This is a rush transcript of "Special Report With Bret Baier" from February 27, 2009. This copy may not be in its final form and may be updated.


CHRISTINA ROMER, COUNCIL OF ECONOMIC ADVISERS: We're forecasting real GDP growth of 3.2 percent for 2010 as a whole, and more robust growth in 2011, 2012, and 2013.

So our forecast reflects the reality that the economy has substantial downward momentum, but it also reflects the administration's assessment that the comprehensive recovery program outlined by the pre sident on Tuesday night will be effective.


BRET BAIER, HOST: That's the president's chief economic advisor Christina Romer, sounding pretty sunny about the economy in the long run. She said we had a lot of inside information. We knew the plan that we were going to put in place, and that's why we're projecting what we're projecting.

What about that? Let's bring in our panel — Fred Barnes, executive editor of The Weekly Standard, Nina Easton, Washington bureau chief of Fortune magazine, and syndicated columnist Charles Krauthammer.

Charles, you touched on it last night. Today, Christina Romer came out and told us these figures.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Sunny, and I would say chirpy. You almost want to invest after hearing her talk. She sounded extremely happy about our economy.

It's one of the reasons they don't talk about a depression anymore, as the president had — when he needed a stimulus, we heard the word "depression" every six hours. It is not used anymore. After he got his stimulus passed, he now abandons all talk.

And the reason is, if Romer is right, according the administration's projections, we are going to have a growth of over three percent next year. Now, that's not a depression, that's a recovery, and it's quick. What's scary, however, is that in the quarter we just had at the end of last year, we had a dramatic contraction. The administration redid the numbers, it's is over six percent. Which, on an annualized basis, is a contraction of a trillion dollars in American output in one year. That's the size of the entire output of Indonesia or a Turkey, substantial economies. And the projection had been that would be our worst quarter, our trough. It looks as if the first quarter of this year will be equally as bad or worse, in which case we are still are in what she called the downward momentum.

BAIER: Nina?

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: They, of course, are counting on the fact that their stimulus plan is going to contribute to this rosy scenario.

That Christina Romer, which the viewers just saw, was the same academic who at U.C. Berkeley did studies that showed in fact stimulus packages don't get us out of recession. But she thinks it is big enough and fast enough that it's going to turn us around.

They have an interest, as you said, in a rosy scenario because they need to project more revenues coming in to pay for this huge budget that they just released this week. But the interesting thing is there is some dangers with this rosy scenario, that long term — even if things are better short term, longer term, the Congressional Budget Office, a non-partisan organization, has said that while the stimulus plan may help short term, long term it will cut GDP a little, not a lot, but it will cut GDP and depress wages. So that same thing, that same package that they're counting on to boost the economy could also hurt the economy long term.

Then you have to ask the question about the tax hikes, as they would say on the wealthy, but the top two percent of earners. Those tax hikes, what is that going to do to the economy in the longer run in these out years, where they're talking about expanded growth and more revenue? So it's, like I said, a rosy scenario, but we'll see.

BAIER: Fred?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: You mean the top two percent. Those are the people who invest in America, who start businesses, who create jobs, and they're important. And the Obama administration has said tax hikes ahead, not only in your income, but also in capital gains and dividends and other things.

The tax rate will go up for them, in effect, about 42 percent when you take away some of the deductions they had before.

Look, the truth is we saw again today, Bret, the same thing that happens every time the Obama administration announces more information about how it's going to save the economy. The stock market sinks. What did it go down, 120 points or something today?

Look, financial markets, as you've heard me say and everybody knows, are a bet on the future. Financial markets, and most economists as well, I think, do not see rosy times ahead — 3.2 percent growth, which is pretty good in 2010? I don't think many people agree with that.

What they see is government growing at the expense of the private economy growing. And that's not a recipe for a robust, these robust growth figures that Christina Romer mentioned.

BAIER: And, Nina, the other thing is, the other big move today was the government really getting more control of Citigroup, 36 percent. What does that mean for somebody sitting on the couch?

EASTON: Well, it wasn't surprising. We all knew this was coming. Citi came begging for it. This wasn't the administration foisting it on them. But it was sort of an accounting sleight of hand by the administration. They didn't want to go back to Congress and ask for more money. That TARP money is running out. And this is something that they could do without spending more taxpayer dollars.

