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'Special Report' Panel on Bernanke's Nomination for a Second Term as Head of the Fed

This is a rush transcript of "Special Report With Bret Baier" from August 25, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Our objective remains constant, to restore a more stable, financial, and economic environment, in which opportunity can again flourish, and in which Americans' hard work and creativity can receive their proper rewards.

REP. TRENT FRANKS, (R) ARIZONA: I saw a statistic the other day that was pretty profound. It said the $12 trillion debt that we have now, if we paid that off at a million dollars a day and didn't go into debt any further and didn't have any interest on that debt, it would still take us 34,000 years to pay it off.

(END VIDEO CLIP)

BAIER: The nomination of Fed Chairman Ben Bernanke for a second term comes on the day when the White House boosted the projected ten-year deficit from $7 trillion to $9 trillion.

On average, deficits — that's the difference between spending and revenue each year, will average about $900 billion for the decade. We reported a lot of this Friday.

The public debt, now, that's the amount of credit taken out to pay for the yearly deficits, is now projected to hit $17.5 trillion by 2019. In that year alone, interest on the debt will equal $774 billion.

It's hard to get your head around all of this. That's why we have the panel, Steve Hayes, senior writer for "The Weekly Standard," Juan Williams, news analyst for National Public Radio, and Jeff Birnbaum, managing editor digital of "The Washington Times."

Jeff, first of all, this announcement about Bernanke comes on the day when this is bad news. Timing, coincidence?

JEFF BIRNBAUM, MANAGING EDITOR DIGITAL, "THE WASHINGTON TIMES": It's a pure coincidence, I'm sure we all agree.

(LAUGHTER)

I think there's no question that the announcement of Bernanke, which is good news to the markets, was meant to offset the very bad news of the gigantic deficits.

BAIER: And how bad is this news that I just read there?

BIRNBAUM: Well, the simple way to think about it is the largest ever deficit before this year's deficit was a trillion dollars less then not only what will be this year's deficit but also the projected deficit for next year.

It's a essentially one and a half trillion dollars this year and next year, and gigantic deficits.

It is astounding. I covered budgets for years in Congress and I remember the day that I heard that the deficit might go to $250 billion. And I got a bad feeling in my stomach when that happened.

Now, I mean, you don't even have a stomach anymore, so bad are these. And this news is very bad for Bernanke. You have to be careful what you wish for. He wanted to be nominated again for another four years, but he will have to face the gigantic task of managing the huge run-up in debt and the inflation that that will probably cause.

Balancing — dealing with inflation by raising interest rates and not causing a double dip, a second dip into a recession will be the monumental task he now faces.

BAIER: And Juan, in Washington, ten-year budget projections are usually wildly inaccurate.

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: Right.

BAIER: So this could be short of what it actually will end up being as far as these projections go.

WILLIAMS: Yep.

BAIER: For the Office of Management and Budget to put this out, it is kind of like a car running into a wall. You see the wall down the road, but you keep on going. Isn't it amazing to think about this as the budget projection for a White House?

WILLIAMS: It is. On the other hand, OMB also says they predict that we're going to grow. They think that the recession is going to end shortly, and therefore, if you have growth, you could, in some ways, you know, produce revenue that would help to — I don't see how we would eliminate it, but diminish it to some extent.

That's the optimistic scenario. But it's much more likely here that what you have is escalating deficits over time, and the question is whether or not then you have inflation that comes with it that could, again, prompt someone like Bernanke then to say, you know what, we have got to do something about interest rates, we have to raise them from zero which they basically are at now, pump them up again to try to hold inflation in place. And that's going to anger a lot of people who are, I think, not Ben Bernanke fans, people on Main Street in this country who feel that he has done a lot for the banks, he has done a lot for Wall Street. Wall Street was rejoicing today. They like Ben Bernanke. He is one of the guys. He is one of the guys who arguably got us in this mess.

BAIER: So do you think that anybody in the White House believes that these numbers are unsustainable over the long term? I'm asking Juan. I guess, from the White House perspective...

WILLIAMS: I think that they believe that — they're still in this mode when I hear from them, they're in the mode that says, look, we got wars under President Bush. We had prescription — Medicaid prescription benefits under Bush that drove up the deficit. We've got tax cuts under Bush that drove up the deficit.

And all of that has contributed to this, and we are now trying to put the brakes on a recession. We had to spend this money.

BAIER: Steve, the Bush economy becomes the Obama economy at some point.

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": Please, at a certain point they're going to have to stop pointing to everything and blaming George W. Bush. It is sort of laughable at this point, I think.

I think one of the ironies given what Juan just said is that in a sense, the re-upping of Ben Bernanke actually means that Obama owns this even more. He owns the bailouts in a way that he didn't necessarily before. He owns the recovery, both the stimulus side, which he was going to own no matter what, and the monetary side, which he wasn't necessarily going to own.

I think in a sense it makes Republican' arguments about the economy a little bit more complicated, because I think Republicans, even those who were skeptical of bailouts, were saying, look, the stimulus isn't the reason that we have had some recovery. It really was the Fed. It really was this injection of cash into the economy.

And now, by doing that, they will sort of by bank shot at least be giving President Obama some credit.

