This is a rush transcript of "Special Report With Bret Baier" from August 16, 2010. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA : As a citizen and as president, I believe that Muslims have the right to practice their religion as everyone else in this country.


That includes the right to build a place of worship and a community center on private property in lower Manhattan in accordance with local laws and ordinances. This is America and our commitment to religious freedom must be unshakable.

I was not commenting and I will not comment on the wisdom of making a decision to put a mosque there. I was commenting very specifically on the right that people have that dates back to our founding. That's what our country's about.


BAIER: The president making remarks Friday at the White House and then clarifying those remarks Saturday in Florida. Now there is a lot of firestorm politically from Republicans and now Democrats as well. Senate Majority Leader Harry Reid through a spokesman says this, quote, "The First Amendment protects freedom of religion. Senator Reid respects that but thinks that the mosque should be built someplace else."

What about the fallout from all of this? Let's bring in our panel tonight: Bill Kristol, editor of The Weekly Standard; Nia-Malika Henderson of The Washington Post, and syndicated columnist Charles Krauthammer. You think I could say the name correctly after all these years.

Charles, let's start with you. What about the dustup after this weekend, what the fallout is?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, when you consider the sequence of events, it begins with the White House saying this is a local issue; we are not going to comment. Then you get the president ostentatiously endorsing what appears to be the mosque at a Ramadan dinner to a Muslim audience, which is not a great act of courage -- that audience likes hearing it.

Then it turns out a day later 1,000 miles away he says on camera as we heard, but I was only addressing the legality of it. That's not addressing anything. We all agree on legality. It's the propriety, the decency of this on which he doesn't comment, but it does imply he might have a few questions about the propriety of it.

And then you get the White House saying it was not a walk-back. It was walk-back. It was a revocation. You get whiplash out of all of this. What happened was the president made a strong statement, hailed as a courageous one at the dinner at Ramadan. But it wasn't a matter of courage. Courage would have been that audience, a Muslim audience, he should have said, yes, I believe in the legal right -- you have every legal right to do it -- but I would appeal to you as Americans -- after all, I'm the president, not a judge, not the Supreme Court, I don't decide on legality, but as president, I speak on behalf of the spirit of America -- that you ought to consider decency and propriety of establishing house of worship dedicated to Islam at a spot where people were murdered in the name of Islam.

Obviously there is a distinction between murderers and religion. There is a no question about that. But this is place where you might want a non-denominational place of worship, as you have in hospitals, a place of meditation. But establishing a mosque in that area is a provocation. The president should have said that, he didn't. He missed an opportunity. And I think he alienated all sides here.

BAIER: Nia, some Democrats are scratching their heads. And now you have the Senate majority leader putting out a statement. Other candidates are putting out statements. How troublesome is this as an issue politically?

NIA-MALIKA HENDERSON, WASHINGTON POST: It's troublesome for now. I think it's yet to be determined whether or not this is going to last until November. You know, obviously economies is what people are focused on.

I think for now, I mean, some of the points that Charles articulated, this idea it's about the First Amendment on the one hand but also maybe this should be placed somewhere else. This looks like a place that Democrats can essentially stake out. We saw Reid do that. So, in some ways I don't necessarily know that it's clear it's only a problem for Democrats, because on the stump they can essentially articulate whatever position they want. There isn't going to be any record of voting for this. They are not going to have to vote for this in Congress or anything.

So I think they will have enough room to articulate things in the way that they want to.

BAIER: The issue when you poll it, Bill, the latest Fox News Opinion Dynamics poll has it this way -- "Do Muslims have a right to build a mosque near Ground Zero?" Yes, they have the right, 61 percent. Now the question of building the mosque, an Islamic culture center near ground zero, is it appropriate -- 30 percent; is it wrong, 64 percent.

The polls seem to be able to differentiate between the right and whether it is right.

