This is a rush transcript of "Special Report With Bret Baier" from March 17, 2009. This copy may not be in its final form and may be updated.
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REP. ERIC CANTOR, R-VA.: The latest news now is in the stimulus bill that passed, there was a provision of which disallowed companies — which disallowed the government to go back and retract any ability for companies to pay bonuses.
Basically, a prohibition on what the president is now talking about was in the bill that passed and signed into law.
Again, what's going on in this administration? It seems like they're in an administration in disarray.
SEN. CHRIS DODD, D-CONN.: The language that I wrote on executive compensation had no dates in it like this at all. When my language left the Senate, it did not include it. When it came back, it did.
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BRET BAIER, HOST: OK, so what's this all about? It's about a provision in the stimulus bill that's called the Dodd amendment. After the conference committee met, the provision included a date, February 11, in which contracts that existed before that date — February 11, 2009 — would not be covered by the new restrictions.
Again, it falls under the Dodd amendment, Senator Dodd being the title sponsor of this amendment. The date was added in conference, so says Senator Dodd and he wasn't responsible for it.
Well, the AIG bonuses — the $165 million — they fall under this category.
What about all this and all of the rhetoric today? Let's bring in our panel: In New York, Rich Lowry, editor of The National Review, from Washington, Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.
Mara, let's start with you. Your thoughts on all of this as we hear that legislation is being drafted to tax these bonuses at AIG.
MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Well, Congress is bound and determined to get back these bonuses if it's the last thing they'll do. And there is nothing so entertaining as a full-fledged pitchfork rebellion in the halls of Congress. People are just falling over each other trying to express their outrage.
The point is, yes, they could have passed legislation, put something in that stimulus bill to prevent this from happening. The bigger question, of course, is for the White House, Tim Geithner, the treasury secretary, apparently knew about these bonuses but either felt he couldn't do about it or misjudged the firestorm of criticism that was going to happen once these bonuses were made public.
And I think this is really a problem for the administration. It's an incredible problem if they want to come back to Congress and ask for more bailout money. There already was incredible bailout fatigue, and now if they have to come back and ask for hundreds of billions more, it is going to be even harder.
RICH LOWRY, FOX NEWS CONTRIBUTOR: That's right. I mean, in discussing this, Bret, you have to stipulate up front that our politics is in the grip of an often witless populism, which is why we are obsessed over a .097 percent of the AIG bailout.
But what the administration risks here is that this becomes not just an issue of populist outrage directed at AIG, but a question of the administration's competence.
And it's an embarrassing when you have the president of the United States going out and saying this is an outrage that can't stand, that we're going to do everything we can legally to stop it — three days after the bonuses have already been paid and when people in his administration knew about the bonuses beforehand and basically gave them a green light because they thought there was no legal way to stop them.
And now you have a stampede, obviously, on Capitol Hill, everyone trying to get in front of this populist pitchfork brigade. And today you saw every possible solution to this mess or proposed solution, just short of an attempt to mandate the Grassley plan. And he, of course, yesterday suggested that AIG officials commit suicide.
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Last night I suggested public hangings in case the suicide isn't forthcoming.
But look, the larger issue here is, of course, the administration is really hurt. It is an issue of competence. The Democrats in charge are in disarray.
But the larger issue here — this the best argument against socialism, socialism writ large or socialism writ small, meaning the takeovers of companies in the United States.
When you get politicians ahead of the mob running companies, you get madness and idiocy here. The contracts are legal contracts, and it wasn't as if these bonuses were unknown or sprung at the last minute. They were written into these agreements over a year ago, long before AIG was even nationalized or partially nationalized.
And the problem here is that by the Congress now trying to break the contracts by a ruse, essentially a 100 percent taxation or confiscation, they're going against a few hundred years of common law where you don't do retroactive confiscation or bills of attainder, which are laws aimed at particular individuals. It's just not done.
And to sacrifice all of those principles of democracy and business and contract over, as Rich indicated, a tenth of one percent of the bailout, is absurd, particularly in a Congress which just a week ago signed a bill with enough pork to fund these bailouts for about 20 years.
BAIER: Mara, you mentioned the "who knew what when" aspect to this story. Is that another wrinkle for this already beleaguered Treasury Department under Secretary Geithner?
LIASSON: I think it is. I think he is going to be asked, and members of Congress are already asking, when did he know it and what did he know?
