This is a rush transcript of "Special Report With Bret Baier" from May 26, 2010. This copy may not be in its final form and may be updated.


PRESIDENT OBAMA: My administration is intensively engaged with scientists and engineers to explore all alternative options. And we're going to bring every resource necessary to put a stop to this thing.


CHRIS WALLACE, FOX HOST: President Obama trying yet again to get out in front of the disaster in the Gulf. He has a big offensive plan with a news conference Thursday and a second trip to Louisiana on Friday.

Let's bring in our panel, Tucker Carlson, editor of the dailycaller.com, Erin Billings, deputy editor of Roll Call, and syndicated columnist Charles Krauthammer.

So Charles, the president will get a report from the Interior Secretary Salazar tomorrow, but we know what is in it today. It will call for more safety regulations, tougher inspections. He will have a news conference and then he goes to the area Friday.

Does any of this matter, or is the only thing that can get the president off the hook here is to close the darn spill?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: None of it matters. It all hinges on whether "top kill", an interesting name for the procedure that is now happening, like top-hat, will work or not. If it does, he's a genius. If it doesn't, and if we have to wait until August, which the commandant of the Coast Guard said is possible, that August is when the relief wells would be completed, that will be the likely cure, if nothing else succeeds. But we have to wait until August and rate of the flow of the oil continues and it will be a catastrophe, then he suffers.

I'm rather sympathetic to the president on this. This is largely out of his hands. The Democrats and the liberals were hardly as sympathetic with Bush after Katrina, but sometimes a president is held accountable no matter what is in his power or not.

I think the one person who is benefiting politically is the Governor of Louisiana, Bobby Jindal, who has been out there, energetic, demanding more equipment, skimmers, barges from the federal government. He's been coming up with somewhat loony ideas like putting in his own barrier islands, but at least he gives what Alexander Hamilton called energy in the executive, the image of action.

And Obama looks as if he's over-learnt the lesson he learned in '08 when he was calm and collected in the financial meltdown and McCain got hyperactive and a little bit overactive on something he couldn't help, and he's acting again cool and collected. And I think the country wants energy and passion.

WALLACE: Erin, the political blowback is growing. We reported earlier that Governor Jindal says now that 100 miles of coastline in Louisiana have been hit by the oil. So this problem really is beginning to literally and figuratively hit home.

Governor Jindal and Florida Senator Bill Nelson are both urging, pressing the president to get tougher. And take a look at this editorial from today's New Orleans Times Picayune: "Most Americans are ready for the president to light a fire under the company BP and under the bureaucracy overseeing the disaster response."

The political heat on the president is growing.

ERIN BILLING, ROLL CALL: It has grown and it will continue to grow. Even if the well or this top-kill works, this is just the beginning. This is the beginning of the PR campaign.

I don't think that even if this works and people claim some victory, the problems are going to continue. This is a huge, huge massive spill. We don't even know what the ramifications and the consequences, we have no idea what the ecological or economic impact will be.

So this is a huge mess. The president tried to keep some distance early on because he wanted this to be all on BP. Now you look at the opinion polls and they say we want the president and the administration to do more. They want someone to blame.

BP hasn't fixed the problem. Now they're looking to the administration to step in. And he can't avoid it any longer.

WALLACE: Is there anything, Tucker, that the president could have done, could do now more? I mean I understand people want action, and to a certain degree as Charles says, it's really out of the president's control and that's a hard thing for people to accept.

What more over the last five weeks, talking now 35-38 days. What more could the president have done?

TUCKER CARLSON, EDITOR, THE DAILYCALLER.COM: Not just over that period but over the preceding year. You hear people say what was the plan? What was the plan for the deep water oil leak? And the truth is they didn't have one because you can't plan for every possibility. And you shouldn't because it's waste of time.

There is a limit to government power, even the president's power, and to human power. And you kind of wish the president would admit that tomorrow. He won't. He will attack BP. And it is fundamentally their fault and his job is to hold them accountable. They ought to pay for it. That's just fair.

But nobody is admitting the obvious, which is accidents happen, tragedies occur, this is one of them, and the federal government literally can't fix everything. And I think people lose sight of the fundamental fact.

WALLACE: It's interesting, I'll pick up on that with you, Charles, because The Wall Street Journal had an interesting editorial today which basically said that all the finger-pointing early on by the Obama administration about BP has in effect backfired because it fed the narrative that there was something that could be done.

KRAUTHAMMER: I think that's right, and the idea that you have to light a fire under the oil companies is absurd.

WALLACE: Put your boot on their neck is —

KRAUTHAMMER: You know, a kind of a fascist image which is ugly in the first — in any circumstances, but here, extremely odd and sort of offensive.

But the president, I mean implying that if we only put pressure on the oil company it would act more quickly, it is in its interest to stop the leak. Every day, every hour that the leak continues increases the liability, the damage, the restitution it's going to have to pay. This company could disappear. It has every incentive right now to stop the leak as best it can, and the idea that somehow it isn't being pushed or prodded enough is absurd.

WALLACE: All right, we have to step aside for a moment. But please go to our homepage at foxnews.com/specialreport for web exclusive from Rick Leventhal on a party girl turned combat engineer. It's our latest "Faces of War" feature.

