This is a rush transcript of "Special Report With Bret Baier" from April 1, 2009. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: We passed through an era of profound irresponsibility. Now we cannot afford half-measures, and we cannot go back to the kind of risk-taking that leads to bubbles that inevitably bust.

So we have a choice. We can shape our future or let events shape it for us.

BRITISH PRIME MINISTER GORDON BROWN: The truth is that today' s global problems require global solutions. This summit cannot simply agree to the lowest common denominator. We must stand united in our determination to do whatever is necessary.


BRET BAIER, HOST: The G20 summit in London has begun with a dinner this evening and President Obama speaking with the prime minister of Great Britain today.

Let's bring in our panel about this: Fred Barnes, executive editor of The Weekly Standard; Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Charles, you listened to the president and the prime minister today, and saw the events the events, the meetings with Russia and China. Your thoughts?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The important meeting was with China to set up what will essentially be a G2 — ongoing meetings between the leaders of the two largest national economies in the world. That's important.

What I was struck by, however, was what came out of the meeting with the Russians, where Obama persisted in his habit — which is incessant — of denigrating American foreign policy before him, when he said that for the last several years relations between Russia and the United States have been allowed to "drift." That's how he put it.

Drift? Russia invaded Georgia. Russia threatened to put missiles in Europe to threaten our allies, the Poles and the Czechs. Russia gave a bribe — $2 billion worth — to Kyrgyzstan to kick us out of our air base in Manas, which has injured our war effort in Afghanistan.

The idea that somehow there was an evenhanded neglect of relations or we're equally responsible is simply not so. And if he didn't want to blame the Russians — it's their aggressiveness that's the reason for the coldness in our relations — if he didn't want to say that openly in his meeting, he should have said nothing.

It is not a good idea. He's the president of the United States. He owns American history and if he won't defend it, he out to at least not denigrate it in public and give our adversaries ammunition in attacking us.

BAIER: Mara?

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Look, I think that the meeting with, Russia which has now restarting these START negotiations around nuclear weapons, is something that could be an important thing down the road.

But the real goal is to get Russia to work with us on Iran and stopping Iran from having a nuclear weapons program.

Now, after the meeting, they did come out with some vague language about that, that Russia wants to make sure that Iran's program is only for civilian use.

But I think that will be the real test of Obama's leadership. He says he wants to push the reset button. He certainly has done that in tone and rhetoric and making nice to the Russians, I guess.

But the real question is, what is he going to actually get out of this that's in the United States' interest? And I think Iran is the big test, and so far we haven't seen results yet from this summit on that.

BAIER: Fred?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: The grounds on which he said he was resetting relations between the United States and Russia was that there are new leaders in Russia. I don't know who they are. You still have Putin. You have the president, the guy he met today. They're not new leaders.

And we have the same problems that the Russians just don't agree with the U.S. about. They don't want to help with the Iranians. And there are lots of other things they don't want to do and the START talks.

Look, the truth is that missiles, American and Russian missiles don't matter anymore. We're not fighting each other. The Cold War is over. We're not enemies. We may not be very friendly, but we're not enemies.

The China, as Charles said, was everything. The G2 matters. The Chinese are legitimately worried that all the dollars they are investing in Treasury Bonds will be inflated and when they cash in their bonds, they will get a depreciated dollar and they will lose money.

And Obama has to give them some reassurances and of course he wants China to save less and spend more and help stimulate the economy in the world as the U.S. is doing.

So, look, China and the U.S. matter. The others, "the G18," they don't matter much, because they can't decide on anything anyway.

BAIER: Mara, what about the tone the president took today. He said "I'm here to listen." He used a couple of terms that at least perked some people back in Washington's ears.

And what about his approach to this G20 summit?

LIASSON: I think his approach, as he said, he was going over there to listen as well as lead. And he did a lot of self-criticism, I guess you would call it, of the United States can't be back going to this boom and bust economy, that we have to be held accountable.

We certainly have some things to account for, the fact that we were, at least in Europe's eyes, the perpetrators, the originators of this global financial crisis.

But, look, I wanted to say one more thing about China, because inflation is a slow motion default. And that is what the Chinese are worried about.

But they have a way to counteract that. They can just raise the price that they're going to charge us for financing our debt. And Obama has to not just reassure them, which he did in these meetings today, that, yes, of course we're going to get our deficit under control. He has to actually do something.

