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Special Report

Fallout from Debt Deal; President Pivots Back to Jobs

This is a rush transcript from "Special Report," August 2, 2011. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIPS)

PRESIDENT BARACK OBAMA: It shouldn't take the risk of default, the risk of economi c catastrophe, to get folks in this town to work together and do their jobs.

SENATE MINORITY LEADER MITCH MCCONNELL, R-KY.: The only reason we're talking about passing legislation that reins in the size of Washington instead of growing it, is because the American people believed they could ha ve a real impact on the direction of their government. They spoke out and we heard them.

SENATE MAJORITY LEADER HARRY REID, D-NEV.: Neither side got what they wanted. Each side laments some of the things we had to give up. But that's the way it is.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: President Obama today as you see here signed the debt limit extension in to law. That happened after a vote in the U.S. Senate, 74-26.

With all the talk about who are the winners and losers in this debate, one thing is clear -- the Tea Party is mentioned a lot. Democrats mentioned it many times with words like "terrorists" or "extortionists," even "suicide bombers."

If you take a look at this graphic here, this is the vote in the House. And you can see the Democrats in the House vote 95 yes, 95 no, three not voting. So 49 percent voted against the debt ceiling bill. There is the Tea Party Caucus, 34 yes, 34 voted for it. And 26 voted against it. So 43 percent of the caucus, the Tea Party caucus within the Republicans voted against it.

Just some perspective as we bring in the panel for the big picture, Steve Hayes, senior writer for The Weekly Standard, Charles Lane, editorial writer for The Washington Post and syndicated columnist Charles Krauthammer. Chuck, overall thoughts about the whole whatever it is that we watched in the past couple of weeks.

CHARLES LANE, EDITORIAL WRITER, WASHINGTON POST: Well, call me crazy, but I'm willing to say the cup half full. And here's my reasoning. We have gone through a brutal debate. But it did end in a compromise. The debt ceiling meltdown scenario got avoided. The debate sharpened and crystallized. It had penetrated the country's consciousness. The public is really focused on the nation's financial conditions in a really serious way. And yes, there were endless antics in Washington, but I think the issue is now squarely confronting the country in a very healthy way.

BAIER: Steve, late today Moody's came out and reaffirmed the government AAA credit rating but gave at it negative outlook. One of the concerns was the joint committee that the bill sets up. Here is a quote, "while the combination of the Congressional committee process and the automatic triggers provides a mechanism to induce fiscal discipline" -- this is actually not the quote. But "attempts at fiscal rules in the past have not always stood the test of time."

Basically, this quote is that they are skeptical of the second part of the bill, the joint committee, that would be responsible for finding $1.5 trillion in additional cuts.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I think there are great reasons to be skeptical of commissions in Washington, D.C. The reason that people are arguing that the committee, or the special committee, might not work is because it's designed to produce a deadlock. If it doesn't produce a deadlock, it triggers these additional cuts that would bring in this additional revenue.

The key to the commission working is getting the right combination of people who will actually do something to produce this without having to get to that stage.

I think this is a problem. You've got people on each side, Republicans and Democrats who are saying we want people to press our case as hard as the possibly can. On the Republican side you say, you have conservatives saying I don't want anybody who's open to tax increases, which is a position I understand. On the left, you had talk today -- basically all day -- about the need for Democrats to do nothing but push for tax increases. I think that is why it look like a stalemate and we're going to be following it closely. To me it takes the eye off the ball of the bigger picture, but it is what it is.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The fact that we will be looking at this, we will hear about this for six months and come to a head in a year and drama will return and it reinforces the point that Chuck made that this is now -- it isn't only in the national consciousness, it's now on the agenda again and again.

I think one of the great achievements here is the debt ceiling is no longer a nullity. You know, the Democrats are arguing why are we doing this? We raised it 78 times since 1960 without anything happening. Yes, that's the point. That's why we're in the trouble we are today. We went 40 years ignoring what really was happening every time we raised the debt ceiling.

