This is a rush transcript from "Special Report," March 1, 2011. This copy may not be in its final form and may be updated.

BRET BAIER, ANCHOR: Before the break week asked you who will get the most blame if the government does, in fact, shut down. In our non-scientific poll 86 percent said Democrats, 14 percent responded Republicans. But it doesn't look like that is going to happen at least for a couple of weeks. Take a listen.


UNIDENTIFIED FEMALE: The joint resolution is passed.

HARRY REID, D-N.V., SENATE MAJORITY LEADER: The sooner we get this short term of the funding government done, the quicker we can move to a long term CR. That is where we are headed.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: There is no debate about the need to cut spending. The question is where do you cut in a way that doesn't harm the economy, doesn't throw in it reverse, doesn't reduce job growth.


BAIER: well, the House passed a continuing resolution for two weeks, cutting $4 billion from the budget. It just goes two weeks though, so it delays just a bit. The Senate, we're told, is going to vote on this tomorrow at 11:00 a.m. from sources up on Capitol Hill. In the meantime, the Government Accountability Office put out a report today with some interesting facts in it. Among them government waste, 18 programs of food and nutrition assistance, $62.5 billion in 2008 and 11 have never been reviewed. Homeland Security, more efficient baggage screening systems could be $470 million in savings over five years. They found 100 duplicative programs, basically programs being done twice, at least, in different areas. And there you see them. And 35 duplicative programs in highway infrastructure.

The GAO report, we're back with the panel. Charles, let's start with the GAO report.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well I would say if you are a Republican, it's a timely report. You are in a fight over real cuts in the budget, you hear the president's spokesman saying "oh yes, everybody wants cuts. I guess he's saying the era of big government is over. But it depends on cuts, we don't want to hurt anybody with any of these cuts or hurt our future."

Look it's about real cuts or phony cuts. And having the GAO actually put numbers on what everybody understands happens in the government. If you are spending $3.7 trillion a year, you know the amount of waste is simply incalculable. Well it's nice to know that we have 82 teacher quality programs, we have 47 job training programs and there are 15 agencies involved in food safety.

So imagine if Republicans came in and said, we want to abolish 14 of the programs -- food safety, which would be a good idea, which would consolidate, which would save a lot of money and which would make it efficient, the Democrats could say, "they want to cut food safety."

This whole debate over cuts is simply -- it's misleading. A, it's cuts from what baseline? We have a hugely inflated baseline as a result of the mega spending over the last two years by the Obama administration. And secondly, cuts can be in areas that will actually improve efficiency and now we have a documentation of that.

BAIER: A.B., it also gives perspective. In this GAO report it's hundreds of millions of dollars -- hundreds of billions, I should say, of dollars -- billions with a "b." We're talking about $61 billion Republicans want to cut from the continuing resolution for the rest of the year. So it gives you kind of a perspective of what you are looking at here.

A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: Right I think it changes the whole dynamic of the debates over these continuing resolutions that are going to happen this week and, of course, again in two weeks. Because we're not going to resolve the budget issue for fiscal year 2011 by March 18th either.

But I want to say quickly, that the House Republicans won round one the before the GAO report appeared. I mean they boxed the Senate Democrats into a corner. They had the upper hand, there's no doubt about that. They got 100 Democratic votes today.

That said, the GAO report shows, as you said, that if these billions here and billions there and Charles grabbed my favorite statistic so I'll pick the 20 offices devoted to homeless programs. But if you look at this and the fact that the GAO is going to continue to study the rest of the discretionary budget and they haven't even studied all of it, it changes the dynamic on whether or not $61 billion is just too draconian to pass.

So I think it's going to change the whole debate. I think the debate won't end on March 18th, but I think it radically shifts the position that the Democrats are in to defend all these spending programs.

BAIER: Steve, it was interesting on the debate about this continuing resolution for two weeks, Republicans put the cuts in that President Obama wanted. And Democrats wanted another two weeks on top of that, so extending it out to a month. It looks like they are going to get two weeks, $4 billion in cuts despite some Democratic moans and groans about it.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Look this is a big win for Republicans because now this pace, $2 billion a week pace in spending cuts is the status quo. This is now what people will be expecting.

And the argument shifts because I think now Democrats are gonna have to say, "no, no that was really too much." And what is going to happen is people are going to see with this continuing resolution, all this talk of the shutdown of the government, that there were cuts, that there were big cuts in non-defense discretionary spending, and that the world didn't end. Ya know, you can do these kinds of things without having the world end.

And I do think for all the reasons that both A.B. and Charles mentioned the GAO report helps them make that case. In the short term, the short term political case for Republicans.

But I think they're also making a strategic mistake in the bigger picture. Republicans are talking about Tom Coburn was saying, this shows that ya know, we're incompetent here in Washington and they're talking about the need for common sense, reform of the federal bureaucracy. That is not what this reports shows. This report is totally expected. You have a government the size of the government that we have, it's inevitable that you are going to have this kind of waste and inefficiency.

So what it tells us is that the size of government is way too big, not that the government is not working properly.

BAIER: Yeah. Charles, how many times have we heard waste, fraud, and abuse, we're going to tackle that this year?

KRAUTHAMMER: Right. But, I mean, I think it started with Nixon. He used it as a way to say, yeah we're going to cut when you are not serious about it. But it's nice to have a number on it. It's nice to have a number of these programs.

And look, anybody who has watched a construction project funded by the stimulus, there is one outside my house, with eight guys watching two guys digging a hole, knows that is how it works. And then you do in your head -- you add 12 zeros after that and we're talking the GAO report.

BAIER: Down the line, do we push the government shutdown after two weeks?

KRAUTHAMMER: No, it's not going to shut down.


HAYES: Much less likely.

BAIER: That's it for the panel, but stay tuned for one fired up reporter about a unique weather story.

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