This is a rush transcript of "Special Report With Bret Baier" from June 30, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES OF AMERICA: So the Iraqi people are rightly treating this day as a cause for celebration. This is an important step forward as a sovereign and united Iraq continues to take control of its own destiny.

And there is more work to be done, but we've made important progress in supporting a sovereign, stable, and self-reliant Iraq. And everyone who has served there, both in uniform as well as our civilians, deserves our thanks.

(END VIDEO CLIP)

BRET BAIER, "SPECIAL REPORT" HOST: The president at the White House as Iraqi leaders paraded their military hardware and security forces through the Green Zone in Baghdad.

On this day, the U.S. forces left Iraqi cities. The prime minister there declaring it a national holiday, a day of sovereignty.

But of course, violence is still a major problem. A bombing in Kirkuk killed at least 25.

So what about this? It took a long time to get to this point. Let's bring in our panel, Mort Kondracke, Executive Editor of "Roll Call," Nina Easton, Washington Bureau Chief of "Fortune" magazine, and syndicated column columnist Charles Krauthammer.

Charles, the president talked glowingly about U.S. troops and their efforts on the ground in mentioning this transfer of power.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: But he referred to what we have achieved as a sovereign, stable, self-reliant Iraq. He left out one word, and he left it out because it was a George Bush word — democracy. That was a Bush idea was to implant a democracy in Iraq.

If we had wanted to have merely a sovereign, stable, self-reliant Iraq, we could have chosen a Saddamist general to succeed Saddam after the war and gotten out.

It's true that the democracy established here is a fragile one. It's still struggling, and we will argue for decades over whether it was worth the 4,000 American lives, as we still argue half a century later with whether or not it was worth 36,000 lives to salvage a democracy in half of the Korean Peninsula.

Nonetheless, it is a democracy, and that's what makes it unique and distinctive, and an amazing achievement in a sea of autocracies and dictatorships, having an effect, by example, on Lebanon, on the gulf states, and even on Iran, where Iranians look to their west and see a country which is also Shiite, Arab, which the Persians consider culturally inferior, and yet it has a democracy, it has elections, it has an Ayatollah Sistani who says the clerics ought to stay out of politics, and the Iranians are living under a sixth century dictatorship run by mullahs.

So it's a remarkable achievement, and we ought to emphasize what we have achieved in terms of democracy.

And it's a pity that the president ignores that because the democratic nature of Iraq will establish the basis for a strategic alliance between America and Iraq in the future.

BAIER: Nina, this has come a long way — 27 months ago, the Senate majority leader had this to say about the war.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D-NV) SENATE MAJORITY LEADER: Now, I believe, myself that the secretary of state, secretary of defense, and you have to make your own decisions as to what the president knows, that this war is lost, and that the surge is not accomplishing anything, as indicated by the extreme violence in Iraq yesterday.

(END VIDEO CLIP)

BAIER: Your thoughts on the big picture here?

NINA EASTON, WASHINGTON BUREAU CHIEF, "FORTUNE" MAGAZINE: Well, I mean, we have to step back for a minute and remark on the fact that this is a remarkable achievement for George W. Bush.

At that time, that wasn't just Harry Reid. It was the entire Washington establishment though, first of all, we shouldn't do the surge. Keep in mind, even before those comments, the Iraq study group, you know, magazine covers saying well, of course George Bush is going to go along with this Iraq study group and we're not going to increase troops there.

He bucked the entire Washington establishment, went with the surge, which enabled us to have the day we're having today.

That said, it is an incredibly fragile situation there still. I don't think it's time to put up a "mission accomplished" banner by any means.

I thought the most telling part of today was General Odierno, the commander on the ground, was pressed over and over again, how many troops are you leaving in the cities as advisors? And he refused to give a number. He kept saying he didn't know.

BAIER: Well, because they change from week to week.

EASTON: OK, but I think what they want to do is make it — allow, enable Maliki to say, look, the American troops are out, so they look — the country looks at it, and says the American troops are out. But in fact, they are there. They are close by. They are hand- holding, essentially, is what they're doing at this point. And so I don't think it is a huge pullout by any means.

MORT KONDRACKE, EXECUTIVE EDITOR, "ROLL CALL": I think that the insurgents, what the insurgents are doing is trying to demonstrate that the Americans really aren't out.

In other words, that the Iraqi security forces can't handle this, can't suppress the violence, and that they are still going to be around, and that they are going to use it to discredit the Maliki government and the whole enterprise.

It's a great day for all the reasons that Charles said, but it's not a complete day, as Nina said.

You know, it would be so nice if Barack Obama could just say George Bush was right about the surge.

BAIER: Do you expect him to do that?

KONDRACKE: No, of course not, so I'm saying it for him.

If he wanted all American troops out by March of '08, you can imagine what would have happened if we had all been out by March of '08? This would have been a catastrophe. Then you would have had a failed state on his watch, in addition to Afghanistan, he'd have to be figuring out what to do, because it would have been his policy that got us there.

So he owes George Bush some thanks for that.

BAIER: Charles?

KRAUTHAMMER: That's not going to happen. And he doesn't have to look back and say I was wrong and Bush was right.

But what he can do is, looking ahead, we signed two agreements with Iraq, status of forces under which a withdrawal is happening today, but we also had a second agreement signed, which is a strategic cooperation.

That's equally important. It means in the future it will be an ally of ours economically and politically and diplomatically and perhaps even militarily in the area in the heart of the Middle East, an amazing asset if it works out.

