This is a rush transcript from "Special Report," November 18, 2010. This copy may not be in its final form and may be updated.


SEN. MITCH MCCONNELL, SENATE MINORITY LEADER R-KY.: The American people spoke loudly and clearly on Election Day. They want us to put aside the liberal wish list and focus on jobs. And the more important thing we can do to create jobs between now and January 1st is to send a message to job creators that we're not going to raise their taxes.

SEN. HARRY REID, SENATE MAJORITY LE ADER D-NEV.: My friend Senator McConnell has offered legislation to extend them all, costing $4 trillion. If he wants a vote on that I'll be happy to help arrange that, and we want opportunity and maybe plural to vote. We have to do it more than once, twice, whatever it takes to show the American people that we support the middle class.


BRET BAIER, HOST OF “SPECIAL REPORT”: Well, Republicans want all of the tax cuts extended, leaving tax rates the same January 1st. Democrats only want the middle class tax cuts extended.

There will be votes according to the current Senate majority leader Harry Reid on that issue. He also is pledging to bring up "don't ask, don't tell," allowing gays to serve openly in military, and the Dream Act which mandates in-state tuition for children of illegal aliens. All of that in this lame duck session.

Let's bring in our panel, Steve Hayes, senior writer for the Weekly Standard, Julie Mason, White House correspondent for The Washington Examiner, and Juan Williams, Fox News contributor. Steve, first to you. What about this back and forth for? The Democrats were at the White House today seemed to stiffen their resolve on this tax cut issue.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: They certainly did. And a senior Democratic official emerged and said they now understand clearly where the president stands. I don't think many other people understand where the president stands on this.

Look, they're trying to pack so much into this lame duck session.  There are so many things that they think they're going to accomplish. Take one example, the defense authorization bill. This is something that typically takes weeks, plural, to get done. Democrats think they're going to do that. They think they're going to repeal "don't ask, don't tell."  They think they're going to ratify START. You ticked off all these things they think they're going to get done.

And it seems what's lowest on the priority list even though Harry Reid finally mentioned it today is tax cuts. This is what people care most important thing that can emerge from this lame duck session, and it seems like it's an add on or an asterisk at the end of a long list of things that Democrats want to do.

BAIER: Julie, two things, one is the government runs out of money December 3rd and they need a continuing resolution because there's not a budget in place, and two, the tax cuts expire January 1st. It would seem those would be the two priorities. But there's a lot in here.

JULIE MASON, THE WASHINGTON EXAMINER: What are they doing up there? We don't even know. Like you said, continuing resolution and the tax cuts, those are imperatives. We haven't seen any action on this, and they seem to be putting it off.

What we saw from Congress over and over, there will be like a frenzied flurry of activity at the end and they'll do what they need to do.  They're not going to do the Dream Act. That's just something that Harry Reid and Obama promised liberal voters before the election. You know, they'll bring it up. It's not going to go anywhere, just like "don't ask, don't tell."

BAIER: Where is this going, Juan? With all this talk about compromise today, it seemed to go backwards.

JUAN WILLIAMS, FOX NEWS CONTRIBUTOR: It did, and in large part, because president Obama punted. There was a great deal of attention in terms of Democrats on the Hill and specifically in the Senate looking for some direction to come from the White House on this with regard to the tax cut. What do you want? What are you willing to negotiate?

The president, then, in combination with Pelosi and Reid came to the conclusion, you know what, let the congress, Democrats on the Hill, the leadership there handle this. Democrats still have the majority. Let them negotiate and use the tax cut as leverage to say, on one hand, if you want to have a vote, it's going to be first the vote on just the people who make less than $250,000 and make it clear to everyone that Republicans are here talking about extending tax cuts for the very rich and driving up the size of the American deficit.

And then secondly they're going to use that also to say we have other priorities here and it's not just a matter of wasting time, but that we think it's important that children who are going to serve in the U.S. military, children who are performing important roles and being educated in this country, living in this country would have the opportunity to go to school, that "don't ask, don't tell," is an important item that many in the military have not come around on.

So they want their priorities put forward, and to just give Republicans what they want at this moment would be to say OK, Republicans, you guys can go home for Thanksgiving. In fact, go home for the rest of the time because nothing else was going to get done.

And they're not willing to say that to the Republicans. If you want that tax cut, play ball.

BAIER: After this election, do you think that they're reading things wrong by pushing the Dream Act and "don't ask, don't tell" and trying to cram all this in to this lame duck session? And what about also the president handing the keys again over to the Democratic leadership in congress.

WILLIAMS: I think it was a mistake in the first place when he handed the keys to the Congress to Pelosi and the like because you saw him in the election you're referring to the loss of independent voters, swing voters who are looking for more bipartisanship from this president.

He promised more bipartisanship when he was elected.  And Pelosi and Reid are playing hardball politics saying we've got a majority. We don't need to deal with Republicans. That's what happened on health care.  That's what happened on so many other bills.

Yes, OK. And so the second point that you're talking about here, I think that, you know what? Yes, the American people said jobs should be the number one issue, much to pick up on what Steve was saying. But you know what, this is politics. Now the election is over and Democrats don't have the majority and it's no reason for Democrats to pull up their tents and say we give up.

HAYES: Nobody is suggesting that they should give up. But I find it actually humorous that the president would turn this over to Democrats on Capitol Hill after this election. I mean, could you possibly pick a more unpopular and disliked group in politics today? And he said, yes; let's actually give it back to him. It's as if the election never happened.

And let's say for the sake of argument that I agree with you on the fact that these other issues are important. You only have so much time. If these issues were that important, they were probably this important back in July. And they were this important back in May. And the fact that they didn't bring them up was because they had other things that they deemed more important.