And don't forget, the way this thing unfolded on Sunday, members of the administration were all over the talk shows saying, basically, our hands are tied, there is nothing we can do. These are contracts. And then, you have on Monday President Obama telling them to go back and try harder, because we've got to do something about this.
I mean, a wave of populist anger is a very dangerous thing for a politician, especially someone in the president's position, who is basically going to ask the taxpayers' forbearance for hundreds of billions of dollars for more of bailouts for the banks.
And his entire domestic agenda depends on this. He has to fix the banks so he can fix the economy so we can get the kind of growth that his entire budget is premised on to pay for all those programs, and I think this really threatens it.
BAIER: Last thing, Rich. It is behind the curtain and a little inside baseball, but this conference committee, there was a provision by Senators Snowe and Widen that would have capped executive compensation and bonuses like this at $100,000. It was killed, and then this provision was added, anything before February 11.
Is that another aspect of this story that may unfold in the coming days?
LOWRY: Of course. It seems as though the Democrats are the majority that can't shoot straight.
And certainly it makes you think it might have been a good thing for people to be able to read carefully the stimulus bill before it was rushed into law.
And I would add just one thing to what Mara was saying. It is not just that the administration will have trouble getting billions more to support the financial system if that's necessary. Also, Geithner's plan depends on a public/private partnership. He wants to entice private actors to come in and take government money to buy bad assets.
What company in its right mind is going to do that if they're going to have a 535 people in Congress tripping over each other to run their companies if they do something wrong?
BAIER: Coming up, a new law sparks a trade spat between the U.S. and Mexico, just what both countries don't need in a struggling economy.
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REP. KEVIN BRADY, R-TEXAS: Right now, with our economy being so fragile, we need to be selling more American products, not less around the world, especially when it is to a neighbor next door.
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BAIER: So is this just a minor dustup or part of a larger problem? The panel weighs in after the break.
JOHN MURPHY, U.S. CHAMBER OF COMMERCE: It's very worrying, because at a time of sharp economic crisis that we're feeling right now, to raise new protectionist barriers, in this case with our second largest export market after Canada, is very dangerous.
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BAIER: U.S. chamber of commerce reaction to word that Mexico is going to impose tariffs on 90 American products as payback or retribution for Washington's move to put the brakes on a cross-border trucking program.
We're back with the panel. Charles, what about this?
KRAUTHAMMER: If you thought AIG was an example of Democratic incompetence over a relative triviality, look at this. There are over 6.5 million trucks in the United States. This program allows 98 Mexican trucks to roam among them. And over that, they are willing to risk a trade war with Mexico.
If you wanted to do protectionism, do it competently: Go the full Smoot-Hawley. But over 98 to enrage Mexico, to threaten to destroy NAFTA, and to show the world that the American Congress is willing to impose protectionism over trivialities at a time when the economy is hanging by a thread, where every other country is looking to see if American is going to turn protectionist.
And, as we saw in the stimulus package, it included a provision to buy American, which enraged the Europeans. There is a huge amount at stake, meaning the world economy and the risk of a world depression if you have trade wars. And to do it over 98 truck is absolutely absurd.
LIASSON: I agree. They don't call this the omnibus spending bill for nothing. There is a lot of things stuffed in there that have very little to do with funding domestic programs.
But the problem for the president, I think, is that he is trying to send a message that he is not a protectionist, that especially at this time of global economic crisis, the worst thing that countries can do is start to close their borders.
But the problem is every time one of these little things happens, they cause repercussions, and it means he has to go back and fix it. Now at the White House they're talking about doing something legislatively that would fix this problem with Mexico.
I think that you can't have it both ways. Either you're a petty clear free trader and you really make that point, or you allow the unions and various people who have interest in ratcheting back some of these free trade programs to have their way.
And I think more and more of these things are going to come up. Buy America and the trucks are not the last.
LOWRY: This policy, it's wrong as a matter of legality, it's wrong diplomatically, it's wrong economically. It is just wrong every way you look at it.
And the way we work with Mexico now n the trucking situation is absurd. It's like something out of Monty Python. The Mexican trucks have to stop 20 miles or so over the border in a commercial zone, drop their goods off, then they go on short haul trucks, then they eventually go to domestic U.S. trucks and then they can be delivered.
It's a system that makes zero sense. But this is all about politics. And I'm afraid if Obama has the choice between needlessly antagonizing a neighbor or pleasing the teamsters, and a very political choice, he will take the teamsters.
BAIER: Unanimous from the panel tonight, which is in still the "Hollywood Squares" format. We go to our new and improved studio on Thursday night.
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