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This is a full transcript from "The Beltway Boys," on May 26, 2007.

FRED BARNES, CO-HOST: Coming up on the "The Beltway Boys," the antiwar left is in a tizzy after Congress votes to fund the Iraq War without timetables.

JUAN WILLIAMS, CO-HOST: The newly minted immigration bill faces stiff opposition from both sides of the aisle. We'll tell you if it will survive.

BARNES: Rudy Giuliani slams John Edwards for calling the war on terror a bumper sticker.

WILLIAMS: And John Murtha tries to make amends for his recent outburst on the House floor, but is it too little too late? BARNES: All coming up on "The Beltway Boys." But first, the headlines.

(NEWSBREAK)

BARNES: I'm Fred Barnes.

WILLIAMS: And I'm Juan Williams, in for Mort Kondracke. And tonight, we're "The Beltway Boys."

BARNES: And tonight the hot story is short-term win. Obviously President Bush winning over Democrats to get funding for the troops in Iraq through September. He thwarted the Democratic effort, as you know, Juan, to apply these timetables for the withdrawal of troops. If you had those in there, I think it would have been catastrophic. On the other hand, the funding is only through September, when there will be another vote, and his policy in Iraq is still I think in very, very deep trouble, though not exactly for the reasons that Nancy Pelosi said after this vote, but watch what she said anyway.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAHER: Yesterday was the start of a whole new direction in Iraq. I think that the president's policy is going to begin to unravel now. We will be voting on our appropriations—defense appropriations bill in July, but September is the moment of truth for this war.

(END VIDEO CLIP)

BARNES: You know, I think that she's wrong about the president's policy unraveling, and this is a new direction and everything. The president started a new direction when he brought in General Petraeus and with his counterinsurgency strategy. But she's right not to be downcast because I think Democrats politically and particularly come out of this pretty well. One, they still have the Iraq issue. And as you know, this is one that as long as they're talking about—any week they're talking about it is a bad week for Republicans. Two, if they had gotten those timetables, Juan, I think that it would have given them some ownership of the war itself. I mean, here they are dictating what goes on on the ground. And they avoided that maybe inadvertently. And lastly, they can't be blamed for de-funding the troops, because they have not done that. So I think Democrats are—still have a commanding position on this issue, at least politically.

WILLIAMS: Well, Fred, I think you're right when you say it's a short-term victory, because it seems to me the president is paying a high price right now just for the reasons that you have detailed, and I think the price is going to get higher. It's going to hurt the GOP headed towards '08. Don't forget, the Democrats are funding the troops, as you just pointed out. And I think, as you said, the GOP owns this failing war effort. Let's look at what The New York Times polls had to say about this. And you will find that according to the latest CBS/New York Times poll, a whopping 76 percent of Americans think the war is going badly. Only the 20 percent think the increase in U.S. troops to Iraq has made the situation better.

BARNES: And Juan, count me with the 20 percent.

WILLIAMS: OK. All right. But I must say that even the president this week in the press conference in the Rose Garden said, the violence was going to get worse, Fred. And what that means is when General Petraeus shows up in September, when the day of reckoning comes in terms of the next vote on appropriations for this war, it's going to be a tough sell. And you've also got to remember that in the midst of all this battle, the fact that the Democrats tried to put the deadlines in, you had moderate Republicans going to the White House, challenging the president's own credibility on this war issue. So now it's the case that the White House is looking at the Iraq Study Group as if, oh, wait a second, we found this document on the shelf, hey, where did this come from? Of course, it is the same document that they were disparaging not long ago. It's a sign of desperation in the White House.

BARNES: Yes, I know. I don't think there's any desperation in the White House. And I don't think Bush is that bad off. Not that he is so well off on this. I don't mean to say that. Look, the Republicans—and you're right, those moderates went and they complained. On the other hand all of them voted for him. They voted with him and against the Democratic timetables, and that will last at least through September they'll be with him. And I think when General Petraeus gives his report at the end of September on whether there's any progress in Iraq, particularly in securing Baghdad, I think he's going to report great progress and say that the city is heavily pacified. And I think that will increase some of the public support, not all of it, you know, I mean, but it will help some. And Democrats do have this problem: The party is divided, not on the war, but on what to do about the war itself. And you can see that particularly among all of those Democrats who are presidential candidates. In the Senate, the ones who voted against the funding of the bill were Hillary Clinton, Barack Obama and Chris Dodd. Voting for it: Joe Biden, the chairman of the Senate Foreign Relations Committee. And even in the house, the House leadership was divided on the issue. Speaker Nancy Pelosi and Appropriations Chairman Dave Obey, the author of the bill, both voted against it. Majority Leader Steny Hoyer and vocal war critic John Murtha voted for it. You know, Hillary wanted to have it both ways. She said she voted against it because—just to show a complaint. But if she needed to, she would have voted for the funding. I guess that's typical of Hillary. I want to show one other thing. And that, the difference in approaches that we saw in the Senate in particular. Watch John Kerry, and then Carl Levin, the two Democratic senators, watch.
(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D), MASSACHUSETTS: This bill does not provide a strategy worthy of our soldiers' sacrifice, instead it permits more of the same, a strategy that relies on sending American droops into alleys and backroads of Iraq to referee a deadly civil war.

