Updated

This is a rush transcript from "Special Report," May 13, 2016. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIPS)

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: The challenge here is not to isolate anybody. It's not to discriminate against anybody. It's not to make anybody unsafe. It's actually to ensure that our schools are as inclusive and respectful and safe as they can possibly be.

LIEUTENANT GOVERNOR DAN PATRICK, R-TEXAS: We will not be blackmailed by the president's 30 pieces of silver. If they want to keep their money, keep their money. They're not going to buy our children. They're not going to tell families what to do. We will find a way in Texas to find the dollars if they want to pull the money.

EARNEST: This does underscore the risk of electing a right wing radio host to a statewide elected office.

(END VIDEO CLIP)

DOUG MCKELWAY, GUEST ANCHOR: Touche from Josh Earnest right there. This is all about a new Obama administration directive directed to all public schools across the United States which requires them to allow transgender students to use the bathroom and the locker room of their choice even if their gender is different gender on their birth certificate. The guidance does not impose any new legal requirements but it comes with a very strong stick as well as a carrot, a threatened withdrawal of federal funding for the school district in which the offense happens.

Let's bring in the panel now: Steve Hayes, senior writer for The Weekly Standard, Susan Page, Washington bureau chief at USA Today, and syndicated columnist Charles Krauthammer. Charles, what do you think of it?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Look, on one level could you say it's a fairly small problem, tiny population. But there's something very large at stake here, and that is the federal government is unilaterally decreeing, without a debate, without consulting with Congress, that as of now sex is no longer, or gender is no longer a fixed category, as we have assumed for, say 5,000 years, but actually a simply a matter of declaration, of preference.

That is a huge step. It's going to have a lot of implications in the future. Again, this is a rather trivial issue, the use of the bathrooms in comparison with other items on our agenda. It's important to the individuals involved, but this is a major change on how we view one of the defining aspects of any person. And I think it deserves a lot more than simply a declaration, that unless you accept the idea that you can declare yourself a man on a Monday and a woman on a Wednesday, and it's completely up to you, that unless you accept that, you are a bigot and you are acting like the segregationists in the south 60 years ago. I think that is a huge step.

And the use of the power of the federal government to bully, I think that's the right word, to enforce this I think is disgraceful. It just shows how the arrogance of an administration unilaterally sort of overriding federalism, the separation of powers, we already know about that, is a terrible example for the future.

MCKELWAY: Susan?

SUSAN PAGE, USA TODAY: I agree this is a serious issue that deserves serious attention. I'm not sure it's fair to say people declare themselves a man on Monday and a woman on Wednesday. The transgender people I have met have felt from a very early age that they are a gender that is not the one that is on their birth certificate, and that's a feeling they hold for their whole lives and it sets up a lot of seriousness. So I agree it's something that deserves a lot of debate, and we should be aware that this is of course going to go to the courts. This is -- the administration does not have the final word on their interpretation of this law. It's going to go to the courts. We're going to have a debate.

MCKELWAY: I don't think people assume it's going to change gender identification over the course of a night. But some have argued that this could adversely affect women's sports for example. If you take a man who identifies as a woman and wants to join the basketball team and he happens to be 6'4" and has muscle mass and body mass that's much bigger and stronger than female players, you're going to put the female players out of business.

PAGE: There are going to be a lot of repercussions to this. It does reflect, I think a big sea change in attitudes, public attitudes on some of these issues, as we've seen on the issue of gay marriage. This is not a stance I think the administration would have taken when President Obama took office eight years ago. I think attitudes towards this are in the process of changing, but not everywhere and not everyone is in agreement on them.

STEVE HAYES, THE WEEKLY STANDARD: I have a slight difference of opinion with Susan in what she just said. I don't think it reflects a sea change. I think it seeks to drive a sea change. From my perspective, what the Obama administration has done is taken an issue that requires, demands compassion and thoughtfulness on a local level, on a school-by-school level dealing with individuals, and tried to force what I think is an ideologically extreme view on the rest of the country, and they've done so really in an Orwellian fashion. If you look at the language of Title 9, which was intended to prevent discrimination against women and girls based on their biological sex, what the administration is now saying, we're going to use the same exact language to erase those same distinctions. It really doesn't make any sense on the face of it. It contradicts the plain language of Title 9, and I think that's where they would have legal problems if this does indeed go to court.

PAGE: I would agree with you that it's an effort to drive public opinion and force a debate on this issue. And it really struck me as the kind of thing a president would do only in his second term. It's not a step that he would have taken I think in the first term.

MCKELWAY: Go ahead, Charles.

KRAUTHAMMER: Let me make one point. Yes, there have always been people of indeterminate sex. Some are genetic like people with Turner syndrome where you have an x chromosome and you don't have another one so you don't second x and you don't have the y. There are people who have said chromosomes which normally are male and female but have the sense that they belong to another gender. That is true.

But once you are making this ruling, you have declared it from now on there's no relation to genetics, there's no diagnosis, there's no showing that are you a one sex or even that you are inclined to one sex. Simply a self-declaration, it's a matter of your choice. And that is a radical change. There are people who are -- who have and have a sense of unstable sexuality and who do change. It's not the majority of transgender.

MCKELWAY: It's 23 percent I think is the number.

KRAUTHAMMER: But it would show you that if you are a person of that kind, it's up to you to decide who you are on these days with no external objective criteria.

MCKELWAY: Even school districts that seem to be looking at this situation in a spirit of good will are facing the heavy hand of government. There's a case in Illinois. Last November, the Office of Civil Rights of the U.S. Department of Education sent a letter to the superintendent of Township High School in Illinois. And the letter read, and I'll quote it, "The district has honored student A," this is the student in question, the transgender student, "request to be treated as a female in all respects except the request to be provided access to the girl's locker room at school. The district stated that granting student A the option to change her clothes in the girls' locker room would expose female students as young as 15 years of age to a biologically male body. The Office of Civil Rights finds the concerns unavailing in this case." The district ultimately settled, but only under the threat of losing over $6 million in federal funding. Steve?

HAYES: Look, I think this is one of those areas where American people are using this dictate from the Obama administration and saying have we lost all common sense? Why isn't it the case that they things can be handled on a case-by-case basis, on a district by district basis, or even a school-by- school basis rather than having the federal government come in and make a sweeping declaration, a sweeping decree of national policy? I think when you hear something like that, if I'm a father and I've got a young daughter who is going to be changing in the same locker room with somebody who is biologically male, however that person may self-identify, that's causing me huge problems.

MCKELWAY: This certainly seems to be lighting a fire across the country and I suspect we've not heard the last of it. Certainly the courts are going to be taking a look at it, no doubt about that.

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