This is a rush transcript of "Special Report With Bret Baier" from March 11, 2009. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: This piece of legislation must mark an end to the old way of doing business and the beginning of a new era of responsibility and accountability to the American people have every right to expect and demand.

SEN. JOHN MCCAIN, R-ARIZ.: There's lots and lots of spending in it. And Americans are having to tighten their belts, and h ere in Congress, we are on a spending spree that is committing generational theft.


BRET BAIER, HOST: So what about earmark reform? President Obama signing today a $410 billion spending bill that had around 8,000 earmarks in it, but then talked about earmark reform.

Let's bring in our panel to talk about this: Jim Vandehei, executive editor of The Politico; Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Charles, do you see hypocrisy in today?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Hypocrisy squared. Look, anybody who believed Obama last year that he was going to reform government, remake Washington, bring to heel the grandees and the pubahs of the Congress, and that he was going to usher in a new era of citizen government deserves a disappointment.

It's the joys of being a cynic: You expect nothing, you get less, and you remain serene.

And this is one of many hypocrisies. He talked about not hiring lobbyists. Of course, if he needed a lobbyist here and there, he hired one. He talked about reaching across the aisle -- he knows he has a large majority in the House and Senate, and he pushes

through without support of Republicans what he needs. Anybody would do that. It is just that he promised otherwise last year.

The real test here -- it's really interesting, because last year, almost on this day, he voted against -- he voted in favor of a measure to abolish earmarks for the year 2009. And, as you said, he signed 8,000 of them today. And then he gave a speech in which he gave an interesting defense of earmarks in general.

So the real interesting event is going to be what is going to happen in the budget next year. He says he's going to crack down. I suspect he's going to lose again to his own big shots in the Democratic Party in Congress.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: It is kind of like an alcoholic saying "This is my last drink, I really promise." He said "This is the end of business as usual. I'm going to sign one more business as usual bill, and then we're going to do something different."

Look, you could argue that this is what happens when you make process your biggest priority, you know. The promising not to have lobbyists? Well, it's hard not to do that if you want Tom Daschle to be your HHS secretary.

And promising to do something about earmarks? Well, it's really hard to do that if your legislative strategy is if you are going to defer to the Democratic majority in Congress because you have things that you care about more, really, than earmarks, like health care and energy and all the other things you want them to pass.

I thought the statement was pretty incredible. He kept on talking about how earmarks have to be open to public scrutiny. Guess what? If they went through the regular authorization process, they would be. An earmark is something that is put in without being authorized. That's the definition of it.

I would say the bottom line is, though, as much as John McCain talks about it and as much as it has become a kind of symbol of excess, I don't know how many people really get exercised about earmarks in the end.


JIM VANDEHEI, EXECUTIVE EDITOR, POLITICO: It is kind of a sideshow. There is no doubt there is hypocrisy, but when people get all fired up and you have conservative conservatives talk about this as a way to bring the budget back in line, it is kind of absurd.

You are talking about the tiniest sliver of the federal budget. You are talking about projects that you know members of Congress are never going to give them up.

Think about it: If you're a member of the House, especially if you're not a commitment chairman, you're basically anonymous. You have no power, despite what people might think.

The only power you have is the ability to bring home some of these funds and then say "Look, I created jobs. Look, I got funding for universities. I got funding for pig research," and all these other silly things that we're talking about. They're never going to forfeit that. He was a senator. He knows it. He had in this situation to buckle because he wants their support elsewhere.

The truth is for the people that are fired up at the budget, start looking at the tough ones. Start looking at Medicare. Start looking at means testing, Social Security and all the things that actually eat up the federal budget.

If you look at the Obama budget, a blueprint that he has put out, by 2019 we will double the amount of federal debt to $23 trillion. You think getting rid of a couple of earmarks will take care of that problem? It is, in some ways, I think, a big distraction.

BAIER: Well, two things: One is it fires up the public when they talk about all of the specific projects. And, two, isn't it disingenuous a little bit to talk about earmark reform and then sign this bill, 8,000...?

VANDEHEI: There's no doubt. I don't think anyone here is going to argue that it's not disingenuous. You read that statement, and parts of it are laughable.

It sounds like it was written by the old bulls on Capitol Hill, saying if a project is worthy -- that's my favorite line -- "if it's worthy."

What the heck is worthy? If I'm trying to get a project for my constituents, of course I think it's worthy.

BAIER: Charles?

KRAUTHAMMER: But this hypocrisy is particularly notable, because Obama was elected as a new kind of candidate, a man who would usher in new politics. And people in the mainstream media were waxing poetic about how he is going to change the way Washington happened.

I never believed it, but a lot of people did. And that explains in part why he was elected. And that's why his hypocrisy, I think, stands out a little bit more.

