This is a rush transcript from "The Beltway Boys", September 29, 2007, that has been edited for clarity.

MORT KONDRACKE, FOX CO-HOST: Coming up on "The Beltway Boys", is the Bush administration setting its sights on war with Iran? That's what some Democrats are saying. We'll take a look.

FRED BARNES, FOX CO-HOST: Hillary Clinton has the lead, but being the front-runner has its risks. We'll explain.

KONDRACKE: President Bush and Democrats face off in their first major spending battle. We'll tell you who won.

BARNES: And the "New York Times" disagrees with itself over the MoveOn.org ad.

KONDRACKE: "The Beltway Boys" are coming up next, right after the headlines.

(NEWSBREAK)

BARNES: I'm Fred Barnes.

KONDRACKE: And I'm Mort Kondracke. We're "The Beltway Boys".

The hot story is talk or bomb.

What to do about Iran. It's nuclear weapons program, the fact that it's sending operatives and weapons in to kill Americans in Iraq are — the whole subject of what to do about Iran is going to become a major issue in the 2008 presidential campaign and it's becoming one, in fact.

Rudolph Giuliani earlier this month said, quote, "ran is not going to be allowed to be a nuclear power. If they get to the point where they're going to become a nuclear power, we will prevent them. We will set them back eight to 10 years. That is not said as a threat. That should be said as a promise," unquote.

Now, when asked about this at the Dartmouth College debate — my alma mater, by the way never looked better — this week among Democrats, here's what the top contenders said about Iran. Watch.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON, (D), PRESIDENTIAL CANDIDATE: What I have said is that I will do everything I can to prevent Iran from becoming a nuclear power, including the use of diplomacy, the use of economic sanctions, opening up direct talks.

SEN. BARACK OBAMA, (D), PRESIDENTIAL CANDIDATE: I think what mayor Giuliani said was irresponsible because we have not yet come to that point. We have not tried the other approach.

JOHN EDWARDS, (D), PRESIDENTIAL CANDIDATE: We can put a clear proposal on the table for the Iranian people, sticks and carrots, carrots being we'll help you with your economy if you give up your nuclear ambitions. The flip side, there will be severe sanctions if you don't.

(END VIDEO CLIP)

KONDRACKE: I agree with Obama. You're on the cusp of being president of the United States and you're promising you're going to go to war with another country. That's not responsible. On the other hand, not one single Democrat mentioned the military option, which sends a signal to the Iranians — they don't have to worry if a Democrat gets elected president.

BARNES: So you're an Obama guy now?

KONDRACKE: No. No.

BARNES: The truth is. The military option is viable. The U.S. can do it. I'm not sure about Israel. It would take 200 war planes. We have them, and we can do it without detracting from our effort in Iraq. And there's no reason that we shouldn't start talking about it.

KONDRACKE: Should we do it, though? Are you in favor of doing it?

BARNES: No, no, no. Well, I'll get to that in just a minute. Talking about it, right now, it's clear that the Iranians and Mahmoud Ahmadinejad are convinced that the U.S. and the Europeans will do nothing serious to stop them from going nuclear or interfering in Iraq, and actually sending in Revolutionary Guards.

If the Bush administration, not the president, started talking about the military option and describing it and how it would work and what would be taken out, the entire nuclear complex of the Iranians could be taken out and the program could be set back for years, the president doesn't have to say this, Condoleezza Rice doesn't have to say this. Have you heard of a leak? Newspapers are filled with leaks. And we've been talking about it and writing about it, the Iranians would get the message. It is saber rattling. It can work. No question about that.

Right now, the only person who has talked seriously about the war option and then very vaguely is president Sarkozy from France and his foreign minister. But at the end of the day, say, January 19, 2009, as Bush is about to leave the White House, it would be a gift to the world if the Iranians were still moving with their nuclear program, for him to take it out.

KONDRACKE: Oh, for goodness sake. That would get the United States into another war.

I'm in favor of — we've got a war going on right now. And I don't think Bush's gift to his successor will be a smoking ruin in Iran and also terrorist raids around the world and god knows what happening in Iraq.

I thought one of the most interesting — the Israelis on the other hand just might. Because for the Israelis, Iran's nuclear program is a threat, a threat to its existence.

BARNES: And the Israelis would only do it if the U.S. OKed it.

KONDRACKE: OK, right. And it is outsourcing. It is doing it by proxy and presumably we would get the blame for it.

One of the most interesting things that happened this week was that in that debate, Hillary Clinton was asked about this Israeli bombing of a suspected North Korean nuclear target in Syria, and she said she strongly approved of the action. She wisely said she would not comment on bomb Iran or Israel bombing Iran, but nonetheless, I think that was a yellow light to the Israelis that they should precede on thinking about Iran.

Every other candidate when asked about bombing Iran or anything else was negative on it. And Hillary was also the only presidential candidate among the Democrats to vote for the Lieberman-Kyle resolution in the Senate, which declares the Iranian Revolutionary Guards to be a terrorist organization. Others voted against it or ducked in the case of Obama.

And here's what John Edwards had to say about it. Watch.

