This is a rush transcript of "Special Report With Bret Baier" from April 9, 2009. This copy may not be in its final form and may be updated.
BAIER: You are looking live there at the White House, where today there were sounds of more optimism, with the Director of the Natio nal Economic Council Larry Summers saying the economy's steep plunge appears to be ending.
So what about the state of the economy? Let's bring in our panel — Jeff Birnbaum, managing editor digital of "The Washington Times," Mara Liasson, national political correspondent of National Pub lic Radio, and Byron York, chief political correspondent of "The Washington Examiner."
Jeff, is this the turnaround?
JEFF BIRNBAUM, MANAGING EDITOR DIGITAL, "THE WASHINGTON TIMES": Well, there are real signs that the economy is improving. Wells Fargo, one of the nation's largest banks today, reported a $3 billion first quarter profit.
We hear reports that the stress tests by the Treasury Department of banks all around the country, about 19 of the biggest banks are doing well.
BAIER: And we'll hear about that tomorrow when the president meets with a group of economic advisers.
BIRNBAUM: That's right.
The stock market clearly thinks that things are turning better. The market was up well over 200 points today, the Dow Jones Average. And stock market is often a leading indicator of that.
Now, I think it's a little too early to say that everything is going to be going smoothly. Unemployment, while down a little bit, is still in a lot of trouble. But I think that there is no question that things are looking a little better.
And we hear from Larry Summers, the chief White House economist, that things may actually be tangibly better, all sorts of numbers, in a few months, which is a big reversal of the expectation from the White House previously of a turnaround not until 2010.
MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Yes, I agree with that. There are the green chutes(ph) of spring. There are little signs of growth. And I think that is very important.
I think the key thing, at least politically, for the White House is that if the stock market is a leading indicator, unemployment is a lagging indicator. That's the last thing that usually turns around, and it could continue to go up even as growth resumes and as you see these other things.
So unemployment is the number that counts politically, whether people feel worried about losing a job or have lost a job. And I think the White House — Larry Summers was very reluctant to say when that number would —
BAIER: Let's listen to that from Larry Summers today.
(BEGIN VIDEO CLIP)
LAWRENCE SUMMERS, WHITE HOUSE CHIEF ECONOMIC ADVISOR: I don't think we can hold out the prospect that unemployment will stabilize at the current level.
And I think there are seven cameras there, which means there are seven too many for me to provide a number for the number at which it will — at which it might be likely to peak.
(END VIDEO CLIP)
LIASSON: So it might keep on going up is what he was saying.
BAIER: In not so many words.
LIASSON: Yes. It's going to get worse before it gets better.
BYRON YORK, CHIEF POLITICAL CORRESPONDENT, "THE WASHINGTON TIMES": Well, he said the economy, this sense of being in freefall might be ending, which means maybe we're in controlled descent, or something like that, which is better.
But if the unemployment rate is 8.5 percent now, a lot of people think it will go over 10 percent. And that is politically difficult. Retail is still in difficulties. Wal-Mart did not have as good of a last quarter as they thought it would.
And we still may be looking at the bankruptcies of one or perhaps two major U.S. automakers.
So there is a lot of rough road ahead.
BAIER: Yes. And you talk to small communities, and they are feeling it a lot, feeling that pinch.
Jeff, what about the TARP money and what this administration may do going ahead? Are they going to have to dip into this place holder that they put into the budget, $750 billion?
BIRNBAUM: I don't think there's any question that they will need some extra bank bailout money for not just banks but for a lot of financial institutions that are not banks, like life insurance companies.
And while some of the banks that they are stress testing are doing fine, some of the others are not.
And I think some of the this good news we're hearing and the stock market rally that we've — the mini one we have had, that on top of the bonus scandal, all these will combine to make it very difficult, if not impossible, for the Obama administration to actually get Congress to approve any of that place holder money and send the money, the billions of dollars that they're going to need.
And that is Obama's number one problem now.
LIASSON: And the Congress took out the placeholder anyway. He put that money in his budget.
BAIER: He put it in, yes.
LIASSON: But they took it out.
LIASSON: So they are telling him, we don't even want it in there as a placeholder, which means it will be harder for him to get any more.
YORK: And now we find out today that more than $350 billion has not actually gone out the door of the current TARP money.
I just talked to John Sununu, the former Senator, who is on the TARP oversight board. He explained to me very carefully where all the money was.
And I said "Why hasn't the administration actually explained that," because people have the sense that $700 billion has been spent and the government literally doesn't know where it's going. And they do know.
And so, first of all, they have to get rid, or use this $700 billion, and then, only then, could they go for more.
