This is a rush transcript of "Special Report With Bret Baier" from February 6, 2009. This copy may not be in its final form and may be updated.

BRET BAIER, HOST: Now some analytical observations from Bill Sammon, FOX News Washington deputy managing editor, Juan Williams, senior correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Charles, a possible deal? What do you think about all this back and forth up on Capitol Hill?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, it looks as if the Democratic strategy is to go for a gang of two or three on the Republican side. They apparently have a couple who will come over, as we just heard.

And what they'll end up with is a package which is, I think, essentially what the Democrats had proposed with cosmetic changes. If you end up at $830 billion or so, you have got a Democratic package.

The problem is that by trying to strip out small elements, as Collins and Specter have done, you are conceding the premise. And the premise is that this huge, pork-laden package, which is with all kinds of arbitrary numbers and programs, is the legitimate baseline.

And what's going to happen in the future is that in two years all of this stuff is not going to expire. It is going to be a new baseline. It is going to be impossible to shrink it, and we're going to have a huge expansion of government as a result of this.

BAIER: Juan, a much different tone from President Obama last night, even today. Was there a sense that the White House was losing this for a while?

JUAN WILLIAMS, SENIOR CORRESPONDENT, NATIONAL PUBLIC RADIO: Oh, yes. And I think that they have the sense that they had been losing and that he needed to take the lead.

And I think there is a particular sense of discontent with Harry Reid's leadership in the Senate, that they wanted something stronger and clearer. They didn't imagine that they would have to be battling to hold on to Democrats. They didn't think that was going to be part of the deal.

And today we heard from Senator Dianne Feinstein of California that she was having doubts about this because she said she didn't see how many jobs would actually be created.

When you hear that kind of language, it suggests that the Democrats are not holding together, and that is a disappointment to the White House.

And so President Obama was aggressive last night at the retreat for the House Democrats, and today in announcing his economic advisory board.

Again, he came out very strong, even mocking in terms of tone, and saying, you know what? People need jobs. You look at the job losses over January, the worst in 35 years or so. How can people not be reacting?

I think he feels somewhat isolated, as if he doesn't have the political support that he thought would be sure in this moment of what he has deemed an economic crisis.

BILL SAMMON, WASHINGTON DEPUTY MANAGING EDITOR, FOX NEWS: It is useful to link the stimulus to the jobless numbers, because that's very powerful and we're getting scary numbers out today. He's going out to a couple cities next week where the jobless numbers have gone from the single digits to the double digits, and that will be very powerful.

But it's possible to go too far on that front and cross the line into fear-mongering. And when Obama talks about catastrophe, when Obama talks about a recession that will never end if we don't pass-think about that. That's getting rid of the business cycle. We're going to have a recession without end.

I think Americans resent that. And so he has to be very careful not to push that too far.

So on one hand you have Democrats trying to influence public opinion by talking about jobless numbers. On the other hand you have Republicans trying to influence public opinion by talking about all the junk that is in this bill.

And the republic is coming away with the impression that this is a trillion dollar turkey. You can shave a $100 billion off of it, and we're suddenly supposed to feel good about that. We start with $900 or a trillion, and it comes down to $800 billion, and that's suddenly a bargain.

I still think we're a long way from getting this thing passed. I'm glad we're exercising restraint on this network and saying it's very tentative, because these things happen where they talk about-"We have an immigration deal," and then it falls apart, or "We have a TARP deal," and it falls apart. So I'm waiting.

BAIER: That's a great point. The immigration negotiations, Charles, it brings up that the Bush administration went to these moderates to make that happen. It's much like this Obama administration is going to the few people who are controlling this debate.

KRAUTHAMMER: And the gangs are always ad hoc. It can be a gang of 14 or 20, or now down to two. But it's always ad hoc. It's undisciplined. It doesn't have any structure. And it depends on the whims of an Arlen Specter and a Susan Collins, which is not exactly an element that you can predict or count on.

WILLIAMS: What a devastating defeat this would be for the new president. With all the good will he has, it's still the case that the polls indicate the American people prefer the tax cuts to the spending. BAIER: Our Friday lightning round is next, including a mea culpa from a sports icon.