SEN. CARL LEVIN (D), MICHIGAN: I cannot vote however to stop funding for our troops who are in harm's way. I simply cannot and I will not do that.

(END VIDEO CLIP)

BARNES: Levin's is the right position, substantively and politically for Democrats.

WILLIAMS: Well, you know what, I think the Democrats come out of this politically in good shape. As we have just been saying, I think they look good. And then going into '08, I think this still is a Republican problem, and the Democrats are able to say, they have been trying to oppose this war, trying to create some strategy that would allow American troops to successfully pull back, not necessarily withdraw, but pullback and fight a war on terror. But what strikes me about the vote that you just went through, Fred, was not the no votes. Not Pelosi. And by the way, it's rare to see the speaker of the house cast a vote on anything, especially something that she has allowed to come to the floor. But here is Pelosi, and I think the reason, you know, is politics. She wants to fly the flag. She wants to say her leadership has been about taking a stand against this war. But what catches my eye is the idea that you get people like Joe Biden? Joe Biden, well, I can understand why Joe Biden would do it, because he wants to be clear in the Democratic presidential contest that he's right there, the moderate, reasonable voice of foreign policy experience and these other people don't have that experience. But the one that really gets me scratching my head, Fred, is Murtha. Murtha says he strongly opposes, wants the deadlines, wants it all, and then votes no? I don't get it. What is he doing?

BARNES: He's a former Marine, couldn't bring himself to cut off the troops.

WILLIAMS: Well, he's a puzzle to me. I must say, I can understand Pelosi and Obey, and all of those guys flying the flag of opposition, I just don't understand what's going on with Mr. Murtha. And I think that when it comes to fundraising, I think when it comes to playing the polls, the Democrats have come out of this thing in good shape, although the immediate victory goes to President Bush because there are no deadlines in there.

BARNES: hate to agree with you, but I do.

WILLIAMS: Oh, my gosh. Well, Fred, let me just tell you, one thing that I think you and I can agree on this Memorial Day weekend, is that we really want to honor our men and women, not only those serving the country at the moment, but those who have served our great nation. And you know, early this spring, there was an event in the Capitol, Pelosi, Boehner, and President Bush were in attendance to honor the Tuskegee airmen who served during World War II. Here's President Bush saluting the Tuskegee airmen.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When America entered World War II, it might have been easy for them to do little for our country, after all, the country didn't do much for them. On behalf of the office I hold and a country that honors you, I salute you for the service to the United States of America.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BARNES: Fantastic.

WILLIAMS: Isn't it great?

BARNES: All right. Coming up, the immigration bill takes a lickin' but keeps on tickin', so far, at least. And Rudy Giuliani lets John Edwards have it over comments Edwards made about the war on terror. Stick around, our "Ups and Downs" are next.

(COMMERCIAL BREAK)

BARNES: Welcome back to "The Beltway Boys." Let's check out our "Ups and Downs" for the week. Up, the immigration bill, barely. Despite several attempts this week to change and in some cases weaken the bill or even kill it, immigration reform still has a chance and a pretty good chance of passage in the Senate. It got a big boost this week from the number two Republican in the Senate, Trent Lott, watch.

(BEGIN VIDEO CLIP)

SEN. TRENT LOTT (R-MS), MINORITY WHIP: 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? But to try to address a major issue like this.

(END VIDEO CLIP)

BARNES: Yes, that's a good point. And look, the compromise—the bipartisan compromise on immigration reform, with, you know, Senator Edward Kennedy on one side and Senator John Kyl on the other, of Arizona—and why I couldn't come up with his name, know him well. It did not unravel. It was attacked and you really should have seen Teddy Kennedy in action beating back the liberal challenges. The liberal challenges.

WILLIAMS: That's really—I know, it's interesting.

BARNES: And he really did a good job. The biggest challenge was this one that came from Senator Byron Dorgan to kill the temporary workers program. Well, if you kill the temporary workers program, that means the whole thing—I mean, the compromise unravels. You know, Kyl has to drop off and Republicans won't back it. But Kennedy beat it back. At one point, it looked like a vote on that was going to go against them, and Kennedy went and got a Democratic senator, Daniel Akaka of Hawaii, to change his vote. So they won. So I think at the end of the day, immigration reform is alive in the Senate. My guess is that it will pass in June in the Senate. The House, whew, that's another thing.

