This is a rush transcript of "Special Report With Bret Baier" from July 10, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SEN. DIANNE FEINSTEIN, (D-CA) CHAIRMAN, SENATE INTELLIGENCE COMMITTEE: The intelligence committees had been briefed. They could have watched the program. They could have asked for regular reports on the program. They could have made judgments about the program as it went along.

That was not the case because we were kept in the dark. That's something that should never, ever happen again.

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BAIER: Senator Dianne Feinstein on "FOX News Sunday" about what she said a program senior intelligence officials, a former senior intelligence official says that this was an initiative, and sources telling FOX News, to target Al Qaeda members with assassination teams at the beginning after the 9/11 attacks.

Now, whether it was a program or not that was briefed by the CIA director Leon Panetta to Congress, here is what a former senior intelligence official told me: "This was not a program. It never began. The authority was given by Congress to develop this idea, the spine of a capacity. There was no need to brief it. It wasn't a reality. The president had an extremely detailed brief every week that ran the gambit. This was not something that rose to the level of his briefing." There's one story that we're dealing with now about intelligence. The other is that the attorney general, Eric Holder, is considering naming a special prosecutor to investigate the Bush administration handling of interrogation techniques. We do want to break in right now that the shuttle Endeavour is not a go for a launch, we are told by NASA, as you look live at the Kennedy Space Center down there in Florida, because of weather. It is scrubbed yet again, so they will try again — they are going to try again, we think, for tomorrow, 30 minutes earlier than this time. But again, scrubbed today because of weather. We wanted to get that update in, and we will be watching that. So, let's bring in our panel about the intelligence questions, two different ones — Steve Hayes, senior writer for the "Weekly Standard," Mara Liasson, national political correspondent of national public radio, and the syndicated columnist Charles Krauthammer. Steve, first let's start with Panetta briefing to Congress and the program that I have been told was not a program.

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": Right. I think my reporting is very similar to the reporting that you have gotten. I was told that there was some funding associated with the program. That might be one reason the Democrats wanted to have it briefed.

Here is the great irony in this whole thing. The program wasn't briefed for seven and a half years. Then it was briefed on June 24th, and three weeks later, we know that the program existed. We know the broad parameters of the program. We know that it targeted Al Qaeda.

We know all of these things from a classified briefing, three weeks after the original briefing took place, and the original objections to briefing it to Congress at all was because it would leak.

So I think the people like Dick Cheney, like George Tenet, and others who objected to briefing this to Congress, either because it wasn't an actual, live active program, or because they thought it would leak, look pretty good right now.

BAIER: There was the front page story that Vice President Cheney allegedly held up the briefing of to Congress of this initiative, or capacity, or whatever we want to call it.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Right. And Leon Panetta clearly thought Congress should be told about it, and he went and told Congress about it.

This is also happening at a time when Congress and the White House are at odds and the White House has issued what I believed to be its very first veto threat but how many people in Congress should be briefed about these programs.

Right now it's just the ranking members of the relevant committees. The Democratic leadership in Congress wants there to be briefings with the entire intelligence panels. The White House says they will veto the bill if they do that.

So you can imagine, maybe we would know a lot more if the rule was that they had to brief the entire committee.

BAIER: What about if this, and we don't have all the details, obviously, because they are classified, but if this program was to target Al Qaeda to have assassination teams, to specifically target Al Qaeda after 2001, is that a bad thing?

LIASSON: That's not really what people are saying. They are saying we wanted to be told about it. They are not saying this was some horrible program.

BAIER: But how is that different than drones blowing up Al Qaeda members along the Pakistan-Afghanistan border. They're not told about that every time.

LIASSON: Not a lot of difference.

KRAUTHAMMER: We are doing, as you say, we are doing targeted assassinations every day from the predators. This is an alternate way to do it on the ground with teams of guys that would have been legitimate.

But from your reporting, it wasn't a program. It was an idea. It didn't rise to the level of having it briefed to the president, why would you say it had to be briefed to the Congress? I don't understand the logic here.

