This is a rush transcript from "Special Report," July 26, 2011. This copy may not be in its final form and may be updated.


JACK LEW, WHITE HOUSE BUDGET DIRECTOR: Our best estimate is that August 2nd is very real and that nobody should b e assuming that there's wiggle room beyond that. There's always a desire in Washington to figure out where is the last minute, the last possible moment. August 2nd is real.

REP. JIM JORDAN, R - OHIO: There's enough money in the month of August to make sure that bondholders get paid, Social Security recipients get their check, and the men and women who wear our uniform and protect our country get paid.


BRET BAIER, ANCHOR: The back and forth on August 2nd, the deadline that the Treasury Department says will be the start of when the government can't pay its bills.

Now, the president last night asked for the American people to call lawmakers today. Many offices did see that. They saw a lot of calls, but to give you some perspective according to the House administration office, the average calls per hour on an average day, 20,000. Today, 35,000 and there you see the health care debate, 50,000 per hour to Congress during these times.

We're back with the panel. Charles, what about the White House press secretary tonight saying that the president is still pushing for a big plan, meaning this would be a $3 trillion to $4 trillion plan that would include tax revenues and entitlement reform?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think what Jay is saying is they're calculating that the Boehner approach will not succeed. The Reid plan will probably not get out of the Senate, even if it does, it dies in the House. So by the end of the week, there's nothing on the table in Congress.

Remember, when you spoke with the speaker yesterday, he said, my offer to the president remains on the table. I haven't withdrawn it, he wasn't offering to go back into negotiations. Twice bitten, he was not going for a third try. But it's on the table and Carney said to you, the president's offers are still on the table and that extra amount of taxes that he tried to squeeze out of the speaker, which precipitated Boehner's walking out, well, that can be negotiated away.

BAIER: It wasn't an ultimatum is what he said.

KRAUTHAMMER: So what he's saying is we're gonna withdraw it if he'll come back. And now, that would be a hell of a chance on the part of Boehner, but the president I think is calculating everything dies in the House and the Senate, ends up in the White House again and we strike a grand deal. I think it's delusional, but that appears to be what they're saying.

BAIER: Susan?

SUSAN FERRECHIO, WASHINGTON EXAMINER: Well, I think that that's a real possibility this weekend. They've got nothing in the House, nothing in the Senate. What was the last closest deal they had, it was a deal that Boehner walked away from that added the $400 billion that as the White House has said, is negotiable. If they just put that deal back on the table Boehner said he was willing to go for it at that time, and the president was also willing to do it, that could be really the last best chance they have. And again, Obama certainly it's in his favor to try to get ahead of this and be the one who strikes the big deal and get it back in his corner.

BAIER: What about the big speech last night, A.B., and the reaction to it one day later and whether it changed any of the dynamic up on Capitol Hill?

A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: Well, I don't think it was meant for Capitol Hill. It wasn't going to change the minds of Tea Party backed freshmen in the House of Representatives in the Republican conference. It was meant to stay to the American people I've stayed at the table, I've been left at the altar. But I'm the great compromiser. These people are holding the economy captive, we need to share the sacrifice, balanced approach, balanced approach, he kept repeating that.

I think it was, you can call it a campaign speech if you want. It doesn't matter that it was four days late. No one knew, no one except for us in this town knew about the Reid plan and the Boehner plan.

BAIER: I would argue that viewers of "Special Report" have been paying attention. Maybe readers of the Wall Street Journal maybe?

STODDARD: Except for this, distinguished audience, I really do believe that a lot of people are focusing late and that he had a chance in a prime time address to make the appeal for those people who hadn't heard his pressers at ya know,11:15 in the morning on a weekday about the balanced approach. And he really -- I think Charles is right, I think he's saying I'm sorry, I think he's trying through Jay Carney's interview and other ways to get Boehner back to the table. I don't think Boehner can get back to the table and actually stand by $800 billion in revenues. I don't think his conference will let him.

BAIER: Yeah, I mean can he continue to be speaker if he did that?

KRAUTHAMMER: If he can't sell the Boehner plan he's not going to sell the Obama plan.

But I want to make one more remark on last night's speech because it went unremarked. When I heard it, I heard the president, as a lot of Democrats like to do, heaping praise on Reagan, saying how reasonable he was about debt ceiling, quoting Reagan and saying that he increased the debt ceiling 18 times in his presidency. Well if you do the math that means the average length of increase of the debt limit was less than six months. Three minutes later Obama is denouncing the Republicans and the Boehner proposal because it's six months, which is unconscionable, irresponsible and reckless. In fact, his argument, that he will veto the Boehner Bill is because he says it creates instability in the markets because it's so short. In fact, instability and the downgrade in the markets will occur because of all of this reckless spending. But I'm surprised that nobody in the White House is able, actually, to divide eight by 18.

BAIER: Not to mention the debt, the credit situation, that likely because of the debt situation is going to get downgraded anyway.

KRAUTHAMMER: Yes. It's the debt, it's not the debt, light, and the ceiling.

BAIER: That's it for the panel. But stay tuned to see one last appeal for a debt ceiling increase.

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