Well now because of the "Boehner rule," which he invented on his own out of whole cloth in that speech he gave at the New York Economic Club a few months ago, in which he said a dollar of the debt ceiling increase has to be matched by dollar of spending cuts, which Jay Carney is right there is no logical connection, but now a political, indelible connection. Every time the debt ceiling comes up there is going to be a debate in the country. This is a real success.

BAIER: Meanwhile, while the economy is weak and fragile, now the talk, the focus again pivots to jobs and finding jobs and trying to figure out the economic situation on the job front. The president mentioned it today. He has mentioned this numerous times before. Take a listen.

(BEGIN VIDEO CLIPS)

OBAMA: Jobs must be our number one focus in 2010.

That's why the administration remains focused every single day, pushing this economy forward.

All these investments in education, innovation and infrastructure will make America a better place to do business and create jobs.

And making sure jobs are available is the first thing I think about when I wake up in the morning, it's the last thing I think about when I go to bed each night.

Not a day goes by I'm not focused on your jobs, your hopes and your dreams.

And in the coming months I'll continue to fight for what the American people care most about, new jobs, higher wages and faster economic growth.

(END VIDEO CLIPS)

BAIER: The last one was today. Can that happen? He said it before, Chuck.

LANE: Well, it's interesting how the jobs discourse changed a little bit at the White House. If you notice, one of the reason that Gene Sperling on your show gave for being in support of deal it would get the Moody's downgrade monkey off our backs. That is not a Keynesian argument. That is an orthodox economic argument that we have got to keep the bond markets happy. That is the big condition to create stability and promotes jobs. So they're not only shifting their argument here out of necessity.

I think what you are hearing from the president is campaign speech. That unemployment number hangs over his head and threatens his reelection. He has to show the concern 24/7 and that's why he says those things.

BAIER: Steve, are Republicans vulnerable on the point that all of the focus on the debt ceiling and the debt and deficit overall they have not been producing jobs bills out of House. Are they vulnerable on that at all?

HAYES: No, I don't think so. I mean, if you look at the Paul Ryan budget that was passed in the House it had a growth agenda. Part of the Paul Ryan budget that very few people talk about is the growth agenda and tax reform proposals. So I don't think they are particularly vulnerable.

But what is striking to me about what the president is saying he is talking about the need to create jobs, thinking about jobs and given speeches about jobs and talking about green jobs. What exactly now is his plan? It's fine to say you're concerned about jobs, that we need to create more jobs, but you just can't just say we need to create more jobs. You have to tie it in to a plan. It's unclear he has one at all.

BAIER: Clearly, politically stimulus package is not viable.

HAYES: It's totally politically dead. But he hints at it. That is what is interesting in the rhetoric if for three weeks when he talks about the need to get ahold of the debt and deficit issues, problems -- particularly when he's addressing progressives -- he says we need to do to spend more and invest more in our children. The president is --

BAIER: Get it on the table.

HAYES: -- we've got slow down spending to get the issue out of way so that we can start spending again.

BAIER: Charles?

KRAUTHAMMER: An index of how spent he is sort of intellectually on the issue of jobs is the campaign speech he gave today -- the fourth in 10 days -- in which he pivoted. He did his pivot and he announced five initiatives. Listen to them: Payroll tax extension. We already have that. Unemployment insurance extension. We already have that. Trade deals. He had it for two-and-a-half years and it's done nothing. Spending, more infrastructure, perennial, more dams and bridges and roads. And the last one I love -- here is the real new one to get us out of the doldrums: patent process reform. Now that I think is the key to economic explosion, getting us out of 9 percent unemployment.

He's out of bullets and arrows and looking for stones on the seashore. And it shows he may want a jobs agenda and may want to do a pivot. There is nothing left in the cupboard. He did a huge Keynesian gamble and it failed.

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