President Obama Brings Special Guest to Job Summit

The following is a rush transcript of the July 14, 2010, edition of "Special Report With Bret Baier." This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

THOMAS DONAHUE, U.S. CHAMBER OF CO MMERCE PRESIDENT: Taking collectively, the regulatory activity now underway is so overwhelming and beyond anything we have ever seen that we risk moving this country away from a government of the people to a government of the regulators.

WHITE HOUSE PRESS SECRETARY ROBERT GIBB S: The Chamber of Commerce has a different approach to certain issues. But we have different responsibilities. The president, we have not in any way instituted a regulatory structure that is in danger of doing anything like that.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: The president, the vice president and a special guest, former president Bill Clinton, met with business leaders at the White House today. The former president called in to help with this particular group as you see him there, talking to Carol Browner.

This happened on a day when obviously more polls are coming out showing that the American people's confidence in this administration's handling of the economy is pretty low or at least dropping from what it was.

We're back with our panel tonight, Steve Hayes, senior writer for The Weekly Standard; Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Steve, first let's talk about Bill Clinton being called in to meet with the business leaders.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: It's interesting. It's clear the Obama White House is trying to trade on the distant memory of the Clinton administration and the relatively successful economy he presided over in the late 1990s.

I think it's an irony certainly, given the fact that we've seen Clinton and Obama being at odds going back to the campaign. There were some nasty fights in the campaign. President Obama brought Hillary Clinton in and things settled down. We have seen Bill Clinton involving himself in races in opposition to the White House in Arkansas and the Colorado Senate race.

It's an interesting time to call back on Bill Clinton and ask him to stand there for a photo-op, like he did with Warren Buffett today.

BAIER: Mara?

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I got a snarky e-mail from a Republican operative, I think the headlines was something like "President Obama taps Bill Clinton to be president." That's not exactly what is happening, but Bill Clinton can be useful.

The Obama White House made a point of trying to distance itself from anything that the Clinton administration ever did. But the fact is -- or any tactic or strategy they used. But the fact is that Bill Clinton is popular in many parts of the country where Barack Obama is not, so he can go in states and congressional districts and campaign like he did in Arkansas.

He also, the administration is actually chock full of Clinton administration veterans who all thinks he should be used more. And it looks like he's going to be.

BAIER: But is this a sign of weakness, of reaching out at a time when they are going in the wrong direction?

LIASSON: I think there's a lot about Bill Clinton's legacy that Barack Obama is going to be turning to more and more, especially as his attention moves from expanding the government to shrinking it and solving the deficit problem.

BAIER: Charles, Vice President Biden out again today saying the administration is on track after the stimulus to save or create 3.5 million jobs.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: As usual, a number invented out of nowhere. I'm not sure anyone believes it. We were told $1 trillion would keep us from eight percent unemployment and now we're on 9.5 percent. These are all fictional numbers.

I think what we heard from the Chamber of Commerce is extremely important when they talk about overregulation. The Wall Street Journal points out that financial reform bill that is going to pass, 2,300 pages, will create 243 new regulations to be written in the future, lobbied, probably litigated in court. It will create tremendous uncertainty. It is going to change practices from the heavy hand of government.

And when you add that to the thousands of pages of health care and the fact nobody knows today what its effects it will be, it has a terrible chilling effect on capital if you don't know what the health care costs will be or the cost of borrowing the money. It creates a capital strike, which is what everybody is talking about.

BAIER: At this hour, House Democratic leaders are meeting at the White House -- they've been there an hour right now. This comes after a rift in the Democratic leadership at the White House after what Press Secretary Robert Gibbs said over the weekend about possibly there being enough seats up to lose control of the House.

Here is how Congressional Quarterly wrote about a meeting with House Democratic leaders, quote, "Things heated up as Pelosi, the House Speaker, jumped in and blasted Gibbs for making politically inept comments. According to one source, 'it was bad.' Another source said, she was like, 'I don't appreciate it. I don't know who this guy is. I've never met him before. And he's saying we will lose the House?' She was very upset." This is how Gibbs responded today at the briefing.

(BEGIN VIDEO CLIP)

GIBBS: Of course the opinion of the speaker of the House matters to me. It matters to Democrats in Washington and throughout the country. I have not spoken to the speaker. I think we will retain the House and Senate.

(END VIDEO CLIP)

BAIER: Mara, a different tone? And this meeting is continuing at this hour.

LIASSON: I think the White House thought if they state the obvious, that you could mathematically lose the House, and that would be wake-up call for the apathetic, un-energized Democratic voters. But it had the opposite effect.

These kinds of statements can have a self-fulfilling prophecy, and members of the House felt it could dampen fundraising and kind of send a signal that Democrats are giving up too soon.

So Nancy Pelosi was pretty angry and that was a big dis to say "I don't who this guy is. I never met him before."

(CROSSTALK)

LIASSON: And of course, Robert Gibbs was asked about it --

(CROSSTALK)

LIASSON: Look, when times are tough, it's very hard for the struggling party to avoid turning themselves into a circular firing squad. That's what is happening now. This is a very tough environment for Democrats. And there is a lot of grousing, and I think more than is really justified on the part of congressional Democrats complaining that the White House isn't doing enough for them.

