This is a rush transcript from "Special Report," December 30, 2010. This copy may not be in its final form and may be updated.


JAMES COLE, DEPUTY ATTORNEY GENERAL NOMINEE: The attorney general mu st use every resource he has to fight this scourge and this enemy. The point of the article that I wrote in 2002 is that we must do so consistent with the rule of law.

REP. PETE KING, R-N.Y., HOMELAND SECURITY COMMITTEE: This is one of the worst appointments made by President Obama. James Cole to me is unfit for the job.


CHRIS WALLACE, GUEST ANCHOR: That was James Cole who just got a recess appointment from the president for the number two job at Justice and Republican Congressman Pete King who clearly doesn't think much of Mr. Cole.

Let's bring in the panel, Chris Stirewalt, the politics editor digital for Fox News, Julie Mason of The Washington Examiner and syndicated columnist Charles Krauthammer.

Critics have several complaints about James Cole as deputy attorney general, but the biggest involves the 2002 article he referred to in the sound bite, an article he wrote one year after 9/11 calling for the prosecution of the people involved in 9/11 in civilian courts. Let's put up part of the article. He wrote "For all the rhetoric about war, the September 11th attacks were criminal acts of terrorism against civilian population," comparing them to bombing of a federal building in Oklahoma City. He then went on, "Our country has faced many forms of devastating crime, including the scourge of the drug trade, the reign of organized crime, and countless acts of rape, child abuse, and murder. The acts of September 11 were horrible, but so are these other things."

Charles, what do you make of the remarks?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: This is a man who denies that the war on terror exists. We heard him write of the rhetoric of war. It's not just rhetoric. It's a matter of law. A week after 9/11 Congress passed authorization of use of force against the people who did 9/11, Al Qaeda and those affiliated with them, and indeed the nation of Afghanistan harboring Al Qaeda.

Congress, itself, in a law it passed not as a matter of rhetoric but a matter of law, categorized what had happened as an act of war. In modern times authorization of force is equivalent of what used to happen with declaration of war. So you have Congress acting as a matter of law declaring it war. And here's a guy saying it's matter of rhetoric. He says as a war on terror, rhetorical, you have to treat the people as if they were domestic rapists. In fact, the Congress categorized these people in a different way. They are enemies of war, they are unlawful enemies of war. If you refer to the rule of law as duds, under the rule of law they should be treated differently. His entire argument is bonus.

WALLACE: Other than that --


WALLACE: Here is the point I want to raise with you and Chris. You can disagree with the article and the reasoning, but isn't his basic position, right or wrong, that of the new boss and old friend Attorney General Eric Holder?

JULIE MASON: That is right. The problem for opponents is there is not an ideological litmus test for the Justice Department. They can disagree with them. I don't hear anybody say he's not qualified for position. This shines a whole new light on the Obama administration's failed policy in prosecuting terrorists as criminals.


STIREWALT: I don't know all the ins and outs, but from a political standpoint, this is an unnecessary provocation. This job is an administrative one. And as the administration points out in defending their choice, this is functionary. This is somebody who administers and helps the attorney general do his job.

WALLACE: Not policy.

STIREWALT: Not policy. This is a job for someone careerist inside the Justice Department. While Cole has a 13-year record inside the Justice Department, et cetera, et cetera, I don't understand why it's worth the heat the administration will take doing this and doing this in this way.

WALLACE: Charles, let's get to a bigger issue besides James Cole. The recess appointment and he was one of six seem to be the start of a new approach by this president and this White House to go outside of Congress and either recess appointment or excessive order of regulation to get things done.

KRAUTHAMMER: Yes, it's completely legal, constitutional. Every president has done it. But the nature of his choices tells you how phones were his pleas and promises of the bipartisanship in the coming years, because a lot of these appointments are provocations.

I'll give you another example. He appointed an ambassador to the Syria --

WALLACE: Which we are going to discuss in the next segment.


KRAUTHAMMER: Can viewers hold on for the next seven minutes? I'm not sure.

WALLACE: They can. I'm very seldom cut you off. Let me pick up on this with Julie, though.

KRAUTHAMMER: You can see I'm completely speechless.

WALLACE: it's never happened before.

But Julie, you have president and the Medicare, the Health and Human Services is proposing regulations. They couldn't get it in the healthcare bill to pay for end-of-life consultations. You have the EPA that couldn't get it in climate change and they're going to regulate green house gases. So he may have a new Republican majority in the House, but the president has substantial powers aside from Congress.

MASON: Right, and I think we'll see him use them more and more saying the Republicans back me in a corner. I have to do this, I have no choice. The problem for Obama, not to be naive and hold politicians to their promises, but he promised to never revert to politics as usual. And recess appointments are very much politics as usual.


STIREWALT: Also, you know, we should mention AIG. This is really Cole's problem on the left and the reason that people who are interested in reform haven't cottoned to the choice because he and his law firm got paid $20 million by AIG to be, quote-unquote, "independent consultant" to work with the government and talk about that and didn't alert anyone to the problems that cost us all $180 billion in form of bailout. So he has a problem there.

