This is a rush transcript of "Special Report With Bret Baier" from July 9, 2009. This copy may not be in its final form and may be updated.


HOUSE SPEAKER NANCY PELOSI, D-CALIF.: There is a briefing that is of serious co ncern to members of the committee and they have their course of action to deal with it.

HOUSE MINORITY LEADER JOHN BOEHNER, R-OHIO: I do not believe that the CIA lied to Congress. I am still waiting for Speaker Pelosi to either put up the facts or retract her statement and a pologize. And I don't know that this letter changes anything with regard to the speaker's action.


BRET BAIER, HOST: Well, "this letter" was a letter from seven of the Democrats on the House Intelligence Committee referencing the CIA Director Leon Panetta attending a briefing June 24 in which he told those Democrats — that committee — that there was something, we don't know what it was, that was not adequately briefed, according to the CIA, to Congress.

From that, the chairman of the committee, Silvestre Reyes, wrote a letter saying that he felt that the CIA had lied to Congress. That was followed up by the seven Democrats who called for Panetta to apologize.

This is outside and separate of the House speaker's comments about the CIA lying to Congress.

So what about all of this and where does it stand? Let's bring in our panel: Steve Hayes, senior writer for The Weekly Standard; Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Steve, it's important to separate the two. House Speaker Pelosi was talking about a briefing in 2002. These Democrats are talking about a briefing that happened in June 24 where there was some kind of revelation.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: The way you framed that is exactly right and it is important to be precise about this and separate the two. They come together at some point, but you need to separate them to start with.

What I find most fascinating about this, looking at the allegations of the briefing that took place on June 24 — Director Panetta in front of a closed session of the House Intelligence Committee — is that it is now the position of the chairman of the House Intelligence Committee, seven Democrats on the house intelligence committee and the speaker of the House, Nancy Pelosi, that the CIA lies to Congress as a matter of policy, as a matter of practice.

That is their claim now at this point. They went back to Director Panetta and asked him to retract his comment before relating to the first matter, the Nancy Pelosi matter.

BAIER: In which she said she wasn't told about waterboarding.

HAYES: In which she said she wasn't told about waterboarding and accused the CIA of misleading her. Panetta sent a letter and said "No, we don't mislead."

Well, it's now the position of these prominent Democrats, really, the House Democrats, that the CIA does, in fact, lie to Congress as a matter of policy and that Panetta needs to retract that earlier letter because of what he said in this briefing the other day.

It's confusing, but it's important to understand that in a Democratic administration with a former Democratic member of the House leading the CIA, House Democrats are accusing the CIA of lying as a matter of practice.

BAIER: Mara?

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I think this is baffling on a lot of levels. I mean, you have got Democratic control now of all branches of government and you have this fight between House Democrats and the CIA.

You would think the message that the Democrats would want out there about intelligence and national security is we're working as hard as we can to do better and to have more — smarter — intelligence. Instead, there is just a big fight.

BAIER: So it's your sense that this was a political move that backfired, to protect the House Speaker?

LIASSON: I think, on one level, that's part of it, because, even though, as Steve pointed out and you did, these are completely separate matters, it echoes the exact charges that Nancy Pelosi made about the CIA. And she didn't make a distinction at first between the Bush-era CIA and the current one. She basically said it's the CIA in general.

And then you have this other layer of this where you have the Democratic Congress at war with the Democratic White House over the intelligence authorization bill, about whether or not you should brief just the top ranking members of the intelligence committees or whether the whole committee should be briefed. And the White House has issued what I think is its only veto threat, I can't think of another one.

BAIER: It's first, yes.

LIASSON: It's first veto threat over this.

So this is what the Democrats doing about intelligence right now, which doesn't seem to be the message that they would want to send.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: What we have here, there's a truth issue and there's a politics issue.

On the truth, we need to hear from the head of the CIA, what he said. He's not going to tell us in detail, obviously, what he said in a closed session, what was it, the general area, where in the world, what time, was something concealed or lied about? And he is the one who would know.

In the meantime, the politics of this are puzzling. The only advantage I can see that Democrats are gaining is to blacken the name of the Bush administration, which is, of course, an exercise in redundancy: There is no advantage in that; it's been done.

On the other hand, it hurts the Democrats in two ways. First of all, as Mara indicated, it puts the Democrats, who are in charge of the Congress and in the executive, at war with their own CIA in wartime. It's insane. And it's going to undermine Panetta in the CIA he is supposed to actually lead.

And secondly, if it was an attempt, and it looks as if it was an attempt, to cover for Pelosi and her accusations of lying, a) it doesn't work, because, as we heard earlier in the show, this lapse, if it occurred, was not about interrogation, and her issue was interrogation.

So, a) it will not help her in substance. And, b) it raises the issue of her veracity, her changing stories, which had hurt her a few months ago, and had been dormant. Now it's revived. It's on the table again.

I think it's going to hurt the Democrats all-in-all.

BAIER: And as you said, the CIA says that Panetta learned about this on the 23rd. He felt that it was not adequately briefed to Congress, suggesting perhaps it was briefed at some level, perhaps the gang of eight, the leadership and the head of the committees. And it was a program that ended, started in 2001, and at some point has ended.

LIASSON: Or never actually happened. It is unclear.