That's what Obama is ignoring. He is talking only about — and he emphasizes only getting out, forgetting it, and leaving it all behind. But in fact, looking ahead, we have achieved a lot. We could lose it, but if we keep it, we're going to have an extremely important ally in the heart of the Middle East.

BAIER: Quickly, former vice president Dick Cheney is expressing concerns about this day and that he doesn't want to see any progress lost. And in our pieces earlier there was some concern about how quick U.S. troops could respond to a big even inside cities.

EASTON: But I don't think — Obama doesn't want progress lost either. He has some ownership in this as well. So I don't — you know, I do think, as I was saying before, that there is a level of support system on the ground that they will stick to.

KONDRACKE: Look, Iraq could be a vital asset in containing Iran. After all, it is an Arab country. All the other Arabs in the region are terribly concerned about the Iranians. If this worked out well, this could be a real resistance point against the Iranians.

BAIER: Coming up, has the Minnesota Supreme Court handed Democrats an iron-fisted control of the U.S. Senate, and how will it play out on a number of legislative priorities?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NORM COLEMAN, (R) FORMER MINNESOTA SENATOR: I just had a conversation with Al Franken, congratulating him on his victory. And I told him it's the best job that he will ever have, representing the people of the state of Minnesota in the United States Senate.

AL FRANKEN, (D) MINNESOTA SENATOR-ELECT: I received a very gracious call from Senator Coleman a little while ago. He wished me well. I wished him well, and we agreed that it is time to bring this state together.

(END VIDEO CLIP)

BAIER: He also received another call from President Obama about 4:30 this afternoon, the president calling now Senator-elect Al Franken to welcome him to the Democratic senatorial caucus and also talk about health care and energy and a host of topics.

What about this and how it plays in the U.S. Senate? We're back with the panel — Mort?

KONDRACKE: The important thing is 60 votes. The 60-vote mark has now been achieved.

BAIER: Filibuster —

KONDRACKE: Filibuster-proof, and theoretically, the Democrats could ram anything through they want without the Republicans.

But Senator Byrd, Robert Byrd, and Senator Kennedy have been absent much of the time. That brings it down to 58. And then you have on left-right issues, you have a whole bunch of senators, Senator Bayh, Senator Nelson of Nebraska —

BAIER: Senator Specter from Pennsylvania.

KONDRACKE: — maybe Senator Specter on labor issues, the two senators from Arkansas, Mary Landrieu from of Louisiana, all of them not reliable liberals who are going to vote the party line.

EASTON: That is absolutely right. But it is true the Democrats gain a key vote. But the Republicans gain a key punching bag.

If you need to put a face of the outrage on liberalism, Al Franken is your guy, you know, to add alongside Nancy Pelosi. You can't attack Hillary Clinton anymore. She has gained too much respectability, I think. But he was incredibly statesman like during the campaign, but there is the old Al Franken of old. Don't expect him to be quite that contained during his senate career.

And I think there will be lots of opportunities for Republicans to go out with direct mail starring Al Franken. And I think we will see a lot of that.

KRAUTHAMMER: I think it will be refreshing having at least one senator who admits he is a comedian.

(LAUGHTER)

As for the number 60, you know, the really important number is 50. That's a one-time majority. If you have the vice president, you get control of the Senate and control of the committees.

Sixty, as Mort indicated, is a floating number on different issues. You will have around 60. So it's incrementally a help to Democrats, but it's not in any way a fixed super majority.

BAIER: Democrats will need the votes, every single one of them, to pass climate change. That passed the house. It's a 1,300-page bill with a 300-page amendment that was added early in the morning.

Mort, Brian Wilson did a piece where he couldn't find a lawmaker who read the whole thing. There had been some developments this week.

KONDRACKE: Yes, well, whatever — the House bill is almost dead on arrival in the Senate. You know, it's got — it's got so many restrictions in it, so many things that nobody has read, as Brian pointed out, that it's going to be substantially changed. Even the concessions that were made in the House, there are going to have to be more concessions in the Senate.

And one major one is going to be that President Obama is going to embrace nuclear power. In fact, very shortly, they're going to give loan guarantees for the building of four new nuclear plants. That is a major outreach to Republicans, and that could help pass the bill.

BAIER: It's going to turn off some on the left, too.

KONDRACKE: It will.

EASTON: I think the big problem with the cap and trade bill is - - and if you're concerned about cap and trade and you think it's a tax on the economy and you think it's going to hurt the economy at a time of a fragile recovery, as I do, the big concern is less Al Franken than it is the EPA.

The Environmental Protection Agency is going to put out a directive that says that these emissions are dangerous, and it's going to act on its own in likely in a more draconian way than Congress is going to. So that's going to force a lot of these more centrist Democrats who are more concerned about cap and trade, that's going to push them in the direction of taking some kind of action.

BAIER: Despite some emails we didn't really see until they were reported back and forth on climate change from the EPA.

KRAUTHAMMER: This bill is length and complexity if not in elegance is the "War and Peace" of legislation.

And left and right agrees on this that it is corrupted at the core because almost all the permits which were intended to be auctioned off in a market have been given away in a bazaar of special interests, which makes it extremely uneconomical, inefficient.

It's a mess, and I think it's not going to pass in the end as a result of that.

BAIER: Not even close?

KRAUTHAMMER: Well, it will be close. But I guess I'm naive, but I think in the end sometimes rationality will prevail on Congress.

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