This is a rush transcript of "Special Report With Bret Baier" from September 14, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: The only way to avoid a crisis of this magnitude is to ensure that large firms can't take risks that threaten our entire financial system, and to make sure they have the resources to weather even the worst of economic storms.

SEN. JIM DEMINT, R-S.C.: Instead of looking at more regulation, we could do a lot by fixing our tax system in this country to make us globally competitive.

The president needs to focus on what has caused problems and look at what has really made America so prosperous. And I'm afraid that's not the lens he's looking through right now.

(END VIDEO CLIP)

BRET BAIER, HOST: Exactly one year after the collapse of Lehman Brothers, President Obama traveled to Wall Street where he delivered a speech today calling for new rules to protect consumers, also a new consumer financial protection agency to enforce those rules, and broader oversight of the entire financial system.

What about this speech? Let's bring in our panel: Steve Hayes, senior writer for The Weekly Standard; Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Mara, what was new in this speech?

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: There's wasn't anything new in terms of policy proposals. He has made those before. And, as a matter of fact, they're running into trouble from his own party on Capitol Hill.

I think that he has some tough talk for Wall Street. He said we're not going to let you — we're not going to let firms that are too big to fail collapse on the taxpayers' dime ever again.

The problem is that I don't know if a lot of people on Wall Street believe him. One year after this crisis, you have people making big profits again. There are fewer investment firms, but they're doing fine and they're paying big bonuses.

And it is unclear if the package that he wants Congress to pass would actually change things in the future. I think there is a sense now maybe that his bark is worse than his bite. And part of that is because he is getting pushback from a lot of Democrats.

But I don't, in terms of what Jim DeMint was saying, I don't think the reason we had the Wall Street crisis was because of the tax system. There was not enough financial regulations — not just at Wall Street firms but also at Fannie and Freddie Mae. And it is unclear whether the package the president wants would fix that.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Essentially what got us away from the brink — we're not out of the woods, but we're off the precipice — was the substitution of U.S. government debt for private debt, which was lousy. That is essentially the whole story. And in the end, people believed in the dollar and in the U.S. government's faith in credit, and as it was substituted for bad debt, it stabilized the system.

The problem is this: Even though the government is beginning to wind down, even though credit is flowing and, in part, the government is withdrawing the exquisite guarantees — for instance, at the end of the month, the guarantees to money market funds is going to expire. Those are explicit guarantees. The problem is that everybody interests are that the implicit guarantees are still in place. Nobody will say it but everyone understands it. The government is not going to allow the money markets to fail the way it did last September when they were in trouble and they were guaranteeing it. It will not allow a huge bank to fail, even though it's not explicit.

So in a sense, the government is still hanging behind. It is almost like the situation of a Freddie and Fannie before the crash. Everybody understood it was an implicit guarantee. So you had all these nominally private institutions with the government standing behind. That's why I think in principle regulation is a good idea. It's got to be good and smart and targeted regulation, but I'm not against it in industries which are not truly independent and where the government is the bailer-out of last resort and it still is in the financial industry.

BAIER: Steve, a lot of concern is that the pendulum swings too far the other way.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I think that's a very legitimate concern.

One thing that was most interesting to me about this speech, and there were echoes of the health care debate or health care argument the president has made, is his use of the language of markets to make a case that I think is fundamentally anti-free market.

At one point he said he was a strong believer in the power of the free market. He talked repeatedly in his speech about choice in competition, exactly the same words that we hear him use in health care. And yet he is proposing what I think most analysts would recognize, and you can be on either side of whether it's a good thing or not, most analysts would acknowledge this is massive government intrusion into the financial services sector. I think perhaps there could be more regulation.

I guess I would differ from Mara's analysis in that I would say different kinds of regulation rather than more regulation in toto, but I think that's the probably quibbling on the margins. But it was very interesting to see him make essentially a statist case for more government intervention in the market in the language of free markets.

BAIER: Mara, he did say that the economy, in his opinion, is returning to normal. He credited the stimulus with that. He just said in his latest NBC interview — the CNBC interview today — that he has a strong inclination not to do a second stimulus package.

What about that?

LIASSON: Well, first of all, I don't think that he could pass a second stimulus package. I don't think there is any more appetite on the part of voters to spend more money. I think they could extend unemployment benefits and call that some kind of stimulus. They could, if this doesn't work, pass some tax cuts, but I don't think they can spend any more money.

I think the president, in terms of taking credit for the passing of the crisis, he said today the storms have begun to break. And I think that's correct.

The problem is that oftentimes he is left saying it would have been worse without the stimulus plan. In other words, he can't really say things are getting a lot better when unemployment is 9.7 percent. He has left arguing things would have been worse without my plan. That is a very hard thing to prove.

KRAUTHAMMER: Look, nobody seriously believes that the stimulus is what saved us or got us off the brink. What saved us was Henry Paulson, who took a wild swing. He was mostly lucky a year ago. He is the man who invented the huge number.

He decided that with the failure of confidence in the system, he had to invent a number so huge that nobody would believe him, and it was shock and awe. He came up with $700 billion. No one has ever heard of a number that high.

(CROSSTALK)

KRAUTHAMMER: Right, but when there is crisis of confidence and the Treasury Secretary says the U.S. government is going to pump unlimited amounts of money, and $700 billion a year ago sounded unlimited. Now it's lunch money, but at the time the arguments were over a billion here and a billion.

