This is a rush transcript of "Special Report With Bret Baier" from May 19, 2010. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: I think the Arizona law has the potential of being appl ied in a discriminatory fashion. After it was initially passed, the Arizona legislature amended it and said it should not be carried out in discriminatory way. The judgments that are going to be made in applying this law are troublesome.


BRET BAIER, ANCHOR: President Obama welcomed Mexican President Felipe Calderon to the White House today and both leaders took turns slamming the new Arizona immigration law. At the arrival ceremony this morning, Calderon called for unified border to protect undocumented Mexican immigrants.


FELIPE CALDERON, MEXICAN PRESIDENT: With a community that will promote a dignifying life and an orderly way for both our countries who are some of them still living here in the shadows with such laws as the Arizona law that is placing our people to face discrimination.


BAIER: It came up today a lot. What about this? Let's bring in the panel, Fred Barnes, Executive Editor of The Weekly Standard, Erin Billings, deputy editor of Roll Call, and syndicated columnist Charles Krauthammer. Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I am sort of offended when the president of Mexico speaks, he said criticizing the Arizona law, saying it's placing our people in face of discrimination. If they are his people, what are they doing in the United States? If they're his people, why do they leave Mexico, abandon his country, to live under the jurisdiction and the laws of the United States?

You can't have it both ways. Particularly coming from Mexico, a country where if you enter illegally it's a felony and you get up to two years in prison. And if you do it a second time you get up to ten years.

BAIER: In Mexico.

KRAUTHAMMER: In Mexico. So he has a country that's extremely strict, draconian, if you like, about illegals entering into Mexico, and he's lecturing us on our laws here where it isn't a felony. It's only a misdemeanor.

And then even worse is our president refusing to stand up for his own country, joining in the attack in Arizona. And the president says he understands the reaction of Arizonans to the absence of comprehensive immigration reform.

It's not the absence of comprehensive immigration reform. The reason for that law isn't the absence of amnesty. It's the absence of securing the border, and it's the dereliction of the federal government which is at fault, and the president isn't lifting a finger to do anything about it.

BAIER: I should point out you are going to a black tie dinner tonight, but not the state dinner.

KRAUTHAMMER: No. I had thought about crashing it. But if I was caught I'd say — my defense would be — I'm simply an undocumented guest, not illegal.


BAIER: I had to explain the tux.

Erin, the line that the president says "I think the Arizona law has potential to be applied in discriminatory fashion." Doesn't that really apply to any law on the books? Any law has potential to be applied in discriminatory fashion?

ERIN BILLINGS, ROLL CALL: That's a good point. The president today was trying to thread the needle. He had the president of Mexico here and had to pay a certain amount of lip service and welcome him to a manner he's accustomed and should be treated.

He also has Hispanic Americans and Hispanics in Congress he needs to throw a bone to. They clearly want comprehensive reform, immigration reform. He has got to appeal to them.

And then the Arizona law, which polls show is fairly popular. More than 60 percent of the American public thinks this is good thing.

I think the president has to — it's a delicate balancing act for him.

BAIER: The president said he wants to get comprehensive immigration reform done. That's what he said. He said he needs help from Republicans. You buy that?

BILLINGS: I'm not buying that. In fact, one of our reporters talked to Lindsey Graham tonight who said I don't know where, I don't know who he is talking about. I don't think he has the Democrats.

He said there is probably 12 Senate Democrats that don't have any interest in looking at this, and certainly not in 2010. Comprehensive immigration reform, there is no time for it and there is no appetite for it.

BAIER: Fred?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: She's right. Erin's right. That's true. He needs to get Democrats first and then worry about the Republicans.

President Calderon said he wanted to be respectful of the policy of the United States. And then he was disrespectful. This is a man who has no standing to criticize American policies on immigration.

Bret, do you know how much Mexico does to stop illegal immigrants from entering the United States? Zip, zilch, nothing. So then he lets them in against our laws and then criticizes our laws which might crack down on them.

Look, if I go to Mexico and I lose my passport and I can't show it when they want to show it to me at a hotel, which they would require it, I'd be in big trouble. And yet he thinks asking someone who has already been stopped by a policeman, by for some other reason, a traffic stop or something, asked about, asked to show documents that he is here legally in the country, that that is a huge affront.

Look, President Calderon has no standing to criticize Arizona or the United States on this issue.

BAIER: So Charles, where does this go from here?

KRAUTHAMMER: I think there is nothing that will happen in the legislation this year. I think it will become an issue because I think Obama before his election campaign will want to appease the Hispanic constituency that's left on the issue.

But I think it's a loser. In the long run, I think Republicans, the Karl Rove idea that Hispanics are a growing population and you don't want to alienate them, and that's why he was in favor of comprehensive reform.

But in the shorter run, in the next year or two or three with these amazingly high numbers supporting the Arizona law, it's a loser. I think Republicans would welcome a debate on this in 2011 and '12.

BAIER: Erin, real quick. Attorney General Eric Holder last week we learned he did not read the 16-page law. Yesterday, we learned that Homeland Security Secretary Janet Napolitano had not read — they both said they glanced at it.

We don't know whether President Obama read it or not. He talked like he looked at the statute actually, but no one asked about it. There is bit of a disconnect about what is being said and what is actually in the law.

BILLINGS: I think we need to listen to our parents. Didn't they tell us to read before we went to class?

Yes, I mean I think there is a little bit of a disconnect. I imagine the president probably read it knowing how deliberative he is and how thorough he likes to be. However, you don't want to go before a panel of members of Congress and say I haven't read that, especially if you are the attorney general of the United States.