Next up, a police chief talks to Attorney General Holder about Arizona's new immigration law.



ROBERTO VILLASENOR, TUCSON POLICE CHIEF: By mandating that we now determine citizenship or immigration status for all those individuals we come in contact with in that capacity will severely strain our resources.


WALLACE: The police chief of Tucson, Arizona, one of a group of law enforcement officials who met with Attorney General Holder today to lobby against Arizona's new law on illegal immigration.

And we're back now with the panel. So Tucker, as I said, Holder met with about a dozen police chiefs from around the country. They have an interesting argument. They said that this new law, especially if it's replicated in other states around the country, will actually create more crime not less crime because it will scare off immigrants.

And this is one of the arguments that Rudy Giuliani had when he was mayor of New York, that if you crack down, it damages relations between police and the immigrant community. What do you think of that argument?

CARLSON: Strictly speaking, it's impossible to prove a theory like that. It's more a theory than an argument. There is some evidence that illegal immigrants are pretty hesitant to cooperate with law enforcement in the first place, being illegal.

I'm struck, though, by the amount of energy and time this administration is spending on this law and the debate over it. There is a lot going on in the world now, not just the oil pouring into the Gulf, but crises if Korea, in Iran, potentially 10 percent unemployment.

Why focus on this, one law in one state? It strikes me as a very cynical and coordinated get out the vote project designed to help Democrats in the upcoming midterm election. It scares the heck out of Hispanic voters, there's new polls out today showing that.

And I don't think I'm cynical when I say that's why the president is focused on this. He got up with the foreign leader, the president of Mexico next to him, and basically called the voters of Arizona racist. Why did he do that? Because it helps him politically.

WALLACE: Erin, is Tucker being too cynical?

BILLINGS: Yes, I think he is. I think Republicans like this debate as well. They know the Arizona law is popular. And this has sparked a whole new conversation about how porous the borders are. McCain and Jon Kyl are going to the floor every day hammering the administration about doing more, sending more troops to the border. That is what he did.

I think the administration, Obama was smart here. He is now deploying 1,200 new guardsmen out there and calling for $500 million for enforcement and trying to neutralize himself or neutralize these attacks. I think it was a wise political move. But yes, Tucker's too cynical. It's not just Democrats trying to capitalize and make hay out of this.

WALLACE: Charles, I want you to respond and get into the argument. But also the Justice Department's civil division has drafted a complaint that would call the Arizona law unconstitutional. Do you think Attorney General Holder will join the other lawsuits against the Arizona law?

KRAUTHAMMER: I think so. I must say the correct answer is that Tucker is not cynical enough.

CARLSON: Thank you, Charles.

KRAUTHAMMER: Absolutely the administration is driving all of this because looking at the midterm election and its strategy is a base strategy. It will get slaughtered, otherwise it has to hold its base.

That would explain a couple of other interesting and odd developments this week. You get the concentration on Hispanics, the relentless story every day from the White House or Justice Department on the Arizona law.

Secondly, a surprise announcement today of the Israeli prime minister will be in the White House next week. Well, that's because of the huge disaffection and pushback from Jewish Democrats over insulting treatment of Israel and the prime minister by the administration earlier.

And third, the odd announcement earlier in the week that "Don't Ask, Don't Tell," instead the deal had been we would wait until December until the military study is completed on this, it is now going to be pushed to the next day or week to vote in the House and Senate as a way — and if you look at it, it's three constituencies, gays, Hispanics, and Jews. It used to be said the president before an election had to go to Ireland, Israel and Italy, well now it's Jews, Hispanics, and gays if you are going into a midterm election. It looks real bad.

WALLACE: Let me pick up on this. Politics on this are tricky for Republicans and Democrats because you're exactly right. For the Democrats, the base politics, the liberals, Hispanics, mobilize them on this. But the polls indicate overwhelming support for the Arizona law.

KRAUTHAMMER: That is why it's a double-edge strategy. But if you are way behind as the Democrats are and scared to death about November, and you think in a low turnout election, which is a midterm election, if you hold the base, at least you will avert a calamity. You will go for the base and sacrifice, as you say, the majority who now support the Arizona law.

WALLACE: Are you persuaded now that you were not cynical enough?

BILLINGS: I come on the show and Charles always puts me in a corner. Just kidding.

Look, I really think that this is an issue that gets, you know, incites passions on both sides and sparked the debate anew about comprehensive reform. The president came out with this border plan and it was strategically timed.

He is no fool. More than 70 percent of the public wants stronger border protection. This is not a shock. The only problem is that liberals want comprehensive reform and they don't want the full border security first. That is —

CARLSON: Yes, that 70 percent, look, there's no question that the Democratic base is not in favor of this. As Charles said, he is not speaking to the country. He is speaking to a subset of the country, and those are likely Democratic voters, who are passionately opposed to this. They are not for comprehensive immigration reform. They are for legalizing people who are here illegally.

And I just reject comprehensive immigration reform. It's language designed to deceive its true meaning.

WALLACE: We have to end it there, but I suspect we will have this conversation again and again.

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