This is a rush transcript from "Special Report," August 3, 2012. This copy may not be in its final form and may be updated.
SHANNON BREAM, ANCHOR: Every week viewers vote for your choice online in our Friday Lightning Round poll. And this week the Romney tax accusations from the Democrats won with 33 percent of the vote. So, before we start our discussion, let's have a little bit of the back and forth.
(BEGIN VIDEO CLIP)
HARRY REID, D – NV, SENATE MAJORITY LEADER: The word is out that he hasn't paid any taxes for ten years. Let him prove that he has paid taxes, because he hasn't.
ROMNEY: Harry Reid really has to put up or shut up, alright. So, Harry, who are your sources? Let's have Harry explain who that is. And by the way, Harry, I understand what you are trying to do. You're trying to deflect the fact that job numbers are bad.
(END VIDEO CLIP)
BREAM: And by the way, Romney did go on to say in his statements today that it was patently false, it was wrong, he's paid taxes, and, he said, a lot of taxes. So Charles, is this just more pressure to get him to release those returns?
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Yes, it is. But when the leader of the Senate begins an accusation with "The word is out," it's beyond appalling, it's disgusting, which is a word you ought to use rarely in politics. It is the worst kind of demagoguery where he makes an accusation without any basis whatsoever on a blind source which he won't tell us about and then say you prove it and deny it. That is the lowest kind of politics. And the reason it's disgusting because it actually is effective. It puts Romney on the defensive. It's lose-lose if you're Romney because he is talking about taxes, which is exactly what Reid had intended in response to a baseless accusation. It works. That's why it's so bad.
BREAM: But Susan does it in any way gain some sympathy points for Romney?
SUSAN MILLIGAN, U.S. NEWS AND WORLD REPORT: I would think so. I was astonished when I saw that because this is a potentially a powerful issue for the Democrats. It's not going to move a lot of votes. But people are wondering why do we only have one year, we're gonna get another year. There is a sense, I think, that there is something in there that he doesn't want people to see. I'd be very surprised if it was that it's he paid no taxes. I suspect it's was that he maybe, I suspect -- I shouldn't say that. But it may be that he didn't pay as much in taxes because he legally took advantage of some very, very legal tax breaks or it may be that he was getting paid by Bain when he said he wasn't doing [INAUDIBLE], something that he doesn't want people to know. But I'm sure -- I can't imagine that it was illegal or no taxes.
But to come out and say, ya know, word on the street is whatever, it's an overreach. It looks reckless. It looks like rumor-mongering. And we've seen enough of this frankly from our profession and among some other people at much lower level at politics. For the Senate majority leader to go on the floor of the Senate and say something like that without backing it up, I think actually undermines what could have been one of the Democrats' most powerful weapons against Romney.
BREAM: But it has us, Steve, talking about his taxes.
STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Yeah, well look, Harry Reid is disgrace. You expect this from Harry Reid, right? He does this kind of thing. He's a politician. That's what you expect from politicians. The disappointing cohort in this to me is journalists. I was watching another network earlier today, and I saw -- I know. I was, I was. Every once in a while --
BREAM: You were doing some research.
HAYES: My satellite was out, I couldn't get Fox. But I saw another network anchor ask a Romney supporter about this accusation and say you know, "Harry Reid is a really honorable man. You should answer this. And by the way, there is one way to settle this question and that's for Mitt Romney to put his taxes out." That is exactly what this kind of a baseless, absurd charge is going to bring about. And he is having to answer questions about it all day. It's ridiculous.
BREAM: I want to make sure that we get to our other topic. So let's move on to the jobs numbers -- 163,000 jobs added, but the unemployment rate ticked up as well. Quickly, Steve, your reaction, 8.3 percent now.
HAYES: Well, I think the rate, to the extent people are paying attention to this specifically and at this time, the rate doesn't help.
But I was struck by President Obama's comments today. He gave a speech and he said what we need to do is modest raise of taxes for the top two percent. And then a moment later he said by doing just this tiny increase of the top two percent, we're gonna save $1 trillion and we're gonna help resolve our debt issues. You can't make those arguments in consecutive paragraphs.
BREAM: Well, and the White House today Susan did say we are talking about 29 months of consecutive private sector job growth. There are positives there.
HAYES: There are. But what I found when I've traveled around the country is that people have an idea of what the economy feels like and it's kind of set in their mind. So I was in Ohio. The unemployment rate is lower than average. And people are just really distraught. I was in Nevada where the unemployment rate is astronomically high. And people, I wouldn't say they're upbeat, but they have more of kind of a – more of a homesteader attitude out there. But it's more of a, hey, I lost $3,000 but here's another slot machine. But people just are more ready to start over there.
I think because they are newer, you know, residents of the state. So I think that the rate itself isn't necessarily determinant. It's just how people feel about the economy. And that's pretty much usually set by Labor Day. I think this year it might be set earlier.
BREAM: Charles, it's on, so we can get to topic three.
KRAUTHAMMER: The rate itself is not the key. It's the rate of change. And it's going in the wrong direction. It rose. And that is what I think hurts Obama. The chief economist of Credit Suisse said to the Times today -- the New York Times -- that this is the worst recovery ever, including during the Great Depression. He said if you aren't scared by that, you don't know what is going on. Pretty heavy, as we used to say.
BREAM: It's always nice to have someone who is fluent in French on a panel as well.
Our final topic, the GSA scandal –
KRAUTHAMMER: Credit Suisse
BREAM: It was very nice. Rolls off the tongue. The GSA scandal and the fact that there may be now 77 additional events conferences that they're going to be investigating. Steve, how do they dig out of this one?
HAYES: It's an incredible story. The funny thing is, the big picture political impact, this is, you know, you're not actually talking about a ton of money. I mean all of it is big money but relative to our $15.7 trillion debt, you're not talking about a lot of money. What you are talking about is a culture. And the fact that they are so oblivious to how this looks to taxpayers is truly extraordinary.
MILLIGAN: Yeah. I couldn't agree more. I can't say it better than Steve. It's just, and it also gives a black eye to sort of government workers in general, which is unfortunate, because there is a lot of people working in government who work very hard and do a great job. And this is just appalling.
KRAUTHAMMER: It hurts Democrats, deserved or not, because Democrats are the party of government. And everyone knows that you've got to cut spending. But the Democrats speak about raising taxes. You hear about this. And you think they are barking up the wrong tree.
BREAM: $20,000 for drumsticks and appearance by Agent X, whoever that might be. Panel, thank you very much. Stay tuned for a very special message for our own Bret Baier.
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