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This is a rush transcript from "The Beltway Boys," on July 7, 2007.

FRED BARNES, CO-HOST: Coming up on a special edition of THE BELTWAY BOYS.

It's dead on Capitol Hill but immigration is still a hot topic here in Washington and beyond the beltway.

MORT KONDRACKE, CO-HOST: We'll tell you how the states are moving forward with their plans to secure the borders.

BARNES: We'll tell what the federal government is doing or not doing to keep illegals out.

KONDRACKE: And we will also take a look at the politics of all this, what it means for the Republican Party and the presidential race.

BARNES: THE BELTWAY BOYS are next, but first the headlines.

(NEWSBREAK)

BARNES: I'm Fred Barnes.

KONDRACKE: And I'm Mort Kondracke. And this is a special edition of THE BELTWAY BOYS.

BARNES: And tonight's hot story: now what? You know the immigration bill is dead, Mort, but immigration is still a big issue. And it is an issue that is in the Bush administration's court.

I think they've got to do two things for sure: one, they're going to have to, on their own, increase border security, particularly in the south; and secondly come up with some way to deal rationally with the 12 million illegal immigrants here in the country.

Now, Michael Chertoff, who is the secretary of homeland security, and I think has done a very good job there, said the enforcement is going to be, well, maybe even a little brutal. Watch.

(BEGIN VIDEO CLIP)

MICHAEL CHERTOFF, SECRETARY OF HOMELAND SECURITY: We will continue to see heart-wrenching examples of families being pulled apart because I have an obligation to enforce the law, whether it's painful to do or whether it's pleasurable to do. But in order to regain the credibility with the American people that has been squandered over 30 years, we're going to have to be tough.

(END VIDEO CLIP)

BARNES: Well, I'll tell you another way that he brushed aside to build up credibility with the American people and that is to take that $4.4 billion which the Bush administration had promised would be a part of the immigration bill to beef up security on the border. That was going to be paid for with fees, you know, from illegal immigrants as a part of the immigration bill.

Well, Chertoff said, well, we don't have the money for that. Find the money and use that money for more security.

And secondly, I think the administration, and they don't need legislation to do this, needs to do something about the two or three or four million people in the United States who have got visas to come in and then overstayed their visas, like the 9/11 terrorists. Remember, they were people who had come in illegally and overstayed their visas. Find out who they are and where they are. Something needs to be done there.

And once, Mort, once Americans believe that their nation is more secure, their borders are more secure, I think we'll someday move ahead on immigration reform and do something about giving the 12 million illegals a path to citizenship.

KONDRACKE: Yes, I mean once you get the impression of what Chertoff is saying, you want enforcement, I'll give you enforcement, and it's going to be ugly. And I'm afraid it is going to be ugly.

Look, I think that there were a lot of people who — I think there were a lot of racists and nativists involved in this debate. There were a lot of other people who just didn't trust the government. They don't trust the Congress. They don't trust the government to enforce the law. And I don't blame them.

I mean ever since 1986, nobody has really enforced the borders. So I'll agree with you. Let's have the fences. Let's have the $4.4 billion. Let's, you know, do all the other stuff that you want. But is still is not going to solve America's fundamental immigration problem because we've got jobs that Americans don't want to fill and they're going to have to be filled somehow. And you've got 12 million illegal immigrants here. They're not leaving. And I'm afraid they're just going to be more exploited and more victimized than they've ever been before.

BARNES: Mort, I don't think so. There's not going to be a wave of bias and discrimination here in the United States. I don't think America is not going to betray its vision and its welcoming as shown by the Statute of Liberty.

And once security is restored and people believe it, we'll move ahead in ways that I think you'll like.

KONDRACKE: Yes, you just watch when sheriff's deputies start arresting people who are American citizens who happen to look Hispanic because — to check their I.D. cards. You think that's not discrimination? You watch it.

BARNES: Well, I know it would be, but it won't happen.

KONDRACKE: It's going to happen.

BARNES: Oh, come on!

KONDRACKE: Coming up, while Congress spins its wheels on immigration reform, several states are moving ahead with their own plans to secure their borders. We'll talk to a state legislator who is taking the lead in his state next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JON KYL (R), ARIZONA: A lot of my constituents have said why should we believe that a new law is going to be enforced when the existing law isn't enforced? And that is a very good question.

(END VIDEO CLIP)

KONDRACKE: Welcome back to a special edition of THE BELTWAY BOYS. That was Republican Senator Jon Kyl of Arizona last week when the immigration compromise that he helped broker fell apart.

