'Special Report' Panel on Obama's Handling of the Economy

This is a rush transcript of "Special Report With Bret Baier" from June 8, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: We created and saved, as you said, Joe, at least 150,000 jobs, jobs of teachers and nurses and firefighters and police officers. People who had been laid off are not being laid off.

We're providing summer jobs for youth that are particularly hard hit in this market, breaking ground on hundreds of new projects all across the country in clean energy and in transportation, and so on.

(END VIDEO CLIP)

BRET BAIER, "SPECIAL REPORT" HOST: Well, some called it the "re-launch" today of the stimulus package. The White House assembling the Cabinet there. The president speaking in front of two flat-panel TV's with an elaborate presentation about the stimulus projects that they have ongoing in the second 100 days of their administration, saying 600,000 jobs are expected to be saved or created, among those, as you heard, some summer jobs, 125,000.

What about all the math here? Let's bring in the panel — Steve Hayes, senior writer for "The Weekly Standard," Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer — Steve?

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": Remember back when the White House was pressing especially hard for passage of the stimulus bill?

We heard that if the stimulus weren't passed and weren't passed quickly, we would be on the verge of economic collapse, catastrophe. They refused even to give members of Congress 48 hours to read the bill.

And I think the most interesting number in light of that little bit of history that we have seen come out in the past week is that they spent only 5.5 percent of this vast sum, $787 billion. What were they doing? Why is it that we can only spend that little amount of money and yet they are taking credit for having created all these jobs?

BAIER: Or saved them.

HAYES: Or saved.

Now, there is a disconnect there. And I think what's interesting now looking forward is that they are talking about creating, or projecting creating 600,000 new jobs by this next 100 days.

And as a Republican aide pointed out to me today, how is it that they can say with certainty that they will create the 600,000 new jobs, but they haven't been able to project how much money will be spent in the next 100 days? That's something that they have full control of, how much money the federal government actually is going to disburse over the next 100 days.

They can't tell us that number but they can tell us how many jobs will be created by spending that amount of money. I think it sounds political.

BAIER: Juan, this is a tough story for this administration to tell. They projected that unemployment as going to go above 8 percent. Now it's at 9.4 percent, and it looks like it's going even higher.

This created or saved job number a little seems soft, doesn't it?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: It is soft. I don't think anybody would argue that it's a hard and fast number.

And it's a function of the fact that if you say you saved a job, there is no way to prove it. There is no way to say here is a job we specifically saved.

President Obama said today in response to his critics, let them go out there and talk to people who have been called back to work or someone who has had a job saved.

But, again, how are you going to do this? It is all anecdotal at this point, Bret.

So I think what we're dealing with here, I think, is a soft spot. I think of it as an Achilles' heel for the Obama administration, and you can see it in the poll numbers where if there is one area where the administration gets low marks, or President Obama personally gets low marks, it's in his handling of the economy.

Mitch McConnell, though, the Republican leader in the Senate, said today, he said if it's a matter of recovery from the recession, he thinks the economy can do it on its own. And why did we need this spending, because the economy seems to be ginning back up?

Now, I will say in defense of President Obama, if you look at the last months unemployment numbers, there has been a decline in the rate of job loss in the last month.

And he's talking, also, about in these coming months helping young people who, of course in a recessionary market are less likely to get summer jobs. So he sees some of this money going in and helping those young people stay afloat during this difficult times.

Will the American people buy it? I don't know. And, of course, it plays big in terms of how long the American people have patience with him on the economy.

BAIER: And before you weigh in there, Charles, of the 600,000, the 125,000 summer jobs are counted in there. Of course, they will be going away when the summer is over.

OK — Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: This is a mathematical fantasia.

Apart from the distortion introduced into the economy by taking stimulus money from the general fund of taxation and distributing it to favored constituencies like teachers' unions, government workers, especially in blue states and swing states, is the damage the administration is doing to economics itself.

