This is a rush transcript of "Special Report With Brit Hume" from May 23, 2007.

BRIT HUME, FOX NEWS ANCHOR: Next on SPECIAL REPORT, President Bush unveils what he says is an unmistakable link between Al Qaeda in Iraq and Osama bin Laden. John Edwards says the war on terrors is nothing but a bumper sticker. Rudy Giuliani jumped all over that. Democrats get the witness they hope would implicate Karl Rove in those U.S. attorney firings, but it doesn't turn out that way. House Republican leader Boehner privately calls the immigration bill crap, using another word. John Murtha apologizes for threatening a Republican colleague, as GOP criticism of him mounts. All that right here, right now. Welcome to Washington. I'm Brit Hume. President Bush today used a graduation speech at one of the military service academies to reveal previously undisclosed details about Al Qaeda plots targeting Americans. The ideas was to show that there is a connection between Osama bin Laden's group and Iraq, something that's been the subject of intense debate. Chief White House correspondent Bret Baier reports.

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BRET BAIER, FOX NEWS CHIEF WHITE HOUSE CORRESPONDENT (voice-over): Delivering the commencement speech at the U.S. Coast Guard Academy, President Bush pointed to newly declassified intelligence to show that Al Qaeda wants to use Iraq as a staging ground for world wide attacks. The president specifically referred to intercepted communications in early 2005 from Al Qaeda leader Osama bin Laden to the had of Al Qaeda in Iraq, Abu Musab al-Zarqawi, in which bin Laden is said to task Zarqawi with forming a terrorist cell to conduct attacks outside of Iraq.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Bin Laden emphasized that America should be Zarqawi's number one priority, in terms of foreign attacks. Zarqawi welcomed this direction. He claimed that he had already come up with some good proposals.

BAIER: The president said the communications show that to help Zarqawi with external operations, bin Laden asked a top Al Qaeda operative, Hamza Rabiya, to brief Zarqawi on Al Qaeda plans for attacks on the U.S. already in the works. But according to the intelligence reports, senior Al Qaeda leader Abu Faraj al Libi suggested that bin Laden actually sent Rabiya to Iraq to help Zarqawi plan and said that if the effort proved successful, Al Qaeda might launch most of its attacks from Iraq. The president said all of that planning never came to pass. BUSH: May 2005, Abu Farah was captured and taken into CIA custody. Several months later, in December 2005, Rabiya was killed in Pakistan. In June of 2006, the terrorist Zarqawi was killed by American forces in Iraq.

BAIER: The president called those blows to Al Qaeda and a testament to U.S. efforts to stay on the offense. He said many critics of the Iraq war compare it to Vietnam, but he insisted there are many differences between the conflicts, and one stands out above all.

BUSH: The enemy in Vietnam had neither the intent nor the capability to strike our homeland. The enemy in Iraq does.

BAIER: White House officials conceded it was, quote, late in the game to declassify this intelligence on Al Qaeda, but said officials needed time to fully analyze it.

FRANCES TOWNSEND, HOMELAND SECURITY ADVISOR: Plans don't necessarily die with the death or capture of the terrorist. They may be handed on. They may be carried on by other terrorists in the network. We have to assume that these plans and intentions are still in place.

BAIER: Democratic senator and presidential candidate Joe Biden charged that the president's policies have created the Al Qaeda threat in Iraq.

SEN. JOE BIDEN (D), DELAWARE: There has been a Bush fulfilling prophecy in Iraq. Al Qaeda wasn't there. It's there now.

BAIER: Biden said he wouldn't be surprised if Al Qaeda cells in Iraq were planning attacks outside of the country and possibly in the U.S. homeland.

BIDEN: If that's true, Mr. President, get out of the civil war. Get in the business of dealing with Al Qaeda.

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BAIER: The president quoted Osama bin Laden numerous times in the speech, and cited other communications showing that bin Laden tried to send another top Al Qaeda operative to replace Zarqawi after he was killed in Iraq last year. That operative, Abd al Hadi, was captured and is now at the detention facility in Guantanamo Bay, Cuba. Brit?

HUME: Bret, thank you. Despite those assertions from President Bush, Democratic presidential candidate John Edwards today trashed the administration's, quote, war on terror, an attack that drew a quick response from a Republican rival, whose campaign is built on that very issue. Chief political correspondent Carl Cameron reports on today's dust up.