WILLIAMS: But you know what, ultimately this argument comes down to something that President Bush said this week when he was asked about the immigration issue. He said, do you really think that there's a realistic possibility of deporting 12 million—that's the high end of the estimate, but 12 million illegal immigrants to this country? No. The answer is no. So what do the opponents really have to offer? And that's what Secretary Gutierrez of Commerce had to say. Essentially what you're saying when you say no to this is you like the status quo. You like the idea of people living here illegally, breaking our laws, flouting the laws to the point where it invites other people to come in and break the laws, in addition to which, the front part of the bill says we have got to secure the borders and go about doing it. So it seems to me you have some loud voices on either side, Fred. And I'm particularly interested in Bill Richardson, you know, the lone Hispanic candidate running for the Democratic nomination, who says, oh, I'm against it because of the family reunification issue. You know, they put more emphasis now on education skills than family reunification. But I think he's posturing. The left is posturing. The unions really lost on the guest worker vote that you talked about because they're worrying about depressed wages. But so many of the Democrats, from Obama to Hillary Clinton say, oh, we're not sure, they're sure. They support it. The real opposition is coming from the right, and it's those people on the right who are going to be a problem in the House. And I don't know. I think there is still a chance this will go through because they are going to be

(INAUDIBLE) — what do they have to offer other than negativity and a little bit of xenophobia? Up, Rudy Giuliani. Rudy Giuliani, the former New York mayor got another golden opportunity to bolster his terrorism credentials this week courtesy of John Edwards. Watch this smack down.

(BEGIN VIDEO CLIP)

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 as 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 are—or at least some of them, are in denial.

(END VIDEO CLIP)

WILLIAMS: Well, you know what I think, Rudy Giuliani gets the better of this fight, by a long shot, Fred. And here's why. It's not as easy as when he took on Ron Paul. Remember Ron Paul's conspiracy theory during the Republican debate on why we were attacked during 9/11. But you know what, it seems to me that what you get here is Rudy Giuliani reasserting himself as a real leader on the war on terror. And I will give John Edwards these points. You know, clearly it highlights the whole notion that Republicans play the politics of fear and the administration rhetoric of combining the war in Afghanistan with the war in Iraq, calling it all the war on terror—and potentially I guess, war on Iran. But that's all inside baseball and is lost to most people. The point is to most people that what they're going to see is that Edwards is not strong when it comes to seeing that there's a terror threat out there.

BARNES: It comes down to this, who are you going to trust to fight terrorists and keep them from invading America again and having another 9/11? Are you going to trust John Edwards or are you going to trust Rudy Giuliani? That's easy. And the truth is, when Democrats talk about this exaggerated fear, the truth is they are in denial. They are—Radical Islamic jihadists are plotting at this very moment to bring down Western civilization, to attack Americans around the world. It's something we have to thwart. And to pretend like it's not really a threat is I think a disservice.

WILLIAMS: Well, one last thing, you know, Edwards is trying to keep himself to the left of Obama, left of Clinton.

BARNES: He's succeeding.

WILLIAMS: And that's what—well, maybe that's what he was up to. Coming up, Bill Richardson makes it official this week. And John Murtha apologizes. We get another dust up on the House floor. We'll tell you what happened. Don't you go anywhere. More "Ups and Downs," next.

(COMMERCIAL BREAK)

BARNES: Welcome back to "The Beltway Boys." I'm Juan Williams, in for Mort Kondracke. We're continuing with our "Ups and Downs" of the week. And up, New Mexico Governor Bill Richardson. He officially joined the Democratic presidential race this week. His two big selling points, Hispanic heritage and his resume. Here's Richardson talking up his diplomatic credentials.

(BEGIN VIDEO CLIP)

GOV. BILL RICHARDSON (D-NM), PRESIDENTIAL CANDIDATE: We can negotiate with honor, we can defend with integrity. We can reach out with conciliation. We have many fences to mend. And I'm ready to get started.

(END VIDEO CLIP)

WILLIAMS: Fred, this was an announcement of a vice presidential candidacy, and I think he wins, I'll give it to him. With Hillary, Obama, Edwards, whoever, he's the ideal vice presidential candidate. The Hispanic vote, as you know, is key. I don't care where you are in this country, growing population, terrifically influential. And I think especially with immigration at the top of the agenda right now, you're going to see that Richardson really fits the bill. And he has terrific credentials. Not just the diplomatic credentials, but remember, he has been a congressman, he has been secretary of energy, U.N. ambassador, negotiator with North Korea, governor of New Mexico. I think he's a very attractive guy. And now, he said this when he announced, he's up to double digits in Iowa. But I think the real upset would be to get him anywhere near the frontrunners in this contest.

