This is a rush transcript from "Special Report," December 29, 2010. This copy may not be in its final form and may be updated.


REP. ROB BISHOP, R-UTAH: The idea of changing the way we do things in Washington is what I think the people want in the last election. And we are bound and determined we're going to change the way we do things in the future.


CHRIS WALLACE, GUEST HOST: That’s Republican Congressman Rob Bishop of Utah. He’s talking about ending the practice of asking for earmarks or special projects in Congress, but the reform agenda is a whole lot bigger than just that.

Time to bring in our panel, Steve Hayes from The Weekly Standard, Nia-Malika Henderson of The Washington Post, and syndicated columnist Charles Krauthammer.

So Steve, when Speaker Boehner and the Republicans take control of the House, and it's gonna happen next week -- really after all of this waiting it is about to happen -- what do you expect to be at the top of their agenda and what do you think should be at the top of their agenda?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I think they will do a lot of these process things. They will focus on things; make a big deal about things like ending earmarks, about highlighting transparency, posting bills online for three days so people get to see them. I think they’re right to do it. I agree that part of the message of the 2010 elections was the way Washington does business and the way the process works is broken and it needs to be fixed.

To the extent that they focus on process fine, but process in this instance is secondary, I think. Ultimately what they’ll be judged on in two years or four years or six or eight years on is what actually happens and what they do. Are they able to reform the government to make it more responsible and cut spending the way voters want them to do?

WALLACE: I think that is the way they will be measured particularly in the House, cutting federal spending. How aggressive do you expect them to be?  Where do you expect them to start?

NIA-MALIKA HENDERSON, WASHINGTON POST: I mean, obviously they're starting with earmarks and that is an easy place to start. Earmarks are about one percent of the federal budget and everyone likes to talk about them around campaign time.

They have to really look at 60 percent of the budget that no one want to talk about, which is Social Security, which is Medicare and Medicaid and defense. And so I think that’s the question of whether or not they will make hard choices and really get at this.

President Obama has very much said when he comes back in with the new Congress he will try to focus on the budget, on deficit and the debt and reducing spending. So that will be a tough call for Republicans to join him.

WALLACE: I want to get to this the question of hard choices. You know, there are easy targets in the federal budget obviously. But to make the kinds of cuts that Republicans are talking about they will have to cut programs that people depend on and that help some people and we can't afford anymore.

Do you expect Republican first six month to go after those and say it’s legitimate program and it’s not waste or fraud or abuse. We just can't afford it. 

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think the Republicans learned a lesson from what happened with the Gingrich revolution in '94.  The Republicans were so heady in those days they thought you could govern from Congress. They had control of the House and Senate, and they could not. They were defeated, the president faced them down and won reelection and essentially drove them out of town.

I think the Republicans have to control of control of only one House all they can do is containment. If the Republicans propose serious entitlement reform they are going to get crushed. First of all, it will not be enacted. It will be demagogued by the Democrats.

If there is going to be a deal on that, it will have to be one behind closed doors the way the tax cut deal was done in the lame duck session where the Republicans and Democrats agree they will take equal hits.

So if you don't do entitlement reform, what is left? You will do discretional spending. I think what the Republicans have to do it is to it in a process way. If you say we want to restore the budget to the 2008 level you are not actually attacking individual programs. You are leaving to the bureaucrats, meaning the Democratic Obama bureaucrats the choice was what you cut and what you don't.

So I think it is it smart to put a cap on spending and say to the Democrat administration you go ahead and do it. That way when the program is cut, you are not directly responsible.

WALLACE: Steve, I want to go back to Shannon Bream's report at the top of the broadcast about members of the Tea Party caucus who last year supported their own earmarks, 764 earmarks at a cost of over $1 billion.  It was a different time and there was not a ban. Do you expect the Tea Partiers to live up to their rhetoric this year?

HAYES: They sure better. And let's remember their numbers have grown by two, three dozen new freshman. So this will be a powerful group, and I think they will be checking one another and saying we can't afford to do this.

You also have Eric Cantor who has said repeatedly when this came up again; there will be no earmarks from Republicans on the House side. He laid down the law. They try that at their own peril. I don't expect they will. 

WALLACE: Nia, in the couple of minutes that we have left, what kind of a speaker do you expect John Boehner to be? 

HENDERSON: So far, I think we have seen he has a way with words. He speaks plainly, and he is very emotional sometimes. And I think he's going to be someone who challenges the president in very vocal ways. He's going to be a speaker that really is able to discipline his troops in the House in the way that Nancy Pelosi was. He's coming in with the wind in his back. I suspect he will be strong.

WALLACE: Charles, what kind of a speaker do you expect Boehner to be, and how do you expect him to handle the pressure from the Tea Parties that go even further?

