This is a rush transcript of "Special Report With Brit Hume" from September 26, 2008. This copy may not be in its final form and may be updated.


PRESIDENT GEORGE W. BUSH: The legislative process is sometimes not very pr etty. But we are going to get a package passed.



REP. ROY BLUNT, (R-MISSOURI) HOUSE MINORITY WHIP: We want to get this right, and it's more important to get it right than we get it done quic kly.



REP. BARNEY FRANK, (D-MASS.) HOUSE FINANCIAL SERVICES COMMITTEE: Whether or not we can actually have it all signed into law and engrossed, et cetera, I'm not sure. I am convinced that by Sunday we will have an agreement that people ought to understand on this bill.


BRIT HUME, HOST: And so at the end of the day, everybody seems hopeful that there will be a bill, after everybody was hopeful for a while yesterday, or claimed there was a bill.

We will talk about that now with Fred Barnes, executive editor of The Weekly Standard, Nina Easton, Washington Bureau Chief of Fortune magazine, Bill Kristol, editor of The Weekly Standard, and Juan Williams, Senior Correspondent of National Public Radio, all are FOX News contributors.

Well, where are we in this, in your judgment, Juan?

JUAN WILLIAMS, SENIOR CORRESPONDENT, NATIONAL PUBLIC RADIO: Well, at the moment, it looks as if House Republicans are trying to get something going among themselves.

And I think that from what we're hearing is that they want to have something in place that they could act on by midnight tonight or going into tomorrow.

But they are hopeful, and my sense is, again, they're under tremendous pressure from their constituents, who don't want a deal. I'm surprised—

HUME: They don't want a deal, or don't want this deal?

WILLIAMS: They don't want this deal. They are angry at Wall Street. The anger at Wall Street is palpable, and it's what is pushing the House Republicans.

The other side of this is, of course, that you get the Bush White House literally saying we got to deal because we have a sense of urgency.

HUME: Have to have a deal, you mean-not "We got a deal," but "We have to have one."

WILLIAMS: We've got to have a deal is what I'm trying to say.

HUME: Gotcha. Bill?

BILL KRISTOL, EDITOR, THE WEEKLY STANDARD: I think there will be a deal. It will be a pretty bad deal.

I watched Barney Frank, the great defender of Fannie and Freddie on the Hill, and Chris Dodd, the Senator from Countrywide, and Roy Blunt, the Republican House designee who is a pretty good friend of a lot of lobbyists, and it doesn't really inspire confidence in me that were going to get a good piece of legislation, but I think we will get one.

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: Yes, but Hank Paulson, the Republicans' plan prompted a bloodbath in the Republican Party.

The revolt over this, the middle class revolt was just astonishing. The calls were coming in 200 to 1, 300 to 1 into these members of congress's office and still are. — And there is, by the way, an election not far away.

So I think what you will end up seeing is they will find enough Republicans — and Democrats —who are safe, who can stitch together a package stitched together, a unit who can vote for it and move on.

But the fact is this House Republican thing that they are talking about, which is insuring mortgage-backed securities, not buying them up, it's completely different than what Paulson is talking about right now. These are two different things.

But what they need, the need to come back with something that they can take to their constituents, some kind of window dressing, that makes a few of them, so that enough of them can go along with it.

HUME: So your sense is that we are not going to be starting from scratch here, we will be doing window dressing, is that the idea?

EASTON: Yes. The meat piece of it, what they are really talking about—again insuring mortgage-backed securities—is completely different than the Paulson plan.

So I don't see how they're going to come to an agreement with those two completely different plans. One is a private sector approach, one is a government bailout—totally different.

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: There is a way to do it, and Republicans would like them to do it, and that is to have a number of securities be the ones, according to Paulson, that the federal government would buy, and other securities that could be—where you could apply this insurance plan where the government would be the insurer in the case with these securities where there would be no other insurer.

Now, do the House Republicans have any hope that that is going to happen? No!

And they regard their enemy right now is—it's not Nancy Pelosi or the Democrats. It's Henry Paulson, who doesn't want to budge on any of this stuff.

And so the expectation is they'll just be able to nibble around the edges in these negotiations. And, ultimately, a bill will pass, and Republicans won't like it. House Republicans won't like it, but maybe enough will vote for it.

EASTON: But he did budge on things that the Democrats wanted, which was executive pay limits and oversight.


BARNES: The House Republicans now regard Henry Paulson as Nancy Pelosi's best friend.

WILLIAMS: But Fred is so nice to President Bush. Henry Paulson works for President Bush, and so they're having trouble with a Republican White House.

BARNES: No, they aren't.

WILLIAMS: Why do you think...

BARNES: Because, look, the White House has deferred to Hank Paulson on this, and he is a very knowledgeable guy. I think he's, all in all, has done a pretty good job.

But there are parts of this plan that House Republicans don't like, they don't expect major changes, and they thought that Paulson would budge some.

HUME: Do they expect to vote no? Because if they vote no and block, there will be no deal.

BARNES: They probably won't, and particularly if it is part of a continuing resolution.

WILLIAMS: So it puts it back in the hands of the Democrats. And if it is just going to be Democrats who get this through, then the Democrats will attach all kinds of "Christmas ornaments" to this bill that the Republicans will hate.

