This is a rush transcript from "Special Report," September 29, 2010. This copy may not be in its final form and may be updated.



HARRY REID, SENATE MAJORITY LEADER D-NEV.: We may not agree on much, but I think, with rare exception, all 100 Senators want to get out of here and get back to their states. There has been no decision made on what if any amendments there will be on the CR.

MITCH MCCONNELL, SENATE MINORITY LEADER R-KY.: I think the one thing we can clearly say about our friends on the other side of the aisle, they have a unified desire to leave town. And that is the reason that we will be heading out of town to make our cases to the American people this November.


BAIER: The Senate is still in session. Can you see the light there above the Capitol? They're still over there. They're working on the continuing resolution, the CR. This essentially keeps the government funded.

And there is some debate whether it should include additional spending over the next couple of months. It will only go to first week in December. This is the back and forth. But apparently they are just going to vote on it, get it moving and get out of town.

We're back with the panel. Charles, what about this?

KRAUTHAMMER: I know the Republicans have wanted a clean resolution, i.e., you extend what you have now and you don't add anything.  But the one add-on I this is going to happen is the post office. Surprise, it's in the red by a lot.

And I'm not sure Republicans want the Election Day to happen with post office shut on account of Republicans not allowing the CR to pass. So I think that is going to be included.

But this is I think really a strong issue that Republicans could employ. They can argue it isn't only that the Democrats have governed ideologically left or ineffectively in not solving economic issues, but also simply incompetently. They have not passed a single appropriation, and they will not.

And also on the tax issue, here they are after two years and they cannot tell you what your rates will be on January 1st. That is shear incompetence apart from ideology and ineffectiveness.

BAIER: And Nia, there is not a budget and there aren't appropriation bills being passed, and the tax cut issue is still looming.  It's actually a tax increase at the end of the year.

HENDERSON: And you all of a sudden from this White House saw them start prioritizing this, the passage of this bill over the tax cuts. They essentially said we can take care of that later, but they really want to pass this. The president will meet with the top Democrats tomorrow. So yes, it's a priority for them. They will be able to say they did something.

BAIER: To keep the government running.

On the budget situation, there is one senator, a Democratic senator, who is holding the appointment of the budget director, the head of the OMB.  That is Jack Lew; he is the nominated budget director for the Obama administration.

Senator Mary Landrieu is holding it up. There is Jack Lew. Here is what Senator Landrieu told Politico, "I am going to keep this hold on until we get movement." This is about the oil moratorium. "It's not a great way but it's the only way I have now to get their attention over the next couple of weeks. Lew can be appointed as a recess director, budget director.

The president's policies now are doing much more harm than the BP oil spill itself to on the economy of the south coast. It's just gotten to a point where the people in Louisiana ask, do they even understand what is going on down here? They have the entire offshore industry virtually shut down."

Steve, that is pretty remarkable for a Democratic senator to hold up a democratic administration’s budget director.

HAYES: Yes, and even more remarkable are her words. That is a stunning indictment of the administration, saying that this -- their moratorium is doing more damage than the actual spill. She was saying it back then, but it's amazing to me how little attention this is getting beyond this show and inside Washington baseball.

It's really not getting the kind of attention, and if you talk to people in the Gulf they will tell you exactly what she is saying. This is a clearly a pitch to the home crowd back there because they are saying the exact same thing. This has been devastating and it continues to be devastating. And the big question I think everyone is asking is what is the holdup?

BAIER: And quickly, Nia, Democrats running in this coming election not on the budget or tax cut issue.

HENDERSON: Yes, essentially running against the Bush legacy and saying that Republicans would turn back the clock. So that's what they're running against. We thought it would be healthcare. It's not. We thought maybe it would be the stimulus package and a rebounded economy. And it certainly isn't.

BAIER: Last word.

KRAUTHAMMER: On the Oil moratorium, Rahm Emanuel had said you never want to waste a crisis. Here is an opportunity where the administration placated its ecological left with the shutdown, exploiting the BP spill. Big mistake.

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