This is a rush transcript of "Special Report With Brit Hume" from January 12, 2009. This copy may not be in its final form and may be updated.


PRESIDENT BUSH: In terms of the decisions that I have made to protect the ho meland, I wouldn't worry about popularity. What I would worry about is the constitution of the United States, and putting plans in place that makes it easier to find out what the enemy is thinking. Because all these debates will matter not if there is another attack on the homeland. The question won 't be, you know, were you critical of this plan or not? The question will be why didn't you do something?


BRET BAIER, HOST: Well, President Bush at the White House today, calling it the "ultimate exit interview," likely his final news conference with White House reporters. Some analytical observations from Fred Barnes, executive editor of The Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer — FOX News contributors all.

Your thoughts, Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, I thought he displayed his usual equanimity, and also generosity of spirit.

He is a man who is not at all tortured by his years in office. He wasn't speaking with any of the paintings in the White House, obviously, the way Nixon was reputed to have done at end of his term.

I think history will look at him, and I think he sees himself as a Truman president, one who left office — Truman was scorned, excoriated, very low popularity, also in the middle of an unpopular war. But history has a different judgment. He is the man who put in place all of the structures and the sinews of the Cold War, which 40 years later we won.

That's what the Bush knows he did. He didn't only keep us safe, a seven year accomplishment, he put in place the institutions that he thinks will keep us, in the war on terror, on the winning side, and ultimately history will judge him as the man who allowed us to achieve a victory. And I think that's why he leaves with equanimity, despite the fact that now he leaves with record low popularity.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I thought he was pretty candid and reflective. And he mentioned three things that, as he said, didn't go according to plan — Abu Ghraib, Katrina, and weapons of mass destruction, so I think he was pretty candid on that.

The problem for Bush is that he is giving a series of these exit interviews and this press conference. He will speak to the nation on Thursday. It is just going to take a long time before history renders its final judgment on him.

We will have to see if the success in Iraq holds, assuming that Obama will build on it, which I think he will, and to see if the record of keeping America safe from attacks continues.

BAIER: Fred?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: I thought that the lunch that Bill Kristol and I had with President Bush about a week ago was the ultimate exit interview.

LIASSON: Little do you know.

BARNES: I guess not.

And the truth is he was relaxed there. We talked about all kinds of subjects — books that he has read, and so on. And I discovered later that both he and Cheney have read "Tried by War," the James McPhearson book about the way Abraham Lincoln dealt with his generals during the Civil War, a great book.

The president, I think, I agree with Charles. I think he will have a Truman-like recovery among historians. And who knows? It could be 10, 20, 30 years.

I wrote a piece for The Weekly Standard this week about Bush's ten achievements that Bush has made. I have gotten so many e-mails from people, all of whom saying "You left this out and you left that out and you left this other one out."

I think Bush has a much stronger record than he is given credit for because the political community and the press, all they regard as important, really, is popularity.

LIASSON: Well, and the economy, come on. He is leaving with the worst economic crisis since the Great Depression, and it happened on his watch. There are other reasons.

BARNES: Yes, I know. But historians will be able to look back and see that while there were things President Bush could have done, it is in part his fault, but not in the largest part.

KRAUTHAMMER: And, also, on the economy, history will judge whether the year of the crisis, '08, in which he and Paulson and Bernanke trying everything, threw a lot of money at the problem, ultimately saved our system.

The banks were teetering. Credit was disappearing. It looked as if we were really going to have a collapse and catastrophe, and he averted that.

So he will get the blame for the occurrence of the crisis, but he may get a lot of the credit for having saved us at a time of real imminent disaster.

BAIER: He talked about a number of mistakes. He mentioned that it was clearly a mistake to put "Mission Accomplished" on an aircraft scarier when he was delivering that speech. There you see the picture. He said it sent the wrong message. We were trying to say something different, but it conveyed a different message. He said that was a mistake.

He also said that he thought long and hard about Katrina and whether to land Air Force I in either Baton Rouge or New Orleans, and he said he didn't think that would have been a good idea looking back, and defended federal response to that storm.

BARNES: It would have been a good idea to land. That's what presidents do. They have to go. If it inconveniences a few state cops, that's fine. Presidents need to be there.

We know that now. It's demanded, one, by the media, and, I think, two, by most people. A president has to do that. Bill Clinton certainly knew that. His father went out to — after the Rodney King riots in L.A., his father, when he was president, went out there a couple of days later, and flew right over. He should have done that.

He was wrong about another thing, too, and that is saying "I should have done immigration reform first in my second term and not Social Security." Look, the Social Security reform is something he campaigned on. He didn't get anywhere with it, but he laid down some markers.

Immigration reform wouldn't have helped. It wasn't going anywhere either.

BAIER: Mara, what about that.

