This is a rush transcript from "Special Report," March 30, 2012. This copy may not be in its final form and may be updated.

CHRIS WALLACE, GUEST HOST: Every week, viewers vote for your choice online in the Friday Lightning Round poll. This week, Jane Fonda playing Nancy Reagan won with 38 percent of the vote. I have to say, I knew that's what people would want us to talk about. To explain, they are making a movie about a White House butler who served eight presidents over decades, and Jane Fonda -- there is talk, not firmed up yet, is in talks to play Nancy Reagan, and of course, Jane Fonda of Hanoi Jane fame. Questions, starting with you, Steve Hayes, anything wrong with this?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Look, I don't get terribly exercised at Hollywood being Hollywood. This is what Hollywood does. They create a controversy. They generate publicity. They get people to talk about a movie that probably nobody would have been talking about at this point in production. They call it a success. Yes. Is it offensive to have Jane Fonda play Nancy Reagan? I think it is.

SUSAN MILLIGAN, U.S. NEWS AND WORLD REPORT: Maybe I'm giving a woman's perspective, but Jane Fonda has become known more for the exercise videos and being in phenomenal shape than being Hanoi Jane. And if I were Nancy Reagan's age I would be pretty happy that somebody looking like Jane Fonda was playing me in a movie.

WALLACE: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Extremely offensive, but then again, extremely trivial. That's Hollywood. What do you expect?

WALLACE: Let me just say, incidentally, first of all, Jane Fonda is a good actress in addition to being in fabulous shape. And secondly, Nancy Reagan did a great thing, because she was there when the butler retired. And at his final state dinner, she said, guess what, you are a guest. Other people are going to serve you. So I have a feeling it will be a very nice star turn for Jane Fonda and Nancy Reagan in the movie.

Issue two, Michael McFaul, the U.S. ambassador to Russia, has posted tweets wondering whether the Russians are hacking into his e-mail or spying on him some way, Steve, because he shows up at a variety of places and the state TV network is there. And these events are not on his public calendar. They're on his private calendar.

How serious is this, and what does this say about the state of U.S.-Russian relations at a time when President Obama is saying to Medvedev you have to give me a little space here?

HAYES: I think it's extremely serious. I mean, I think this is a big deal. Mike McFaul is a serious diplomat and a serious intellectual. He is not somebody likely to fly off the handle or create a controversy where there is none. He speaks forthrightly. He can be aggressive diplomatically, but he is not somebody to make something up. So the fact he made these claims and made them in public is a big deal. It would be a big deal if it were anybody being harassed this way, but to do that to the U.S. ambassador, in Moscow, is a really big deal.


MILLIGAN: I think it was very deliberate on the ambassador's part to let everybody know he knew about this. I lived in Eastern Europe in the late 1990s, and people didn't get out of the habit of spying on people. My neighbors told on me to the landlord. People opened my mail. And I think he is letting them know I know what you are up to, and it embarrasses them a little bit and puts the United States in a little bit of a position of slight power there in that situation.

WALLACE: Charles?

KRAUTHAMMER: The difference here is that it wasn't the ambassador's neighbors. It was the Putin government that is harassing him. It wasn't only his tweets, it was the State Department as we saw earlier in the show, speaking of harassment and question about his security and safety. That is a serious issue at a time when the president is lovey-dovey and confiding in the Russian president. You wonder if there is a disconnect between the comedy at the top and the harassment happening on the ground.

WALLACE: Finally, let's talk about the situation in Indiana. The Indiana senator, U.S. Senator Richard Lugar's, residential problems. He's running for reelection for a seventh term. He faces a tough primary challenge from a Tea Party candidate. And the county election board said that he could not vote using the address of a house he apparently sold years ago. His permanent resident is apparently here in the Washington metropolitan area, Steve. But now the election board has kind of backed off and said he can reregister using the Lugar family farm in Indiana. What do you make of this?

HAYES: He initially didn't want to do that because he said it's not accurate to call this family farm a residence because I don't reside there. He sold the house he was registered at in 1977. And in some ways I think Dick Lugar is emblematic of the changing nature of the U.S. Senate. He has been here for a long time. He is by all account a very good man. But this is an old guard and the fact that he faces a serious challenge from Richard Murdoch, who is a smart and serious conservative, that's his bigger problem right now.

WALLACE: Richard Lugar was asked about this whole situation. Let's look at what he had to say.


SEN. RICHARD LUGAR, R-IND.: Why in the world anybody would come in at this point after 36 years and challenge the right of my wife and me to vote in an election in which we aren't actually participant.


WALLACE: It is interesting. This is a real culture clash between one of the lions of the Senate, particularly on foreign policy issues, and the new guard and the new way of seeing things.

MILLIGAN: It's hard to defend his, you know, behavior here and not really living in Indiana. But on the other hand, the fact he has been here as long as he has and spent so much time here is part of why he is as effective as he is. He has an extraordinarily close relationship in terms of trust with Senator Kerry as the chairman of the committee. Being here is part of that.

WALLACE: With 36 years in the Senate he is the third longest serving senator.

KRAUTHAMMER: And I think right now that's something of a disadvantage for him. The problem isn't his residence, it's his politics. He is a moderate. And, as you said, he is an old lion. There is an anti-incumbent and anti-Washington sense in the country. He is in a very close race. I have a soft spot for him because he is the only senator who officially supported an idea I proposed years ago of raising gas taxes and a commensurate drop in payroll tax. So when you got one out of 100 on your side you stick with him. But then again, I'm not a Hoosier and I don't have a vote, so I'm not sure I can influence this in any way.

WALLACE: With 15 seconds left, who among us paid or bought Mega Millions tickets?

KRAUTHAMMER: I suspect it was you, Chris.

WALLACE: I did. Anybody else?


KRAUTHAMMER: No, we are rational people.

WALLACE: Folks, this may be my final show because when I win the $640 million. But on the other hand, I don't have anything better to do, so I'll be back, not here, on Sunday doing my show.

KRAUTHAMMER: Will your acceptance speech be a brief one?


WALLACE: By your standards. That is it for the panel.

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