This is a rush transcript of "Special Report With Brit Hume" from September 16, 2008. This copy may not be in its final form and may be updated.


SEN. JOHN MCCAIN, PRESIDENTIAL CANDIDATE: The top of our economy is broken , and we have seen self interest, greed, irresponsibility, and corruption undermine the hard work of the American people.

It's time to set things right, and I promise to get the job done as your president.

SEN. BARACK OBAMA, PRESIDENTIAL CANDIDATE: John McCain's newf ound support for regulation bears no resemblance to his scornful attitude towards oversight and enforcement.

John McCain can't be trusted to reestablish proper oversight of our financial markets for one simple reason — he has shown time and again that he does not believe in it.


BRIT HUME, HOST: Well, there you see the debate drawn. Each man is trying to say that he is the one, just the one to fix the current woes besetting Wall Street and perhaps the economy in the larger sense.

Some thoughts on this debate now from Fred Barnes, executive editor of The Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and the syndicated columnist and FOX News contributor Charles Krauthammer.

All right, Fred, Obama said — McCain says he's the guy to fix this. He doesn't like Wall Street's self-interest and greed. Obama says he's ideologically opposed to this kind of regulation and oversight. Who is right?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: I don't think either one of them is right, to tell you the truth, and I worry what Washington is going to do, not what will happen on Wall Street.

Remember when you had the Enron scandal, and we got Sarbanes-Oxley? What did that help produce? It made New York no longer the financial center of the world. It moved to London, during all the IPOs, initial public offerings offshore.

Washington doesn't understand Wall Street. Wall Street doesn't understand Washington very well either. But McCain — look, he says he's going to regulate. What does he have in mind? Is he going to tell investment banks where they can invest and where they can't, and how much leverage they are allowed to have?

You know, that's not — that shouldn't be —

HUME: — historically been a big opponent regulation?

BARNES: We have sometimes. But here is the thing about McCain-he likes capitalism. He just doesn't like capitalists. He really does not like corporate CEOs.

And Obama is blaming it on Bush administration policies. Which ones?

I mean, look, capitalism, particularly in a globalized economy, is something that has produced great wealth and reduced poverty, but it's a rough and tumble affair, and sometimes companies take a lot more risk than they should have. That's what happened here.

Look, this may be a crisis on Wall Street, but what is the best example of where we're headed and whether we should be optimistic or not? It's the stock market. It went up today. That's a bet on the future.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I think that both of them are talking about more oversight or regulation. There is no doubt that John McCain's record is of a deregulator. He has called himself that in an interview with The Wall Street Journal.

And they're both trying to fight for the same ground. Yesterday he was talking about the fundamentals of our economy are strong. Today he said the top of our economy is broken, which is a milder variation of Obama saying "How can you fix the economy if you don't know it's broken?" Now he thinks the top is broken.

I think what's extraordinary is that Obama does not have a bigger advantage on this issue than he does. He has a small one, now but the Democrats should be way ahead. This is a financial crisis that makes people nervous, and Democrats usually benefit mightily in a situation like that.

I think Obama is getting better. You saw him reading from a teleprompter there. That was about as feisty and clear and tough as I have seen him in a speech in a long time. I think he is trying to hit on this. I think this is a great opportunity for him. I'm just surprised that he isn't way out ahead.

And, of course, you know, McCain is just saying because I'm a maverick and I am going to reform everything, I can reform Wall Street, too.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Look, given the fact that Obama is blaming it on Republicans and Bush policy, I'm heartened that McCain is joining in the mindless populism, blaming it on Wall Street greed. What does he think happens on Wall Street?

The causes of this are not obscure, and there are several of them. One of them is that the Federal Reserve under Alan Greenspan kept the punch bowl open for a long time with low interest rates after 9/11, which led to a wild borrowing spree of Wall Street and Main Street.

Secondly, for two decades you've had Republicans and Democrats in the presidency and also in Congress who pushed to expand lending for housing to people who hadn't had it before, particularly African-Americans, who had been denied it because of discrimination and racism, and encouraged subprime loans, which in the end collapsed in a fury and in a wave.

And, thirdly, what we had was a kind of an advance in computers in which people that derived these esoteric instruments of debt, which was understood not as a way to cheat and hide but as a way to spread the risk of mortgages.

But, ultimately, because it was obscured, it had the opposite effect of spreading the liability in a way that people aren't even sure how much they own.

The reason that Lehman collapses is because it looks at its books and doesn't really understand how much of a liability it has and the run starts on it, and it can't answer.

HUME: So who wins this debate politically?

KRAUTHAMMER: I think it is a draw because both of them are appealing mindlessly to a populism which, I think, Republicans will respond, if you blame Wall Street and Democrats will respond if you blame the Republicans.

HUME: Sarah Palin, meanwhile, is refusing to cooperate in an investigation into her actions as governor. And will take a look at what is being called "trooper-gate" when we come back.



GOV. SARAH PALIN, VICE PRESIDENTIAL CANDIDATE: No, nobody fired the trooper. He is still a trooper. To this day he's out there.

