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Special Report

President Obama Sells July Jobs Numbers; Republicans Mull 14th Amendment Challenge

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 CLIP)

PRESIDENT BARACK OBAMA: July job numbers reflect in p art expected losses related to the census winding down. But the fact is, we've now added private sector jobs every month this year instead of losing them as we did for the first seven months of last year.

(END VIDEO CLIP)

CHRIS WALLACE, ANCHOR: President Ob ama putting the best face today on what are generally considered disappointing job numbers for July. And let's bring in our panel: Steven Hayes of The Weekly Standard; Jennifer Loven, chief White House correspondent for the Associated Press, and syndicated columnist Charles Krauthammer.

So, let's take a look at the July numbers behind the 9.5 percent overall unemployment rate. Let's put them up on the screen: As you can see -- 143,000 census jobs that ended, temporary jobs and were ended as expected. Private employers added just 71,000 jobs. Overall, 131,000 jobs lost last month.

Steve, what is all of that tell you about the state of this recovery?

STEVE HAYES, WEEKLY STANDARD: Well, I think the first thing to be said is that we didn't fall off a cliff. Things did not get dramatically worse in this -- in these job numbers. But they're not good. I mean, the 71,000 number is interesting, but we'll see if it's 71,000 when we look at these numbers in a month.

Remember, we just had the June number, the private sector June number revised down to 31,000.

WALLACE: Eighty thousand to 30,000.

HAYES: That's pretty --that's a pretty big drop. So, we'll see if the 71,000 number is what it is.

But the president -- I mean, I give the guy credit for going out and continuing to try to make the argument. I suppose he doesn't have much of a choice at this point, but he's getting to the point where he's, you know, he's touting these things that are slivers of good news against this vast array of bad numbers and bad news day after day after day. And he's out touting batteries or signs, or, you know, pointing -- trying to point to anything that can give him a boost. I think it's very tough and it's getting tougher.

WALLACE: Yes. Jennifer, political experts generally say that voters make up their mind several months before the election of what the state of the economy is. We're now several months before the election. I mean, this is the decision time when people's opinions are firming up.

How worried are they when they continue to see these not very encouraging numbers and see just how tepid this recovery is?

JENNIFER LOVEN, ASSOCIATED PRESS: Well, I think you can tell how worried they are by what Steve rightly pointed to, a sort of a tortured explanation that you hear from the president, right? You have these numbers, he picks out a thin sliver of good news and, you know, couches it correctly in all the bad news. And it doesn't add up to very much, right?

And the White House realizes that they have before them is a very hard sell, which is it's not as bad as it could be. That's not the kind of slogan that wins elections and they realize that that's a really tough thing for him to go out and say.

What they're hoping is that he can continue to talk about what little bits of good news there is and talk about the things that could have happened that didn't and his ideas for trying to create more jobs. Some of which are being opposed by Republicans and that that will be --

(CROSSTALK)

WALLACE: And the other argument they're making is, hey, it's not as bad as it was. In the old days, they drove us into a ditch, we're getting us out.

LOVEN: Right.

(CROSSTALK)

WALLACE: Do they think that's a winning argument or is it just the only argument they have?

LOVEN: You know, I think it's the only argument they have, right? I mean, it's -- it may win. Republicans are, you know, stonewalling and they have their ideological reasons for doing that. And they have economic arguments that they make and can make for the positions they're taking on the economy.

But it is -- it is a starkly different position on how to pull us out of this, the president likes to say, this ditch. And I think the president and his team have settled on their message. Democrats on the Hill are happy to hear that he has a consistent message now that he's giving pretty much at every stop he makes. And we'll just have to see.

WALLACE: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Look, if you blame it on Bush after a year-and-a-half to two years, it smacks of desperation. They have no other argument. I think this is going to be an interesting election because it really is over ideas.

Look, normally, any administration will suffer if the economy is bad. That's a given. But here, you can make a very strong argument that it's been made worse or the recovery is slower than it would be otherwise. It's going to be about ideas.