BARNES: You know, I agree with most of what you said. I think he has some things that may come back and haunt him, like when he signed that bill on medical marijuana in New Mexico. But—he has got these great credentials, but, Juan, nobody runs for vice president. They all think they have a chance of winning the presidency. And Richardson does, too. You know, they will all—I mean, even the most—the candidate with the heat money and the least staff and the least chance of winning and lowest in the polls has some scenario whereby he winds up in the White House. So I agree with you, though, Richardson will wind up.
(LAUGHTER)

BARNES: . as vice president. He does make a lot of sense as a Democratic V.P. All right. Now John Murtha. The Pennsylvania Democrat tried to strong-arm a Republican congressman, that was Mike Rogers, in a dispute over earmarks, giving fellow Democrats a headache and ratcheting up the pressure on Nancy Pelosi to live up to her party's promise to clean up the culture of corruption. You know, look, I mean, Murtha is a political throwback and he's the kind of guy that thinks you push people around to get what you want. And that's obviously what he did, and he has apologized for it and he is not going to be officially censured or anything like that. But—and here's why he's probably smarter than we think he is. You know, his earmark was for this National Intelligence Center that everybody thinks is duplicative. The intelligence agencies say it's unnecessary. The Pentagon does. It's waste, it's a white elephant. And yet he'll probably wind up getting it built in his district.

WILLIAMS: I know, well, we know that kind of politics in this town.

BARNES: Yes, I know. I wanted to mention one other thing, that his only real enemy seems to be the press. I want to read you something from a New York Times editorial...

(CROSSTALK)

WILLIAMS: L.A. Times.

BARNES: L.A. Times—what did I say, New York Times? L.A. Times, much better. Here's what it said: "It doesn't help the Democrats' image that this dispute over Murtha's comments originated in an earmark, a special interest provision widely seen as the culture of corruption decried by Democrats in the last election."

Now what do you think Murtha said if he read that? I'm sure you.

(LAUGHTER)

WILLIAMS: You know, it's whining for losers. But let me just tell you something. The Democrats, Fred, have passed an ethics bill. It does require disclosure of lobbyists bundling money. It says you've got to put a name with the earmarks. It has taken a long time. I think you are right. You know, it has taken too long. And Murtha's action do rank with bullying tactics. But look at this, you know what? I think the culture of corruption tag still hangs around the Republicans' necks. It wasn't enough to really, I think, change that in the voters' minds.

BARNES: Yes. I would agree with that.

WILLIAMS: All right. Up, Republican presidential hopeful Tom Tancredo. The Colorado congressman condemned ABC News for airing a story about alleged covert U.S. operations in Iran. Now I just think this so ridiculous. This is a bald political play by a presidential contender. The White House, the Pentagon, the State Department, all had over a week to voice any objections to ABC News, and they did not. They didn't say there was anything that was going to be disclosed.

BARNES: Well, they should have.

WILLIAMS: But you know what? The U.S. is involved in what I would call a velvet revolution—fomenting a velvet revolution inside Iran by supporting intellectual organizations, political groups, opposition groups because, guess what, it's official U.S. policy that we want regime change in Iran.

BARNES: I know, but it seems to me now it's official media policy that we'll run anything we want, even if it screws up covert operations which might bring democracy to a place like Iraq. I think that was totally irresponsible. Tom Tancredo is right. If the White House and the State Department can't get up the gumption to complain, I'm glad he did anyway.

WILLIAMS: All right. Don't move a muscle "The Buzz" is coming up next.

(COMMERCIAL BREAK)

BARNES: Here's "The Buzz," Juan. You know that poison pill in the immigration debate, that poison pill being the amendment that would have ended the temporary workers program and killed the immigration bill was voted for by Barack Obama and Hillary Clinton. It shows you that they pay more attention to pleasing the AFL-CIO than they do to immigrants, say.

WILLIAMS: Well, who has the money for (INAUDIBLE).

(LAUGHTER)

WILLIAMS: Here's some more "Buzz" for you. Two books coming out on Hillary Clinton, vastly, unbelievably large print runs, indicating the publishers think they're going to be bestsellers, but according to the news reports on these books, there's no news. It used to be "cash for trash" on the Clintons, now if someone—of Hillary Clinton's advisers say it's just "cash for rehash."

(CROSSTALK)

WILLIAMS: Yes, I don't think so.

BARNES: All right. That's all for "The Beltway Boys" this week. Join us next week when the "Boys" will be back in town and Mort will be with us. Stick around, "FOX News Watch" is next.

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