This is a rush transcript of "Special Report With Bret Baier" from March 19, 2009. This copy may not be in its final form and may be updated.


SEN. JON KYL, R-ARIZ.: You have the president saying that he takes full respo nsibility and then saying it wasn't his fault. You have the chairman of the Banking Committee saying well, he didn't put this language in the bill, and then saying, well, he did, but it was because somebody made him do it.


BRET BAIER, HOST: One Republican's take on the Democratic Party in Congress and also, of course, in the White House. What is going on? A lot of finger-pointing here in Washington as the president is out west.

Let's bring in our panel: Fred Barnes, executive editor of The Weekly Standard, Juan Williams, senior correspondent of National Public Radio, and Jim Vandehei, executive editor of Politico.

First, I want to start with everybody's take on this AIG vote, this House bill that votes to tax 90 percent of the bonuses — AIG included — but other bonuses as well. There are questions about its constitutionality. The vote was 328 to 93, it passed.

Jim, your thoughts?

JAMES VANDEHEI, EXECUTIVE EDITOR, POLITICO: I mean, this is what you get when you have Congress act quick and with emotion.

I mean, this bill, for the first time we're going to use the tax code to go after individuals. I totally get it, sort of save the hate mail that something has to be done to recover the bonus money, but the truth is this obscures the much bigger question of whether or not the company deserves $173 billion in bailout money in the first place and whether or not we should give it more money if they ask for it down the road.

In addition to that, a lot of the money that they have gotten has been shipped over to some foreign companies. And you would think that these would be the issues that Congress would be examining and showing rage about and trying to figure out the answer to. But instead, we have everybody spending the week trying to out outrage each other.

BAIER: Juan?

JUAN WILLIAMS, SENIOR CORRESPONDENT, NATIONAL PUBLIC RADIO: I think there is outrage. And I think the outrage is legitimate.

Now it is populist politics, you could say, on one level, but from the perspective of the White House, they have to get involved here in terms of getting ahead of the parade. They want to get ahead because they want to capture public opinion and have public support down the line for additional steps that they take to help the banks or to help companies like AIG.

At the moment, you have some people already saying, not another dollar, not another one of my dollars given to people who fail and failed the American economic system are being rewarded with these bonuses in an illegitimate manner.

So I think the outrage in some sense is legitimate. I'm surprised to see that they acted so quickly, to pick up on Jim's point. But believe me, they're reflecting public sentiment.

BAIER: Fred?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: This thing is clearly unconstitutional. It violates the equal protection clause. There is no question about that. It will be struck down and should be struck down. It's ridiculous.

But, look, Democrats are pointing at Republicans. Republicans are pointing at Democrats. But this is big trouble for only one person and that's Barack Obama. George Bush isn't president anymore. You could say it was under his presidency when this contract with AIG, the deal was done to bail out AIG and this bonus thing was allowed.

But Obama is the president now and we watch how this has really shaken his presidency. He leaves town. Other people, like Tim Geithner, the treasury secretary, can't keep his story straight. All these Democratic senators in Congress keep saying, hey, we were told about the problem with these bonuses weeks ago, way before the White House and Geithner admit that they'd heard about it.

BAIER: And you have Senator Chris Dodd-obviously, we talked about the flip-flop yesterday in what he said yesterday and what he eventually ended up saying. But a number of Democrats are pointing toward the Treasury Department on this AIG mess. What about this? Is this Democratic Party in disarray, and are Republicans taking advantage?


BARNES: Of course Republicans are taking advantage, because they don't have to do anything. All they can do is stand on the sidelines and watch Democrats attack each other and disagree with each other and offer different stories and timetables from each other.

So Republicans really are in an ideal situation. They are the minority. Nobody expects them to pass any legislation.

WILLIAMS: I thought Republicans were opposed to taxing people, especially taxing upper income people? It looks like their buying into the tax package.

BARNES: Well, most Republicans — nobody should have voted for this thing, because it is clearly unconstitutional. A bunch of Republicans very cleverly in the House waited to see if it was going to pass, and then voted for it because — there is one reason: Most of what goes on in Washington, Bret, doesn't get through to the public, but every now and then you have things like the bridge to nowhere. I think last year, McCain's seven houses, that got through to people. And now the bonuses for AIG that has gotten through to people.

It's a problem for Obama.

VANDEHEI: For all the people who wanted bipartisanship, here you have it — bipartisan culpability. They are all guilty. It was Republicans pushed for deregulation in the first place. It was both parties raced who raced to Wall Street to raise money from them. They help fund the Democrats, they help fund the Republican Party.

Both parties wanted Geithner. Everyone wants to point the finger now at Geithner on the Republican side. They had the chance to really hold up his nomination in the first place. They didn't because they liked him. They liked the work that he did at the Fed.

And so I think everyone's hands are dirty on this.

BARNES: That's not the point. It's only a problem for Obama. Republicans aren't in power. George Bush isn't president. It's a big problem for Obama. That's why his numbers are dropping. Obama runs the country.


Obama and the treasury learned weeks ago about this. Obama could have done things.