LIASSON: I agree with that. He is on the money on one thing about immigration reform. And he did talk about the future of the Republican Party. The Republican Party was on the wrong side of immigration reform.

I'm not saying he would have succeed if he had done it in a different order, but he understood the importance of Hispanics as part of a broad governing coalition and a majority coalition, and he knows that the Republican Party has to get right on that if they are going to succeed in the future.

BAIER: Mr. Bush's successor wants to get the second half of the bailout money now in the pipeline. We'll talk about that with the panel when we come back.



PRESIDENT-ELECT BARACK OBAMA: Today I called President Bush to trigger the second half of what is known as the TARP program.

I felt that it would irresponsible for me with the first $350 billion already spent to enter into the administration without any potential ammunition should there be some sort of emergency or weakening of the financial systems.

SEN. DIANNE FEINSTEIN, D-CALIF.: I probably will not vote for the additional $350 billion unless something comes up to really change my mind.


BAIER: There you see President-elect Obama today saying that he has asked the Bush White House to ask Congress for the second half of the $700 billion rescue package, which the Bush White House has done tonight.

And you also will see California Senator Dianne Feinstein saying she has a problem. She doesn't want to vote for it.

We're back with the panel. Fred, is there a problem on the second half of this $700 billion?

BARNES: I think there is. It's significant that Dianne Feinstein's a Democrat, because I think most of the Democrats in the Senate will be for it. But there are a lot of Republicans against it. And they start with this argument. They say, look, we had last year, 2008, $150 billion stimulus. Then we had the $350 billion of TARP. That's $500 billion.

And while, as Charles said in the earlier segment, you could argue that things could have been worse if we hadn't spent that money. It may have prevented a financial catastrophe, it certainly hasn't spruced up the economy at all. It has been utterly unstimulative, and that's $500 billion.

Now they want another $350 billion in TARP, which is supposed to help the financial system, and then they are going to want another $800 billion to $1 trillion plus in a stimulus package.

I don't think they've made a case for actually either of those big numbers in either of those cases. My friend Dave Schmidt, who is an expert on the global financial system says, look, the banks now, their balance sheets are bubbling over with money. They have something like $800 billion in their reserves. They can loan, then can lend money.

I mean, look, they don't have to lend money to people who aren't going to pay it back, but they're not lending to anybody. They're just waiting around.

And he says, and I think he makes a pretty good case for this in a piece in The Washington Post today, for Obama to do something. This is a political problem for Obama and for the banks. Obama needs to jawbone. He needs to get the bankers to explain why they aren't lending. But they have the money, and it's not being lent.

LIASSON: And, look, the TARP comes with strings attached. One of the things could be you have to return it if you don't lend it. There are all sorts of ways congress could structure this.

Obama can and the Democrats can pass an $800 billion stimulus package every two years from now ad infinitum, and it's not going to help the economy if they don't get this other part right.

TARP is what is supposed to get the economy actually working again and credit flowing again. And although it has stabilized the system, it hasn't gotten it working again. And, as Fred said, they're not lending money.

The way the Democrats want to restructure TARO is to make sure this goes not just to banks but to people who want car loans and student loans and home loans, and I think they will alter it. But TARP is almost more important than what the stimulus may do.

BAIER: And to that end, Congressman Barney Frank has introduced legislation to put more strings on the remaining $350 billion — Charles?

KRAUTHAMMER: Which is why I think in the end it will pass. I think the Obama administration and the Democrats in Congress will agree on strings, and that will make it acceptable.

But I think you have to separate two issues — recession and collapse. The TARP was not going to save us and eliminate a recession. Its functional was to save the banks. In the middle of last year the banks were teetering. We were going to lose Merrill Lynch, we were going to lose Bank of America, we were going to lose everything.

And without the banking system and credit, we were going to have a collapse of our economy unlike any we have ever seen.

So TARP isn't a goal. It was a save. It saved — the first half of it saved our banks. The second half — I think Democrats will insist instead of recapitalizing the banks, it will be spent at the bottom of the pyramid.

It will help the mortgage holder. It will help with student loans, and it will help auto loans. It is going to go into the real economy and save the banking system, increase our credit at the bottom, which I think is a good way to do it — half of it on the banks and half of it, in the Obama administration, at the bottom.

But it will not end our recession. Our recession will have to end in other ways. And it was never intended. The recession is a side effect of the banking collapse. It's not responsible for it.

BAIER: Is the Obama administration going to fall victim to bailout fatigue?

BARNES: Well, they don't appear to be.

BAIER: On Capitol Hill?

BARNES: Capitol Hill might, but, you know, when you get up into the trillions and trillions, it's a lot of money.

Look, Obama — and so much of this money is being spent in such conventional ways. Where is the boldness? Where is the change? I don't see any of that coming from Obama.

BAIER: That's it for the panel.

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