(BEGIN VIDEO CLIP)

MICHAEL PHELPS: I regret every mistake I have made.

(END VIDEO CLIP)

BAIER: Michael Phelps is in some hot water. The panel weighs in on that and more after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I think the historical precedent of this is there is a director of the census that works for the secretary of commerce, the president, and also works closely with the White House to ensure a timely and accurate count. And that's what we have in this instance.

(END VIDEO CLIP)

BAIER: Hmm. It is the Friday lightning round. We will start with a topic, one topic about the census, the 2010 census, being taken out of the Commerce Department, essentially, and put into oversight at the White House.

We will start with this topic — Bill Sammon?

SAMMON: Think about this. The Commerce Department has always had the Census Bureau for many years, because you're supposed to insulate the Census Bureau from politics.

Every ten years we take a census, and the results have great significance. You redraw the congressional districts so it impacts political power, and you distribute federal dollars based on population.

So it's a political football. What do they do? They take it away from Judd Gregg, the newly minted nominee for Commerce, and put it in, presumably, Rahm Emanuel's portfolio, which is very alarming.

BAIER: Juan?

WILLIAMS: Politics? The census has always been about politics. And what we have here are Latino officials who are concerned that Judd Gregg was going to be in charged, and they said that when Judd Gregg was in the Senate, he was not supportive of making sure there were enough officials to get the census. This will redraw distributes, it has political consequences. So I don't see any problem with bringing it to the White House. It just makes official what we have all known—it's political.

KRAUTHAMMER: You will make it un-political by sticking it in the White House? That sounds illogical to me.

The constitution has a lot of "shall nots" about Congress and the executive. One of the rare items it demands is a census, and it expects that it would be objective, and it ought to be Commerce.

BAIER: Next topic — Michael Phelps, gold medal swimmer. He obviously was been seen in the picture that has been seen around the world of him smoking out of a bong.

Kellogg has now dropped the sponsorship of Michael Phelps, and he has been given a three-month suspension by USA Swimming that he says is a fair suspension — Charles?

KRAUTHAMMER: I think we established the principle 16 years ago that as long as you don't inhale, you can end up in the White House. I suspect he did.

He is a nice kid. He is rather goofy. I would give him a pass. The reason he got hit on this is because he had a DWI four years ago, and it's beginning to present a pattern, and that's why I think he's getting a warning here. I think slightly overtly punished, I would say.

WILLIAMS: I agree with Charles. I think there is a lot of tut-tutting going on here.

And, to my mind, this is silliness. He's a kid. Let him have his way. Let him have his mistakes, and move on. Why he needs to be punished —he is a role model? Yes, he's a role model. He is a great swimmer. If he goes to excess, OK, but I don't see any excess here.

SAMMON: It's a bong hit around the world.

You can't feel too sorry for him. He is still going to be making millions of dollars. He will still go on to swim and get gold medals in Olympics.

But I think when you are marketing to kids through Kellogg's Frosted Flakes, or whatever, you have to be careful you're not sending the wrong message.

I think it's an appropriate punishment. He'll still be a rich man, believe me.

BAIER: All right, surprise of the week — Charles, your surprise of the week?

KRAUTHAMMER: We all watched the big game, and we heard Jennifer Hudson do a spectacular national anthem, and then we learned it was lip-synced. And I am shocked and deeply disappointed.

Also Faith Hill, "America the Beautiful" —

BAIER: Also lips-synced.

KRAUTHAMMER: Absolutely. And I think it establishes a precedent. I think should announce on behalf of all of us that starting on Monday, the panel will be lip-syncing.

BAIER: All right, Juan, your surprise of the week?

WILLIAMS: There is always concern — more tut-tutting about Barack Obama going into the Oval Office in short sleeves. And then I came to learn that, gee, two days after he took office, there was President Bush in the Oval Office without his jacket on, and he is always spoken of reverence for the Oval Office.

But I think that people are quick to jump on Obama, and it is an example of a double standard.

SAMMON: I was surprised that President Obama would drop charges against the alleged mastermind of the USS Cole bombing, and then meet with the Cole victims' families the next day instead of the other way around.

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