This is a rush transcript of "Special Report With Bret Baier" from October 22, 2009. This copy may not be in its final form and may be updated.


KENNETH FEINBERG, SPECIAL MASTER FOR COMPENSATION: Vindictiveness, punitive ness is not part of this program at all. It is nowhere mentioned in the statute. It is irrelevant.

But getting the taxpayers' money back, that is the primary objective. And if I can do that in a program that reforms the compensation structure, the incentives, less cash, more long-term stock paid to these guys that is tied to future performance of the company so the value of the stock will depend on how well that company does in the marketplace, that is another goal of the program.


BRET BAIER, "SPECIAL REPORT" HOST: The special pay master Kenneth Feinberg, who is obviously not from the south, he is also the pay czar for the president, he announced today that the government-ordered salary cuts of 90 percent to the highest 25 employees of these seven companies, seven large corporations that received hundreds of billi ons in bailout funds from the U.S. They haven't paid back those loans.

Now there is a cap on how much the top employees can make at each one of those companies.

What about this announcement, this plan, and the reaction? Let's bring in our panel, Fred Barnes, Executive Editor of The Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and the syndicated columnist Charles Krauthammer — Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I have no objection in principle at all about these cuts in pay. This is not intrusion into free enterprise. These enterprises are not private or free. They are wards of the state. They ran themselves into the ground, and they are now partially or largely owned by the government. So the government has every right to intervene and dictate salaries.

But the question is a practical one. Is it smart if you're a shareholder in the company, as we all are, and thinking of its future and the ability to repay the loan, is it smart to institute a cut this drastic?

The obvious danger is that if the cut is too large, it will induce the people who run it and who presumably know how to run it to go elsewhere.

So, to me, it is a practical decision, and the fact that Obama was hands off on this and he left it in the hands of someone whose expert in this area I think is the right decision. Obama is not an executive. He is not a businessman. He ought to leave it to Feinberg, who in these negotiations has become expert, so I think it was handled the right way.

BAIER: Mara, the companies who took bailout funds and repaid those loans do not have the stipulation of a cap, and there are actually some out there that think they should.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Well, they paid their bailout money back with interest, and that was supposed to be kind of the punishment, and they fulfilled that contract.

I think that legally these are the only group of companies that the government could do this to, and I agree with Charles. There is nothing wrong with doing this.

And I think the more important thing is getting regulations in place that will not have these companies get into this situation again. And maybe, as Ken Feinberg said in that cut we just played, that they will just have to do with how they are compensated.

In other words, why shouldn't an executive pay be tied to the performance of their company? That just seems like the most basic thing. Every small business owner's in America pay is tied to the performance of their company.

BAIER: Fred, besides the concerns Charles raises about the possible brain drain at these companies, are there fundamental concerns about how this has all come together?

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": Yes, I certainly have them. I don't know why they are pooh-poohing this thing for another day at the office for Ken Feinberg.

This is unprecedented. We haven't seen this before where they are coming in and telling people how much they can make. Look, if you're really interested, Bret, in stopping these companies from taking excessive risks, there are ways to do that. Have them raise their reserve requirement, you know, they have to have more cash on hand.

One of the problems that so many on Wall Street got in so much trouble is because it was 30 or 40 to one, in other words, how much they had laid out in investments and loans and that one was how much they had in reserve. So if you're really interested in that, well, in the risk factor here, you don't cut their pay. That won't have any effect. Really, come on now. There is a good way to do it. And the second thing is this could go well beyond what they have done with these seven companies. Increasingly a part of the liberal agenda is to force American executives to be paid less. It offends them. It ideologically offends liberals. And right now, they don't have the legal authority to do that. They can do it with these firms. But just think about companies that are defense contractors. I mean, they're in the hock for all these government contracts and so on. And what about the companies that participate in the Medicare prescription drug program, and they're allowed to come in...


LIASSON: ... it is different than being owned by the government. We own big chunks of these companies. The taxpayers own huge amounts of AIG.

BARNES: They can legally do this now, but — Mara, you have heard it. Charles, you have heard it. You hear them on Capitol Hill talk about it, Barney Frank talk about these executives, executives for American corporations, they think, liberals think make too much money, and they would like to have them make less.

KRAUTHAMMER: If and when that happens, I will savage it, as you have savaged today's cuts.

But you say it is unprecedented. Well, the situation with these companies is also without precedent. We have never had huge institutions go bust and be saved by the government, which essentially owns it. There is nothing wrong at all in principle with regulating a company that you own. It's not an attack on —

BARNES: I understand that.

KRAUTHAMMER: It's not an attack on private enterprise. This is not private. It's quite simple.

BARNES: But Charles, this is not just something done because it is good for the company and it will cut down on excessive risk. This is ideological punishment. That's an element in there.

BAIER: A camel's nose under the tent, a phrase that Charles has used before, but not in this instance.

KRAUTHAMMER: If the tent starts moving, I will be here to object to it.

BAIER: President Obama has weighed in on the White House war with Fox News. We will talk about that and more when we come back.



GUTHRIE: The stir over Fox News. Do you think it is appropriate for the White House to say what is and what is not a news organization? Your advisers raised this issue.

