This is a rush transcript of "Special Report With Brit Hume" from December 19, 2008. This copy may not be in its final form and may be updated.


GEORGE W. BUSH, U.S. PRESIDENT: If a company fails to come up with a viable plan by March 31, it will be required to repay its federal loans.

The automakers and unions must understand what is at stake and make hard decisions necessary to reform. These conditions send a clear message to everyone involved in the future of American auto makers.

PRESIDE NT-ELECT BARACK OBAMA: The auto companies must not squander this chance to reform bad management practices and begin the long term restructuring that is absolutely necessary to save this critical industry and the millions of American jobs that depend on it.


BRET BAIER, GUEST HOST: Well, $17.4 billion in loans to the automakers. GM and Chrysler are taking part. Ford says it is not going to take part at this time-$13.4 billion at first, $4 billion available in February, all coming from the $700 billion rescue package.

You heard the president and the president-elect talking about it. President-elect Obama puts the emphasis on bad management and not costly contracts from labor.

We did get a reaction from the UAW today. Ron Gettelfinger, the UAW President, said this: "While we appreciate that President Bush has taken the emergency action needed to help America's auto companies weather the current financial crisis, we are disappointed that he has added unfair conditions singling out workers.

We will work with the Obama administration and the new congress to ensure that these unfair conditions are removed."

So what about all of this and the conditions? Some analytical observations from Fred Barnes, executive editor of The Weekly Standard; Mort Kondracke, executive editor of Roll Call, and syndicated columnist Charles Krauthammer -- FOX News contributors all.

Mort, are there unfair conditions tied to these loans?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: I do not think they are unfair conditions.

What they require is that the wages and benefits of UAW workers be matched to those of foreign transplants that operate in the United States by the end of next year.

So this is-and there has been this argument, does a UAW worker makes $75 an hour where as the transplants make only $48 an hour? No. So the difference between them that has to be adjusted is not that great. It's about $10 an hour that the UAW would have to take a haircut on.

This is a marker that the unions are laying down to the Obama administration and to the Democratic Congress, because they, after all, are the ones that will have to carry this out. George Bush has basically kicked this can down the road into the Obama administration.

And Gettelfinger is saying we do not like this. You save us from this requirement.

BAIER: Fred, Senator Richard Shelby, Republican from Alabama, said this: "Instead of pursuing the more responsible course to ensure that these companies restructure through Chapter 11 bankruptcy, the President chose to stick the taxpayer with the tab as he walks out the door.

I believe it is a shameful attempt by the president to protect his own legacy. The taxpayer will surely remember him for it."

He is not alone in this criticism.

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: He is just against any kind of bailout for the Big Three auto companies.

But the president really had an opportunity here to force the auto companies and the UAW to make reforms that would actually lead, as everybody know, to making them viable companies. And he blew it. The president did not do it.

And here's the difference -- there are conditions, and then there are targets. And all the stuff that matters, there are all targets. Mort said that it was required that they do this wage compromise by the end of next year. No they're not. That's just a target. Targets are easy to miss.

And the stuff about getting rid of so much of this unsustainable debt that the auto companies have? That's a target.

Getting the work rules of Detroit to match those of the transplants in the sought, that's a target.

We know what needs to be done, and there is no reason why the president couldn't have said, "You are going to get this money, but you have to do this."

And the White House's excuse was the auto companies need flexibility. That's all they've had for decades now. And look where it's led them.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: At this point the president really had no choice because he had no leverage.

He has got a month to go, yet already signaled ahead of time that he was not going to allow the companies to collapse. He was not going to allow a Christmas destruction of American autos with all of the subsequent economic ripples.

So once that was known, the UAW had the upper hand, and it was not going to make concessions. That's why the Senate Corker amendment, which would have imposed the reduction in wages and the work rules of the UAW did not succeed. The UAW opposed it, knowing there would be a bailout and not a bankruptcy.

So once that was signaled, there was no way the administration with a month to go was going to negotiate with the bondholders and the dealers and the unions any new contract. So it had to be done.

However, I think the real issue here is, ironically, had the Senate agreed to weaker provisions, it would have all come out of pre-appropriated money.

The problem here is that the administration is taking this money out of the TARP, which should have been only for the banks. And the problem is that it gives Obama and the Democrats, who are itching to inject the government into our economy in a way that's unheard of, it destroys and removes the last ideological barrier.

The Republicans intervened. And now instead of saying it is only for our banks, it is also for any industry, and the bidding is now starting.

BAIER: And Secretary Paulson says he needs Congress to unfreeze the second half, the $350 billion.

Coming up, we'll find out what the panel thought Governor Rod Blagojevich's defiant statement when we come back.



GOV. ROD BLAGOJEVICH, D-ILL.: I'm here to tell you right off the bat that I am not guilty of any criminal wrongdoing, that I intend to stay on the job and I will fight this thing every step of the way.

I will fight, I will fight, I will fight until I take my last breath.

Now, I know there are some powerful forces arrayed against me. It's kind of lonely right now. But I have on my side the most powerful ally there is, and it's the truth.

And, besides, I have the personal knowledge that I have not done anything wrong.


BAIER: A defiant Illinois governor, Rod Blagojevich -- what a political drama in Chicago. Let's bring back the panel -- Charles?

KRAUTHAMMER: And what a gift.

I find it hard to be indignant about this guy staying in office. He is the gift that keeps on giving. This is a guy who is deeply corrupt, stupid, unrepentant, profane and defiant. What an incredible combination.

People are talking about him being a distraction to the Obama campaign. He is an American distraction. At a time of zero interest rates, of collapsing auto companies and the gloom and doom, we need this kind of distraction.

I know the collateral damage -- Illinois will be ungoverned and it will be lacking a Senator. But, look, in the name of entertainment, I'm in favor of him staying in office, at least through his impeachment.

BAIER: Mort, he hasn't been indicted. But he challenged U.S. Attorney Patrick Fitzgerald -- essentially, bring forward what you have.

KONDRACKE: Yes. And the Illinois legislature also wants to see what Patrick Fitzgerald has.

And, apparently, beyond the initial case against him with trying to sell the Senate seat and all of that, there is a lot more to come. I mean, everything expects Blagojevich to be indicted.

But this impeachment is going to take forever. And it looks as though Illinois is going to be without a senator as long as it takes to get Blagojevich out of there, which means there ought to be a drum beat in Illinois right now from the newspapers and everybody else to have that special election.

And the Democrats are scared to death of a special election, because all this corruption oozing out, and dribbling out, and now cascading out of the governor's office might elect a Republican. And they are terrified of that.

BAIER: Fred?

BARNES: How about flooding out.

KRAUTHAMMER: It's gushing out, actually.

BARNES: Gushing out -- very good, Charles.

I'll have to say, on the question of whether Blagojevich should resign or not, I'm 100 percent behind him. There is no reason why he should resign. Right now he was a winnable case in court. I'm sure his lawyers are telling him that.

Look, I'm not defending him as being incorruptible leader, far from it. But the motives of Democrats are really crass. For one thing, if this is where Republicans were trying to impeach him or something, Democrats would be all indignant about it, he is innocent until proven guilty, and so on.

Their fear is, one, what Mort said, that it will drag out and they may have to have a special election that a Republican might win, and Blagojevich, the longer he's there, and this is a huge national story, a real American drama that hurts the brand of the Democratic Party.

BAIER: And at the end of the news conference, his attorney said if the people of Illinois suffer, he will step aside.

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