This is a rush transcript of "Special Report With Bret Baier" from February 24, 2009. This copy may not be in its final form and may be updated.


ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: If we're going to have this mar ket grow again and get this economy moving for people, we're going to have to cut this deficit, because the government is borrowing money to spend on needs like Iraq that is crowding out the same amount of money that could be going to small businesses to create those jobs.

That's what the president is going to talk about. That's why he has a goal of slashing our deficit.

SENATE MINORITY LEADER MITCH MCCONNELL, R-KY.: A way of looking at it is we have spent more in the first 23 or 24 days of this administration — in other words, charged more — than it cost, post 9/11, for the war in Afghanistan, the war in Iraq and the response to Katrina already.


BRET BAIER, HOST: Some thoughts about the president's speech tonight, the address to the joint session of Congress. Some analytical observations from Juan Williams, senior correspondent of National Public Radio, Nina Easton, Washington bureau chief of Fortune Magazine, and syndicated columnist Charles Krauthammer — FOX News contributors all.

Juan, your thoughts about heading into this speech — what does the president need to lay out? What will he lay out?

JUAN WILLIAMS, SENIOR CORRESPONDENT, NATIONAL PUBLIC RADIO: I think he is going to change his tone a little bit from what we have been hearing in the past. I think the message has gotten through that he had been a little bit too apocalyptic in his descriptions of the American economy.

So what you're going to hear is a president, and this is what White House people were saying today as they had folks like me over, is he's going to talk about the fundamental sprints of the American economy and the American nation, and say this is a thing that we are going to work through and it has an end in sight.

So I think what you're going to hear is basic steps that we can take. Yes, people may be angry, especially angry at the banks and Wall Street. But it's not an opportunity to govern out of anger or punish anybody. There are steps that have to be taken, including helping the banks, in order to unlock credit.

So it is going to be a basic step-by-step, not a lot of rhetoric, beautiful language or anything like that, Bret, but more basics, to say, you know what, here is an accessible way for you to understand what I'm trying to do to help this country move forward.

BAIER: Nina?

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: I think it will be a reminder to all of us of the breathless ambition of this president.

When you think about it and you step back, he has already passed the $780 billion stimulus plan, this bank rescue plan that is quite ambitious, and this $275 billion foreclosure plan, all in the space of a month. But if you go in the White House, he's got teams working on an energy plan to make this country energy independent, and a healthcare plan, and plans to cut the deficit, and entitlement reform. And they are serious about all of this.

And so if you think that he's just going to put this stuff to the side while this other stuff works its way into the economy — it was interesting, Gibbs saying earlier, "We're going to show you what it would take to get America back to work." Well, if you thought he has already taken the steps to get America back to work, there is a lot more coming.

And I think that's going to be a reminder tonight.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I agree. And I think what he's going to say is that all the agendas he has have to be advanced at once because they all depend on each other. Now, that, actually, is not true, but I think he actually has an ambition to get it all done this year.

Look, this is a president who thinks of himself as an FDR, a revolutionary, or, as he would say, a consequential president like Reagan rather than a Clinton.

And he sees his impact is going to be in three areas, what he really cares about. He wants to be to universal health care what Johnson was to Medicare. He wants to be to a new government-controlled or guided green energy economy what Kennedy was to the space program.

On education, his goals are a little more fuzzy, but he wants a lot more government control and spending. And you saw all of these elements in the stimulus.

The non-stimulus element in the plan are the expansions of the government precisely in health care, in energy, and in education as a way to get a foot in the door and start a revolution.

The speech tonight is a way to get the momentum for all of these agendas, because he sees himself as doing all this. And the reason he wants it all in one year is not because they all depend on each other. It is because he will never be as strong as he is now.

He will never have the mandate he has now. He will never have the popularity or the support in the Congress. And he will never have the idea of a crisis scaring Americans in order to rally them behind his agenda.

BAIER: I had lunch with the president and senior officials at the White House today. I was struck by a couple of things. One was his confidence heading into this speech despite the economic environment.

Two, a sensitivity to taking on too much too fast, because Congress can't digest it all, according to officials there.

And, three, that they have not ruled out this nationalization of banks in some way, shape or form, that the administration has not taken that off the table.

Nina, are we going to hear that tonight?

EASTON: He may speak to that. But in fairness to the president, this idea of, quote, "nationalizing the banks," which is to some extent is really just taking common shares in banks as opposed to preferred shares, it's something that banks came to him asking. This isn't something they dreamed up.

I mean, these are the major banks. Not a lot of the small and middle banks were doing just fine, thank you, but some of the big major banks who pose a systemic risk to the economy coming and saying we need even more. Buy common shares. Have the government have a major stake, ownership stake in our companies. That's the only way we can succeed.

BAIER: All right. So that's a preview of the substance of tonight's speech. But what will the tone of the message be? Will it be hope or fear?


