This is a rush transcript from "Special Report With Bret Baier," September 23, 2010. This copy may not be in its final form and may be updated.


HOUSE MINORITY LEADER JOHN BOEHNER, R-OHIO: These are the things t hat the American people are demanding. And our pledge to America is that the Republicans stand ready to get it done, and beginning today.

REP. MARSHA BLACKBURN, R-TENN.: Washington has gotten in the way of those solutions and that Washington has made the problems worse.

HOUSE SPEAKER NANCY PELOSI, D-CALIF.: The legislation and the small business initiative are on their way to the White House.

I think it's important to note they talked about small business and rushed back here to vote against small business opportunity.


BRET BAIER, ANCHOR: Well, the House speaker talking about the vote, 237-187 in the House, moving the small business bill forward to the White House. She says the Democrats are getting it done. Republicans are just talking as Republicans officially roll out their pledge to America.

What about the back and forth? Let's bring in our panel, Steve Hayes, senior writer for the Weekly Standard, Rick Klein, senior political reporter for ABC News, and syndicated columnist Charles Krauthammer.

Steve, two competing events today, one in a hardware store in Virginia where the GOP leaders rolled out their pledge, and one of the west steps of the capitol where Democratic leaders moved this small business bill forward.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, it's an interesting contrast. It's clear that we're in campaign mode here.

I think what Republicans did worked. Look it was smart for John Boehner and Eric Cantor I think to step back and let others make the arguments. To the extent it trickles down to the American voters, which is questionable, it's a good thing to do.

I think the pledge overall is a smart thing to do. I think it's a good program. I think it's bold and pretty aggressive. It doesn't answer all of the questions. And of course, what happens on November 3 in some respects in governing is more important than what happens on November 2. But it's a campaign document. So they are doing it so they can campaign on something.

What I think it does practically in political terms is it takes away one of two Democratic arguments. Democrats spent the past six or eight weeks making two arguments. The first is that Republicans have no ideas and no plans. The second is that the bad plans that Republicans have are going to take us back to the Bush era. Now they can't say that the Republicans have no plan and no ideas, and they have to attack the idea presented. Nancy Pelosi didn't seem like she wanted to do that today. We see what arguments they end up making going forward.

BAIER: Speaking of that, House Majority Whip Jim Clyburn, congressman from South Carolina, did talk about the plans to push back against the Pledge to America today. Take a listen.


HOUSE MAJORITY WHIP JAMES CLYBURN, D-SC: I don't recall that we had an opposition strategy before. Some of us did call a contract, a contract on America. But that's not anything that we developed.

I can tell you we are going to develop a very rigorous response to this platform, because since we are talking about healthcare -- I guess if we're not talking about healthcare, the notion of a plague would not have occurred to me.


BAIER: He called it a "plague on America," harkening back to 1994 when some Democrats called at it "contract on America," not "contract with America." Rick?

RICK KLEIN, ABC NEWS: Yes, I think, this is a lot about the symbolism. They went literally outside the beltway by 20 miles. They took the ties off. They went out there and say look, we care about these issues.

But mostly I think this was checking a box. Nancy Pelosi and the Democrats had something similar roughly in 2006. Nobody remembers it. What it did at the time was it answered a charge that all Nancy Pelosi could do was say no. Well now Republicans have the charge against them.

I don't think this is likely to be a determinative issue, but I think for a lot of folks now, if you now say to Republicans you don't have anything to run on, they have something to point to. And they can say here's a document that we presented.

And we didn't see the candidates today. This was House leadership and House members. I think even for Republican challengers you don't want to be associated with incumbents, Democrats or Republican. I think that was telling.

BAIER: Charles?

KRAUTHAMMER: The problem with any statement that the Republicans issued if you are a local candidate and a constituency where, for example, you have a pro-choice constituency, you don't want to put a lot of weight on abortion issue. You get locked in.

So I think there is some problem with issuing something that is speaking for the whole party. However, had I seen or anticipated how weak would be the Democratic response, as we've seen today, I would say it probably isn't an era.

And I think Pelosi's answer on the small business issue is one Republicans ought to engage and seize. She passed a bill which allow loans to small business. Republicans should say you want to raise taxes on half of small business income on January 1, 13 percent, and then you want to lend some of it back at your sufferance with paperwork and restrictions.

Our program is to not raise the taxes, leave the money in the hands of entrepreneur with more insight how to spend it than any government official or lending officer in a bank, and not have to have restrictions, interest payment, et cetera. If the Democrats want to have the argument on this loan versus tax hike, Republicans will win.

BAIER: Steve, if you talk to the small or mid-size bankers they say the small business bill could present problems. It is still the same paperwork. There are still the liquidity issues. How will this play politically?

HAYES: It also seeks to solve a problem that if you talk to many small business owners, and if you look at the poll taken by the federation of small businesses, which is a lobbying group that represents small businesses, it solves a problem that isn't what most small business says the primary problem.

The primary problem is the economy is slow and there is uncertainty about the economic situation in the country. One way to solve that is to cut taxes, let business owners keep their money and determine how they're going to spend it.

As Charles says, it's a very easy case. And it's not only Nancy Pelosi who has been making it. This is precisely the case that Robert Gibbs made from the White House on his Twitter account a couple days ago, basically saying once we pass the small business bill, small businesses across the country will begin hiring.

Of course, there are dozens of other, much more significant issues that this small business bill in Washington. It's such a myopic inside the beltway view that both Nancy Pelosi and the White House has expressed, I think it's a real problem for them.

