Updated

This is a rush transcript of "Special Report With Bret Baier" from August 4, 2010. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIPS)

FRED SAINZ, HUMAN RIGHTS CAMPAIGN: We want the same legal protections that any other American family enjoys. We believe that we are an important part of the fabric that makes America the great nation that it is and we believe that we should be a part of every single aspect and a part of every institution of American society.

SEN. JIM DEMINT, R-S.C.: What one judge did in California has overruled millions of Americans in 39 states.

All Americans should be treated equally, but that doesn't mean that you change the institution of marriage.

(END VIDEO CLIPS)

BRET BAIER, ANCHOR: Supporters of California's gay marriage ban filed an appeal today with the Ninth Circuit Court of Appeals after that federal judge yesterday ruled striking down the voter approved law, Proposition 8 in California.

What happens next? And what about the politics surrounding this whole issue? Let's bring our panel: Steve Hayes, senior writer for The Weekly Standard; we welcome Julie Mason, White House correspondent for The Washington Examiner, and syndicated columnist Charles Krauthammer.

Charles, let's start with the ruling and the impact of this ruling and what it means.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It's obviously a very sweeping ruling and it was a great day for gay marriage advocates. It was victory, but I think it's a Pyrrhic victory. It's going to end up in the Supreme Court. It's quite likely the Supreme Court will reverse this.

What I think we're doing here is recapitulating the history of abortion, when in the early '70s the judges decided to wipe out all the laws of the land on abortion and say that abortion is legal. Now, I'll read you what Ruth Bader Ginsberg, Supreme Court Justice, a liberal who supports legalized abortion, said that before she ended up on the courts: "Roe v. Wade halted a political process that was moving in a reform direction and thereby prolonged divisiveness and deferred stable settlement of the issue."

This is exactly what has happened here with gay marriage.

At the time abortion was being legalized in New York and elsewhere and we ended up with a large number of Americans who felt left out with no democratic means of changing the ruling. That's happening on gay marriage.

Look, Prop 8 passed by 52 percent of the vote. The same referendum eight years earlier in the same state passed with 62 percent. It's obvious where the trend is headed and over time states are legalizing gay marriages is happened the right bay by legislative action in D.C. in Maine -- I'm sorry, in Vermont and New Hampshire.

And that is how it ought to be done. Otherwise we're going to have embittered the country and there's going to be no recourse in the vote in the legislative assemblies because of a ruling by fiat of judges. And that will be divisive and it will postpone a stable settlement of the issue.

BAIER: That's the legal side. Julie, let's talk about the political side of this for President Obama. His senior adviser David Axelrod was asked about the president's stance on same-sex marriage and specifically Proposition 8 this morning:

(BEGIN VIDEO CLIP)

DAVID AXELROD, SENIOR WHITE HOUSE ADVISER: The president opposed Proposition 8 at the time. He felt that it was divisive, he felt that it was mean-spirited and he opposed it at the time.

(END VIDEO CLIP)

BAIER: But in June 2008 in an interview with Jake Tapper, as you see here, this is what he said in the exchange. Tapper asked, "Do you oppose same-sex marriage?" He says "Yes." "Do you think that the fact this is going on in California, does it cause you to rethink the pledge to repeal the Defense of Marriage Act?"

"No. You know, I believe that marriage is between a man and a woman. I also think that same-sex partners should be able to visit each other in hospitals, they should be able to transfer property, they should be able to get the same federal rights and benefits that are conferred onto married couples.

"And so, you know, as president my job is to make sure the federal government is not discriminating and that we maintain the federal government's historic role in not meddling into what states are doing when it comes to marriage law. That's what I'll do as president."

Here's where Tapper asks, "Does it bother you what California is doing?" Answer, "No."

Julie?

JULIE MASON, THE WASHINGTON EXAMINER: This is a tough one for Obama, Bret. Obviously he is for civil unions but he is not for gay marriages. It's a tough one because for November, the Democrats are trying to reenergize their base, they are trying to bring those people back out.

And now we have gay marriage proponents sitting with environmentalists on the sidelines getting nothing from Obama and it's not energizing the base.

He's tried to walk a middle distance on gay rights. Like I said, he's for civil unions. He talked about the Defense of Marriage Act, but the administration hasn't really done anything to oppose it, to really fight it.

And also on "Don't ask, Don't tell," they kind of pushed that off until after the elections. So this middle ground that he cuts on this and other issues really isn't helping him. And you see where Republicans look like they are going to try to make this an issue.

Where Obama has an advantage is people still care more about economic issues than this for the fall.

BAIER: Sure. Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, I'm not sure it's much of advantage for him at this point, that people care more about economic issues.

Look, what's interesting is looking at the president's supporters on this. And I think we saw that from the comment from the spokesman from the Human Rights Campaign. There is a wink and nod understanding that the president actually does favor gay marriage but he just can't say that he favors gay marriage. And if you get into discussions with Obama supporters about that, they'll talk about it quite openly. Well, look we really think he supports it but he can't say it because it's not politically tenable.

As to the legal questions, I agree with Charles in his analysis. It's clear that the trends are heading in this direction. But I think even people that support some kind of institutionalizing of committed same-sex relationships -- myself included -- you have to have reservations about the way that this was done. And to call this "sweeping" I think is an understatement. If you read through the opinion there is a lot of soft social science that the judge seems to be relying on and at times he makes these broad statements that seem without any anchor in reality or in the law.