The administration sold the program on the idea, a very Keynesian idea, we're going to stimulate, we're going to spend, we're going to intrude into the economy with a lot of regulation and to try to create a green economy -- all of this from Washington with experts. And what we know is the numbers are crushingly consistent, the economy is sluggish.

It contrasts with the last really serious recession, '81-'82, the Reagan recession, from which we had a tremendous rebound, the growth of 6 or 7 percent, huge amount of re-employment. It's not happening.

And I think the argument is clear that it's result of the policies of this administration, regulation, higher taxes, which are inevitable as a result of the spending and the debt. We have a $2 trillion of corporate cash sitting on the sidelines. Corporate earnings are good. The market is doing well, the economy is sluggish.

All the money is on that -- on the sideline, it's not being invested, and the reason is, uncertainty high taxes, and all of that as a result of the policies of this administration.

WALLACE: And, Jennifer, it seems to me that the Obama White House really has the worst of both worlds, because on the one hand, they've got conservatives saying, you threw all these money at it and you didn't target it in ways to boost the economy. And liberals are saying, you didn't spend enough money, you didn't have a big enough stimulus.

LOVEN: Right. I mean, you can -- you pick your economist, right, to make the argument on either side and to make it well and to back it up with data. And Charles is right. It's about -- it's about a difference in ideas, a difference in ideology.

And somebody could make a perfectly good argument that the Obama administration is right and Charles is wrong, that the numbers would be much worse had they not poured this money, had they not done the intervention into the auto industry that they did and it was unpopular. That they didn't take the bank bailout forward.

You know, and the public has to decide who they believe. But, ultimately, they're going to decide based on what their family budget feels like, what their life feels like. And that doesn't look very good.

WALLACE: And we've only got about 30 seconds left in this segment, Steven. I mean, in the end, people are going to say -- aren't they, we don't know, but as of right now, what we think they're going to say is: we elected you to do something and you don't do it.

HAYES: Yes, I think the difficulty with the argument that Jennifer says that people could make, on behalf of the administration numbers, is that they are falling short of their own standards. It's not as if, you know, they're falling short of standards that right-wingers set for them. This is what the Obama administration said themselves. And if they charge that Republicans are blocking the agenda, I think the answer from the public at this point at least is: good.

WALLACE: All right. We're going to have to leave it there. The "Friday Lightning Round" is next with a topic you selected in your choice online poll. You can follow the voting at the last minute at our homepage, FoxNews.com/specialreport.

(COMMERCIAL BREAK)

WALLACE: Every week on the FoxNews.com/specialreport page, viewers vote on what topic we should discuss first during the "Friday Lightning Round." I got to tell you, folks, it's been neck-in-neck all day. Very exciting here between the controversy over the 14th Amendment and Charles' wild card pick. Charles has had his staff and his family stuffing the virtual ballot box.

And in the end, the winner is Charles' wildcard! So, Charles, are you going to steal the victory from the 14th Amendment controversy?

KRAUTHAMMER: Let me say that because it was a close race and because the other side ran such a clean campaign --

(LAUGHTER)

KRAUTHAMMER: In tribute, I'm going to adopt their issue. So, yes, 14th Amendment, Lindsey Graham among others, is proposing that we repeal the provision which make its, where you get the automatic citizenship if you are born in the country.

What should we do? What -- is this a good idea? The correct answer is: Great idea but if it were a statue, I'd repeal it tomorrow. But it's not. It's in the Constitution. It's in a kind of a sacred amendment since the Civil War Amendment.

And it's also a side issue. The main issue here is illegal immigration, out of control, even though on principle, I would repeal it. I say, let's not spend all of our time changing the Constitution. Let's get immigration reform; meaning, control of the border.

WALLACE: Jennifer?

