This is a rush transcript of "Special Report With Bret Baier" from December 16, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: The missile tests do nothing but undermine Iranian claims. They're not productive. They're not for satellites and they're not for fireworks.

GEOFF MORRELL, PENTAGON SPOKESMAN: We're watching closely and we are concerned.

IAN KELLY, STATE DEPARTMENT SPOKESMAN: These kinds of tests can only undermine Iran's claims of peaceful intentions.

(END VIDEO CLIP)

BRET BAIER, HOST: Three administration spokesmen today with the same message, that they concerned about the latest missile test from Iran. Iranians call it the Sagile-2 missile, with a range of 1,200 miles, which would make it capable of hitting Israel or U.S. bases in the region. There you see the range in the picture there.

The test providing a lot of anxiousness here in Washington and around the world as the diplomacy continues.

Let's bring in our panel: Steve Hayes, senior writer for The Weekly Standard; Mort Kondracke, executive editor of Roll Call, and syndicated columnist Charles Krauthammer.

Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Those remarks are pathetic. "Undermines Iran's claims of peaceful intentions," as if anyone has any doubt. The president said two months ago at the U.N. that the Qom facility, the one they discovered on satellite, a huge facility that's under construction, is not compatible with peaceful intent, which means it is military, which means we all know what's going on.

How many ostentatious gestures does it take on the part of Iran for this administration to understand it is being treated contemptuously? You have got the missile launch. You have got the reports which even the State Department says is good journalism of Iranian scientists working on a nuclear trigger. You have got even on a lesser issue the putting on trial of the three American hikers who obviously aren't spies; it's a form of hostage-taking.

At what point is the administration so humiliated it actually speaks and does something active? Some conservatives have taken heart from the Oslo speech. There was nothing in the Oslo speech. The only change in the Oslo speech was that Obama called Iran "Iran" instead of his usual obsequious "The Islamic Republic of Iran." So the headline is "Obama drops an adjective, Tehran trembles." This really is appalling.

BAIER: Mort, you have the Israeli military intelligence official coming out saying that they making leaps and bounds in technology, according to the Israelis, and then you have the pledge by the Iranians to build 10 more enrichment facilities.

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: Exactly. Look, I think that whether Obama is a successful foreign policy president will depend on as much whether he can stop the Iranian nuclear program as whether he succeeds in Afghanistan.

If he is not successful in stopping that program by sometime next year, the Israelis are likely to attack with all kinds of dire consequences, and Benjamin Netanyahu, the prime minister of Israel, can quote back to Obama his own speech in Oslo in which he said that a head of state is entirely justified in order to protect his own country to unilaterally act against an adversary.

So, you know, it's time for the president. He said Iran had until the end of the year -- this year -- in order to prove whether it was amenable to negotiations. It is clearly not amenable.

We've got to go for very stiff sanctions and the kind of sanctions that might work are a closing down of banking relationships by European countries and the United States or cutting off their gasoline.

BAIER: Reality, Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, I think the real question is -- I agree with Mort that this will likely be the most significant foreign policy issue and decision of Obama's first term, have the most far-reaching consequences.

The issue is -- as much as the issue is the nuclear program, the issue is the regime, and to the extent we treat the nuclear program separately, I think it does a disservice to the seriousness of the problem that we face, and it allows people like Robert Gibbs and others to pretend to go along with this charade that we don't really know what they're doing. We do, in fact, know what they're doing. We have known what they're doing for a long time -- the 2007 NIE on Iran's nukes notwithstanding.

The bigger problem is whether the Obama administration internally is deluding itself into thinking, continuing to delude itself into thinking that this regime can be dealt with. And it can't and we've known that now for this entire year.

BAIER: Charles exactly four years ago today, you wrote a column in The Washington Post called "In Iran, Arming for Armageddon," talking about Mahmoud Ahmadinejad and his apocalyptic statements, the return of the 12th Imam, et cetera.