BARNES: They won't do that.

KRISTOL: But I was to say something. Juan made a good point. Hank Paulson works for George Bush.

Henry Paulson doesn't know anything about politics. The way they introduced the bill was ludicrous. And, frankly, the president does deserve a lot of blame for the way this has unrolled.

I think he didn't build any consensus for what they were about to do. They knew this was coming. They could have gotten at least conservative economists, their input and gotten them onboard.

It has been mismanaged, I think, at every level, frankly.

HUME: Well, let's talk about what this drama has meant to the presidential campaign, and we'll do that after a break.



SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: At this point, my strong sense is that the best thing that I can do, rather than to inject presidential politics into some delicate negotiations, is to go down to Mississippi and explain to the American people what is going on and my vision for leading the country over the next four years.



SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE: I have a record of putting my country first. I see that we did not have a deal, and unfortunately, we still don't have a deal.

But I think that we made progress, and I'm confident we will have a deal. How much I had to deal with that, I'll let you and others be the judge.


HUME: Well, to hear leading Democrats and much of the media report on that very subject John McCain was just talking about, McCain doesn't only deserve credit for any deal. He is the guy who by coming back to Washington exploded a deal that was on the table.

Fred, true or false?

BARNES: It's a total myth. The fact is House Republicans were not involved in endorsing any deal, and most of them were against the deal that mainly Senate Democrats and Barney Frank in the House, and some Senate Republicans had come up with.

Look, there was no deal. And even beforehand, John Boehner, the House Republican leader, said there was no deal.

And the one Republican—not the only once, but Spencer Baucus, the House Republican guy who was involved, said afterwards there is no deal, and the Republicans didn't give me the power to negotiate.

So there never was a deal that McCain blew up.

HUME: In fact, he wasn't even back in town by the time this so-called deal—became clear that the deal was no deal, and he wasn't even there, right?

BARNES: No, he wasn't. And I think McCain is very lucky that he can go on national TV tonight—and I don't know how many people are going to watch this debate, 40 million, 50 million, who knows, maybe more than that— and explain what he did in interjecting himself in this thing. He didn't break up some deal.

And the fact is when the deal is made and he's been a part of it and he endorses it, that will bring more Republicans than were there originally, that's for sure. How many more, I can't say.

HUME: Nina?

EASTON: He got completely knocked on defense yesterday. He came out saying he was going to postpone the debate—or he wasn't going to show up to the debate—and gets called on it by Barack Obama, saying well, I'm sorry, a president should be able to multi-task. That didn't make him look so good.

He doesn't come off all that well in the negotiations. I mean, Roy Blunt said that having the presidential candidates here including McCain was not particularly helpful, the Republican Whip.

And the other problem for John McCain is that every single day that this deal is out there and this economic crisis is out there, is bad for him. He needs to get it solved.

But all that said, I think he enters this debate tonight after a very tough week.

KRISTOL: I think it's been a poor week for them, in all honesty. Senator Obama is the leader of the Democratic Party. They don't have the White House. He is their presidential nominee. He has let their policy be determined by Barney Frank and Chris Dodd. I think that's pathetic.

HUME: The fathers of Fannie Mae and Freddie Mac—

KRISTOL: Yes, parts of the problem, not the solution. That's the Democratic Party.

McCain, I think, made a bold move in holding his campaign and coming back to Washington. I applauded it. I don't think he had thought through, necessarily, what deal he wanted substantively, how much he was willing to side with the House Republicans or push them. I think he—

HUME: Which I guess he has now done.

KRISTOL: Well, it's not clear what he's done. I think they will end up with a deal that will be acceptable to enough House Republicans.

If it's such a great deal, incidentally, let the Democrats pass it and take credit for it when the stock market soars. You know, I don't know why-if this is such a wonderful thing, I don't know why Democrats spend half their time whining that there is not enough Republican support.

But I don't think McCain has had a great week, either. And I think they're—

HUME: Well, wait a minute, Bill—that same question could certainly be asked of Republicans as well. If this deal going through is going to cause the market to soar, then they would get as much credit. They don't believe it, and the Democrats don't believe it either.

KRISTOL: Then why are we doing it? We're doing it to stabilize the markets.

HUME: Exactly. That doesn't mean it will be popular in the short term.

KRISTOL: But I do think people think if it doesn't happen on Monday, the markets are going to open—

HUME: They might.

KRISTOL: They might, and that's the argument. But then the people who were for it should be willing to really be for it.

WILLIAMS: What people are for is stability in the markets, realizing that even a populist revolt on Main Street against Wall Street is one in which people next who can't get loans to run small businesses will "What's going on? Why didn't Washington do something?"

So there is up and downs.

I think McCain had a really difficult week. I don't think that he came across—to respond to what Fred was saying, I don't think his intervention actually led to anything, and he is now the captive of the House Republicans.

HUME: So you don't agree that his intervention led to the collapse of a deal?

WILLIAMS: No. That's ridiculous. That's Democratic mythology.

But the fact is he is now the captain. He came back as a leader. And did he lead the House Republicans to a resolution? No.

HUME: At least not yet.

WILLIAMS: That's right.

HUME: That's it for the panel.

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