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This is a full transcript from "The Beltway Boys," on June 9, 2007.

FRED BARNES, FOX NEWS ANCHOR: Coming up on THE BELTWAY BOYS, after weeks of withering attacks on both sides of the aisle, the immigration bill is lying near death on Capitol Hill.

MORT KONDRACKE, FOX NEWS ANCHOR: The fingerpointing is in full swing. We'll tell you how it will play out on Capitol Hill and in the presidential race.

BARNES: Newly indicted Democratic Congressman William Jefferson says he was set up by the Feds.

KONDRACKE: And President Bush tries to diffuse simmering tensions with Vladimir Putin.

BARNES: That's all coming up on THE BELTWAY BOYS, but first the headlines.



SEN. EDWARD KENNEDY (D), MASSACHUSETTS: This morning, I'm reminded of the 1967 Boston Red Sox team. The impossible dream team that was behind for a good part of the season but came roaring back and grabbed victory out of the jaws of defeat. And that's what we intend to do with the immigration bill.


KONDRACKE: I'm Mort Kondracke.

BARNES: I'm Fred Barnes. We're THE BELTWAY BOYS. The hot story is immigration bust. And I hope you get the double entendre there, you know, like the government people raiding illegal immigrants a bust and then this bill that's become a bust. You got that?

KONDRACKE: Very subtle.

BARNES: Anyway, Senate Majority Leader Harry Reid pulled the bipartisan comprehensive immigration bill from the Senate floor and, you know, it sure likes like it's dead, except for the fact that there's the chance for a resurrection. That's a small "r" resurrection. There really is. Now Kennedy has a very good analogy. The Red Sox came from last place the season before to first place won the pennant in the last day of the season. He did not didn't mention that they lost the world series to the St. Louis Cardinals. But first, here's what happened to the bill: there was a proposal by Mitch McConnell, the Republican leader, for more Republican amendments that would take a couple days to allow those to be debated on the floor. And Harry Reid said no because there was some mischief being done by Republicans opponents of the bill.

KONDRACKE: And there was.

BARNES: Of course there was, no question about it. Most of these amendments won't be passed, but McConnell is right, Republicans who have so much of their base against this bill, need to let off some steam. So listen to McConnell.


SEN. MITCH MCCONNELL ®, MINORITY LEADER: I think we are within a few days of getting to the end of what many would applaud as an important bipartisan accomplishment of this Congress.


BARNES: Indeed. But Reid pulled the bill and in the aftermath, mischaracterized President Bush's role, in a way, taking a shot at the president. Watch this.


SEN. HARRY REID (D), MAJORITY LEADER: This is the president's bill. This is the bill that we came up with. Democrats and Republicans working in unison with the administration, came up with a bill. We want to help.


BARNES: It's a funny way to help. I mean, aside the evidence Bush's bill is ridiculous—the bill was negotiated by Republicans and Democrats, a dozen of them meeting over a three-month period, and the White House was invited in sometime after the negotiations had already begun. So I don't know why Harry Reid was saying that. It was not to help.

KONDRACKE: The president is going to take part in the aftermath of this and try to save it. Look, this is—this bill is a major test of whether this Congress or indeed our whole polarized political system can solve any major national problem, whether it's health care or entitlement reform or energy or anything. And so far, you would have to say, on the basis of this, which everybody understands is a pressing national issue, the first big one that they've actually faced up to, the answer is no, that they simply can't do it. The good news here is there's deep chagrin on the part of almost everybody involved that it the thing failed last week, and it looks like it's only on life support. And secondly, they're encouraged by the fact there really is a majority, quite a substantial majority, in the Senate that favors this bill. Whether there is in the Congress, we'd have to find out down the line. Now to save it, what has to happen is first there has to be a repeal of two killer amendments that got passed. One, Byron Dorgan's amendment, that satisfied the AFL-CIO and to try to put limits on the guest worker program, which Hillary Clinton and Barack Obama, by the way, both voted for killer amendment. Secondly, there has to be a repeal of the John Cornyn amendment, a Republican amendment, which would have discouraged illegal aliens for every applying for this so-called Z-visa, which would allow them to stay in the country.
And then after that, the Republican leadership has to do what it couldn't do last week and that is to convince their side to limit the number of amendments that are going to be up for debate so that Harry Reid doesn't get agitated again and call for closure. Now what happened in the end is that people were putting their party loyalty ahead of their willingness to get any kind of a bill passed, and that's what brings down every kind of compromise that has to pass in this country.