BILL KRISTOL, EDITOR, THE WEEKLY STANDARD: As does Harry Reid. I agree with Harry Reid. I've wanted to say that for three and a half years. For three and a half years he's been Senate majority leader and I don't think I've ever said that on this set or maybe anywhere else. But I'm bipartisan kind of guy.


The Reid-Kristol position, if I call it that, is that of course there are legal rights to use private party in accordance with the local laws, but the mosque should be built somewhere else.

What do they say about property, location, location, location? This is about the location. Governor Paterson, the Democratic governor of New York, about a week ago offered the builders and the imam -- Imam Rauf -- we will help you find another place that's half a mile away where you won't face the questions about your intention and you won't offend a lot of people and he was turned down, it appears.

So this is not finding a place for worship for Muslims in lower Manhattan. This is making a statement, and I think a provocative and offensive statement to many Americans right at Ground Zero. And that's what I think Harry Reid's comments bring out very well and that is something that President Obama I think will have to express an opinion about at some point.

BAIER: Charles, New York Mayor Michael Bloomberg spoke out today saying this -- "If we shout down a mosque and a community center because it's two blocks away from the site where freedom is attacked, I think it would be a sad day for America."

Now, we just pulled up The New York Times from December 8, 2009, where it describes the Burlington Coat Factory and the staff in there saying "there was no immediate sign that the fiery cataclysm, but out of the blue suddenly stained with smoke, a plane's landing gear assembly, the size of a World War II torpedo, crashed through the roof and down through two empty selling floors of the Burlington Coat Factory." That's from The New York Times in 2009. That is the building.

KRAUTHAMMER: That is the building. And it hasn't been mentioned at all. In fact, if this hadn't happened it would still be a sacrilege, I believe, to be on the edge of the vicinity of Ground Zero.

But this in fact, the fact that you cite, means that the site was a point of attack. This was Mohammad Atta's plane which he was using as missile to indiscriminately attack Americans and destroy and kill as much as he could. And a piece of that missile, that airplane, went through the roof on that site. That is a point of attack of 9/11. It's not even peripheral area. And that makes it all the more a provocation.

BAIER: Last thing -- Nia, if Democrats had a problem with positioning today, they had another person speak out today, and that is the cofounder of Hamas. Take a listen quickly:


AL-ZAHAR, HAMAS CO-FOUNDER: We have to build everywhere. In every area we have to pray and this mosque is the only site of prayer especially for the people when they are looking to be in a group, not an individual.


BAIER: So what is your sense? Does this thing blow over? Is this August, that we are covering this too much? Or is this a real big issue?

HENDERSON: My sense, I think it's popular to say everything ends up being a political issue, but my sense is it will blow over by November and it won't necessarily be an issue. The Democrats, point of fact, might have a way to do something that a lot of them wanted to do and that is distance themselves from Obama on some issue.

BAIER: Last word, Bill?

KRISTOL: The only way this blows over is if they move the mosque.

BAIER: What do you think is the most important factor in the mosque controversy? Logon to our homepage at FOXnews.com/specialreport. Vote in the online poll, right there on the right of the screen.

Up next, General David Petraeus goes on a media blitz and his boss goes on the clock.



GEN. DAVID PETRAEUS, US/NATO AFGHANISTAN TROOPS COMMANDER: We have to really put our shoulder to the wheel and show during the course of this year that progress can be achieved. And again, one manifestation of that out there is that you have this date. But again, we have had good dialogue on this and I think the president has been clear in explaining that it's a process, not an event and that it's conditions-based.


BAIER: General David Petraeus in Afghanistan on a bit of a media blitz this weekend, talking to The Washington Post, New York Times and "Meet the Press."

Also we learned today from a Foreign Policy magazine interview, Defense Secretary Robert Gates said this about his job, quote, "I think that by next year I'll be in a position where you know we're going to know whether the strategy is working in Afghanistan. We'll have completed the surge. We will have done the assessment in January and it seems like somewhere in 2011 is a logical opportunity to hand off." He's saying he may be done sometime in 2011. Not a surprise, perhaps.