BARNES: I sincerely doubt that the president has read the bill. I'm in favor of comprehensive reform. I'm in favor of amnesty for illegal immigrants who have been in the United States for a period of time.

But there is only one way to get it. You know what it is? To build a wall that hasn't been built along the southern border, or at least increase the security many times to stop illegal immigration. If you don't do that first, you don't get comprehensive reform. And if President Obama wants that he better understand that.

BAIER: Go to the homepage at foxnews.com/SpecialReport. Vote for the topic you want to discuss on the Friday lightning round.

Up next, the fallout from Tuesday's primary elections. We'll be back in three minutes.



REP. JOE SESTAK, D-PA., U.S. SENATE CANDIDATE: This is what democracy looks like.


A win for the people over the establishment, over the status quo, even over Washington, D.C.!


RAND PAUL, R-KY., U.S. SENATE CANDIDATE: I have a message, a message from the Tea Party, a message that is loud and clear and does not mince words. We have come to take our government back.

SEN. BLANCHE LINCOLN, D-ARK.: I believe I'm a part of the solution to what is not working in Washington.


BAIER: Just some of the sights and sounds from last night, a big night. We're back with the panel. We start with the big race in Pennsylvania. The Senate race pitting Joe Sestak against Arlen Specter, Sestak the big winner. What about the fallout from this? Charles?

KRAUTHAMMER: I think it's very simple explaining that election. Specter demonstrated the limits of political opportunism. Even by senatorial standards he exceeded it by a margin that was impossible to absorb and to take.

BAIER: Erin?

BILLINGS: Two things. I think it was the party switching, and clearly Mr. Sestak did a good job exploiting that. And two, it's the anti- establishment. Obviously, Specter has been around for a long, long time. And that's what we saw.

BAIER: Fred?

BARNES: You know, Democratic voters voted five times in Pennsylvania against Arlen Specter for Senate when he was a Republican. And just because he switched a year ago he just couldn't get majority to vote for him as a Democrat.

BAIER: Sestak will go up against Republican Pat Toomey, and Toomey is already saying Sestak is the inside Washington guy who will vote for Obama every time.

BARNES: That is not the issue if you're establishment or anything like that. They'll all say the other guy is. What you vote on is do you like Obama's policies or not? Do you like the health care bill or like the way the economy is or cap and trade? That's what matters.

BAIER: Pennsylvania house district 12, the 12th district, won by the Democrat Mark Critz going away really. This was a big win for the Democrats played as such today. Fred, what about it, the fallout on both sides?

BARNES: It was a big win for Democrats for sure. It is a heavily Democratic district and the Republicans ran a bad campaign.

On the other hand, both candidates were against Obama and the policies. Mark Critz the Democrat said he is against abortion rights, he's against gun control. He said he would have voted against the Obama Democratic health care bill. He said he would have voted against cap and trade.

This is a guy who got to the right of the Republican candidate and accused the Republican of being a tax raiser. So look, a Democrat — and it's true. If Democratic candidates do that, repudiate their own party all over the country, they will win a lot of seats.

BAIER: Erin, that district is used to Jack Murtha bringing home the bacon, the pork from Capitol Hill.

BILLINGS: Indeed. He was one of the pork kings, if you will.

But this was a smart campaign. He ran very local. That's what he needed to do. And I think the message that the Democrats got on Capitol Hill today beyond the fact that, oh, my goodness, maybe it's not the tsunami we thought it would be in November, was, hey, you guys need to run your district.

What I'm going to be interested to see is how they re-calibrate or how they go forward. Are they going to say, all right, we'll stick to the plan for the safe votes and we're not going to force, you know, don't ask, don't tell and immigration reform and some of the really sticky toxic issues down the throats of the vulnerable members that really they can't afford to take them.

BAIER: Charles, voter registration was two to one for the Democrats. John McCain did win the district the last election. But did Republicans oversell this race?

KRAUTHAMMER: Yes, look it was tilted Democratic because of a heavy contested senatorial campaign. So that brought out a lot of Democrats, which helped this.

But I think it's reminiscent of what happened in New York 23 in the elections last November where Republicans swept in Virginia and they swept in New Jersey statewide races. But the one race they lost was a House race, which was localized. The issues were localized.

Here again, across the board, it was a good night last night for Republicans, but this House race, I think it demonstrated if you run in your district on local issues, you stay close to the ground. You stay away from nationalizing an election and stay away from Obama and Pelosi and the Democratic agenda in Congress, you have a chance.

I think that there was hubris among Republicans, and I would be included on, this on election night on January 19th after Massachusetts. It's not a slam dunk that it will be a complete sweep in November.

BAIER: Quickly, Erin, Kentucky, Rand Paul a big winner on the GOP side and he will go up against Attorney General Jack Conway. That race?

BILLINGS: It will be interesting to see. Rand Paul has a lot of momentum right now. Obviously, he has the Tea Party movement. He has an interesting dance.

He has to negotiate here, because he will have a big unity rally this weekend with the establishment, but yet he is running as the anti- establishment candidate. So he has to keep the brand as the anti- establishment guy and make sure he doesn't make major gaffes or appear too eccentric.

BARNES: He is running as conservative Republican. He's not running — he is the anti-establishment. Look, it's what he is running on, not what he, you know, says he is.

BAIER: Ten seconds. Arkansas, can Blanche Lincoln pull off the run off?

BARNES: I doubt it. If you don't get 50 percent — if they didn't vote for her the first time, they'll probably vote for the challenger, the lieutenant governor the next time.

BAIER: Charles?

KRAUTHAMMER: I think Fred is right. Even if she wins she is really weakened and will lose in November for sure.

BAIER: That is it for the panel. We made it around.

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