So I think it's a troubling trend in the fact that the judge is imposing his views on what's happening.

BAIER: Charles, but in the appeal in the ninth circuit, the history would lean toward the judge's ruling being upheld?

KRAUTHAMMER: Absolutely and then it will end up in the Supreme Court.

What's so ironic about all our discussion about where Obama stands, is that he is now irrelevant. It's now in the hands of the courts. It doesn't matter what the president thinks, what the Congress thinks, what the people think. It's going to be decided by a bunch of judges on the ninth circuit and ultimately by the nine on the Supreme Court.

That's what is wrong with doing it this way. And what Obama can say, whatever he thinks about it is irrelevant, what is important to his left is that he has now appointed two justices who will rule the way he wants and they want. So that's his power and that's how it's exercised.

BAIER: And Senator DeMint makes the point that running, Julie, quickly, in the fall to remind voters about the judicial appointment choices.

MASON: Sure, absolutely, this is an issue that works for the Republicans advantage, not to the Democrats, certainly not to Obama. And respectfully, I do think it plays a role in November even if the issue is decided later.

BAIER: Log on to our homepage at FoxNews.com/SpecialReport and let us know what you think and what to talk about in Friday's lightning round. You can vote there.

Up next, we'll talk about just how dangerous the U.S. considers Iran.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIPS)

MAHMOUD AHMADINEJAD, IRANIAN PRESIDENT (via translator): The fate of the three countries are knotted together in different ways, and those who impose pressure on us from outside and who are unwanted guests should leave.

DANIEL BENJAMIN, STATE DEPARTMENT COUNTERTERRORISM COORDINATOR: Iran's financial, material and logistic support for terrorist and militant groups throughout the Middle East and Central Asia has had a direct impact on international efforts to promote peace. It has threatened the economic stability in the Gulf and has jeopardized the tenuous peace in southern Lebanon and undermined the growth of democracy.

(END VIDEO CLIPs)

BAIER: Afghan President Hamid Karzai in Tehran tonight with Iranian President Mahmoud Ahmadinejad and the president of Tajikistan, those are the three countries that Ahmadinejad is talking about, discussing building a stronger regional alliance on the same day the State Department puts out a report saying Iran is the biggest -- foremost -- state sponsor of terrorism.

What about all of this and how it plays out? Steve, if nothing else, the images were powerful today.

HAYES: They were. The timing is bad. And you had the president in a meeting with journalists and think tank-types talking about both sanctions and the effect they are having and the fact that the administration is being tougher on Iran with respect to sanctions, trying to squeeze with our European allies. And the administration thinks it's having some effect.

At the same time, though, he opened the door that I think should have remained closed when he talked about the United States and Iran having quote "mutual interests" unquote in Afghanistan. It is preposterous for him to be saying that right now.

We have reams of evidence of Iran supporting Al Qaeda, supporting Taliban, supporting like-minded groups in Afghanistan -- people who are killing our soldiers every day. Nobody disputes this. Nobody serious disputes this.

We saw in the WikiLeaks documents that came out last week more evidence of this, things that details about the extent of the support. And it's very troubling. If you are Ahmadinejad, and the president of United States is saying that we have mutual interests in Afghanistan, you are meeting with Hamid Karzai and thinking, what is the president of the United States saying? Does he not understand that we are basically at war with them in Afghanistan?

BAIER: Julie, what about the administration is saying on the one hand and doing on the other and what perhaps Hamid Karzai is saying and doing?

MASON: Karzai, what a scamp, right? He loves playing U.S. and Iran off of each other. He is upset about this early pull out of Afghanistan, so he is saying, oh, you are going to leave me, now this is going to happen.

And then on the other hand we have a sort of incoherent policy from Washington, you wonder if State Department is talking to the NSC because you have two such different messages coming out of the State Department and White House. So it's hard to suss out where the administration is going with, you know, overture of possible negotiations. It's hard to imagine what kind of constructive role Iran could play in Afghanistan.

BAIER: Charles?

KRAUTHAMMER: Look, Karzai is a cunning, unreliable ingrate. Let's start with that.

BAIER: OK, just lay it out on the line.

(LAUGHTER)

KRAUTHAMMER: However, you have to think in his terms.

When the Soviets left, the leader was Afghanistan was left behind, hid in the U.N. compound was ripped out by the Mujahedeen, tortured, lynched and left in a horrible position indescribable on television.

The Afghans remember that. And when they hear, as Julie and Stephen said, a) that the president yesterday is talking about negotiations with Iran over Afghanistan, cutting a deal and secondly hearing in the speech that the president gave in December that he is going to do a surge but we're going to begin leaving in July of 2011, when they hear all of that, they remember what happened.

And that's why, he's looking to cut his deal before the Americans leave. That is why it's all understandable. I think the original sin here was announcing a transition withdrawal date and also, these negotiations with Iran.

How can the president of Afghanistan, who lives in the region, and Iran is not going away, be more anti-Iranian than the Americans who want to open negotiations?

So even though personally he is not a sweet guy, you have to understand his motive.

BAIER: And Steve, as we talked about many times on the panel, there is very little nuance reading in the villages of Afghanistan when it comes to messages?

HAYES: Right, that's very true. Also they know what is going on on the ground. They see it every day. They understand the Iranian influence. They feel it. They see it every day.

BAIER: OK, that's it for the panel. Julie, thanks for joining us.