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


UNIDENTIFIED FEMALE: The yeas are 57. The nays are 41. Three- fifths of the s enators dually chosen and sworn not having voting in the affirmative, the motion is not agreed to.


BRET BAIER, "SPECIAL REPORT" HOST: Well, that motion, that vote happening at the beginning of our show, the motion was for cloture to move forward with financial regulatory reform. Now it heads back to the drawing board and they continue the negotiations. Here is what the White House put out, a statement by President Obama moments ago: "I am deeply disappointed that Senate Republicans voted in a block against allowing a public debate on Wall Street reform to begin, the reform that both parties have been working on for a year to prevent a crisis like this from happening again. I urge the Senate to get back to work and put the interest of the country ahead of party." It wasn't entirely a party line vote. Senator Ben Nelson, a Democrat from Nebraska, voted with Republicans to scrap this cloture vote and send it back to negotiations. That's where we are tonight. Let's bring in our panel. Stephen Hayes, senior writer for The Weekly Standard, Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer. Steve, it was a bipartisan vote, at least one Democrat.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: At least one. It's interesting. I think what you saw from the president there is exactly what the Democrats were hoping to get out of this vote, an opportunity to paint Republicans as obstructionists and as friendly to Wall Street.

This has been happening now for the better part of a year, but especially intensely for the past couple of weeks. You saw Harry Reid savage Mitch McConnell, minority leader. You see Democrats making these kinds of statements to try to link Republicans with Wall Street.

The interesting thing I thought from the president he said this bill would ensure this crisis couldn't happen again. This is altogether unclear. I mean there is a wide disagreement about whether that is in fact the case.

But one thing that people seem to agree on, at least people not in the Senate, not in the Democratic Party, is that the kinds of bailouts we saw are not likely prevented in this kind of bill.

We've had this back and forth between the parties for the past couple of weeks, this report that others talked about, NPR reporter who couldn't find an expert who could say that this bill would prevent such bailouts in the first place.

And you have the kinds of incentives with this broad governmental backstop that is being provided that could actually encourage these kinds of bills. That is the central question. Until the Democrats can answer that, more effectively, they're not going to get many Republicans on board.

BAIER: Juan, that is a point. There was a Democrat push-back at the beginning that this was all talking points, that too big to fail was just a talking point that Republicans inserted. But you talk to people on the left, even from Brookings, they say it may be institutionalized in the bill as written currently.

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: No, the counterpoint is simply this — we have for the banks, an FDIC, federal deposit insurance. What this would do is allow for a structured reorganization of something that is failing along the lines of too big to fail so you don't have it have this domino impact on the rest of the economy. They don't want a disorderly disaggregation of some major financial institution on Wall Street.

What interests me here is I think the Democrats politically the play is you keep having cloture votes and make the Republicans look bad because you say they are standing and defending the silver spoon mindset on Wall Street.

BAIER: To that end, let me just interrupt you. Senator Reid majority leader switched his vote to no vote so that procedurally they could bring up another cloture vote as early as tomorrow.

WILLIAMS: Right. I think we will see that political play. And given what has happened with the SEC and the e-mails from Goldman Sachs and public opinion is clearly opposed to Wall Street, it's a very tough situation for Republicans.

But the Republicans, it's interesting here, say they have an alternative bill that they have yet to unveil. When they talk about the, what we can see so far in terms of the shape of the alternative bill coming from the Republican Party, it's less about this business about there is bailouts hidden in there, but more about things like concern about privacy information, because there would be a consumer protection group formed. And would they be gathering information on loans and all that kind of thing, or they are concerned about, you know, unusual mortgage deals that might be put together?

In that concern, are they going to stifle consumer credit? Are they going to make it harder for businesses and individuals to get credit? If the Republicans really have an alternative it will be fascinating.

BAIER: Charles, just within the past minute, Senator Nelson just put out a statement saying he could not support a bill he had not seen as of yet, but don't take the no vote meaning on cloture as he won't support negotiations still continuing, which is really what the Republicans have been saying. We are OK with the regulatory reform, as long as it's good reform, and we want to keep negotiating.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It looks as if Nelson is always cleaning up after himself. He wanted to make sure he explained the vote so he wouldn't be hung out there as an example of how bad the bill is. He's simply explaining it away as he hasn't read it.

The president said in the statement you mentioned he is dismayed by this. He is joyful. He couldn't be more happy about the vote. It was engineered precisely by the Democrats to produce the effect it did, which is to get the Republicans appear to be standing in the way of reform, which the president has said in the speech he made last week, you either are in favor of reform, which means my bill, or you are against it. So you are a Wall Streeter.

Look, it's all demagoguery from the beginning of this. The president needs to recoup from the healthcare debacle and he fixed on this.

The problem is that for the Republicans, unless they produce a bill quickly, which they should, they've got to have an alternative. They are going to get hit in November, because it's very hard to explain in a sound bite or 30-second ad what is wrong with the bill.

I'll give one shot at it, and the weakness of my attempt will show you how hard it is. Juan talked about this is just like the FDIC guaranteeing all the banks. Yes, but it guarantees all the banks equally, so nobody has an advantage.

In the bill here, it's only the big guys, the guys who pose a systemic risk who can get the bailout, which means instantly you have a two-tiered system.

