This is a rush transcript of "Special Report With Bret Baier" from June 15, 2009. This copy may not be in its final form and may be updated.


IAN KELLY, STATE DEPARTMENT SPOKESMAN: The United States is closely watching e vents folding in Iran. We are deeply troubled by the reports of violence, arrests, and possible voting irregularities.

What we have seen so far is — gives us some very deep concerns.


BRET BAIER, "SPECIAL REPORT" HOST: That was the administration's take up until what we have just got word from President Obama in a meeting with the Italian Prime Minister Silvio Berlusconi. That tape is going to play out in just a matter of seconds, and you will see it live here on FOX News Channel.

All of this about the Iranian elections and the two men who were running for the Iranian presidency, current President Mahmoud Ahmadinejad up against the opposition leader premier Mir Hossein Mousavi.

And the government determined the election came out in favor of Ahmadinejad. However, Iran's supreme leader came out over the weekend saying they would look at this election again and investigate whether there have been, in fact, some indications of fraud in this election.

And you saw the protests there on the streets of Tehran as thousands of Iranians have hit the streets, and sometimes those protests have been violent.

We are going to introduce the panel, and we expect the president's statements any moment. Some analytical observations about all of this from Steve Hayes, senior writer for the "Weekly Standard," A.B. Stoddard, associate editor of "The Hill," and Mort Kondracke, executive editor of "Roll Call.

We understand that the president said it is wrong to stay silent on this issue. And he is very concerned about this situation. Again, we are under a minute here — Steve, your initial thoughts before we listen to the president.

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": I'm glad he decided, finally, that it's wrong to stay silent. He was silent through the week.

And I think the real concern that as we were these images on television and reading about the stories of these protestors, that the United States was, in fact, saying nothing about an election that was very clearly manipulated and stolen. So I think the silence was in that case deafening.

And we saw strong statements from the Canadians, from the Germans, the French condemned the quote, unquote, "brutal oppression." And the entire time, the United States didn't say anything.

So I think it's good that he is saying something, and it will be interesting to hear what he does say.


STODDARD: I think it's about time. I agree with Steve. I expected to hear something earlier, particularly given that speech in Cairo just days before this election.

I was surprised that the president didn't want to come out and condemn this violence and this suppression of electronic means of communication in the strongest terms. I will be interested to hear what he has to say.

BAIER: Mort?

MORT KONDRACKE, EXECUTIVE EDITOR, "ROLL CALL": Yes, I agree with that. He is tardy, clearly. As I understand what he's said, he is not really condemning the Iranian regime. He is not declaring that this was a fraudulent election. He is not saying they are out of line. He is not saying that they are violating human rights.

It is a rather tame statement by comparison to all those others that you cited.

BAIER: We are still a few moments away.

But when you look at the supreme leader, Khamenei, coming out and saying that there should be an investigation here, does anybody think that this is going to be overturned in Iran?

KONDRACKE: No. Look, we don't know whether this is going to be Tehran, 1979, where there was a revolution that overturned the Shah, or Tiananmen Square, 1989, where the regime cracked down and killed everybody who was getting out of line, or whether it's going to fizzle.

What Khamenei is trying to do is to make sure that it fizzles by giving the Mousavi forces some — a little bit of room to see that their objections are being met in part, hoping that they will go back to their homes.

But we don't know what will happen, whether they will have to crack down in a big way, or whether they will actually going to overthrow the government, which would be great if they did.

BAIER: Steve, one of the interesting things is you talked to the people on the ground there, and they say they hadn't seen those kinds of protests since 1979.

Some of the people were so afraid to be on the streets, they went out in the dark on the rooftops screaming, protesting this election.

Could this potentially lead to something, and should President Obama be really tapping into this protest?

HAYES: I think you talk to, you know, Iran experts, intelligence folks who have looked at the area, and they're still skeptical that the regime will not crack down and crack down hard, and ultimately prevail. But I think the things we have seen thus far suggest to me, anyway, that Iran is never likely to ever be the same. I mean, this is going to change Iran, I think, fundamentally going forward no matter what happens.

Some of the things that you have seen with Mousavi's wife talking about free speech —

BAIER: Excuse me, one second. President Obama with Prime Minister Silvio Berlusconi in the Oval Office, and the first question about Iran. Let's listen.

PRESIDENT BARACK OBAMA: And I want to start off by being very clear that it is up to Iranians to make decisions about who Iran's leaders will be, that we respect Iranian sovereignty, and want to avoid the United States being the issue inside of Iran, which sometimes the United States can be a handy political football, or discussions with the United States.

Having said all that, I am deeply troubled by the violence that I have been seeing on television. I think that the democratic process, free speech, the ability of people to peacefully dissent, all those are universal values and need to be respected.

And whenever I see violence perpetrated on people who are peacefully dissenting, and whenever the American people see that, I think they are rightfully troubled.

My understanding is that the Iranian government says that they are going to look into irregularities that have taken place. We weren't on the ground. We did not have observers there. We did not have international observers on hand. So I can't state definitively one way or another what happened with respect to the election.

But what I can say is that there appears to be a sense on the part of people who were so hopeful and so engaged and so committed to democracy who now feel betrayed.

And I think it's important that moving forward, whatever investigations take place are done in a way that is not resulting in bloodshed and is not resulting in people being stifled in expressing their views.

