This is a rush transcript from "The Beltway Boys", December 13, 2008, that has been edited for clarity.

FRED BARNES, FOX CO-HOST: Coming up on "The Beltway Boys," from Rod Blagojevich to Charlie Rangel, Democrats and president-elect are scrambling to distance themselves from big-time scandals.

MORT KONDRACKE, FOX CO-HOST: The Big Three auto makers may have avoided a financial death sentence for now.

BARNES: Joe Biden will attend a lot more funerals for vice president. We'll explain.

KONDRACKE: And there are fresh signals from the Senate that Eric Holder's nomination for attorney general may be in trouble.

BARNES: That's coming up on "The Beltway Boys" right now.

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D), PRESIDENT-ELECT OF THE UNITED STATES: We need a president who sees government not as a tool of enriching well-connected friends and high-priced lobbyists but as a defender of fairness and opportunity for every American.

REP. NANCY PELOSI, (D), SPEAKER OF THE HOUSE: We will keep our promise to drain the swamp that is Washington D.C., to let sunshine disinfect the Congress.

(END VIDEO CLIP)

BARNES: I'm Fred Barnes.

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

BARNES: Tonight's hot story, Mort, stink bomb! My, my, did you hear those statements by Obama and Pelosi, promises about what they're going to do. I think now that the stink bomb has exploded regarding Rod Blagojevich, the governor of Illinois, and his alleged attempt to sell the Senate seat now held or formerly held by Barack Obama, that stink bomb, now we do need the swamp to be cleaned because — and not just a lot of words from these people.

Look, this scandal, Blagojevich's scandal, is the biggest scandal I think since the Monica Lewinsky and Bill Clinton deal which was a little over ten years ago. And it's not going to go away overnight. This is really huge. Partly because it's the Senate seat of the president-elect. If this had happened in Delaware and it was a governor picking a Joe Biden replacement that would be different. But there, all the governor did was try to preserve the seat so Joe Biden's son can run in a couple years. There's nothing illegal about that. But trying to sell it, gee.

Now, it would have been nice if Barack Obama had stepped forward boldly and candidly and told all he knows about his connections, conversations, whatever, with the governor of Illinois and those of his associates, which would have been perfectly natural. Obama and the senator from Illinois had talks over the years and more recently with the governor, particularly about his replacement.

But, Mort, we didn't get anything very illuminating from Barack Obama. Watch.

(BEGIN VIDEO CLIP)

OBAMA: I was as appalled and disappointed as anybody by the revelations earlier this week. I have never spoken to the governor on this subject. I am confident that no representatives of mine would have any part of any deals related to this seat. I think the materials released by the U.S. attorney reflect that fact.

(END VIDEO CLIP)

BARNES: Mort, nobody's accusing Obama himself of any personal wrongdoing in this thing. But in these vague statements, like he just gave, that we just heard, have disappointed even people who are his great admirers, including the columnist for "The Washington Post" Gene Robinson, who wrote, "Obama's statements have been cautious and precise, careful not to get ahead of the facts or make declarations that have to be retracted. For politicians, that would be good enough, that is, for most politicians. Obama, who inspired the nation with the promise of change we can believe in, it's not." A pretty good statement by Gene Robinson.

Of course, part of the problem is Charlie Rangel, the chair of the House Ways and Means Commission, who is caught up in scandals involving taxes and favors to people, including his son, who did some campaign stuff. It isn't illegal, but it is nepotism. And Pelosi has tried to speed the ethics committee investigation as has refused to have him stepped down even temporarily as chairman of the Ways and Means Committee.

KONDRACKE: I'm glad you got around to saying no one accused of Barack Obama of personal involvement or taint in the scandal.

BARNES: No, but there's a lot more than he's saying.

KONDRACKE: But to compare and even to compare this with Monica Lewinsky, I mean, Bill Clinton was involved in the Monica Lewinsky scandal and Obama's not...

BARNES: What I said was it's the biggest since then.

KONDRACKE: Well, in any event, so far as we know, and I'm sure this is going to be the case, Obama's going to be clean in all this. And the public is definitely rooting for him.

