This is a rush transcript from "Special Report," December 27, 2011. This copy may not be in its final form and may be updated.
(BEGIN VIDEO CLIP)
STEPHEN MOORE, EDITORIAL WRITER, WALL STREET JOURNAL: We still have not found the bottom in the h ousing market. It's very distressing for Americans if for no other reason than the principle asset that Americans own today is their home. If that continues to decline in prices and values, that means Americans are feeling poorer, it means they are not going to spend as much.
(END VIDEO CLIP)
SHANNON BREAM, GUEST HOST: All right. Let's talk about it with our panel. A lot of economic news in today, Jonah, Kirsten, and Charles. Housing numbers that Steve Moore reared to there. The index showed prices dropped in October from September in 19 of the 20 cities tracked. Jonah, what do you make of the news?
JONAH GOLDBERG, AT LARGE EDITOR, NATIONAL REVIEW ONLINE: I think the news is generally, it's not terrible news, but it's not good news either. I think this is basically as good as it gets for as far as the eye can see. It gives the Obama administration the ability to say hey it's not getting worse, which I don't know is that great politically, and they keep up with this canard that they stopped the next great depression. But I don't think you're going see anything like the Reagan era explosive growth that got Reagan to his landslide victory in 1984, and that's probably bad news if we're talking about the politics of it.
BREAM: There was some good news. Consumer confidence is up. It's at the highest it was since April. What do you make of that, Kirsten?
KIRSTEN POWERS, COLUMNIST, NEW YORK POST: I think that there has been a lot of good news, retail sales are up. The last unemployment numbers were good. And I agree with Jonah, I think most people look for and it don't see it going gang busters, they see sort of a steady improvement but not really turning around completely. In this kind of economic crisis, that's not that surprising. The question is whether or not the Obama administration can convince people, look, just don't change teams right now because we have got you on the right trajectory, it's just going to take a little time to get there.
BREAM: They predict that the unemployment rate will be at 8.4 percent probably around the November election. That's still not a great number, but he is showing that we are moving in the right direction, does the president have a strong argument, Charles, for keeping him around?
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: You could have a slight upward trajectory but it's really a flat trajectory. At least it's not at a downwards. But if you go to 8.4 percent of unemployment, that's really in a range that has never re-elected a president since, I think, 1936.
The problem is the projection on growth on the expansion of the economy is about 2.5 percent. In 2011 it was under two percent, and that essentially is flat. It doesn't supply enough employment to actually bring the rate down.
And ironically if there is an increase in economic activity, the first effect is that people who have dropped out of the workforce are going to start looking again and that will raise the unemployment rate the way it's calculated. So I think it looks as if the next 11 numbers are going to be relatively flat, and on Election Day we will be running essentially on what we have today.
BREAM: Jonah, how much success do you think the White House will have with the argument that they have been trying to get things done and it's a do-nothing Congress that has stopped them at every turn.
GOLDBERG: I know they want to make that argument. There's a couple of problems. First of all, the whole idea of a do-nothing Congress goes back to Harry Truman, who ran a kind of vicious campaign that you did not pull off in the day of modern communications. And he also had basically a four way race in 1948. So running into the do-nothing Congress the way Obama wants to do it has never been done before.
Moreover, Harry Reid controls the Senate and is the source of a lot of this gridlock and partisan wrangling in Washington. So I think it is kind of a muddy argument for him to make, especially when you go back and realize that we are now into the third year of the beginning of the recovery summer. That's sort of a ugly place for him to be.
Historically, people don't buy those kinds of arguments. They look how they are doing and other neighbors are doing. And the rest is just verbiage from Washington. I would be hard pressed to believe you could make a selling case on that.
BREAM: But Congress has the lowest approval rating of anybody just about on the planet, certainly here in Washington. Kirsten, is that going to be a selling point for him if we are talking about eight percent to 10 percent approval ratings.
POWERS: Congress typically has low numbers, maybe not this low, but they're never high. You see individual congressmen who have higher numbers and the overall body gets low numbers.
A presidential election is a referendum on the incumbent president. There is no getting around that. Now, can he say, if I had a different Congress maybe I could do more, fine. But then that raises the question of why can't you work with these people? Bill Clinton worked with Newt Gingrich. There are answers to those. But I'm just saying this is what people think when they hear that. It's like, we voted for you to be in charge.
I think it's better for him to actually just argue aggressively that this is a really hard situation to get out of. It does take time, we are on the right trajectory, and focus on that and rather than try to blame it on somebody else.
BREAM: Charles, how worried do we have to be about the impact of what's going on in Europe?
KRAUTHAMMER: It could be ironically that two people on the planet will decide about who becomes our president next year. Angela Merkel, if she is generous enough with German tax money to float the lazy southern Europeans at least until American Election Day. If she does that I think we will probably be OK. If she doesn't and you get a precipitous collapse of Spain or Italy or a retraction of credit as has happened in 2008, you get a depression or at least a severe recession in Europe and rebound here also a recession.
And the human on the planet who is going to effect this election is Ron Paul. If he decides he runs as an independent candidate, I think Obama wins hands down. So ironically I think a lot of this is out of the hands of the people that we expected to be in. It's the hand of one Republican candidate and a German chancellor.
BREAM: Looking beyond the U.S. borders, was anybody surprised about the decision that we're going after China about their currency issues, and the fact that that does resonate with labor unions, a strong backer of the president.
GOLDBERG: Yes. It's funny you bring up China, because I was going to say that's the other leg of this possible stool. We are already seeing the housing bubble of China pop. No one knows what happens when the economic engine of China, which has been chugging at what, eight percent a year. When that starts that stall out that could be scary as well and could have knock-on effects in Europe and all the rest. There are a lot of things off of Obama, out of Obama's hands on the economy and is he going to get the blame for them because that's what happens to all presidents.
BREAM: Kirsten, final word to you.
POWERS: I actually agree with what Jonah says.
BREAM: We had disagreement, we have some agreement, we have some history lessons, and we are good to go. Charles, you look like you have something to say.
KRAUTHAMMER: Well, the battle of Hastings --
BREAM: All right, that's it. Close up your history books for now. Thank you, panel.
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