This is a rush transcript of "Special Report With Bret Baier" from September 9, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

HOUSE SPEAKER NANCY PELOSI, D-CALIF.: They said if you have a better idea, put it on the table. For the moment, however, as far as our House members are concerned, the overwhelming majority of them support a public option.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: There's not a rigidity. He is focused on the end. He is focused on results. I think that's what the American people will see tomorrow night.

SENATE MINORITY LEADER MITCH MCCONNELL, R-KY.: The status quo is not acceptable, but neither are any of the proposals we have seen from the White House or the Democrats in Congress so far.

SEN. LAMAR ALEXANDER, R-TENN.: I hope the president has heard the American people and we start over.

(END VIDEO CLIP)

BRET BAIER, HOST: You hear some of the debate today, as you look at the most recent Gallup poll: How would you advise your congressman to vote on health care reform bill? For, 37 percent, vote against it, 39 percent. Then you take a look at Americans over the age of 55 — same question — 35 percent for, vote against, 44 percent.

That is the dynamic the president is facing as he gets ready to deliver the speech to a joint session of Congress tomorrow night.

Let's bring in our panel: Fred Barnes, executive editor of The Weekly Standard; Juan Williams, news analyst for National Public Radio, and the syndicated columnist Charles Krauthammer.

Juan, you look at the polls, you hear the debate, what is your thought about where this is headed?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: I think the president is in the bottom of the ninth — he said earlier that he thinks he is in the eighth or ninth innings — I think he is in the bottom of the ninth and he has to swing for the fences.

What he has to do is reshape the terms of the debate. When you look at the poll numbers that you just cited, Bret, the people are saying if it is going to be bigger government, more government intrusion in health care, if it's going to be more expensive to pay for insurance — they don't want any of it.

So he's got to say, you know what? That's not what I'm talking about. I have got a better plan. And he has got to lay out what that plan is.

I don't know that he has got to go explicit on the public option versus co-ops. The Senate Finance Committee, Max Baucus and Mike Enzi, Grassley, those guys are saying they want to get something to him before tomorrow's speech. I don't think that's going to change the dynamics.

What he has got to get back to is the fact that there's a huge percentage of Americans who want health care reform and that people generally think that President Obama is trustworthy. But he hasn't laid out what he believes in. Tomorrow we should expect something bold.

BAIER: Juan mentions the Gang of Six, the negotiators — Democrats and Republicans — in the Senate Finance Committee, and there you see them there. Charles, Max Baucus, the chairman, has come out what he calls a new plan, a new proposal to try to get some bipartisan cooperation. It is pretty complex.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It is astonishingly complex. It is also very intrusive in just about every area of existing medicine.

It's got a lot of arbitrary provisions. I will give you just a couple of examples. It says in one provision that the 2010 scheduled reduction in reimbursement for doctors under Medicare is no longer at 21 percent reduction. It is a 0.5 percent increase, out of nowhere.

It imposes what it called "fees," but these are really taxes on health insurers, drug companies, the providers of medical equipment and diagnostics, as a way for the government to help reduce the $1 trillion it would cost. It ends up reducing it by $100 billion.

But all that means is, if you're a diabetic, the cost will be passed on to the consumer but hidden in what you pay. You will be paying extra for your diagnostics, for your needles, for your drugs and your health insurance. So it's hiding a lot of the costs.

I would only point out one thing — the numbers on those who support the plan has slightly increased. There was a 10-point gap against the health care reform, and it is now a 2-point gap, and it coincides with the two weeks that the president was on vacation and said nothing.

BAIER: Fred, even late this afternoon, House Speaker Nancy Pelosi said that Republicans still don't have an option. They don't have a plan. We're going to keep on moving forward. What is the response to that?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: President Obama has said the same thing repeatedly, and both of them have to know better, because there are all kinds of plans. I have read them. They weren't written in invisible ink.

There's one by Paul Ryan, who is really the smartest thing thinker on these issues among House Republicans, a plan that is basically based on more consumer health care where consumers, individuals, patients would decide they pick their own insurance, and so on. That's one of them.