PRESIDENT OBAMA: I think that what our advisors have simply said is that we are going to take media as it comes. And if media is operating basically as a talk radio format, then that's one thing, and if it's operating as a news outlet, then that's another. But it's not something I'm losing a lot of sleep over.


BAIER: OK, that was the president on Fox News and the back and forth.

And today there was announcement by the administration. They were putting out the pay czar, Kenneth Feinberg, as we showed you earlier, for the White House pool.

They sent out a message to the White House pool that Feinberg would be doing a round robin of interviews with the five-network pool that covers the White House, basically shares the cost and daily coverage duties of covering the president. Fox News has been a member since 1997.

When they put out that message, they specified that all members of the pool were welcome except Fox News. Well, the other members of the TV pool said, well, we're not going to do the interview unless Fox News is included.

That's how our day went. We're back with the panel. What about the latest in this back and forth — Fred?

BARNES: Trying to fiddle with the pools at the White House, which is an official thing, a group of reporters going in and the kit and caboodle of the White House press corps can't go. And to try to ban Fox is breathtaking in its pettiness.

And to think that the Obama White House has gone this far, you know, it's time to let go. This doesn't help them.

We have seen the conservative presidents do this, attack the media. Remember in 1992, the bumper stickers, "Vote for Bush, annoy the media." Maybe it did. I don't think it annoyed the media much when he got 38 percent of the vote.

Presidents do not benefit from this. Obama is not going to benefit from it at all, and he just ought to stop. I thought this interview would be the time for him to stop, to back off, but he's not backing off at all. I mean, this is crazy.

And one adjective comes up, and when this adjective comes up, you know you're in trouble — and Charles is nodding — it's "Nixonian," that's the one, and it's not a compliment.

BAIER: When the five network rotation stood up after that announcement was made, the administration relented. Then the Feinberg interviews were taken from five minutes to two minutes. Now, there may be extenuating circumstances for the timing, but every network only had two minutes with the pay czar.

LIASSON: I don't have as much of a problem. Ken Feinberg did a masterful job in those two minutes.

BAIER: Then why not put him out for five or ten?

LIASSON: The White House accomplished its goal with Ken Feinberg in two minutes. He made a blindingly articulate thing for the White House.

BAIER: One reporter called it "speed dating," in and out.

LIASSON: Then I think on those grounds the press has very little to complain about. Go and interview other people about the pay issue. They gave them Ken Feinberg for two minutes.

BAIER: Turning to the question of the president saying Fox News is like talk radio.

LIASSON: The White House view is that a lot of Fox News is like talk radio. And I think in the short run, this war is probably benefiting both sides. It certainly hasn't hurt Fox ratings at all. We wouldn't be discussing it otherwise. And the White House I think is sending a message to its base that says we're going to fight back against our biggest enemy in the media.

In the long term, I don't understand where this goes, because — now, the pool question was a good example. The White House, every White House plays favorites and has people they want to give interviews to and people they don't. If they dealt every network individually, they wouldn't have this problem.

To deal with the pool as an official entity, I didn't understand that at all, because the pool acted as it has to act in its official capacity to represent everyone. I just don't see where this goes in the future and how it benefits anybody.

BAIER: Charles?

KRAUTHAMMER: Lamar Alexander is a senator. He's an old hand in Washington. He was secretary of education in the first Bush administration and he is not a wing nut.

And he gave a speech this week in which he expressed dismay and alarm over the way the Obama administration is demonizing, not just criticizing, but demonizing and trying to ostracize and destroy his opponents.

And he went through a list of these, including the chamber of commerce, the insurance companies, Fox News, and I would add the way he tried to demonize the people who attended the town halls in August and those who have demonstrated, and the tea bag demonstrations. And Alexander said "I was in the Nixon White House at the age of 27, and I saw how the poison of enemies' lists worked and what happened in the end." And when Alexander is saying that, I think people ought to listen.

I think this is really destructive. I think what happened today, I think, was extremely important, because in trying to ostracize and demonize Fox, the administration needs complicity from other news organizations, otherwise it won't work.

And what happened today was other news organizations, admirably and on principle, standing up and saying no. If you are not going to include Fox, we're not going to go. And that solidarity I think is important. We are all in the business together. We have different perspectives. Nobody enjoys a kind of holy objectivity. And what happened, I thought, was a confrontation between an overreaching executive and a free press, and the executive backed down.

BAIER: It was a big moment for the White House press pool, but, Mara, where are the First Amendment folks that a lot of times, you look at it, what if this happened under George W. Bush, and he did not...

LIASSON: Didn't someone get kicked off Cheney's plane? Remember that? I think some news organization did get kicked off.


KRAUTHAMMER: Yes, but it wasn't in midair.


BAIER: The point being...

LIASSON: Look, I think that access is not the same thing as free speech. I mean, access means — you're not — the White House is not duty bound by the First Amendment to give everybody the same interview.

BARNES: Nobody said that.

LIASSON: But as long as they're using the pool system, which they probably now think is a mistake, the pool acted as it's supposed to, which is the guardian for everybody's interest collectively.

BARNES: If the next step is to bar Fox News from sending White House reporters, they could yank their press pass and bar them if they want to. I don't think they would go that far, but it fits in with what they're doing so far.

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