This is a rush transcript of "Special Report With Bret Baier" from April 5, 2010. This copy may not be in its final form and may be updated.


CHRISTINA ROMER, COUNCIL OF ECONOMIC ADVISERS: We'll grow about three percent real GDP in 2010. That's not a lot to get a lot of job growth. We'll get positive job growth, it will be enough to bring the unemployment rate down a little bit. But you need faster than that to really make a dent.


JIM ANGLE, FOX NEWS ANCHOR: OK, we're talking jobs. Let's bring in our panel, Fred Barnes, executive editor of The Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Administration officials had once argued the $800 billion stimulus would have us in an unemployment rate of less than 7.5 percent by now. Instead it's about 9.7 percent.

Over the weekend, as you heard Christina Romer say, they're a little more cautious these days Charles. For instance, if we continue to create jobs at the rate on Friday, even though that was a little padded by the fact we had census workers, it would take more than four years to replace the jobs lost in this recession. So we still have a long road ahead.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: And that is why administration was talking to Dan on the weekend. They were burned as you indicated from their predictions early on with stimulus. They were so wildly off in what was the implied promise that this stimulus would keep us from reaching eight percent, 8.8 percent, that they have had trouble with the stimulus politically ever since. So that is not going happen again.

They also understand, as Romer indicated, that with the growth of three percent the job recovery will be really slow. Secondly, I think the one thing that was unstated was we now have had a significant spike in oil prices up to $87.

And if you think about what happened in '07, '08, we went to astronomical oil prices coinciding with the banking crisis, and that really made it much worse. So we're going to get a squeeze on the American economy as a result of our dependence on oil and the rise in prices.

And lastly is this quirk in the way we do numbers, which is that the discouraged are not counted, if you stop looking for a job. So as economy improves as it slowly improves, you get people who return and look for jobs. And they get added onto the unemployed, so you get an artificially higher number than you would, otherwise.

It's for all of those reasons that I think that Romer and the others are very cautious in predictions about a recovery of unemployment.

ANGLE: What is your sense, Mara?

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I think they're right to be cautious. The last thing you want to do is oversell a recovery when a lot of people are out of work.

The problem for the administration and for Democrats in Congress is that they need the economy to be better by November, and it's not going to be better, or at least that gross unemployment number. I think they'll be able to make the argument it's going in the right direction. We had a good jobs report on Friday, GDP growth will be continuing, jobs will be created, but the unemployment number I think is going to be very stubborn.

Republicans are going to point to that gross number and it say it's still high, too high. And the administration is going to say it's going in the direction and it could be worse. It's just a difficult economy to go to the polls with.

ANGLE: Fred, let me shift a little bit. One of the White House advisers Larry Summers says you know the way to create jobs is for us to double our exports. The problem is that they're about to do a report on China about whether or not China was manipulating it's currency making their goods cheaper here and our goods more expensive in China making it much harder for us to increase exports. Let's listen to what he said.


SUMMERS: It's being delayed because that is part of our international economic dialogue. It's directed in supporting a crucial issue for jobs creation, doubling our level of exports, and that depends on what other countries do.


ANGLE: This deal is they're going a report shortly on whether or not China has been manipulating its currency. They have decided to delay that report. Why? Is it because we're depending on China to keep buying our debt and we need them on Iran sanctions, or is it because we're trying to give China one last chance to do right thing?

BARNES: Well, all three of those are actually part of it. And clearly the Chinese do manipulate their currency. It's served them well over the years. They don't care about the rest of the world. They care about China, and so they continue to do this.

This Chinese now are getting worried about the world playing along with this much longer, and they have appreciated their currency slightly in the last several years and they'll probably do a little more.

But I think what President Obama is looking for is for them to help out on sanctions against the Iranians and their nuclear program. The Chinese, I mean it depends on what day of the week it is. One day they're for joining in and helping to draft a new sanctions message that the U.N. would presumably adopt after arguing about it for three or four months, then the next day no, no. They're for diplomacy, they're not for sanctions.

And so I don't know what they're going to do, but they're not going get much out of it. I don't think Obama is going get much from them. Not the kind of sanctions that would really have some affect on the Iranians.

One other thing about this recovery, and that is normally, a normal recovery, and this one is much worse than a normal recovery, you get when you have a sharp drop as we did in our economy, afterwards you get a sharp rise if you're dealing with the economy appropriately.

The American economy always wants to recover. The American economy is an organism that wants to grow. But this one isn't, it's not rising sharply at all. I think what Christina Romer said is evidence of that.

ANGLE: We want to get one other thing in here. We're squeezing a lot in ion the economy. And that is on Friday the president was doing a town hall meeting on health care, and you had presumably a supporter, who knows, stood up and asked a rather pointed question. Take a listen to this.


UNIDENTIFIED FEMALE: The economic times that we have now, is it a wise decision to add more taxes to us with the health care because we're overtaxed as it is?


ANGLE: Well, that prompted one of the longest answers in the annals of presidential town hall meetings, a 17 minute answer, six full pages while the president dealt with what is a rather sensitive topic, Charles.