BARNES: I think you've oversimplified it. Particularly, look, Mitch McConnell needed a few more hours to present a paired paired-down list of amendments that he wanted to bring up to Harry Reid and Reid said no. And so he shut the whole thing down. But anyway, McConnell and Jon Kyl and others who have worked so hard on this bill from the Republican side, and I think Teddy Kennedy from the Democratic side, are going to agree on a number of amendments and they will go to Harry Reid probably next week, for certain next week, and say look, here's what we've got, maybe a dozen amendments, and it will only take two days, and then we'll guarantee you a vote. Given the historical importance of this bill, that is not too much to ask. So the burden is going to be on Harry Reid. He can kill the bill and we'll know who killed if he says no. Otherwise, if this happens, I think the bill will pass, given dealing with those two killer amendments that you suggested. And one more thing, and you touched on it, some of these Democrats who are all for immigration reform, like Hillary Clinton and Barack Obama and I would mention Joe Biden and I would mention the Democratic leaders Reid, Durbin, and Schumer, voted for that killer amendment. They knew it was a killer amendment. Are they for immigration reform or not, or are they just hypocrites?

KONDRACKE: Well, I want to show you a delicious exchange that took place on the Senate floor between Lindsey Graham, Republican of South Carolina, one of the heroes of this thing and Obama. Watch.


SEN. LINDSEY GRAHAM ®, SOUTH CAROLINA: When you're out there on the campaign trail, you're trying to bring us all together. You're trying to make America better. Why can't we work together? This is why we can't work together, because some people, when it comes to the tough decisions, back away.

SEN. BARACK OBAMA (D), ILLINOIS: The notion that somehow that guts the bill or destroys the bill is simply disingenuous. And it's engaging in the sort of histrionics that is entirely inappropriate for this debate.


KONDRACKE: Now actually, what they were fighting about was an Obama amendment, which was not a killer amendment. Lindsey Graham was wrong, but he was right on the principle of Obama voting for the Dorgan amendment, which was a killer amendment now. Obama goes around and he's been very encouraging, talking about the new politics and how we've got to get beyond the partisan divisions and all that.

BARNES: You forgot the phrase, bring us together.

KONDRACKE: Yes, new politics. Anyway, and then when it comes down to it, he is pandering to the AFL-CIO here, which opposes this bill because he's running for president. Now I've got to say, there's a lot of pandering on the other side, too. When it came up in that Republican presidential debate in New Hampshire, where Rudy Giuliani, former one of the most pro-immigration mayors in all of America, and Mitt Romney, who is pretty pro-immigration himself in the old days, decided to denounce amnesty and all this kind of stuff to appeal to the base. Pandering goes on, on both sides.

BARNES: Mort, I want to add one thing, and I agree there is pandering. I happen to think that the Republican opposition to this bill of the base is legitimate. I'm glad they're voicing it. Jim DeMint, the senator from South Carolina is the main agent of it. I respect it, on the other hand, I disagree with him.

KONDRACKE: OK, I'm glad. Coming up, a shakeup in the ranks of the Pentagon. And Rudy Giuliani leads the exodus from this summer's Iowa straw poll. Stick around, our ups and downs are next.


KONDRACKE: Welcome back! Let's check the ups and downs for the week. Down, the Iowa straw poll. While it's traditionally been seen as a previous of how candidates will fare in the caucuses, this year's defection of John McCain and Rudy Giuliani as raised serious doubts over just how much influence the poll will have in the 2008 nominating process. Not only is the Iowa straw poll down, but temporarily and only temporarily perhaps is Mitt Romney, who has the best organized, best- financed of all the Iowa campaigns indeed is leading in the Iowa polls. So when Giuliani and McCain pull out of the straw poll this summer, it reduces the impact of his victory, because he was going to win it. And that's part of the reason they pulled out. But the fact is that Mitt Romney remains the best financed and best organized of all the Iowa campaigns. And if he keeps that going, he will the Iowa caucuses next January, and he's leading in New Hampshire, so he could score the first two victories and be on his way to winning the nomination. I'm not handing it to him.

