This is a rush transcript of "Special Report With Bret Baier" from March 31, 2009. This copy may not be in its final form and may be updated.


BRITISH PRIME MINISTER GORDON BROWN: We must reshape the global financial system for new times so that with early warnings and proper precautions we can prevent crises like this happening again.

I believe that the unsupervised globalization of our financial markets did not only cross national boundaries, it crossed moral boundaries, too.


BRET BAIER, HOST: President Obama arrived in London today for the G20 summit this week — that's the Group of 20 wealthy and developing nations representing 85 percent, roughly 85 percent of the world's economy. A lot of talk about stimulus, global stimulus, as well as regulation and who's going to sign on to what.

Let's bring in our panel: Mort Kondracke, executive editor of Roll Call, Nina Easton, Washington bureau chief of Fortune magazine, and syndicated columnist Charles Krauthammer.

Charles, your look ahead at the G20 this week.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, you mentioned stimulus and you mentioned regulation. Neither is going to happen.

This is test of the proposition that Obama had run on last year, that the source of our difficulties broad, the source of anti-Americanism, of dissension among our allies and the alleged isolation of the United States was George Bush.

And Obama was not Bush, and he was going to be a new figure, a transcendent, multi-cultural, attractive, young, new American leader who would rally the world.

Well, we have a test. He's going to Europe. He's not even asking the allies for an increase in troops in Afghanistan, which we desperately need, because he's going to get a "no."

He wants a stimulus in Europe. He's not even asking because he's not going to get it. The Germans and the French are against it for historical reasons and economic reasons, and the power of personal diplomacy that Obama ran on and pretends he has doesn't exist. It's all about national interests.

And then on the issue of Iran, he is not going to get anything. In fact, he is not even going to get assistance for the Russians, to whom he essentially offered new influence over Eastern Europe in return.

The bottom line is that personal diplomacy is a nice idea. It amounts to nothing. Nations act on their national interests. And he is weak in Europe because we don't have a lot of cards to play in this economic crisis.

BAIER: Nina?

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: Well, in fairness to President Obama, these sorts of summits tend to be a lot of theater and not a lot of substance agreed upon. The whole trick is to make it look like you have agreed to something big when you really haven't.

And in this case, we will see the host, Gordon Brown, whose popularity is at a record low. He will take the opportunity to rail against, as we saw, the greed of the financial markets.

We have President Sarkozy of France threatening to walk out because nobody will take on his call for — the U.S. and the U.K. won't take on his call for a global regulator.

Well, that gives him a chance to blame the Anglo Saxons in the U.K. and the U.S. for the mess we're in. He's also in a troubled position because of the economy, and it helps for him to rail against these folks that aren't inside his country.

So I think at the end of the day, it will — Charles is right. I don't think a lot will happen and I don't think there will be much out of it that is substantive.

We will get to see Obama, who is quite popular with the population there, we will see expressions of — although we will see dissent. We will see some anti-war protests, as we're already seeing.

BAIER: Is there any chance that the Americans, President Obama and the administration, will sign on to some version of a global regulator after this G20 summit?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: What there is going to be is a college of regulators that are going to consult with one another. The top regulators in the various countries are going to talk to each other and try to coordinate.

But the idea of what Sarkozy wants to do — I mean, there should be, the world desperately needs a new Bretton Woods — that's the postwar agreement where we established the IMF and we agreed to fight protectionism, and all that.

This is a global crisis. You've got credit flows that sweep across the world with, you know, keystrokes on a computer. And there ought to be some sort of regulation.

But you're not going to have an agreement because the Europeans, for one thing, their idea of regulation is to close down hedge funds. You know, they don't want anybody shorting the euro.

And we believe — the Anglo-Saxons believe in a more robust, kind of innovative financial system. It got so innovative under Bush that the whole world nearly collapsed, but nonetheless, we have a different philosophy than they do.

So there's not going to be any agreement on that.

I think this is Obama's introduction to the world stage. He is going to meet with people he has never met with before. They will all size each other up. It had to happen sometime. It is going to happen now.

And it is like a fraternity rush. We will get some notion of what they think about him.

BAIER: You don't think much about the communique coming out of the G20 either?

KONDRACKE: There will be a lot of statements of agreement on this and agreements on that, but I don't think there will be a lot of substance to it.

KRAUTHAMMER: The only statement that would have any importance at all would be a statement about protectionism, which is important and it will be in there.

The problem is we had a statement on protectionism at the first meeting of this group in September, and since September, 17 of the 20 have instituted laws that have protectionism in one extent or another, including our country.

So the bottom line is nothing will come out of this.

BAIER: Last word?

EASTON: Nothing substantive. I think a lot of pretense but no big agreement.

KONDRACKE: One thing you can say about it, expectations are low.


