Tensions Mount Between Iran and Israel; How Obama's Legislative Agenda Will Affect Elections

The following is a rush transcript of the July 26, 2010, edition of "Special Report With Bret Baier." This copy may not be in its final form.

(BEGIN VIDEO CLIP)

MAHMOUD AHMADINEJAD, IRANIAN PRESIDENT (via transla tor): They have decided to launch attacks within the next three months on two countries in our region, on at least two countries. It is quite clear that all these games are aimed at saving the Zionist regime.

EHUD BARAK, ISRAELI DEFENSE MINISTER: I don't know. I cannot explain and I do not pretend to penetrate him. He said it. And now he is basically seems to be ready to start negotiations while telling the world we cannot coerce him into said negotiations. He's quite a sophisticated but still bizarre character. I don't -- I prefer not to judge him upon what he said but upon what he is doing.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: The Israeli defense minister in an exclusive interview here, talking about what Iran's president said today. Let's bring in our panel about all of this, Steve Hayes, senior writer for the Weekly Standard, Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer.

Charles, first an overview of what you thought of that interview and reading between the lines.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I thought the most important statement that you got from the minister of defense was the kind of offhanded, semi-tongue-in-check, who is the second country. After all, Barak is the guy in charge of planning for any attack on Iran, so he would know who the first is, and that was somewhat of a hint that Israel is quite serious about acting if it has to in the long run.

The other really puzzling and interesting thing that the president of Iran said was he said Israel is preparing to attack within three months two countries. I read that as Lebanon and Syria, which would precipitate a regional war in which Iran would come in.

And I'm reminded of the fact that the 1967 War began, that was June '67, that began the train of events that led into it began when the Soviet Union falsely told Syria that Israel was planning an attack, and that set in train a set of events, the mobilization of Arab armies, the military, pacts between them on the blockade of Israel that ultimately led to the outbreak of war.

So this kind of rumors or threats of an Israeli attack on Syria is serious business. I'm sure it is absolutely false, there is no evidence whatever. It is not in Israel's interest to attack Syria and Lebanon. However, Iran, now under the pressure of sanctions unilateral -- American, EU, and Canadian, and feeling internal pressure and even scolding from the Russians, and even hints out of Washington that it is reconsidering its opposition to a military option, all of that, I think, is leading Iran into making these war-threatening statements because it's as if he is threatening Israel, if you do anything, we can start a war by using Hezbollah in Lebanon, Syria, and that would be a regional war that you would regret. I think that is his message.

BAIER: Juan, in the same breath in this interview, Ahmadinejad said that it makes no sense for the world leaders to go after Iran with sanctions, but then said we are ready for new talks without preconditions.

So I mean, the mixed message out of Tehran is really something.

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: And I think all you're seeing there is he is dragging it out. And it's typical negotiating strategy of someone who really has no positive end in sight and does not intend that there be a successful conclusion but wants more time.

And time for what? In this case we know for what, to develop nuclear weapons.

I think the difference is that he is speaking to sanctions and speaking to sanctions in the aftermath of the actions by the European Union and the Canadians. The U.S. is ratcheting up its sanctions unilaterally.

My sense is that this is putting pressure especially on the elites inside Iran and possibly fomenting the kind of dissent that we saw come to a head last year when you had, of course, the famous situation where people were literally at the doorstep and the having to be rebuffed by the military elites.

BAIER: Steve, what about the Israeli defense minister's response that he does not, at least publicly saying he doesn't see daylight between the Israeli government and the Obama administration about trying to prevent Iran from getting nuclear weapon?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I think he has to say that. But there is actually some similarities in the message. If you listen to what he said when asked about, reminding Ahmadinejad saying he is willing to negotiate. He said, no, no, no, we need to see a change in behavior.

We now have the Obama administration saying the same thing, and in discussions I have had with people in the Obama administration working on Iran policy, they will say the same thing. We now need to see a change in behavior.

And I think it's a striking change in tone from the Obama administration that goes along with what you have seen from people that the Obama administration talk to regularly, Joe Klein from Time magazine, and quite critical of anybody who has even raised the possibility of a U.S. or an Israel strike on Iran.

He wrote an article last week in which he talked about the military option being back on the table. It was a political article that said the same thing.

Now, I suspect that this is the Obama administration finally understanding, late, in my view, that in order to have successful diplomacy with Iran, you need a credible threat of force, and we have not had that both in our public message and in our behind-the-scenes message.

BAIER: This comes, Steve, as the WikiLeaks story continues, and also documents in there in the 91,000 documents saying that Iran is active in supporting the Taliban inside Afghanistan. Yet the president today said there is really no news in any of this release.

HAYES: In one sense, he is literally correct. We have known what they have been doing. We have heard this. We haven't heard it with this kind of specificity from documents, we haven't seen these kind of documents.

But we have seen numerous news reports. Jennifer Griffin had one last year that was a fantastic report about weapons caches that have been found, we've seen it in other news reports. We've seen administration officials, particularly uniform military officials, talk about the support that Iran is giving to Al Qaeda and to the Taliban.

And I think we have finally seen the end of this idea that Iran wouldn't support Al Qaeda and the Taliban because of religious or ideological differences. People have finally come to understand that that is just not how it works.

