This is a rush transcript from "Special Report," December 14, 2011. This copy may not be in its final form and may be updated.


SEN. HARRY REID, D-NV, SENATE MAJORITY LEADER: It's here, it's dead. A nd they don't want the vote on it. You think maybe they don't want to vote on it because Republican senators are kind of embarrassed or ashamed of what is in the bill? I would think so.

SEN. MITCH MCCONNELL, R-KY, MINORITY LEADER: I'd say, speaking of embarrassment, we're doing an omnibus again. And the reason we're doing an omnibus again here on the eve of Christmas is because we haven't passed our appropriation bills. We have had almost as many show votes in the Senate this year, roughly equal number of show votes, in other words designed to fail, to go nowhere, to present a talking point for the president and his campaign, as we have on real bills that we're supposed to pass.


BRET BAIER, ANCHOR: That was very, very interest on the Senate floor. It had Senator McConnell, the minority leader, up against the majority leader, Harry Reid. Basically this is a standoff with a government shutdown looming again Friday night. The omnibus they are talking about is the overall spending bill, all the appropriations bills put in one bill to fund the government.

This is now tied to, similarly tied to the extension, the payroll tax extension that passed the House. I know we're in the weeds here. But basically the Republicans are saying you have a way out of this. The Democrats are saying this is unacceptable, except Democratic Congressman Jim Moran from Virginia who disagreed with Senator Majority Leader Reid, says it's dangerous holding up a complicated deal with time running out. He says if he have a reasonable agreement with Republicans on funding the government we should seize that opportunity and do it. Don't hold it up for what may be more political considerations.

We're back with the panel. Susan, I didn't do a good job of explaining that at the beginning.



People cover Washington, you know, would get it. But --

SUSAN FERRECHIO, WASHINGTON EXAMINER: It's impossible to explain. It really is.

BAIER: Boil it down.

FERRECHIO: The end of the year comes around and a lot of big things that have got to pass before Congress adjourns. Right now we have got how to fund the government, this huge spending bill, and the payroll tax cut and unemployment insurance benefits. These are really important things. They are all tied up because everyone wants to put in things that neither side likes.

The bottom line is they have to get this thing passed before they leave. And what is different about it this time, is I think neither side has a better political advantage. I think when we were talking about the debt ceiling fight earlier this year, the Democrats had a bit of an advantage. I think right now with this whole effort to hold up the big appropriations measure by tying it to the payroll tax cuts and unemployment insurance is not going well for Democrats right now. And you just heard that with Jim Moran saying we really shouldn't hold up this spending bill. Both sides agreed to it.

And now you have Harry Reid trying to tie it to payroll tax cuts and unemployment insurance so they can pass it along with a big tax increase for millionaires, which Republicans will never agree to. Conversely, Democrats aren't going to agree to a Republican plan to not have these tax increases but to tie it to building this XL pipeline which would create thousands and thousands of jobs but upset a lot Democrats and upset environmentalists and President Obama.

BAIER: You did a far better job. Little bit more time, but far better job.


FERRECHIO: It's not easy.

BAIER: Chris, what about this Keystone XL pipeline and Democrats saying it's a poison pill to tie it to this whole deal.

CHRIS STIREWALT, FOX NEWS POLITICS EDITOR DIGITAL: It's not a poison pill if you are in a union. There would be 20,000 jobs, all these pipe fitters and these pipe liners out there. They want the job. As I was discussing with Steve before, the president has a way out on this.

If he gets jammed up in the end -- and I want to ask this question. When are they going to stop underestimating John Boehner? This guy is jamming them and getting the votes and winning these things and sticking it to them, and every time Reid and Obama are sitting there with egg on their face saying how did they do that? He is really good. Keystone is something he can trade, that in the end the president can swallow that poison pill because it at least pleases part of his base in the union.

BAIER: We should point out some Democrats question the 20,000 immediate job number, about how many jobs it will start. But the Senate majority leader has said that any time Republicans are on the same side of James Hoffa that usually it means that they have a deal some place.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Yeah well I mean look, if you get to the point where Republicans and Democrats are quibbling over 20,000 jobs or 15,000 jobs, and it's something that Republicans have been pushing and making a political issue of over the course of several weeks, that is a win for the Republicans. I mean Susan did do a terrific job of describing the overview. But I would argue --

BAIER: Mine was dismal.

HAYES: Yours was really good. Yours was really good. Hers was terrific.

But I would actually argue that given the exact facts that you laid out, that is to Republicans advantage at this point. Republicans right now, when you have got the president of the United States having meetings with senior Democrats this afternoon and saying maybe we will back off this millionaire surtax we have been talking about, that is a cave. They may have gotten what they wanted politically out of that, but if they are even considering that, that's a good thing.

BAIER: Ten seconds. For votes like Claire McCaskill in Missouri, John Tester, Mary Landrieu, these moderate Democrats, that is a tough vote for them.


HAYES: It's a very tough vote for them. I mean, I think they've got to do it.

BAIER: That is it for panel. But stay tuned for a look at what is coming up tomorrow night right here in Sioux City.

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