VANDEHEI: The politics of this of ephemeral. What matters here, there is actually a very substantive problem that we have in a country where we're pumping all this money into these companies. We're all saying they're too big to fail, they're too big to fail.

But you don't see the public education about what is actually going on at AIG and whether or not it is actually too big to fail. You don't have Obama doing the speeches that he should do or the outrage in Congress and the hearings dragging people before to actually educate people on what we're doing. This is unprecedented—

WILLIAMS: I think Obama — look, Obama is going to have a press conference Tuesday night. He's on "Leno" tonight. He's going out there to California and having these town hall meetings.

And, I must say, it looks like he is being greeted like a conquering hero out in California, between the audiences even in Orange County lining up and Governor Schwarzenegger, a Republican Governor, lining up.

It seems to me we do have a problem about how do we go forward in this economic crisis? For the moment, Obama still has public support behind him. It may be his last weapon.

BAIER: We get a lot of e-mails, and a lot of them say "a pox on all their houses." They're talking term limits on the computer. That's what their talking about.

BARNES: I love term limits. I have always been for them. But the thing is, the problem here is only Obama's and he can't find a way out of it.

BAIER: It's the sixth anniversary of the start of the Iraq war. So is anyone ready to declare victory?


MAJOR GENERAL JOHN KELLY, U.S. MARINE CORPS: We are winning, for sure, the war in Iraq, six years almost to the day later.


BAIER: We'll find out what this panel thinks after the break.



SENATE MAJORITY LEADER HARRY REID, D-NEV.: This war is lost and that the surge is not accomplishing anything is indicated by the extreme violence in Iraq yesterday.

KELLY: The lesson to the world is America will see this to victory. It's right around the corner anyways. Certainly it would seem to me that the situation is on the ground is such that it improves every day.


BAIER: The Senate majority leader in 2007, and the situation today.

So, can the U.S. declare victory in Iraq? There have been, as of today, more than 4,250 soldiers killed in Iraq, and the U.S. has spent more than $650 billion there.

We're back with the panel — Juan?

WILLIAMS: I think you can declare victory to this extent — you can say that after the surge, it was 30,000 in '07, things have clearly improved. The level of violence, I don't think there is any doubt, the level of violence is down.

You have to say that in terms of our efforts to stabilize the Iraqi political scene, we have made tremendous progress. I think they're on the path. They haven't quite gotten there. They have elections coming. It looks like right now there is more of an opportunity to say they will be able to take control of that country as we head towards the deadline for the lion's share of American troops to pull out, even though some will remain.

So, on all those counts you would have to say we have made tremendous progress. But if you look at polls today, it's still the case most Americans say it was a mistake to go in there initially and most Americans feel that they were lied to about the reason for going in.

BAIER: It's hard to believe this is the sixth year anniversary of the start of the war — Jim?

VANDEHEI: A couple of things are certain. The one thing you can certainly say whether you hated or loved George Bush is that his decision to do the surge, and he did it against a ton of opposition in this town, was a smart move and one that I think has been validated by events since then.

That said, any measuring success in victory, and clearly things are much better than they ever were before, whether or not people will see this in retrospect as a good thing for the United States, it all depends on how you view going in there in the first place.

If you thought that he was not a lethal threat to the United States or to our interests, it wasn't worth losing that many people. It wasn't worth all the people that have been injured.

But at least now there is bipartisan agreement that we will try to get people out of there in 17 months and that if we can do that, that would be victory as determined under today's circumstance.

BAIER: Do you think President Obama has done enough to talk about the successes in Iraq?

VANDEHEI: I don't think anyone is talking about the successes in Iraq. Go pick up a newspaper any day of the week. No one covers success. No one covers the economy when the economy is going well. There is five stories on the front pages today because the economy is in the tank.

So we still have 140,000 troops. It's atrocious that there isn't more coverage of what is happening in Iraq and our interests there, and, quite frankly, what's happening in Afghanistan, because we're going to go through a very similar process once we move a lot more troops over there.

You're going to see a continuing escalation, presumably, of violence and death and hand wringing about whether that strategy is working or not working.

BARNES: Bret, I would say "mission accomplished."

BAIER: That's dangerous, isn't it?

BARNES: Look, the truth is we have an Arab democracy. We had a successful election there, we're going to have another one this year.

Obama was handed a gift by President Bush as a result of the surge, and that is his withdrawal plan is one that after the status of forces agreement was signed between the U.S. and the Iraqis that the generals could agree to in Iraq. All the troops will be out of the cities in Iraq by the end of July, and then you have I forget how many months until the end 2011 to get all the troops out of Iraq.

And there is something that Obama can do as president, and I hope he does. I don't know whether he will or not-and there is the status of forces agreement, but there is also a framework agreement about a long-term economic and military agreement.

The thing he can do is make an agreement there to keep some American forces in Iraq. They're important there, a buffer to Iran and so on. And maybe an air base. It would be terrific. Iraq is an ally in the middle of the Middle East, very important.

BAIER: We've got to run.

WILLIAMS: The gift that they gave President Obama was the White House. That's what the war cost Republicans.

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