This is a rush transcript of "Special Report With Brit Hume" from January 5, 2009. This copy may not be in its final form and may be updated.


GOV. BILL RICHARDSON, D-N.M., FORMER COMMERCE SECRETARY-DESIGNATE: It was my idea to withdraw. I withdraw because I felt that I didn't want a possible inquiry going on to delay the enormous progress we need to rebuild this economy.

ROLAND BURRIS, U.S. SENATE APPOINTEE: This is all politics and theatre. But I am the junior senator according to every law book in the nation.

SENATE MAJORITY LEADER HENRY REID, D-NEV.: Roland Burris has not been certified by the state of Illinois. When that takes place, we will, of course, review it.


BRET BAIER, HOST: Potential headaches for the incoming Obama administration. First you saw New Mexico Governor Bill Richardson, who withdrew his nomination for commerce secretary because of an ongoing probe by the FBI.

Then you saw Roland Burris, the former Illinois attorney general who was appointed to fill the seat left opened by the incoming president, and now there are questions whether he will be seated in the Senate.

And, finally, a new development today — Leon Panetta has been named to be the head of the CIA under the Obama administration. He has to get approved first, but it is raising some eyebrows on Capitol Hill, even among Democrats — potential headaches.

Some analytical observations now from Mort Kondracke, executive editor of Roll Call, Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer — FOX News contributors all.

Mort, let's start with Roland Burris. Tomorrow the senators will be sworn in on Capitol Hill. The question is, will Democrats seat Roland Burris, who has been appointed by Illinois governor Blagojevich.

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: If they have any brains, they he will.

Harry Reid and Dick Durbin are the keystone cops here. They have talked themselves into a no-win situation.

Roland Burris — look, there is a Supreme Court case on this, the Adam Clayton Powell case, in which the Supreme Court said that the only reason that you can deny someone a seat is if he is not a citizen, not a resident of the state, and is not of age. Those are the constitutional requirements.

They have no legal leg to stand on here. They made a political statement about Blagojevich, hoping to get Blagojevich out of — hoping to get Blagojevich out of Springfield, out of the state, so that they could get an appointee to their satisfaction.

And now Burris is here. There is not a signature from the secretary of state, but the secretary of state is required to certify. He doesn't have any choice in the matter.

So what are they going to do? They are going to deny the citizens of Illinois a Senate seat? They are going to deny themselves a Democratic vote for months and months until this is resolved? I mean, it is just stupid, and they ought to just back off and just seat him tomorrow.

BAIER: Mara, Blagojevich has not been indicted, as we know. In fact, the U.S. attorney, Fitzgerald, has now received 90 days from a judge to delay this indictment, potentially.

And you had, this weekend, Senate Majority Leader Reid saying there might be some negotiation. What do you think he meant by that?

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I think that the scenario Mort just painted might not happen at all. I think that the Senate Democrats would like to find a way to get out of the mess that they have created.

Now, one thing that Harry Reid suggested is he would be happy to seat Burris if Burris was not appointed by Blagojevich. So, maybe if the lieutenant governor became the governor and appointed Burris also, he would seat him that way.

Or, Burris, don't forget, is in court challenging the secretary of state's refusal to sign. He might win that.

I think that there is an interest in getting out of this mess.

BAIER: So, is this big political theater tomorrow?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, it will be interesting to see an African-American blocked from entry into the Senate. That will be a dramatic picture that I don't think Democrats want.

I think what might happen is the Jim Angle solution, where the lieutenant governor today announces in advance that if he ever becomes the governor, he would appoint Burris. And that would give the Democrats an excuse to say one way or the other he will be here, so we might as well preemptively accept him.


Mara, Richardson drops out as come commerce secretary. How big of a problem is this? This probe was known about since August.

LIASSON: This is a very puzzling thing. Obama's team has not made a single mistake. They have really been a very efficient, well-oiled machine on these appointments.

Either Richardson convinced the vetters that this was a smaller problem that it really turned out to be, and the FBI discovered that it was bigger when it started looking into this, or somehow somebody dropped the ball. I think this is a small headache. It is a black eye for them. But it is a headache averted because he's not going to be the nominee. He's not going to have to go through these confirmation hearings, where these problems are discussed. So I think they nipped that one in the bud.

I think in almost any administration there's kind of one bad appointment that gets through the process, and the real test for a president elect is how fast they pull the plug.

BAIER: Mort, they dropped the ball on the vetting?

KONDRACKE: Well, it looks like. Or there might have been new developments in the case, and there is some indication of that, that after the vetting that more serious charges arose, or more serious implications arose, about Richardson's involvement, and that that scotched the thing. But it doesn't look as though the vetters did a great job. I mean, this case was running.

BAIER: Finally, Charles, Leon Panetta, who is a former chief of staff for President Bill Clinton, and also a former chairman of the House Budget Committee, now being tapped to potentially head the CIA.

