This is a rush transcript of "Special Report With Brit Hume" from November 11, 2008. This copy may not be in its final form and may be updated.


J.D. FOSTER, HERITAGE FOUNDATION: There is a real question whether we shoul d be sending money to General Motors and Ford and Chrysler to keep them up and running in the current crisis, because their problems are long term. They're not driven by the recession or the credit crunch.

MARTIN FROST, (D) FMR TEXAS REPRESENTATIVE: I believe that it needs to be done, and it needs to be done sooner rather than later. I don't know that you can wait until January 20th, the day that the president is sworn in.


BRIT HUME, HOST: There you have pretty distinct views on what ought to happen with the proposal to bailout the big three Detroit automakers.

Some thoughts on this issue 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, it seems this business about the leaked conversation has been cleared up. Yes, President Bush and Barack Obama did discuss the trials and tribulations of Detroit. No, there was no proposal to link presidential support for Detroit's bailout to the Colombia Free Trade Agreement. So we got that out of the way.

But what about the underlying issue here, what to do about the automakers, if anything--Mort?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: If AIG is too big to fail, the insurance giant, then probably the auto industry is too big to fail completely, too. There are two to three million jobs involved, and if they sank in the middle of a recession, that would be terrible for every region where they are.

So they probably need a bridge loan of some kind. But then the question is what do you do about them in the long run?

And it seems to me that the best idea I have heard is what you might call the "Pearlstein plan," Steve Pearlstein, the columnist for The Washington Post, who was endorsed also by the Washington Post Editorial page, amounts to a structured bankruptcy, a precooked bankruptcy, where the government would offer some aid.

But, basically, the bankruptcy court could eliminate their pension burden, rationalize their dealership structure. They've got many, many more dealers than they need or can support. Rewrite the union contract to the level of non-union contracts--

HUME: Is that something that labor would ever sit still for?

KONDRACKE: Well, you know, probably not, and probably it won't happen because the Democratic congress, you know, won't allow it to happen. But it is probably what ought to happen, because these are companies that, as the introduction said, have long-term problems that are their own fault. They probably need new management.

But you will never get it if things are allowed to continue as present. And if you just feed them money, it will go down a rat hole.

HUME: Wait a minute--it would be in the form of loans they would have to pay back, though, right?

KONDRACKE: Will they ever be able to pay it back?

HUME: The one instance was Chrysler. There are all kinds of arguments about whether that was a good idea, but it did get paid back.

KONDRACKE: It did get paid back.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Every one of these bailouts have come with some kind of strings attached, some kind of protection for the taxpayers, or something that the government wants the automakers to do better than they're doing now.

Whether it's a precooked bankruptcy or some kind of a structured workout, there has to be something other than just throwing money at the automakers.

The other thing, even though I know there was no quid pro quo, and that's been cleared up, I think the question about trade is interesting.

And we don't know whether Barack Obama is going to stick to his campaign utterances about renegotiating NAFTA an resisting these new trade deals, or whether he is going to be, as he suggested after the heat of the primaries, he will be more favorable to them.

I think that raises a fascinating question.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think what is fascinating here is the philosophical divide that you can see emerging between the Bush administration and the future Obama administration on what to do on the bailout.

The Bush administration wants to restrict the bailout to the financial institutions. It sees it as a utility, as a power company. You can't allow a power company to go under and the electricity shut off to all the other industries.

HUME: That affects everybody.

KRAUTHAMMER: If the credit is gone, nothing happens. So if it had this restriction in the $700 billion, it would be only financials.

What the Democrats want is to have it expanded to include industries-large ones, because its concern is unemployment. If you have a large number of people thrown out of jobs at a time, you get a decrease in consumer spending, you get an increase in mortgage defaults, more unemployment, you get a spiral and a depression.

So there is a logic there, but the problem is that the Democrats prevail, the question is where does it stop, and why autos and not others?

It becomes extremely arbitrary and political that the companies that will be saved outside of the financials will be those with the biggest political influence and lobbyists, exactly what Obama said he was running against.

And, secondly, it will be inefficient. As Mort indicated, it's a way of saving the old obsolete and ruinous union contracts which have driven the big three into bankruptcy at a time when the manufacturing of Japanese companies and others in the south is succeeding.

So, in the end, you have to make a decision. Are you going to throw money into the auto companies? It will be a maw that will be endless. And you have to draw a line.

