This is a rush transcript of "Special Report With Bret Baier" from May 28, 2009. This copy may not be in its final form and may be updated.

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PRESIDENT OBAMA: Well, it is a great pleasure to welcome President Abbas.

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BRET BAIER, "SPECIAL REPORT" HOST: Abbas said we are fully committed to all of our obligations.

The president saying we can't continue to drift in the peace process, with increased fear and resentment on both sides, the sense of hopelessness around the situation that we have seen for many years now. We need to get this thing "back on track."

This comes, of course, after Israeli Prime Minister Benjamin Netanyahu visited the White House just recently, and it comes on the same day that Israel has essentially stepped back from the thought that they would stop settlements in the West Bank. They have not agreed to that stipulation that is being called for by President Obama.

Let's bring in our panel now, Steve Hayes, senior writer for the "Weekly Standard," Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer — Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: We have to start understanding that Abbas is an illusion. He is a fiction. He is a ghost. He is a potential president. I could go on, but you get the idea.

I mean, even the presidency he holds is a dubious legality. And it is said of him that he doesn't even control downtown Ramallah where his offices are.

So you got a man who doesn't have anything in his control. And the reason that years of negotiations he held with the previous Israeli leader, Ehud Olmert, went nowhere is because when Olmert offered everything, Abbas had nothing he can offer to back it up.

So, what is it the United States is trying to do? It has to have a peace process in place, otherwise people will wake up and say we don't have a peace process, and that is intolerable. So you create one.

If you see where Obama is going next week, he's going to be in Egypt, in Jordan, and Saudi Arabia. The idea is to he create an odd, three-way negotiation in which Israel makes concessions, small concessions, incremental, on the ground, like the lifting of roadblocks, the dismantling of outlying settlements.

And the corresponding concession is not from Abbas, who can't deliver, but from the Arab states — for example, the relaxation of Israel's isolation, trade bans. You could imagine the ping-pong team in Saudi Arabia, although that's rather unlikely, but a gesture onto part of Arabs. So that's what the administration is setting up.

There are some, however, in the administration who believe you can actually have a real settlement in this administration. I think it's an illusion. There's an old adage in the Middle East, "He whom the gods would destroy puts it in his head to solve the Arab-Israeli dispute."

BAIER: Juan?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: You can't separate what is happening between the Palestinians and the Israelis from the threat that is being posed by the Iranians at this moment, and the White House connects the two dots.

And the way that they connect it, Benjamin Netanyahu, who was here last week, also is asking about what the U.S. will do to stop the possibility of Mahmoud Ahmadinejad taking some steps against Israel.

So the administration feels, wait a second, if we can get the Arab states together to act in some sort of consolidated fashion, to help with Hamas, which is the kind of alternate to President Abbas, and to get them, Hamas, under control so that we can have a functional Palestinian state, then you can have the possibility of a two-state solution.

And then you can start to put an added pressure on Iran. You can build this pressure, because the moderate Arab states that the president will visit in this coming week, they're no friend to Iran. They, too, are threatened by Iran.

And I think this is an important moment of understanding in that regard. So when he's meeting today with Abbas, the president's trying to build up Abbas. He wants a Palestinian state that can do business with Israel.

BAIER: Steve, what about the Israelis refusing the demand to freeze construction in the West Bank on this day that President Obama meets with Abbas?

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": Well, I think they rightly see that as an issue to be resolved far, far down the line, rather than something that need to be started with, which the Obama administration is doing.

I think Juan actually has very accurately described the view from the White House about this situation, the peace process and Iran. I just think they've got the sequencing backwards, and so, I think, does Benjamin Netanyahu.

You have, in effect, the White House trying to solve a decades-long problem. We're trying to make significant progress on a decades-long problem in a very short amount of time. How much time do they have? We don't really know.

Rather than, I think, lead the world, the region in a way that confronts now. The Israelis obviously believe that Iran has a clock that's ticking, and that is an urgent matter. The White House, curiously, doesn't seem to think so.

BAIER: Charles, on this trip, this upcoming trip, do you see the Arab peace process, we'll call it that, the focus of some of these speeches and some of that, and perhaps the Cairo speech?

KRAUTHAMMER: I think Obama wants in the Cairo speech to make a semi-dramatic announcement of some Israeli concession. And that's why I think he is pushing hard on settlements.

He is not going to get it. And the reason is — it sounds arcane, but the Israelis agreed to a settlement freeze in the sense of no expansion of it territorially. But what the administration is insisting on is no natural growth, which means, in essence, that if a child is born in Malah Abdolim (ph), an adult has to leave.

BAIER: One for one.

KRAUTHAMMER: Which, of course, is impossible.

The Israelis are saying we won't expand the territory it covers but if a family has children, it can build a house nearby within its property as a way to accommodate new people. A freeze means in which you don't allow that, means essentially a withering away of settlements, and it means Israel giving away a very important chip in return for nothing.

BAIER: Does the administration press on this, Juan?

WILLIAMS: Sure they press on it. You can't have expansions of settlements. You can't have new settlements for certain, but you can't say to people you can expand and you can have as many babies, just bring new people in.

Anytime you put a baby's face on it, you want to just hug it. But, come on, Charles, you can't say expand. Essentially, that's the argument that Israel is an occupying force, and you think that's too important a chip to give up.

Charles, that's a pessimistic view. If you want to get something done, if you have any hope, you have to say let's negotiate in good faith.