Joining me to talk about the bill's demise and where immigration reform goes from here is Arizona State Representative Republican Russell Pearce.

Welcome.

REP. RUSSELL PEARCE (R), ARIZONA: Thank you for having me. Thank you, Fred.

KONDRACKE: This is Mort actually. But in any event, the governor, Janet Napolitano, a Democrat, signed your bill, which calls for employers who knowingly higher illegals to lose their — to have their business licenses suspended after the first offense and canceled after the second offense. This goes into effect January 1. What's going to happen? Do you anticipate a mass exodus of the illegals from Arizona or what do you anticipate happening?

PEARCE: Well, those that are illegal, that would be nice. Certainly, you'd take away the jobs. As Disneyland learned a long time ago, if you want the crowd to go home, you got to shut down the lights and shut down the rides. Enough is enough.

But we are going to go after illegal employers who compete illegally and unfairly against honest employers as well as the fact they are the.

(CROSSTALK)

KONDRACKE: The Arizona Chamber of Commerce says that this is going to be a disaster. What's going to happen to landscaping industry and the resort industry, which is very big in Arizona?

PEARCE: Some people may have to mow their own lawns. I mean I'm really sorry for them, you know. But the East Valley Chamber of Commerce is representing almost 6,000 businesses, has endorsed this bill. They refuse to support and aid and abet, you know, the bad employers, the illegal employers.

This is a good bill. It's a fair bill, but enough is enough. And we need to take the handcuffs off of law enforcement.

KONDRACKE: OK, did you — I saw you quoted somewhere as saying that Jon Kyl and John McCain, the former prisoner of war and war hero, were traitors. Did you mean that to the country or how did you mean that?

PEARCE: Well, that was taken out of context. What I talked about and have no regrets for is the bill that was run through Congress was treasonous. Actually, it was the sellout of America. It was amnesty to law breakers. It ignored the damages of the crime. It allowed gang bangers to stay here. It allowed convicted felons to stay here. It allowed terrorists to stay here.

(CROSSTALK)

PEARCE: It would have a cost of trillions of dollars to the taxpayer.

BARNES: All right, let me step in here. This is Fred Barnes.

There are an estimated 12 million people here illegally. What would you do about that?

PEARCE: Well, about 20.

BARNES: Well.

PEARCE: I mean I'll tell you, if you break laws, there are consequences, you know. And I believe in family reunification too. And I believe those who have left their families and have come here illegally ought to be arrested, deported and returned to their families. Enough is enough. If you break the laws here — drive drunk, you get separated from your family.

(CROSSTALK)

PEARCE: There are consequences.

BARNES: Well, wait a minute, let me — wait a minute, I understand that. What do you do if you came here illegally and you've had children? They're legal citizens of the U.S. What do you do, break up the family?

PEARCE: Well, they can take the family with them or go to jail. You can take the family with you. The point is there are consequences. They knew that when they came here.

Now am I supposed to feel sorry for enforcing our laws, putting America first, putting the rule of law first? When you break the law there are consequences. You know that when you break the law.

BARNES: I understand. Let me.

PEARCE: You know you can't put the burden of guilt on the citizens for insisting that their laws are enforced.

BARNES: Let me ask you about legal immigration and people like Tom Tancredo and I've heard others as well, suggest that we need a time out in the number of legal immigrants come into the United States. Is that a good idea?

PEARCE: Well, it's probably a good debate they ought to have because we certainly are out of control. Certainly — I mean, goodness sakes, we're a generous nation. We let 1.4 million into our country last year.

But here is what's happening: we have almost a million folks, 680,000 that have been ordered to leave that are still running around this country they can't find. So I'm going to give the federal government more responsibility to do what they haven't been able to do. I'm going to trust the same government that in 1986 said never again. We're going to enforce the laws and go after bad actors, bad employer, illegal employers.

KONDRACKE: Representative.

PEARCE: They've done nothing.

KONDRACKE: I'm curious as was to what this controversy is doing to the politics of Arizona and the United States? Randy Graf and J.D. Hayworth, who took your position, immigration last, were defeated in 2006. Jon Kyl changed his mind about comprehensive immigration reform. Yet here we go, it looks like things are moving your way. What's going to happen in Arizona to Jon Kyl and John McCain's future?

PEARCE: Well, they've got a long way, you know. They've got years before they're standing back before their public. They're lucky that they have some time down the road to recover from this.