BAIER: Jeff, the White House came out earlier in the year, and Christina Romer among others had a pretty rosy projection of what the gross domestic product would look like over the upcoming quarters. Now they are saying the economy will contract by 2.8 percent this year. That's more than twice what they predicted.

They are not predicting well.

BIRNBAUM: No. And so I guess we should be skeptical about these projections in general.

But they were wrong on the wrong side. Clearly, the economy, and they now admit it, is a lot worse, and so we should expect that they're seeing the future in with through rose-colored glasses, and that's a problem.

In other words, what we now see as gigantic, unmanageable deficits, and by the way, Juan, the White House agrees that they're unmanageable. They're trying to reel it back every chance they get, we should expect that those numbers actually will be worse, because the economy is probably not going to rev up enough to pull back those deficits very much.

So we should expect that the president will talk a lot about deficit reduction. The question is can he actually do anything about it? Can he come up with more than just superficial ways of reducing spending?

BAIER: OK, coming up, we'll discuss whether the just-released CIA documents vindicate former Vice President Dick Cheney's support for enhanced terrorist interrogation techniques. We'll be back after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: I have read the documents.

The public reports and the public just fictions for these techniques, which is that we got information from these individuals that were subjected to these techniques, doesn't answer the core question, which is, could we have gotten that same information without resorting to these techniques?

And it doesn't answer the broader question, are we safer as a consequence of having used these techniques?

(END VIDEO CLIP)

BAIER: Well, the documents the president was talking about back in April were the documents requested by former Vice President Dick Cheney. Those, at least two of them, were released on Monday.

Vice President Cheney released a statement saying those documents released Monday "clearly demonstrate that the individuals subjected to enhanced interrogation techniques provided the bulk of intelligence we gained about Al Qaeda, which prevented terrorist attacks."

He said that "The president's decision to allow the Justice Department to investigate and possibly prosecute CIA personnel serves as a reminder, if any were needed, of why so many Americans have doubts about this administration's ability to be responsible for our nation's security."

What about the Cheney documents? We're back with the panel. Steve, we'll start with you. We learned tonight that there is at least one more document that has not been released in this series.

HAYES: Right. There is a — the document that was released yesterday that describes pivotal information gained from detainees as a result of interrogations is actually dated June 3. The one that Cheney requested was dated June 1st. There is, I'm told by an intelligence source, more information in the June 1st one.

We don't know whether that happened by accident or whether it was a withholding of information taking place here. But to the broader point, and to president Obama's point, I think the president was simply misrepresenting what is in the report, not only in the Cheney documents, but in the inspector general report itself, which was supposed to be for the left.

"The Big Kahuna," Rachel Maddow described it on her show as "The Big Kahuna," the inspector general report. This was going to vindicate the left on this issue. And it did precisely the opposite. I think you can draw direct lines from the enhanced interrogation techniques used to the information that they provided.

And forgive me, indulge me for reading one of these about Al Nashiri, who was the plotter of the USS Cole attack, "Following the use of EITs techniques, he provided information about his most current operational planning as opposed to the historical information he provided before the use of the IETs." It doesn't get clearer to that.

So we can debate the morality, we can debate whether this was torture. We can't debate any longer about whether this was effective.

BAIER: Juan, do you agree?

WILLIAMS: No. It seems to me President Obama had it exactly right when he said, listen, it doesn't come to the core question, Steve. The core question is could we have gotten this information in any other way?

Yes, under the enhanced interrogation techniques, better called torture, we got some information apparently that was viable and might have led to the prevention of future terrorist attacks, which is all to the good for America's security.

But the question is, was that the only way to do it? Could it be that these people were reacting to the fact of how long they have been held? Could we have done it in another way that could have been in comportment with our values as Americans, with our ideals as Americans? Could we have done it in a way that wouldn't have damaged our reputation?

You know, I had a friend write me and said "Yes, damage our reputation with a bunch of terrorists." But, no, it also damaged our reputation with, it seems to me, as much of the world that began to look at us in a negative height and did not support us in terms of sending troops to Iraq and now to Afghanistan.

BAIER: Juan, did you read the sections in these documents that said these suspects or suspected terrorists were unresponsive initially, and then became very forthcoming after these techniques were used, how do you interpret that?

WILLIAMS: There is no way to interpret but that in some cases the use of torture benefited U.S. intelligence, that in some cases it had the desired impact.

As I say, there are larger questions about whether or not we could have gotten this information otherwise. And now with this new organization that Vice President Cheney again, said that is an affront to the CIA, but the one that President Obama has put in place that will allow for other techniques to be explored.

You have people in the White House, national security, FBI, and CIA involved. It seems to me you will have the opportunity to find the very best techniques that do not require you to, you know, be pulling out people's fingernails.

BAIER: Jeff?

BIRNBAUM: I think that the inspector general did fuzz up this issue enough so it will continue to be debated, though I do agree that it's quite clear that there is a connection between the enhanced interrogation techniques and the vital information that stopped anthrax attacks, bombers across the world, and even a possible attack on the Brooklyn Bridge, among other things.

I think that Cheney really does have a win, finally, here, that the CIA was able to get a lot of information using techniques that are now criticized that saved possibly millions of lives.

BAIER: This is not the end of this one. That's it for this panel, but stay tuned. President Obama is now apparently losing more support from a one-time very chose ally.

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