KRAUTHAMMER: Yes, but negotiating in good faith means I'll offer X if you offer Y. Where is the y?

WILLIAMS: The Y is that the Palestinians will give Israel security and acknowledge Israel's right to exist. The president and the administration want that, Charles.

KRAUTHAMMER: Abbas is going to give Israel security? He can't even control his neighborhood?

WILLIAMS: You're right, but the question is can we build up Abbas? Can we build up the Palestinians by using the other Arab states to achieve its end? Don't give up before the games begin.

BAIER: The question comes down to how much strength and authority Abbas has.

WILLIAMS: Well, if that's the question, then don't start, because Abbas doesn't have much authority.

KRAUTHAMMER: He's got none.

BAIER: We will check in on the Supreme Court nominee, Sonia Sotomayor, and hear what some are saying about her positions on a couple of issues.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is not about feel-good justice. This is about her understanding of our fundamental constitutional rights.

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BAIER: The panel opines on a couple of the issues after the break.

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KEN BLACKWELL, AMERICAN CIVIL RIGHTS UNION: The judge is one of only three out of 170 appellate court judges that believes that state and local laws trump our federal rights to bear arms. And that's very, very disturbing.

PAUL HELMKE, GUN CONTROL ADVOCATE: Most state constitutions actually provide a broader right to keep and bear arms than the U.S. constitution does. And in most of those states, the courts have long held that there is that right, but there is the right to have reasonable restrictions. And that's really where I think the judge is going to be crucial.

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BAIER: One of the major issues, gun control. Gun rights activists are saying that they're concerned about Judge Sotomayor's previous writings. Sonia Sotomayor signing on to an opinion in the second circuit saying the Supreme Court recently held that this confers an individual right — the Second Amendment — on citizen to keep and bear arms.

It is said of law, however, that the Second Amendment applies only to limitations the federal government seeks to impose on this right, meaning states are free to set up gun ownership restrictions on their own.

It's raising eyebrows, also on the abortion issue. We're back with the panel. Steve, let's start with gun rights.

HAYES: Well, I think it was interesting to read that her comments in the Maloney case that it was set of law that states can, in effect, override the federal government on the issue of the Second Amendment.

I think we will see that many of her new colleagues, if that's what they end up being, will disagree with her on that.

The other interesting argument that she made, now this is some time ago, was that Second Amendment rights don't attach to an individual. This was before the Heller case was decided in 2008.

Even the man who nominated her, Barack Obama, in December of 2007 was making the argument that, in fact, the second amendment does attach to individuals.

And so I think you're looking at somebody who, particularly on gun rights, has a view of the second amendment that is out of step with the mainstream, perhaps far out of step with the mainstream.

BAIER: And when you said the Heller case, that is the District of Columbia versus Heller decision, where the Supreme Court ruled definitively that the Second Amendment does guarantee gun ownership for individuals — Juan?

WILLIAMS: This extends into the abortion argument, because what you have heard all today is, you know what, if you look at her record, she sided with the Bush administration in saying that the government money would not flow to organizations that either supported or performed abortions internationally, that she is someone who was opposed to an asylum case in which a woman said that she was being forced to have an abortion in China, and she sided with the woman.

She is Roman Catholic. She is Hispanic. There certainly are a larger percentage of Hispanics who would say they are pro-life in this country than if you would look at other communities. So everybody says maybe it is the case that this woman is, contrary to anyone thinks, opposed to abortion rights in the country.

I think all of this is fantasy. I think all of this is people just spiraling out of control. In my opinion, on gun rights, she's not going to change anything. She is not going to change anything on abortion rights. It's pretty much settled law.

The Supreme Court has ruled in Heller that individuals have a right to own a gun in this country. We can argue about some narrow interpretations in terms of restrictions.

It's pretty settled on terms of abortion. And then you can go into some minutiae about that.

But I think people are stretching so much here to try to find anything to get a grip of Sonia Sotomayor.

BAIER: Charles?

KRAUTHAMMER: Heller is hardly settled law. It is law in its infancy. It's a couple years old. And if she is on the court, she might be inclined to revisit it, either overturn it or reinterpret it in a way where it's weakened beyond measure.

Looking at her ruling on the other Second Amendment case, in which she joined with the majority of the second circuit in saying that it's settled a law that the Second Amendment doesn't apply to the states, she's relying on a case, the Presser case of 1886, which is true. It excludes the application to the states.

However, we have 100 years of Supreme Court rulings since which have established the so-called "incorporation doctrine," in which all of the first Ten Amendments, the Bill of Rights, are incorporated into the state and are applied to the states.

So it is not only Congress that can't curtail speech, a state can't either.

So it's extremely odd that she would reach all the way back to 1886 and say that a gun case is excluded because it is under state jurisdiction. It would imply to me that she was reaching as a way to undermine gun rights. And it would also imply that she might be inclined to overturn Heller or restrict it in the future.

BAIER: Steve, as we look at these past rulings and try to interpret where she stands, we're confident that president Obama knows where she stands on these issues of abortion and gun rights?

HAYES: Yes. There was an interesting exchange with Robert Gibbs, it was yesterday, where he was asked about her position on abortion. And he said, well, the president never asked her.

Well, I think he said that for a reason. I would be shocked that somebody, given, especially, that I think President Obama had her in mind for this choice for quite some time, for at least seven months since he was elected, perhaps 20 years since at Harvard since he knew he was going to be president. He likely has an idea of what she thinks on this issue.

BAIER: It's the dance we always play.

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