This is a rush transcript of "Special Report With Bret Baier" from June 26, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR, (R-VA) HOUSE MINORITY WHIP: In the midst of a severe recession, why would we even contemplate a plan that amounts to a growth-killing millstone around the neck of small businesses and all American consumers?

REP. JOHN LARSON, (D) CONNECTICUT: That is what this is about in the final analysis! It's about this great country of ours and making a stand for what we believe in, standing up for American dominance and superiority!

(END VIDEO CLIP)

BRET BAIER, "SPECIAL REPORT" HOST: Well, there's some of the flavor of the House as they debated the climate change bill.

What you're looking at now is a GOP amendment. This is a substitute for the actual Democratic bill, and it's being voted on. We expect two procedural votes before the actual final vote at 8:00 p.m. eastern time.

This has been quite a debate today, and Democrats were counting votes, counting heads all day long. In fact, they called back one representative, Representative Patrick Kennedy, Democrat from Rhode Island from rehab. He had checked himself in to rehab, but he has shown up to cast a vote for the climate change bill.

It is going to be that close, and again, we expect a final vote about 8:00 p.m.

So what about all of this drama today here in Washington? Let's bring in our panel, Juan Williams, news analyst for National Public Radio, Nina Easton, Washington Bureau Chief of "Fortune" magazine, and syndicated columnist Charles Krauthammer.

Charles, you know it's going to be close when you dip into rehab.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Absolutely.

And what I particularly enjoyed was Representative Larson, who we just heard, the Democrat, shouting that we all have to stand up for American dominance and superiority. I suspect he didn't get the Obama memo that we aren't supposed to speak that way of America anymore. I'm sure he will be issuing an apology in a week or two, perhaps in Cairo.

Look, this bill is so bad it's almost indescribable. It starts with what we heard Eric Cantor say. In principle, it's a carbon tax. And to do it — which is probably the largest tax in American history — and to do it in the middle of a recession is quite insane.

But secondly, even if you accept that we have to do a carbon tax because there is an emergency in the climate, even so, what we have — the bill that we have today is an abomination — 1,200 pages, as you said, with a 300-page amendment dumped on people this afternoon today.

And it involves so many concessions to constituencies, to coal companies in states, to all kinds of favorite constituencies, that it's a mess, and it undermines the idea of a cap and trade, a system in which the market will regulate carbon emissions.

As a result, in the final analysis, it gives money and carbon credits to utility companies on the condition that it does not raise rates on people's electricity. But if that is the case, then it undermines the entire argument in favor of this, which is to induce the reduction in the use of energy. If there are no rise in rates, there's no incentive to reduce emissions, and the whole purpose of the bill is undermined.

BAIER: I should point out that we mentioned that the House Minority Leader John Boehner was reading through the 300-page amendment added at 3:00 a.m. in the morning.

He peeled through, we're told, the major portions of that amendment. He took one hour and three minutes, not reading every line of the 300-page amendment. That could have gone past midnight.

So that is why we have moved on now to these procedural votes, and we expect a final vote about 8:00 p.m.

Nina, the question is, OK, let's say they squeak through here in the House. In the Senate, what happens to this bill?

NINA EASTON, WASHINGTON BUREAU CHIEF, "FORTUNE" MAGAZINE: This is a lot of drama about not a lot, because it's not going to go anywhere in the Senate.

And the fact that you're looking at the House, which it's so far to the left of the Senate, and you're having to buy off the farm states, you're having to — there are these giveaways — not give giveaways, these free pollution rights to utility co-ops. They're trying to buy off farm state senators.

There is just no way that they are going to get anywhere in the Senate, which was already concerned about this.

One of the other ironies I would add to all of Charles' list in the sort of giveaways that are in this bill is Wall Street. I mean, you're going to be trading pollution rights essentially.

Well, who is going to be running the trading of those pollution rights? Wall Street, the same place that you have been bashing, the House of Representatives has been bashing them for six months. They will creating markets in this and the futures markets in this.

So I find it kind of interesting that that's the direction that this is all taking. And when you talk to conservative Democrats in the Senate, they have been really clear that they have a lot of concerns about this entire direction.

BAIER: Juan, what does this say about the Obama administration's effort to push these major pieces of legislation, and perhaps even House Speaker Pelosi's effort to get all of these votes lined up. They're having trouble tonight.

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: They're having terrible trouble, and they're whipping people hard, and they're having to make the concessions that we just heard referenced, because what they want to do is have a win in pocket at any cost at this point.

Their argument is they have to start somewhere when it comes to controlling carbon emissions in the country, and they have to be a world leader.

And the way the White House is pushing this is to say it's a jobs bill, to say, wait a minute, forget about the whole notion of tax and cap and trade and the argument put forward by Republicans that it's really cap and tax. Stop and think for a second about how you create new jobs for America in the 21st, and a lot of that is going to have to come out of new ways of developing energy, not to mention lowering dependence on oil coming from the Middle East.

So that's the push coming from the White House. That's the push coming from Pelosi. But it doesn't do much with a lot of the Midwestern states, especially the big industrial states.

I think, contrary to what Charles is saying, it doesn't undermine, these concessions don't undermine the basis for the bill. The complaint really comes from the left. The left says, why don't we have stronger restrictions on who can emit carbon taxes? Why have these concessions? If you are going to do a bill, do a hard tax on carbon emissions.

