How should the US handle the unrest in Iran?

This is a rush transcript from "Special Report with Bret Baier," January 2, 2018. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

(SHOUTING)

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: America longs for the day when Iranians will take their rightful place alongside the free people of the world.

ALI KHAMENEI, IRANIAN SUPREME LEADER (through translator): The enemy is waiting for an opportunity, a crack through which it can infiltrate. Look at the recent day's incidents. All those who are at odds with the Islamic Republic have utilized various means including money, weapon politics, and intelligence apparatus.

NIKKI HALEY, U.S. AMBASSADOR TO THE U.N.: We must not be silent. The people of Iran are crying out for freedom. All freedom loving people must stand with their cause. The international community made the mistake of failing to do that in 2009. We must not make that mistake again.

(END VIDEOTAPE)

BAIER: Trump administration hopping on these protests in Iran, telling the world that they should pay attention. The president tweeting this morning "The people of Iran are finally acting against the brutal and corrupt Iranian regime. All of the money that President Obama so foolishly gave them went into terrorism and into their pockets. They people have little food, big inflation, and no human rights. The U.S. is watching."

With that, let's bring in our panel and start there, Eli Lake, columnist for Bloomberg View, Rachael Bade, Congressional reporter for Politico, and Katie Pavlich, news editor at Townhall.com. Eli, you wrote a very interesting column today about next steps in this situation. And what about what the Trump administration is doing now and the president is doing?

ELI LAKE, COLUMNIST, BLOOMBERG VIEW: So far, so good. It's good to see that the president is bringing attention to it and ignoring the advice of some of the Obama administration alumni to be quiet. But this has got to be the beginning of it. And we should be realistic. I hope the regime falls tomorrow, but at the same time we should prepare for this to be the beginning of a longer process.

And that I think that would mean hopefully the State Department will begin to compile names of people who have been arrested, publicized those names in Farsi. And I think it's an opportunity for Barack Obama, who has a lot of time on his hands right now, to become a kind of leader of western solidarity. No American is going to lead this Iran freedom movement. That's for the Iranians. But there are things that a charismatic figure, an ex-president like Barack Obama can do to call attention to their plight, lead boycotts of businesses that do business with Iran when there are political prisoners in jail.

BAIER: Here is Barack Obama back in 2009, the last time there were significant protests in Iran.

(BEGIN VIDEO CLIP)

BARACK OBAMA, FORMER PRESIDENT OF THE UNITED STATES: It is up to the Iranian people to make a decision. We are not meddling. I take a wait and see approach.

(END VIDEO CLIP)

BAIER: And basically that's what happened. The administration said we are not going to get involved. We think it's going to be harmful to their efforts. But in reality, there was in the back of the picture this Iran nuclear deal that they really wanted to push through.

LAKE: That's absolutely right. And more importantly, when he did speak out about the protest, he never did what the protests asked him, which is to recognize that there was a stolen election in 2009. And I think that that is something -- this is an opportunity for Obama to rehabilitate his reputation and make up for that mistake in 2009. Not to say that his support would have made a difference necessarily, but as a low moment in my opinion in terms of U.S. foreign policy.

BAIER: Rachael, what about the president here obviously stepping out and saying that these protesters should be watched? But for his base and in this election that we just witnessed last 2016, he wasn't talking about getting involved in places. And for some of the people who elected him, maybe this is a little not what they were buying.

RACHAEL BADE, POLITICO: I think the big question is what's next. Is it going to stop with the tweet and giving a shout out to these protesters, or is he prepared to go further than that? There is talk right now about bringing in the national security council at the United Nations -- Security Council -- and bring them in to say what can we do about Iran and what can we do about these protesters?

There are some people in the Obama administration who are saying that if the United States comes out and supports these protesters very adamantly, that the leaders of Iran will say this is something that was inspired by the United States. They are already sort of latching on to this and saying these are outsiders. These aren't real folks in Iran, which we know is not the case of course. But there is that backlash. It will be interesting to see how they balance those two things.

