This is a rush transcript of "Special Report With Bret Baier" from May 15, 2009. This copy may not be in its final form and may be updated.

BRET BAIER, "SPECIAL REPORT" HOST: Today the CIA released a letter by Director Leon Panetta to agency empl oyees reacting to Pelosi's charge, stating, among other things, "Let me be clear. It is not our policy to practice or practice to mislead Congress. That is against our laws and our values.

As the agency indicated previously in response to congressional inquiries, our contemporaneous records from September 2002 indicate that CIA officers briefed truthfully on the interrogation of Abu Zabaydah, describing the enhanced techniques that had been employed."

Late tonight, Speaker Pelosi put out a statement reacting to Panetta's letter, stating in part: "My criticism in the manner in which the Bush administration did not appropriately inform Congress is separate for my respect for those in the intelligence community who worked to keep our country safe."

Well, let's bring in our panel, Steve Hayes Senior Writer for the "Weekly Standard," Mort Kondracke, executive editor of "Roll Call," and syndicated columnist Charles Krauthammer — Steve?

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": Well, it's an interesting statement that she put out today, and it's complete nonsense.

It makes sense that she would want to charge the Bush administration and separate her attacks from the criticism that she leveled yesterday against the intelligence professionals that she now claims to side with. That was inconvenient, and she was getting beat up for it.

I think there is also a very interesting story taking place in Congress right now. You have Pete Hoekstra and John Boehner asking to see a second set of documents related to the briefings that Nancy Pelosi got.

Those documents include, potentially, things like the slide shows that were shown at those briefings at which she— that she participated in. That will give us more information about the briefings that she participated in, and I think we are likely to see a concerted push from Republicans to get that out.

You have already had Steny Hoyer say he is in favor of having it out. Nancy Pelosi yesterday said she was OK with it coming out. Silver Reyes, the chairman of the House Intelligence Community has said "I don't want that out." He seems to be the only one blocking it at this point.

MORT KONDRAKE, EXECUTIVE EDITOR, "ROLL CALL": Yes, I was with a senior Bush official last night, who said you never want to get into a fight with the CIA, because they can leak on you to death.

And that's what's happening. This report that Nancy Pelosi did stop another operation by the CIA when she objected, you know —

BAIER: In 2004.

KONDRACKE: Right, undoubtedly came from the CIA. And they have lots of evidence that they can use against her.

And it looks as though she's trying to back off from that. "I didn't mean the present CIA, I meant that old CIA that was running under Bush."

But look, this is all about, fundamentally a battle of vengeance. The Democrats did not impeach George Bush, so now they want to represent his entire administration as being a criminal enterprise.

And the Republicans are fighting back by saying, look, you, Nancy Pelosi, in 2002, in the aftermath of 9/11, you agreed that this was OK. But now, you know, years later, she wants to join the hanging party of Bush.

It's not going to work.

BAIER: Is she threatened?

KONDRACKE: I don't think she is threatened as speaker, but her reputation is certainly threatened.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think it could go far out. I don't think it's a battle between the Republicans and Democrats anymore. It's Pelosi and the CIA. And as Mort indicates, you don't want to mess with the CIA, and she messed with it.

She accused it, its agents of felonies, lying. And what we're getting — and you don't want to do that, because the CIA is the keeper of the secrets.

This statement by Panetta, remember, a leading Democrat, and an Obama appointee, every word of it is a contradiction of what she said — "contemporaneous records," implying there is other stuff out there that we have which contradicts. It could be the slide show — and that the briefing was about interrogations describing the enhanced, as you said, techniques that had been used, meaning it was about what had happened a month earlier.

Her problem is that they can leak, as we saw earlier in the show. We had the story from Jim Angle in which he talked about how Pelosi had stopped an operation.

And where do you think Jim got his stuff? I'm not privy. I didn't speak with Jim. But as a listener, I hear it, and I say it obviously didn't come out of Pelosi's office.

The CIA has the goods and it will leak and leak and leak until she breaks. At some point, there is going to be a decisive piece of evidence which will show that she was told, and she is going to have to explain how she said originally "I hadn't heard," which is OK. It could have been a lapse of memory.

But now her story is "I heard, and they said it hadn't occurred." Well, that's hard to defend.

KONDRACKE: You know what she ought to do is she ought to send an aide out to the CIA, have him look over the record out there, come back, and then she could say, "On second thought, having reviewed the record, my memory —

KRAUTHAMMER: It's too late.

KONDRACKE: No, I don't think so. I don't think so.

KRAUTHAMMER: She could have done it when her story was, "I don't recall ever hearing about it." Once you say "I heard the opposite," that's a positive recollection, and you can't walk it back.

