This is a rush transcript of "Special Report With Brit Hume" from July 3, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: This is a far reaching decision, where people taken off the battlefield, foreign fighters, are now given the same rights as American citizens.

DANA PERINO, WHITE HOUSE SPOKESWOMAN: There is considered judgment from many federal government lawyers all the way up to the Attorney General of the United States that it is a very real possibility that a dangerous detainee could be released into the United States as a result of this Supreme Court decision.

(END VIDEO CLIP)

BRIT HUME, HOST: Well, what about the possibility? How dangerous are these detainees that are being held at Guantanamo Bay? Let's look at some numbers from a report by the Defense Intelligence Agency that came out back on May 12, which said that confirmed or suspected of having returned to terrorism is 37 percent. These are people who were released from Guantanamo Bay.

The rate of reengagement over three years of tracking of those who left Guantanamo Bay, 5-8 percent. That is not an insignificant number.

The administration made it clear today that it was having a difficult time figuring out quite what to do to comply with the Supreme Court decision that said that the right of habeas corpus, something that had been previously been reserved for American citizens and those inside the United States, extended to terrorism captives or suspects held in Guantanamo Bay.

Some thoughts now from Fred Barnes, executive editor of The Weekly Standard, Mort Kondracke, executive editor of Roll Call, and the syndicated columnist Charles Krauthammer, FOX News contributors all.

Mort, what do you make of this?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: Well, the president in his interview with FOX said no decision is imminent on this issue. It is July of the last year of his presidency. What he could do is temperize on this, reach no decision on Guantanamo, and dump it into the lap of his successor, which is one possibility.

Another possibility is that he could go back to Congress and say well, the Supreme Court wouldn't agree with what we did the last time around, you and I —

HUME: Let's try again?

KONDRACKE: Let's try again, maybe establish a separate civilian court instead of a military tribunal, like a FISA court, to handle this kind of thing that, and just keep it going along.

The court did not say that the terrorists already charged like Khalid Sheikh Mohammed, had to be tried in civilian court. Presumably, those trials can go ahead. This referred to the prisoners who had not been charged with anything, but yet they get a hearing now.

HUME: But you can see what happens — even some of those when they are released return to the battlefield.

KONDRACKE: And they were released by the military on their own.

HUME: Exactly.

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Look, this is an unbelievable, man-made mess made by, actually, one Justice, Anthony Kennedy. He was the swing vote. He was the fifth vote and voted with the four liberals.

Bush can come back to congress, but all the Democrats, Mort, they thought the decision was great. They all praised it. They said it was wonderful. This he shows how America really defends its rights, and so on.

The problem is even if Khalid Sheikh Mohammed has his trial in a military commission, he can appeal after that, and he'll have a right of habeas corpus. He can appeal it. The problem is, if you shut down Guantanamo, where are these guys going to go? The Senate voted in a resolution last year 94-3 that they couldn't be put anywhere in the United States.

Well, there are lots of countries around the world. A lot of these people would have been sent home to their countries if their countries would take them. But, of course, they don't want them because they're terrorists.

And these ones who have gone back, who have been released and gone back and are fighting as terrorists, rejoined the Taliban, fighting in Iraq against American troops, those are the ones who were declared they were not enemy combatants. They were the guys they were not going to put on trial. I mean, they were relatively the good guys and they're back now killing Americans.

The truest thing that was ever said in that whole important case was in the descent of Justice Scalia who said "This will lead to American deaths," that ruling.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: And one reason for that is because the ruling extends far beyond Guantanamo. We have already had a case where there are lawyers who are bringing habeas proceedings in the United States for a prisoner, an enemy alien combatant being held at Bagram Air Base in Afghanistan.

That means that under this ruling, anybody captured by the United States anywhere is going to have an appearance in an American court, which is chaos and insanity.

Let's understand what the court has done here. For the first time in American history, indeed for the first times in British common law history going centuries before that, enemy combatants held on foreign soil are being given the right to appeal their detention in civil court.

That has never happened, and for a reason. There is no way a soldier, let's say in Afghanistan, in a battle is going to be able to collect the evidence you would want to have in a civilian court to establish a crime. He's not going to go around looking for spent bullets or get the police tape.

And imagine if the hearing is held in the United States. You're going to recall that soldier out of the war in Afghanistan and have him go to court the way you would a cop in New York on a burglary case?

This truly is amazing, and the reason it's so difficult is because the law is new and it's an invention of the court, there are no procedures or precedents. They will have to invent this as it goes along, and no one knows how the courts will rule, how much evidence will be required, what kind of evidence, and what standards.

KONDRACKE: I'll bet you that Guantanamo is still in business at the time that George Bush leaves office. And let Barack Obama or John McCain figure out what to do about it, and the next congress. Congress does not want those people coming into the United States. Well, let them figure out what to do.

And Bush will be able to play out his hand on this. He has said for months that he wants to close Guantanamo bay but he hasn't figured out how to do it. I bet he doesn't figure it out before the end of his term.

BARNES: Am I wrong? I thought the president said he would deal with this before he leaves office. Am I wrong about that?

HUME: It sounds like that's what they're trying to do.

BARNES: Yes, but I thought he said he would. It may not work out, but —

HUME: I think what they have discovered is that they figured out, my god, we have no idea how to do this.

BARNES: It is a huge self-inflicted wound in the war on terror, which has been going very well.