There are now things that as Julie says are imperative. You have to fund the government and you certainly have to do the tax cuts. Now, Harry Reid seems to want to play a game of chicken with Republicans on the tax cuts.

It's inconceivable that he wins that game. You already had people talking about some kind of a compromise openly and in public if they don't pass the tax cuts now, Republicans will be happy to pass them retroactively after the New Year and say this is the first act of the new Republican Congress, and again, not tax cuts but for stalling a tax hike.

BAIER: Julie, in the midst of all this is this push for the START treaty. And it feels again like let's get it all done and get it all finished. And Senator John Kyl is saying hold on, this is a big deal. I need more time.

MASON: Right and it's a big embarrassment for the White House.  The president is going to meet with Medvedev in Portugal this weekend.  They're going to talk about it. He thought he had a deal in hand and now it looks like no.

BAIER: OK. Up next, General Motors' comeback and today's IPO.  You can get all the details in the "show notes" section of our homepage as we head to break. Head to FOXnews.com/Special Report. 



PRESIDENT OBAMA:  Today one of the toughest tales of the recession took another big step towards becoming a success story. General Motors re-launched itself as a public company, cutting the government's stake in the company by nearly half.  What's more, American taxpayers are now positioned to recover more than my administration invested in GM, and that's a very good thing.


BAIER: President Obama celebrating the return of General Motors to the U.S. stock market today. The stock rose from $33 a share to close at about $34.19. But the U.S. government did get a big chunk back from all of that and they hope to get more, as you heard the president.  What about this? We're back with the panel. Julie, the president is obviously touting it, a rare appearance in the White House briefing room. He needs a win.

MASON: He needs some good news. That's why they came out with this today. The thing is it feels a little premature, doesn't it? The government hasn't broken even on this deal and they still own more than a third of GM. That will take the stock price to come up quite a bit.

BAIER: To $50.

MASON: And it closed at about $34 something today. It felt a little early. It felt a little quick for this announcement.

BAIER: Steve?

HAYES: I agree. You're going to have the stock go up above $52 for government to recoup the $4.5 billion that it still lost in this round because the government paid an effective price of about $44 a share to buy it and it went public today at $33 a share.

BAIER: It's important to note that the bailout started in the Bush administration, and when the president talked about the recouping of the money, he talked about the money that his administration added to the bailout.

HAYES: Right, as taxpayers actually cared. Yes, it was slippery language to be sure. He was for it.  The Bush administration was for it.

Look, the big picture, I don't think it should be terribly surprising that a struggling company going through bankruptcy that was given a bailout of $50 billion from the U.S. taxpayer would be able to show an improvement on its books.  The question -- the long-term question is can the stock price rise to $52 to make the taxpayer whole on this round, and can in the future when the government divests the 33 percent that the taxpayers are still on the hook for this, is the company successful strong term? Is it in a better position in terms of the products it's providing to let the taxpayers recoup?  And that's certainly an open question and there are reasons to be skeptical.

BAIER: Here's a bigger, broader question, Juan. Is there now because of the success with the IPO more of a feeling that bailouts work?  You know, we heard in the TARP vote when the tarp is going to be paid off, you know. Democrats are talking like this is going to be OK. We did the right thing on tarp, on GM bailout, the money is coming back.

WILLIAMS: What's going to be ok?

BAIER: The money is coming back to the U.S. treasury.

WILLIAMS: There's no chance they're going to do additional stimulus or additional bailouts.

BAIER: I'm talking about a philosophical question about is somehow this GM success in the IPO going to lend to mentality that bailouts somehow work in the big picture?

WILLIAMS: I just think they're so politically unpopular, I don't know how you justify it. I mean, you can make a case for stimulus, but the American people didn't buy it. Clearly, stimulus is not a popular item and we don't want to take responsibility for it before the voters.

But I would say there's a whole different number of elements that you two didn't discuss. One is more than 70,000 people kept their jobs because GM and the auto industry didn't go out of business. And there were all the repercussions in terms of subsidiary industries that stayed afloat and kept this country and kept people working, kept the country from going into an even deeper recession.

I don't understand how you can do analysis of this and simply say it's about the stock price. We were about trying to keep America working and keep people in jobs and keep families together. That's important.

HAYES: No question that's important, but there are also things that you didn't mention. There are opportunity costs to doing this. There are business losses that other car companies probably took because they weren't able to go out and hire workers from GM.

When the government steps in on behalf of one particular car company, it's helping the one particular car company. It's not necessarily helping, you know, car buyers, not helping competitors of that company.

WILLIAMS: Did you hear Ford complain? I don't hear Ford saying why did the government help? I think this helps the American auto industry, helps us to retain an auto industry and all the manufacturing goes with it even as we're losing so many blue collar jobs in this country.

And just looking at it in terms of stock shares I think it's very limited and not fair in terms of the larger goal.

BAIER: You're making my point or my question, the defense of the government intervention into companies. And --

WILLIAMS: Oh, in the midst of a situation where you may be going on the verge of depression, if we were ever in that situation, again, you're saying to me, would the American government, therefore, feel that they could point back to this say look, it worked.

I think you're right because I think that President Obama feels that way in his heart. I think that there are a number of people on Capitol Hill who feel that way. But the politics of it has also been punishing for those very same politicians.

BAIER: Julie the Tea Party, the Republican Party, the rest of America, I think, is in a different mindset if you look at the exit polls.

MASON: Right, right. That's exactly the point I was going to make, Bret and you raise an important issue because the politics of this are bad and you can't go back retroactively and turn around people's opinions of it regardless of the merits of the policy or whether it was a success. People didn't like it, they're against it, you can't change their minds now.

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