It is in President Obama's complete political interest to keep as many Democratic seats in the House as possible.

BAIER: Charles?

KRAUTHAMMER: I'm not sure his interests are congruent with Pelosi's. She wants to keep her job. She wants her members in their jobs as well. Obama's objective is reelection.

He had 500 days in this term to enact a very aggressive ideological agenda. His second shot is not going to be until 2012, and nothing will happen whether he keeps the House in the Senate or not. It's going to happen in the second term. His eye is to reelection. When Gibbs spoke about losing the House, it was lowering the expectations. So if it is a squeaker and they keep the House, Obama is going to look good.

BAIER: We'll weigh in on this in the online show, I promise you. Much more on this topic. Just log on to our homepage, FoxNews.com/specialreport. Get ready for tonight's edition of "Special Report" online at 7:00 right after the end of the broadcast.

Up next, the president uses the phrase that he reportedly had banned.

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BAIER: In a rare change from the administration policy, President Obama used the term "Radical Islam" describing the terror attacks in Uganda.

Talking to the South African Broadcasting Corporation on Tuesday, he said this, quote, "What you have seen in terms of radical Islam is an approach that says that any efforts to modernize, any efforts to provide basic human rights, any efforts to democratize are somehow anti-Islam. I think that is absolutely wrong. I think the vast majority of the Islam faith reject that. I think the people of Africa reject that."

It's something the administration rejected saying. In fact, this is the 86-page report of the Fort Hood shooting back in November and it doesn't have one word about Islam. In fact, it doesn't mention Major Nidal Hasan in the report either.

What changed? We're back with our panel. Steve?

HAYES: I think the big question is, was this just a slip or is it something that the administration decided to do as a matter of policy? The way it reads I think this is a change. We'll likely see the president and others in the administration say it again down the road.

I think it's a welcome recognition of the basic reality that we are with radical Islam and have been for nearly a decade. It was silly to the point of preposterous to continue to hear and see administration officials avoid the use of that term. That's what it is. So I think it's totally appropriate he does it.

It's interesting to me that it comes a week after there was this sort of an outcry about the comments that the NASA administrator made, Charles Bolden, about NASA outreach to the Muslim world.

BAIER: Let's put that up. Charles Bolden, the NASA administrator, told Al-Jazeera this about President Obama telling him his mission, quote "Perhaps foremost he wanted me to find a way to reach out to the Muslim world and engage much more with predominantly Muslim nations to help them feel good about their historic contributions to science and engineering."

White House Press Secretary Robert Gibbs said that he misspoke.

HAYES: Gibbs said that on Monday that he misspoke. The problem is a week ago the White House was asked about this and Nick Shapiro, another White House spokesman, said on the record, basically defended the comment. And a NASA spokesman, also on the record, basically defended the comment.

So if he misspoke it took a week to recognize he misspoke as the rest of the country was talking about how silly it was for NASA's main, foremost mission to be outreach to Muslim countries for basically a self-esteem project.

BAIER: So isn't there a change in the focus of Islam or radical Islam? It comes after the report from the Washington Institute. The Associated Press got a hold of it, and said it's a threat to national security not to recognize radical Islamist extremism.

LIASSON: I think that the White House recognized the threat from Islamic terrorists. I think that the language, the change in language, if you measure the administration seriousness in fighting terror by whether or not they use the word "radical Islam," yes, it is a big change.

I think that it's a small change. I think that it's fine to say radical Islam and make the distinction which the administration is trying hard to make -- we're not talking about Islam itself or Islam the religion, but about a certain subset of people who are distorting Islam purposes.

But I think that this president has been very active and energetic and he called more Predator drone strikes than ever before. He prosecuted the War on Terror pretty vigorously. What he hasn't done is adopted the rhetoric of his predecessor.

BAIER: Charles, you remember the back-and-forth that Attorney General Eric Holder had on Capitol Hill, asked repeatedly about radical Islam, and he refused to say it.

KRAUTHAMMER: I think the fact that the president used it now is evidence of the answer to the question, how long does it take for the president to acknowledge the blindingly obvious? The answer is 18 months.

I found a more interesting element in the interview when he said Al Qaeda doesn't respect African life. I mean, it doesn't respect Indonesian life, Pakistani life, Iraqi life, American life. What -- of course it doesn't respect African life, but it's not because of race. It doesn't respect anyone or any organization, any people who won't accept the extreme interpretation of Islam and the bringing on of the one rule under Sharia.

So the administration spokesman tried to explain that by saying what he meant about Africans is that Al Qaeda only uses them in lower-level operations.

BAIER: As cannon fodder --

KRAUTHAMMER: That's an odd statement. Is our complaint against Al Qaeda is not practicing affirmative action in executive hiring? That it's not diverse enough in the executive suites in the case of Pakistan? And if somehow it appointed a black African in charge of, I don't know, blowing up the girls schools, we'd be OK with that?

LIASSON: Charles --

KRAUTHAMMER: Look, this is ridiculous. It's bad enough if you don't use direct language. This is idiocy. And I say it with the utmost respect. I can't understand how you can have an administration official explaining that in those absurd terms.