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Special Report

'Special Report' Panel on President Obama's Proposed Bailout for Embattled Homeowners

This is a rush transcript of "Special Report With Bret Baier" from February 18, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: This plan will not save every home, but it will gi ve millions of families resigned to financial ruin a chance to rebuild.

It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everybody.

(END VIDEO CLIP)

BRET BAIER, HOST: President Obama today in Arizona, unveiling a $75 billion plan the White House says will prevent somewhere between 7 million to 9 million Americans from losing their homes to foreclosure.

What about this plan? Some analytical observations now from Juan Williams, senior correspondent of National Public Radio, Nina Easton, Washington bureau chief of Fortune Magazine, and syndicated columnist Charles Krauthammer -- FOX News contributors all.

Nina, let's start with you. What's your take of the plan?

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: One of the things that the president didn't say is that you need this leg -- this is part of a stool with three legs. You have the TARP financial rescue package, you have the stimulus, and you need something to stem foreclosures, most people think.

The Bush administration tried it, but it was very much based on voluntary efforts by the banks and so forth, and it really didn't go very far.

I do think this is, unlike TARP, the last TARP plan, and unlike the stimulus plan, this actually does move in the right direction. For one thing, it provides incentives to lenders up the food chain, so not only the bank who originated the mortgage, but the holder of the mortgage up the food chain, to participate.

And that was a big problem with this previous program.

The second thing it does is you don't have to have defaulted on your payments in order to qualify, so it doesn't encourage people to default, which some of these other programs have done. So, basically, if your home is -- if the value of the home is underwater, if you're home's underwater -- in other words, the value of the home is less than the value of your mortgage -- you can still qualify, and the bank will cut your interest rates, and the government agrees to kick in to help cut the interest rate.

So it has the potential of helping. I don't think it's going to solve the problem, and you may have to come back and say "I'm already hearing noise that you're going to have to cut the entire mortgage principle" which the banks really oppose. So there's more to come.

BAIER: It obviously has its critics already. Republican Richard Shelby of Alabama says this about it-"The biggest outrage is that the President's plan actually will use taxpayer money to pay people to do what they are already supposed to do -- pay their mortgage.

This is nothing more than a lender bailout, where the American taxpayer is once again being asked to foot the bill."

Juan?

JUAN WILLIAMS, SENIOR CORRESPONDENT, NATIONAL PUBLIC RADIO: Well, you know, the problem is here is it is across the board in terms of the three-legged stool that Nina spoke about.

Are Republicans simply going to say no to everything, are they acting as obstructionist, or is there something else here, something else at work?

In Senator Shelby's statement, there is something else at work, which is he is saying you shouldn't reward people who were given loans when they knew they couldn't pay their mortgages. These are people who oftentimes were speculating.

President Obama said today people who were expecting that the mortgage market, the housing market would go up 20, 30 percent per year. So they were playing like Las Vegas, and they were playing with our money, and now they want us to back them. And I think Senator Shelby has a strong point. But there's another thing here at work, which is that the housing market is key to the American economy, and last month I believe it went down 17 percent. That's the lowest number of housing starts we've seen since the Great Depression.

In that kind of situation, it seems to me, there is a necessity for some government action. And I don't see that Senator Shelby saying to me, "Oh, yes, here is what we would do instead."

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I'm a Republican, and I'm one who says "Yes." I think the content looks reasonable -- it's risky but reasonable.

The system is at stake, and I have argued for long that if you're going to help the bankers at the top of the system, you are going to want to also attack the problem at the base, which is the mortgage holders. But the problem I have with Obama is not the plan itself, but the way he packages and presents. He is always on the stump. He is always promising.

Look at what he said -- "The program will not reward folks who bought homes that they knew from the beginning they would never be able to afford."

Now, that obviously is a statement that can't be true. How are you going to ascertain if somebody purchased a house knowing in advance he couldn't afford it? Are you going to put him before an A-Rod press conference? Are you going to have them sit before the Illinois House Impeachment Committee?

Maybe we bring them all to Guantanamo, which is going to be empty, we're told, and have good interrogations there.

He is making a promise he knows is a false one. He does it because it garners applause, as it did today, and because it's demagogic.

It's a good plan, but I wish he would stop campaigning and govern in a way that doesn't over-promise, as he is wont to do.

BAIER: And, quickly, Nina, isn't the politics of this a little sensitive in that the people who are paying their payments on time maybe feel left out?