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CARL CAMERON, FOX NEWS CHIEF POLITICAL CORRESPONDENT (voice-over): The Republican front-runner nationally, but trailing in the lead off primary state of New Hampshire, former New York Mayor Rudy Giuliani made another one of his rare campaign visits to the Granite State. On just his fourth strip in five months, he toured a cabinet manufacturing plant, and spoke briefly to employees, then visited an insurance company, where he held a town hall style meeting open only to employees. Aides called it a routine get acquainted trip to talk about immigration, the economy, and the war on terror, the central issue of his candidacy.

RUDY GIULIANI ®, PRESIDENTIAL CANDIDATE: America will, if I have anything to do with it, never again be on defense against terrorism.

CAMERON: But then word spread that John Edwards, whose running a distant third in the Democratic race, had ridiculed the war on terror in what was billed as a major address to the Council on Foreign Relations in New York.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: The war on terror is a slogan, designed only for politics. It is not a strategy to make America safe. It's a bumper sticker, not a plan. It has damaged our alliances and has weakened our standing in the world.

CAMERON: Edwards has used the phrase war on terror countless times. But in his courtship of anti-war liberals he has removed it from his rhetoric and his web page in recent weeks. Now he accuses Republicans who use the same phrase of fear mongering.

EDWARDS: Whether by manipulating threat levels leading up to the elections, or by deeming opponents weak on terror, they have shown no hesitation whatsoever about using fear to divide.

CAMERON: For Giuliani, hero of 9/11, that was too much to let pass.

GIULIANI: When you go so far as to suggest that the global war on terror is a bumper sticker or slogan, it makes the point that I've been making over and over again, that the Democrats, or at least some of them, are in denial.

CAMERON: He didn't mention Edwards by name there, but in an interview with Fox News got specific.

GIULIANI: Maybe the zeal to criticize President Bush is so great that it means he's clouded out reality. But that's kind of dangerous. This global war on terror is going on whether John Edwards recognizes it or not.

CAMERON: The speed and single purpose with which Giuliani seized on the Edwards remarks was reminiscent of his show-stealing criticism of long shot rival Ron Paul in the FOX News debate for his suggestion that U.S. foreign policy provoked the 9/11 attacks.

GIULIANI: I would ask the Congressman to withdraw that comment and tell us he didn't really mean that.

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CAMERON: As just as Ron Paul stood by his remarks then, so is John Edwards standing by his remarks now. And Giuliani, for him, that's just fine. He's under fire in New Hampshire from Republicans who say he hasn't campaigned here enough and from conservatives who say his socially liberal views are out of step with the party. So any chance to go after critics of the war on terror is precisely the opportunity that Giuliani loves to serve up some red meat and fire up the Republican base. Brit?

HUME: O.K. Carl, thank you. Iraqi police have found the body of a man who was wearing what appeared to be a U.S. military uniform, a body floating in the Euphrates river south of Baghdad. They say the man had been shot in the head and chest. That discovery comes as U.S. troops continue a massive search for three soldiers abducted almost three weeks ago. The body has been turned over to American forces. No identification yet. An explosion at a Lebanese mountain resort in the town Aley late today wounding at least five people. Police believe bomb was hidden in a bag about 200 yards from the main government building in town. Meanwhile, about 15,000 Palestinian civilians have fled and hundreds continue to leave the Nahr Al Bared refugee camp in northern Lebanon. This follows a truce between the Lebanese army and the Fatah Islam fighters who have barricaded themselves in that camp. The Lebanese government has promised to uproot Fatah Islam, while that group swears it will fight to the death if attacked. Later on SPECIAL REPORT, Democrats look for a smoking gun in the firing of those U.S. attorneys. But first, more criticism for that immigration bill, as lawmakers from both parties try to change and, in some cases, soften that troubled legislation. Stay tuned.

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HUME: That immigration reform bill being debated in the Senate seems to be the measure everyone loves to hate. With opponents on both sides of the aisle and a lack of public support, the bill picked up an important ally today, someone who knows what it's like to buck the odds. Congressional correspondent Major Garrett has the story.

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MAJOR GARRETT, FOX NEWS CONGRESSIONAL CORRESPONDENT (voice-over): Mississippi Republican Trent Lott, who defied the odds and returned to power after being dumped four years ago as majority leader, is now plotting an equally improbable resurrection, saving the Senate's star crossed immigration bill. Lott, the party's number two Senate leader, took over a closed-door GOP immigration meeting today, imploring colleagues to ignore the polls and back the hard-fought bipartisan compromise. Lott told Fox why.