But there are several other house plans. And there is that plan in the Senate by Senator Ron Wyden of Oregon, who is a Democrat. It's been endorsed by any number of Republicans as well.

So there are plenty of plans out there. That's a Democratic talking point that President Obama, in particular, should not pick up, and he said it repeatedly. He said it again on Monday in his speech in Cincinnati. He said Republicans are the people that want nothing, they don't have a plan.

You know what I think is odd about this speech? If you remember 16 years ago, President Clinton gave his speech on health care, and he outlined — this was at the beginning of the whole health care debate, and he outlined what he wanted. And it went on from there.

Now we have had the health care debate. We have had three bills pass three committees in the Senate — in the House, there are a couple of bills in the Senate, and now the president is going to come in and tell us?

Look, what a strong president does in a case like this is sit down with the parties in Congress and say here is what I want and then negotiate a bill and go from there. There is no reason for this speech, unless he is going to hit the reset button and I don't think he is.

This speech is designed not because there is a health care crisis. It is because there is a President Obama political crisis. And that is what he is going to deal with tomorrow night.

BAIER: Juan, could there be a game changer — do you think there will be a game changer in this speech? There was some talk about possibly some kind of tort reform if Democrats would accept something like that. I talked about it with Brit earlier in the show. What is your thought?

WILLIAMS: That would be a game changer.

There are all sorts of elements that could continue to reshaping the parameters of the debate.

BAIER: But it would also open up opponents like, for example, trial lawyers who would have a problem with that.

WILLIAMS: Sure, but he has got to make a move that shifts the way that we're all talking and thinking. At the moment everybody is focused on the negatives and he hasn't even said exactly what he believes in.

By the way, I think he says that Republicans don't have a plan is that you don't have Republicans coalescing around set of issues.

(CROSSTALK)

BARNES: ...the Paul Ryan plan.

WILLIAMS: I don't see it. The day they lay it down, fine, but until then...

BARNES: It doesn't have to change the parameters of the debate, Juan. He needs to change the parameters of the bill.

WILLIAMS: No, he needs to change — he has had such a bad August. It has been a political bad season for Barack Obama. He needs right now to get back in the game by saying, listen, you know what, overwhelmingly, Americans want some form of health care reform, so let's go about being serious people and not playing politics.

BAIER: Charles, last thing. Does he go after more Republicans by inserting some sort of tort reform at the risk of losing more liberals, or does he kind of walk the line as he has done many times in his big speeches?

KRAUTHAMMER: He is a guy who walks the line. If he did tort reform, I would be shocked. And I think if he had done it early, he could have gotten a lot of Republicans onboard. You do tort reform and you do regulate the insurance companies so everybody has guaranteed insurance, he would have had wall to wall support.

But it's late in the game. I can't imagine him attacking a major constituency at the end of this debate. It would be an extraordinary stroke, a good one, I think, but I don't expect he will be that bold.

BAIER: We shall see.

Iranian President Mahmoud Ahmadinejad says he is ready for open dialogue, but then he cuts a deal with Venezuela. We'll explain all of this. The FOX All-Stars tell us what it means when we return.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MAHMOUD AHMADINEJAD, IRANIAN PRESIDENT (via translator): From our point of view, Iran's nuclear issue is over. We continue our work within the framework of global regulations and in close interaction with the International Atomic Energy Agency. We will never negotiate over obvious rights of the Iranian nation.

(END VIDEO CLIP)

BAIER: Well, Iranian President Mahmoud Ahmadinejad says now he's ready to talk. This comes just a couple of days after he signed a deal with Venezuelan president Hugo Chavez. Venezuela will provide Iran 20,000 barrels of gasoline per day starting in October. Apparently, according to Chavez, Venezuela is getting paid $800 million a year for this gas deal.

We're back with our panel. What does this all mean and what about the situation with Iran and our administration her in U.S.? Charles?

KRAUTHAMMER: Well, I think this marks the complete collapse of Obama's Iran policy. Let's remember the premise was you be nice to our adversaries, you extend a hand, and you go around the world on an apology tour.

