This is a rush transcript of "Special Report With Bret Baier" from November 17, 2009. This copy may not be in its final form and may be updated.
(BEGIN VIDEO CLIP)
HOUSE APPROPRIATIONS COMMITTEE CHAIRMAN DAVID OBEY, D-WIS.: These mistakes are frustrating and infuriating because they get in the way of having an honest discussion of exactly what the role of the recovery package has been on the economy.
REP. MARK KIRK, R-ILL.: Now they've started to make up congressional districts. And I'm looking forward to meeting the congressman or woman from the 86th distinct of Arizona.
(END VIDEO CLIP)
BRET BAIER, HOST: There are only eight districts — congressional districts — in Arizona. This is about recovery.gov — the listing of how many jobs the administration says have been saved or created by the stimulus package, and there are some problems.
Here is what the White House is saying about that: "We are going through the reports with a fine tooth comb, identifying mistakes, working with filers to correct them.
"Three big picture points should not be lost. First, the mistakes are relatively few and don't change the fundamental conclusions one can draw from the data.
"Second, some of the mistakes are frustrating typos and coding errors that don't undermine information at the heart of the data. When people send in 130,000 reports some will have mistakes.
"Third, transparency is going to be messy, but it is better than the alternative."
What about this?
Let's bring in Steve Hayes, senior writer for The Weekly Standard; Nina Easton, Washington bureau chief of Fortune magazine, and syndicated columnist Charles Krauthammer.
STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, you know, the federal government said that $5 million in stimulus money was spent in the North Chicago public district, creating some 473 jobs. The problem was there were only 293 jobs there — right now in existence.
They asked the superintendent of the schools how did this happen, and she said I don't know where the number comes from. It was a similar thing in Wilmette outside of Chicago.
You are seeing these reports pop up again and again and again.
BAIER: They're trickling out from every media outlet.
HAYES: Everywhere. Everywhere. Sure.
I have to say, a lot of the very good reporting on this has been done by local newspapers at a time when local newspapers, smaller papers don't get a lot of credit. They're doing really good work on this kind of thing and I think demonstrating their value.
But what's interesting to me is that all of the mistakes seem to be going in one direction. We're not reading stories about how there were 10 jobs created and then, oh, accidentally we reported only 10 but really 100 were created or 500 were created.
So what this gets to is the credibility of the reporting and credibility of the Obama administration. I think it was farcical at the outset to say jobs would be saved and created and that you could count that in any sort of meaningful way.
But what this does I think is will make people question going forward, including Democrats in Congress, what do these numbers mean and why should we ever believe what they're saying?
BAIER: Nina, with unemployment at 10.2 percent and number of jobs physically lost since the stimulus was signed at about 3 million, how big of a problem is this for the administration?
NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: Well, the problem with, you know, openness and government is it also undermines faith in government, because, as Steve said you're seeing all of these examples.
My favorite example is not only that the stimulus package actually expanded Congress — so we have more seats in Congress than we used to — but they bought a lawnmower to do the Fayetteville national cemetery and claimed 50 jobs were saved.
BAIER: By the lawnmower.
EASTON: By the lawnmower.
So they come out and it makes them ridiculous. I agree with Mark Kirk that you need an independent audit, a third-party audit looking at these numbers.
And the thing that strikes me the most is not just — OK, let's say the overall numbers are generally somewhere in the ballpark, which is what the White House is claiming. The White House also said that 90 percent of those jobs will be in the public sector. If you take their numbers, at least 50 percent are in the public sector.
BAIER: You mean in the private sector. Now they're all in the public sector.
EASTON: Yes, in the private sector. This is expansion of government. It is not boosting private sector jobs. In fact, half of the jobs being saved are educators. And, you know, when you go to talk to some of these school districts, they said we would not have laid off these educators anyway.
So it goes back to the question of whether those numbers were accurate in the first place.
But this is really expanding government. It's not — these not boosting private sector, lasting-jobs.
BAIER: Charles, we saw "Saturday Night Live" with that Joe Biden skit we played as the kicker last night where he says the stimulus is working and waves his hand. They continue, the administration does, to say that it is working, but these numbers coming out today, especially with the congressional districts, seem to be having an effect.
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The effect ultimately and the danger for any administration is to be an object of ridicule.
Look, this whole discussion has had an "Alice in Wonderland" quality from the very beginning. You can't measure saved jobs. Arguing over the precision or imprecision of the numbers, which are frictional at the beginning, is like arguing that there are 12 angels on the head of a pin and only ten, one of them is a leprechaun and the other flew away on Wednesday. This whole thing has a bizarre quality about it.
And when you hear these reports, as we're hearing now with the fictional congressional districts, what the risk for the administration is that it becomes an object of ridicule. And once that happens, it's hard to actually stop.
And the issue will become competence. There have been ideological objections against this administration — it's left wing, it's radical, and all that. But now we're starting a new kind of meme, that it is an administration that really can't get things done.
And when you have the president announcing, as he did in his address to the Congress, you know, don't worry about the tracking in the stimulus; it will be done by the vice president and nobody messes with Joe Biden, remember he said that in his address, which sort of elicited a chuckle at the beginning.
Well, it looks as if he is in the 99th district of the Mariana Islands, which doesn't have a representative in Congress, are messing with Joe Biden.
Once the meme starts, it becomes the subject of late-night comedy and you don't stop it.
BAIER: OK, Steve, so the administration says if they didn't have the stimulus, the economy would be far worse than it is right now, and they say that these postings on recovery.gov are filers who are just sloppy in the way that they're filing, but the jobs actually are materializing.
