This is a rush transcript from "Special Report," July 4, 2011. This copy may not be in its final form and may be updated.

SHANNON BREAM, HOST: We have something special for you on this Fourth of July edition of "Special Report." Here's Bret Baier.

BRET BAIER, ANCHOR: Thanks, Shannon. Welcome to this special July 4th panel talking about the economy, possibly how to save the economy in this tough environment, the economic environment that we've seen. The unemployment rate now stands at 9.1 percent. And there you see, when the president took office in January 2009, 7.8 percent under employment. This includes people in jobs, part-time jobs, people who have stopped looking. There you see that 13.9 percent, and in May of 2011, 15.8 percent.

As far as the handling of the economy by the administration, the latest poll by Bloomberg has approval at 39 percent, disapproval at 57 percent. This is the environment in which we're operating on this economy on this Independence Day.

We'll talk about the economy now with our Independence Day panel, Liz Claman, Fox Business News anchor, David Cote, chairman and CEO of Honeywell, Michael Landrum, owner of Ray's restaurants, and syndicated columnist Charles Krauthammer.

David, let's start with you. Your company, Fortune 100 company, sales of $33.4 billion in 2010, more than 130,000 employees. And you look at all these stats, very impressive in this economy. What are your thoughts about where things stand now from your perspective sitting where you sit?

DAVID COTE, HONEYWELL CEO: Well, interestingly, you quoted $33.4 billion. This year we'll $37 billion.

BAIER: And growth is increasing as you see in this graphic.

COTE: Things are growing. And if we were to look around the world, we see sales growing -- sales and orders growing, in every region and in every business. So we do see things moving along and starting to get better.

That being said, there are still causes for concern. And this particularly when it comes to consumer spending. And that's the one that worries me the most. Consumers, especially with the impact of high oil prices, it really takes a lot out of their pocketbook.

And I mentioned that all of our businesses are doing pretty well. The only one that's struggling is the one that sells consumer retail -- auto parts. And it's almost like people have a budget for their car. And they're gonna spend a certain amount. And if it all goes to gas, then the other stuff doesn't get spent.

So there are reasons for concern. But by the same token I do believe the global recovery is more robust than people give it credit for. And I point to North Africa and to Japan. If both of those events had happened a year ago we could have had the crisis of confidence that precipitated a double dip, we didn't. That being said, it doesn't mean things are gonna be great. And I think we're more likely to see kind of a struggling economy continuing to improve but not have any of that robust growth that we've been hoping for.

BAIER: Liz, confidence is a big part of whatever this recovery's gonna end up being, right?

LIZ CLAMAN, FOX BUSINESS HOST: Oh, absolutely. Every time you see consumer confidence numbers tick down slightly or tick up, everybody makes a sweeping statement. The fact is, that truly there is this inability to really seize upon a trend. One minute things they look pretty good, the next they don't.

But I want to go back to what David Cote is saying. Here he runs gigantic company. But let's take a Warren Buffett for example who has 70-plus companies under his umbrella, everything from jewelry to Dairy Queen to Fruit of the Loom, to brick companies, that makes bricks for houses. And he said every single one of his businesses except the ones tied to the housing market are looking a lot better. Not gigantic numbers to the up side, nut moment by moment, improving.

That is a trend that you can look at from a business perspective and say OK, now is there this disconnect between the numbers that you see that you put on the screen to start? We have millions of people unemployed. That's a real number, and that is the issue that needs to be attacked. Question is, how do you do it?

BAIER: Yeah, Michael, from a small business perspective, what is your sense of the economy and what do you see in your restaurants? You have five restaurants and just under 250 employees.

MICHAEL LANDRUM, RAY'S RESTAURANTS OWNER: Well, I can only speak anecdotally. I'm not an expert here like the other esteemed members of the panel --

BAIER: Well, you're an expert in your own business.

LANDRUM: In my own small business. My overall view is that the spirit of entrepreneurship and innovation in the American people is something that is indomitable and that will bring the economy around. My own personal experience since 2008, I have created 75 to 100 new job positions since the worst of the economy hit. And a lot of that was a distinct and overt decision on my part to devote my resources in the company to creating jobs.

BAIER: We're watching video of the president eating at your restaurant with Russian President Medvedev.

LANDRUM: And of course with that, I should probably mention that my experience might be unique because I did benefit greatly from some public windfall, and I made the decision at that time to translate that windfall into reinvesting in human capital to preserving jobs that I had, making a distinct stand not to eliminate positions and to devote all of my resources at the expense of my bottom line, to hiring and creating new job positions knowing that eventually with a turn-around those people will be there to benefit just not my business but all of the economy moving forward.

BAIER: Do you think that you are the exception as far as small business owners willing to put, kind of, back in?

LANDRUM: I would like to think that I was less of an exception; I would like to think that more people would put human capital ahead of bottom line considerations. I know that there are some unique companies that are doing so. And historically people who have invested in jobs and in business develop in the hard times are poised to profit exponentially at a greater level once the economy does turn around.

BAIER: World events and watching Greece and austerity over there, and the concern about the dollar, Charles, makes some business owners we talked to just a little scared.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, it's understandable, because when you don't know -- we had a scare about the money markets, which everybody assumes that's a secure source of money, it's like a bank account and we had a little scare this week, they had a terrible scare, of course in 2008, where one of them actually went below sort of the one dollar mark, meaning they - you weren't going to get a return on your money market funds which everyone assumes is stable.

The banks in Europe are dependent on Greek loans, some of our banks have invested in the money markets here have invested in European loans. So as long as that remains unsettled, it puts a pull on the entire economy.

And it's true that large business and some small are doing rather well, at least staying afloat and getting reasonable profits. And that's why the stock market is doing -- despite a slight setback -- is doing well compared to where it was a couple of years ago.

But the problem is at the consumer level, confidence is low. And that's because, as you showed, we had underemployment of one out of every six Americans. And that's historical -- And the worst element of that is that among the unemployed, against American history, more than approaching half have been unemployed for over six months. And that is historically unprecedented in the United States.

It's a phenomenon that is seen often in Europe, rarely seen here. In 2007, the average time to get a new job was about five weeks. It's now near six months. And that implies there could be a whole segment of the population, the more elderly or the middle-aged who may never get employed again.

BAIER: So the question is how to turn that around?

KRAUTHAMMER: Well, you have two different answers. The Republicans argue that if you reduce the debt, you give confidence in the economy, and it can expand and reduce taxes as well.

The Democrats I'm not sure they have a good answer. They tried a huge Keynesian stimulus that had a minimal effect. The Fed has stopped easing, meaning printing money. There are no obvious sources of stimulation, except perhaps I think that perhaps Obama will suggest a further reduction in the payroll tax, because that would be a way to pump money in immediately. But still, I'm not sure either of the parties has an answer that's convincing enough that will sway the electorate.

BAIER: We will dig in to some more possible answers, a look at taxes, green jobs, the housing market, how it all pieces together with our expert panel on this Fourth of July talking about the economy.

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