This is a rush transcript of "Special Report With Brit Hume" from December 26, 2008. This copy may not be in its final form and may be updated.

BRET BAIER, HOST: It's the day after Christmas, so we thought we would have a fun panel — who got a present this year, who got a lump of coal.

Some analytical observations with that question in mind from Fred Barnes, executive editor of The Weekly Standard; Nina Easton, Washington bureau chief of Fortune magazine; Jeff Birnbaum, managing editor-digital of The Washington Times, and syndicated columnist Charles Krauthammer — FOX News contributors all.

Fred, let's start with the lump of coal.

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Taxpayers get this lump of coal in the form of a bill that they will have to pay not this year, not next year, and not until probably after the 2010 elections to pay for all those bailouts and all the huge spending that President Obama is going to do — a huge bill.

BAIER: Nina, lump of coal?

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: A lump of coal, I think, is going to Jesse Jackson, Jr. And the lump of coal is in the form of the complaint that—he is a congressman from Illinois, and that lump of coal came in the form of a complaint/affidavit released in the Rod Blagojevich case in which Jesse Jackson — an emissary for Jesse Jackson is said to have spoken to Blagojevich about the possibility of favoritism, or doing favors for a Senate seat, to get Barack Obama's Senate seat—say that straight.

And I think it's particularly a lump of coal for Jesse Jackson, who is somebody who had great ambitions, wanted to be senator. I think that probably his hopes are dashed now, and I think it could possibly hurt his career in the House as well.

BAIER: Even though the stories have come out that he was helping federal agents in one aspect of this case?

EASTON: Right. I just think he is definitely not going to get the Senate seat. And, again, I think it can taint him going forward.

BAIER: Jeff, lump of coal?

JEFF BIRNBAUM, COLUMNIST, THE WASHINGTON TIMES: I think a lump of coal is going to be in the stocking of Christopher Cox, who is the Chairman of the Securities and Exchange Commission.

And, in fact, all federal regulators have to be blamed for the Bernie Madoff scandal. That's the Ponzi scheme that lost $50 billion for investors around the country.

And, in fact, I think regulators at the federal level probably have to bear some of the blame for the entire financial meltdown that started with the mortgage crisis. If regulators had done their job better, and if the Security and Exchanges Commission in particular had done its job better, maybe things would not be as bad in this otherwise holiday season.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Secretary of the Treasury Henry Paulson.

It grieves me somewhat to drop a lump of coal in his stocking, but here's a guy who has had his hair on fire-and I speak allegorically of course—ever since the mortgage crisis struck, in which you're supposed to be the voice of calm, but he tried very hard, but he has been zig zagging on policy, and introducing uncertainty in the market already rattle by enormous uncertainty.

So he tries hard, but I'm afraid — history may judge him a genius, but right now it looks as if he has stoked the fires.

BAIER: Let's go to the nice list. Who gets the present this year?

KRAUTHAMMER: President Bush. He took a shoe for the team in Baghdad.

And, in a way, it spoke for how he's handled as this. Here is the guy who heroically ordered the surge, which saved us in Iraq, but remains the object of scorn and derision and a lot of even hatred around the world.

I think it's all been personalized against him, as we saw in that incident. And, in a sense, it will leave our next president with a lot more leeway in the way he reacts in Iraq, and he will have a lot more support at home and abroad as a result of that taking a hit for the team.

BAIER: Jeff, your present?

BIRNBAUM: I think a toy has to be put into the stocking of the Bush and Obama transition teams. Now, it's actually the Bush administration and the Obama transition team.

But the two have worked historically well together — and here we saw them both wearing the identical blue ties. They are on the same page.

And in this time of international meltdown, economic meltdown, and where terrorism is still a very serious problem, and we are at war in at least two countries, I think they deserve a present for working so closely together to try to keep things together. And it would have been much worse had they not worked so closely together.

BAIER: Nina?

EASTON: This is a not a toy that I'm giving nor Santa is giving, but I think this is a nicety that Barack Obama gave to Bill Clinton. How? By appointing his wife Hillary at the state department.

Hillary is going to be so busy managing foreign affairs and international crises that she won't have a lot of time to be mad at Bill for everything that he did during her campaign that set her campaign off footing.

BAIER: Fred, your nice?

BARNES: I never would have thought of that.

Think General Motors — same unproductive company, same cars they build that nobody wants, same terrible labor contracts, same management. And yet what do they get? Money from the federal government — a small bailout now, and a bigger one yet to come.

BAIER: Let's ask about that, because do you think that that in the new year, with the new congress, the new administration, is going to be a much different picture about this auto bailout as we look at months ahead?

BARNES: I don't. In for a dime, in for a dollar.