BARNES: And all his associates?

KONDRACKE: Just a minute. A new "Wall Street Journal"-NBC poll shows that 67 percent of people have a positive view of Obama. That's up 11 points since mid-October. The latest FOX poll shows Obama's approval rating is 68 percent.

Now, I'm fascinated actually by the machinations going on in Illinois, which we'll get to in a second. I do think Obama's staff and whatever contacts they had with Blagojevich have to be aired and soon. And I'm sure that they will be. These are not fools after all. And they realize that Obama is losing the airwaves on account of the Blagojevich scandal. It's all Blagojevich all the time instead of Tom Daschle and the other nominations and the discussions that Obama wants to have about his agenda.

Back to the Illinois machinations. At first, the Democrats started talking about they've got to get rid of Blagojevich. They were talking about having a special election to fill Obama's seat. That has now vanished because, you know why? They say because it would be too expensive, too much delay and all that kind of stuff. In fact, there are municipal elections all over Illinois going to take place in October.

BARNES: In October?

KONDRACKE: Sorry, in April. The reason the Democrats don't want to do it is they're scared to death our friend, Republican Congressman Mark Kirk, might beat any Democrats nominated for that got nominated for that seat.

BARNES: He'd have a pretty good chance too. That was well said, that last part. They're scared to death of an election.

Look, we have the former governor of Illinois, George Ryan, a Republican, in jail right now. We have Rod Blagojevich, who may be on his way to jail. And now, they want to leave it to Blagojevich's Lieutenant Governor Pat Quinn, who advanced to the Chicago political machine like so many others, leave it up to him to decide who the next senator's going to be I guess for the next two years? Huh-uh. That smells. That's another stink bomb actually. And it shouldn't happen.

We need an election. That's for sure. And, look, it's a Democratic state — a Democrat may win that seat. Mort, have you noticed the role reversal here scandal-wise. Republicans, for heaven's sake, were dogged by all those congressional scandals for the last two years, killed them in 2006. Hurt them again a little more I think in the election last month. And now we have among Democrats, we've got Blagojevich. We have Charlie Rangel. We have Jesse Jackson Jr., fairly or unfairly, got up in this whole scandal over naming someone to Obama's Senate seat.

Democrats were awful lucky that their two House members who were in such trouble, Bill Jefferson, of Louisiana, and Tim Mahoney, of Florida, lost in the election. I'm sure they're glad to have them gone, the Republicans that had so many in office at one time that it was trouble for them. It will be less for the Republicans.

And let's not forget about former New York Governor Eliot Spitzer.

KONDRACKE: Eliot Spitzer.

BARNES: Who was caught up in that sex scandal and now he's trying to get back into public life.

KONDRACKE: Kwame Kilpatrick in Detroit as well.

BARNES: Right.

KONDRACKE: But of all of those, the only person who is a continuing problem, as you mentioned, is Charlie Rangel. Republicans are going to constantly insist that a guy running the tax laws of the United States should not be somebody who is not paying his taxes. And I think there's a fairly legitimate case of that. Although, by the rules, he is not required to step down unless he gets indicted and there's no indication yet that he's going to get indicted.

But for sure, you're right, the idea that Nancy Pelosi is trying to hustle along the House Ethics Committee in order to get its investigation of Rangel's misdeeds, whatever they may be, out of the way before the next Congress takes over is totally wrong. She has got — when the new Congress convenes, they've got to take up the Charlie Rangel case again. And if he's found guilty of something wrong, and there's a lot of stuff alleged about him, they ought to come to a determination and not have her try to rush it out of town.

BARNES: On a scale of one to 10, how much damage is the Blagojevich scandal going to be for Barack Obama?

KONDRACKE: It's a distraction. It's going to be like .2.

BARNES: I think it's more than .2. What it is, is, and you may agree with this, this is a problem for the Democratic Party's brand. It's a major national story and it does hurt Democrats.

Coming up, the Big Three auto makers and the Auto Workers Union may have gotten a reprieve but they're not out of the woods yet. We'll explain next.