HAYES: And having talked to some people who are familiar with the contents of this next batch of material that could come out, I think the last thing she wants is to actually be familiar with those contents.

That could be even more damaging to her, because then she is going to have to try to explain away these very specific details about what was actually in these briefings that she got.

BAIER: We pointed out yesterday that this clearly was fuel to the fire on the story, and it gave it a lot of legs. As you go into next week and we continue to talk about these truth commission possibilities, where does this go? Steve, let's start with you.

HAYES: I don't know that it goes anywhere right now. Democrats who have been so enthusiastic about truth commissions have to be stopping and saying, "OK, wait a second. We don't know what's in the CIA memos to the file. We don't know what the agency has against us right now, or have in its records right now.

But we do know that one of our leaders, Nancy Pelosi, has directly challenged the agency in a very public way, accusing its officers, intelligence professionals, of lying." That's not a good place for Democrats to be right now.

KONDRACKE: I think Obama really has to get this stuff stopped. And he is trying to get things stopped by not putting out the pictures, for example.

BAIER: Although they wouldn't weigh in at all today.

KONDRACKE: I know, but that's evidence that they don't want any part of this.

I think that if he appoints a presidential commission that is above reproach, which everybody agrees is composed of sterling characters, I think he can get this off the table.

KRAUTHAMMER: Maybe he wants to, but he's the guy who started it. He's the one who decided on releasing the memos. It was an issue that had been put away. It was not on the table. It was not out there. He created the firestorm, and now he's got to live with it.

BAIER: Sticking with terrorism issues, the president may be resurrecting military tribunals. Is that another defeat for the left? The panel weighs in on that next.



PRESIDENT BARACK OBAMA: This legal black hole has substantially set back America's ability to lead the world against the threat of terrorism, and undermined our most basic values.

So make no mistake. We are less safe because of the way George Bush has handled this issue.

I have confidence that our system of justice and that our traditions of rule of law are strong enough to deal with terrorists.

GIBBS: The president believes that in dealing with certain detainees at Guantanamo Bay that this is an appropriate avenue.


BAIER: Candidate Obama called military commissions a "legal black hole." Now President Obama is bringing them back, saying they will fall under different rules than the ones proposed under the Bush administration.

We're back with the panel — Charles?

KRAUTHAMMER: Well, you don't have to argue about Obama's hypocrisy on this. It was seen on tape. It's right out there.

But that's a side issue. The real issue is that we are now safer and that Obama has done the right thing as commander-in-chief.

I am not impressed by the five changes he is instituting. I think that they are cosmetic. I will give you an example — ostentatiously announcing that we are not going to use evidence derived from coerced interrogation.

Well, as Andy McCarthy, who was a lead prosecutor under the Bush — the prosecutor in the case of the blind sheikh on the World Trade Center attack of the 1993 points out, under the Bush administration, they dismissed a case against a high Al Qaeda official, Mohammed al-Katani, on the grounds of his interrogation involving coercion.

So there is nothing new here.

What is interesting is how Obama is vindicating the Bush approach on the War on Terror on almost every aspect of it, including the commissions. And I think it's an admirable thing.

But I wish he wouldn't pretend in word that he is not. Indeed he is. He ought to at least admit it once in a while in word that the Bush administration had it right.

KONDRACKE: Wait a minute. In 2006, this issue, the Military Commissions Act was addressed by Congress. Obama voted in favor of an amendment, or an actual commission —

BAIER: Different version, yes.

KONDRACKE: — big bill which contained these various safeguards — no hearsay evidence, no use of testimony derived under duress, and, you know, lawyers — defendants being able to get their own lawyers.

When that was not in the final bill, he voted against the final bill. So he is pretty consistent. And John McCain and Lindsay Graham were with him on that.

BAIER: I tell you, looking on my in e-mail inbox from the ACLU e-mails —

KONDRACKE: They hate it.


KONDRACKE: They hate it, because they think that these guys ought to be treated like any old street criminal.

KRAUTHAMMER: But he was not consistent on what he said as a candidate, as we say.

KONDRACKE: Yes, oh no, no.

KRAUTHAMMER: He attacked it as a black hole, and attacked it carte blanche.

KONDRACKE: You could say he attacked the final bill of the commission.

KRAUTHAMMER: He attacked the entire idea as a candidate.

HAYES: He clearly reversed himself on this. He is beginning to make John Kerry look consistent. These are, I think, as Charles said, cosmetic changes. They are window changing. These are essentially the Bush military commissions. And I think it is a good thing that we are going to have them.

What I found interesting was the White House spin today on this was that this was all being undertaken because they wanted to expedite the swift and certain justice for the victims' families.

