Updated

This is a rush transcript of "Special Report With Brit Hume" from May 15, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: Some seem to believe that we should negotiate with the terrorists and radicals, as if some ingenious argument will persuade them they have been wrong all along. We have an obligation to call this what it is — the false comfort of appeasement.

(END VIDEO CLIP)

BRIT HUME, HOS T: And when the president said that to the Israeli parliament today, Barack Obama concluded that the president was talking about him, and he promptly released a statement, quote,

"George Bush knows that I have never supported engagement with terrorists, and the president's extraordinary politicization of foreign policy and the politics of fear do nothing to secure the American people or our stalwart ally Israel."

Democrats on Capitol Hill chimed in, led by Nancy Pelosi.

(BEGIN VIDEO CLIP)

NANCY PELOSI, (D) HOUSE SPEAKER: I think what the president did in that regard is beneath the dignity of the office of president, and unworthy of our representation at that observance in Israel.

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: This does bring up an issue we will be discussing with the American people, and that is why does Barack Obama, Senator Obama, want to sit down with a state-sponsor of terrorism?

(END VIDEO CLIP)

HUME: What did Obama actually say? He has said that he would negotiate with Iran without preconditions, and it is succinctly summed up on his campaign Web site as follows

"Obama is the only major candidate who supports tough, direct, presidential diplomacy with Iran without preconditions."

Some thoughts on this controversy now from Mort Kondracke, Executive Editor of Roll Call, Mara Liasson National Political Correspondent of National Public Radio, and the syndicated columnist Charles Krauthammer, FOX News contributors all.

Well, whether the president intended it as such, the Democrats, led by Obama, thought it was bait, and they rose to it. Who wins, Mort?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: I think, on the merit, the Democrats ought to win. I can't believe I'm saying this, but I agree with Nancy Pelosi. This was an outrageous performance on the part of the president.

In another country, observing Israel's 60th anniversary, to start playing domestic politics —

HUME: What did he say here that referred to Obama?

KONDRACKE: Oh, come on — it didn't. but we know from Wendell Goler that White House aides said that he was including Obama in this statement. And, furthermore, if you look at this speech, the logic of it is he puts Osama bin Laden and Hamas and Hezbollah and Ahmadinejad all in one paragraph, and then goes on to start talking about negotiation as appeasement.

Now, Obama may be naive in the idea that he wants to go and talk directly to Ahmadinejad without pre-conditions, but that's not appeasement. Negotiation is not appeasement. Appeasement, Chamberlain-style, is when you cave to the other side and you give the aggressor — hand another country off to an aggressor.

That is not what Obama is all about, and the president should not have done what he did.

MARA LIASSON, NATIONAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I agree with Mort on some of that. The president should not have maybe used that venue. However, this will be a major fault line in the general election.

The question, not even so much of whether we should negotiate with Iran, even Secretary Gates said it would probably have been a good idea to talk a little bit more —

HUME: No, he said by non-government contact.

LIASSON: Outside the government through other channels, that's right.

HUME: That's different.

LIASSON: But the question for Obama and the threshold that he has to reach with the American voters is can he be a credible commander in chief, meaning is he tough enough to keep this country safe.

And that is that is the weakness that Hillary Clinton has been picking away after this entire campaign, and John McCain is going to do it, too.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Obama and his defenders here are really a piece of work. Remember how all this started — we saw it earlier in the show in the clip in which he answered the question in that debate, would you speak with these thugs who run Cuba, Venezuela, Iran, et cetera.

He said yes, and then he immediately said that he was saying this because it is, quote, "a central diplomatic principle of this administration not to talk to them," and that, he then said, is ridiculous and disgraceful. That was in his answer.

He has repeated that in one form or another at least 20 times over the course of this campaign. So he makes it an issue of an attack on the Bush administration and its diplomacy, and if the president defends himself and defends the policy of not speaking with these thugs, all of a sudden it's illegitimate, disgraceful, and unworthy of the president.

Of course he should defend himself on this, and of course he should include Obama with Jimmy Carter, who spoke with Hamas, and with Pelosi, who went cap in hand to Damascus and spoke with Assad.

And the question John McCain asks is a good one — what exactly is he going to say to these thugs that has not already been said? If he doesn't have anything new to say, then a trip to Iran or a negotiation with Ahmadinejad is an exercise in redundancy, and in honoring him.

And if he has new stuff to say, what is it going to be? It's not going to be more sticks. He is not going to be tougher on Iran than Bush and Cheney. It's going to be carrots.

So let's ask Obama — are you going to offer Iran Lebanon? Are you going to offer sway over Iraq? Are you going to offer it domination of the Gulf? Or are you are going to offer it America squeezing Israel?

So it is about appeasement, and Israel is a place in which he wants to make that statement.

LIASSON: Why appeasement?

KRAUTHAMMER: Because if there were to be an offer to Iran, it would surely involve Israel's interests.

