This is a rush transcript from "Special Report," July 15, 2011. This copy may not be in its final form and may be updated.

BRET BAIER, ANCHOR: Now every week viewers vote in your choice online on our home page. This is our Friday Lightning Round. This week Fast and Furious won with 46 percent of the vote. We're back with the panel.

Fast and Furious, Steve, is the operation in which guns were allowed to essentially walk across the border to Mexico, given to criminals. They ended up showing up in dozens of crimes, many murders in Mexico, as well as the killing of U.S. border agent Brian Terry last year. Now there is a new development in another operation called Operation Castaway in Florida that looks to be similar, the ATF says it's different, but again, guns going to Honduras.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: It's similar enough I think for the purposes of the Washington discussion, and that's what matters here at this point, the Washington discussion. We had indications this week again, that more senior administration officials or top-level Justice Department officials not only knew about the existence of the programs but may have in fact coordinated them and helped to conceive of them and run their execution.

I think this continues to be a problem for the administration. And unless they can put these allegations to rest and do it quickly, this is going to grow and I think spiral out of control for the administration.

BAIER: A.B., if we weren't in debt ceiling-palooza it might be covered a little bit more.

A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: Right. Well, what's interesting is these new restrictions that the government is going to place on gun sales to try to make up for what has happened here and repair this situation are now enraging gun advocates. And we have the possibility -- gun supporters say this is end run around the Congress and so there's a possibility that the National Rifle Association ends up suing. And that will bring plenty of attention to this issue as the investigations continue on the sidelines. And it's not going away, as we continue to say.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think it's certain that the NRA will sue if they have this requirement where they're gonna check on gun dealers, legal gun dealers and report if they sell to someone more than once in five days. I think this is obviously a terrible operation that the administration had run and botched this. It was sending out weapons and never tracked them. It was all about tracking. I think it has got to explain what happened rather than putting the onus on gun owners and sellers.

BAIER: OK. Next up, the "News of the World" story. Rupert Murdoch, the chairman of News Corp, the parent company of this network, apologizing today to the family of murdered school girl Milly Dowler. Allegations of phone hacking into this girl's cell phone started this "News of the World" phone hacking story that has exploded in the U.K. and now in the U.S. with the FBI investigating allegations that there was phone hacking in 9/11 victims as well. What about this story, where it goes and where it's been?

KRAUTHAMMER: I think the apology was extremely important. I think the visit Murdoch made with the parents was extremely important because it was out of the ordinary and it was egregious.

The British accept the tabloid culture in which the politicians and the celebrities and sport stars and the royals are tapped into and the cops are paid, and the loyal servants are tattling. We were amused in '90s when we got all of the details of what Charles was saying to Camilla.

But this is different. That is why it's a scandal, and apparently there was a lot of this kind of stuff unusual and way beyond the pale. That's why it's an emergency, and I think that Murdoch by accepting the resignations and with a personal apology is beginning the repair work.

BAIER: You think he sells all the British papers?

STODDARD: I don't know if he is going to do that, but people are dropping. I think it's largely a British scandal. And I think Charles is right, it's more tolerated, it's better tolerated there than it is here. If the FBI determines that and finds evidence that 9/11 families had their phones hacked, it will be a huge scandal here. It will no longer just be a British scandal.

BAIER: And we have covered this every day with any developments. We will continue to do so. Steve?

HAYES: Yeah I think A.B. is right. I mean at this point it is largely a British scandal. And I think it's a result of the kind of different media cultures that Charles mentioned. Ya know, it is fair to ask and look at whether these 9/11 victims had their phones hacked in fact. And if there were, I think the consequences will be significant.

BAIER: Two high profile resignations today.

Before the break, we asked you do you agree with the Obama administration's recognition of the Libyan opposition as the country's legitimate government? 16 percent of you said yes, 84 percent of you said no in our unscientific poll. Steve?

HAYES: I think this is overdue, in fact, I think it should have happened a long time ago. The question remains what is does it mean in terms of the arms embargo? Is it going to possible now for the opposition to get arms more easily and better mount a fight against the regime? Open question.


STODDARD: Yeah, I just think it's hard to be confident that providing the rebels with frozen Libyan assets is going to help them break the back of Qaddafi's army at this point. And I think if they don't, if they don't soon, I really think the U.S. is going to have to pull out of this operation in the coming months.

BAIER: Charles?

KRAUTHAMMER: I agree. It's about time. The rebels may not succeed but they will certainly have a better chance if they have access with funds than if they have no money now. They need to receive weapons and money, and this is a way to start to do it by having them as the recognized regime.

BAIER: While there are reports that Qaddafi is continuing to feel the pressure, he is at least publicly pushing back very firmly.

KRAUTHAMMER: It's like the "Saturday Night Live" line that Marshal Tito is still dead. Well, we hear the story all the time. Let's see if it really eventuates in his resignation or leaving the country.

BAIER: That is it for the panel and this Friday Lightning Round, but stay tuned to see an explainer about some big campaign fundraising.

Content and Programming Copyright 2011 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2011 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.