(BEGIN VIDEO CLIP)

EDWARDS: What I learned is that you cannot give this president the authority, and you can't even give him the first step in that authority, because he cannot be trusted. And that resolution voted on today was a very clear indication.

(END VIDEO CLIP)

KONDRACKE: It wasn't. All it did is declare the Revolutionary Guard to be a terrorist organization and didn't say anything about the war.

BARNES: Here's another problem with the Bush administration. And it's this, we have the sanctions that are to be applied against 50 Iranians who are involved in their weapons of mass destruction program. So far, the U.S. has only enforced the sanctions, which means freezing assets, against 17 of them. And the president said he wants to declare the Revolutionary Guards a terrorist organization and have sanctions against them. And it hasn't happen.

If the sanctions will work — and I think the president really believes in them. You were there when he got in an argument with some conservative journalist who he said were mad bombers who wanted to bomb. And he said he thinks sanctions can work. If they're going to work, he has to press them more forcefully and vigorously then he has so far. No question about that.

Coming up, President Bush and Congress battle over children's health care. And Hillary Clinton's sitting pretty in the Democratic presidential race. That doesn't make her the inevitable nominee. We'll explain, next.

(COMMERCIAL BREAK)

KONDRACKE: Welcome back. Let's check out the "Ups and Downs" for the week.

Up: Hillary Clinton, the mainstream media is treating her like she's a shoe in for the nomination. And the average shows Hillary with a 17 point lead over the rest of the field. And she's ahead of the pack with the early voting state, although it's close in Iowa.

BARNES: Mort, it's not inevitable. She is not the ultimate nominee. It's not locked up, even though that's what so many of our friends in the press are saying.

I want to give you a little history lesson here. And very recent history, of what should be an example of Hillary, why she should be worried. Polls four years ago, back in 2003, in an Iowa poll taken two months prior to the caucuses, John Kerry was at 15 percent in the polls. And the national poll taken in December, 2003, one month before the primary voting began. Howard Dean was in the lead with Kerry at 7 percent.

What happened in Iowa and New Hampshire? Kerry got 38 percent in Iowa and won New Hampshire and it was all over and he won. So the polls can be very deceiving.

KONDRACKE: She's not inevitable. And if John Edwards fades because he's going to have to take federal money, and that sends a message that his campaign can't make it and people might flood away to somebody else, who would they flood to? Probably Obama and that would make a real race out of it.

On the other hand, Obama reminds me of lots of historical Democratic candidates whose strength lay in very high income and highly educated Democrats, like Paul Tsongas and Gene McCarthy and Bill Bradley.

And Hillary is the juggernaut establishment candidate, the Hubert Humphrey candidate. And you could say that Obama has the added advantage of having African-Americans, so he could develop into Bobby Kennedy.

BARNES: I was going to say that.

KONDRACKE: But still, historically, Al Gore and Walter Mondale and the establishment juggernaut candidate ends up winning.

BARNES: We'll agree Hillary is the front-runner, but it's not inevitable.

KONDRACKE: Agree.

BARNES: Down: President Bush. He may be right on the policy of vetoing the children's insurance bill, in fact, I think he is. That bill is known inside the beltway to us as SCHIP. But he is getting slammed on the politics. That's why he gets a down arrow.

Here's a sample of the debate in the Senate this week.

(BEGIN VIDEO CLIP)

SEN. DICK DURBIN, (D), PRESIDENTIAL CANDIDATE: Please, for the sake of this country, for the sake of our families and for sake of the kids, the millions of kids who will have health insurance coverage, please do not veto this bill?

SEN. JUDD GREGG, (R), NEW HAMPSHIRE: Why would you expand the program to families who make $80,000? To adults who don't have children? To children who already are insured, and draw them out of the private insurance into the public insurance. Why would you do something like that?

(END VIDEO CLIP)

KONDRACKE: Bush is not right on the policy and he's not right on the politics.

We have 9 million uninsured kids, who meet the standards, and this bill will cover 3 million of them, more than 90 percent of them are under 200 percent of poverty, that $41,000 a year in their families.

The Bush alternative to the SCHIP bill that got passed would cut the number of kids being covered by 1.4 million.

And there are only ten states in the country, at their option, that were given permission by the Bush administration to cover kids up to 300 percent of poverty, up to $62,000 a year. And most of them are high-income states, which are high cost of living states, where $61,000 is nowhere near the median income. So this is not government takeover, socialized medicine.

And the truth of the pudding is that 45 Republicans in the House voted for it. And 18 Senators, including conservatives like Orrin Hatch and Kay Bailey Hutchison and Pat Roberts, all voted in favor of it in the Senate. And if it were socialized medicine, you wouldn't have the health insurance industry in fare — in favor of it.

BARNES: I didn't say it was socialized medicine. I'm not the administration.

KONDRACKE: You're going to argue their case.

BARNES: I'm going to argue the case for limited government and for not doing something that will increase government-run health care. And that's what this is. It doesn't have to be socialized medicine.