SEN. TRENT LOTT ®, MISSISSIPPI: We've got to do this. If you just weigh the polls and if you back away from it because it's difficult, why are we here? To try to address a major issue like this.

GARRETT:Lott knows party activists dislike the bill's grant of temporary legal status to 12 million illegals here now. And he said a flood of angry phone calls, e-mails and Internet denunciations have left many Senate Republicans spooked.

LOTT: I think if we made any mistake, it was not aggressively getting out there explaining the good that we had achieved. But, you know, politically it's not easy.

GARRETT:The first national poll shows only 26 percent support the immigration compromise. Forty eight percent oppose it; 26 percent aren't sure. Opposition crosses party lines, with half of Democrats and just under half of Republicans and independents opposed. The plan's biggest problem, voters doubt border security will, as compromise supporters promise, actually precede creation of a guest worker program and other pro immigrant reforms.

LOTT: I think that's a critical point. I thin it is a significant point. People want to know that we are going to secure our borders.

GARRETT:The polls show 72 percent consider border security very important, a priority of nearly 90 percent of Republicans and 2/3 of Democrats and independents. Less than 1/3 identified legalizing illegals here now as a top priority. Among those, Democrats placed the highest emphasis on legalization. The bill's temporary worker program, as expected, was slashed in half today, from 400,000 to 200,000. Also removed, an escalator allowing the number of guest workers to rise based on labor demand. The lopsided vote represented the biggest challenge yet to the so-called grand compromise. Other challenges await. Democrats will push to increase so called chain migration so more family members can enter the country.

SEN. ROBERT MENENDEZ (D), NEW JERSEY: The deal struck virtually does away with the provision for family reunification, which has been the bedrock of our immigration policy throughout our history.

GARRETT:Republicans will press for tighter triggers. That's legislative lingo for mechanisms designed to guarantee that border security actually comes first. One GOP skeptic called today's immigration triggers an insult to yesterday's most famous TV trigger.

SEN. CHARLES GRASSLEY ®, IOWA: I think if Roy Rogers were here today—and he's been dead about 20 years—he would say boys, saddle up. There's going to be a rough ride ahead for us.

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GARRETT:First, there's nothing like a breeze in springtime in Washington. The depth of Republican revulsion over this bill really can't be overstated. In a private meeting last night, the House Minority Leader John Boehner called this bill a piece of S, a four letter word I can't repeat on this network, not if I want to keep my job. Boehner aides say he said that in a joking manner. The reality is, many Republicans consider this bill a joke and not a very good one. Brit?

HUME: Major, thank you. That battle in the Senate over immigration legislation seems mild compared to the fight in Arizona between state GOP conservatives and Arizona's two Republican senators, John McCain and John Kyl. Correspondent William la Jeunesse reports.

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MICHELLE DELLA CROCE, SEN KYL PROTESTER: You lie to me as a mother? You lie and destroy the future of our kids? You don't get a second chance.

WILLIAM LA JEUNESSE, FOX NEWS CORRESPONDENT (voice-over): Earlier this week angry voters protested outside Senator Kyl's Arizona office. And at state GOP headquarters Wednesday, this Air Force veteran and life long Republican quit the party, turned in his voter I.D. card and registered independent.

RUSS WHITTENBUER, US AIR FORCE (RET): John Kyl has betrayed the American people. He's betrayed the voters of Arizona and he's betraying his country.

RANDY PULLEN, ARIZONA REPUBLICAN PARTY CHAIRMAN: You have people coming in here, basically dropping off their registration cards, saying I'm not a Republican any more.

LA JEUNESSE: State party chairman Randy Pullen broke ranks with Senators McCain and Kyl publicly Monday, criticizing the immigration bill at a press conference and holding up this letter featuring a prominent middle finger, which he called characteristic of the feelings of the GOP base.

PULLEN: Essentially they're saying I'm not going to donate any more money to the Republican party. I'm going to change my registration. It's mostly negative. It's probably 100 to one negative, opposing this bill.

NATHAN SPROUL, FMR AZ GOP DIRECTOR: We have absurd conduct by a small handful of people.

LA JEUNESSE: Others Republicans say the party is being hijacked by a vocal minority, and that the chairman's actions are way out of line.

SPROUL: Reprehensible, unconscionable, unprecedented. He is doing everything he possibly can within his power to destroy the Republican party in Arizona.

SHARON GILL, SEN KYL SUPPORTER: I believe in Senator Kyl. And what I have seen so far does not betray anything that he has said before.

