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Special Report

'Special Report' Panel on Congressional Reception to 'Paulson Plan'

This is a rush transcript of "Special Report With Brit Hume" from September 23, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SEN. JIM BUNNING, R-KY,: The Paulson plan will not bring a stop to the slide in home prices. But the Paulson plan will spend $700 billion worth of taxpayers' money to prop up and clean up the balance sheets of Wall Street.

SEN. CHRIS DODD, D-CONN., SENATE BANKING COMMITTEE CHAIRMAN: The secretary and the administration need to know what they have said to us is not acceptable. This is not going to work, and they're going to have to come back and work with us.

And we'll make the decision as to whether or not we're going to send something back to them that can work. I'd like to achieve that result. But it is not going to be as though someone will send me a blank check.

(END VIDEO CLIP)

BRIT HUME, HOST: Well, the markets continue to slide today. Whether it was because they were distressed by what they heard from the likes of Jim Bunting, Republican, and Chris Dodd, Democrat, is anybody's guess.

But we will take a few guesses of our own here now with Fred Barnes, executive editor of The Weekly Standard, Mort Kondracke, executive editor of Roll Call, and the syndicated columnist Charles Krauthammer, FOX News contributors all three.

I don't really want guesses here, but some thoughts, anyway. Mort, let's — you're as in touch with the Hill as anybody. What do you make of this reaction up there? Are these guys huffing and puffing, or are they getting ready to dismember this plan and put together their own?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: I think huffing and puffing, or due diligence, you might call it. There are certain conditions which they have to tell their constituents that they're meeting, such as that they're not going to have the CEOs getting golden parachutes after they have been bailed out.

And I think the administration, by the way, when Barack Obama said that Bush is being stubborn, I don't think that's true at all. I think the Bush, the White House understands that CEO pay is going to have to be conditioned some —

HUME: Are you are talking about the outgoing CEOs or are you talking about the incoming CEOs?

KONDRACKE: It depends on whether they're replaced or not.

HUME: What I'm saying though is this — I don't know if you have noticed, but the outgoing CEOs are getting kicked out, and at Fannie and Freddie, for example, their executive compensation departure packages were all cancelled.

I don't have the impression that given the stock hits that these enterprises are taking that a lot of these people's wealth has held up very well.

But what about the new people you bring in to take over?

KONDRACKE: That's the question — do you bring in new people in to take over? When you buy these lousy securities, do you also replace the CEOs? No, you don't.

Hank Paulson said — in fact, his initial position was that if you try to affect the pay packages of the CEOs, then they will not sell their securities to this new entity, whatever it's going to be. It's going to be a discouragement.

I think that that's a bargaining position and that they will deal on that issue.

HUME: OK, so what do you think will happen?

KONDRACKE: I think ultimately the Dow Jones declines if they continue will scare everyone into doing this. Whether or not it's the right thing to do, and, frankly, I'm not smart enough to know whether this is the right thing to do, what —

HUME: Then off with your head!

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: I disagree with Mort on one thing. I don't think they're huffing and puffing. I think, basically, Hank Paulson and Ben Bernanke have failed to sell this package to congress in a bipartisan way. Republicans are more opposed to it than Democrats are.

I was on the Hill today, and I'll tell you, there is not a crisis feeling up there. I happen to share Paulson's and Bernanke's feelings that there is a crisis in financial markets that could spread into the economy. But boy, you sure don't feel that up on Capitol Hill.

For Republicans, particularly the conservatives in the House, their mail and calls and everything are running overwhelmingly against it.

And the big problem is, I don't think pay for the CEOs. It's one thing. It's the number — $700 billion. And, Brit, you and I, all of us know that that a lot of that might over time be returned, as it was in the S&L bailout a number of years ago, but that message hasn't gotten through.

Bernanke and Paulson have not been reassuring. And I don't know what's going to happen, but —

HUME: So you think there is chance this thing may not pass?

BARNES: It may not pass, and then they may have to come back and do something else.

Bu the administration has raised these great expectations that something is going to be done. And, look, the best argument right now for it is we have to do something. There's only one thing worse than our package, and that's doing nothing.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Something is going to be done because the markets have spoken. On Monday you had a very steep decline. Today you had another decline.

It's a direct result of the fact that people are looking at Capitol Hill and seeing this resistance, also temporizing, and also the pontificating on the part of these people on the Hill who, as Fred has indicated, don't have a sense of crisis.

If they don't, they are living on the moon. There is a crisis. The credit markets are absolutely in seizure, and everybody's expecting help. And if it doesn't happen, there's going to be a huge reaction.

That's why I think in the end Congress will go along with it. But the attitude right now among Republicans and Democrats is that Paulson is asking for a favor, and they will only give it to him for a quid pro quo, as if he wants the power, as if he wants a trillion dollars to dole out.

He's going to be a lame duck in a month and a half. He's going to be on the street in four months. All of this is going to be the work of his successor.

