This is a rush transcript of "Special Report With Brit Hume" from December 5, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

BARNEY FRANK, (D-MA) HOUSE FINANCIAL SERVICES COMMITTEE: A time of great crisis with mortgage foreclosures and autos — he says we only have one president at a time. I'm afraid that overstates the number of presidents we have at the present time.

And I think we have got to — I think we have got to — he's got to remedy that situation.

(END VIDEO CLIP)

CHRIS WALLACE, HOST: That was the irrepressible Barney Frank, Chairman of the House Financial Services Committee, joining a growing list of Democrats today who want Barack Obama to do more about the economy in the weeks before his inauguration.

All this after we learn the economy lost another half million jobs in November, the worst monthly job loss in 34 years.

Let's talk about it now with our panel, FOX News contributors Fred Barnes of The Weekly Standard, Mort Kondracke of Roll Call, and syndicated columnist Charles Krauthammer.

It was interesting, Fred, because Barney Frank is joining a growing list of Democrats. He said that this president has to be more assertive, has to step up about the economy. What do you make of that?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Well, I think he's right.

Nobody is asking Barack Obama as president-elect to run America foreign policy. It is just this narrow area, but a most important area, and that's the economy where it's going to be — whatever is done, whatever stimulus there is, bailouts, and so on, are going to be forged by Democrats.

And who is the leading Democrat, and who will be president in, what, five weeks or something? It's Barack Obama. So he really has to be a part of this.

Look, he's being really tested in about three areas. One, the auto bailout. What is he going to do there? Something is probably going to have to happen in December just to tide the auto companies and GM over until sometime early next year, when you will decide on how much more you want to do. But they need some cash quickly.

Then there is what kind of stimulus package you're going to have, whether it is something that really stimulates or not, or just a bunch of stuff that labor wants.

And you know what hasn't been talked much about is the guy he picks, or the woman he picks, for special trade representative, because that will send a signal.

He's considering a guy from California, Xavier Pasara(ph), who has a mixed record on trade, leaning now toward protectionism. If he picks somebody like that, that is a terrible signal to send to the world economy.

WALLACE: Mort, we were talking about this with Major Garrett at the top of the newscast, and he was saying one of the reasons the Democrats want a direct message, for instance, on the bailout from Barack Obama is to cover their political rear ends.

In other words, he's popular. He can get give the marching orders, and they can just follow him.

MORT KONDRAKE, EXECUTIVE EDITOR, ROLL CALL: Look, the country needs leadership, and it's not getting it from George Bush, whose days are all too numbered.

WALLACE: It's also not getting it from the congressional leadership in congress.

KONDRACKE: Exactly. But Barney Frank's reference there to the one president we have — actually, we have about a third of a president. And, you know, President Bush finally admitted today that we're in a recession after 533,000 jobs lost in November, more than 2 million this year.

And you know, I think an interesting question for us to start discussing, because it's going to be discussed sooner or later, is does George Bush go down in history as Herbert Hoover?

And you could make a case for that, that by doubling national debt and saying deficits don't matter, you create an atmosphere where everybody goes into debt, leverages like crazy, and the bottom dropped out.

Now, he's not Herbert Hoover in the sense that he didn't raise taxes in the middle of a recession, which Hoover did, or impose tariffs, but I think there's a good case that George Bush is going to have to fight against that charge that he's Herbert Hoover.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I disagree with Mort and the irrepressible Chairman Frank, who usually has a quip, often clever, often cheap.

We have had the most interventionist administration in the history of the American economy over the last six months, and that is the Bush administration acting through his treasury secretary. He's not going to act alone.

The fact is his administration has been, if you like, hyperactive — intervening, saving, rescuing, letting go, pumping a trillion dollars into the economy.

This is — to say we haven't had leadership, you can argue over the fact that it hasn't succeeded, but certainly he has led.

WALLACE: Could he have done more, though, Charles, about the recession. I'm talking about as opposed to the financial crisis and dealing with the tremendous downturn in the economy and this hemorrhaging of jobs now?

KRAUTHAMMER: Look, the Democrats have believed that had to have a massive countercyclical effort, pump the money in and save us on jobs. Republicans believe otherwise.

What Bush intervened in was the panic in finance because there was no credit. He sees it as a problem of a utility, like electricity, that goes down. The Democrats wanted intervention in the broader areas of the industrial economy.

That's why you've got stasis now. Democrats are still in opposition. The constitutional administration is a Republican one. It only wants intervention on the utilities, on the finance.

And that's why you don't have what you might call leadership on autos. But that's not a lack of leadership. It's because Republicans want to draw a line and say not everybody gets a bailout, only the big finance institutions.

