This is a rush transcript of "Special Report With Bret Baier" from February 12, 2010. This copy may not be in its final form and may be updated.

UNIDENTIFIED FEMALE: Is the administration considering a military commission for KSM?

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: There are a series of things that are being looked at, most appropriately the security and logistical concerns of those in New York as a decision is being made. That's what the president is focused on.

UNIDENTIFIED FEMALE: But has it ruled out the other option?

GIBBS: Focused on the decision at hand.


BAIER: White House secretary not pinned down on the question of whether the decision will be to move from civilian trials back to military commissions for the trial of Khalid Sheikh Mohammed.

It all stems around a Washington Post quote from the attorney general, and here it is. Attorney general Eric Holder told the post: "At the end of the day, wherever this case is tired in whatever forum, we have to ensure that it's done as transparently as possible with adherence to all the rules. If we do that, I'm not sure the location or even the forum is as important as what the world sees in that proceeding," a lot less forceful about civilian trials there.

Let's bring in our panel. We have an adjusted panel tonight. First of all we welcome Rick Klein, senior political reporter for ABC News, Nina Easton, columnist for Time and Fortune magazines, and our own Fox News national correspondent Catherine Herridge, who is playing the role of Charles Krauthammer.


BAIER: He is caught in traffic, believe it or not. And you guys said it's just not moving out there.

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: As I told you, we only got out here because we got on the metro, which derailed this morning. Otherwise we wouldn't be here.

BAIER: He called in and said he has been in the same spot for the last hour and a half.

On this trial issue, Catherine, you covered this today. Is this the trial balloon that says this is the beginning of going back to military commissions?

HERRIDGE: I don't think so. I think that this is more evidence that the administration's policy to send it to federal court in New York is, in fact, circling the drain at this point.

When you look back three months to November when Eric Holder made the announcement, he did that solo. And since then the official line has been from the White House that it was his decision alone. That gave them some political insulation on the issue.

I think the fact that the president is now inserting himself into the process strips away some of that insulation. And the fact that they are not closing the door to military commissions is very telling.

One of my contacts within the military commissions told me that they withdrew those charges a few weeks ago to preserve their legal position just on the outside chance that the trial could come back to them. And I think there is increasing evidence that that may well be the case.

BAIER: And Nina, just on that sound bite alone you can see that Robert Gibbs doesn't want to be pinned down on this. They know they are on the wrong side of the politics, the public opinion here.

EASTON: It's politically damaging. Maybe it's politically damaging to reverse course. It's far more politically damaging to have the site of a trial where you are going to have a terrorist on the witness stand spouting terrorist propaganda, and possibly a judge throwing out charges because he went through enhanced interrogation.

I mean, these are things that send chills down the spine of the American public, and they didn't see that coming, and now they do.

The other thing is there is nothing for them to be gained with the civil liberties community on the great symbolic idea of doing a civilian trial because they are doing military tribunals for other detainees. So there is nothing to be gained on that front. So it seems to make perfect sense to move forward and do a military trial.

BAIER: And Rick, can they legitimately say this is Congress forcing us to do this, as you have Senator Lindsey Graham with a bill proposal to pull all the funding for a possible civilian trial? So say we tried to stand up on the issue, but Congress is going to pull the money?

RICK KLEIN, ABC NEWS: The time for trial balloons is past. That balloon got shot down by Congress. It's clear if this came to a vote right now Lindsey Graham is sure of it, they have got the votes to rebuke the White House on this. It will never get to that point.

I think that's why we're hearing the maneuvering now about where it is going to be, how it is going to be constituted. It's because they realize they would lose a vote on the floor of Congress, and Democrats don't want that. Republicans would love to get that — score that point. But they have forced this shift. And it is Congress that's driving this.

And I think the White House let the attorney general handle this up to a point. They let him drive this train. He really just drove it right into the wall of Republican-led opposition that's been joined now by Democrats.

BAIER: Is it possible, Catherine, that this trial, whatever it is, back to military commission, happens at Guantanamo Bay? Can we go all the way back to that?

HERRIDGE: I think if you look at the facts as they stand right now, no money has been appropriated for a site here in the United States to move the detainees. We don't have the legislative framework in place to do that either.

And when you just look at those two considerations, you have to ask yourself, what is the administration going to do later this year with the five military commission cases that are already on the docket?