(COMMERCIAL BREAK)

(FOX NEWS BREAK)

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

Down, the United Auto Workers. Their president, Ron Gettelfinger, in the lead. He blocked a deal between the White House and Congress to bail out the big three automakers. But it looks as though the White House is going to bail them out anyway.

Look, the Democrats are blaming Senate Republicans for blocking this White House congressional Democrat deal to bail the auto companies out. But the fact is that it was Gettelfinger who, as part of the negotiators, blocked a good deal that was invented which Tennessee Senator Bob Corker, that would have made the auto companies competitive in the long term. Now...

BARNES: Maybe even in the short-term.

KONDRACKE: Yeah. It would have helped them get rid of their debt and get rid of some of their obligations, their pension benefits and stuff like that, and they would be able to compete with the transplants in the company. So the — it was basically the UAW that said — would not agree to that deal. So the whole thing went down.

And, you know, the — in the short-term, I think Gettelfinger's going to be successful really because the White House and/or the Treasury and the Fed are going to come up with the $14 billion and give it to the auto companies to the auto companies to tide them over until the Obama administration gets into office. And then you can expect that there will be no restrictions on pay or benefits for auto workers.

And what that means is that the companies will never become competitive. There will be bailout after bailout after bailout until either the public gets sick of it and demands that it stop, in which case they'll go into bankruptcy, or they'll just be bailed out forever. And the Congress and the administration will end up being automakers themselves. I mean, they're going to be managing auto companies. That is not the way to proceed.

BARNES: Mort, I just wish I could say you are wrong, wrong, wrong. I'm afraid you're right, right, right however. And we can't just blame the United Auto Workers and Ron Gettelfinger. He does not have a seat in the Senate. Democrats have seats in the Senate. They can say no to him. They can say no to the United Auto Workers. They can say, look, we're going to agree to a formula we think is going to work.

It's going to hit the auto makers, it's going to hit the UAW a little and we're going to go ahead and do it. Pretending it's just Gettelfinger who's responsible — he was part of the negotiations. I'm not disputing any of that. But Democrats are bowing to his wishes and not letting this Corker plan, which is very good — and Corker, as we've both said before, is the hero in this thing. If — but they blocked it.

Now, turn to the transplant, these foreign companies that have profit- making, high-paying plants in the south, what is the difference between those plants? Why are they doing well and the ones in Detroit are not? They don't have the UAW to contend with. They're non-union in the south. And it works much better that way.

All right, up, Caroline Kennedy. All political signs point to her taking Hillary Clinton's Senate seat in New York.

I don't have any objection to that. Are you upset about that? Did Caroline Kennedy — look, Mort, she has a law degree. She's the daughter of JFK and that gives her a certain aura that others may not have. I think she's at least qualified as half the members of the Senate and more qualified than most in the House of Representatives.

But New York Governor Gary Ackerman has publicly questioned Kennedy's credentials in a radio interview. He's a Democrat, of course: "I don't know what Caroline Kennedy's qualifications are except she has name recognition. So does J. Lo. I wouldn't make J. Lo the Senator unless she proves she has great qualifications. But we haven't seen them yet."

KONDRACKE: Actually, she is. Is J. Lo a worldwide ambassador on behalf of hunger?

(CROSSTALK)

BARNES: She's not qualified to Gary Ackerman, but I'll settle for Caroline Kennedy.

KONDRACKE: I have no objection to Caroline Kennedy either.

BARNES: There they are.

KONDRACKE: Her basic qualification is that she's a Kennedy. Her second basic qualification is...

BARNES: She can't help that.

KONDRACKE: ... that she made a timely endorsement of Barack Obama. The third thing is — and this is major — she is an ally of Joel Klein, who is the New York school's chancellor and a great school reformer in New York City, who would be my choice for secretary of education, except for the fact he doesn't want it because running the New York schools is a better job.

Coming up, not all President-elect Obama's cabinet picks will be slam dunks in the Senate. What role will Biden play in the new administration? Here's a hint. It won't be as big as Dick Cheney's.

(COMMERCIAL BREAK)

BARNES: Welcome back to "The Beltway Boys." We're continuing with our "Ups and Downs for the week.

