This is a rush transcript of "Special Report With Brit Hume" from June 12, 2007.

BRIT HUME, FOX NEWS ANCHOR: Next on SPECIAL REPORT, the president tells Senate Republicans the status quo on immi gration is unacceptable and GOP Leader McConnell says the bill is almost done. Wasn't this bill supposed to be dead?

And wait until you hear what a new poll shows about how Fred Thompson is doing.

House Republicans, meanwhile, rip Democrats over the special spending known as earmarks .

And what have they done with that U.S. sponsored Mideast TV network and who did it.

Plus, Duke prosecutor Mike Nifong in the doc for his alleged misconduct towards those lacrosse players. All that right here, right now.

Welcome to Washington. I'm immigration bill stalled in the Senate is still the best way to secure the border, telling reporters after the nearly hour and a half long lunch meeting that he will continue to personally try to salvage this bill.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I believe without the bill it's going to be harder to enforce the border. The status quo is unacceptable. And I want to thank those senators on both side of the aisle who understand the team is now to move a comprehensive piece of legislation. The White House will stay engaged.

BAIER: Senators in the meeting described it as more of a soft sell than an arm twisting, with a extensive question and answer session about border security. The Senate minority leader said he didn't know how many mind were changed, but insisted the Senate is close to passage.

SEN. MITCH MCCONNELL (R-KY), SENATE MINORITY LEADER: I do think this bill is about 80 or 85 percent of way through, toward the finish line. And we don't have any interest in giving up on it.

BAIER: A group of nine Republican senators sent a letter to the president today urging him to step up border security measures now, instead of inserting them into the bill as benchmarks or triggers. Senator Jim DeMint from South Carolina is one of the senators who was not and will not be persuaded by the president's push for a comprehensive bill.

SEN. JIM DEMINT (R), SOUTH CAROLINA: When we passed a bill last year that would secure our border, with more border agents and barriers and fencing, and we haven't moved ahead with that.

BAIER: Despite a determined group of opponents like DeMint, a late—afternoon bipartisan meeting between key Senate negotiators was set to lay out a finite number of amendments to be considered in order to break the political logjam. Senior aides to Senate Majority Leader Harry Reid said once that is done, Senator Reid is committed to bringing the bill back up for debate and a final vote in possibly the next two weeks.

Today Reid again publicly put the onus on Republicans.

SEN. HARRY REID (D-NV), HOUSE MAJORITY LEADER: The question is do the Republicans support their president's immigration bill? At this stage, it's a resounding no. When it comes to be yes; when they get 25 or so votes for us, we will have another proportion that we can bring to the Senate.

BAIER: At the White House there is growing confidence about Senate passage.

TONY SNOW, WHITE HOUSE SPOKESMAN: The key provisions have the support of more than 60 members of Senate. What the president is trying to do is to work constructively with both sides to try to get a bill that is going to deal with the problem that has been 21 years in the coming.


BAIER: One idea suggested at the lunch meeting that has received tentative support here at the White House is for the president to put forward an emergency supplemental funding request for border security, like the administration has done to fund the war. The idea being that the administration could then show senators specifically that the security measures will be funded.

Republican Senator Arlen Specter told Fox today that might, quote, dilute a lot opposition to this bill. Brit?

HUME: Bret, thank you. The guest worker program in this immigration reform plan would look something like the current program we have for seasonal workers. Some American businesses says they could not survive without those employees. Congressional correspondent Major Garrett looks at one such company not far from here.


MAJOR GARRETT, FOX NEWS CONGRESSIONAL CORRESPONDENT (voice-over): On the Chuptank (ph) River in Cambridge, Maryland sits J.M. Clayton Seafood, the world's oldest crab factory, a fourth generation family business run by Jack Brooks.

JACK BROOKS, JM CLAYTON SEAFOOD: Actually, here is a boat coming in right here, so this is luck.

GARRETT: Crab arrives in bushels by boat for weighing and processing, or by truck from water men up river. Brooks sells crab whole to restaurants like Harris Crab House on nearby Kent Island. In addition to whole crabs, restaurants like Harris buy Brooks' hand picked crab to make a variety of crab dishes, chief among them, crab cakes.

But Brooks can't succulent crab morsels without crab pickers, blue collar, blue crab surgeons who toil nine to 10 hours a day in this picking room. It is here the raging debate over immigration reform and Brooks' family business collide.

Most of Brooks' workers are from Mexico. They receive H2B Visas as seasonal, non-farm laborers. Brooks keeps files on each worker, plus state and federal forms verifying native born workers won't take his jobs, jobs he is compelled to advertise locally.

BROOKS: We had one person apply this year. So we called them and tried to hire them, but they are not available or we couldn't get in touch with them.

GARRETT: Brooks began hiring foreign workers in the late 1990's starting with 15 in 1997. Now he hires nearly 150 a year, and whatever happens on immigration reform this year, Brooks needs Washington to keep these workers coming.