BAIER: Please go online with "Special Report" right after tonight's broadcast. At the end of the broadcast is our first interactive show. We'll have more from the panel and others on some of the hottest political stories. We'll have reaction to your questions and comments.

It is a first. You want to be a part of this. Link up at FOXNews.com/sronline.

The president names a new drug czar, but is the U.S. adequately responding to the increase in drug violence along the border?


REP. JOHN CULBERSON, R-TEXAS: We are in a state of undeclared war on the southern border that's already spilled over. And it's just utterly unrealistic to think that it hasn't.


BAIER: The panel's take on the drug war after the break.



REP. HAROLD ROGERS, R-KY.: We just arrested 750 people associated with the Mexican drug trade across the United States two weeks ago -- 750, members of the cartel from Mexico in U.S. cities.

SEN. JIM WEBB, D-VA.: They use automatic weapons, RPGs, grenades. And they are already in our country.


BAIER: You talk to people along the southern border here in the U.S., and they are worried. They have stories about drug cartels moving into the U.S. And it's a situation that a lot of people along the border and across the country are paying attention to.

We're back with our panel. Mara, is the administration doing enough on this issue?

LIASSON: Well, I suppose you can never do enough on this issue.

The scary thing is the joint forces command issued this report that I think raised the hair on the back of a lot of people's necks, where they say Mexico is the world's next likely failed state. And there is a drug war going on, and it's going on in Mexico, and it's a real shooting war. And it's between the government and the army, and these drug cartels, which, as you just heard, are really well armed. And it's scary.

And the economic crisis is going to force more of this over the border. I would say probably the U.S. isn't doing enough. But the drug problem is a really big one as long as the U.S. is a huge consumer of Mexico's drugs.


VANDEHEI: What's most amazing is that you have over 100,000 drug thugs at war with an army of 130,000 soldiers with the possibility that it will spill over into the United States. We have already seen abductions. We have already seen grenades dropped on a bar table at a bar in Texas. And it is not even probably in the top 10 concerns for the Obama administration.

I don't think it's because they don't care about Mexico, they don't care about the southern border. It's because they have a banking crisis to deal with. They have an economy that's melting down. They have an active war in Afghanistan and Iraq. And it has certainly not been a central focus of the Obama administration.

Certainly if there is a big uptick of violence and it does increasingly spill over the southern border, there is no doubt that they will have to engage. And it is probably the last thing he needs right now, the last thing. He has to figure out the banking crisis, the thing that's staring him in the face. And that should be an all-consuming exercise for him.

Now you add to this on top of the other five or six other issues, it is a heck of a thing.

KRAUTHAMMER: I'm not sure that even in the absence of the other crises we would be able to do a lot. This really is an problem where area we are really powerless.

Look, at the origin, it's a problem that we have caused. If the demand did not exist in the U.S., you would not have a supply and it wouldn't be a problem. On the Mexican side, I think the one thing that we can do -- it is not a panacea -- but it would help if we completed the fence.

The primary objective of the fence, of course, is to prevent illegal immigration, but it would help in making it a little harder to get the guns out of America into Mexico, the drugs into this country, and the bad guys from shuttling back and forth.

The real problem is that the only way to approach the drug issue is in two ways: Either you legalize drugs here completely, or you do a Singapore, and you hang anybody who is caught in possession of a minimal amount of anything. And Singapore is drug free in an area of the world where there are a lot of drugs.

We are not going to legalize and we are not going to do a Singapore, which means we are going to have this issue alive and well and hurting us forever.

There is no escape. And having a drug czar appointed is almost comical. It is the least important, powerful position in the government, because we don't have any instruments that actually work.

BAIER: Mara, you listened to the national intelligence director. He says parts of Mexico may actually be ungoverned right now.

LIASSON: Or governed by the cartels.

BAIER: But you listen to the Homeland Security Secretary Janet Napolitano, and she hasn't really engaged on this issue and she is a former governor from Arizona.

You're over at the White House. Is this on their radar?

LIASSON: I think it is on their radar screen. She is pretty new. She is going to have to be dealing with this. The southern border is a big deal because of immigration and now because of this drug violence. She is from that part of the country. I think they will.

I think there are a lot of other things that were on their plate first. And, believe me, if this violence increases, it will force its way up to the top of the agenda, or higher up.

BAIER: Last word, Jim.

VANDEHEI: I do think that the only way he will pay attention to it more is if that violence does move this way. Otherwise, there is not that sense of urgency.

We have heard from Attorney General Holder on this. We have not heard that much from Napolitano. We haven't heard that much from the president himself. And until a problem stares you in the face, as a president, particularly in a time when you've got so many other issues that you have to grapple with, he's not going to reckon with it.

BAIER: Talk to people down there. It's already there.

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