BAIER: Rick, you agree?

KLEIN: I don't think it will change anything around the politics around this. Democrats passed this, they feel good about it and say it. I don't think it will change perceptions of the economy. I certainly don't think it will change where the economy is by the fall. I think this tax issue that is lingering out this and likely not to get done --

BAIER: It looks like won't be addressed in this session. For Democrats who are using it as an issue the fact it's not coming up, is that an issue?

KLEIN: I think Republicans are going to make the argument that under Democratic control in Washington, the American people, all of them, are set to see biggest tax hike in history. That is a problematic argument for Democrats. And this paralysis is going to get lost in the shuffle.

The fact that all the tax cuts are going to expire at the end of the year, Democrats really have to worry about that and try to find a solution with that with their own members as much as the Republicans.

BAIER: Next up, President Obama and his Iranian counterpart at the United Nations. You can get more on this story at the Foxnews.com homepage, Foxnews.com/specialreport. Stay with us.



PRESIDENT BARACK OBAMA: The door remains open to diplomacy, should Iran choose to walk through it. But the Iranian government must demonstrate a clear and credible commitment and confirm to the world the peaceful intent of its nuclear program.

MAHMOUD AHMADINEJAD, IRANIAN PRESIDENT: Some segments within the U.S. government orchestrated the attack to reverse the declining U.S. economy and its grips on the Middle East in order to save the Zionist regime. The majority of the American people as well as most nations and politicians around the world agree with this view.


BAIER: Well, there you see the American delegation walking out at that point in Iranian President Mahmoud Ahmadinejad's speech, didn't want to hear what they called the "vile conspiracy theories and anti- Semitic slurs" saying essentially that the U.S. was behind the 9/11 attack.

We're back with the panel, analyzing the day at the United Nations. Charles?

KRAUTHAMMER: So after that speech, the U.S. delegation at the U.N. says that what the president of Iran had said was abhorrent and delusional. The State Department issued a statement and it accuses him of being outrageous.

At yet an hour earlier, our president on the same podium reaches out his hand and opens the door to new negotiations with a man who apparently is abhorrent, delusional, and outrageous.

Now there's a real disconnect here. Obama operates under the assumption that all Iran has to do is show it's sincerity and it's meeting the obligation under the NPT. This is the way a law professor speaks about the duties and obligations of a citizen in the cozy civil society where all of agree on the norms.

The international arena is a state of nature where there are no norms, especially for a regime like Iran's, a rogue regime. And it acts in its own interest to augment its own power. To pretend as Obama does that this is only a question of obligations and duties and to again stretch out a hand that's spat on for 20 months is simply unbelievable. It betrays the nature of the international community that's not even a law professor's, it's an adolescent's.

BAIER: Rick, Ahmadinejad, Chavez, they always seem to have something to say at the U.N. podium every year. This seemed pretty unique though for him in New York a few blocks from ground zero to say that the U.S. is behind the 9/11 attacks and that many Americans and international diplomats believe the same thing.

KLEIN: It's a great platform if you are a leader of rogue regime because you get the world stage looking at you. You have the president of the United States in the same building just hours before Ahmadinejad. He obviously used it to his benefit.

I think he was playing to a domestic audience more than anything else. This is the kind of thing that he says with almost regularity, but just rarely that he says it on American soil. This close to ground zero as you point out. Clearly he closed the door that President Obama tried to open again earlier in the day. The Americans were surprised, they were probably taken aback by this because it's stronger language than we have seen from him in a setting like this.

BAIER: One second. Literally as we're talking, White House Press Secretary Robert Gibbs just said President Obama found the remarks outrageous and offensive, especially since we're just blocks from ground zero, exactly what we're saying here.

KRAUTHAMMER: I want to say Iran closes the door and Obama keeps knocking on it.

BAIER: Steve?

HAYES: You can go back and look at other examples of this. When we reached out to the Iranian regime via a series of letters elections shortly before the Iranian elections, and the Iranian regime put down the uprising after the elections. There are so many examples of this.

The real question is why the Obama administration treats this regime as if there is a question about the nature of the regime itself. And I think that is what we do saying look we are willing to sit back and have discussions.

And nowhere is this more apparent than what the regime is doing in Afghanistan. It's the policy of the regime approved at the highest level to kill American soldiers, to attack Americans. They supply the arms and money and they supply training.

Why doesn't the President of the United States in this forum ever say anything about it? He hasn't done it. It's been 20 months. He never challenges them on the fact that they are the foremost state sponsor of terror in the world and that they're killing Americans.

BAIER: Quickly, Charles, the president did not mention North Korea's nuclear program that obviously the U.S. has big concerns about.

KRAUTHAMMER: He stayed away from all the important issues, Iraq on the brink, Afghanistan headed south, the Iranian issue, which I think he was very, very weak on. What does he devote a quarter of the speech to? To Arab- Israeli negotiations.

The only news he made is he said that Israel has to extend the moratorium without demanding anything of the Palestinian side, which immediately means the Palestinians are going to offer nothing in return. There is no obligation on their side. They will sit on the sidelines and allow a row to break out between America and Israel.

It's not a smart move if you want to have evenhanded and reciprocal negotiations.

BAIER: Rick, on Iran, the administration continues to believe that these sanctions are having an effect.

KLEIN: Yes, and I think that is something that we will hear from the White House. They know there is a new round going into effect later in the month. And they are hopeful around it. But I don't think there are good options there. However the president uses a forum like this, he knows there aren't great options and this is just one of many areas he has to confront. He chose today to focus on the Middle East.

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