KRAUTHAMMER: I'm not sure. I think fatigue will set in. People have had enough of this. The resistance grows every time a bailout is offered. I think it will be a lot harder, even with Democrats in the White House and control of congress.

BIRNBAUM: I actually think that things will get better once we get into the second quarter of next year, and so there will not be as much pressure to keep handing out the money.

But the way the bailout is now structured, the automakers will be right on the cusp of that. So it's very hard guess whether there will be more money or no more money. I think at least a little bit more money, but not as much as we're expecting right now.

EASTON: And it's really not going to test Barack Obama's relationship with labor. The terms of this deal are very fungible, and it's going to be very interesting to see how Barack Obama deals with the question of wage cuts for UAW workers.

BARNES: Here is a man who never bucked organized labor once ever, and he won't in 2009.

BAIER: Last word on this one.

Coming up, the all-stars weigh in on what they think should be President-elect Obama's New Year's resolution. Stay with us.



PRESIDENT-ELECT BARACK OBAMA: We face challenges unlike any we have faced in generations. Daunting as the challenges we are inheriting may be, I'm convinced that our team and the American people are prepared to meet them.

It will take longer than any of us would like — years, not months. It will get worse before it gets better. But it will get better if we are willing to act boldly and swiftly. And that is what we will do when I am president of the United States.


BAIER: President-elect Obama talking about dealing with the economy in the new year. He has a lot of challenges to deal with in the new year.

We're back with our panel to talk about what his new year's resolution should really be. Start with Charles.

KRAUTHAMMER: Well, I'll start with a little history. When a Roman general conquered an enemy and returned home, he was offered a triumph, which was a parade in which he received the adulation and the cheers of the crowds. And in his chariot standing behind him was always a man who would whisper in his ear, you are only a mortal, reminding him that —

BAIER: And there we have the picture.

KRAUTHAMMER: — he was not a god.

And I think Obama would do well to hire a specialist whose only job is about two times a day to remind the man who said that he would heal the planet and make the oceans recede, that he, also, is not a god.

EASTON: That could be Michelle!

BAIER: Keep him in check, OK — Jeff?

BIRNBAUM: I think that Obama should — I disagree just a slight bit. I think that he should — his resolution should be to dream big, to dream very big, but not to imagine that he could get everything that he dreams done at the same time.

I think that his resolution should be to have big dreams, but to have success sequentially, that he should decide his priorities one at a time.

One of the worst mistakes a new president makes is to try to do too much. The attention span in Washington is not that large, nor is the legislative funnel. It's not that wide. And so he should decide to do the economy, and then maybe healthcare, and then maybe the environment, but not all of them at once.

He should be very careful, because if he tries to do too much at the same time, he may end up failing at all of them.

BAIER: Although, don't you sense that they are trying to do a lot of things all at once after they get in office, the Obama team?

BIRNBAUM: The word being used by one top Democratic aide that I've spoken to was "legislative blitzkrieg" is what the Obama people are planning. And I think that that is, like the last time there was a blitzkrieg, ultimately it will fail unless he is very careful.

KRAUTHAMMER: A slightly unfortunate historical resonance.

BIRNBAUM: Yes, but the idea of a lot at once is what I mean by that.

KRAUTHAMMER: I would call it a surge!


BAIER: All right, Nina, your resolution?

EASTON: As he is doing all these grandiose things, I think he should make it a point to offend the left wing, the special interest groups of the left wing of the Democratic Party.

He has already done it one supporting the eavesdropping bill because of his concerns about national security. He did it again, having Rick Warren give the prayer during the inauguration.

And I think he could do it again. He could stand up to labor. And one of the first things he could do is let card check, which enables unions to very, very easily organize, let that die in the Senate. Because that's something that if it is passed, not only it goes to war with business, but it could also, I think, harm the economy in the long run. So I think that's one place.

And also in the fiscal stimulus, I think he's going to find there's a lot of places where he's going to need to stand up to those special interest groups on the left that supported him and financed a lot of pro Obama stuff during the election.

BAIER: Fred?

BARNES: I will leave the panel so I could take that job that Charles recommended, to whisper twice a day into Obama's ear — "You're not immortal."

What he needs to do is find — I think his resolution should be that he should find someone to save him from his liberal friends, who are in the cabinet now, who do want card check to go through, particularly his labor secretary, who would turn over the entire American workforce to organized labor, and his health and human services secretary, Tom Daschle who thinks that the Clinton healthcare plan was great but was just marketed poorly, and all these environmental people who don't care about the economy-they just want to deal with the distant threat of global warming.

He needs to be saved from them. Maybe Rahm Emanuel can do that.

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