LOVEN: I guess I just have to say, really? This is the solution to the immigration debate, to reopen the Constitution? It seems a little farfetched. And I think short-term political thinking versus long-term political thinking. Republicans could lose big if they're portrayed as extremists who are trying to reopen the Constitution to solve what is a policy debate.

HAYES: I understand the frustration that generates this kind of a discussion. But I agree with Charles. I just don't think you go back and revisit the Constitution because you're frustrated that the borders aren't sealed.

WALLACE: It also becomes a particular issue as Charles mentioned, Steve, the 14th Amendment is the amendment that ensured civil rights for slaves and it's one of the proud parts of the Republican Party history.

HAYES: Indeed, there's something on the Republican Web site -- the Republican Party Web site boasting of that fact. So, I think it will sort of climb-down to start tinkering with the Constitution because you're unhappy with, you know, understandably unhappy with illegal immigration.

KRAUTHAMMER: Instead, I'd build a fence.

WALLACE: You'd build -- we know that.

KRAUTHAMMER: It's a lot easier.

WALLACE: OK. Issue two. The Pentagon is putting more pressure on the organization WikiLeaks to give back all the classified military documents it has just as the Web site has put up a new encrypted file ominously called "Insurance" that seems to imply, come after us. And you know what? We may just release a whole bunch of new damaging information.

Charles, where is this heading?

KRAUTHAMMER: Well, I'm not sure that we have the power to shut it down. And you can hide all this information. I think we ought to try to nab whoever we can who is in the United States, the people who leaked it. But controlling information once it's out there is utterly impossible in the age of the Internet.

It's good that we have a national consensus against these leaks of military stuff in wartime. I wish we'd had it when we had a Republican administration and those who leaked weren't excoriated as they are now. But instead, were honored with Pulitzer Prizes.

WALLACE: Jennifer, what should the government try to do? What can it do about WikiLeaks?

LOVEN: Well, I think that's the question, right? What can it do? It's hard for me as a reporter to feel that the government has the ability, has the standing to order somebody to give back documents that they have. There are recourses to go after the leakers as Charles said. And that's really their main -- that's really the only thing they can do. And they're sort of stymied otherwise.

WALLACE: Steve?

HAYES: On the first day of the WikiLeaks dump, the first dump with the first 77,000 documents, I talked to the intelligence folks who said, that stuff is really bad. The really, really bad stuff is in the final 15,000 documents. So, there's some potentially very, very damaging information out there.

But you can't bargain with a guy like this Julian Assange. He's a clown. And he's not -- you can't set that precedent. I think the precedent you need to set is to really, really go after Assange if you can, whoever is found guilty of the leaks.

WALLACE: All these people are foreigners and they're operating --

HAYES: Not all of them. People responsible for the original leak potentially are --

WALLACE: No, we'll stay with WikiLeaks, they're -- the people there doing this file encryption.

In any case, now listen, this doesn't happen when Bret is doing the show. This just in: A late-breaking item for the "Lightning Round" -- California Attorney General Jerry Brown has asked a federal judge to authorize the resumption of gay marriages in the state. Brown's action follows the judge's ruling earlier this week overturning a ban on the marriages.

We're running out of time, Charles. What do you think about the ruling and Brown's decision to get involved in this? Of course, he is the attorney general and now running for governor.

KRAUTHAMMER: The Brown decision to make this demand, I think, it gives opportunism a bad name.

Lightning Round.

WALLACE: OK, let's go ahead.

LOVEN: Wow! Didn't expect him to wrap up so quickly, did we?

This is headed to the Supreme Court, it seems pretty clear. And, you know, we just had a new Supreme Court justice, you know, talked about at the White House today, sworn in tomorrow. And it's going to be explosive, I think, in November.

WALLACE: Steve, 10 seconds. Make them good.

HAYES: It may help him get out his base. But remember it won 52 percent -- with 52 percent of the vote. So, may not be wisest of moves.

WALLACE: All right. That's it for the panel. Thank you, all, for rolling with the breaking news.