'Special Report' Panel on Politics, Government and Budget

This is a rush transcript of "Special Report With Brit Hume" from November 13, 2007. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SEN HARRY REID, SENATE MAJORITY LEADER, (D) NEVADA: When a president continues to ask for billions of money that he knows is going to be borrowed in Iraq, he today vetoed one of the most important bills that we could send him.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: Congress needs to cut out that pork, reduce the spending, and send me a responsible measure that I can sign into law.

(END VIDEO CLIP)

BRIT HUME, HOST: Well, there's a fight for you. The president has vetoed another bill. This one funded the Department of Labor Health and Human Services, and Department of Education, none of them particular favorites among Republicans anyway.

But the Democrats say that the amount of money that's involved is minor, that he is doing this for political show. But the battle is joined, as it has been on a whole series of other issues.

Some thoughts on all this now from Bill Kristol, Editor of "The Weekly Standard," Nina Easton, Washington Bureau Chief of "Fortune Magazine," and the syndicated columnist Charles Krauthammer, Fox News contributors all.

Nina, you've wrote about this particular fight over this particular bill. Is this a veto that the president can sustain, in your judgment?

NINA EASTON, WASHINGTON BUREAU CHIEF, "FORTUNE MAGAZINE": This is part of the president's trying to remake himself as a fiscal conservative.

After we saw the Transportation Bill a couple of years ago, which was pork-laden, had the bridge to nowhere, and horse trails for Virginia, et cetera, signed by the president, he has been accused by conservatives for not being fiscally conservative.

So now the White House is determined —

HUME: Will he win this, do you think?

EASTON: I think he could win it. But you have to look at the bigger battle, and the bigger question is can the Democrats — what they are trying to do is regain, or gain the reputation of fiscal conservatives. And they will continue this battle over and over again, sending these bills—

HUME: How are they going to get that if they are sending bill —

EASTON: That he says are too expensive. They're going to try to, not only on this, but on the broader issues, say that it's — as they pointed out today, priceless for the president to consider himself a fiscal conservative.

But also they are trying to show him as mean-spirited, whether it comes to HHS or S-chip.

BILL KRISTOL, EDITOR, "THE WEEKLY STANDARD": The good news for the Republicans is that the president is picking these fights with a Democratic congress. Bush is not on the ballot, he is not running in 2008. The Republican nominee won't come from the Bush administration in 2008.

The Democratic nominee will come from the Democratic Congress, most likely, if it is Senator Clinton or Senator Obama, and the Democratic Congress will be an ongoing issue in November 2008. They're on the ballot again.

And I think the Bush administration and the Republicans in Congress are doing a pretty good job of defining this Democratic Congress as a pork- spending, tax-raising, Iraq defeat-embracing, no-terrorist-eavesdropping — that will be next month when the debate on the terrorist eavesdropping bill comes up — Congress.

I think this Democratic Congress is a problem for the Democratic Party next year.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: That's a good bumper sticker, but you need a hummer to put it on.

The president, I think, is playing his very weak hand very well. As of a year ago he was pronounced dead. But he did what Clinton did after he lost the midterm election, losing both Houses of Congress, he proved once again he is relevant.

And the president did it with a weaker hand because he was in year six, when his is a lame duck, and also with an unpopular war, which is draining all of his popularity.

But I think the big stroke he did is he doubled down his bet on Iraq right after the election last year. It is because of that that you have had the surge, you've had the relative success.

And even though you have had a minor swing in public opinion, it's large enough that it's influenced the Congress, and he has remained in control of the war policy.

And what's hard for Democrats above all is not this spending stuff, it's the fact that they claimed a mandate to end the war and they haven't, which hurts them on their left. But among moderates and independents, and others who don't want to see America defeated, they appear as a party anxious to shackle the war effort in a way to ensure defeat.

So it's a lose-lose proposition on Iraq. Iraq already was going to hurt the Republicans, and they had already taken their political losses. Now, this year, the real story is Iraq has really hurt the Democrats.

EASTON: I agree. I think this is more than the spending is the toughest nut for the Democrats. Nearly half of Democrats think, voter Democrats, think that the party leaders have not done enough to challenge George Bush over Iraq.

HUME: In the Political Journal that came out, they did a tally on the number of votes that had been taken in one way or another to halt or impede the war in Iraq. There were 40 of them, and none of them has become law. So they are 0-40 on Iraq.

EASTON: Yes, 0-40. They passed one, and the president vetoed it.

They're stuck in this position. They're going to get caught up now, particularly in presidential politics. They're getting nipped on their left by presidential contenders, not just the party base.

And then they've got not only moderate Republicans not willing to jump onboard with this, they've got conservative Democrats — a lot of those new Democrats who came in are more reluctant to get onboard.