BAIER: And the politics of this, if this squeaks by with conservative Democrats' support, and it fails in the Senate, the National Republican Congressional Committee is going to be launching a massive campaign against the moderate Democrats who signed on to this bill.

KRAUTHAMMER: Correct. In principle, it's a tax. Secondly, it's a mess, and it is a kind of political payoff left and right. It's all kinds of patronage.

Lastly, on the issue of jobs, what it does is it kills the jobs in coal, oil, and natural gas, where America is abundant. If you want to create jobs in energy, open offshore oil in Alaska. That will create jobs, real jobs today and producing real stuff which will relieve our dependence on foreign sources of oil.

WILLIAMS: This is an old argument. The new argument, Charles, is about things like clean energy, like wind energy. It's talking about wave of innovation rather than going back to old paralyzing arguments about offshore drilling and coal, which we know pollutes.

I mean, the idea here is, look, they have been talking about this will cost $3,000 to up the taxes on Americans. The CBO says $175. Don't you think we have to start somewhere with dealing with this energy and environmental problem?

KRAUTHAMMER: The idea of creating jobs in completely uneconomical ways of energy like wind and solar is nice, except that it is make-work unless you have a technological leap, which hasn't happened and has never been mandated out of Washington. It is either going to happen in the scientific community or not.

But this idea that Washington will make solar and wind economical is absurd.

BAIER: Final word, Nina.

KRAUTHAMMER: It's taxing all of the other sources of energy.

EASTON: I would just say that the critics have the political wind at their backs simply because of the state of the economy right now. And imposing a tax, whatever you want to call it, imposing it at this time is something that I think people are resistant to.

BAIER: Ending on a wind analogy, very good.

South Carolina's governor stumbles, Iran's people rumble, and Iraq's security just might tumble. How about that? The Friday lightening round is next.

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(BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES OF AMERICA: The rights of the Iranian people to assemble, to speak freely, to have their voices heard, those are universal aspirations.

And their bravery in the face of brutality is a testament to their enduring pursuit of justice. The violence perpetrated against them is outrageous.

(END VIDEO CLIP)

BAIER: There's the president today.

Here are the topics for the Friday lightning round — Iran, the U.S. troops pull out of Iraqi cities, and also Governor Mark Sanford and the latest on that. Maybe bring your own comment. We'll see.

Let's start with Iran — Juan?

WILLIAMS: Well, it looks to me like what you have got is the cleric's Ayatollah Khamenei command is retaining a strong hold on all the clerics. And we thought for a second some of the clerics might go with the protestors. What we have seen over the last few days is, in fact, they now say that the protestors are rioters and siding with the authorities in terms of clamping down.

So not a good sing. The question is, do Mousavi and do those who are in opposition regroup over the weekend?

BAIER: Nina?

EASTON: They think they're winning. I agree with Juan. There is definitely — I don't think this is turning into a revolution at this point.

One of the losing candidates withdrew his request or his objection to the election being fraudulent today, which shows you something that was going on behind the scenes.

But I think the real question is for Barack Obama, do you engage in a regime that now whose legitimacy is seriously questioned.

KRAUTHAMMER: You know, we Americans have a sentimental idea that in the end justice and truth will win out. Well, it happened here and it has in our own history, but it doesn't happen around the world.

And the idea that this freedom movement cannot be suppressed with bullets and snipers and beatings — it can, and it's succeeding. The opposition is marginalized.

And the real issue is Mousavi. Where is he, and will he speak up? And will he be a Yeltsin who will stands on a tank and declare essentially a revolution? I doubt it?

BAIER: U.S. troops are pulling out of Iraqi cities. June 30 is the deadline. There is some concern about safety and security not only for the Iraqis but for U.S. troops — Charles?

KRAUTHAMMER: It is. It's a dangerous situation. The only question is this simply a spike as a way for the terrorists to take advantage of this pullout, or is it going to be a continuing situation in which in the absence of Americans, there is going to be a true situation of lack of safety and perhaps even incipient civil war in the cities.

And nobody knows.

EASTON: The fact is we can go back in if we're invited. And I think it is a point of political pride at this point to enforce this agreement to get out of the cities. And by the way, not to be — not to have our troops protected by these armored vehicles.

But I do think that if violence escalates, there is a real chance that our troops will be invited back in to come to the aid.

BAIER: Quickly.

WILLIAMS: And, you know, I think a lot of it is just pretend. They don't say exactly how many people are being pulled out. They say we will have some posts that are abandoned. But for the most part, we're still in Iraq. And I think, just as Nina said, if we need to be, we will be there in greater numbers.

BAIER: Under a minute — Governor Mark Sanford insists he is not going to resign — Juan?

WILLIAMS: You know, this is all about politics and, from my perspective, internal Republican politics in South Carolina. Forget the presidential aspirations. That's out of the game.

So now he has the support of some leading Republicans in the state, and he is making the case that, you know, it's his personal business, and he's trying to repair it with his wife and family. That is probably the appropriate thing to do.

EASTON: This is not the generic, I'm having an affair case, Juan, as we have seen a lot of these politicians do. This is a case where he left the state, didn't let people know where he was. This is a governance issue, not just having an affair.

KRAUTHAMMER: Exactly. If it were only about sex, he might get away. But in the end, it's his use of funds. We love to make it into a story about corruption. That way you don't have a sense that you're exploiting the titillating details, and that's what's going to give the story legs, that he used state funds. He did. I think he's toast.

BAIER: OK. We almost made it on that clock, by the way.

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