LA JEUNESSE (on camera): Arizona sees more illegal immigration than California, Texas and New Mexico combined. But there is a fear today that this fight will spread nationally, hurting the GOP's ability to raise money and organize in the run-up to next year's election. In fact, in the last few hours, Chairman Pullen's staff received a phone call from the Republican National Committee to, quote, shut up. It calls to mind Ronald Reagan's so called 11th amendment: thou shalt not speak ill of any fellow Republican. In Phoenix, William la Jeunesse, Fox News.

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HUME: Late on SPECIAL REPORT, the U.S. conducts war games in the Persian Gulf, as fresh concerns are raised about Iranian nuclear program. First though, Democratic Congressman Murtha, concerns about him.

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HUME: Some apologies have been forthcoming from Pennsylvania Democratic Congressman John Murtha since yesterday's floor vote that blocked a possible formal reprimand. Even though Murtha been contrite his outburst and threats toward Republican colleagues, these episodes have shown a light on what his party promised to do on ethical reform. Correspondent Molly Henneberg has the story.

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MOLLY HENNEBERG, FOX NEWS CORRESPONDENT (voice-over): Delivered this afternoon, a hand-written note by Democratic Congressman Jack Murtha, saying I'm sorry to Republican Congressman Mike Rogers. REP. MIKE ROGERS ®, MICHIGAN: I got a short note from Mr. Murtha apologizing for his outburst. That's a good first start. Hopefully we can use this to highlight and move forward on how we spend money in the United States Congress.

HENNEBERG: Sit wasn't just Rogers who raised Murtha's ire for not supporting funding for one of earmarks or pet projects. Republican Todd Teart also got a tongue-lashing for voting against funding for the same earmark. Murtha avoided an official reprimand for his conduct by the House when Democrats voted to kill the measure Tuesday night. But Congressman Rogers says the episode raises the issue of lawmakers voting without fear of retribution.

ROGERS: That's exactly the kind of conduct, this bullying on the House floor, the war boss politics and then kind of laughing about it that got us into trouble with earmarks in the past. I think it's wrong and I think Americans deserve better.

HENNEBERG: The liberal editorial board of the "L.A. Times" appears to agree, taking Democrats to task today, saying, quote, it doesn't help the Democrat's image that this dispute over Murtha's comments originated in an earmark, a special interest provision widely seen as part of the culture of corruption decried by Democrats in the last election." All this comes as a Democratically led House plans to take up an Ethics and Lobbying reform bill on Thursday. But critics, including some on the left, say too many of the reforms that could reign in influence peddling have been stripped from the bill.

CRAIG HOLMAN, PUBLIC CITIZEN'S CONGRESS WATCH: The Democrats in the House have taken so long to get to this legislative package. I mean, this is something that the Senate did in January. And the House Democrats have been dragging their heals all the way, and then weakening the bill bit by bit.

HENNEBERG: And a "New York Times" editorial said today, quote, "The House's new Democratic majority is flirting with disaster as it guts key provisions of the strict lobbying reform it promised voters last November." (on camera): And the liberal website MoveOn.org urged its members to sign an online petition in favor of the bill, saying, quote, Democrats were elected to clean up corruption. In Washington, Molly Henneberg, Fox News.

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HUME: President Bush's choice to head the Consumer Product Safety Commission withdrew his nomination today. Michael Baroody is a lobbyist with the National Association of Manufacturers, and that put him at odds with some Senate Democrats. They brought up potential conflict of interest issues and questioned the $150,000 payment Baroody would have taken when he left the organization. The White House said it would start looking for a new candidate immediately. Kentucky Governor Ernie Fletcher has cleared one hurdle in his reelection bid. Fletcher won the Republican primary, overcoming an indictment in a hiring scandal that threatened to derail his political career just nine months ago. But as correspondent Steve Brown reports, Fletcher is not home free yet.

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GOV. ERNIE FLETCHER ®, KENTUCKY: Well, I guess we have answered the electability question.

STEVE BROWN, FOX NEWS CORRESPONDENT (voice-over): Governor's Republican Governor Ernie Fletcher won his party's primary Tuesday, defeating two challengers, including Ann Northup, the former five term member of Congress who got into the race —

ANNE NORTHUP ®, KY GUBERNATORIAL CANDIDATE: At the urging of so many Kentuckians, Republicans, across this state that knew that this administration had no chance of being reelected. BROWN: Fletcher was unelectable, charged Northup, because of a state hiring scandal. Some Democrats on the state payroll were targeted for dismissal or relocation to make way for Republicans. Fletcher pardoned members of his administration involved. After refusing to testify to a Grand Jury, he was indicted. Ultimately, Fletcher swung a deal, acknowledging the scheme, but avoiding blame. It may have cost Fletcher votes in the primary but not victory.