BROOKS: We are not for the temporary workers, the local workers. They wouldn't be working here. I don't know where they would be, but it wouldn't be here. Again, we would be — I don't know what it would be here, a condo, or who knows.

GARRETT (on camera): But you would be closed?

BROOKS: Yes, it wouldn't be a crab house.

GARRETT: Without these workers.

BROOKS: Exactly.

GARRETT (voice-over): The jobs open in March, close in November. Minimum wage is guaranteed, but pickers are also paid by the pound of crab picked. Experts can earn up to 15 dollars an hour. Nearly all the crab pickers are women. Brooks says that's because the women are far more patient.

BROOKS: I guess they're risk takers, so to speak, you know, leaving home, leaving family. Some of them leave kids. But, you know, they come here to work.

GARRETT: Thirty two-year-old Conseulo Mendozo has picked crab here for nine years. A single mother, she has two boys, ages nine and three. With nearly a decade in the picking room, we asked if she likes crab.

CONSUELO MENDOZA, TEMPORARY WORKER: I used to. Now, not any more.

GARRETT: Twenty three-year-old Olga Gonzales, also a single mother, has a four-year-old daughter in Mexico. Like all the Mexican workers, Olga sends most of her earnings back home.

OLGA GONZALES, TEMPORARY WORKER: You make more money, more here than you do in Mexico.

GARRETT: The woman pay 35 dollars a week in rent to live communally in a home Brooks provides. Inside, chores of a different kind, but also the chirp of UniVision and touches of home inside their adopted one.

Back in the picking room, Brooks said native born workers have more year around employment choices, and dislike the tedious, meticulous and strictly seasonal work of crab picking.

BROOKS: We would love to have all American workers. It makes our life a lot simpler. It used to be a lot simpler. But, you know, we are crab people. We are just running our business and making a living, and hoping that, you know, people in Washington will let it continue.

GARRETT: For Brooks, the words continue and temporary workers add up to survival.

In Cambridge, Maryland, Major Garrett, Fox News.


HUME: Communities across the country are struggling over how to deal with illegal immigrants who, unlike those in Major's report, do not have steady work. While some places need the migrants and rely on them, others object to the unsightly if not dangerous conditions at the places where day laborers gather. In one New York community, a lawsuit has forced the town to come up with its own answers. Correspondent Laura Ingle has that story.


LAURA INGLE, FOX NEWS CORRESPONDENT (voice-over): Day laborers in Mamaroneck can now congregate freely inside the Straight Gate church as they wait to be picked up for a job. Police will no longer be able to question workers about their immigration status or order them to move on. The laborers had made complaints to Hispanic rights groups that they were being hassled by police. They took those complaints to one of New York's largest law firms, which decided to do the case pro bono.

JANIS MEYER, DEWEY BALLANTINE LAW FIRM: The issue of whether the plaintiffs or the other day laborers were documented or not never — did not arise in connection with the equal protection claim. The case was not about immigration. The case was about having the ability to seek work if you are here.

INGLE: The workers have won a ground breaking settlement with the village of Mamaroneck that allows them to gather in a safe haven, which will also serve as a place for the immigrant community to gain skills.

MARIANO BONEO, HISPANIC RESOURCE CENTER: This is a safe place and it is dignified. Language skills, yes (INAUDIBLE) English as a second language. And actually those classes also incorporate citizenship and American culture. We really want to foster integration and we both have to learn from each other.

INGLE: The agreement was reached yesterday after village board members decided it would be more cost affective to come to a compromise with the workers.

(on camera): This is the park where day labors would congregate and wait for work. But there were so many quality of life complaints coming from resident that police had to shut down this informal hiring sight. That forced the workers out on to the streets, which is how the lawsuit began.

(voice-over): The settlement provides for the payment of attorney fees for the workers, modifications to police procedures about questioning day workers, and there will be a court appointed monitor for this site. The village and the day laborers issued a joint statement outlining the agreement and trying to reach out to the people of the village of Mamaroneck: "In putting this matter begin us, the day laborer community and the village of Mamaroneck look forward to building bridges with all village residents to achieve a mutually beneficial relationship based on cooperation, communication and understanding."

But not all members of this small community want this site here.

DONNA DICKERSON, MAMARONECK RESIDENT: Where are these men from? What is their background? Are they sexual predators? You know, are they robbers? You know, who are they? Nobody knows. Would you want that in your neighborhood? I don't want it in mine.

INGLE: The settlement is not final yet. It still needs approval from a federal judge. Until them, the workers will be congregating at this site, hoping to find work.

In Mamaroneck, New York, Laura Ingle, Fox News.


HUME: A new Rasmussen Report poll finds likely Republican primary voters as much in favor of Fred Thompson for the GOP presidential nomination as for Rudy Giuliani. Thompson, who is, of course, not yet officially running, is tied with Giuliani at 24 percent. John McCain, once considered the front runner, has fallen to 11 percent, along with Mitt Romney at 11.