HUME: When we come back with out panel, John McCain says Barack Obama did not keep his word on the issue such as free trade. The FOX all-stars will weigh in next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, PRESIDENTIAL CANDIDATE: I believe in free trade. I think that all countries can prosper as a consequence of free trade. What I also believe in is that we have not been very good negotiators in our trade agreements.

SEN. JOHN MCCAIN, PRESIDENTIAL CANDIDATE: Barack Obama has switched. He said that he was all for free trade, but he is against NAFTA and against the Columbia free trade agreement. He's against them all.

(END VIDEO CLIP)

HUME: Is that fair? Is it fair to say that Barack Obama is against all the trade agreements and has switched to say he's in favor of free trade, Fred?

BARNES: Look, we know something about Barack Obama. He can keep two totally contradictory things in his mind and claim allegiance to both of them. We saw it when the D.C. gun ban was overturned, and he said he was all for it before he had been against — he had been in favor of the ban, and then when it was turned over, he was in favor of that, too.

Free trade — well, he's for free trade, he's just not for free trade treaties.

HUME: He thinks they have been badly negotiated?

BARNES: No. That is not the reason. There is one reason, and that is organized labor is against them. And he is against them. And he has not once in his Senate career that I know bucked organized labor. They insist on this.

And the South Korean treaty, the Colombian treaty, in particular, are ones that benefit the United States. And CAFTA, how could you be against CAFTA? It was a puny little treaty that could only help out Central American countries and would have no effect of American workers or the American economy or American society.

And he was against that. Do you know why? Because labor said if you want our support, if you want to avoid a primary challenge, you have to vote against it. And so they all did, including Obama.

KONDRACKE: Obama wants to have it both ways on free trade. He has got a bunch of New York investment bankers who think that he is a capitalist and that he does believe in free trade. So he tosses them the line that he is in favor of free trade.

In his blueprint for change in America, which is the basic campaign document of his positions, he says that he is going to amend NAFTA, that he is going to get the Canadians and Mexicans to rewrite it to include labor and environmental standards.

But, as Fred said, the Colombia Free Trade Agreement contains labor and environmental standards. So does the Korean free trade agreement. And he is against that

HUME: He's against that?

KONDRACKE: He's against that. He's certainly against Columbia, and I believe he is against South Korea, too.

BARNES: Yes he is. He's against it.

KRAUTHAMMER: His straddle, of course, is brilliant, because he's in favor of free trade in the abstract but he's against every treaty in the real world. It is like what people used to say about socialism — they love humanity in the abstract and they hate individual people.

With him, though, he carries it off, I think, largely because the press doesn't get him on this. Fred had mentioned the flip on gun control. The New York Times reported it as if his position had always been supporting individual rights and not even pointing out that his campaign had said in November that he believed that the law that was overturned was actually constitutional. When the decision was issued last week, he agreed with the court in saying it was unconstitutional.

But it's unreported, and I think he has got all of these rushes to the center on these issues, and he is getting away with it. And McCain is trying to hit him on this as a character issue, can you trust him? And up until now, I'm not sure it's having any traction.

KONDRACKE: I think that McCain, besides challenging Obama's trust worthiness, has also got the big job of convincing Americans that free trade is a good idea. He is a free trader, and he's got to sell that idea, because every poll indicates that, 50, 60 percent of Americans think that free trade hurts America more than it helps, and all that.

HUME: If that's true, then why is Obama going around saying he's for it?

KONDRACKE: Because he has these investment bankers that he wants to make nice with.

HUME: Well, they're fools, I take it?

KONDRACKE: No. I think he's juggling two different groups, and he is basically —

HUME: The latest issue that arose today was talk was in the air that he was about to flip on Iraq. He came out and said today that he is unwavering in his determination to remove the troops in such a way they will be out in 16 months, and that that commitment remains unchanged.

Earlier he said he would do it in 2009 — 16 months obviously would take him past 2009. But is that enough to call it a flip?

KRAUTHAMMER: Yes, because earlier in the day, he said that he will adjust his position, and refine his position — he said this earlier in the day — according to the safety of the American troops, which is what he has always said, but he added a condition which was new, the stability in Iraq.

That's McCain's position. He wants withdrawal over —

HUME: McCain doesn't have a timetable. Obama didn't abandon his timetable.

KRAUTHAMMER: I guarantee you it will go. It's only a matter of time.

HUME: But it hasn't went yet.

KRAUTHAMMER: But he's preparing the ground, because when he says withdrawal will depend on stability, he is opening up a huge window. His commanders will say stability requires either sooner or later, and he has got to wait —

HUME: They ain't going to say "sooner," are they?

KRAUTHAMMER: Sooner is something he will say as a sop to the left. Whatever stability allows, I will do.

KONDRACKE: I agree that he is liable to change his position, but he really corrected it today and said that 16 months still applied.

BARNES: He can say anything now. Is he going to not move quickly to bring our troops out of Iraq when he gets in as president? The entire Democratic Party expects him to do that. If he backs away from that as a president, the party will rebel. He will have a hard time doing that.

KRAUTHAMMER: He will not do it. He will do it as his commanders will advise. It will be a slower timetable. He does not want a catastrophe on Iraq on his hands. It will wreck his presidency, and he knows that.

BARNES: He'll buy that, maybe, but moveon.org won't.

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