FLETCHER: Let me say this. There's nothing about that that hasn't been said multiple time. So there's nothing through.

BROWN: But in the state's capital said the scandal issue will live on.

STEVE BESHEAR (D), KY DEMOCRATIC GUBERNATORIAL CANDIDATE: It's time for some bold experience, effective and honest leadership in Frankfurt for a change.

BROWN: Steve Beshear emerged from a six-candidate field to win the Democratic primary. Beshear grabbed 40,000 more votes than Fletcher did in his primary. Beshear insists the hiring scandal still matters to Kentucky voters.

BESHEAR: I think they have already made a judgment for the most part on the current governor and his administration. And I think they're ready to get bring somebody else in here to kind of clean the mess up and get the job done.

PROF DOUG GROSS, UNIV OF KENTUCKY: He's going to present himself as a more progressive candidate than what we have seen. He's going to focus on leadership. Underlying a lot of his campaign is going to be this entire reach of expanded gaming in the state.

BROWN: Beshear says legalized gambling is a way to bring money into the state without raising taxes, but traditionally gaming has been opposed by evangelical Christians and conservative. Both groups are powerful players in Blue Grass politics, and their members do include Democrats.

FLETCHER: They have shown that they will vote for a Republican. But not only that, they have shown that they'll vote for me.

BROWN (on camera): Fletcher's run a great campaign so far, says one Kentucky Democrat. But with the lingering affect of the hiring scandal and the fact that Democrats outnumber Republicans by a 3-2 margin in this state, Fletcher may need to be better than great the rest of the way. In Lexington, Steve Brown, Fox News.

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HUME: New York Governor Eliot Spitzer has announced a two billion dollar settlement that ends all the legal battles over the insurance policy covering the World Trade Center. Lawsuits have delayed the insurance payouts, which are a major funding source for the redevelopment of that site. The final insurance total will be just over four and a half billion dollars. Spitzer called the insurance dispute, quote, the last major barrier to rebuilding. And Vice-President Cheney's daughter Mary has given birth to an eight pound six ounce baby boy. Samuel David Cheney is the first baby the 38-year-old Mary Cheney and her partner, Heather Po. He is the sixth grandchild to the vice president and wife Lynn. Mary Cheney was an aide to her father during the 2004 election campaign, and is now an executive for "America Online." We'll take a break here to visit with our sponsors and check other headlines. When we come back, what ever happened to that massive Taliban spring offensive? You may be surprised. We'll tell you on the Grape Vine

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Click here to read the "Political Grapevine."

HUME: Democratic lawmakers had high hopes for today's testimony from a key figure in the controversy over those fired federal prosecutors. The Justice Department's former White House liaison Monica Goodling had been granted immunity and therefore the freedom to name names. But it didn't exactly turn out that way. Chief Washington correspondent Jim Angle as the story.

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JIM ANGLE, FOX CHIEF WASHINGTON CORRESPONDENT (voice-over): Democratic critics were hoping Goodling's testimony would finally validate their suspicions of some kind of wrongdoing at the White House, especially by Karl Rove.

JOHN CONYERS (D-MI), HOUSE JUDICIARY CMTE CHMN: As the White House liaison and one of the attorney general's most trusted advisers, Miss Goodling may well have information that will help us in our inquiry.

ANGLE: But if that was the expectation, Goodling's testimony was an enormous disappointment.

MONICA GOODLING, FMR JUSTICE DEPT OFFICIAL: I've never a conversation with Karl Rove or Harriet Miers while I served at the Department of Justice. And I'm certain that I never spoke to either of them about the hiring or firing of any U.S. attorney.

ANGLE: Neither Attorney General Alberto Gonzales nor his former chief of staff, Kyle Sampson, has clearly explained how the U.S. attorneys got on the list, so suspicions sprouted that White House officials must have done something improper, a suspicion Goodling did not advance.

GOODLING: I never recommended to them that a specific U.S. attorney be added to or removed from Mr. Sampson the list. And I do not recall that they ever communicated any such recommendation to me.

ANGLE: But one critic could not be dissuaded.

SHEILA JACKSON LEE (D-TX), HOUSE JUDICIARY CMTE: But I want the record to be clear that the only way we can get to the full truth is if Mr. Karl Rove is sitting in the very same seat that you're sitting in and he needs to be here and he needs to be here posthaste.

