This is a rush transcript from "Special Report," July 8, 2011. This copy may not be in its final form and may be updated.


REP. DARRELL ISSA, R-CALI.: We do have an oddity in that the attorney general knew or should have known long before he says he did. Ya know at the point that Senator Grassley is sending letters, months go by before the attorney general says he's even aware of this program.


BRET BAIER, ANCHOR: Congressman Darrell Issa on our program talking about Operation Fast and Furious and who knew what when in the Justice Department.

Every week the viewers vote your choice online in our Friday Lightning Round. This week Fast and Furious won with 57 percent of the vote. We're back. This obviously -- with our panel. Jonah, this is a program that put guns in hands of criminals. We now learn that the program, the overall program, Project Gunrunner, was funded with more than $50 million, and $10 million of that came from the stimulus package.

We also know that there's another effort by ATF that we're just learning about to get guns from Tampa ino Honduras, violent gangs called MS- 13 down there. This seems to be expanding and we don't know really where it's headed.

JONAH GOLDBERG, NATIONAL REVIEW ONLINE: Yeah, I would say if the economy wasn't such an overriding concern, this had all the makings of a classic Washington summer scandal with hearings and who knew what when and all of the rest. It is obviously a huge mess-up.

But if I could just add one thing that hasn't been put in a lot of the commentary. Mexico is complaining about a violation of its sovereignty. And I think that the program is an outrage and they have a right to be mad of that. But Mexico as a matter of policy, been violating the sovereignty of the United States with illegal immigration for decades, and they encourage it. And yet somehow we are supposed to bending over backwards apologizing. Where we should apologize on the merits of the bad program, but they should drop the sovereignty talk.

BAIER: Do you think this goes to attorney general directly? Kirsten?

KIRSTEN POWERS, COLUMNIST, NEW YORK POST: Yeah, well there has been -- he's called for an investigation by the inspector general into it. And just to clarify, there's a difference between Operation Gunrunner and Fast and Furious. So the money that went to Operation Gunrunner is different -- no money went to Fast and Furious. It actually was something that the White House didn't even know about.

BAIER: Well we don't know that yet.

POWERS: There's an ongoing -- well that is what the White House tells me, and that there is an investigation and they want to get to the bottom of this.

Also to Darrell Issa, according to the Washington Post, he was briefed on this program in April of 2010. So it's a little curious to hear him talking about how this was some secret program that nobody knew about. Because --

BAIER: But the attorney general testified in front of his committee that he didn't know about the program until a couple of weeks before March of this year. This is the attorney general.

POWERS: But I'm talking about Darrell Issa. It says he was given highly specific information about it in April of 2010 briefing. Members of his staff also attended. And this is in the Washington Post June 21. So he should probably address that, because he seems to have known about it.

BAIER: OK, but what the administration knew, he is doing investigation.

POWERS: But the administration is doing an investigation. The attorney general is doing an -- or ya know the IG to do an investigation. The White House didn't know about it. The president has said that. They think it was a bad program, you know.

BAIER: And you buy that?

POWERS: It's understandable. I do. I absolutely buy it, unless there is some other information that comes forward.

BAIER: So the ATF just operates solely on their own to put the guns in hands of criminals and not track them across the border into Mexico.


POWERS: It started with the ATF in Arizona and then it had the cooperation, as I understand it, of the Justice Department. But I don't think that --


BAIER: -- with the ATF sending guns to Honduras? How do you have like, similar programs that are not linked by some overriding authority?

POWERS: Well everything doesn't have to be a conspiracy. I mean I don't know. But I'm saying specifically to this one, the White House says that they didn't know about it and they're doing an investigation into it to get to the bottom of it.

BAIER: OK, Charles, when the acting ATF director shows up for testimony and he brings his own personal attorney, things are changing.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: If you're in the administration, that's not a good sign. It means that he was a guy chosen as the sacrificial lamb and he is not gonna go quietly. He is looking out now for himself. He realized he has been abandoned by the administration. So to protect himself, he's gonna talk. It's like John Dean, perhaps.

And I'm not sure it's going to be a summer scandal. I would predict it's going to be an autumn scandal as well. In the end, the issue isn't Darrell Issa, it's Eric Holder. What did he know and when did he know it?

BAIER: Space shuttle last launch today. Take a listen.


UNIDENTIFIED MALE: The final liftoff of Atlantis on the shoulders of the space shuttle. America will continue the dream.

UNIDENTIFIED MALE: Roger home, Atlantis.


BAIER: Charles, it was an interesting watch. It's always exhilarating. What about the future of the space program?

KRAUTHAMMER: The manned space program is dead. The administration has allowed it. The problem isn't the end of the shuttle. It was never a good idea. It was going to be ended whoever was in the administration.

The problem is that Obama canceled the follow-on. There is no way America's gonna get men into space. Right now we are going to have to hitch a ride, to beg a ride, to rent a ride on the Russian Soyuz. It's an incredibly irony. We left them in the dust in the moon race and now we are a supplicant. And the Russians having a monopoly are tripling the price of what we're going to pay to put an astronaut into lower earth orbit.

BAIER: And quickly, Jonah, end of an era?

GOLDBERG: It's an end of an era. The tragedy is, is that NASA is a badly run agency. The space shuttle was a bad idea, I agree. In constant dollars we spend enough to send someone to Mars now and we spend more than we spent to send people to the moon. I think that the only last hope is with organizations like SpaceX to do private space exploration.

BAIER: That is it for the panel. But stay tuned for a local story that caught our eye.

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