BARNES: You really don't think that's going to happen, do you?

KONDRACKE: It could. Absolutely could.

BARNES: The world could come to an end. Which will come first, the Romney presidency or the end of the world? I'm just teasing. I agree with you. I think it's smart of Giuliani and McCain to drop out of the straw poll. And I'm surprised top-tier candidate haven't done that it in the past. It's actually August 11th in Ames, Iowa. Now I think one of these second-tier candidates ought to jump in and really do some organizing, because what the Iowa straw poll can do is give a secondary candidate a big boost.

KONDRACKE: Tommy Thompson has got a great opportunity.

BARNES: Who knows, something good might happen.
All right, down,General Peter Pace. The joint chiefs of staff chairman decides to retire instead of facing what was shaping up to be a rough denomination fight in the Senate.

KONDRACKE: Well, you know, the defense secretary, Bob Gates, was clearly down when he announced that Pace was leaving at a press conference on Friday. And he said—well, unhappy, and I don't mean down in up and down terms. He said he wanted to nominated Pace, but the prospects were that senators were going to use Pace as a whipping boy to reexamine former Defense Secretary Don Rumsfeld's war policies and why the brass, including Pace, were not more independent of Rumsfeld. That's what the hearings were going to be all about.

BARNES: The Democrats would never do that, would they? The truth is, when did it become the job of the chairman of the Joint Chiefs of Staff to be independent of the secretary of defense? I don't think that's his job. The idea is to get along with the secretary of defense. And, look, if he somehow split with Rumsfeld, he would have to split with the generals in Iraq as well who were following what we now believe I think was a mistake in strategy, one where the American troops were not involved in the counterinsurgency in Baghdad and in Anbar Province, which is what's going on now with General Petraeus.You know, I like General Pace. I think he's a great marine, a great patriot, I'll be sorry to see him go. And he certainly didn't fight for the change in strategy.

KONDRACKE: But, look, there are lots of generals who think that the brass under Rumsfeld was poodles, and were unable to voice legitimate descent from within the military ranks.

BARNES: These are all the retired generals.

KONDRACKE: A lot of them, I know some of them.

BARNES: My dad is a retired colonel. He always complained about what was going on after he retired.

KONDRACKE: They're all honorable guys.

BARNES: Of course they are.
All right, coming up, newly indicted Democratic Congressman William Jefferson speaks out. But first, President Bush tries to smooth things over with Russian President Vladimir Putin. That's coming up next.


BARNES: Welcome back to THE BELTWAY BOYS. We continue with our ups and downs for the week. Down, Vladimir Putin. After weeks of chest thumping, the Russian president seems to be backing down on his opposition to President Bush's plan to put a missile defense system in Eastern Europe. Here is Putin changing his tune Thursday after meeting with Bush.


VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): If we make this work transparent and if we provide for an equal access to the management of this, the system then will have no problems.
BUSH: What you just heard, the desire to work together to allay people's fears. There's a lot of people don't like it when Russia and the United States argue, and it creates tensions.


BARNES: It doesn't create tensions, it reflects tensions. Look, I think the president seemed a little bit surprised by Putin's proposal to erect an alternative missile defense system in Azerbaijan, which is an independent country. If Putin had consulted the Azerbaijanis.
But any place, the president to me looked actually pleasant surprised if that and Putin has abandoned all that tough talk about aiming his Russian missiles at Europe, if the president deployed missile defense systems in Poland and the Czech Republic. And they're going to meet in Kennebunkport, Maine, you know, at the Bush summer retreat where I know you're always invited up there, Mort.

KONDRACKE: I was sailing with the Bushes.

BARNES: Look, the president - I don't know whether they'll reach a compromise, but I think the president has defused this considerably.