Americans are mad. They flooded Washington. They had to turn off the phone lines. They had to shut things down. I mean, you know, enough is enough! We understand the rule of law. And to reward those who are breaking the law and ignore the damage, I mean the thousands that are killed and injured and maimed, the billions of dollars that it costs the taxpayers, America wants something done.

(CROSSTALK)

KONDRACKE: Who do you think this issue benefits in the 2008 Republican presidential race?

PEARCE: Well, it would be a good question, you know. And one of the problems is very simply, there were Republicans.

And back to your question on Randy Graf and J.D. Hayworth, again, they were an exception. Most of those that were removed around the country, Republicans that were defeated, were open border, moderate Republicans, 34 percent. And only 2 percent were secure the borders. And of course, Randy wasn't in office. J.D. was.

(CROSSTALK)

PEARCE: So the public — this was not a referendum against conservative politics. This is a referendum against — again Republicans were in charge and did nothing and should have been fired.

BARNES: Yes. Let me ask you a question about why immigrants come here. Why do you think immigrants come here legally or illegally? Don't they come because, at least in my view, they come here and they want jobs, they want to decide the destiny in their lives, which they can do here in the United States but not elsewhere, that they come here for the right reasons?

PEARCE: It's the majority — you know you make a good point. The majority, I think do. But you can't ignore the rest. You can't ignore the rest. And the rest are those who commit crimes.

Arizona, number one in crime and the second most violent state in the nation. The carjacking, home invasion, identity theft capital of the world. Two hundred and twenty-five thousand non-English speakers in our K- 12 system. That's a million students. At $8,500 per student, that's $2 billion a year just in non-English speakers.

BARNES: And let me ask you.

PEARCE: Where does it end? You know those jobs are destroying America.

(CROSSTALK)

BARNES: One final question here: would you allow people who come here illegally to stay if they swore allegiance to the United States?

PEARCE: No. They started out as law breakers. They violated the laws. They've broken into our country. Again, we have 5 billion people worse off than Mexico and those Latin American countries. They would all love to come here. How about get in line, come here the right way, wait until those guys have sometime — are some of our best Americans..

BARNES: Representative Pearce.

PEARCE: . they wanted in line. They fought hard. They want to be Americans.

BARNES: Representative Pearce, thanks very much.

PEARCE: Thank you. Thank you.

BARNES: Coming up, the other side of the debate with Republican Congressman Jeff Flake of Arizona. He was a key sponsor of immigration reform legislation in the House. We'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. DAVID VITTER (R), LOUISIANA: I do think this has created real divisions within the party, within our Senate caucus, within the Republican Party, more general. But I think all of those things can and will be healed if we respond to this very clear message from the American people and if we gather around a consensus position that attacks enforcement at the border and at the workplace first.

(END VIDEO CLIP)

BARNES: That was Republican Senator David Vitter of Louisiana, an opponent of the immigration bill.

And joining me now to talk about the politics of immigration reform and how the debate impacts the Republican Party in particular is Republican Congressman Jeff Flake of Arizona. He sponsored an immigration reform measure in the House.

Congressman Flake, a recent Gallup Poll shows 58 percent of Hispanics identify as Democrats, only 20 percent as Republicans. Aren't Republicans by — being the main people not the only ones who killed the immigration bill, but it was primarily Republicans, aren't they locking in those numbers, that disparity that is so hard for the Republican Party?

CONGRESSMAN JEFF FLAKE (R), ARIZONA: Yes, I fear so. It looks like the trend is not good in terms of winning Hispanics over. And that's troublesome for the party.

BARNES: You know you must have Hispanics in your district. And how do you explain what happened in Congress with Republicans being largely responsible for killing the bill?

FLAKE: Well, I think that they see that and then they see other Republicans in Arizona, in particular, John McCain, Jon Kyl, myself, and others, who wanted comprehensives reform. So I think Arizona, you kind of have both sides. But I hope that they see that there are a number of Republicans who are looking for comprehensive reform.

BARNES: Senator Lindsey Graham of South Carolina, who was a Republican, who has been very much a player in seeking immigration reform, said to me the other day that the Republicans don't have to worry about coming together, that they'll be divided in 2008 on immigration. But if Hillary Clinton is the nominee of the Democrats, that'll unite the party again. Do you think that's right? Can Republicans get over this immigration divide that easily?

FLAKE: Well, I don't know about that easily but certainly we can. If Hillary Clinton is the nominee on the other side, she's a uniter for Republicans, and I think that will help. But certainly this is something that, you know, for the long-term trends. I think putting a better face on immigration would benefit us.