You said, quote, "Everyone knows where Iran's nuclear weapons will be aimed, every know they will be put on Shahab rockets which have been modified so that they can reach Israel, and everyone knows that if the button is ever pushed, it will be the end of Israel.

"Negotiations to deny the certifiable lunatic genocidal weapons have been going nowhere. Everyone knows they will go nowhere, and no one will do anything about it."

This was December 16, 2005.

KRAUTHAMMER: And nothing has changed. The Bush administration applied pressure, but it was obviously insufficient and they knew it in the end. And this administration hasn't even applied pressure. It started all over.

And as Steve indicates, the one chance of stopping this Armageddon is change of regime. Sanctions are not going to work. It is either going to be an Israeli attack or change in regime.

And this historic opportunity has presented itself in the demonstrations in the streets, and there is graffiti on the walls of Tehran which says "Obama, are you with us or with them?" meaning their oppressors.

And this outreach, this delusion that the Obama administration has that it can reach an agreement where Iran will actually undo its nuclear efforts is nothing but a delusion. Our only chance is supporting vigorously the revolution in the streets, as Reagan, for example supported the dissidents in Eastern Europe.

But it's not on the table. Obama is still wedded to a losing strategy of negotiations, which going nowhere.

KONDRACKE: Well, what he surely has to do is side with the demonstrators in the streets. Also, apply severe economic sanctions with a lot of allies and say basically to the Iranian people, your regime is causing this economic hardship that you're on.

It's not just the United States. It's not George Bush. It's the Russians. It's the Chinese. It's the Europeans. We're all saying to this, you know, get rid of this regime or we're going to keep it up.

BAIER: But Charles...

KONDRACKE: There's no way of stopping the nuclear program short of either an Israeli attack or Israeli attack or change of regime. I agree with that.

BAIER: Quickly, do you think that this administration knows who they dealing in the Iranians and in President Mahmoud Ahmadinejad?

KRAUTHAMMER: It is hard to imagine that anybody sentient doesn't. But it seems as if by the behavior of this administration, it either doesn't understand or it wants to not understand because understanding implies action and it is afraid of any kind of action, even sanctions, or supporting the dissidents.

KONDRACKE: I disagree with that. I think they will go for sanctions quite soon. The deadline is up, the end of the year. He has to go for big sanctions.

BAIER: Do you agree?

HAYES: I think they will go for sanctions. The question is, will they be effective? They've talked about crippling sanctions.

BAIER: Will they get them?

HAYES: Will they get them, will Russia and China be with us? I think that's highly, highly unlikely.

BAIER: More big problems for Senate Democrats trying to push through health care reform before the holidays. We will talk about all of that after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JIM DEMINT, R-S.C.: It's become clearer and clearer that they have a bait and switch strategy where they have us working on up one bill on the floor of the Senate while they're developing another bill in secret. So we just determined that the only way to stop this is to slow it down any way we can.

SENATE MAJORITY WHIP DICK DURBIN, D-ILL.: Clearly tells us what their strategy is. It is to slow down or stop this bill at any cost. And I will tell you, it is at considerable expense to the safety of our nation.

(END VIDEO CLIP)

BAIER: Well, Senate Republicans are not backing away from the obstructionism charge. They in fact are embracing it, saying they do want to obstruct in health care reform bill.

Right now the Senate is taking up the defense spending bill. They have to deal with that until Saturday. Our producer up on Capitol Hill says that could mean, according to Senate aides, that they're voting on health care reform on Christmas Eve or Christmas Day.

Here's the latest polls on health care: Proposed changes to health care -- Washington Post/ABC poll -- "Would you say that you support or oppose it?" 51 percent oppose. "If these proposals become law, will your health care cost more if changed? Yes. If not, 33 percent."

There you see the numbers: "Quality, if left as is, is better." "The country's health care will change if it changed, 55 percent." These polls just out today.

What about all of this. We're back with our panel -- Mort?