KRAUTHAMMER: I don't know why you're so surprised. It's only nine times the length of the Gettysburg Address, and after all Lincoln was answering an easier question, the higher purpose of the union and soldiers who fell in battle.

The president had an easy answer. He could have said I wanted to make history with health care and to do it, and to make the CBO numbers look OK, I have to raise your taxes. Sure, it's not a good time economically in the middle of a recession, but politically, I had to because I have a window, a majority in Congress and I'm going to lose in November. End of answer.


LIASSON: I'll give you an alternative answer.

KRAUTHAMMER: That is the correct answer.

LIASSON: He should have said your taxes are not going to up if you make under $250,000.

BARNES: But if you give that answer they'll know why he's been unable to sell his health care bill.

ANGLE: Afghanistan's president is shaking up things up a bit here in Washington. Tell us what you think the U.S. should do by voting in our online poll. Go to our homepage at Foxnews.com/special report. We'll talk about the situation with the panel in three minutes.


ANGLE: And we're back with a panel. They're have been several days of odd statements from Afghanistan President's Hamid Karzai, first criticizing the role of the U.S. and U.N. in his country, and then making an odd statement about possibility of joining the Taliban which brought this from an American official.


P.J. CROWLEY, STATE DEPARTMENT SPOKESMAN: I haven't seen a particular transcript of what he said, but what he says, you know, does have an impact back here in the United States, and he should choose his words carefully.


ANGLE: Well, to suggest in whatever context that you might be forced to, or find yourself joining the Taliban clearly would have impact here, probably there, too. Charles, what on earth is Hamid Karzai up to?

KRAUTHAMMER: I think it was an extreme hypothetical.

What we have here is the problem of an unruly client. The problem with Karzai is that he's the worst ally except for all the others. We're stuck with him, and we're not in Afghanistan because of him but for our own perceived national interest. We're stuck with him. We're going to have to tolerate this.

Now, I think there is a way you can play this to your advantage. That is you want a client, someone who is behalf you're fighting a war, which is what's happening in Afghanistan to have nationalist credentials. So more he builds them up, the better it is, because he then gets authority in the country.

We have a similar issue with Maliki in Iraq. There were time he defied us and there were times he won't do what we wanted. But in the end you have to play it in a way where you use it to your own advantage because stronger is he in internally the better it us for us.

And what you do is you do not attack him as we did, as Obama was on his way over to Afghanistan, saying we're going read them the riot act on corruption. You don't do that and leak it. You do it in quiet and in public hail him as a liberator.

LIASSON: I think if Karzai was doing this in a calculating way to boost his nationalistic street cred while maintaining his staunch alliance with the west — I think it's worse than that. I think he's unbelievably unpopular at home because he's corrupt. I think he lashed out at the United States because had just been lectured to and he didn't like it.

The White House said many times that you can't do correct counterinsurgency without a credible local partner, and they doubted very much his ability and willing to do the things necessary in Afghanistan to make this work. And here, he's showing us once again, how he's probably isn't very able or willing.

However, I agree we Charles that we have no choice and he we have to stick with him and hope that we can build up a credible national government around him.

ANGLE: Go ahead.

BARNES: Yes. I was going to say I agree with the State Department spokesman that Karzai should choose words more carefully. So should members of the Obama administration, because, as Charles suggested, there's a way to handle him. Others have done it well.

Senator John Kerry went there and got Karzai, remember this, last year after the election got him to agree to a second election. And then, his opponent dropped out. But Kerry dealt with him behind the scenes. He didn't say I'm going brow beat that guy and make him agree.

And General McChrystal has done a very good job of dealing with the commander in Afghanistan. But if you announce ahead of time you're going to brow beat him, and then afterwards saying he's not doing what we need him to do, you're going to get outbursts like this.

So there is a way to deal with him. The Obama administration, I suspect will learn from their experience in the last week that the way they were dealing with him was not the right way.

ANGLE: It also seemed possible he was trying to get buy-in from local commanders because it was in that context that he sort of laid this out to say if you don't buy in on this, if you don't support this, then, we might as well —

KRAUTHAMMER: And he's talking to 1,000 or so tribal leaders in Kandahar, the heart of the insurgency. These guys know if you make a mistake, you and your family and their children are dead. So it's a tough situation.

He comes there and said if I didn't think this would work I'd be on other side. But he's a guy who has to speak to a contingency which is worried. Americans are going to be start leave in a year. So these guys have to worry which side am I on? Who is going to be standing in the end when my family is threatened?

LIASSON: I think this is a very tough situation. I disagree with Charles on one thing — we might start leaving, but we are not going to leave for many, many years. There is going to be a lot of us there for a long time.


LIASSON: Yes. Yes, because we can't.

BARNES: Remember who elevated Karzai in the first place — the U.S. He's our guy. We're stuck with him.

ANGLE: That's it for the panel, but stay tuned to see why President Obama did not make the cover of one popular magazine this week.

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