He was saying essentially we're going to put 5 percent of the GDP of the United States behind anything. And when that happened, people had a sense that the U.S. government was going to bail out anybody and everybody if it had to, and that had a calming effect.

BAIER: It could be a bumpy ride for U.S. relations with China. The panel discusses the rough road for Chinese tires, next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: We invoke provisions of existing agreements. We do so not to be provocative or to promote self-defeating protectionism. We do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system.

CHARLES FREEMAN, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: There is a political gotcha that they've got going here with focusing on auto parts and chicken parts which have been sort of more high-profile U.S,-China trade cases in the last year. So they're really trying to stick the knife in.

(END VIDEO CLIP)

BAIER: He's talking about China and is there a new trade war developing here? President Obama leveled steep tariffs on Chinese made tires for passenger and light trucks announced late Friday night, September 11.

The Chinese came back and filed a formal complaint with the World Trade Organization in Geneva. They also announced an investigation into whether U.S.-made auto and chicken products are flooding Chinese markets.

The president in that interview said he is absolutely confident that the United States and China can avoid a trade dispute, a trade war over this Chinese tire imports issue.

We're back with the panel — Charles?

KRAUTHAMMER: The way that the president has presented it is really remarkable. He doesn't lie. He is too smart. He deceives.

This is incredibly deceptive. He said, as we just heard, he says all I'm doing here is enforcing trade agreements. That would make you think that the Chinese have done something wrong, that they had dumped a product or they had undercut or subsidized. In fact, not.

This provision in the tariffs on tires are treated entirely by the U.S. Trade Act Section 425 which allows the slapping on of a tariff simply in response to a surge of imports, even if it's not illegal or done underhandedly, simply a surge. We have had a surge of imports. So it is not as if the Chinese are in violation of anything.

What is the effect of this? It is only done in the name of unions. The tire companies are against the tariffs. The unions are trying to protect jobs. The problem is it's not going to protect the jobs. If you cut off the Chinese imports, it will come out of Indonesia and Brazil and Vietnam.

So it's not going to help. It is going to increase the price of the low-end tires — hurt the poor — and, in the end, it could spark a trade war.

It is a dumb policy and it is a payoff to a special interest, nothing more than that.

BAIER: We know when you have the section number, that you're very prepared.

KRAUTHAMMER: Or I made it up — it's one or the other.

BAIER: One of the two — Mara?

LIASSON: Enforcing the trade haws is what every country says when they put tariffs on another country.

But there are two theories on this. One is this is the beginning of a series of mini trade wars that will escalate to the detriment of the entire global economy, or that President Obama has seen the light about trade — free trade — and he wants to show he is tough to his domestic base, the unions first, before he does some opening.

It is kind of like doing a lot of border enforcement before you pass an immigration reform bill. And we'll see petty soon which way he is going to go.

KRAUTHAMMER: I doubt it.

BAIER: The administration has been siding heavily with the labor overall.

LIASSON: So far. So far.

BAIER: And ahead of the G20, does this provide a problem?

LIASSON: I think this means this has to be discussed at the G20. And he will have ample opportunity to talk about this.

But then the question is can he get over Democratic opposition in the Congress to do free trade deals that are currently stalled?

BAIER: The G-20 summit will be held in Pittsburgh in coming weeks — Steve?

HAYES: You have to wonder if he is deliberately trying to pick a fight. When he says in his speech we're not trying to be provocative and that protectionism is self-defeating, my inclination actually is to read those as saying exactly the opposite. We are trying to pick a fight and in fact, this is protectionism. I think he basically acknowledges that.

I think the problem that he faces — Charles is exactly right in terms of who this benefits. It clearly benefits the unions. They're the ones who actually looked for the safeguard petition in the first place, not any of the producers.

So that, I think, makes it clear where the benefit is going. This is entirely for domestic political consumption.

BAIER: John Sweeney, the AFL-CIO president put out this statement right after it was announced on Friday evening: "It sends a strong message that the U.S. government will take necessary action to ensure that American workers and producers can compete on fair terms in the global economy."

Charles, it's a little more complex than that.

KRAUTHAMMER: Look, I mean, it implies that the Chinese are acting unfairly, and in this particular case, there is no evidence of that. There isn't even a claim of that.

I think the Chinese are upset. If the president of China shows up in Pittsburgh a chicken suit rolling a tire, we will know that it is on his mind. Obviously the Chinese will retaliate one way or another.

And I can't imagine Mara saying that, well, it's a zig in order that he can zag into a free trader. Clinton did that early in his administration, but he was a man who believed in free trade. Obama is not. There is not a shred of evidence he believes in free trade. Obama is not. There is not a shred of evidence he believes in free trade. He believes in one thing, unions and union support — actually, two things.

BAIER: Mara, it does open up the question. During the campaign, he had all of this questioning about the North American Free Trade Agreement and where he stood.

LIASSON: And which he backed away from much to the unions' dismay. He talked about owning it up, renegotiating it, and that's not happening. So he didn't do that. He hasn't gone to the extreme of opening up trade agreement and renegotiating them. Now he hasn't spend spent a lot of his political capital trying to get the South Korean and Panama and there's a couple that are in Congress right now.

HAYES: This has been this debate raging in Washington today about whether this is sort of a typical first term, in effect a brush-back pitch that presidents throw. Reagan did, Bush did it. Clinton did it.

I don't think so. There is nothing in his background that would lead us to believe he is an ardent proponent of free trade at all. And we all know that he certainly owes a lot of his political success to unions.

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