EASTON: It is. And I think that's why he keeps making the case, well, if there are a lot of foreclosed homes in a neighborhood, it affects everybody's home price. But the other thing that I think Charles raises is this question of who's going to oversee this? I mean, this government, we're finding, is very good at spending money, but, just like the stimulus plan, what apparatus is ion there to really see that this going to be --

WILLIAMS: Just very quickly, let me just say that the lenders are being given incentives to lower the rates so that people can afford it.

But if the lenders are not being told to make risky loans, these subprime loans again, so if the lender is in a position to say this isn't going to work, I think it is not to the lender's advantage to make another risky set of loans.

BAIER: Next up-Afghanistan. Even though the president's announcement about more troops was pretty low-key, it signals that a lot of American forces are going to be there for several more years.

(BEGIN VIDEO CLIP)

GEN. DAVID MCKIERNAN: For the next three or four years, we're going to need to stay heavily committed in a sustained manner in Afghanistan.

(END VIDEO CLIP)

BAIER: The panel weighs in on the war in Afghanistan after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEN. DAVID MCKIERNAN, U.S.-NATO AFGHANISTAN COMMANDER: Even with these additional forces, I have to tell you that 2009 is going to be a tough year. This is not a temporary force uplift that is going to need to be sustained for some period of time. I can't give you an exact number, the year that it would be, but I've said I'm trying to look out for the next three to four to five years.

(END VIDEO CLIP)

BAIER: General David McKiernan, the commander of U.S. forces in Afghanistan, at the Pentagon today with a grim assessment of the years ahead in Afghanistan.

We are back with the panel. Charles, this announcement about the troop buildup, as we talked about, was pretty low key in comparison to other troop deployment announcements.

KRAUTHAMMER: Exactly. When President Bush announced the surge in Iraq, he did it on prime time television. And this was a press release. The president spoke about it only in speaking to Canadian television, an odd way to announce a significant event.

I think the reason is that he understands he has lower expectations in the war in Afghanistan. It was politically opportune when he ran for the presidency to attack the Bush administration for its emphasis on Iraq, "the wrong war." Afghanistan was going to be "the good war."

He didn't know that the Iraq war would essentially end before he became president, and he would be left with Afghanistan.

And now he knows that it's a grim assessment. It's not essentially winnable the way Iraq is, and he will have to have his troops for all of his, at least, first term, in what is essentially a stalemate. It's not a happy prospect, and that's why it's all being under-spoken, underplayed and being extremely low key about it.

EASTON: I think there are international reasons, too.

By the way, I think this is not "the good war," it is "the difficult war." It will be a very had to win, as you said, in any sense.

BAIER: Although Iraq wasn't a cakewalk.

EASTON: No, but I think there is a lot of delicate balancing acts that have to be done in Afghanistan.

But I think part of the downplaying it is to not create an image of a large American footprint in Afghanistan, where already the population is angry about civilian deaths as a result of some of our raids, and where you've got the possibility of destabilizing nuclear armed Pakistan right next door.

And, by the way, in this interview, the CBC interview, he insisted that it's not just military means. We have to use diplomatic means and economic means.

I think it's really dangerous for him to go marching in and acting like--and ringing bells, and saying we're going to march in with the surge, and, you know, with a big American presence. I think that's dangerous on the ground in Afghanistan.

WILLIAMS: It seems to me that, first of all, this is not the surge in Iraq. And I think that there is a clear difference in mind in terms of the American foreign policy approach to what took place in Iraq and the question of whether that was a necessary war versus Afghanistan and what's going on in Pakistan, which I think most people would say is necessary if we are to undermine and permanently put out of business not only Al Qaeda, but the Taliban and their very attitudes.

So I think that's different approach.

The second thing to say is this was on the front page of every newspaper I saw today. So there is no question this is getting widespread attention.

It is very disquieting from the White House point of view from many of their base constituencies on the left that Obama, who ran as the anti-war president -- again we go back to Iraq -- is now going to be taking on his own very aggressive posture, not only with regard to Afghanistan, but, again, with regard to what's going on in the mountains of Pakistan.

I think the left is going to be extremely upset with this. They have already voiced concern about his willingness to be so combative, to take on such military action.

That's why I think he is talking more about diplomacy, although I hope it's part of the package. You are going to have to engage in a long, tough slog to get through Afghanistan.

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