It's not about him, but people are pretending it is about him. The reason he wants it is the same reason Bernanke wants a bailout and the markets are screaming for a bailout, because there will be a credit crisis, an equity crash, and the economy will go stale.

They all understand that in the end all of these complaints on the part of Congress and the demands of quid pro quos are going to be compromised, but a package is going to have to be passed.

KONDRACKE: Right. And Bernanke is going to have to have a better answer than he has today on what is the price for which these securities will be bought. Is it the face value of the stocks, the securities, which is a phony number —

HUME: Well right now it's zero.

KONDRACKE: No, that's what they would bring in the market because nobody will buy them. But they have a value on them, and the question is, do you give —

HUME: They're talking about a big auction, right? So it would depend —

KONDRACKE: That is the answer, if you had a reverse auction where the government essentially says give us your lowest price, and then the houses go in there and gives the lowest price to the government, and they buy them at the low price. And then perhaps the government can make money.

BARNES: I think it as Paulson today, and maybe I'm wrong, but one of them was asked, basically, what is your plan b, and they didn't have one. But they may have to come up with one.

KRAUTHAMMER: There is no plan b.

BARNES: I know there's not, but they may have to find one.

HUME: President Bush called out Iran for its sponsorship of terrorism as Mahmoud Ahmadinejad prepared his turn to speak. We will talk about what both men said, next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: A few nations, regimes like Syria and Iran, continue to sponsor terror, yet their numbers are growing fewer and they are growing more isolated from the world.

MAHMOUD AHMADINEJAD, IRANIAN PRESIDENT: Today, the Zionist regime is on a definite slope to collapse, and there is no way for it to get out of the cesspool created by itself.

American empire in the world is reaching the end of its road and its the next rulers must limit their interference to their own borders.

(END VIDEO CLIP)

HUME: Well, there are a couple of contrasting viewpoints there, those from Ahmadinejad and President Bush about this.

What about this appearance today by Ahmadinejad and Bush making his last speech, barring some unforeseen emergency. What about it, Charles?

KRAUTHAMMER: Well it belied what the President said about Iran being isolated and Syria increasingly isolated. In fact, Syria, which was isolated a couple of years ago when it essentially by proxy killed a leading politician in Lebanon, a friend of Saudi Arabia.

All of that isolation has been undone. He was invited over into Europe and France. The Syrians are out of the woods.

And all the sanctions on Iran have completely failed. I mean, it's time to sit back and admit after eight years that Iran is going to go nuclear. The United States made a noble attempt to stop it, but it has not succeeded, and it will not succeed.

There will not be a military attack on the part of this administration. I doubt that the next administration will, which means that Iran will go nuclear.

Any country that wants to go, unless it is attacked, is going to succeed. Iran was attacked in '81. Syria was attacked this year. Sorry?

HUME: What about Israel? What will Israel do about this?

KRAUTHAMMER: I suspect the administration is actively putting pressure on Israel not to act. And I'm not sure Israel actually had the physical capacity to carry out an attack successful enough to be worth all the risk.

So I suspect the answer is no one will attack, and it will go nuclear.

KONDRACKE: I'm afraid that's right.

I think, you know, there is upheaval in the Israeli government. There's not — Olmert is stepping down, and the country is going to get a new prime minister. And so, you know, that's a retarding factor.

And, you know, Ahmadinejad just completely, flat-out lied, which is not unexpected, by saying the IAEA, the International Atomic Energy Agency, had basically given a clean bill of health to his uranium program, which is a flat falsehood. The IAEA has said again and again that Iran is not cooperating.

As to Bush's speech, I was kind of surprised that he waited until the end to discuss what is topic A among the countries of the world, and that is the world financial crisis. I mean, this is-credit is an international activity-

HUME: And necessity.

KONDRACKE: Yes. And Sarkozy had a very good idea, the French president, and that is to have an international conference — it should be the major industrial countries — to open up credit flows if they possibly can and figure out how they could work together to do that.

There is a book out, "The World is Curved" by our friend Dave Schmidt, that says there is $6 trillion sitting in world money market accounts that is not moving because there is no confidence. This is a world situation that has to be dealt with.

BARNES: Ahmadinejad said something before he got here. He said something I agreed with. He said the U.N. out to be moved out of the U.S. to an independent country. What a great idea! Let's take him up on that!

KRAUTHAMMER: Zimbabwe is where I'd put it.

BARNES: Zimbabwe would be good. Maybe Burma, or whatever they call it now.

Look, the sad thing is to see what Ahmadinejad has achieved. He comes to New York and speaks. He has equal billing with President Bush. People are more interested in his speech than even in President Bush's.

HUME: He makes more news because he says such outrageous things, isn't that what it is?

BARNES: Yes, but there is a sense that he has been legitimized.

And I couldn't agree more with Charles. The U.S. isn't going to attack. And since the U.S. won't be involved, the U.S. won't want Israel to do anything, because the U.S. would get blamed then anyway.

HUME: That is it for the panel, folks.

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