That's what they say in response. It's just not — there's not a lot of backup on that.
HAYES: Charles is exactly right. How do you count it? That was the question from the beginning.
Remember, they started touting "saved jobs" within a week or two. It was almost immediate they were saying, look, the stimulus is working, look at all of the things that we have done. It was farcical at the beginning. It's farcical now.
And I think the reason that they keep touting the stimulus — they keep saying the stimulus is working, the stimulus is working — and the reason they do that is because at some point unemployment will start to decrease, and they want to be able to take credit for it.
I think the trick is exactly what Charles says, you know, do you in the meantime become an object of ridicule and I think they're very close already.
EASTON: I think what it did do is provide a temporary safety net, expansion of unemployment benefits, providing some assistance to the states and localities. So I think as a temporary safety net, you can give it some credit.
But to say that it is creating lasting jobs, that's where I think the downfall is.
BAIER: And the only other thing is that before, when this whole thing bubbled up, there was an Associated Press story that started all of this and the economic advisers came out and said wait for the recovery.gov report. We are going through this and we're scouring it to make sure it is right. And now this.
KRAUTHAMMER: When they speak seriously about this and how precise all of this is — 640,329 jobs saved — a comical precision, and then it turns out a lot of these are fictional jobs in fictional districts, what happens is an administration has already been satirized on "Saturday Night Live" as do-nothing, is now going to be seen as an administration that cannot even do-nothing competently.
BAIER: Did you know you were paying China $50 billion, tax dollars, a year just in interest on your debt to that country?
We'll talk about that situation when we return.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: So far, China's partnership has proved critical in our effort to pull ourselves out of the worst recession in generations. Given that interconnection, I do not believe that one country he's success must come at the expense of another.
HU JINTAO, CHINESE PRESIDENT (via translator): We believe that now the world economy has shown some signs of stabilizing and recovering, but the foundation for this recovery is not firmly established.
(END VIDEO CLIP)
BAIER: There is concern in China about the U.S. economic situation. Why? Because some analysts put the U.S. debt to China at about $1.3 trillion U.S. dollars, most of that in U.S. treasuries.
What about all of this? We're back with our panel — Nina?
EASTON: Well, the biggest critic of the Obama-level spending is not John Boehner, believe it or not. It is the Chinese, and they have been expressing this concern going way back this summer when they met with top officials.
The difference between John Boehner and the Chinese is that they have real power over us. A lot of investors talk about overseas, investors talk about the possibility of what they obliquely call a "debt event" as it being a real national security possibility.
What if the Chinese suddenly led a stampede of investors out of U.S. treasuries, the value of the treasuries fell and our country essentially went bank bankrupt?
There is that possibility. It is remote. And it is unlikely the Chinese will do that at this point because it affects their own holdings. But they do have tremendous power over us.
BAIER: Explain the $1.3 trillion. You have about $800 billion in U.S. treasuries. What is the rest?
EASTON: The rest is agency debt, like Fannie Mae, Freddie Mac, those sorts of agency holdings.
BAIER: That's a big hole.
EASTON: It's a big hole. It is a big hole to fill.
The other thing is the lectures, we have heard a lot on this, on "Special Report" tonight about the lectures that the U.S. is giving China about their economy. Well, the Chinese view us as this profligate economy where, first of all, the private sector and households are living way beyond their means and now the government is living way beyond their means.
So they think they have the upper hand on this moral argument.
KRAUTHAMMER: Look, the reason you have this odd alliance between Republicans and Chinese on health care reform is that the Chinese holding all this debt they know that eventually the United States will take care of it in one way. It's not going to be default. We are not Argentina. It is not going to be a repudiation of debt the way that Cuba did.
It is going to be in inflation. We will inflate our way out. It takes only four and a half years of 10 percent inflation to actually cut the value of the dollar in half. The Chinese are worried about this.
Now, the existing amount of debt, over $1 trillion or so, is large, but it's not out of control. It is about a tenth of our GNP.
What the Chinese are worried about is the ambitious social agenda this administration is going to add hugely onto our debt, starting with a new entitlement in health care reform which could add trillions to national debt, even our projections today.
In the absence of health reform are going to be $9 trillion added in debt over a decade. They are holding all of that stuff, and that could ultimately wipe out all their holdings.
That's why the Chinese are worried and that's why Republicans are worried and that's why Americans are worried about this incredible spending that the Obama administration has on its agenda.
HAYES: You know you're in trouble when you're being lectured by communists about the size and scope of government. That's never a good day.
I think that actually having one-tenth of your GDP as a deficit in 2010, which is the projection, is quite large and I think deeply troubling. I think that's one of the main reasons that you're seeing this kind of talk from the Chinese and concerns about devaluations.
What is interesting was going into this week the Obama administration had clearly set out to message on deficits. There was a big piece in Politico talking about his commitment to reducing deficits. He said it in his remarks the other day.
And, again, this goes back to what we talked to about on the first panel: There is a credibility problem here. The things that you are proposing are new heights. I mean, reports today of $12 trillion debt for the first time.
You are talking about deficits into this political reality that makes people think does he even understand what he's talking about?
BAIER: Nina, last word — does the president come out of this trip with anything in regards to the Chinese?
EASTON: Well, he didn't come out with a climate change agreement. And he's not coming out with anything on currency or trade. But in fairness, you know, the previous administration didn't get much on currency or trade out of the Chinese either, so they're tough partners.
BAIER: We'll see what happens with Iran.
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