He has to actually cut the deficit, which is going to be incredibly hard.

BAIER: Charles?

KRAUTHAMMER: Look, I think he's saying we're here to listen and the criticism of the past is not a way to be self-critical. It a way to preen himself and to say "I'm different. I'm a new American. I'm unlike the Bush administration. I'm not a guy who dictates" — as he indicated in his speech on Al Arabiya — dictates to the rest of the world.

That's not a way to talk about your own country.

BAIER: Back here at home, some say the too close to call special election in New York's 20th Congressional District is a referendum on President Obama. The panel votes on that premise after the break.



JAMES TEDISCO, R-N.Y., U.S. HOUSE CANDIDATE: I believe that when the smoke clears, we will have won a tremendous victory.

We have looked at the numbers and we have more of our affiliation in conservative ballots, so we think we can win it.

SCOTT MURPHY, D-N.Y., U.S. HOUSE CANDIDATE: The amount of energy that people put out this weekend, getting the vote out, it is incredible. And look at the total. Every minute counted. Thank you so much.


BAIER: It's too close to call after the special election in New York's Congressional District 20. The spread right now is 25 votes. Democrat Scott Murphy leads GOP State Assembly Leader Jim Tedisco. And the full count won't happen until April 13, when the absentee ballots are added up.

We're back with the panel. Mara, this was billed as a big election, a referendum on President Obama.

LIASSON: There are so few special elections, it's very important that we overweight them with as much importance as we can load onto them.

This was not a referendum on President Obama, despite the fact that the national political class might have wanted to make it that.

This was a district that was traditionally Republican, but for the last two cycles, Kristen Gillibrand has held it before she got appointed to Hillary Clinton's Senate seat. And there are about 70,000 more registered Republicans there than Democrats.

Although Republicans in New York are kind of a dwindling breed and you could say this is a district that has been trending blue.

That being said, the thing that I found most interesting about this race, you have got a pro-business Republican running an anti-Wall Street campaign against this very rich venture capitalist, the Democrat Scott Murphy.

He took advantage of the AIG bonus issue. He slammed him for being a venture capitalist who approved bonuses like this. And in the end, it was a real squeaker.

I will be very surprised if the absentee ballots and the military ballots don't give the Republicans the edge here.

BAIER: Charles?

KRAUTHAMMER: You can spin this every which way. And I agree, it...

BAIER: And they've tried to on both sides.

KRAUTHAMMER: And it will be over-spun because it's all we have. So we're going to have to go with it.

But I look at it a little more simply. I'm no Richard Feynman, but I can do elementary arithmetic. Five months ago the Democrats won this seat with 62 percent. Last night it was a split 50-50. That's a 12 percent drop in less than half a year.

And I think it's explained by the fact, among other things, that the magical mystery tour of Obama is over and that charismatic era is done.

And now what he is, still popular. He is on his honeymoon. It's very early in the administration. You would not expect at day 72 a repudiation of his administration. It's a little early to declare a presidency failed, although I would like to do it. But it's not reflected in this election.

He is still popular, and that's why I think he has got — his candidate is slightly ahead.

The Republicans I think could look at this and say that given the fact that they had been crushed here in the last election, it's an improvement and it shows it even only two months out. The sheen and the glow of the presidency has worn off.

BAIER: Fred?

BARNES: It's worn off, but the backlash hasn't set in. There isn't one. I think there will be one if the economy doesn't improve by the fall, or something like that, maybe even sooner. But there isn't one now.

And it's a district that, as Mara said, has been historically Republican, except for the last two elections. I think the election that's more reflective is the 2006 election — terrible Republican year and Gillibrand won by six points, 53 to 47.

She ran as an incumbent in 2008 in a very good Democratic year, and obviously won in a landslide.

Special elections can be very indicative of what's coming up. I'm old enough to remember the ones in 1993 and 1994, which really did foreshadow — Republicans were winning in all kinds of Democratic districts, and, obviously, they won a sweep, a landslide in 1994 in that election.

And then there were some Republican districts going Democratic before 2006 in special elections and before 2008. This one doesn't seem to indicate anything.

BAIER: Down the road, who wins here?

BARNES: My understanding is, partly from talking to Mara, is that there are more Republican absentee ballots out there, which would lead to you believe there may be more Republican votes among them.

LIASSON: I think he pulls it out.

KRAUTHAMMER: The Republican hack wins it.

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