This is a rush transcript of "Special Report With Bret Baier" from September 7, 2009. This copy may not be in its final form and may be updated.


REP. MIKE PENCE, (R) INDIANA: This isn't just about the extremist views of one man. The president should suspend any future appointment of so-called czars while the administration and the Congress carefully examines the background and qualifications of the more than 30 individuals who have been appointed to these czar positions.

VALERIE JARRETT, SENIOR WHITE HOUSE ADVISER: We were so delighted to be able to recruit him into the White House. We have been watching him, really, for — he's not that old — for as long as he has been active out in Oakland in all of the ways that he has — creative ideas that he has. And now we have captured that.


BRET BAIER, "SPECIAL REPORT" HOST: That is Valerie Jarrett, senior advisor to President Obama, talking about Van Jones, who was the green jobs czar until this weekend, when he resigned late into the evening, actually, early Sunday morning.

With the release, the White House tried to step away, saying it was Jones' decision to resign. There you see Valerie Jarrett commenting just two weeks ago, August 15.

Here is part of the resignation statement from Van Jones: "On the eve of historic votes for health care and clean energy, opponents of reform have mounted a vicious smear campaign against me. They are using lies and distortions to distract and divide." So let's bring in our panel about all of this — Fred Barnes, Executive Editor of "The Weekly Standard," Mort Kondracke, Executive Editor of "Roll Call," and syndicated columnist Charles Krauthammer. Charles, we did a story about how little coverage elsewhere there has been about Van Jones, but the fact that he signed on to this 9/11 petition that said the government was complicit in the 9/11 attacks and some of the other things, a long list that he said in his career, were not talked about in that final resignation statement.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: No, and, look, it's clear that what did him in was the truther's statement. All the other stuff — you know, you can have a communist or two in the White House. You can have a guy who uses expletives about the opposition. But you can't have somebody in government that believes there was a Bush conspiracy to allow, to deliberately allow 9/11. That is beyond the pale. It is a rancid paranoid politics that is beyond radicalism.

If that hadn't happened, I suspect he would still be in office. So that is what did him in.

And here he is protesting it was a smear campaign and lies. If they were all lies, why did he apologize twice?

And then secondly, you get him or his defenders saying that he didn't carefully read the petition. The petition is quite easy to read and plain. It speaks about the government officials who may have deliberately allowed the 9/11 attack.

Now, this is a guy who has been touted as a graduate of Yale Law School. So where is the fine print here? Where is the ambiguity and the difficulty and the difficult syntax that he couldn't decipher?

I assure you that any of the schoolchildren that Obama will be addressing tomorrow would read it and understand it. So his explanation is completely incredible. He obviously knew what he was signing. And that's what did him in at 12:01 on a Sunday, usually the time for executions.

BAIER: On a holiday weekend.

MORT KONDRACKE, EXECUTIVE EDITOR, "ROLL CALL": I think the most serious thing about all of this was not that not only was Jones not vetted and required to fill out this extensive questionnaire that Cabinet officers and subcabinet officers are required to do, but none of the czars apparently in the White House.

Now, this administration has arranged itself in you in such a way that policy gets made out of the control of the Congress by White House or departmental czars who are not subject to confirmation, not subject to questioning by the Congress, whereas the Cabinet officers and subcabinet officers merely execute policy.

So if they're not — they don't have to go through the confirmation process and that whole vetting system, and they're not even vetted in the White House, who is vetting them? Now, what needs to happen here is that the vetting process needs to be vetted.

BAIER: Fred?

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": Yes, I go along with that. Mort is right about that.

I loved when Van Jones says it was a vicious smear campaign of quoting him? It was his own sound bites. It was a petition that he signed. It wasn't that they were spreading lies about him. What killed him is they were spreading truths about him. That's what did him in, especially the one about being a truther himself.

Charles is right about that. Probably without that one, he might not have gone, or wouldn't have this weekend.

It's amazing. Politico counts 31 czars, 31 of them. Isn't that amazing? And there is even a California water czar. I'm not going to test you to see if you know who that is.


But 31 czars. You know, I think some of them matter. Obviously Richard Holbrooke if he is a czar, and Dennis Ross in the Middle East. But I think most of them, it is largely a vanity on the part of President Obama.

BAIER: Fred, that of was the spin this weekend, that the green jobs czar was not that important. It's a low level position.

However, Valerie Jarrett, senior advisor closest to President Obama two weeks ago said that. Isn't that something? Isn't that telling?

BARNES: It is something. It is telling.

On the other hand, I rather doubt that Van Jones was influential there. I think a lot of these czars, it was just a vanity for the president so he can say I have this czar and he is real close to me whenever anything is going on with California water, he can come and tell me about it.

The other thing that was amazing was "The Washington Post" called Van Jones "a towering figure in the environmental movement," a towering figure. I think that tells you something about the environmental movement.

BAIER: Charles?

KRAUTHAMMER: What you also learn about the White House is when Jarrett said, as we saw on tape "We've been watching him all these years," well, that means you have been watching him and must know something about his history of quite radical politics and statements.

And that apparently was undisturbing to Jarrett and to Obama people, and that tells you it is a reflection of the boss. The boss also had a history before he became a candidate of being around and friends with the likes of Jeremiah Wright, William Ayers.

Liberals scolded us last year how irrelevant all of that is, how it is a smear campaign against Obama. But if you live in that environment and you find nothing inherently wrong with that kind of radicalism, then a Van Jones will show up, you will watch him years and years, and you will think this guy is perfectly mainstream.

BAIER: Last thing Mort, is, as we've reported, these czars have not filled out a questionnaire, aren't we one blog post or one report away from derailing any hopes they had from talking about health care?