Some of them are going to go forward as soon as May. Are they going to find a location here in the U.S. and secure that location by May, or are they going to, yet again, have to kick the ball down the field and delay those trials and then open themselves to the criticism of the ACLU and others that it's justice delayed, justice denied for those men?

BAIER: Here is another possible trial balloon out there. The president obviously as he was candidate Obama made the pledge on the campaign trail not to raise taxes on any family making under $250,000 a year.

Here is what he told Business Week, asked about that possibility and talking about a deficit commission he said: "The whole point of it is to make sure that all ideas are on the table. So what I want to do is be completely agnostic in terms of solutions."

Nina, the White House said today it wouldn't be pinned down on that either. It said the president is just not in the game of prejudging the outcome of a commission. This is the president.

EASTON: We could see a case where the president is now expanding the definition of wealthy. We thought wealthy was $250,000 and above, couples, by the way, making $250,000 and above. And now it's possible that he will expand that definition.

I think what this White House does not understand is that a big piece of closing the deficit is economic growth. And by taxing businesses and the wealthy investors, people who create jobs, create growth, and, by the way, pay a lot in taxes, by putting higher taxes on them immediately rather than growing their potential and creating more tax revenues down the road, they're hurting the economy and they're hurting their ability to close the deficit.

BAIER: Rick, what about the politics in this one?

KLEIN: Yes, I think they won't get to that point because it's such a dicey proposition.

Look, the president's words are out there from the campaign trail. He is now stuck in a bit of a bind. He didn't endorse this fiscal commission for a long time, and he finally did after some pressure from Democrats and Republicans toward the end.

And if you are going to have a commission, as I think the press secretary said today, you can't start ruling things in or out at the front-end.

But the problem this creates for President Obama and for Democrats is that up until now, Republicans haven't been able to say Democrats, look, here is the proposal right here that is raising your taxes. That would change with a commission, that would change now with a bit of a shifting rhetoric from the White House. And I think that's really where it is problematic.

BAIER: We should point out that Republicans, some of the sponsors to the deficit commission, pulled out. It did not pass and this is going to be exerted by executive order.

However, this is a commission. He's the president. Shouldn't he come out and say "I'm still going to hold to not raising the taxes of couples who make $250,000?"

KLEIN: Right. I think he gets punished a bit for the intellectual honesty of saying all options taken off the table, because when you start taking things off, it gets very hard to begin to make this happen. But obviously if you then align that with things he said during the campaign trail, you come to a much different place.

BAIER: OK, Catherine, thank you very much.

HERRIDGE: Thanks for having me.

BAIER: We will actually rotate in Carl Cameron next. Believe it or not, it's just a wacky Friday.

The Friday lightning round is next with your choice on line, and Charles' pick was the winner. We have got it all planned for you. Don't worry. Stay around.


BAIER: OK. Welcome back, it's a Friday lightning round, your choice online. We had the vote, and the pick was Charles Krauthammer's wild card pick.

We have a live shot, I think, of one of the roads around downtown Washington. You can see the traffic barely moving there. It's even worse when you get downtown. And I think on the phone we have the man, Charles Krauthammer. Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST, (via telephone): Yes. Hi, how are you?

BAIER: So you haven't moved for like an hour and a half?

KRAUTHAMMER: No. I haven't moved. I'm in downtown hell, which is what Washington is after a snowstorm. It turns out it freezes over the day after the storm when people are trying to get home.

BAIER: All right, so we had to get you on the phone because you won, overwhelmingly, your choice online. So what's the question?

KRAUTHAMMER: Again, I remain humbled by the confidence of the voters.

Here is my question. The president has invited the Republicans to a summit on health care at the end of the month. You are a Republican strategist. Do you boycott purely out of political considerations? Do you boycott? Do you go? Or do you come up with a trick up your sleeve?

BAIER: OK, Charles. We brought in Chief Political Correspondent Carl Cameron to play your spot here on the panel. And Nina and Rick are here. What do you think, Carl? There is the question.

CARL CAMERON, FOX NEWS CHIEF POLITICAL CORRESPONDENT: Best politics is always good policy. Republicans have the polls behind them, the American people are skeptical. So, they recognize that abject obstructionism isn't popular. The American people say if you are going to be opposed to something, you better come up with an alternative.

So they have got to thread the needle and do a little bit everything. Be involved, have their own ideas, fight what they disagree with.