BAIER: All right. Back in the U.S., the new leader at General Motors says more big changes are necessary right now.


FRITZ HENDERSON, GENERAL MOTORS CEO: We need to do more, and we need to do it faster. So we understand very clearly what that means.


BAIER: The panel discusses Detroit's prospects after the break.



HENDERSON: They want us to have a clean balance sheet, a healthy balance sheet, the exact metrics of which are not yet determined. But we know they obviously need to be deeper than what was contained in our loan agreement.

So we got it. We understand it. Now we got to accomplish it.

SEN. JUDD GREGG, R-N.H.: We're going to ensure the warranties on cars? Is that really the business of the government? Is that really the purpose of the government?

I mean, does that mean we put a new telephone in my office in Concord for people having problems with their transmissions, that they're supposed to call me?


BAIER: Well, GM's new CEO said today that he gets it. He also and said GM may have to close down more than the five plants it had planned to close down as part of the restructuring that's ongoing, the deadline looming. Automakers part two, we're back with the panel — Mort?

KONDRACKE: Well, you know, Obama said yesterday that the government is not going to run General Motors. We'll see — 60 days, we'll see whether they let them go into bankruptcy and let it go, or whether we, you know, have more rules and regulations and more replacements of personnel and stuff like that, and whether there's a new bailout.

I mean, this is going to be his moment of decision as far as this is concerned.

I think that what he could have in mind here is to do — UAW is a problem, UAW and more concessions.

BAIER: United Autoworkers. And the president of UAW is Ron Gettelfinger, and some people say he should be taken out of his job.

KONDRACKE: That would be micromanaging and extending the writ of the government.

But look, if GM goes into bankruptcy, UAW is going to have to make concessions. A bankruptcy judge will be responsible for them. Barack Obama will not. Therefore, he gets away with seeing to it that a major Democratic power base takes a haircut without his hands on it.

BAIER: Nina, Michigan Governor Jennifer Granholm says that Wagoner, Rick Wagoner, who stepped down, was a sacrificial lamb in this whole back and forth. What do you think?

EASTON: Obama's sacrificial lamb. When they say they're not running this company, they are running this company in an unprecedented fashion. You have got government running an automaker.

And I think what's really — when you step back from this and you look and you read between the lines and you read a lot of these administration official comments, they're going to remake the board of General Motors.

They're going to — they want to — you can sense the chomping at the bit to turn this company around and make it this shining piece of Obama industrial policy — building clean, energy efficient cars that they're sure American consumers will buy.

They are wanting to make a business strategy for this company, so I don't think they're going to let it die.

The sad thing is, if you had just let this company go into bankruptcy, you would have avoided — which it may now do anyways — it would have had to do a private sector turnaround in Chapter 11. Now you have it possibly going into bankruptcy and being controlled by the Obama White House.

BAIER: Charles, we talked about it yesterday. What was curious to me is that President Obama talked about in a dismal way Chrysler's future as Chrysler is getting ready to go to the negotiating table with Fiat, the Italian automaker.

KRAUTHAMMER: This is industrial policy at its best and worst. You pick winners and losers. Chrysler was tossed aside. It is not going to get any help. It either lives as a piece of Fiat or it dies. And GM will live.

And Nina is right. It is not owned by Obama. When you watch the new CEO Henderson, he knows who his boss is. It's not the shareholders, it's not the board — new or old. It's Obama.

When you see it with the constitutionally, it is really odd, bizarre for the president of the United States to stand up there and to tell you he is going to guarantee your muffler. This is a real stretch.

But we are so far down the road of government control, and particularly with autos, it's not going to be reversed. The only question here is will it succeed? And it will succeed only if the union contracts are rewritten.

And the question is, is Obama going to push the unions on a prepackaged bankruptcy — which I suspect he won't — or, in the end, is he going to let it go all the way to a judge who will tear up all of those contracts and redo them? Does Obama have the political strength to go against his unions in allowing a Chapter 11 liquidation?

I don't know what the answer is, but I think it will determine the course of his presidency.

BAIER: Quickly down the line, does GM and Chrysler, do they turn it around and make it?

KONDRACKE: Well, Chrysler doesn't, for sure. I doubt that GM will. And I think it is going into bankruptcy, and I hope Obama lets it go.

EASTON: I think Obama has a stake in making it survive because, again, he wants it to be a centerpiece of his new policy, his new energy efficient car policy.

KRAUTHAMMER: Obama will make sure it lives one way or the other, on life support or without.

BAIER: Breaking tonight, FOX News can confirm that Health and Human Services nominee Kathleen Sebelius, governor of Kansas, has corrected three years of tax returns an paid more than $7,000 in back taxes after finding unintentional errors.

These are the latest troubles for an Obama administration nominee. She is in the middle of her confirmation hearings. We will monitor this and bring you the latest tomorrow.

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