KONDRACKE: I don't know about that.

BAIER: Or at least off message?

KONDRACKE: I mean, they're going to talk about — yes. I mean, if this becomes the big issue of the week, then it's going to interfere with the president's big speech on Wednesday.

BAIER: And it's not going to change.

KONDRACKE: The other important thing here is I thought Lamar Alexander made a very good point. Lamar Alexander is a senator from Tennessee, responsible citizen Republican, said that there are major constitutional issues here about having these czars out of the control of Congress, no, you know, no confirmation hearings, no testimony, making all this policy in the White House. It ain't the way it's supposed to be.

BARNES: If they are really making policy, then it really is a constitutional problem, that's true.

KRAUTHAMMER: A towering senator?


BAIER: President Obama says he still supports a government-run option, but White House officials say it is not essential to healthcare reform. FOX all-stars give us their take after the break.



PRESIDENT BARACK OBAMA: And I continue to believe that a public option within that basket of insurance choices will help improve quality and bring down costs.

NEWT GINGRICH, (R) FORMER HOUSE SPEAKER: I think the president has had a month in which the American people have said they don't want a government plan. They would like health reform. They would like it in a way that they trust.


BAIER: Well, the president today in Cincinnati, Ohio, talking at a labor picnic on Labor Day, talking about health care and how he believes the public option is still a good tool to get costs down. That was the spin this weekend from his advisors as women.

We're back with the panel. Mort, so what is it — public option, government-run health care or not?

KONDRACKE: Well, if he is still defending the public option and he is going to defend the public option Wednesday, then he is in real trouble, because the public option is not going to fly in the Senate unless they're going to try to ram it through in the reconciliation process where they need only 51 votes, in which case the place is going to blow up and he's going to have a minority health plan, which I don't think is what he wants.

It may be that he is saying that he wants the public option, the government option, in order to — because it's going to be part of the House bill. It is going to get through the House.

And then what I expect will happen is that the Senate will pass its own bill without a public option, and either — what I've heard, actually, is that he is going to try to get the liberals in the House to eat the Senate bill, which will not have a public option in it, which will probably cost a lot less money than $1 trillion dollars, which will — may have some medical malpractice reform in it, and so on.

And it's going to be a hard swallow for the liberals, but my guess is that that is the only way that they can get a health bill to pass, and they've got to get a health bill passed.

BAIER: I want to play this sound bite, Charles, from last week when House Speaker Nancy Pelosi two days in a row tried to get to the point of whether there will be a government-run option or not.


REP. NANCY PELOSI, (D-CA) HOUSE SPEAKER: We will have a public option in the bill. Let me say it another way — we can't pass a bill without a public option.

If they want no public option, but a trigger, you can be sure that the trigger will bring one on a very owe bust public option.


BAIER: So Wednesday is we have to do it, but Thursday is maybe a trigger will work, but it will lead to a public option.

KRAUTHAMMER: It a perfect example of the incoherence on the Democrats on all of this. And she is reflecting the president's incoherence.

On the one hand, here we are eight months into this administration, three months into a really active, vigorous debate on health care, and two days before the president's great speech, nobody has any idea what's in it, and even he problem hi doesn't. So, on the one hand he's saying we're in a crisis and we have to act and it has to be done by last August, and then he doesn't even know as of today what it is, and he's asking immediate action on something that he doesn't even know about. That's number one.

But secondly, underlying all this is unease about his intentions. Obama is a man who believes in the government-run system. He has said that several years ago. He has now disavowed it. Bt clearly people understand that the public option is a way to achieve ultimately a government-run system.

BAIER: A single payer system.

KRAUTHAMMER: A single payer system, but he can't admit it, because in America it is not going to happen. He himself has said that tactically you can't be in favor of a single-payer system.

He also says he will never talk about rationing. But he has said it in public and he has said it in interviews and he says it in private, troubles about the hip replacement his grandmother had when she was very sick and ill and terminal. He clearly thinks about rationing. He thinks it's important, but, again, he can't say it. So in his heart of hearts, he believes in a national system and he believes in rationing, but he has to deny it, and that's why people worry about incoherence and disingenuousness.

BAIER: Fred?

BARNES: The White House says what they need to do is reframe the debate over health care. They're going to have better arguments for it, and so on.

But the problem is not the debate. The problem is the bill. There's enough known about the bill — I mean, there are different bills that have passed, so it's unclear. Charles is right about the real specifics. But we know in the House, the bill has passed the three House committees that there is the public option in it and there are a lot of other things that the public doesn't like and they don't trust.

Poll after poll shows the same thing. They think it's going to cost them more, their insurance, it's — they'll wind up with worse care, it will cause taxes to go up, it will increase the deficit at the same time. So they have thought all that.

He has got to come up with a new bill if he wants to get one passed, one completely different. And what he talked about today in Cincinnati in talking about health care sounded like — it is not even new arguments, and it's the same old bill.

That bill is the problem. His arguments haven't been good either, but mainly because the bill is bad.

BAIER: Should we expect something surprising Wednesday night, Mort?

KONDRACKE: What I expect — he's got — this is the highest stake speech of his presidency, I think. This is the equivalent of the post Jeremiah Wright speech during the campaign. If he doesn't regain the initiative here and he loses health care, which is his signature issue with an overwhelmingly Democratic Congress, his presidency is headed for failure.

It's not necessarily terminal, because after all, Bill Clinton survived this kind of thing, but it is a very bad sign for him. So it's a big speech.

KRAUTHAMMER: The surprise on Wednesday will be if he achieves coherence.

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