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Special Report

Panel on Obama's Visit to Gulf Region; Lack of Federal Budget

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: If the oil hits the beaches, that's actually probably the easiest to clean up. So it's a concern obviously for tourism, it's a concern for an entire Gulf region that economically depends on the tourist season and this period of time when people are out of school.

But those beaches will recover, because those big globs of oil, when they hit the beaches, we can send a bunch of people out there and scoop them up, dispose of it properly, and those beaches will look pretty pristine a year or two years from now.

The biggest concern we have actually are the marshes, the estuaries, the wetlands.

(END VIDEO CLIP)

BRET BAIER, "SPECIAL REPORT" HOST: President Obama on his trip to the Gulf region today, visiting three states. He did sound more optimistic than that sound bite in other statements today, saying the region will bounce back, and that he and the administration are doing everything they can.

This before a speech to the nation from the Oval Office Tuesday night, and then he will meet with BP executives Wednesday.

What about all of this, what is said, what is being done? Let's bring in the panel, Steve Hayes, senior writer for the Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Steve, if you are living on the Gulf Coast and you listen to globs of oil, that is fairly depressing -- one or two years away.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Yes. Not the timeframe you want to be hearing from the president of the United States. I talked that some people working in the region said we would be lucky if we're one-third of the way through this right now. So I think you're looking at something that is very long-term.

And it's precisely the reason that you have President Obama spending two days down in the gulf now, to see the kind of pictures that we're showing and other networks are going to be showing. It's why he is giving the speech tomorrow night. This is the time where he is finally going to take control in a way that I think he tried to do earlier with his press conference but which failed because he botched some question.

He's now saying I am taking control and directing BP to do what I want BP to do. This is going to be the White House-controlled recovery.

BAIER: That said, he is meeting with BP on Wednesday and he is speaking to the nation Tuesday night. Why not tell them what to do first and then tell the nation what to do?

HAYES: Because he is going to tell them what to do in public before he tells them what to do in private.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Look, he is going to take a couple of steps. First of all, he certainly stepped up his involvement in the region. He has been down there a lot more. He's going to set up the escrow account, which is going to be administered by a independent third party but funded by BP to handle claims process.

BAIER: He said a deal is close to that, likely Wednesday.

LIASSON: And BP has gotten a lot of criticism for having a complicated, not very efficient claims process. That is one thing.

He will also have to lay out a plan for how this thing is going to be cleaned up after the well is truly capped and it's contained. And those are things that the federal government is responsible for and he's going to be held responsible for.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think it's very smart for him, politically smart, to propose the escrow account, because it puts him in control, because that would be a place where BP would have to put the money in to and then he would have, as Mara said, the money would be independently distributed by supposedly the government or some independent agency.

BAIER: Not to interrupt, but if BP said we're not going to do that, there are question about what the administration could legally do to compel them to do it.

KRAUTHAMMER: I agree. It's somewhat extra legal instructing BP. After all, the liability limits under the law today is $75 million. The fund he wants is $20 billion.

But that's why you have the White House lawyers. They create loopholes in the law or they give Obama ammunition by saying when he meets with the president of BP, our lawyers looked at this and there are 18 possible laws that you may have violated. And the penalties would amount to a lot more than $20 billion escrow. How about we make a deal?

I'm not sure how legal it is. He doesn't have the authority to order BP, but I think he has the leverage to make the BP do it. And it's very politically smart, because whereas up until now he was theoretically in charge, or saying he was, that really puts him in charge of BP at least as to restitution and compensation.

LIASSON: And don't forget Congress is considering a law that would raise the cap. There is already a limitation --

KRAUTHAMMER: But can you do it retroactively? That's the question.

LIASSON: That's a legal question, but he won't get any pushback from anybody in Congress to say let's not make BP responsible.

KRAUTHAMMER: If you do it retroactively it's absolutely illegal.

HAYES: I think you may have to do it as a practical matter. This may come from the president for precisely the reason you said, because it may not be legal. So president needs to do it to increase public pressure on BP.