KONDRACKE: I think the Democrats will get their 60 votes.

BAIER: On Christmas Day?

KONDRACKE: It may be Christmas day and if it's Christmas Day, then the Democrats will turn to the cameras and say the grinches over here are the Republicans who drove us to this late date.

But look, I agree with that poll that says that most people expect that their health care costs are going to go up as a result of this. I don't see how they cannot, in spite of what the Office of Management and Budget says and lots of other people.

There's going to be lots of costs offloaded to people in the form of higher premiums, there just our, and they don't have a cost control mechanism in this.

Still, the Democrats cannot not pass this bill. It is too big and too important to fail. They cannot have their president lose on an issue of this importance, and I think the skids are all greased to 60 votes in the Senate.

I think that the -- and Joe Lieberman, Joe Lieberman is getting roundly criticized by the liberals, but he did them a favor by creating the circumstances under which a whole bunch of moderates can vote for this bill.

And they're not going to get the public option. They're not going to get a buy-in to Medicare, but they're going to pass the bill, and the House is going to eat it.

BAIER: Really? Steve, we were supposed to see these Congressional Budget Office numbers at one point. They were going to be private, but we expected to get leaks today. I haven't seen any. Have you?

HAYES: No, I haven't. It could mean that the numbers don't say what Democrats hoped they say or it could just mean that the timing was off. There with stories earlier today that the numbers would be coming out and starting to be leaked. We haven't seen that yet.

Look, I mean, these polls are interesting, and they basically tell us what we is known all along. The public understands from a common sense perspective that if you insure more people, you're going to pay more to do it.

And you even have members of the administration acknowledge this. Dr. Romer has said this on occasion, well, of course spending is going to increase.

BAIER: Christina Romer, the national economic council advisor.

HAYES: Right. You have had them basically admit the obvious in these moments of weakness.

The real question I think for a Republican becomes how aggressively did they fight this in a public way? I mean, you pointed out that they is signaled that they intend to obstruct and they intend to make it known that they're obstructing.

One question is will they begin to have sort of a campaign that says we will repeal Obama-care heading into the 2010 election? Do they run on that? Do they start saying that?

The thinking on Capitol Hill is that if they do that now it sort of concedes defeat before it is defeated. But it's a smart strategy.

BAIER: Mort, you believe the Democrats are going to roll over. Charles, you have said that the House Democrats are going to. But there are still a lot of people out there that are talking that we can't let this go forward, Howard Dean leading the charge, Anthony Weiner coming out today, the congressman from New York.

Do you think that all folds like a stack of cards?

KRAUTHAMMER: I think it is a bluff and in the end it will be called and they will seize the opportunity to change the whole architecture of American medicine and they'll amend it later.

But what's interesting, I think, in the Senate you see, for example, a lot of senators from conservative states are positioning themselves, Democrats. James Webb of Virginia, conservative state, he saw what happened in the elections in November. There is a massive shift of independents against the Democrats.

He published an op-ed in one of his local papers in which he said he's troubled by aspects of the bill. He hasn't decided which way he will go. And he mentioned that the cuts in Medicare, which are enormous, and also the cutting out of Medicare Advantage, which is a program that a lot of seniors are using and they like.

But again, I can't imagine in the end, despite objections, that any of them are going to kill it, because it would be just a calamity politically.

I think for Webb and a few others, you register objections. You vote against certain amendments, and you might even oppose the bill at the end, because Reid can spare 10 Democrats. All he needs is 51 at the end. But you approve of the cutting off of the debate.

So you could have a Webb on cloture, he votes for ending debate, but in the end he opposes it, and perhaps gets away with that on Election Day.

BAIER: Mort, passes before Christmas?

KONDRACKE: Barely, yes.

BAIER: And a conference in the new year?

KONDRACKE: I think they're going to start -- they are already conferencing, pre-conferencing, and I think they will try to get a bill signed by January 20th.

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