PRESIDENT BARACK OBAMA: If we do not act, a bad situation will become dramatically worse. Crisis could turn into a catastrophe for families and businesses across the country.


BAIER: The panel shares its thoughts when we return.



FORMER U.S. PRESIDENT BILL CLINTON: I'm glad he shot straight with us. I just want the American people to know that he's confident that we are going to get out of this, and he feels good about the long run.

GIBBS: This president doesn't need a lecture about how we've done that before, we'll do that again. We understand there are brighter days ahead.


BAIER: Some of the talk about the tone of this speech tonight, whether it will be optimistic.

Here is an excerpt from the speech we have been given by the White House. Quote: "What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more."

We're back with the panel. Charles, is this a much more optimistic tone, you think, from the president?

KRAUTHAMMER: I think the president has discovered after a year of having used it well that hope is rather overrated, and that fear, when you're in the White House, is rather useful.

He has done well with fear. In fact, he has dabbled in fear itself when he talked about if we don't do what I say, this crisis could end up being one from which we do not get out. He said that more than once, which is scary.

Look, to give him his due, this is a crisis, and he knows it's bad, and he doesn't want to do happy talk. On the other hand, he knows how to use fear as a way to rally the country, and that's how he got his stimulus.

And I think what he also understands is that he will be required in his speech to have the hopeful note, and I assure you that at the end, you will hear about the sunny uplands of the future that we are approaching, or some such, and he may be able to fake sincerity. I think he probably will, but you will know he doesn't really mean it — a, we're in a crisis, and b, he wants to use this.

Look, he said early on after his election, as did Rahm Emanuel, that crisis is also opportunity. He knows that because of the crisis and the fear, he can do the stuff the way FDR did to change America in a way that you could not in normal circumstances.

BAIER: Nina, Gallup has a new poll out, a daily tracking poll, the presidential job approval, and it is at 59 percent, down from 68 percent — disapprove, 25 percent.

EASTON: Still pretty high.

BAIER: Pretty high.

EASTON: But, look, I think he has to walk a different line than he did a few weeks ago when he had to use fear to get his packages through.

But he does have to walk this line where he can't be George W. Bush, who was insisting that the fundamentals of the economy are sound, or John McCain, who followed with the same kind of talk, nor, by the way, Jimmy Carter in the last State of the Union, who said we were moving in economic recovery. Look how wrong that proved to be.

But the fact of the matter is, to use the old Pottery Barn rule, he didn't break this economy, but he does own it now to a large extent, now that he has passed the economic stimulus, now with the TARP, and with the foreclosure plan —

BAIER: So it's his economy now?

EASTON: It's not completely his. I'll be interested to see whether he uses the world "inherit," whether he inherited this economy. But now he has a stake in this economy turning around. He has a stake in these programs working. So I think he has an interest in talking up the economy.

And, by the way, on those polls, in those polls he is getting a lot of support from the public, but the market hasn't reacted very well. In fact, the DOW has dropped about a thousand points since he came into office. So he has another constituency that he needs to speak to tonight.

BAIER: And I'm sure you wouldn't be surprised to know that the administration doesn't tie his words to what the market is doing. They dispute that heartily.

WILLIAMS: They dispute it, but they say they don't watch the markets. And they have various audiences. They have the public, government officials, plus the markets.

What's interesting at this point is that when you see a dip in terms of his numbers, the dip is coming in terms of Republican support. Republican support for Obama since he took office has gone down about 25 points.

It has not shifted in his Democratic base, and, what is really important to the political folks at the White House is it has not shifted in terms of the independent voters.

So going out of this speech, they know there is going to be bad news Thursday when they announce the budget, because there will be some cuts in there that are not going to be popular. But looking forward, President Obama is going to be there for some ribbon cuttings when these projects that in the stimulus package get going.

Also, many Americans' paychecks will have more money in them come April. And they think that's going to be another boost for Obama going forward.

So they think that going forward, as long as people see some forward motion, that President Obama can keep those numbers up going into the fall.

BAIER: What about the optics of this speech? It's not technically a State of the Union, but basically it is that, an address to the joint session. We are going to see the different sides standing up and cheering in a less bipartisan fashion, Charles?

KRAUTHAMMER: No, of course not. Everything stays the same in Washington, and people will ostentatiously sit on their hands on the Republican side and make a point at certain points.

But, of course, when he does invoke the sunny uplands of our future, everyone will stand up and applaud, and some will have moist eyes at the same time.

EASTON: And also when he talks about fiscal responsibility and cutting the deficit, which are going to be parts of the speech tonight, he will get the Republicans applauding him.

WILLIAMS: Charles, moist eyes. Are you going to cry? Oh Charles, you touch my heart, Charles!

BAIER: He didn't say he was one of them.

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