EASTON: Yes, trick up their sleeve. They have to show up. You say they have the wind at their back, Carl, but there is also a lot of concern in the polls that the Republicans aren't compromising. Show them on camera that you are compromising, but show up with ideas. Show four clean, clear ideas, and make clear that the health care bill that passed the House is dead.

BAIER: Rick?

KLEIN: I would bring a prop, actually two props. One is the Democrats' 2,000 page health care bill and the other is what I would say the Republican idea, would be about this thick, and you say, Mr. President, here are ideas, you sign on right here, I can guarantee you 150 Republican votes in the House.

BAIER: Charles, you still there?

KRAUTHAMMER: Yes. Do you want the right answer?


BAIER: Yes, bring it.

KRAUTHAMMER: The right answer is c, a trick. Here is what you do. You show up and you designate one guy who knows a lot about all this health care stuff, your only spokesman. You don't have people raising hands and shouting questions. You pick Paul Ryan, who knows this stuff up and down. He is your David. You give him a slingshot and you send him up there.

BAIER: All right, listen. We don't want you to get in trouble there on the road. So we will send you along your way. Are you going to come in here or are you going back home? What's happening?

KRAUTHAMMER: I'm going to camp out here and I will make a fire and steak for the evening.


BAIER: Thanks for getting on the horn with us. We will have you back next time. Be careful out there.

All right, second topic, reconciliation, what the possibility is of moving this health care through with 51 votes. Carl?

CAMERON: In a lot of ways Democrats are right where they were when they began this process almost a year ago. They don't have the votes and they don't know how to get there. So they are looking at the possibility of bringing reconciliation out of mothballs. This is the idea that does away with the 60-vote threshold in order to shut down a debate and put it down to 51.

They recognize if they go that way, there will be huge partisan fallout. Republicans are going to be angry. Centrist Democrats are going to be angry. Guys like the budget committee chairman Kent Conrad is on the record saying this would be a bad idea not very long ago.

So they are still desperate for votes, they are still desperate for a way to get out of the wilderness. So they have got to keep talking about these things though they don't see the exit strategy yet.

BAIER: Rick, they are talking about it. A few of them are saying let's keep pressing. Let's do it.

KLEIN: And they would love to get rid of the filibuster. Of course when they were in the minority it's a much different situation. I feel like we had the exact same conversation a couple years ago.

That's not going to happen. The Senate rules are the Senate rules. They clearly don't have 60 votes for anything that's on the table now, so they build up from what they can get. And if they can get 51 votes or something through reconciliation I think they will do that.

I think ever more likely than that is to try to build around the pieces, around the edges. And if they can find some discreet ideas instead of a big, sweeping health care bill, some individual ideas that can get some Republican support, that's the best path forward, really.

BAIER: Nina?

EASTON: We are talking about reconciliation now. In a past Congress we called it the nuclear option, and you all remember that.

BAIER: It's all about timing, yes.

EASTON: I am going to praise the filibuster. I think this is a mechanism that is trotted out as something that is blocking Congress from getting stuff through, it's obstructionist. It's actually a great vehicle for bipartisanship. It forces some bipartisanship on the Hill. Otherwise we would have the Democrats jus ramming stuff through.

BAIER: All right, really quickly — Olympics start tonight, opening ceremonies started with bad news story about a Georgia luger who died in a training accident. But this Olympics has had a tough run already and it hasn't even started. Rick?

KLEIN: I feel a little bad for Canada, because they want to impress the world. They don't want to show that they are trying too hard. The luger, unfortunately, is a tragic incident. You need storylines in Olympics, and you don't want the storylines to be tragedies. So some of the character lines need to develop, and that's how you really get the people and American public involved.

BAIER: Nina?

EASTON: It's of course one of the problems aside from this tragedy is it has been warm there and a lack of snow. But I'm told that they — these athletes will perform even better in warm weather, and so I predict that our Vail girl Lindsey Bond will heal and do better and win medals.

BAIER: The shin will heal — there she is.

Vice President Joe Biden representing the U.S. up there. Carl?

CAMERON: It only happens every four years so you have got to give the athletes their day in the sun. But it's tainted by the idea that the extreme sports athletes aren't amateurs, they are the epitome of pros. Half the Canadian people think it costs too much and they're beginning to turn on their own Olympics.

And let's face it, we could ship a few bulldozers of snow from here and help them out on the slopes.

BAIER: That's exactly right. Charles could tell that story. Carl, thank you very much for sitting in, buddy.

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