KONDRACKE: Congressman, you've endorsed your fellow Arizonan John McCain for president. He didn't do well in the fund-raising. And I wonder if the immigration controversy has mortally wounded his candidacy.

FLAKE: Well, I don't know if you can single out immigration. Certainly, there's a very passionate group of Republicans who are very opposed to the Senate bill. And nobody can deny that and that caused difficulties for his campaign.

But I think a lot of people admire John McCain for standing for his principles. I certainly do, for standing up and saying this is what we've got to do. And I've held this position for a long time and I'm not going to change it just for politics' sake. But it's a difficult position.

KONDRACKE: But your party, it looks like, is going to be the anti- comprehensive immigration reform party going into the 2008 election. Can you win under those circumstances?

FLAKE: Well, I think it makes it difficult. When you talk to politicians from California, people like Dan Lungren and others, will tell you, you know, the reform in the '90s, 187, it energized the base for a while. But for the long term, it really hurt Republicans in California simply because the tone and tenor of the debate was, I think, kind of like it is today. And that doesn't benefit us.

Certainly, there are real concerns, genuine concerns about the federal government's record in terms of enforcing immigration law. But you can have a little better tone and tenor to the debate.

KONDRACKE: What about Senator McCain's standing in Arizona? I've seen some Democrats and some Republicans sort of hooting about the fact that his popularity even there is sinking.

FLAKE: Well, it was thought that, you know when he ran last time. There were a lot of people saying that, oh, he could be taken out in a primary but nobody dared do that. John McCain remains quite popular, broadly, in the Republican Party. So I think that that's overstated just a bit.

BARNES: Congressman, what needs to happen now to careen a circumstance where immigration reform can pass?

FLAKE: Well, clearly, I think that the federal government needs to step back now and say, all right, let's do a better job, let's accelerate what we're doing on the border, move faster in terms of the fencing and the other barriers, hiring of border patrol agents, and convincing the American that they will move ahead.

It's going to be difficult. I can tell you where the real fence needs to be built is on the employers' side. But as it stands right now, employers really don't have the tools necessary to determine, you know, whether those they're hiring are legal or illegal. And that's going to make it difficult.

And harking back to 1986, people say well, that simply wasn't enforced. Part of the reason — the biggest reason that wasn't enforced in '86 is it wasn't a comprehensive approach. We didn't have a guest worker plan moving forward. And then we continued to need labor. And it simply wasn't realistic given our labor needs. And so we never enforced that law. And I think we make the same mistake today unless we do it in a comprehensive fashion.

BARNES: Well, isn't there anything that can be done in terms of border security or immigration reform on a smaller basis, something scaled back, something that's not comprehensive but yet would be helpful?

FLAKE: Well, we have the Secure Border Initiative that is moving forward. I think that that needs to continue to move forward. There have been improvements. Apprehensions are down. The crossings are way down, meaning that there is a better, you know, control of the border than we had before.

But we certainly need to accelerate the fencing and whatnot that's going there. If we do that, I think that people will have a better feeling about trusting the federal government to move ahead on employer verification and the other elements.

KONDRACKE: Do you think state initiatives like the one that's taken - - that the governor said, in Arizona, will be found constitutional?

FLAKE: Yes,I think that they probably will. I think that it's going to be difficult because employers right now have to rely on the basic pilot project, which will tell you ultimately, it may take some time whether or not a social security number is valid, for example. But it can't tell you if 500 people are using it. And so there are flaws in that program.

BARNES: Congressman Flake, thank you very much.

FLAKE: Thank you.

BARNES: And we'll have our final thoughts on all this after the break.

(COMMERCIAL BREAK)

KONDRACKE: Welcome back.

Concluding here, I mean it's obvious from — here you have two Republicans from Arizona and it's quite clear to listen to listen to the two of them, that you've got a new third-rail issue in American politics, immigration; and a wedge issue. A News; Domestic the wedge is driving right at the heart of the Republican Party. And I don't see how you put it together.

You could say that Hillary Clinton will bind them back together again. I don't think so. They're going to lose the Hispanic vote and they're going to suffer from it on a long-term basis.

BARNES: Well, they probably will. But Mort, take the longer view. We had Irish immigrants, Italian immigrants, Eastern Europeans, Chinese, other Asians, and America had a hard time accepting them. But ultimately it happened. And we accepted them. They were assimilated and America is better for them.

KONDRACKE: That's all the time for THE BELTWAY BOYS for this week. Join us next week when the boys will be back in town.

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