And the administration said behind the scenes, you can't see the results now, but in time the fruits will be there. Well, let's look at the harvest.

You get Obama saying he wants to meet unconditionally with the Iranians. He holds his tongue when demonstrators are being shot in the street as a way to keep open channels with the regime, even though it sullies America's reputation of supporting democrats, especially oppressed democrats around the world.

He apologizes in the Cairo speech for what Eisenhower had done almost 50 years ago, which, incidentally had been a condition the Iranians had put on resuming negotiations with us.

He does all of that, and what is his reward? President of Iran announces oh, yes, I will speak with Obama, but it has to be in front of the world media, and it will be a debate. And incidentally, the nuclear issue is closed. It is not an issue.

So what does Obama get for that sweet handshake and exchange of books with Chavez at the summit? Chavez arrives in Iran, he makes an alliance and he promises to supply gasoline. Why is that important? Because the one area where Iran is really weak is in refined petroleum. It has got a lot of crude.

But that's where we would be applying our sanctions if they don't stop their nuclear program. So what Chavez is doing is undermining in advance the only remaining economic sanction. All of this for what the Obama administration calls "smart power." It's dumb diplomacy.

BAIER: Juan, this comes ahead of the U.N. Security Council meeting coming up this fall and these talks about what to do next. The gasoline embargo had been talked about. Even there's a bill up on Capitol Hill suggesting that the U.S. do just that with allies. But now what?

WILLIAMS: Now it is not just the Security Council which is divided, because they're always divided and unsure how to deal with someone like an outlaw, and that is what Iran has become, but there is also this late September deadline that President Obama set for Ahmadinejad, and the Iranian clerics to decide how to deal with the nuclear issue and the International Atomic Energy Commission.

And what we have heard just recently from El Baradei is that they are not cooperating with him.

BAIER: Muhammad El Baradei, the head of the IAEA.

WILLIAMS: Yes, he wants to know more about their military activities. So what we have now is a showdown, I think, approaching September.

The key thing here is not to speak to Charles' point, what we expected from Iran. And remember, Iran is in the middle of tremendous political unrest after their disputed elections.

The real consequence is the way the rest of the world might support us if we have to deal with an Iran that is acting in such a way as to instigate trouble in the rest of the Middle East, that we can, in fact, get the other people, that now Ahmadinejad says he's willing to talk with larger parties, that we can get them on the same page and say the U.S. has offered to try to be cooperative with these folks.

This is part of the legacy of what happened in Iraq, that the rest of the world has not seen our softer, more smart diplomacy side, and I think it was a necessary step by the administration.

BAIER: Fred?

BARNES: Juan, you remember what Leo DeRosa said? Charles, do you remember?

KRAUTHAMMER: "Nice guys finish last."

BARNES: Indeed and Barack Obama has finished last here.

Smart power hasn't worked in Iran, obviously it hasn't worked in Iran, it hasn't worked with Venezuela, it hadn't worked with Cuba, it hadn't worked with Russia. It just hadn't worked, period.

When you deal with your adversaries, you have to be tougher than that, because the problems were not caused by lack of a conciliatory attitude by prior administrations. The problems are there because these are bad actors, they are bad players and you have to deal with them that way.

There's a guy who writes for Congressional Quarterly, and I wish I could think of his name, who has identified something in the Obama administration called the "Tinkerbell Effect." You remember Tinkerbell from "Peter Pan?" I'm not kidding about this, the "Tinkerbell effect." And that is when you think things will happen, good things will happen just because you wish they would happen.

And it is the Tinkerbell Effect that applies when you are going to shut down Gitmo and you think, well, somehow, you know, we'll find a place for these 90 guys or so that can't be released or put on trial, and it was the Tinkerbell Effect to think that the Iranians, that we're going to be nice to them and they will be conciliatory will negotiate over nuclear arms.

It doesn't work.

KRAUTHAMMER: Peter Pan and DeRosa in one panel.

(LAUGHTER)

BAIER: It's pretty amazing, it's pretty amazing what we can fit in here.

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