BIRNBAUM: I think most of that money is really — when it's committed, it may not be out the door, but it's going to go there. There is about $100 billion left.
YORK: But they are unable to explain, sometimes, where it's gone.
BIRNBAUM: There is no question of that, but there's $100 billion left really to be sent out the door, and that may not be anywhere near enough.
BAIER: Unable or unwilling to explain.
OK, the Obama administration reiterates its desire to talk about Iran's nuclear program.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Engaging with Iran is something we said we will not do without preconditions. But there are is certain obligations that Iran has.
(END VIDEO CLIP)
BAIER: So will Iran play ball with the west? The panel weighs in after the break.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, U.S. SECRETARY OF STATE: It would benefit the Iranians, in our view, if they cooperated with the international community, if they abided by a set of obligations and expectations that affect them and by which we believe they are bound. And we're going to continue to insist on that.
MAHMOUD AHMADINEJAD, IRANIAN PRESIDENT(via translator): To America — if you want change to happen, first it should be based in honesty, justice, and respect. The Iranian nation is for justice, for respect, for logic, and for talks.
(END VIDEO CLIP)
BAIER: OK, two different takes on possible nuclear talks with Iran, as Iran's President Mahmoud Ahmadinejad announced the opening of a new plant for developing uranium fuel. And Iranian officials claim now that the number of centrifuges to make highly enriched uranium has increases to 7,000. The U.S. isn't sure whether we're buying that.
It was a national day of nuclear technology.
We're back with the panel — Byron?
YORK: And that's their response to American overtures. Barack Obama has sent a video message to Iran. Hillary Clinton has invited them to a conference on Afghanistan. There is talks about talks before their elections in June.
And what you get from Iran is we now have a greater capacity.
I think what you're seeing is that, certainly in the United States, a number of the top Democrats on Capitol Hill want to see the administration engage, but not for a whole long time.
They're saying — there was a letter a couple of weeks ago from the top Democrats in the House committees to the president saying that "We want you to engage, but we only have a very limited amount of time. At that point, we really must move on to real sanctions."
BAIER: When, Mara, you get the secretary of state saying we're going to reach out, and then get the Iranian president saying "We're increasing our nuclear capability," is that a bad day for the administration?
LIASSON: Well, it tells you how little these talks will probably produce. And that's why you have Democrats saying let's try them, but not try them for too long.
The clock is ticking. You can talk, but the fact is that the Iranians are moving briskly at a pretty steady pace. They have now completed all the steps in the enrichment cycle of uranium. At some point pretty soon they will have a bomb, and then what are you going to do?
So I think we can talk all we want, and I think talking is not a bad strategy. The Europeans want us to do it. Fine. We can show that we did in case we want to ask them to do something tougher.
But, you know, President Obama is going to have to get the Europeans and the Chinese and the Russians onboard with tougher sanctions. I think that's really the only the way to go, whether he talks or not.
BIRNBAUM: I think there is a lot of doubt about how far the Iranians have really gone in developing a nuclear weapon. I'm told by an Iranian expert that the new plant that he dedicated, that Ahmadinejad dedicated today, was actually the same plant he dedicated a year ago for this annual nuclear day of celebration.
BAIER: And we're looking at the video of it now.
LIASSON: It might be the same video.
BAIER: It might be.
BIRNBAUM: It might be the same.
So I'm not sure. I think that the answer is that President Obama has promised to negotiate with Iran through intermediaries. He is going to do that. But if something harsher has to be done, I think it will probably be left to the Israelis to do it militarily, that is, simply taking out this.
BAIER: Our State Department Correspondent James Rosen is reporting that at the G-20, are Russian President Dmitry Medvedev told President Obama that U.S. intelligence is better than Russian intelligence, they believe, on Iran.
And the senior U.S. officials are telling FOX that they believe Russia is now prepared to move forward with much more severe sanctions on Iran if they don't halt the enrichment activities.
Russia and China, again, key.
YORK: And that's a very important development, because there is disagreement about how far along they are, not really about what their intentions are, but how far along they are, and what it would take to, not destroy their system, but knock it back a few years.
So if you could get the Russians onboard and the Chinese onboard, then you could actually start. I mean, there are a number of non-military actions that could have an effect on Iran that haven't been tried. So you've got to get them onboard before you can start those.
LIASSON: And if he can do that — if President Obama can do that, that will be a big validation of his diplomatic strategy.
BAIER: We have heard it before, right, Jeff?
BIRNBAUM: We have heard it — North Korea, for example. You've seen that would be the easiest one to get sanctions out of the Security Council. Still silence from the United Nations.
BAIER: And more restraint today when asked about it at the State Department.
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