But the issue is the commissioner, who was his boss, was he pressured to fire that trooper? That's the underlying issue here, right? Commissioner Monegan.

Commissioner Monegan has said "The governor never asked me to fire him. The governor's husband never asked me to fire him." And we never did. I never pressured him to hire or fire anybody.


HUME: That is the discussion that is at the heart of what's being called "trooper-gate." The Commissioner of Public Safety out in Alaska was fired in July by Governor Palin. She had a list of reasons why she said he was fired.

Critics have said now those weren't the real reasons. The real reasons were that Walt Monegan wouldn't fire a particular state trooper named Wooten who happened to be Palin's ex-brother-in-law.

And there is, therefore, a legislative investigation is underway out there to determine whether she improperly tried to influence the firing of a trooper who, by the way, never did get fired.

But, nonetheless, this thing has legs. It continues to go on. There is a lot of news coverage about it, and the investigation is moving forward, although she now says she's not going to cooperate.

Where are the equities here, Charles?

KRAUTHAMMER: I think this is a ridiculous charge. The commissioner serves at her pleasure. He is the member of her cabinet. She can fire him if she thinks he's too short. She doesn't have to have a reason, and she had several.

There were at least two instances of insubordination in which he went public by opposing policies which she had supported, and that would be sufficient.

Unless the Democrats can produce evidence with e-mails or otherwise in which she actively pressured him, which would mean that she's lying here, what's their case?

Are they going to find a way to prove that in her heart of hearts, the reason that she fired the guy is because — it wasn't because of the insubordination, it was because he wouldn't fire a trooper who had tasered his 10-year-old son, shot a moose illegally and allegedly had threatened her father.

If you want to prove it, prove it. I think it's impossible.

HUME: Well, did he not say Monegan back to the Anchorage Daily News back earlier, in August, I think, that she did not pressure him to fire the trooper?

LIASSON: She didn't. Now there is a question that — the panel that is investigating this is now going to talk to her husband to see if he had any communication with anybody suggesting that he and the governor wanted this guy fired. Look, this thing —

HUME: So this guy acknowledges, the commissioner who got fired acknowledges, does he, that she didn't pressure him.

LIASSON: No, she didn't. And she has not been subpoenaed. Only her husband and a bunch of her staff members, including her scheduler.

This is supposed to be done by October 10, which I think is probably a good thing all around, especially if the McCain campaign is confident, as they seem to be, that she will be exonerated of these charges, and, as a matter of fact —

HUME: Somebody must not be very confident that she is going to be exonerated, because she is not going to play, right?

LIASSON: She's not going to play, but they haven't subpoenaed her yet. Her staff members are going to testify, and so is her husband.

BARNES: All you need to know, and Charles touched on some it, is that the trooper involved, who was once the brother-in-law of Sarah Palin, was found guilty by an investigator for the state police. He was found guilty of tasering his stepson. He was found guilty of threatening to kill his father-in-law.

And you would think — and a couple of other things as well. You would think that would be enough to have him fired right there.

LIASSON: She says she didn't want him fired!

BARNES: No, I'm talking about when he was first investigated and he was found guilty of these things. And you know what the punishment turned out to be? Suspended for five days. This is somebody after they found him guilty of threatening to kill his father-in-law — five days suspension.

HUME: But the charge is that she —

BARNES: I know what the charge is now with Monegan. And he said both ways. Before he said he felt pressure, and now he says, well, neither Governor Palin or her husband or anybody on her staff actually asked him to fire the trooper.

HUME: But he felt pressure anyway?

BARNES: Well, he said before he had felt some pressure. And clearly he had gone behind her back —

HUME: What about the claim that's being made in the Palin camp that the investigation by the legislature has become politicized?

BARNES: Well, it is headed by-I think it's headed by the chairman of the Senate Judiciary Committee, who is a Democrat. And that may well be true.

LIASSON: But there are plenty of Republicans on the committee, and they voted with the majority to issue the subpoenas.

BARNES: But this is an extremely small matter.

HUME: Well, it's not an extremely small matter, though, if it continues to ricochet around through this campaign and has credence as a scandal.

LIASSON: This was a calculated risk. McCain knew about this when he took her. This wasn't a surprise. This was public knowledge that this investigation was going on. He decided that they could gut this out, and maybe they can.

BARNES: Any reasonable person would think that he should have been fired, the trooper, I think.

KRAUTHAMMER: The interest of the press in this is in itself remarkable given that another newcomer on the scene, Obama, had a scandal in following Rezko and his sweetheart land deal in which there is no interest by the mainstream press. There is a double standard here which is quite remarkable.

LIASSON: At the time of the Pennsylvania primary, there was plenty of interest in that. And Obama has had 19 months out there. She is in a completely telescoped time period.

KRAUTHAMMER: Has there been a real tough investigation of this issue in a major mainstream press? I haven't seen it.

LIASSON: There's been a lot —

BARNES: I haven't even it, either.

HUME: That, friends, is it for the panel.

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