The president said in the speech in New York unless your business model is to bilk the consumer you won't be afraid of this. If you are a smaller institution lending you won't like the bill, not because you bilk your customers, but because the big guys will be able to borrow and to lend at lower rates because they now have implicit guarantee.

And secondly, that increases the chances of a bailout because, unlike in October 2008 when you have to get the Congress on board for the tarp, under the bill the Treasury acts unilaterally.

BAIER: Hence the institutionalizing or the charge it would be institutionalized in the bill.

KRAUTHAMMER: And it makes it easier. There are very strong arguments why it does what the president says it does not, but it's hard to make that case in a sound bite, which is why we likes the political outcome.

BAIER: And we are not going to talk about the derivatives and Warren Buffett. We'll leave that for another time. You can learn more about the financial overhaul effort at the homepage, Foxnews.com/specialreport.

Next up, is Congress getting anywhere on immigration, or climate change, for that matter?



ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: If you look at what has happened in Arizona and the implications that that type of law would naturally — could naturally drive each state to creating its own immigration laws. That's because the United States at the federal level has failed to act.

So I think there is room for progress on both issues. The president will continue to work with members of both parties to see that happen.


BAIER: Both issues are comprehensive immigration reform and energy legislation, climate change legislation. Senator Lindsey Graham, Republican from South Carolina, was working on both of those, but really pushing energy and had released a letter over the weekend in which he said among other things, "I deeply regret that election year politics will impede if not derail our efforts to make our nation energy independent. Moving forward on immigration in this hurried panicked manner is nothing more than a cynical political ploy.

Let's be clear, a phony political effort on immigration today accomplishes nothing but making it exponentially more difficult to address in a serious, comprehensives manner the future." We're back with the panel. What about the status of the legislative items, Charles?

KRAUTHAMMER: Graham is slightly wrong. It doesn't accomplish nothing. It accomplishes a lot politically if you are Barack Obama.

I think Republicans are rather overconfident and complacent about how well they'll do in November. They assume the electorate will be same in January when they won Massachusetts. But Obama is not stupid. He ran a great campaign in 2008 and this is all about campaign for November 2010. There is an old adage in Washington, sometimes you can choose a bill or you can choose an issue. The Democrats know they are not going to get an immigration bill out of this. They want the issue and they want it now. And Harry Reid wants it personally because he thinks it's a Hail Mary that might help him in Nevada where he is way behind, and it might. And Obama wants it because he thinks it will galvanize his base. He said over the weekend he wants a renewal of the coalition that elected him, and he said young people, African-Americans, Latinos. And that is his constituency which up until now has not been really enthused about his presidency. This bill is a way to rile it up and a way that the conservative elements have been riled up over healthcare and all the other overextension of the government. This is smart, tactical politics, cynical as policy. But we shouldn't underestimate how smart tactically he is.

BAIER: Juan, politically, strictly politically, if you move immigration it potentially helps Harry Reid in Nevada and helps Barbara Boxer in California. There are some Democrats out there that perhaps it hurts.

WILLIAMS: Right, because immigration, there are people obviously think we have too many immigrants, and specific, too many illegal immigrants in the country, concerned about even in terms of employment, but you understand the emotional power with the employment in the country.

BAIER: Is it dangerous, is my question, I guess.

WILLIAMS: I think it has some danger to it. The counterpart, and this speaks to something Charles picked up on, are two things. One, Hispanics really, it's interesting, think that Barack Obama has done less for them than he should have, even after Sonia Sotomayor has been put on the Supreme Court.

They think he should have acted on immigration reform as he promised in his first year instead of healthcare reform or whatever. That is their issue. They see it as a critical issue. It keeps families together. Why haven't you done it, Mr. Obama? That is the sentiment coming from Hispanics.

The second thing to say here is when you look at the immigration reform, this is what I don't understand when Charles says it's rushed, and Lindsey Graham says you are rushing it. This is long overdue. The country needs to deal with a major issue.

BAIER: But there is not a piece of legislation.

WILLIAMS: That is the point.

BAIER: There is an energy legislation.

WILLIAMS: OK, so work on energy, but you have to deal — immigration reform is a critical issue at this moment for America. You look at the polls, what do the polls say about this stuff going on in Arizona? People say it will leave to civil liberties violations even if they say we want something done about immigration. Why isn't the federal government doing it?

BAIER: Quickly, two polls, likelihood that Congress will pass legislation to reduce illegal immigration, 56 percent not likely. And the next one, legislation that authorizes police to verify suspected illegal immigrants, 60 percent favor.

HAYES: I think Juan is right on the big picture question. Immigration reform is needed. It's needed quickly. This is an argument that the White House makes and I actually it's a plausible argument. I think they are right on the subject of it.

Charles, though, is right, this is entirely political. This is totally calculated to gin up an interest group politics that Obama said explicitly I think, in a new and sort of troubling way help get him elected.

What you don't —

BAIER: Can they spin two plates? Can they spin the immigration and energy plates?

HAYES: No, I don't not think they will do both.

You know, one of the concerns with immigration if you are a Democrat is what you brought up. You have Democrats in, you know, rural districts, that are not going to be able to sell this immigration reform to their constituents. It's just not going to work.

And for many of them, it's a nonstarter. So to make them after healthcare, you know, after cap-and-trade, after these things, take one more risky vote is going to be really problematic.

KRAUTHAMMER: One plate is to eat on and the other one is to show. Immigration is all about show.

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