KONDRACKE: Wait a minute. You're assuming that Obama is going to go to Ahmadinejad and say what would you like? What about "Get your frigging IED's out of Iraq"?

You're assuming that Obama is Jimmy Carter, and we don't know that that's a fact.

Furthermore, look at this parallel —

HUME: Hold on a second, Mort. He says "George Bush knows I have never supported an engagement with terrorists." What is Iran? Is Iran not a terrorist state?

KONDRACKE: Iran is a state sponsor of terrorism. There is no question about it.

HUME: Do you think that is a valid distinction, between state sponsors of terrorism and terrorists themselves?

KONDRACKE: We are negotiating right now with North Korea. North Korea just tried to pass off nuclear weapons to —

HUME: He's talking about direct presidential diplomacy. What we're having with them is multiparty talks led by countries with leverage over there.

KONDRACKE: I said that that may be naive, but it's not necessarily appeasement.

And here is another factor. If Ahmadinejad is Hitler, and Obama is Chamberlain, then who is George Bush? Is George Bush Winston Churchill? If he is, what has he done to stop Iran in this proxy war? Iran has just about taken over Lebanon. Iran is developing a nuclear weapon.

HUME: What does that have to do with Iran's policy here?

KONDRACKE: I think it has something to do with Bush's policy. Is Bush going to bomb out Iran? He said it would be a betrayal of generations. I want to know what Bush is going to do.

KRAUTHAMMER: Obama took it as an attack on him. Obama has a problem. He says he will not speak with Hamas because it engages in terror.

On the other hand, he wants a direct diplomacy with Iran, which is the world's most proliferate, prodigious supporter of state terror. And if you have that contradiction, you've got to explain it.

Obama at the beginning made a gaffe in answering that question. He knew he was stuck. He made it into a policy, and now it's a doctrine, and he's got to explain it, and he can't.

HUME: When we come back, John McCain outlines his vision for the country and the world if he becomes president. That's next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCAIN: The Iraq war has been won.

There is no longer any place in the world Al-Qaeda can consider a safe haven.

Public education in the United States is much improved.

Health Care has become more accessible to more Americans than at any time in history.

The United States is well on the way for independence from foreign sources of oil.

Illegal immigration has been finally been brought under control.

This is the progress I want us to achieve during my presidency.

(END VIDEO CLIP)

HUME: And, said John McCain today, that is his vision for the way the world will look, or the U.S. at least, in the year 2013m as what he presumably hopes would be his second term gets underway.

That's pretty ambitious — Charles?

KRAUTHAMMER: Look, this speech, which was a great speech, is not about Iraq or education or health care, all of which is summarized well. It is about the age issue.

What he did is he frames in a way when the speaks about the year 2013. He knows that Americans remember that Reagan in the second term at the end looked weak, and afterwards he developed Alzheimer's.

If McCain is going to be older, he does not want Americans thinking of him of 80. He was Americans thinking of him in the first turn. He is strong, vigorous, active, right now, and possibly will be in the next four years.

So he rephrased all of this within the four years. He does not announce he is only going to have one term. That would be a disaster. He would be a lame dock.

But he is applying in that speech — you have all kinds of hints in that speech about not worrying about reelection. On the day I am sworn in until the day I leave office I want to accomplish all this. He is talking about a frame of time which is a way to blunt the age issue, which is a serious issue. It cannot be eliminated, but I think this is a way to at least minimize it.

LIASSON: I think there was another thing he was doing. I think this speech was really clever, the whole device of it. He is saying I can do these things because, as he said in a speech, as I often have in the past, I will work with anyone from either party to get things done.

What he is saying is he can actually do these things, and he has a record of doing all of that bipartisan stuff that Barack Obama just kind of talks about with high flowing rhetoric.

I think that John McCain is a natural triangulater. He is well suited to working with the Democratic congress, and some of the things he mentioned, including illegal immigration, is a deal he could cut.

KONDRACKE: If I were the House Republicans, who are desperately searching around for something to re-brand themselves with, I would just take this agenda, put it in bill form, and then try to pass it to get them on the page to get something positive done.

HUME: You can't pass a Bill that wins the Iraq war or pass a Bill that makes Al Qaeda unsafe.

KONDRACKE: You can present a tax reform solution, you can start talking about health care, education, all of these things. It is not going to pass a Democratic Congress anyway, but it would serve to demonstrate what the Republicans are all about.

McCain did not represent this as a kind of Republican agenda, but the Republicans ought to pick this up and run with it.

But what I thought was interesting beyond the policy prescriptions was this bipartisan stuff that he was talking about, and he went on and on about it at the very end of his speech, and it was an attempt to outflank Obama on that score.

And, moreover, he promised that he would go do question and answer questions, British-style parliamentary question and answer sessions before congress. That is something brand new we've never seen before.

Content and Programming Copyright 2008 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2008 Voxant, Inc. (www.voxant.com), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, LLC'S and Voxant, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.