And secondly, the is the issue of leaking. If it was a live program — again, we're talking here in the shadows, because we're getting leaks from every side, and nobody really knows what was involved here — but if it was a real program, or at least getting off the ground, and it is something you really would want to keep hidden — targeted assassinations is not something you want to trumpet — the leaks we have had in the last weeks tell you how much of a sieve Congress is and how unreliable it is, and how we ought to keep restricted the number of people in Congress who get information, because they cannot hold it.

BAIER: The second story, Attorney General Eric Holder according to two sources is leaning toward appointing a special prosecutor to investigate interrogation techniques, or the practice of interrogation, by the Bush administration — Charles?

KRAUTHAMMER: If he does this, it is a terrible mistake. What we heard today that will only be for rogue interrogators who went outside the law. So presumably, you know, sadists who wanted to have a good time out of rubric of interrogation. I'm not sure there are a lot of those.

What will happen is once you appoint a prosecutor, as we know from past history, he's out of control. There are no limits on what he or she can do. And that means it will not stop with the rogue interrogator. It will go all the way to lawyers. It will go up to politicians.

And what this would be would be a criminalization of policy differences with a previous administration in the middle of two wars in a way that will create open warfare, a, with the CIA, and, b, between Democrats and Republicans. This is a declaration of war if it is enacted, if it does actually come to pass.

BAIER: Mara?

LIASSON: We've gone round and round on this with the White House in a couple of different ways. We have the president who has come out and said very, very clearly that he wants to keep CIA operatives immune from prosecution so long as they, in good faith, followed legal guidance that they got from the then Bush Justice Department.

He has also said, when pressed about it, well, gee, would you prosecute the people, who gave them the guidance. The White House has said no, they don't want to look backwards. They want to look forward. That would be criminalizing policy differences.

Now we hear today that what Holder is looking at is in the rare, I guess, instances where some CIA operative did not follow the guidance of the Bush administration Justice Department and went outside the four corners of the law. I don't know when that might be —

BAIER: Ken Starr didn't start looking into the Monica Lewinsky situation —

LIASSON: That's right. But it depends. Does he appoint a special prosecutor with that kind of unfettered reign, or does it inside the Justice Department where you can proscribe what prosecutors can look at under him?

KRAUTHAMMER: That's not what happened in the Fitzgerald case. He started on one issue and ended up putting somebody almost in jail on a completely other issue.

BAIER: Patrick Fitzgerald, the special prosecutor in the Valerie Plame case.

HAYES: And think about the political pressure on President Obama and the administration from Congressional Democrats, the same people who are now clamoring to have this secret program that we talked about earlier exposed.

He is going to hear it from the left. I think the political left wants — the Obama administration wants a special prosecutor not to go after CIA operatives, but to go after Bush administration policymakers who drew up the plan, the people in the office of legal counsel under George W. Bush.

This won't appease the left. This won't solve the problem. This adds to his problems in exponential ways, I think.

LIASSON: And you know, there is one other thing. This is a time when he wants to focus on health care and he wants to convince the public that his economic stimulus plan is working. He does not want to go and revisit all these intelligence controversies.

BAIER: When we come back, the panel talks about the Sotomayor hearings as they continue this week.

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(BEGIN VIDEO CLIP)

JUDGE SONIA SOTOMAYOR, SUPREME COURT JUSTICE NOMINEE: Many senators have asked me about my judicial philosophy. It's simple — fidelity to the law. The task of a judge is not to make law. It is to apply the law.

The court of court of appeals is where policy is made. I know, and I know this is on tape, and I should never say that, because we don't make law. I know. OK, I know.

(LAUGHTER)

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BAIER: Judge Sotomayor today and Judge Sotomayor in February 2005.

What about the opening statements, day one of the Sonia Sotomayor hearings before the questioning begins? We're back with the panel. Your thoughts, Charles?