BAIER: Charles, the Israeli defense minister cannot talk about timelines or the end of the line, and I cannot obviously get through an interview without asking that question. But, what about that? Realistically, where are we?

KRAUTHAMMER: I think if you listen to Israelis and watch them, they will never speak openly about this. But there is unanimity in the country. They cannot live under a regime where Iran controls a nuclear weapon, because, a, it could be used for genocide, and the Iranians internally themselves have spoken about how there might be retaliation and damage to part of the Islamic world, but it would be nothing like what one or two or three nuclear explosions would do to Israel. It would wipe it out because it is a small country, a small population.

So there is a huge asymmetry here. It's not like deterrence in the U.S. and Soviet era. It is a completely asymmetrical situation. That means they are prepared. They will act. The only question is, will anything happen earlier to prevent that in order to make Iran disarm? It's extremely unlikely. Will they get help from the outside world? It's extremely unlikely.

But most important, will they get a red light out of Washington or a yellow light? And no one knows.

BAIER: When we return with the panel, we examine the backlog in the president's legislative agenda and how that could play in the November elections.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, UNITED STATES PRESIDENT: I intend to keep pushing for broader reform, including climate legislation, because if we have learned anything from the tragedy in the Gulf, it is that our current energy policy is unsustainable.

And everyone understands that we are less than 100 days from an election. The folks we serve who sent us here to serve, they sent us here for a reason. They sent us here to listen to their voices, they sent us here to represent their interests, not our own. They sent us here to lead.

(END VIDEO CLIP)

BAIER: President Obama in the Rose Garden talking about his legislative agenda going forward, pushing climate change legislation. Yesterday he came out and pushed for the Campaign Finance Disclosure Act that was considered in the Senate. It failed today 41 to 57.

What about the president's legislative agenda and how will it play in November? We're back with the panel. Juan?

WILLIAMS: I mean, the disclosure act was the real talk of the town this morning, and I think there was the sense that this is an amazing moment in Washington where you could actually have something that would allow for transparency in terms of the campaign contributions.

And the Supreme Court in the United Citizens case said -- Citizens United, I should say, case -- said that people, individuals and corporations have a right to make contributions, but also called for transparency.

But here is a moment where, you know Democrats, Republicans, but especially the Republicans said no. And Mitch McConnell, the Republican leader in the Senate, said that he felt it was really about cementing the Democratic advantage and it was a bill to help incumbents remain in power.

BAIER: Yes, but 41 to 57.

WILLIAMS: It was overwhelming. And just to me, I don't understand it. As a reporter, I think it is puzzling. But clearly, with the system as the system stands right now protected itself.

But to get out to the larger agenda, he lost on some small business loans. Again, I don't understand it at this moment how that politically plays. It seems to be to the advantage of the Democrats at this moment.

So this is tough waters for the president. I think that is why he had the meeting, the bipartisan meeting today, and it just looks like he is not getting much support and you cannot expect much more. I think we are at day 98 headed towards the election.

BAIER: Comprehensive climate change legislation taken off the table by Senate Democrats. They don't have 60 votes. Immigration reform is essentially dead in the House and the Senate, Steve.

What about the scorecard as you head to November for Democrats? On the plus side they have health care, financial regulations, and probably confirmation of Elena Kagan.

HAYES: I think Dan Pfeiffer, the White House communications director, said that the vote on the disclose act would be a defining moment in terms of the 2010 elections. No, it won't. There are a lot of defining moments that have taken place in the past 18 months, 18 plus months. You mentioned several of them.

But I think the Democrats are in trouble precisely because they don't have much to campaign on and because we are likely to see in September a big fight over the extension of all of the Bush tax cuts.

I think this is going to be a tough issue for Democrats. You have the White House seemingly obstinate in considering to extend the tax cuts for so called wealthy at a time when they need to do it. It makes sense to do it. And economists are largely in agreement that that makes sense.

Now, Robert Gibbs said today he does not know any economist that believes cutting taxes for the wealth would stimulate growth. I would submit that if that's the case, he doesn't really know any economists.

BAIER: Charles?

KRAUTHAMMER: I think we've had an astounding year-and-a-half. I think the president's agenda as of now is done, political capital is spent. But he got a lot in return, historic. I think it is the most, the greatest amount of social change coming out of Washington since Lyndon Johnson and since the New Deal.

What did he do in a year and a half? He's revolutionized health care. It will be incremental, we're going to see it, but it's in law now. He has taken over financial, he has redone the financial system with consequences that are, as yet, unknown, but it will be profound, a $1 trillion stimulus and two appointments on the Supreme Court. In a year and a half that is an amazing achievement.

If you're on the left, if I were on the left I would be cheering and happy. His left is not. It always wants more. But that is why we got this remarkable grassroots, spontaneous reaction against the expansion of government starting, of course, with the tea party, and we will see the result of it in the electoral terms in November.

It is a kind of historic, titanic struggle between left and right as we haven't seen since the 1960's and the 1930's. And I think the Obama administration ought to be proud in terms of its own ideology of what it's achieved.

WILLIAMS: One thing to say here, on this day, though, is that the battle over war funding has divided Democrats. Republicans remain unified in support of the president. So at this moment in terms of that legislative checklist you were talking about, Bret, it's odd, isn't it, to see all of sudden here's bipartisanship on one issue, Afghanistan?