This is the reaction from Dianne Feinstein. "I was not informed about the selection of Leon Panetta to be the CIA director. I know nothing about this other than what I have read. My position has consistently been that I believe the agency is best served by having an intelligence professional in charge at this time."

She is the incoming head Chairman of the Senate Intelligence Committee.

KRAUTHAMMER: A strong letter to follow.

Look, this is somewhere between surprising and shocking. Choosing someone with no experience in intelligence to head CIA at a time of two wars, what we saw in India just a few weeks ago, bad guys out there trying to do collect weapons of mass destruction.

The reason this happened is because Obama has caved to his left. The left will not accept anybody who served in any way in the last eight years under the Bush administration because of the enhanced interrogation, the secret prison programs, and the eavesdropping programs.

That's why, for example, Jane Harmon, who is head of the House Intelligence Committee, who would be an excellent CIA director and the first woman, was nixed because she early on had approved of the listening in on terrorists abroad.

So he chose a novice. I think it's a mistake. I think he's going to get a lot of heat in the end. He'll pass because Panetta is known and liked. But you got a rookie as a president, a novice as head of the CIA in a time of war — not a good idea.

LIASSON: It is still surprising why they didn't let Dianne Feinstein know. That's a basic. That's nomination 101. That's very surprising.

BAIER: Last word for this panel.

But the first order of business for the president-elect, the economic stimulus package. We will discuss that topic with the panel when we come back.



PRESIDENT-ELECT BARACK OBAMA: It's clear that we have to act, and we have to act now to address this crisis and break the momentum of the recession, or the next few years could be dramatically worse.

SENATE MINORITY LEADER MITCH MCCONNELL, R-KY.: I'm convinced as a result of listening to the president-elect that is he interested in what Republican ideas might be offered to the stimulus package that we anticipate him unveiling in the next few days. We do have ideas.


BAIER: They do have ideas. The Senate Minority Leader saying today the number one idea, more tax cuts.

President-elect Obama up on Capitol Hill pushing this massive economic stimulus package. We're back with the panel. Charles, was it a successful day? Did he manage to, do you think, convince Republicans?

KRAUTHAMMER: I think it was a very smart political stroke. Look, Bernanke, the head of the Fed, once said the way to cure recessions is to drop dollars out of a helicopter. Attacking our recession can be done with spending or tax cuts, either way.

Democrats like both. The Republicans only like cuts. So by having a large percentage of this package, about a third of it or more, being in cuts, this is the way Obama is drawing in the Republicans. Why is that important? It isn't just that it creates an atmosphere of comity at the beginning, it's because it's going to be a long recovery. It's going to be slow. And the last index of recovery is unemployment. It could be at 10 percent in two years at the midterm election.

If you started entirely with Democratic votes, it means the Democrats will be blamed and attacked and could have a massacre in that election.

If he brings in the Republicans as he has, he is ecumenical, he brings them in, he protects himself in two years in what is going to be a very slow recovery.

LIASSON: And not to mention it's easier to get the 60 votes he needs in the Senate.

I think Obama has promised this post-partisan presidency. We don't really know what he means by that, but we're learning a little bit each day. And one of the things he has done is now give Republicans something that they want, which I think is a smart move.

And there are going to be a lot of other chances that he has to do things like this. He will have to make decisions on trade and card check, the Employee Free Choice Act.

But one this one, I think he did a smart thing. It will have Republicans buying into the process, and he needs that. This is exactly the opposite of what Bill Clinton did at the beginning to pass his own stimulus package, where he had to scrape and scramble for every Democratic vote.

BAIER: Mort, there is a little bit of semantics here. Some Republicans are out saying, listen, just like the campaign trail, that some of this is not tax cuts because you're giving it to people who don't pay income taxes.

So we're going to get some of this back and forth, right?

KONDRACKE: Yes. But $100 billion of the $300 billion apparently in tax cuts, or whatever you call them, is going to be business tax cuts, a third of the total of tax cuts. And the rest is going to be to put money into people's pockets.

Now, some of those people do not pay taxes, but, nonetheless, they are — the poor people and the people most likely to spend what they get. Middle class people are more likely to pay bills or save the money. So this is actually pretty smart, whether you call it a tax cut or not.

There's one other aspect to this. Not only is this smarter than what Bill Clinton did, by reaching out to the opposition party, it's smarter than what George Bush did. In 2000, Denny Hastert and Trent Lott, who were the Republican leaders of House and Senate, had to fly down to Crawford to see the incoming president, people of their own party.

In this case, Barack Obama goes up to Capitol Hill and has one meeting with the Democrats and another joint meeting with the Republicans. And Eric Cantor told Mara and me that he was just as tough in terms of the schedule of things on the Democrats as he was on the Republicans.

BAIER: We'll be talking about this much more.

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