Down, Joe Biden. He's vice president elect. But there are increasing signs his role as vice president will be scaled down big time. The first duty taken out of his portfolio, attending party meetings in the Senate.

Here's how Senator Majority Leader Harry Reid put it: "He," Biden, "can come by once in a while, but he's not going to sit in on our lunches. He's not a Senator. He's the vice president."

KONDRACKE: Well, actually...

BARNES: Vice president — let me just add one more thing, Mort. Obviously, Dick Cheney had attended those meetings. I know Dan Quayle did. I think Al Gore did. It's been a long tradition that vice presidents who, after all, are president of the Senate attend those meetings with their party.

KONDRACKE: No, no. I think actually Dick Cheney more regularly attended those meetings than the previous vice presidents. And he acted as the administration's enforcer. These are supposed to be discussions among members of the legislative branch about what they're going to do. So Dick Cheney's sitting there, if somebody gets out of line and Dick Cheney beats them up.

BARNES: We're talking about Joe Biden here.

KONDRACKE: OK. So this was an act of legislative independence. But you'd think Reid could be a little more diplomatic towards somebody who has, after all, been a long-time colleague.

But Biden's problems do not end there. He used to be the chairman of the Senate Foreign Relations Committee. And he's been utterly superseded in foreign policy by Hillary Clinton as secretary of state, Jim Jones as national security adviser and Bob Gates as defense secretary, all big heavy weights. You're right. he's going to be going to funerals.

BARNES: Mort, there was a word you were stumbling to grasp but you never got — it never crossed your lips: snub. Harry Reid and these Senators are snubbing him. They obviously don't hold him as highly as many members of mainstream media do. Remember, Obama muzzled him in the campaign because they thought he was shooting off his mouth too much.

The only guy who can give Obama an important role in this administration — Biden, that is Obama himself. I know he's going to let Biden go to a lot of funerals, but do you think he's going to get anything big? I don't think there's anything left for him.

KONDRACKE: The question is, what kind of advice does Biden give to Obama? And does Obama listen to it? Yet, to be determined.

Down, attorney general nominee Eric Holder hopes for speedy confirmation. Hit a major snag this week when the Senate's Judiciary Committee's ranking Republican, Arlen Specter, asked for delay of hearings scheduled early next month so he can take a look at Holder's role in the controversial pardon of financier, Mark Rich, in 2001.

BARNES: Look, Specter's important here because he's the ranking Republican on this committee. And this is a nomination that should be scrutinized by Obama and perhaps rejected. I think it should be rejected.

It's not just the Mark Rich pardon. It's the pardon of the Puerto Rican terrorists of the two Underground women and so on, where he skirted around the normal process at the Justice Department. He's got a lot of answering to do. Holder does.

KONDRACKE: Look, if Specter's against him, he's going to be in trouble.

BARNES: I think he'll still be confirmed.

KONDRACKE: OK. Specter has not decided that he's against him. He wants to investigate and it's perfectly legitimate that it should be investigated. Although, he was bedded by the Obama group and presumably they think he can survive the hearings. They know there's trouble. But, you know, I hope some Democrats will have some tough questions, too.

Don't go anywhere. "The Buzz" is coming up.

(COMMERCIAL BREAK)

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

KONDRACKE: The left is trying to get truth squads or truth commissions or grand juries to look into terrorist surveillance and detainee interrogation. This is something Barack Obama ought to stomp on right now or he's going to have a totally demoralized intelligence service.

BARNES: Look at this picture from Jon Favreau's facebook.com page. Favreau is the guy who is going to be Obama's chief speech writer in the White House. Look where his hand is. You notice that, Mort? If he were a Republican, this would be a huge issue. But it's not much of one now because the press says it's OK when they're Democrats, particularly Obama people.

KONDRACKE: It's clear...

(CROSSTALK)

BARNES: All right. That's all for "The Beltway Boys" this week. Join 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

Content and Programming Copyright 2008 Fox News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2008 ASC LLC (www.ascllc.net), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, LLC'S and ASC LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.