But I don't think it's a good idea politically. I actually think it's a bad idea politically, because basically what you have the president doing is putting all this pressure to solve the legal issues before the problem itself is solved. We still have oil spewing. You have months of the oil washing in the marshes and the president is out there having these fights among lawyers.

BAIER: On that score, this is what he told Politico over the weekend in an interview about the tone of defensiveness, a little bit. "I think it's fair to say six months ago before the spill had happened I went up to Congress and I said we need to crack down a lot harder on oil companies and spend more money on technology to respond in case of a catastrophic spill.

There are folks up there," meaning Capitol Hill, "who will not be named who would have said this is classic big government overregulation and wasteful spending."

Charles, what about that, considering, you know, the Democratic president, Democratic house, and the Democratic Senate.

KRAUTHAMMER: Well, this is a cheap hit at Republicans and it's kind of a hypothetical hit. Had I proposed "x," Republicans would have opposed. Well, you didn't propose "x." You proposed expanding drilling. This is a way to placate his left, while pretending that his proposed expansion of drilling never happened. So I think it's a pretty weak argument.

The fact is that we respond to crises because history shows us what is risky and what is not. We know this stuff a mile down is risky and we need some kind of oversight.

But I must say it's also a way which he is covering up on the moratorium of the drilling in deepwater in the Gulf, which is killing what is left of the Gulf Coast economy without any scientific evidence it's needed and in fact harming us, because the boom will move offshore to other countries.

BAIER: Mara, what about the turn to energy legislation he will make Tuesday night?

LIASSON: I think that the turn to energy legislation is a good thing for the president to do politically and also substantively. This is energy legislation that has passed the House. I don't think there is anybody in the United States Congress of either party who would say we shouldn't do something to end our dependence on foreign oil.

BAIER: But you said on this panel that this bill was dead at one time.

LIASSON: This particular bill. I'm not talking about any particular bill. I'm talking about a comprehensive energy bill, not necessarily the one that is being considered now.

BAIER: I know, but that is the one we have.

LIASSON: That's true. There are many changes that can be made in it. I don't think it was going anywhere. I think this crisis gives it an opportunity to have new life breathed into the effort. And I can't imagine why a compromise couldn't be reached, especially in the wake of this crisis.

BAIER: Steve?

HAYES: Which moderate Democratic senators will be the ones who are eager to join forces with the president? I think the political dynamics that were at play today are the ones at play before the oil spill despite the fact that he can make an emotional argument tomorrow night.

BAIER: Last word.

KRAUTHAMMER: If the bill were truly about oil independence, it would make sense. But it's not. Cap-and-trade is a bait-and-switch. It's not about oil. Oil is a part of it. It's also is a huge tax on coal, in which we are the Saudi Arabia of the world, and if you kill coal at home you increase our dependence in other countries.

So he will want to make it about all kinds of energy, not about oil and will not help the environment, because the Chinese are opening a coal plant once a week for the next ten years. All of this is going to do is shut down our plants, open the plants in China. And it will be a transfer of wealth out of America into China, which is something we really don't need.

BAIER: We will begin a series of reports about what's in the bill that's up there now. Starting tomorrow with Jim angle. Go to the home page at Foxnews.com/specialreport. Tell us what you think the president's top priority should be by voting in the online poll on the right-hand side of the screen.

Next up, why congressional Democrats may not pass a budget this year.

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(BEGIN VIDEO CLIP)

(BEGIN VIDEO CLIP)

SENATE MAJORITY WHIP DICK DURBIN, D-ILL.: The budget in Washington this year will be extremely difficult. I hope we get to the budget resolution or find a path forward very soon.

HOUSE MINORITY LEADER JOHN BOEHNER, R-OHIO: Listen, the Democrat spending spree is scaring the hell out of the American people and it's hurting our economy. Not doing a budget, Democrats are passing up a critical opportunity to create jobs and get our economy moving again. They're banking on the fact that the American people won't even notice.