WALLACE: We have to step aside for a moment. When we return, a war of words between the U.S. and Hugo Chavez. And we promise to get to Charles' recess appointment.



WILL DOBSON, FORMER FOREIGN POLICY MAGAZINE EDITOR: In essence going forward for the next 18 months, Chavez is both the president and the legislature all in one.


WALLACE: One foreign policy analyst talking about Venezuelan president Hugo Chavez and his growing hold on power in his country. We're back now with our panel. So, Chris, we're in this diplomatic tit-for-tat, if you will, with President Chavez. He rejected our ambassador to Caracas. In response, the State Department revoked the visa for the Venezuelan ambassador for Washington. What does it mean?

STIREWALT: It's a holiday season and we can't even get along with Hugo Chavez. It's very disappointing.

But what is going on is South America is in a state of flux. They are testing the limit of American power in South America. You see Chavez working with Evo Morales from Bolivia and all of this going on. He is basically saying how far can he push back against the Monroe doctrine? So far he is having success.

WALLACE: Julie, to pick up on that and the other thing going on is Chavez allies in the national assembly just gave him emergency powers. They did it now and the new assembly comes in next year and it will have more Chavez opposition in it. He is flexing his muscle with those powers, isn't he?

MASON: It's true. But the problem for Chavez now is that country's economy is not doing well at all. He can't push it too far. We have oil interests with Venezuela and they have economic interests with the United States. So he can't afford a full rupture. So the Obama administration policy of not engaging and not isolating either is just keeping him afloat, and that's where he wants to stay.

WALLACE: Now folks, we are going to bring in Charles Krauthammer and we're going to discuss the recess appointment to Syria, which the president also made yesterday. He named fellow diplomat named Robert Ford as the U.S. foreign ambassador to Syria. The first time we've had an ambassador there since 2005. You think this is a big deal?

KRAUTHAMMER: Well, as I was saying --


-- we haven't had an ambassador because we know, we suspect -- we're sure, actually, Syrians were involved in the murder of Rafik Hariri, former prime minister of Lebanon, a broad daylight assassination. At that time, he was the leader of the anti-Hezbollah, the anti-Syria forces.

As a result, there was a court that was convened. The Bush administration pushed hard to have it active. It will render a verdict in days now, and it will indict high level firms in Lebanon and probably Syria.

This is a regime that has been arming Hezbollah to the teeth, tens of thousands of rockets, violating every provision of the truce that was declared after the second Israel-Lebanon War, ally of Iran, essentially an enemy of the United States, undermining all our activities and infiltrating itself into Lebanon out of which it had been kicked in 2005. All of this is happening and what does the administration do? It sends an ambassador in return for absolutely nothing. Returning an ambassador after withdrawal is a sign of conciliation and in this case appeasement. There is nothing, there is no reason to do it. Obama had a dream that if he sweet talked Assad he would get Syria to break its relations with Iran.

WALLACE: Assad, the president of Syria.

KRAUTHAMMER: -- To break relations with Iran and Hezbollah and become an ally of the United States. It gave all kind of inducements. It was humiliated by Assad's response. He expressed contempt for these inducements. The United States offered it in return, a return of an ambassador. It's appeasement of the first order.

WALLACE: And we should point out that Syria is a major supplier of arms to Hezbollah and Hamas. They are, I guess in the Middle East, the biggest ally of Iran. The White House argument is it's better to engage them than have a diplomatic presence in Damascus.

KRAUTHAMMER: The administration always argued for engagement. With engagement of Iran, what did it get? Nothing. A delay of two years. With engagement with Pyongyang it got nothing. The only reason they back up a bit is our allies in Seoul have shown a lot of spine. It's responding with engagement to every enemy, and it gets nothing. I think after a couple of years you have to learn a lesson from history.

WALLACE: Julie, congressional critics are saying in this particular case it's not just that the president made a recess appointment. He named somebody who hadn't been able to get through the confirmation process in the Senate, that he in effect changing in substantive way U.S. policy toward Syria without congressional oversight.

MASON: That's true, but the sanctions that he approved earlier this year, he extended the Bush era sanctions against Syria and those are still in place until May, I believe. So it's not just a full one-sided embrace of Syria. Those sanctions are still in effect.

KRAUTHAMMER: There would no reason that you would lift sanctions. It would have been a scandal if he had lifted sanctions. All he's doing is keeping status quo in a situation where Syria is acting brazenly in arming Hezbollah and re-infiltrating Lebanon.

WALLACE: Chris, you get final 20 seconds.

STIREWALT: As you discussed earlier this is the new trend in the Obama administration. And for the talk of bipartisan agreement we heard in the lame duck period, this is a go-it-alone approach that I think we'll see again and again and gone when we have divided government, because it's pretty much the only choice he has if he wants to get the agenda put forward.

WALLACE: All right, that's it for panel.

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