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Special Report

Debt Commission's Dramatic Recommendations

This is a rush transcript from "Special Report," November 10, 2010. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

ERSKINE BOWLES, DEBT COMMISSION CO-CHAIRMAN: We tried to put a balanced approach out there. It takes $4 trillion out of the budget. We dealt with health care, we dealt with Social Security and we have put forward proposal that reforms the tax code. We lower rates. We take rates down to eight, 14 and twenty-three. We take corporate rate to 26, which makes America the best place to start and own a business.

ALAN SIMPSON, DEBT COMMISSION CO-CHAIRMAN: It's all there. We have harpooned every whale in the ocean and some of the minnows.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: Alan Simpson and Erskine Bowles, the chairmen of the president's deficit commission. They said they may be in the witness protection program after this proposal they've laid out there now. And it's already under attack.

Current House Speaker Nancy Pelosi put out a statement late this afternoon staying, "This proposal is simply unacceptable. It needs to be what is right for our seniors who are counting on the bedrock promises of Social Security and Medicare."

Bernie Sanders, a senator from Vermont, says "It's reprehensible to ask working people, including many who do physically demanding labor, to work until they're 69 years of age. It is totally impractical."

OK, here are the recommendations. We'll lay them out for you in graphic form. First of all, freeze federal salaries for three years. Eliminate all federal earmarks, cut foreign aid by $4.6 billion. Reduce spending by more than $1.4 trillion by 2020. Raise Social Security retirement age to 68 by 2050, 69 by 2075.

Now here's the tax part. The top individual tax rate will fall from 35 percent currently to 23 percent. The corporate tax rate would drop from 35 to 26 percent. However, it would eliminate all deductions. That's the deal. That's the proposal. It's the start.

That's where we bring in our panel tonight, Chris Stirewalt, Fox News politics editor digital, Juan Williams, Fox News contributor, and Julie Mason, White House correspondent for The Washington Examiner.

As predicted, these proposals were going to come under attack. Boy, they came under attack quickly, Chris.

CHRIS STIREWALT, FOX NEWS POLITICAL EDITOR-DIGITAL: Yes. This is exactly what liberals in the president's base talked about, were worried about, and probably why the president's commission waited until after the election to roll this out.

BAIER: What are the prospects? There are 18 members of this commission. And 14 of them have to vote on this to move it forward. What are the prospects of this moving on -- even though it's step one?

STIREWALT: I'd say very, very slim.

When you look at how diverse and divided this body is, it's unlikely that they are going to be able to get something as bold as this through. I think Simpson and Bowles are happy with themselves that they laid out something bold, but I don't think that's going to be what the appetite on the rest of this committee is.

BAIER: Juan?

JUAN WILLIAMS, FOX NEWS CONTRIBUTOR: You know, I think there is a good chance it does get through. Even if it doesn't get through, it begins to act as a model for what is possible for Senate and the Congress to look at in terms of deficit reduction.

Remember, the real purpose here is not the approval of the deficit commission, but getting something that the politicians feel they are insulated as a result of a commission's action, insulated from the voter anger by saying this is how we reduce the deficit.

The voters have been clear that deficit reduction is the number one issue. They want deficit reduction -- they want jobs also, but they want deficit reduction. They think the government is too big, spending too much money.

BAIER: But what about for Democrats who have been out on the stump for the past weeks and months saying don't touch Social Security. It's not in crisis. And then you see this commission, the president's commission come out and say we have to deal with this because it is in crisis.

WILLIAMS: I think there is a bit of a contradiction there. But remember, some people have been saying way back to when President Bush was looking to privatize some elements of Social Security, Social Security was in immediate crisis, and the argument was how far is it in the lock box and all this stuff we don't want to talk about.

(LAUGHTER)

But I will say this, if you are looking long-term, and this commission is looking long-term in terms of bringing down the size of the deficit, you have to take into account Social Security. It would be irresponsible not to do so.

BAIER: Julie, all of the statements out talking about Social Security and how reprehensible it would be to work until 69, to make someone work till 69. The 69 increases is not until 2075. Some of the people haven't been born yet.

JULIE MASON, WASHINGTON EXAMINER: We don't even know the people. Still, it's tough to do. And they are talking about scaling back benefits and reducing the cost of living adjustment, which is something you just really don't mess with, especially for Democrats.

This is going to be an incredibly hard sell. And I think the White House's response was very telling. Obviously, they are not going to get out in front of their commission. But they were extremely circumspect to say this is just a first step in the process.

BAIER: What about the taxes, kind of moving everything to the side, just having three tax rates and taking all the deductions off the table. It's a pretty bold move.

MASON: It is. It's an incredibly bold move, it's very consequential. And that's the thing: Washington is not built for bold, consequential moves. It's built for incremental moves. And if you put this a year out and they decide to do this and pass it a year out, then we're a year out from presidential election and that makes it even tougher for Congress to do anything of great significance.

BAIER: But Chris, optimists would say after this election maybe the American people are ready for the adult conversation.

STIREWALT: Well, there are very few optimists in this city from my experience.

(LAUGHTER)

BAIER: How about this table?

STIREWALT: I'm a rosy optimist.

(LAUGHTER)

But this table is still in Washington. And here is what I think. I think that there is an appetite for change. There is an appetite for addressing this problem, the looming problem that we all know is there. As much as Democrats talked about it on the stump -- you will raise and ruin Social Security, you Tea Partiers -- the truth is everybody knows that the system is badly broken.