ANGLE: But on the central question of whether political considerations influenced any processions or personnel changes Goodling answered repeated questions with the same answer.

ROBERT SCOTT (D-VA), HOUSE JUDICIARY CMTE: The reference to the U.S. attorneys, were the investigations and indictments for Republican officials of the failure to investigate or indict Democratic officials, a factor in the removal of any U.S. attorneys?

GOODLING: Not as far as I know.

ANGLE: At the outset, Goodling who received immunity for her testimony acknowledged that she had, on some occasions, considered the political views of people applying for a career non-political jobs and said she regretted it. Representative Scott wanted to know more.

SCOTT: Was that legal?

GOODLING: Sir, I'm not able to answer that question. I know I crossed the line.

SCOTT: What line? Legal?

GOODLING: I crossed the line of the civil service rules.

SCOTT: Rules? Laws? You crossed the law on civil service laws.

ANGLE: But on the broader question, several Republicans wondered what all the fuss is about and one summed up the day, this way.

TOM FEENEY (R-FL), HOUSE JUDICIARY CMTE: .and I will tell you, you've been a huge disappointment to a lot of people that were expecting to find some grand conspiracy.

(END VIDEOTAPE)

ANGLE: It seems to me, he said in this fishing expedition there ain't no fish in the water. But Senator Chuck Schumer who watched from afar found far more significance. Saying the fact that Goodling denies any involvement in putting together lists of who should be fired, leads to only one conclusion—that it was someone in the White House. And House Democrats argued after the hearing that all roads lead to the White House, so among Democratic critics, that is an idea that will not die—Brit.

HUME: OK Jim, thank you. The drumbeat goes on in the march in what—could eventually be a confrontation over Iran's nuclear ambitions. The International Atomic Energy Agency says Iran is basically stonewalling its efforts to learn exactly what is going on in open defiance of the United Nations Security Council. And the U.S. is flexing its military muscle in plain view of the Iranians. Correspondent James Rosen reports.

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JAMES ROSEN, FOX NEWS CORRESPONDENT (voice-over): As three U.S. aircraft carrier battle groups loaded with 17,000 sailors and marines conducted war games in the Persian Gulf, a show of military muscle for a newly assertive Iran and its anxious neighbors. IAEA director general, Mohamed ElBaradei reported that his agency. "Remains unable to make further progress.to fully reconstruct the history of Iran's unclear program and provide assurances about.the exclusively peaceful nature of that program." El Baradei added that, "Iran has not responded to the agency's long-standing requests for information on Iran's acquisition of P-1 and P-2 centrifuge technology.Iran's work with the uranium metal and its casting into hemispheres.high explosives testing and.the design of a missile reentry vehicle." All activities almost always associated with a nuclear weapons program.

NICHOLAS BURNS, UNDER SECRETARY OF STATE: Iran is once again thumbing its nose at the international community.

ROSEN: Under secretary Nicholas Burns, the State Department's third highest-ranking official, also took issue with ElBaradei's recent comments to a Spanish newspaper, suggesting that because of Iran's steady progress on the group in its enrichment program, the Security Council should abandon its demands for a suspension and seek instead to prevent the program from reaching "industrial scale."

BURNS: We are not going to agree to accept limited enrichment, we're not going to agree to accept that 1,300 centrifuges can continue to spin at their plant at Natanz and we are going to demand that there be—that everyone connected with the United Nations support the policy of the United Nations.

ROSEN: Later, in an interview with ON THE RECORD's Greta van Susteren at the Ronald Reagan Presidential Library in California, Secretary of State Rice took direct aim at ElBaradei.

CONDOLEEZZA RICE, SECRETARY OF STATE: I was, frankly, a little surprised that the director said that and in effect tried to be involved in the diplomacy, here. ROSEN (on camera): The American ambassador to Iraq is set to meet with Iranian officials in Baghdad on Monday, perhaps the most substantive talks between Iran and the U.S. at that level since 1979. But no progress is expected on the nuclear front as the sole subject is said to be Iraq. At the State Department, James Rosen, FOX NEWS.

(END VIDEOTAPE)

HUME: Next on SPECIAL REPORT, the FOX all-stars will weigh in on what the president said today, what John Edwards said about that, and what Rudy Giuliani said about that. Stay tuned.

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JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: "The war on terror" is a slogan designed only for politics. It is not a strategy to make America safe. It's a bumper sticker, not a plan.