KRAUTHAMMER: I think it is exaggerated how much of a negative presence the Tea Party will be and how much it will push Republican to risky measures.

The theme of the election is well known and accepted by the broad spread of Republicans, rein in and smaller government. Within that, I don't think it is hard for a speaker to actually operate. I think Boehner will be strong and lachrymose, which is an interesting combination. I just hope he restrains himself on the floor that that he brings a supply of Kleenex every time he introduces a bill.

WALLACE: And you don't expect him to be try to be a Newt Gingrich and counterweight to the president?

KRAUTHAMMER: Gingrich had the idea he was a prime minister, it doesn't work in our system. Boehner has an acute of understanding of what his role is. And by controlling half of Congress it is saying stop. The election was all about saying stop. He will do it and try to work on Obamacare and on spending, and I think that's his mandate. 

WALLACE: All right, we have to step aside for a moment. When we come back, the U.S. launches a new program to track the bad guys in Afghanistan, and that's just among our friends.



MATT BENNETT, THIRD WAY: President Karzai has put up roadblock after roadblock in U.S. efforts to root out corruption in part because he and his family are profiting from this corruption.


WALLACE: That is Matt Bennett from the Washington think tank Third Way laying out just how big a problem the U.S. has dealing with our Afghan partners.

And we are back with our panel. Nia, we had a report about the new way of tracking the bad guys including an awful lot of our allies in Afghanistan called the malign actor networks, the web of corruption connections among them.

What do you make of that and our seeming lack of success in rooting them out? 

HENDERSON: I mean, it hasn't revealed a lot of surprises. We have known for awhile that this is a corrupt government and Karzai is an unreliable partner. He said he had three enemies, the U.S., the international community, and the Taliban, and I he had to pick a side it would be the Taliban.

So I think from the Obama administration perspective they have tried on one hand to treat him harshly and more recently trying to curry favor with him but there is no evidence that he has a stake in rooting out the corruption. So it is a real problem. He essentially can look to the 2014 deadline and be the last man standing. 

WALLACE: Steve, this is not a new story. The fact of rampant corruption, we have identified it and identified people and force the Afghan government to bring charges. Karzai has repeatedly stopped investigations and prosecutions. Is there any way around Karzai and how much can we hope to achieve with him in power?

HAYES: That I think is the key question, is there any way around Karzai, because when you look at what he has done over the years, you see just how intimately involved he is in this.

I think When Karzai first came to power in Afghanistan; he could be accused of ignoring the corruption going on about him. Now it is clear he is directing the corruption in Afghanistan and doing so to a troubling degree.

There was a WikiLeaks cable from August of 2009 authored by the ambassador in Kabul that laid out the details of what the Karzai government was doing. They were releasing former Guantanamo pretrial x. People that United States wanted to have tried in afghan courts releasing them outright and other Taliban sympathizers.

There is one which is funny in a certain way -- releasing narco- traffickers, five policemen caught with 124 kilograms was heroin, they were released. They were related distantly because they were related to people kill in the civil war.

This is the level of corruption, and I think for the Obama administration, they have to deal with Karzai because he's there, but this shows how knotty the problem is.

WALLACE: So is there any way around Karzai, and if there isn't, because he is the elected president of the country, what can we achieve with him in power? 

KRAUTHAMMER: I think we have to accept reality as it is. There are no alternatives and we are in the middle of the war. It is like the Kennedys and the Diems at the beginning of the Vietnam War. They were killed in a coup and their successors were more corrupt than the next.

There will not be a knight in shining armor that gallops in after the fall of Karzai that will be clean. This is endemic in Afghanistan culture.  It is a tribal society where all politics depends on patronage and kinship.

That doesn't mean you don't do anything. You try to go after the egregious examples and try to minimize what you can. And what I think is most important, make sure that any of the money diverted or lost, I rather end up in a Swiss bank account than in the hands of the Taliban.

You work within limits. And I don't think there's anything we're going to do in the end ultimately that will change the political culture which is 1,000 years old and in the middle of a war in which our main endeavor right now is to contain and defeat the enemy.

WALLACE: So given all of that, what is our goal? What is the most to hope for realistically in Afghanistan? 

KRAUTHAMMER: To clear the ground of enemy control and have the population have a sense of security. And they have lived millennia with a corrupt government, and it is not as if the enemy of the Taliban are pure and aesthetic. They are corrupt as the other side.

So it isn't as if by against Karzai they will choose a lack of corruption. It is a question of who do they want to live under. You want to do what you can on the ground and you try to contain the overt, gross corruption that is at the very top.

WALLACE: That is a very cheery picture, and maybe the best we have got.

KRAUTHAMMER: Happy New Year. 

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