Now the question is can you in the very short amount of time that is available to the president as he is starting his 2012 reelect put this forward and get out from under it? Because that is his real problem, this is a fundamentally conservative idea. If he rolls this one out right now, he is going to lose support in his base, so he has to get it moving and get away from it quickly.

BAIER: Last thing, Juan, the president said he wanted to hear what the commission said, December 1. We're expecting to hear whatever the final product is. And he said there will be some tough decisions. It seems like much of the pushback so far has been from his own base.

WILLIAMS: That's right. And you know, I'm not sure it's a bad thing if you think about the political calculus -- Chris was touching on this. If he has to say, you know what, I'm willing to take a risk and beating from my own base, it may be therefore that it gives him sufficient leverage to say to Republicans, you know what, you have to take a risk as well.

There are things in here I just don't believe will fly. If you do away with a house mortgage reduction, imagine the real estate industry's reaction. Imagine doing away with earned income tax credits for the poor. A lot of people --

BAIER: Yes, but if your tax rate is --

WILLIAMS: Is zero, what are you going to do, right?

BAIER: You're down to 23, 18 or eight.

WILLIAMS: Right, but on the other hand, you know what, look at what is here for the corporations -- lower tax rates. Look at what is here for individuals that earn. There are a lot of goodies in here. We have been focusing on some of the problems. But there are a lot of reasons to say maybe this is a starting point.

BAIER: I sense optimism at this table.

(LAUGHTER)

WILLIAMS: Take Chris' point to heart. This is Washington.

BAIER: Do you think Congress should raise the debt ceiling? That is the question on the homepage at FoxNews.com/specialreport. Vote in our online poll. Story on that tomorrow.

Up next, is Russia taking a step backwards?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ALEXANDER NEKRASOV, RUSSIAN JOURNALIST: There is no strong message coming from Washington, London, Paris, stop this. Stop attacking journalists, otherwise we will not deal with you.

DMITRY MEDVEDEV, RUSSIAN PRESIDENT: Journalists are people in the risk zone and the state should be more attentive to their professional activity because the task of the journalist is to tell the truth.

(END VIDEO CLIP)

BAIER: Nineteen journalists have been murdered in Russia since 2000, four have been attacked in the last four weeks alone. The most serious a reporter Oleg Koshin beaten Friday by two men outside of his apartment. We have video of one of these guys, somebody picking him up and helping him to his feet. Suffered fractures to the skull and legs, finger partially severed. He had to be put in an induced coma.

He wrote articles and others have written articles critical of the government about building a highway near Moscow. And this is a serious situation that the world is paying attention to now.

We're back with our panel. That's the question, first of all, Julie, is the world paying attention for something this egregious for journalists in Russia?

MASON: They are paying attention, they're always paying attention. But there is no pressure from Western leaders on Medvedev to really do much about it. He has done a better job of Putin of pretending to care that journalists are being killed. Of course, there have been no arrests, there's been no justice in the cases.

But the thing is there is no action behind it. The thing is he was here in June as you remember. You remember he had cheeseburgers with Obama and everything. This issue never came up. He talked about wanting more democratic reforms in Russia and everything, but there is no pressure on him.

And here is a time to start applying pressure to Medvedev because he wants to diversify his economy, he wants the Western investment. Here is an opportunity for Western leaders to say, we'll invest in your country but you have to do some democratic reforms, including prosecuting the cases.

BAIER: Juan, the Obama administration has said they wanted to push the reset button with Russia. This seems to be a glaring example for somebody to speak out. The State Department talked about it a couple of times.

WILLIAMS: What strikes me here is the lack of the government action. You use a word "prosecute." Where the prosecutors? Typically absent. It's as if it's not happening. There is a real antagonism toward the press coming from first Putin and now the Medvedev government.

So when you look at the situation, it reminds me a little bit of what is going on in Mexico, where you see the state, especially a lot of the state governors, complicit with the attacks, turning a blind eye. In this case, you mentioned it has to do in large part with the construction of the highway near Moscow --

BAIER: In the two cases.

WILLIAMS: Right. That would take away a forest. So there is economic interest at play here, some of whom are supportive of Putin and Medvedev government.

They, therefore, are not being aggressive about going, about protecting the rights of journalists. It's just apparently not in their DNA at this moment. As a result their attempts to become more democratic, I think, are thin, if they have any substance whatsoever.

BAIER: Chris, according to those protecting the journalists, 18 of the 19 cases of journalists are unsolved to date.

STIREWALT: Well, look I think to Julie's point and pressure and how you get it to be different somehow in Russia, we are not in a position to pressure Russia right now. We're not in a position to pressure Russia on much of anything.

As a matter of fact right now, the president is in Korea where we are playing defense with Russia on what we're doing with our currency. We are playing defense with Russia on a lot of issues right now. And we're not in a position, seemingly, to engage them on this kind of stuff.

I think the other point here is it is time to be shed of the notion that Russia is Westernizing or modernizing. Russia is growing and becoming more powerful, but that's not synonymous with becoming more Western or becoming a more modern country or a more liberal country. And we have to reconcile ourselves to that.

BAIER: And quickly, you mention a trip that the president is on currently, there is a lot there about currency and trying to affect the world's view of the U.S.

STIREWALT: Yes. We're playing defense today in Korea. That's what's going on right now. The president is trying to push back against growing, powerful, emerging countries like Russia and Brazil who want to see us change our ways and are accusing us essentially of currency manipulation and doing bad things to the world economy.

So if we're fighting back against that, we're hardly in a position to be scolding on moralizing.

BAIER: As we're accusing China of currency manipulation as well.

(LAUGHTER)

That's it for the panel.

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