RUDY GIULIANI ®, PRESIDENTIAL CANDIDATE: When you go so far to suggest that the global war on terror is a bumper sticker or slogan, it kind of makes the point that I've been making over and over again, that the Democrats, at least some of them are in denial.

(END VIDEO CLIP)

HUME: Well, there you have Rudy Giuliani seeing an opportunity to taking it. John Edwards seeing, I guess, what he thought was an opportunity. This on a day when President Bush in a speech at the Coast Guard academy had unveiled some previously classified information in which he said showed that Osama bin Laden had actually sent a message to or an emissary to Abu Musab al-Zarqawi, who was the leader of Al Qaeda in Iraq, tasking him to try to carry out some terrorist attacks against the United States outside of Iraq, establishing, presumably, that there was obviously a relationship between Osama bin Laden's Al Qaeda and the—and Iraq. Some analytical observations on this now from Fred Barnes, executive editor of the Weekly Standard; Mara Liasson, national political correspondent of National Public Radio; and the syndicated columnist, Charles Krauthammer—FOX NEWS contributors all. Well, what about this little dust-up here? What about what the president said and what Edwards said—Charles.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, what Edwards said, you can understand a critique of the term "the war on terror," and say it's not perhaps the most accurate. It ought to have been the war on radical Islam. But we know why the president chose "the war on terror," after 9/11 he didn't want to antagonize the Muslims around the world by using that phrase. So perhaps it's not the most accurate, but the underlying reality, whatever is the phrase that you're going to use is undeniable and for Edwards to...

HUME: You mean there is a war? Global war?

KRAUTHAMMER: There is a war against radical Islam that's out to get us. That's a fact, and to deny it or to minimize it and to mitigate it the way that Edwards appears to be doing is a complete sellout to the anti-war left. I can understand a person arguing against the war in Iraq and saying perhaps it's irrelevant to the war on Al Qaeda. I think that's wrong, but I can understand that argument. But the war on Al Qaeda is real, it's all over the world. And the irony is that the president is the victim of his own success. Nobody expected that we would go six months or a year or two years without a second attack. People were saying oh, Al Qaeda works on a two-year strike, on a three-year cycle, it doesn't work on a six-year cycle. It's out there. But the president has lulled particularly the left into a position in which it will believe this nonsense that the war is an exaggeration or a way to win political points.

MARA LIASSON, NATIONAL PUBLIC RADIO: You know, I found this whole exchange rather confusing. If Edwards was saying there is no global war of terror, in other words there is no terrorist threat to us that would be completely out of line. But that's not what he's saying. I think he was saying he doesn't like the way the president is waging war on terrorists. Which I don't think he denies is a threat here. Now, one thing about Rudy Giuliani, he takes any opportunity to remind people of his unique terrorist-fighting credentials, as the hero of 9/11. And he says John Edwards doesn't get it. He doesn't understand that they've been targeting us since the early '90s. That's not what John Edwards said. He didn't say there isn't trying to hit us, he just doesn't like the way the president is fighting the war on terror. He didn't say we shouldn't be having a fight against terrorism. I think this was one of those debates where both parties were completely talking past each other.

FRED BARNES, WEEKLY STANDARD: Well, why would John Edwards be attacking the phrase "war on terror?" Of course it's a bumper sticker, it's shorthand, it's a way of—in a few words, describe what you're doing, you're fighting a war against terrorists. Why would he, other than to appease the anti-war left, as Charles said, why would he make an issue over this? It seems there's only one reason and that's to pander to the anti-war left. I wanted to add one thing, though, particularly Bush's speech today was very good, pointing out contact between Osama bin Laden and Zarqawi in Iraq. And we'd known earlier that the No. 2 to Osama bin Laden, Zawahiri, had had contact with Zarqawi as well. And obviously Al Qaeda is incredibly active in Iraq, they're the ones doing the car bombings. Now, that leads to one thing in particular, and that is what General Petraeus has been saying over and over again. How are these Al Qaeda people getting to Iraq? They fly into Damascus, Syria, and come across the border and there they are and the car bombs have continued and these are Al Qaeda. Now, I think Bush has had some success, but he needs to do something about Syria. Talking to the Syrians isn't going to do any good. Nancy Pelosi certainly didn't talk them into anything. I can't understand to this day why the Bush administration allows this to continue. I mean, take out the Damascus airport, block the border, do something so the stream of Al Qaeda terrorists doesn't continue to flow through the Damascus airport and Syria into Iraq and cause all this problem.