WALLACE: We have to take a break here, but President Bush reviews what has gone right and what has gone wrong over the last eight years in the Middle East. We'll talk about that with the panel after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

PRESIDENT GEORGE W. BUSH: We and our partners have offered Iran diplomatic and economic incentives to suspend enrichment. We have promised to support a peaceful civilian nuclear program.

While Iran has not accepted these offers, we have made our bottom line clear. For the safety of our people and the peace of the world, America will not allow Iran to develop a nuclear weapon.

(END VIDEOTAPE)

WALLACE: That was President Bush today in a speech reviewing his successes and failures over the last eight years in the Middle East.

Let's get some thoughts now from our panel. Charles, let's start with the president statement you just heard. The U.S. will not allow Iran to develop a nuclear weapon. When you look at his record over the last eight years, what, if anything, does that mean?

KRAUTHAMMER: I think nothing, because he failed. Iran is in the process of developing. The president has heroically attempted to construct an international alliance with sanctions.

But the Germans and the Russians and the Chinese and others have essentially said no, and he can't act unilaterally. The only way he can act unilaterally is by attacking.

And unless that's what he is hinting here, which I can't imagine is what he's hinting, that is the only way that we will stop a determined Iran, which is on the road and will probably have a nuke in the first Obama term.

Unless he's implying that America under his successor will not allow Iran to go nuclear, but that is not in the cards either. Obama is not going to be a president who is going to attack Iran, sanctions will not succeed.

WALLACE: Mort, President Bush also said, and let me quote this, "The Middle East is a freer, more hopeful and more promising place than it was in 2001." Do you think that's true?

KONDRACKE: I think yes and no. Saddam Hussein is gone, and there is a government that is working so far in Iraq. It may fall apart once U.S. troops leave, ethnic hostility being what it is.

There are no nukes in Libya now. That is a major accomplishment. On the other hand, as Charles said, there are likely to be nukes in Iran.

There is a Middle East peace process that stated way late in 2007 with the Annapolis process, but it rests on a whole weak structure of the Palestinian Authority, which can't control its own territory, really. And, as a matter of fact, Mahmoud Abbas's term as president —

WALLACE: President of the FATAH faction of the Palestinians, as opposed to Hamas.

KONDRACKE: Right. He is the president of the Palestinian Authority. His presidency runs out January 9. And if he doesn't have new elections and get himself reelected, which is a question mark if he could, Hamas may declare that it has the presidency. And then that's another invitation to civil war.

So more peaceful-some. But there is also great dangers.

WALLACE: And let me ask you to follow up specifically, Fred, about the Israeli-Palestinian conflict, because in his speech, the president said there is now, quote, "Greater international consensus than at any point in recent memory about a possible peace deal."

BARNES: Maybe there is a consensus in favoring one, but I think that's meaningless.

The president also said that the Israelis and the Palestinians have laid a new foundation of trust for the future. I don't think so. I mean, Hamas is stronger than ever and may take over the West Bank as well, and has Gaza. It is a terrorist organization.

Hezbollah, which is also bearing down on Israel, is another terrorist organization sponsored by the Iranians.

And I really don't think — look, I think there have been some gains. Mort talked about one, Iraq. There have some been gains. Saudi Arabia has cracked down, at least internally, on Al Qaeda. The Syrians are not a big factor in Lebanon now, but Hezbollah is.

The locus or the source of terrorists and terrorism has actually been moved out of the Middle East. It's now in Pakistan.

But, you know, the Israelis and the Palestinians heading toward any kind of a peace treaty? No.

WALLACE: Charles, we have about a minute left. Let's talk about Iraq, because there was something which we haven't perhaps paid enough attention to. The status of forces agreement formally ratified by the Iraqis sets a timetable for the next three years between the U.S. and Iraq. Do you think that's a big deal?

KRAUTHAMMER: I think it's any amazing development. A, the process, which was real democracy in action and a peaceful parliament in Iraq, which you wouldn't have imagined three years ago.

And the outcome, which was Iraq as a sovereign nation acting in a consensus, a national consensus expressed in a parliament essentially accepting an alliance with the United States, a strategic alliance, which will far outlive American withdrawals unless the system dissolves, which it might.

But assuming it stays in power, it's an amazing achievement — an enemy state now a friendly state.

WALLACE: I should also point out that on Sunday, on "FOX News Sunday," we will speak to the Secretary of State, Condoleezza Rice, just back from Southeast Asia dealing with the Indians and the Pakistanis, dealing with that and all of the eight years in which she has been involved in U.S. foreign policy.

But that's it for the panel.

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