thirtysomethings in Atlanta - home of CNN, right? That's all the time we have left this week. Thanks to Jane Hall, Jim Pinkerton, Cal Thomas and Neal Gabler. I'm E.D. Hill. Eric Burns will be back next week. Stay right here on FOX for the latest news and more, coming right up.

For more information and exclusive content related to "FOX News Watch" go to www.foxnews.com/foxnewswatch

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