HUME: Up next on SPECIAL REPORT, another day raucous debate on the Senate floor over the immigration bill. The FOX all-stars will tell you what it all means. Stay tuned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN TRENT LOTT ®, MISSISSIPPI: The people want to know that we are going to secure our borders. People instinctively understand that a country that cannot control its borders cannot long exist. And so they want that assurance.

(END VIDEO CLIP)

HUME: That is Trent Lott, who is trying to step into the breech on an immigration bill that is in some trouble and let me give you a sense of how much trouble it may be in the Senate. This is the latest poll from the Rasmussen Reports poll, he takes very large samples on telephone—automated telephone polls. Look at this. This is 48 percent oppose this bill or not sure about it, only 26 percent favor the bill. And if you break that down on party lines, you can see that the opposition is bipartisan, with Democrats slightly more against it than Republicans and Independence are, so it ends up being about half the people who identify themselves with one of those groups are against this bill. As we indicated in early polling, only a quarter of the people are for it. Today, the Senate acted to cut the guest worker program in half, from 400,000 workers coming in here a year under that program, to 200,000. They took out a clause that would allow that number to grow automatically over time it would have to grow only by legislation, now. Where does this matter now stand in terms of its prospects—Charles.

KRAUTHAMMER: Well, it clearly—when you get a public opinion poll that shows it has less support than the war in Iraq, you know it's got trouble. And, actually, for the president to add his on his plate when he's already reeling on the war in Iraq, very unpopular proposal is a form of political self-emulation. I'm sure is he sincere on this. I know he is. He has talked about it for decades. But this is a hell of a time to do it. And it's a hell of a bill. The bill's problem is, as we saw in the earlier graphic, three quarters of Americans think that the crisis is the control of the border and only about a quarter or a third think there—our crisis is the undocumented illegals.
HUME: That are here already.

KRAUTHAMMER:That are already here. And.

HUME: And that—if people could be satisfied that the border situation had been rectified, as Trent Lott suggested, it might change the political climate.

KRAUTHAMMER:It would change everything. I'd support amnesty, whatever you want to call it, overnight if you could have the president tell us that we have reduced illegal immigration across the southern border by 80 or 90 percent, instead of bureaucratic triggers. And until you—
Americans believe that there's going to be control—and this is the last cohort of illegals who will be legalized, there's going to be tremendous opposition and I don't...

HUME: And by bureaucratic triggers, you're talking about the fact that they've set these benchmarks that have to do with the number of border agents and other equipment and other devices that will be available to try to enforce it. It has to be results, not mechanisms?

KRAUTHAMMER:Right, it's all inputs, it's no outputs.

LIASSON: Look, there are many, many bills that have triggers that have outputs, where the president has to certify that immigration has dropped by some amount. I mean, you know, perhaps that will be an amendment. I think that would be a tougher trigger. I don't know if that would be adopted, but that certainly would be a tougher trigger. I don't know if it would go far enough to satisfy the opponents to this, Charles, because there are people who don't want any path to citizenship.

(CROSSTALK)

HUME: .bill than the one that actually passed the Senate last year.

LIASSON: That's why what I think is possible is that this thing, even though it's taking incoming fire from every possible direction, might still make it across the finish line.

BARNES: Yeah, of course it can make it across the finish line in the Senate, the House is (INAUDIBLE), that's a lot harder. But, Charles is exactly right. Look, what you need to do is have benchmarks that say where — to show that you actually made progress in shutting down the border. It's not enough for the president just to certify its safe and that makes the trigger to move on to the other parts. You have to quantify it.

HUME: Measurable.

BARNES: Measurably. And that's why Charles is right. In fact, I've talked to some members of the Senate about this and I believe there will be an amendment that does exactly that.

HUME: That's it for the panel, but stay tuned to see just how serious this immigration problem has become. That's next.

(COMMERCIAL BREAK)

HUME: Finally tonight, a number of viewers have complained that we here on this show and the politicians trying to pass that law on immigration just don't get how much of a problem this illegal immigration has come—become. Maybe they have a point.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We can only hope to solve our immigration problems if we take it one step at a time. There are three steps to resolving this problem. First is border security, second is fixing legal immigration and the process of legal immigration, and the third is addressing those who are here illegally.

(END VIDEO CLIP)

(LAUGHTER)

HUME: We don't know how they did that, but it's amazing. And that's SPECIAL REPORT for this time, please tune us in next time and in the meantime, more news is on the way—fair, balanced and mariachi.

Watch "Special Report With Brit Hume" weeknights at 6 p.m. EST.

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