KRISTOL: Yes. Those conservative Democrats, I think, should start watching out for their future. They're following Nancy Pelosi and, I think, in the Senate, as well, they're following the Democratic leadership down a dangerous road politically for them.

HUME: When we come back, the deepening crisis in Pakistan. Can diplomatic troubleshooter John Negroponte make a difference there? More with the all-stars on a dangerous place when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PERVEZ MUSHARRAF, PAKISTANI PRESIDENT: She is trying to gain public support. She has come here with utterances which have gone against public opinions. I don't think she is reading the pulse of the people of Pakistan.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: He has agreed to hold elections in January, and he's agreed to take his uniform of. And our judgment is that the sooner he can suspend his emergency decree, the faster Pakistan gets back on the road to democracy.

(END VIDEO CLIP)

HUME: Well, folks, did you catch what Musharraf said, enlisting grievances against Bhutto? He says she's trying to gain public support — Oh, my god! She's coming here with utterance which have gone against public opinion. She's not reading the pulse of the people of Pakistan.

All of which raises the question, if all that's true, then what is he worried about? Charles?

KRAUTHAMMER: He is worried about being eased out, and that's why he declared martial law.

This is a very hard situation from the American perspective, but it is not hopeless, at least not yet. The reason it isn't hopeless is because there is an endgame here, which we can see.

If we can achieve an endgame in which you have elections in January, and you have Bhutto and her allies winning, and earning legitimate power, you have the Musharraf stepping down in the military, and his deputy, to the extent that he is political at all, is pro-American and anti-Al-Queda, is dependable. And then you try to ease Musharraf out in January.

But how do you get from here to there? The real problem is you've got to get a lifting of martial law, otherwise Bhutto will boycott elections, it will be a farce, and you will have a crisis.

A compromise might be where Musharraf declares a date of elections, say early in January, and four weeks before lifting a martial law in order to permit campaigning.

If you have that kind of compromise, and if there is nothing radical that happens between now and then—which means nobody dies — up until now, the military has been pretty gentle by the standards of that part of the world with demonstrations. Nobody has died.

The minute you've got a dead man, a martyr, and a bloody shirt, then you cannot undo what has happened.

Up until now, I think Bhutto has been moderate and cagey, and you could walk that dog back. If there is a death and a confrontation, I think it will be impossible.

EASTON: You have to hope that this is all a grand piece of political theater, which some officials have suggested it is.

HUME: You mean that they both know how this is going to come out, and they are just acting their parts?

EASTON: There is a poll that showed Bhutto at 26 percent support, and Musharraf at 21 percent. The former prime minister has some amount of support.

It is not a done deal on who would win an election, but you have to hope that this won't lead to further violence, because that will destabilize things. Clearly, the administration is trying to play the waiting game, not cutting off aid, saying they're reviewing aid but not cutting it off, not pulling the rug out from Musharraf.

KRISTOL: They are sending Deputy Secretary Negroponte over there earlier this weekend. This is the Marcos moment, I think, where we tell our ally, the friendly and decent dictator, that his time has passed.

The problem with these friendly dictators is they end up wanting to hang on, they like being dictators beyond when it is in their country's national interest, and beyond when it is in our interest.

I think this actually manageable. I do think Musharraf is going to have to go.

HUME: But if he goes, he would probably have to leave the country. First of all, we're telling Musharraf to step down from the presidency — or we expect that he will lose — that he has to strip himself of his military authority, which means he doesn't have that job anymore. He is really a man without a job, and, perhaps, a man without a country, right?

KRISTOL: Well, Marcos went to Hawaii. But Musharraf might not have to leave. Pakistan is not a place where they go — they have occasionally killed ex-presidents. But there this is big civil society there. This is not Iran in 1979. I think it is a mistake for people to use the Shah of Iran analogy.

There are not Khomeinist Islamists in the streets of Islamabad. There are lawyers and normal people saying give us back democracy in the streets of most of the major cities.

There is a terror problem in the northwest of Pakistan, which Musharraf, unfortunately, has not cracked down in the last year.

HUME: And certainly not since martial law was declared.

KRISTOL: No. And we made a very disastrous deal with him about a year ago. So I think it's going to be tough. It's delicate. I'm moderately optimistic that this will come out OK.

HUME: So your view is watch Negroponte?

KRISTOL: Watch Negroponte and what message he delivers in private.

HUME: Do you agree with that?

EASTON: Yes. And I agree also that it just has to play out further, and hope that there is no violence.

KRAUTHAMMER: His job is to ease out Musharraf, not now, but after elections, guarantee him safety and security, and have a tacit agreement with Bhutto about that.

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