KRAUTHAMMER: Well, it was like Washington Nationals game. It's over after the first inning. It's over.

BAIER: And you're a Nationals fan.

KRAUTHAMMER: I am. I grieve, and yet I stay all nine innings. I have no idea why. And we are going to stay all nine innings on her, because it's going to be interesting.

But look, she is a shoe-in. As you heard there, her brief is down pat. Everything that she had said in private or public before is going to be either denied or papered over. She is going to be, you know, only follow the law. She is going to say a wise Latina has rich experience but not superior experience, all of this stuff.

What was most interesting watching Senator Graham, who is like the essentially the quintessential Republican on this committee, who told her it's over. She's essentially — and who said himself that he will not — he will probably support her on the grounds that elections are important. Obama won. He gets his choice.

Unlike Democrats, who vote against the Republicans on the grounds of ideology.

BAIER: He basically said, unless she has a meltdown, she will be voted in, which is classic Senator Graham, I suppose — Mara?

LIASSON: Yes. Senator Graham is always interesting to listen to.

I think that just as Democrats felt great frustration that they could not smoke out Alito or Roberts, you know, this is going to be the same thing in reverse. I mean, Republicans, I think, will be able to lay out a case for what they think an activist judge is, but she will not rise to the bait.

And this is a modern Supreme Court confirmation hearing, where the nominee says as little as possible, and is very gracious, and, you know, this is not going to be a kind of no holds barred discussion about what she really believes.

I'll tell you something else. I think the Republicans have really lowered their expectations about what they want to accomplish. If they can get 20 votes against her, they'll be happy.

And the Democrats did lay down the new standard. It's OK to vote against a nominee because of ideology even if they are otherwise qualified. So the deference to the person who got elected, as Lindsey Graham talked about, is not overwhelming.

But I do think she will be elected — be confirmed easily. I also think that there is a really big prohibition in going after her in a vigorous way, because it will look like you're beating up on a Hispanic or a woman.

BAIER: Steve, today, as we were listening to Republicans, you said that some of some of them were forward leaning and that caught you a little bit by surprise.

However, was there some sense of being tentative to not go too far in the criticism for worry about a backlash?

HAYES: Yes, I think there probably was. You heard several Republican senators invoke Miguel Estrada, which I think accomplished two things. One, it allowed them to talk about somebody that the Democrats had shot down largely because of ideology, or at least that's the Republican perception.

And two, it allowed them —

BAIER: He was a nominee for the court of appeals by George W. Bush.

HAYES: Right.

LIASSON: It was filibustered.

HAYES: And it allowed them to bring up a Hispanic who they had supported rather vigorously.

You know, of course, she is likely to be confirmed. I think everybody acknowledges that. I think we are still likely to see Republicans draw out a few issues, in particular, one of them being racial preferences. The country is squarely opposed to racial preferences.

Her decision on racial preferences in this Ricci case involving the New Haven Fire Department is far outside the mainstream of American thought. It's far outside the mainstream of the thought of most Hispanics. It's far outside the mainstream thought of most Democrats granting preferences to groups based on race.

They are going to bring that up. I think they need to be careful and talk about it in a smart way, but I think they are going to bring it up, and they should. They should be aggressive about it.

The other thing that jumped out today listening to Republican senators was I think five of them brought up this idea, this discussion she has had about paying attention to, or in some cases even operating in deference to international and foreign law.

I think this is likely to be something that we will hear much, much more about from Republicans to try to draw some answers of exactly of what she meant at one point in something she said in April. She said, you know, we will lose our influence in the world if we don't pay more attention to international law.

BAIER: And quickly, Charles, does this lay the groundwork, really, for the next nominee for this administration?

KRAUTHAMMER: She will not alter the balance in the court because she is replacing a liberal. If there is a replacement of a conservative, then you are going to have real attacks by the right and an attempt to actually stop her.

She is understood to be replacement, thus the battle will be mostly shadow boxing.

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