BAIER: Here is Ed Royce. He has, the president does, has support on Capitol Hill.

(BEGIN VIDEO CLIP)

REP. ED ROYCE, R, HOUSE FOREIGN AFFAIRS COMMITTEE CHAIRMAN: We should be supporting the Iranian people who want a better life, who want more freedom, instead of suffering under the brutal repression of an ideologically inspired hateful regime. We have no will towards the Iranian people. It is their government that gravely threatens us and threatens our allies.

(END VIDEO CLIP)

BAIER: Of course chairman of the House foreign affairs committee.

KATIE PAVLICH, TOWNHALL.COM: Bret, to your earlier question about the meddling and what the president campaigned on and not wanting to get bald, he sees this as in the U.S. interest for couple reasons, but first is the terrorism aspect. Iran is, as we know, a huge state sponsor of terrorism. We saw Nikki Haley's presentation earlier this year, or last year rather, about them attacking an airport in Saudi Arabia.

But the other thing too is he has to make peace with this nuclear deal or not. And that deadline is coming up. And this actually gives him leverage. The administration was ready for the protests like this to happen. All of them were on the same page in terms of messaging. You had the president coming out with the tweet. Nikki Haley on the same page at the State Department obviously, but their messages came out of the same time. And the White House came out immediately in support of these protesters, which is 180-degree turn from where the Obama administration was. He's not doing this is a meddling tactic. He's doing this because he believes it's in the American interest in the Middle East to redo the math there, so talk to the Saudis, get the Saudis back on the same page, talk to the Egyptians and the Israelis and stopping the Iranian terrorism that we've seen for so many years.

BAIER: In the meantime he is also pressuring Pakistan, saying they need to do more on terrorism. And just in the past few minutes, the Palestinians. And he said "It's not only Pakistan that we pay billions of dollars to do for nothing but also many countries and others. As an example we pay the Palestinians hundreds of millions of dollars a year and get no appreciation or respect. They don't even want to negotiate a long overdue peace treaty with Israel. We have taken Jerusalem, the toughest part of the negotiation, off the table. Israel for that had to pay more. But with the Palestinians no longer willing to talk peace, why should we make any of these massive future payments to them?"

I said what he campaigned on was different as far as interacting. This is actually what he talked about a lot was not paying foreign donations in essence by the U.S.

LAKE: It sounds satisfying, that tweet, and I can understand why many Americans would empathize. But the U.S. gets a lot out of propping up the Palestinian Authority, which is the fact that Hamas is not taken over the West Bank at the moment since they already control Gaza. So it is in America's interest to continue to pay the Palestinians even though I think Trump is largely right that they recently have not been paying the U.S. a lot of respect.

PAVLICH: But I think there are serious questions about where that money is being used, and the president is trying to take different approach about just handing out the check because every administration has been doing that. For example, the Palestinian Authority pays terrorists and their families for murdering Israelis and Americans. That's why the Taylor Force Act was introduced on Capitol Hill, and we will see where that goes this year if anywhere at all.

But there are questions that Americans have about where their money is being spent, and there is an argument to be made that there are investments made all over the world, but what are they getting in return? And is it being harmful towards their interests?

BAIER: But by saying this about Pakistan and the Palestinians, he is essentially trying to get a policy and objectives by throwing this out there, saying the money can dry up.

BADE: Right. I think it's really interesting that he started the New Year with these tweets, totally changing U.S. policy when it comes to Pakistan. This is noteworthy because the United States, Pakistan has spent a number one ally of the United States in terms of fighting terrorism. But people have long known that there are pockets in Pakistan that do harbor extremism. That's where Usama bin Laden was hiding. So he is pointing to that and he is saying you guys have got to get tougher, and they might lose their foreign aid otherwise.

BAIER: All right, coming up, we've got the president's agenda up on Capitol Hill and a surprise retirement today.

Content and Programming Copyright 2018 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2018 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.