All-Star Panel: Deal to avert government shutdown until after election

This is a rush transcript from "Special Report," July 31, 2012. This copy may not be in its final form and may be updated.


SEN. HARRY REID, D – NV, MAJORITY LEADER: The speaker and I and the president have agreed how we are going to fund the government for the next six months. We're in agreement -- we're going to fund the government for the next six months through the first quarter of 2013.  It'll provide stability for the coming months. It will be free of riders. And this is very good.


BRET BAIER, ANCHOR: Senate Majority Leader Harry Reid today on a continuing resolution agreement. In fact, Speaker Boehner weighed in on that, too, saying, quote, "Leader Reid and I have reached an agreement by which the House and Senate will approve a six-month continuing resolution in September to keep the government operating into next year. During the August district work period, committee members and their staff will write legislation that can be passed by the House and Senate in September and sent to President Obama to be signed into law."

So basically -- we're back with the panel -- this kicks the can down the road into next year, past the election. Susan, a good thing for Republicans and Democrats avoiding this big battle?

SUSAN MILLIGAN, U.S. NEWS AND WORLD REPORT: Yeah. It's good for both of them. I know that each party thinks the other one will be blamed if it drags on past the election. But the reality is people will just hate Congress generically. It means they will hate incumbents. So it's not good for either party if this just goes on without any resolution. I mean it's not addressing the debt and the deficit of course, but people aren't going to see the library shut down.

BAIER: Steve, people would look at this maybe and say this is Washington. This is what happens in Washington. And this is, there is some frustration already from some groups, including Tea Party groups and conservatives in Congress saying this is not a good deal.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Yeah well there was a group of Republican senators, conservatives, Tea Party-friendly senators, Jim DeMint, Marco Rubio, Ron Johnson and others who were trying to push House Republicans to pass something with spending levels at a slightly lower level that they thought would have reduced the leverage that Democrats would have when it comes to raising taxes on the wealthy after the election. This obviously takes that away. I mean, I suppose if you want to defend John Boehner what you would say is, nobody wants to have this fight before the election and we're going to have all -- we're going to fight about all of these big issues in the course of the next three-and-a-half months as a part of the presidential election. I'm sympathetic with the argument that the Republican senators were making.

BAIER: Big items, that is what both Governor Romney and the president have been talking about, the economy. We are expecting new jobs numbers in just a number of days. Listen to the White House press secretary talk about the economy overall and Governor Romney in an ad.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The president is not satisfied with where the economy is. He knows that the American people by and large are not satisfied with where the economy is. And that is why he is doing everything he can and he is urging Congress to do everything it can to take action. To help the economy grow faster and to help it create more jobs.

ROMNEY: The real experience was in Massachusetts I found a budget that was badly unbalanced. We cut our spending. My legislature was 85 percent Democrat. And every one of the four years I was governor we balanced the budget. And I want to use those experiences to help Americans have a better future.


BAIER: Charles, what about the numbers here, how they are adding up for the Obama campaign and the Romney campaign heading into the next three months?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, you can see how damaging it is to the Obama campaign when you watched Carney's response. What can they say? All they can say is it's not a good economy. We believe it's not a good economy. And the only possible argument they have is that we have a lot of measures in Congress. Congress is holding it up. There's nobody who is over the age of nine who believes that there is anything in the Congress now that will change the course of the economy anything serious. So they have essentially no argument whatsoever on Obama's economic stewardship.

And that is why every time any of this presidential debate is about the economy, the state of the economy, the Democrats have nothing that they can offer. And I think that is why the Romney strategy is to try to stay on message over and over again. What we saw in the Romney ad is a positive way to attack it without necessarily attacking Obama, because everybody understands Obama is in charge, he's been around for the four years. And if that's what the election hinges on, Obama is going to lose.

BAIER: Susan, quickly, I want to just talk about these bankrupt cities and the ones that may be facing bankruptcy. There is a long list and it's growing. Here in Stockton is one of them, already declared bankruptcy, and there are a number of them are on the brink. How do you think that factors in? Most of these cities are dealing with pensions that they promised, negotiated during boom times, and now they are saying you know we don't have the money.

MILLIGAN: Well, yeah, they were always going to be in the worst position with a recession; particularly, at this stage because they can't run deficits like the federal government can, which is why Romney is saying he had a balanced budget, everybody has a balanced budget in the states. You have to have a balanced budget. And they have these pension obligations and it's a very difficult situation. They are in a position of cutting police or cutting teachers.

Of course the Obama campaign would say when the stimulus, you know, when that money for the teachers ran out that's one of the reasons that they lost some of those positions as well. But, yeah, it's a definite problem for these cities. I'm really not sure how it's going to play out in the campaign. A city like Detroit isn't necessarily going to blame the president for that. I think if they hadn't gotten the auto bailout they would have been in a much worse position. But they are just in a no-win situation there.

BAIER: Yeah, and a lot of these cities did overspend as well and made decisions with their city councils.

We want to end the panel with this. White House Communications Director Dan Pfeiffer has apologized to Charles for criticizing his column which described the removal of a bust of Winston Churchill in the White House. Pfeiffer has posted this apology on the White House website. He writes that there was "internal confusion about the fact there were actually two busts." He says there was no intent to deceive, but adds, quote, "I clearly overshot the runway in my post." All right, Charles, reaction there?

KRAUTHAMMER: I must say it's a gracious apology. I was stunned. I didn't expect it to happen. I actually wrote in my column that I thought the Nationals would win the World Series before I'd see an apology. So now I suppose the Nationals are not going to win the World Series. But it's a gracious apology. They are still clinging to a tiny point on this, but the argument is over, and I appreciate the correction and retraction.

BAIER: And we can still have the Nationals win the World Series.  Come on, you got to believe.

All right, panel, thank you very much for the Brady Bunch effort today. That's it for the panel, but stay tuned for more about our road show.