Taxpayer dollars are going to be more at risk now, but they don't have to go back to Congress and ask for more outlays. And that money is dwindling, that TARP money.

BAIER: But there is a bundle in the budget request for just that — $250 billion.

KRAUTHAMMER: If this keeps up with Citi, they are going to have to rename the new Mets stadium "Fed field."

EASTON: If Citi doesn't reorganize or spin off some of those operations, this administration will have failed in dealing with Citi.

BARNES: "Bailout ballpark."

BAIER: "Bailout ballpark," nice.

When our panel returns, the president sets a date certain to end all combat missions in Iraq.


PRESIDENT BARACK OBAMA: Iraq is a sovereign country with legitimate institutions. America cannot and should not take their place.


BAIER: The Friday lightning round is next.


BAIER: President Obama said today, August 31, 2010, our combat mission will end.

We are back with the panel, and this is the Friday lightning round. We start with Iraq the speech today to the troops-Fred?

BARNES: I thought it was a very disappointing speech for a number of reasons. President Obama will still not give President Bush any credit for having instituted the surge and won the war there.

Obama He will not use words like "win," "victory." He overuses the word "end," about how he is ending the war, and the war will end, and so one.

And the thing was, he praised the troops, but he treated them as victims. He didn't treat them as warriors who had won a great victory and created a democracy in Iraq. But they are war victims who have the war dreams and have a terrible life at home because of spending time in the war.

As I said, a very disappointing speech.

EASTON: I don't think he treated them as victims. I think he treated them as victors, even though he didn't use that word.

But let me count the ways he did not use the word "victory" or "success," or all of these things that might have implied that George Bush's surge actually worked.

So he stood up there, and he was able to take credit for the surge. He gave credit to the troops, but he would not give an ounce of credit to George Bush. And I thought that was the most notable thing about that speech.

KRAUTHAMMER: What is disgraceful is he had a 20 minute speech in which he did not use the word "democracy" once.

The great achievement here is that we have established the only functioning democracy among the 22 Arab states. That is an amazing achievement-the most open society, a free press, a lot of political parties, free association, and free elections.

And he spoke only about establishing his sovereign Iraq. Well, we could have installed a general after the fall of Baghdad and left a sovereign Iraq. Instead, we slogged it out, lost a lot of good men and women in order to establish a democracy. And he as Commander in Chief did not even acknowledge that.

BAIER: CPAC-Conservative Political Action Conference going on this week into this weekend. Fred, any notables?

BARNES: It is amazing that all the top Republican show up. Romney and others, Newt Gingrich, gave speeches that they hope may launch something toward a presidential bid again. But it is a little too early for that. Romney for president in 2012? I think we had better wait on that.

EASTON: This is the same time last year, of course, was when Romney dropped out of the race at the CPAC.

Notable Sarah Palin was not there. Notable, too, though, I think that this was a group of conservatives today who felt unshackled by having a Bush White House, looking to the future, and enjoying this great gift that Barack Obama gave them this week, the budget.

KRAUTHAMMER: Looking ahead to 2012, the big loser this week was Jindal. The winner is Mitt Romney by default. He is a grownup. He knows economics. And he is a serious guy, and in these conditions, it would help him a lot in running for the presidency.

BAIER: Illinois Senator Roland Burris. How much longer does he stick on? Does he stick on for the long haul?

KRAUTHAMMER: I think he stays because he is shameless.

But his son, the second, he is called Roland Burris II, is the one who got a job in the department of housing, I think after a foreclosure.

I love his name. Normally, you are called "Junior," like Arthur Schlesinger Jr. But he is the second. The "the" impresses me. It is the royal, the Plantagenet. Normally only a Richard III or a Louis XVI. But the Burris' can't wait. The second generation gets the royal treatment.

EASTON: Little did we know that Blagojevich had two gifts to give to the Burris family in return-we don't know if it's in return, but fundraising for the governor.

But I do think Burris continues to hang on. The Democrats are dying to get rid of him, but I do not know how the, quote, "persuade him" to step out.

BAIER: Fred, you said Illinois Senator Burris would be gone in a week. It's a week.

BARNES: It is a week. Look, there is really only one person who can get him to resign. And it is not Dick Durbin, the Senator, it is not the governor. It's Barack Obama, the president.

And Obama seems to want to have him, leave him there and not mess with the situation. After all, Burris is a Democrat.

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