That 1.4 million kids being dropped — the Bush bill adding $5 billion dollars, the Bush alternative would cover a few hundred thousand more kids that are not being covered.

I want to say a couple of things. One, this program was designed to cover poor children. If you — but instead, it's covering millions of people, adults — in states like New Jersey, 47 percent of the people under SCHIP in New Jersey, they're adults.

KONDRACKE: They'll get dropped.

BARNES: No. No, they don't. They don't have to get dropped. It doesn't require that.

KONDRACKE: They require it.

BARNES: No, it doesn't require it thought. And in Minnesota, it's something like 70 percent of them are adults, these high-income states. And there's no reason to cover them.

What you need to do first is make sure that SCHIP is actually covering and ensuring all the kids who are poor, under 200 percent of poverty. Look at these numbers, the poverty line, you can see it. It's roughly $20,000, and $41,000, is 200 percent of poverty. Below that are the poor children. There's no reason to add it to $300,000.

We know what one thing that means — and Senator Gregg referred to it. It means there's a huge crowding-out effect, millions of children who are on private insurance who join government insurance. Mort, you know that's not the way to go. If it's a program for poor children, let's concentrate on them and not this other stuff.

KONDRACKE: Coming up, the "New York Times" speaks out on the infamous MoveOn.org ad. And Robert Byrd gives the Pentagon brass an earful this week. We'll tell you how he went too far.

(COMMERCIAL BREAK)

KONDRACKE: Welcome back. We're continuing with the "Ups and Downs" for the week.

Down: Robert Byrd. The outspoken Senator is no stranger to histrionics, but his performance at a hearing this week on war funding took the cake. He's a sample.

(BEGIN VIDEO CLIP)

SEN. ROBERT BYRD, (D), WEST VIRGINIA: Total funding for the war in Iraq will exceed $600 billion — $600 billion — billion — billion dollars. All of this for a war — a war — a war that General Petraeus two weeks ago could not say had made Americans safer.

(END VIDEO CLIP)

BARNES: Senator Byrd, that mike didn't have all that hooting and hollering behind him.

KONDRACKE: I'm going to get to that. Senator Byrd is 89 years old and has become an embarrassment to the Senate. The polite term for him is aged.

BARNES: What's the impolite term?

KONDRACKE: Write it yourself. He turned that hearing over to the crazies. His job, he's chairman of the Senate Appropriations Committee, out of 12 bills necessary to fund the government for the next fiscal year which starts in October 1st, next Monday, the Senate has passed precisely four of them. And because of the Senate's tardiness, the Congress, as a whole, has sent precisely none, not one.

BARNES: Senator Byrd has been one of the great defenders and protectors of the Senate, its dignity and stateliness. And I've got a copy of his book about the Senate. I'm sure he sent you one, too. Now this, I'm amazed.

Down: The "New York Times". It turns out the gray lady gave a $77,000 price break to MoveOn.org for that now infamous General Petraeus ad. Its ombudsman also says the "Times" violated its own policy about attacks of a personal nature. The "Times" said the undercharging was a mistake.

KONDRACKE: And they said that there was no bias in the decision. I don't know. I don't know whether to believe that or not. I do know...

(CROSSTALK)

KONDRACKE: I do know that the net of this controversy was bad for MoveOn.org and the Democratic Party, especially because the Democrats have refused to condemn the ad.

BARNES: You know who Clark Hoyt is? Washington correspondent for Knight Ridder for years and years and years. He's a great reporter of the "New York Times." He's the one that blew the whistle, from the "New York Times." The publisher said at least we erred on the side of speech. "The Times" is the biggest advocate in journalism of suppressing speech through campaign finance reform. What a hypocrite.

KONDRACKE: "The Buzz" is up next. Don't move a muscle.

(COMMERCIAL BREAK)

BARNES: What's "The Buzz", Mort?

KONDRACKE: Here's Hillary at the Dartmouth debate on whether she would permit torture of a top al Qaeda terrorist who knew where a big bombing would take place in the United States. Watch.

(BEGIN VIDEO CLIP)

CLINTON: As a matter of policy, it cannot be American policy, period.

TIM RUSSERT, NBC HOST, DEBATE MODERATOR: The guest who laid out this scenario for me with that proposed solution was William Jefferson Clinton last year. So he disagreed with you.

CLINTON: He's not standing here right now.

RUSSERT: So there is a disagreement?

CLINTON: We'll, I'll talk to him later.

(END VIDEO CLIP)

KONDRACKE: All the other Democratic candidates said no torture ever. If it ever came down to it and that situation were existed, that she would water board the guy. At least I hope she would.

BARNES: Yeah, of course. Mort, you know I've been — since John Reid went to Moscow and praised the Bolshevik Revolution, artists and writers and so on, AND going to met with left wing dictators and cozied up to them. Kevin Spacey was the actor. They're like moths to a flame. Kevin Spacey has been with Hugo Chavez. He's the latest moth.

That's all for "The Beltway Boys". Joins us next week when the boys will be back in town.

Watch "The Beltway Boys" Saturday at 6 p.m. ET and Sunday at 1 and 6 a.m. ET

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