What about all of this? We're back with the panel. Nia, first to General Petraeus being the face now and essentially saying July, 2011, is really conditions-based. And he's going to make the recommendations he is going to make to President Obama.

HENDERSON: You heard the White House saying today that there is no daylight between their feelings about this drawdown date and General Petraeus.

He definitely has -- I don't think it's probably accurate to say this is his war. He definitely has been the face of this war. It is one place I think the administration has been consistent with the messaging. You saw Petraeus. He's on his media blitz. Obviously, on the one hand, striking, you know, a command of the military. But also speaking politically and kind of being the political face of this war and trying to suggest that this is going to be hard -- this war, this drawdown, the pullout -- the conditions on the ground are improving somewhat, but obviously speaking to some Democrats and the public, who are kind of sour, quite frankly, on this war.

BAIER: He doesn't answer a question better than most. He does not wade too much, Bill, in the politics of things.

What about this push to get Petraeus out there talking about it?

KRISTOL: He does a lot of things better than most.

I think the irony of the fact that Bob Gates, secretary of Defense, and David Petraeus, commander in Iraq, probably more than any other two people pulled off the surge in the last two years of the Bush administration over bitter opposition of the Democratic Party in the House and Senate, including then-Senator Obama and then-Senator Biden and then-Senator Clinton. That those two are now central to the Obama administration success in the most important, probably one of the two most important foreign policy fronts they're facing, but they have to win the war in Afghanistan for many reasons, I think. It's one of those little ironies of history.

I would say that I think Bob Gates genuinely intended to leave at the end of 2008. If you look at interviews he gave in mid-2008, he said over and over, I want to go home, I want to go home. President-elect Obama asked him to stay. He stayed.

I think now he intends to leave probably mid to late 2011, after the July 2011 date, I think when he thinks things are on a decent path. But I honestly believe if President Obama says why don't you stay for the whole first term that Bob Gates will feel that that's the right thing to do.

So I wouldn't be surprised to see Gates and Obama -- Gates and Petraeus as the two key executors of Obama's Afghanistan policy for the next two years.

BAIER: Charles?

KRAUTHAMMER: I would agree. I mean, this is really -- ironies abound. Here we are three years ago, Petraeus arrives in Washington with an ad calling him "General Betray-us." And Senator Clinton at the time, said listening to him requires suspension of disbelief, which is a rather sharp questioning of the man's integrity.

Here we are three years later, he's the face of the war, which I think is more than ironic. I think there is something odd about this. The president is the one who made a decision. He comes in office and he has two wars on his hands. He decides Iraq, he wants to wash his hands of and he's out. All he's done has gotten us out.

Afghanistan is a war he embraces. He decides this is a war that is important -- a just war he wants to win it or succeed in it in some way. He triples our forces there. He gives one speech in December, 2009. Generally speaking he stays away. He talks about the economy, autos, he talks about green energy, he talks about batteries. He doesn't speak about a war which is essentially his war. Not in the Michael Steele way that he invented it. But he embraced it. He said this is important, I commit America to it as we're leaving Iraq.

And who speaks on his behalf? Petraeus, a general. I mean, that's OK, but that is not the way it ought to be done. If the president wants to give a sense of seriousness of commitment and for Afghans to make a decision who they will support, to believe, he has to show he is committed. Otherwise, you get a sense of he's half-hearted in all of this.

BAIER: Quickly, Nia, Defense Secretary Gates, he does have a big role in this administration.

HENDERSON: Yes. He does have a big role in this administration. And as I was reading the Foreign Policy piece when it said he was going to leave in 2008 and now essentially that he's going to leave in 2011, I kind of thought to myself, I wonder if he even leaves in 2011 if the president comes and says, hey, we still need you as secretary of defense, if he, you know, essentially decides to stay.

BAIER: Panel, thank you.

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