KONDRACKE: Yes, well look. We've still got a lot of differences with Putin. He's still an autocrat who is mashing the freedoms of his own people. He still is trying to bully his neighbors all the time, using his oil and gas power. And he's undercutting our efforts to bring Iran's nuclear program to heal. So there's a lot to talk about at Kennebunkport. I'm sure it's all going to be sweetness and light. Anyway, down, Congressman William Jefferson. A federal grand jury indicted the Louisiana Democrat on 16 charges, ranging from bribery to money laundering. Here is Jefferson after his arraignment on Friday.


REP. WILLIAM JEFFERSON (D), LOUISIANA: The alleged facts in the indictment were contrived, many of them as part of a sting. And all of the allegations are misleading and all of the allegations are untrue.


BARNES: There you have it.

KONDRACKE: What Jefferson is apparently claiming is that he was all part of an FBI sting where he was supposed to take this money from the FBI and give it to a vice president of Nigeria, right? One problem that he's got to explain is how come the money, instead of going to Nigeria, ended up in his freezer? So I would say he's innocent until proven guilty, but he's got a lot of explaining to do.

BARNES: now the question has been asked, is it going to hurt democrats? The answer is obvious, of course it hurts Democrats. Look, their contention in 2006 was that there was a culture of corruption that belongs totally to Republicans. And, boy, did they milk that issue effectively in the 2006 election winning the House and the Senate. And I'll have to say, they were skillful, but that issue is gone now. All right down, Lewis Scooter Libby. He's facing two and a half years in prison for his role in the CIA leak case. And Mort, my take on this is that Scooter Libby was oversentenced. The sentence was so stiff and it seemed that he was being blamed for this entire flap over the CIA leak case, which has led to discussion whether he'll be pardoned or not by President Bush.

KONDRACKE: Should he be?

BARNES: I think he should be at some point. Maybe not today, but at the very least, there's not a clash here between a pardon and the rule of law. A pardon is part of the rule of the law and Libby has been prosecuted, tried, and convicted.

KONDRACKE: Well, he was convicted, and he was convicted of a serious crime. Perjury is a serious crime, and he ought to pay some penalty for it. I think he was oversentenced, you're right. Bush could commute the sentence, limit the sentence.

BARNES: What does that do?

KONDRACKE: He could serve either shorter amount of time than 30 months or no sentence but serve—or pay a fine or something like that.

BARNES: That doesn't erase the conviction.

KONDRACKE: I mean, he was convicted of something. I don't know why he committed perjury, maybe he didn't do it on purpose, but nonetheless he was convicted and he should pay some penalty. Hang on to your seats, "The Buzz" is up next.


BARNES: What's the buzz, Mort?

KONDRACKE: Well, win or lose, the heroes of the immigration debate were Jon Kyl on the Republican side, and hands down, Ted Kennedy on the Democratic side. And here's Trent Lott sort of paying tribute to Ted Kennedy. Watch.


SEN. TRENT LOTT ®, MISSISSIPPI: Senator Kennedy, I appreciate the legislative leadership you've been providing. I know it's not easy. Your own colleagues and those of us over here have been beating you up. You're a nice poster child, thank you very much for what you do.


BARNES: You know, I talked to Senator Martinez, Mel Martinez of Florida, who told me that the last thing that he thought he'd be doing when he was elected to the Senate would be working with Ted Kennedy and admiring Kennedy's part of the bill they were working on, this immigration bill. Now, Mort, you very ably described the two killer amendments that are holding back any—no, no, I mean, these are things that are holding back an ultimate agreement and the passage of a bill. There's a way out, and Republicans have actually thought of this and I suspect Democrats have too. There's the Cornyn amendment that Democrats don't like. OK, you drop it. There's the Dorgan amendment that Republicans don't like. You drop it. In other words, you do an amendment that gets rid of both of them. A one for one swap and you throw in some other goodies, smaller items, that make people feel happy. And that solves the problem.
Look, I'm not saying it will work, but it's a proposal that makes a lot of sense, don't you think?

KONDRACKE: I agree, absolutely agree and let's hope it happens.

BARNES: I hope it happens. And then we'll decide, it will be Harry Reid who will decide whether this goes forward or not. That's all for THE BELTWAY BOYS this week. Join us next week when the boys will be back in town.

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