This is a rush transcript from "Special Report," January 7, 2013. This copy may not be in its final form and may be updated.
BRET BAIER, ANCHOR: What may happen ahead of this debt ceiling next stop in the fiscal back and forth between Democrats and Republicans here in this town. In an interview with Wall Street Journal House Speaker John Boehner said some interesting things, among them this, quote, "At one point several weeks ago," the speaker said, "the president said to me 'we don't have a spending problem.' But Mr. President we have a very serious spending problem." The speaker repeated this message so often he says that toward the end of negotiations the president became irritated and said, quote, "I'm getting tired of hearing you saying that." "What I should have done," the speaker continued, "the day after the election was to come out and say, the House has done its work. The House passed a bill that replaced the sequester with real spending cuts. The House passed a plan extending all of the current tax rates. We passed a budget. We call upon the Senate to do their work."
We're back with our panel, the next fight here. Charles?
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well heard Pelosi, with apologies to John Paul Jones, which she and the president said last week is we have not begun to tax and to spend. They have been open about this. As she said, she said well, we got you on rates. That is round one. Round two is we're going to squeeze the money out of you by eliminating deductions and loopholes.
Look, it seems to me with the Boehner interview that the Republican leadership is finally beginning to understand what some of us have been arguing now for four years. Barack Obama has zero interest in cutting spending. Churchill once said, I did not become the king's first minister to preside over the liquidation of the British Empire. Obama is saying, I did not become President of United States to preside over the liquidation over the welfare state or the contraction of it.
And we saw it in his actions -- the biggest expansion of entitlements with ObamaCare, the biggest spending bill in American history with the stimulus. And now what we saw with the "fiscal cliff" negotiations, and now we have -- it isn't just in these, but in words, when he said to the speaker we're not interested in spending cuts because spending is not the problem.
BAIER: Juan, Ed Henry is reporting that Jack Lew may be the treasury secretary nominee. He has a history obviously, in the Clinton White House, a guy that has talked about entitlement reform and the seriousness of all of this. How does that fit in the future of what we are hearing here that this White House is not really ready to do any serious cutting currently?
JUAN WILLIAMS, SENIOR EDITOR, THE HILL: I don't think it's true that they are not ready to do any serious cutting. Just during these recent negotiations, they were talking about, for example, repositioning the CPI, the so-called chained CPI, so that you would have a decrease in the rate of increase -- the rate of spending --
BAIER: Consumer price index, social security --
WILLIAMS: -- on entitlement programs, in addition to which they were fully willing to look at things like raising the age of eligibility, some of these entitlement programs -- in specific the one that people are most concerned about, which is Medicare, and there would be a terrific political consequence for taking these steps. So it's not that they are not interested in cutting spending.
Even if you look back though, at what Mitt Romney was proposing during the Republican -- during the campaign season, he was talking about eliminating loopholes, eliminating some of these deductions as a way to put more money into the treasury, because if you look at it as just a historical fact -- the taxing rate right now as a measure of GDP is at a historic low. It's not high.
But again, it's very political matter. The president will have to cut spending because if he has a meaningful second term, his legacy is going to be tied to things like Simpson-Bowles and making a deal that stabilizes our financial future.
STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I hope President Obama is watching Juan with sage advice for the president. Look, I think Charles is exactly right. It's hard to have good faith negotiations about how to cut spending with somebody who doesn't actually want to cut spending. And the president has given no indication that he has been serious about cutting spending throughout his first term, during the campaign, and now in the early stages or the weeks before he begins his second term. It's impossible to have that. I think this is a hinge moment in these kinds of negotiations because now that Republicans understand that, they won't be tempted to engage in good faith negotiations on an elusive grand bargain.
BAIER: We will have many more bites of this apple. That's it for this panel though. Stay tuned how one Oscar contending film is making an impression on certain Washingtonians.
Content and Programming Copyright 2013 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2013 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.