BAIER: Or never launched. And we don't know what it was.

The bottom line, Steve, where does it go from here? Does it open up this Pandora's box for the speaker again?

HAYES: Sure. It already has. You have the House Republicans now saying, I think with great reason — Nancy Pelosi has accused the CIA of lying. She never provided evidence that they, in fact, did lie and House Republicans have requested the evidence that they have looked at.

Several House Republicans went over to the CIA, they looked at the things that Nancy Pelosi was briefed on in these briefings in question, and among these things, I'm told, are slideshows, or Powerpoint presentations, that lay out exactly what she was briefed on.

Why would Leon Panetta — what is his incentive now not to release those and to show that, no, in fact, the CIA doesn't lie as a matter of policy.

BAIER: We should point out one more thing: The House intelligence committee has not held a hearing on any of these accusations and the Department of Justice has not launched an investigation.

We told you earlier how the president's approval numbers are slipping in one key state. The panel weighs in on what looks like a tough week for the commander in chief.



UNIDENTIFIED FEMALE: Seeing a lot of words come out, you know, a lot of promises, and I'm trying to do this and trying to do that, but I'm not actually seeing it happen.

UNIDENTIFIED MALE: It's all right. It's just this is hard out here trying to find another job.

UNIDENTIFIED FEMALE: A lot of spending happening and not much growth to show for it at this point.

UNIDENTIFIED MALE: Progress isn't fast. It's slow. It could take two, three years, who knows? People are impatient.


BAIER: Some folks in Cincinnati we talked to today. The reason we went to Ohio, number one, Vice President Biden went there to talk about the stimulus package, but also some new numbers out of Ohio, a key electoral state.

The Quinnipiac poll came out; it dropped significantly in recent weeks as far as the president's approval. In fact, he's under 50 percent, as you see here.

You look at the Rasmussen daily tracking poll and of course it goes up and down, but they have this interesting thing called the Presidential Approval Index Rating. It's at negative eight. You basically subtract the two, strongly approve and disapprove. That's the worst he's done since the inauguration.

We're back with the panel. What about this, Charles?

KRAUTHAMMER: This is the axiom of American politics: In the absence of a scandal or a losing war, the main determinant of a president's approval is the economy. And what he has got on his hands, rising unemployment and a stock market that is now after a slight run up again in decline.

So people are feeling unhappy economically, and that's why his numbers down.

His problem is that his he was elected to fix the economy and this recession. But Obama is an architect; he is not a plumber. His idea is to revolutionize American society with the broad reforms he wanted in education and health and cap and trade and energy.

Well, he can't sell that at a time when everybody is hurting. He had assumed early on that he could use the crisis as a way to get all these reforms done the way FDR did, but, in fact, it's undermining him. Unless he fixes unemployment and the recession, he is not going to get anything else.

His problem is that he tried it with a stimulus which is, as of now, rather unsuccessful. And I think he's going to have to have either a second stimulus or a facsimile of it as a way of at least showing, even if economically it's not sound, but politically as a way of showing he's out there trying to get the shovels going.

LIASSON: Well, I think the only kind of second stimulus he could have is extending unemployment benefits again. And that's not really more public works programs.

There is no doubt the president's numbers have been slipping and the most worrisome part of that slippage to the White House is the drop in independents, who are really fueling this. I mean, Democrats remain very supportive of him, and Republicans have never been as supportive of him.

But he still in the high 50s, hovering a little below 60. So he is still pretty healthy at this point. But I do think the long-term trends are a little scary.

They have to be hoping that when the stimulus money finally gets into the economy in enough size, in other words, right now, only 14 percent of the stimulus has been spent, that it will actually make a difference.

The problem for the president, Charles said that he is not going to get this other stuff done. Yes, he is. If he passes health care and energy, that is going to add to the deficit, which is causing his numbers to go down, because people don't like unemployment and they don't like the deficits. And both of those numbers are rising.

HAYES: But I think he will have more trouble before things get easier for him on those specific things.

Charles is right: He said he would come in and do this comprehensively. He was advised, I mean, on editorial pages by Democrats, including Democrats, you should really focus on the economy. And he said no, no, we can't possibly do that. We need to do all of this at once.

That's clearly, I think, come back to bite him. And the problem he faces now is that what he did to address the economy was throw money at it, throw taxpayer money in it, and it hasn't worked or it's not working yet.

The problem is he is going to taxpayers now and saying, look, we want to do the same thing with health care. We're going to throw government at it, we're going to throw money. We're going to do the same thing with energy, we're going to throw money at it.

People are going to be — I think people who are naturally reluctant to part with their own money are going to be even more so now that this is not working.

BAIER: Quickly, do these numbers scare conservative Democrats who are going to be key for some of some of these big-ticket items like health care?

LIASSON: Sure. It makes them less willing to vote for the politically painful parts of this. Health care reform is a politically painful thing to do. You are going to have to either borrow money or raise somebody's taxes.

KRAUTHAMMER: If the economy is improving, you can say we'll throw more money at the programs as a way to continue our recovery. In the absence of that, a conservative Democrat doesn't have anything to show for the creation of huge deficits. And that, I think, is ultimately going to be a problem that is going to be insoluble for them.

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