Now, with respect to the United States and our interactions with Iran, I have always believed that as odious as I consider some of President Ahmadinejad's statements, as deep as the differences that exist between the United States and Iran on a range of core issues, that the use of tough, hard-headed diplomacy, diplomacy with no illusions about Iran and the nature of the differences between our two countries, is critical when it comes to pursuing a course of our national security interests, specifically making sure that we are not seeing a nuclear arms race in the Middle East triggered by Iran obtaining a nuclear weapon, making sure that Iran is not exporting terrorist activity.

Those are core interests, not just to the United States, but, I think, to a peaceful world in general.

We will continue to pursue a tough, direct dialogue between our two countries, and we'll see where it takes us. But even as we do so, I think it would be wrong for me to be silent about what we have seen on the television over the last few days.

And what I would say to those people who put so much hope and energy and optimism into the political process, I would say to them that the world is watching and inspired by their participation, regardless of what the ultimate outcome of the election was.

And they should know that the world is watching. And particularly to the youth of Iran, I want them to know that we in the United States do not want to make any decisions for the Iranians, but we do believe that the Iranian people and their voices should be heard and respected. OK.

BAIER: The first comments from President Obama as he met with the Italian Prime Minister Silvio Berlusconi just a few moments ago in the Oval Office, talking about the elections in Iran over the weekend.

Mort, your first thoughts about what was said?

KONDRACKE: Well, he covered all the bases that he wanted to cover. One, we're not for regime change. It is up to the Iranian people to decide who their bosses are.

Secondly, however, he is concerned, and went on at considerable length about concern about violence and voter fraud and stuff like that, and the whole world is watching, and so on. And the third point is —

BAIER: Was it strong, though?

KONDRACKE: I think it was as strong as — I mean, he is not in a position to — if he had gone over the line and said, how dare they, I mean, they haven't had a Tiananmen Square yet. So he doesn't have to say a lot. He said a lot by that.

And third point is negotiations are going to go forward.

BAIER: As you look at the protests, A.B.?

STODDARD: I think that the Ayatollah Khamenei, the supreme leader, did not throw a bone to supporters of Mousavi which will help him find a way to pack up and go home.

I say this is a ten-day assessment period during which the council of guardians will be looking at the election results. And I think they will be further emboldened, and I think they are going to be out in the streets.

I don't know what the police and militias will do when they are in the streets. But I think that protests will continue.

I think that it is interesting that Obama is trying to set up the fact that he has promised direct negotiations with Mahmoud Ahmadinejad without preconditions, and he is going to have to return to this promise, as he mentioned, a tough hard-headed diplomacy.

But what is interesting is if he was negotiating with Mousavi, it would not be as tough. He has given, Netanyahu, when he visited, a timeline. By the end of this year I need something from Iran.

And so I think he knows now, even though the supreme leader is not going to overturn the election results, Barack Obama is going to be negotiating on a tighter deadline with firmer policies, I imagine.

BAIER: Quickly, Steve, your thoughts on this?

HAYES: Well, I think saying just — it's good that he said something. Let's get that out there. But saying only that he is only deeply troubled, that puts him above the French in his level of outrage. I don't think that is a good place to be, number one.

Number two, I think when you look at his investing, in a way — he seemed to go out of his way, in my view, to avoid saying anything about the election results and anything about the current regime, which clearly and plainly stole the election.

And now he's talking about — he even seems to me, at a moment there, to invest some faith in this fraud, sham investigation that we're going to see out Khamenei. To me, it was not nearly enough.

BAIER: All right, the president assumed the role of salesman in chief today earlier today as he pitched his health care reform to the nation's doctors. We will weigh in on that right after the break.


BAIER: President Obama spoke to the American Medical Association earlier today, pitching the administration's health care plan, really, Congress's health care plan that the administration is trying to sell. The president is saying the status quo is unsustainable.

We usually save the Friday's lightning round for Friday, but since we had the breaking news, let's keep it pithy — Mort?

KONDRACKE: Yes. It was a long and involved and detailed speech, so I won't get into all of it.

What struck me most, actually, was the distrust that the man has for insurance industry. I mean, he said it's personal, based on his mother's experience fighting cancer and having to worry about being declared a person who had a preexisting condition.

The fact — and he says, I'm not going — we're not going to shell out money to the insurance industry. The fact is that the insurance industry has ruled out preexisting conditions anymore if everybody gets covered. And he doesn't give them any create credit for that.


STODDARD: He got booed today at his speech before the American Medical Association when he basically said he was not going to support caps on payouts, awards for medical malpractice lawsuits. That's not what the doctors wanted to hear.

I can't imagine him passing something without the support of the doctors and without support of the Republicans. Both of those groups do not support a public plan.

Right now he is floating trial balloons. So he throws out ideas to which —

HAYES: — hasn't been dealing in government. What government has he been looking at? It doesn't make any sense. It is not going to convince people that the public option is a good option.

BAIER: The Congressional Budget Office analyzed the Kennedy plan as it stands now, and said it would increase deficits by $1 trillion. That's a number that scares a lot of people — Mort?

KONDRACKE: Actually, I will bet you it's going to cost more. I think that they didn't do a complete analysis of the whole bill.

BAIER: Could be $2 trillion?

KONDRACKE: It could be one and a half, it could be two. We will have to see when the final bill comes out, or other bills come out to see what they score.

BAIER: So the chances right now, A.B., as you look at it on Capitol Hill, getting this through, before, who knows, the end of the year?

STODDARD: I can imagine a plan attracting bipartisan support that did not have a public plan or had such a watered down one like the exchanges, the cooperative plan, that Senator Kent Conrad is proposing, which you get Republican buy-in, or maybe there is a public plan with a slight trigger.

But anything with a heavy public plan I don't think is going to pass.

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