I mean, economics is the one social science that we imagine has real numbers, hard numbers that you can actually look at and believe.

Apart from the fictional 8 percent, which, as you indicated, was the number the administration said was unemployment that he we would hit if we did not have this package — and of course we're already at 9.5 percent and rising — is the idea that we talked about a little earlier about the save and created jobs.

That is a complete invention. That's based on nothing. The Bureau of Labor Statistics says that you can't measure a saved job. And yet the president's throwing out precise numbers of how many are saved or created.

As he said, 150,000 already created or saved, and this absurd prediction of 600,000 in the next 100 days.

Whenever you hear "saved or created," you are hearing a fiction. It's an attempt to slap a number on to something as a way of making something appear empirical which is, at best, aspirational, and, at worst, cynical.

The only hardened number in any of this is the trillion or so that will be created in real debt, real bonds held by real governments with numbers on them that we will have to repay. That is not a fictional number. It is a real one, and it's already raising our interest rates, and it could end up in hyperinflation.

That's real. Everything else is —

WILLIAMS: The counterargument would be, what are we to do as an American people in the midst of a deep recession? Are you willing to spend money, are you not willing to spend money?

And I don't know what the counterargument would be, except to say that so far, we don't — you know, as Steve was saying, it is such a small percentage, such a small fraction of the money has been put into the pot already.

Now, of course, if we put the money in more quickly, there would be more corruption and more excess attach to it. So it's not that you want to rush this money out.

But you do want to see the money going forward in a way that you can say it's making a difference.

KRAUTHAMMER: Juan, the counterargument was offered by Christina Romer, the head of the Council of Economic Advisers, who wrote when she was an academic in 1992 that the Great Depression was alleviated not by stimulus spending or fiscal. However, it was entirely by economic, by monetary expansion.

HAYES: By the Fed.

KRAUTHAMMER: By the Fed.

So as a theorist, she argued exactly against the idea of a stimulus creator of jobs. But, of course, today, her mind has been changed.

WILLIAMS: I was going to say —

HAYES: And look, too, look at the president's own rhetoric on this. We were on the verge of economic collapse or catastrophe, then we were walking back from the precipice, then there were glimmers of hope. Now we're once again in a very deep recession. He can't have it both ways.

BAIER: North Korea sentences a pair of American journalists to a dozen years of hard labor. The panel weighs on this diplomatic quandary and takes a look at what the administration is considering when it comes to North Korea, next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HILLARY CLINTON, U.S. SECRETARY OF STATE: We're engaged in all possible ways, through every possible channel, to secure their release. And we once again urge North Korea to grant their immediate release on humanitarian grounds.

(END VIDEO CLIP)

BAIER: Secretary of State Hillary Clinton confirming she has personally written to the North Koreans, urging them to release these two American journalists, Laura Ling and Euna Lee, employees of Al Gore's current TV network. They were tried and convicted for, quote, "hostility to the regime in Pyongyang," sentenced today to 12 years of hard labor.

What about this? We are back with the panel — Charles?

KRAUTHAMMER: Well, this is going to end in a swap, probably with cash exchanged and nobody acknowledging it.

But I want to commend the Obama administration, words I'm sure you thought you would never hear from me.

BAIER: Rarely

KRAUTHAMMER: Yes, rarely, maybe once a month — on two aspects of their Korean policy as we heard it yesterday annunciated by the secretary of state — a, the illusion that the whole North Korean program was always a bargaining chip, the idea that we've had for 16 years and two administrations.

Well, it's a way to bargain in return for food or fuel or a seat at a shiny table at a useless international conference is gone. The Obama administration has said that this game is up.

It's obvious that Pyongyang wants a nuke. It wants the power and prestige that accompanies having it, and it is not a bargaining chip. And that's important, understanding that.

Secondly, what we heard yesterday from the secretary of state on one of the Sunday shows was the playing for the first time of the Japan card. She talked about the threat a nuclear arms race in the region. Everybody understands that that means one thing — a nuclear Japan.

