This is a rush transcript from "Special Report," September 16, 2011. This copy may not be in its final form and may be updated.
BRET BAIER, HOST: Before the break, we asked you our question of the day. Which scandal currently ongoing could be the mos t damaging for President Obama? And 23 percent of you said operation Fast and Furious, six percent said LightSquared we told you about it today, and 71 percent said Solyndra, that is the solar panel deal. That's our vote.
Every week another vote takes place, your choice online in the Friday lightning round. This is it. This week, Paul Krugman won with 45 percent of the vote. We're back with the panel. It centers around this quote that Krugman had in a blog post after 9/11, quote, "The atrocities should have been a unifying event but instead it became a wedge issue. Fake heroes like Bernie Kerik, Rudy Giuliani, and, yes, George W. Bush, raced to cash in on the horror."
Back with the panel. Steve, this raised a lot of eyebrows. Defense Secretary Rumsfeld ended his New York Times subscription. It caused a stir.
STEPHEN HAYES, THE WEEKLY STANDARD: Well, I thought it was a disgraceful column but it stood out not so much because of what Paul Krugman said in this particular column. It's basically what we get from him every time he writes a New York Times column. I'm a firm believer you should read everybody on all sides of these issues, try to understand as many different perspectives as you can. I haven't read Paul Krugman in a couple of years precisely because of these kinds of columns.
KIRSTEN POWERS, THE DAILY BEAST: Yes, I actually like a lot of the things he says substantively. I agree with his ideas. But he often sort of veers into almost hateful, the way he talks about opponents, I guess you would say. I don't think everything he said was horrible necessary. I think the timing was especially bad. This is not the type you say around the anniversary of 9/11. Perhaps if he had written it in the middle of the year or something it would have been written off as partisan. But I don't think it was appropriate.
JOHN STOSSEL, FOX BUSINESS NETWORK: In New York, I'm on the upper Westside where the lefties are and where all the New York Times writers work and the Bush hatred is just pervasive. This is just water I swim in. He is filled with hate. I'm just as upset today he says that Milton Friedman's "Freedom to Choose" is now freedom to die. We libertarians don't care if people die. He's a little over the top. But I read him. I figure, if he is that upset the our side must be making progress.
BAIER: Let's talk about education in America. You have a special this weekend. And tell us about it and what the point of view is.
STOSSEL: Cool new things are happening, finally, outside the smothering government monopoly of public education. Four years ago I did a show with "20/20" called "Stupid in America" talking about kids are trapped. Everybody says we're not funding education. We don't care about it. We are spending three times as much -- adjusted for inflation -- in the last 40 years and scores are flat. Spending, flat, made no difference.
Now with these charter experiments, and the beauty with them is if they don't work they go out of business. If they work, more of them happen. I was in fourth grade classrooms where I would say to kids school is boring. They'd say no, it's not, Mr. Stossel. It's exciting. Reading and math it's difficult. It may be difficult but reading is rocking awesome. They are excited about going to school. I've never seen that before.
BAIER: That movie "Waiting for Superman" opened eyes around the country.
STOSSEL: And what my special is what happened after that. Competition has made everything better. Cars are better. Medicine is better, even though that's half crippled by government. Computers, we all -- everything got better than education because there wasn't competition. It's not allowed in a government monopoly. That's ending.
BAIER: What about the push on the issue of education in this city from the administration up on Capitol Hill?
POWERS: The thing about this whole debate that bothers me is that, yes, there are charter schools that are good in this city. Charter schools have been a big focus. But there are a lot of great public schools. And so we focus so much on the idea that the public school system is broken and the charter schools are great. Well, there are bad charter schools and there are a lot of excellent public schools.
So the solution isn't to forget about the public schools and have charter school for a few people and everybody else, leave them behind if they're in the in an affluent district, because, let's face it, schools in affluent districts, public schools, are great schools for the most part.
STOSSEL: But I didn't mean leaving them behind. Sure, some are great. But the bad ones never go away. It's not like McDonald's is good food, they have the formula down. It's not like everybody doesn't have access to it. The good idea is expand. It's like at the post office, they say mail your package early. Does any private business ever say we want to turn your business away, we're overwhelmed? No. Only government doesn't adjust to meet the needs of customers.
BAIER: Steve, obviously, there is a big union element to all of this.
HAYES: Yes. Well, for a long time, the working assumption was teachers unions were there and made the arguments they made on behalf of students. But that is not actually the case. Teachers unions make the argument on behalf of teachers. While a lot of individual teachers care about students and many of them get in education because of that, the unions don't. That is not their job. Their job is to protect teachers, and too often they protect bad teachers in failing schools. Who is punished in those situations? Students are.
BAIER: I want to go down the row, and our question online was which scandal currently ongoing for the administration is the toughest. Quickly, down the line, for the administration, politically, what do you think?
HAYES: Well, I think this Solyndra scandal is interesting because you have paperwork. It fits in a broader discussion of the stimulus. So if there is nothing new learned now forward, it will be a huge political problem because it fits the narrative about stimulus being wasteful, ineffective, and corrupt potentially.
POWERS: They're all bad actually. The one that hasn't gotten as much attention, the light squared one, I think will probably get a lot worse. So we have the administration pretty clearly pressuring someone, a general, to give testimony that he didn't believe and very far removed from what he believed. That is very problematic.
STOSSEL: I'm most bothered by Solyndra. It's crony capitalism. People trash capitalism, but this is crapatalism. If you have $3.8 trillion government spending that much every year, businesses will line up and manipulate and politicians want for money to run. There will always -- I think what is legal is the scam, not what may be illegal.
BAIER: Thank you for joining us. Good luck on the special this weekend.
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