But they're doing that by expanding these rights, if they are, in fact, expanding any of these rights. I think we have a right to be skeptical about it — expanding these rights for the detainees. That seems like a strange way to help the victims' families.

BAIER: The president at Notre Dame, Israel's new leader in Washington. Buckle up. The Friday lightning round is next.


BAIER: Well, for the first time, a Gallup poll shows that 51 percent of Americans describe themselves as "pro-life," 42 percent as pro-choice. Gallup has been asking that since 1995, the biggest lead for prolife folks since that question has been asked.

This leads into the president at Notre Dame this weekend giving a commencement speech. And that starts our lightning round — Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I'm not impressed by the majority pro-life. I think the numbers always shift around 50 percent on either side. I think it shows how Americans are basically split on the issue.

I think if you ask about a third trimester abortion, you would have a strong majority opposing. If you would ask a specific question about early abortions, you would get a strong majority allowing it to remain legal.

If we were allowed to legislate on those issues, the specific issues, we would have consensus. But as it is, we don't and we can't.

BAIER: Notre Dame. How about Notre Dame?

KONDRACKE: People who think that Notre Dame shouldn't have invited him think that a university is limited to a couple of social issues, stem cells and abortion.

They have got a range of issues. They're trying to educate kids across a broad range beyond Catholic doctrine. So it is entirely appropriate that the president appear there. He is the president of the United States and that there be a debate about the issues where they disagree with him.

BAIER: Steve?

HAYES: I understand people are protesting the decision to have him there. I mean, this is, after all, a Catholic university dedicated to the sanctity of life. It is a principle teaching of the Catholic church.

And why wouldn't they raise objections when they have somebody who is not only pro-choice but I think probably the most aggressively pro-choice political leader we have seen in decades.

BAIER: Israeli Prime Minister Benjamin Netanyahu arrives in Washington, will meet with the president on Monday. What do we look for out of that meeting? Let's start with you, Steve.

HAYES: Well, about a month ago, Joe Biden made a comment that any preemptive attack by Israel on Iran taking out their nuclear facilities would be "ill-advised."

Netanyahu was not happy about that and thought of it as something of a brush back pitch. I would expect that one of the things he will communicate among many, many others is that such discussions should take place in private if that's the view of the administration.

KONDRACKE: My guess is that Netanyahu is going to say, "Mr. President, we think you have about a year to get Iran off its nuclear program, or else we are going to be compelled in our own survival at stake to attack the Iranian nuclear facility."

Now, Obama may say "Give me two years," you know, or "Give me more time," or "We're working on it," or "You can help me out by being nicer to the Palestinians so that I can enlist the other Arabs and in the anti-Iranian effort," stuff like that. It will be a back and forth.

But I don't think there is going to be a breakup or blowup at this meeting.

KRAUTHAMMER: But there is going to be a serious argument between them over one issue — when Israel attacks, and I'm not sure it is if anymore, but when Israel attacks, will it tell the United States in advance?

And I suspect the United States will insist on being told. And I think Israel will say "If we have to, we will anyway," and will not allow itself to be vetoed.

This prime minister is the son of an historian. He knows his legacy. He will not want to be — and none of his colleagues would be — the prime minister under whom a regime dedicated to exterminating Israel acquired the weapons to do it. And he will do it, and I think he will let Obama know in no uncertain terms.

BAIER: And a two-state solution?

KRAUTHAMMER: Look, that's not a major issue. Netanyahu will agree in principle. It's a fudge-able issue. In principle, he would accept the right to a Palestinian state. It's a distraction.

Iran is what he cares about, and that's going to be the center of the argument.

BAIER: A special added panel segment after this break.


BAIER: That was the meaty lightning round. We only got two topics in, so we thought we would come back with the panel and end the week with the highlight of next week — Charles?

KRAUTHAMMER: Well, the first highlight is next week's lightening round, of course.


The second highlight is going to be the shuttle's triumphant, glorious restoration of the Hubble telescope.

KONDRACKE: One — round seven of Pelosi verses the CIA, no knockout. And, two, a wonks delight — two — not one, but two Republican health plans from Paul Ryan of Wisconsin and Mark Kerr from Illinois.

BAIER: I am just so excited about that.

HAYES: I can't wait.

KONDRACKE: It is a wonk's delight.

HAYES: I would say that the most likely highlight will be that we will get Obama's Supreme Court pick next week.

If we don't, the highlight will be on May 21 when Dick Cheney makes a speech at the American Enterprise Institute, and I think sort of ups the ante in this back and forth with Obama.

BAIER: I think the highlight will be the "Special Report" online show, Wednesday. Make sure you tune in online.

That is it for "Special Report" this time, straightforward news in uncertain times.

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