HUME: One of the president's biggest challenges may be Afghanistan, something he has pledged to do a lot about. That subject is next.



SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE: I will send at least two or three additional brigades to Afghanistan.

We also need more training for Afghan security forces, more non- security assistance to help Afghans develop alternatives to poppy farming, more safeguards to prevent corruption in and new effort to crack down on cross-border terrorism.


HUME: And he went on to say only a comprehensive strategy will work in Afghanistan.

President-elect Obama has made some very serious commitments in his campaign to Afghanistan and to try to win the war there and suppress the insurgency that is going on there.

Charles, what about it?

KRAUTHAMMER: Well, he has to be really careful. But you have to start by understanding that Afghanistan is not Iraq. Ironically, Iraq, which has a history of centralized government, is a place where we can actually succeed if you define success as establishing a self-sustaining central government.

Afghanistan has never had an effective central government. It has always been a country of warlords. Pouring American troops into it is a huge mistake. It is what the British and Russians did, and we know how those adventures ended.

I think Petraeus and others in the military have an idea how to approach it. A, you try to negotiate with, yes, warlords, local tribal leaders, and perhaps even insurgents as a way to try to peel away what Petraeus called the "reconcilables" from the irreconcilables. That's number one.

Secondly, you have to build up the Afghan army quickly and effectively, because it is the only national institution that actually works.

The one thing you would like to see is Nato allies actually doing stuff. Other than Canadians and the Brits and the Dutch the Europeans are sitting on their behinds. The Germans don't even go out at night.

And we'll have a test here of the Obama theory that if the Europeans and allies like America again and like our president, that they're going to actually help us and cooperate. I will bet the farm that these countries act out of national interest and never out of affection, and we're not going to get anything out of Nato.

KONDRACKE: I think the other thing--I think, first, Obama ought to listen to Petraeus as to both Afghanistan and Iraq, and follow his advice on both.

But the other thing is that I think he should change his attitude toward Pakistan. I mean, he had this sort of semi-hostile attitude when Musharraf was in charge, and he was going to -- we were going to go charging in it there and capture or kill Usama bin Laden if the Pakistanis wouldn't do it.

The Pakistanis now actually are trying hard. I mean, after all, it was Al Qaeda that killed Benazir Bhutto and Benazir Bhutto's husband is now the president. And they've got troops in there. They are trying to persuade tribal leaders to go the way of the Sunni Awakening in Anbar province.

And it's a democracy. And they've got a good general in charge of the army. And so we ought to be helping Pakistan succeed, and be the model in that--

HUME: It seems to me he has political flexibility to make that adjustment in his attitude if he wants to.

But the question, I think, Mara, is how much has his campaign rhetoric about Afghanistan put him in a position where he has to go forward with a big and continuing American troop presence there? Is this a commitment he can't afford to begin to seem to back away from?

LIASSON: Yes, I think he has made a big commitment there. On Pakistan I think he has been pretty specific. He has said if we had actionable intelligence and the Pakistanis weren't willing to go after Usama bin Laden, I would go across the border and do it.

Well, guess what? So did George W. Bush. He didn't announce it in advance, but he did go do it.

I think on the issue of increasing troops, I think he will find some agreement among military leaders on that. That's something that is necessary.

But I do think that he has laid down a marker. I think he wanted to show that he was a war he was willing to fight. He didn't want to be a complete peacenik on that. And I think he also does reflect the view of serious analysts on this that more troops are needed.

I agree with Charles. He is going to have to be willing to do it all by ourselves. He is not going to get the help from Europe that I think he would like.

I think the question is a practical one. When are these troops going to be available to be moved in there? He has to get them from somewhere. He is either going to have to pull them out of Iraq--and if we need many thousands of them or two or three brigades, they may not be ready until early summer. And that might not be early enough.

HUME: That seems to me to give him more running room, doesn't it? More room to consider his policy, or maybe reconsider it?

LIASSON: Yes. I think on this one he will really follow Petraeus's lead on that.

KRAUTHAMMER: And also because of a rapid withdrawal out of Iraq would jeopardize the success that actually appears on the horizon.

It's ironic that Democrats have attacked the Bush administration for abandoning Afghanistan early and jeopardizing success. Obama could end up doing exactly that in Iraq, with terrible results.

HUME: That is it for the panel.

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