And if there's ever going to be anything that is going to happen on this issue, it's going to be China pressuring the North Korean regime on nukes.

And China has shown no indication of that before. The one nightmare it has is a nuclear Japan. And the threat of a nuclear Japan might induce China in exert the kind of pressure that would either curtail or end the program, or perhaps, ultimately, the regime.

So I commend the Obama administration on that, and for watching us on FOX News and following our suggestions about the Japan card.

WILLIAMS: I think that was your suggestion.

KRAUTHAMMER: Shockingly, yes.

(LAUGHTER)

WILLIAMS: A lot of shocks today. First you are praising Obama, and then —

KRAUTHAMMER: When I proposed it last week, I noticed consternation on the part of my colleagues.

WILLIAMS: I feel that consternation at the moment.

BAIER: Juan?

WILLIAMS: Let me just say that I think that the key here is putting them back on this terrorist list. The Bush administration had taken them off the terrorist list.

BAIER: The "state sponsors of terrorism."

WILLIAMS: Right — to make it clear the international community that what's taking place now is unacceptable. And it's a necessary step, I think, in terms of getting the Chinese and the South Koreans to agree to stop, and the South Koreans are already onboard, to stop any passage of ships that might be carrying fissile nuclear material to the North Koreans.

And the second part of this is to make it clear that these people are involved, the North Koreans, in selling nuclear material to terrorists around the world.

And I think you can make a direct tie between what's happened in terms of the Syrian activity, what's happening between Kim Jong-il and Ahmadinejad in Iran. So I think there is a basis.

Now, as James Rosen's piece showed, Hillary Clinton, the secretary of state, is saying we don't know about current activities. But I think you can look at the history here and not be seen as being impetuous in saying these people are involved in proliferation of nukes.

BAIER: That is the question. A little bit of back and forth about what the secretary of state had said before, that they don't have evidence against North Korea, and then this past weekend said they're looking at it, that they don't have an answer right now — Steve?

HAYES: I think her first answer was flat-out wrong. There is evidence that North Korea has been sponsoring terrorists. They have doing it for decades. We know this.

They have been sponsoring Hezbollah. They have been probably giving arms to the Moral Islamic Liberation Front in the Philippines. There is talk that they were sponsoring the Tamil Tigers in Sri Lanka. There is evidence of this. We have it from our liaison services, other intelligence services. So if they want to use it, they can.

Let me go back to Charles' comment, though. I'm not nearly as sanguine as Charles is. I think what we have seen in the past few days is a slow turn on the part of the Obama administration. They had previously said there wasn't any evidence. Now they are sort of backing off that on the question of relisting them on terrorism.

And there are indications that they are not being quite as bad on North Korea as the Bush administration, which is an improvement.

However, you have to see it happen. We haven't seen nothing yet, I think. We have not seen anything specific. They got a flimsy resolution in the United Nations Security Council. I think we've got a lot to see before we can come to that conclusion.

KRAUTHAMMER: The listing on the terrorism list is entirely symbolic. It won't make any difference.

I think it can be done, ought to be done as a way to undo a mistake that happened in the last year of the Bush administration. But it is not of real importance.

Ultimately, the story is China and how are we going to persuade it. And if the administration is more realistic, and if it has the idea of these deals, which, again and again, prove to be use useless, and it puts — it involves Japan in this, we might get progress.

BAIER: And are the two journalists then just pawns for North Korea in negotiating?

KRAUTHAMMER: The way Iran held that journalist as well, and released her after awhile with some kind of deal that was, that we hadn't heard of, but it might have involved —

WILLIAMS: And if they are pawns, but the key here is getting China to say yes to potential U.S. military action.

BAIER: Does it happen?

HAYES: I don't think so. The question is whether we continue to treat China as a good partner in this and say — and praise China publicly, or if we get tough with China and say China is not being helping.

KRAUTHAMMER: I say scare the hell out of them.

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