(END VIDEO CLIP)

BAIER: Republicans have been talking about how Democrats are not passing a budget this year. They are very upset about that. Saturday night, President Obama asked for $50 billion more for financially strapped states. That's deficit spending, and the Republicans reacted harshly to that as well, as you might imagine.

We're back with the panel. Why not a budget, Mara, and is it hurting them politically?

LIASSON: I think that spending is hurting them politically. Whether or not they pass a budget, I don't know if that is hurting them. There are two numbers that are important to voters this fall, the unemployment rate and size of the deficit.

And the problem is, in the short-term, to increase hiring or to save public jobs like firefighters and teachers, you have to spend money. Or, another way to fight recession would be to give tax cuts, which also increases the deficit.

The problem is that because we have such a big deficit to begin with, and a lot of president initiatives increased it, he doesn't have the psychological space to do deficit spending as a recession fighting measure.

The most important thing he can do for the markets, who by the way are not punishing America the way they are punishing Greece and some of the European countries just yet, is to come up with a credible plan to take care of the structural deficit over time.

BAIER: Charles, there are many in this town who say this is all about politics and Democrats in the midterm election don't want to deal with these tough votes. This week the White House budget director was asked why doesn't they put forward spending cuts and identify all of this and send it to Congress?

(BEGIN VIDEO CLIP)

PETER ORSZAG, WHITE HOUSE BUDGET DIRECTOR: It just comes down to a question of whether it's fruitless exercise because we have very little probability of success in the current environment.

(END VIDEO CLIP)

BAIER: He's talking about Democrats in the House and Senate, there's a low probability they'll deal with what they want to do with.

KRAUTHAMMER: Absolutely. This is all about election year politics. And I think for some Democrats, where in the past if you vote for spending it goes to state and local governments, as Mara says, to save the firemen and policeman, it would be popular, but not this year.

And I love the ploy, this is the oldest one in the books, that when a state and local government is wildly overspending, it is corrupt, inefficient, completely out of control, and anybody dares suggest a one percent cut in the budget, immediately what is said is if you do that you have to shut down fire stations and policemen.

It's always the fire station and policemen first strategy, as opposed to maybe cutting a person at the back of the DMV or seeing in the records department who hasn't worked in ten years. It's always the firemen and policemen, who are a small percentage of the whole workforce.

But that is how you do it. They're going to try to sell this new mini stimulus as saving the firemen or policemen. Remember when you hear it, it's a fraud. You could easily hold all of those jobs and cut elsewhere, which is not done. The private sector has had huge cuts in employment, has gotten lean, but not state and local.

BAIER: Steve?

HAYES: This is political cowardice of the first order.

I disagree with Mara. This will have a political impact. Very few things leaving Washington matter I think in the general sense. One of them is not passing a budget. Every family does it, which is something Republicans will say again and again. Cities are supposed to do it, states are supposed to do it. This is how businesses operate.

If you can't pass a budget, as John Spratt said in 2006, you can't govern.

What is interesting here is Republicans, conservative Republicans in the House, have offered a balanced budget that balances the budget in the same nine-year budget window that the White House can't possibly do.

The White House has put forward a budget, suggested a budget basically, that has deficit spending seven to ten percent in all of the out years. This is a huge problem.

Republicans in the House have offered a similar budget that balances the budget in ten years. Their argument is a simple one. If we are going to be critical for them for not doing it, we should do it ourselves. The question is whether moderate Republicans will support them and how it will be attacked or demagogued politically.

But budgets matter. I think it will be a big deal.

LIASSON: I don't think Republicans could get a majority vote.

HAYES: They're not but they are putting forward a proposal which is something --

LIASSON: That the majority of Republicans wouldn't vote for it.

HAYES: Not at this point. They're not going to get a vote in any case.

BAIER: Last word.

KRAUTHAMMER: If Democrats can't produce a budget then they will look incompetent and out of control, and I think it will hurt them.