But a new "Los Angeles Times/"Bloomberg poll finds Giuliani still leading with 27 percent support, Thompson closing in with 21. McCain and Romney trail at 12 and 10 percent.

Among Democrats, the poll show Hillary Clinton well ahead; 33 percent, followed by Barack Obama at 22. Al Gore still says he has no plans to run; third with 15 percent. John Edwards fourth with only eight percent.

And as for Congress, 65 percent of Americans in that poll now disapprove of the way it is handling its job. That percentage of approval is the lowest in a decade, and House Speaker Nancy Pelosi is also losing support; 39 percent disapprove of her performance; 36 percent approved. In January, her numbers were higher than — her approval numbers were higher than her disapproval numbers.

Later in our program, a U.S. funded Arabic language broadcast network began with high hopes. Now it's in trouble. We'll find out why. And up next, House Republicans and Democrats fight over how to expose pet spending projects to scrutiny.


HUME: House Republicans are vowing to stall progress on a number of measures on the floor until Democrats amend their plan for dealing with earmarks, appropriations that boost federal spending, but can be a lifeline and the basis for reelection votes lawmakers. Correspondent Molly Henneberg tells us what they are fighting about.


MOLLY HENNEBERG, FOX NEWS CORRESPONDENT (voice-over): Republican House leaders say Democrats promised transparency, accountability, but now have put forth a plan not to lift or debate earmarks before the House votes on spending bills. Earmarks are those special pet projects, funded by taxpayer dollars, attached to spending bills, that most members of Congress love to bring home to their districts. The top House Republican says earmarks should be up for discussion.

REP. JOHN BOEHNER (R-OH), MINORITY LEADER: So we are going to slow this process down until the Democrat majority realizes the error of their ways.

HENNEBERG: But the Democratic chairman the House Appropriations Committee says his committee got over 30,000 earmark requests, and with so much time spent this Spring on the Iraq supplemental and unfinished funding bills from last year, they couldn't whittle them down in time.

REP. DAVID OBEY (D), WISCONSIN: Our staff did not have the capacity to screen all of them before we brought the bills out.

HENNEBERG: So here is what Representative Obey has decided: the 12 spending bills will pass the House without earmarks. Then a list of earmarks will be posted before the August recess. Members of Congress can question an earmark in writing. The sponsor of that earmark will reply in writing. Those earmarks ultimately approved by the appropriations committee will be added to the House spending bills in the fall, just prior to the House/Senate Conference Committee.

The final bills out of that committee cannot be appended, just an up or down vote. Representative Obey says that August recess gives plenty of time to review the earmark list.

OBEY: If you see any item that you think we ought to be squawking about, you let us know and we will be squawking.

HENNEBERG: But Republicans argue that this change turns back a measure they passed last year requiring all earmarks to be disclosed, with a member's name attached to it, and up for debate and vote, even in the final bill. Democrat House Speaker Nancy Pelosi today seemed to support the new plan for earmarks.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: So I want salute our distinguished chairman, Mr. Obey.

HENNEBERG: Although back in December, as the Democrats were preparing to take control of Congress, she said, quote, we will bring transparency and openness to the budget process and to the use of earmarks.

So now Republicans say they plan to tie up House bills with amendments and other procedural tactics until Democrats open up the earmark process.

BOEHNER: Let's have real earmark reform. And until we do, we are not going to have much going on here on the floor.


HENNEBERG: Anti-earmark groups, such as PorkBusters.org and Americans For Prosperity are joining forces today, asking volunteers to sign up on the Pork Buster site to, quote, help Congressman Obey review the earmark requests more quickly, so they can come to the floor with the spending bills. Brit?

HUME: Molly, thank you. And we will have more on the issue with our panel later in the broadcast. The Treasury Department reports the federal deficit is running considerably lower at this point in the budget year than last year. The deficit totaled 148.5 million dollars through May. That is down more than 34.5 percent from the same period a year ago. The governor says revenue growing continues to out pace spending.

Still ahead on SPECIAL REPORT, the district attorney in the Duke rape case goes on trial himself. And after a break, could private efforts have more success than public ones in curbing Iran's nuclear ambitions. We'll take a look.


HUME: Iran's judiciary says it will soon decide whether to charge four detained Iranian/Americans with endangering national security or free them. That word came as the country's foreign minister warned that America would regret the detention of five Iranian officials in January by U.S. forces in Iraq. Iran has not directly linked the two situation. Among the four Americans is the scholar Haleh Esfandiari, who was arrested last month while in Iran visiting her 93-year-old mother.

Western governments so far appears to have little success pressing Iran to give up its uranium enrichment programs. But the State Department has been working with some private entities to develop non-U.N. sanctions on that country. Correspondent James Rosen looks into that effort.


JAMES ROSEN, FOX NEWS CORRESPONDENT (voice-over): Bush administration officials tell Fox News the most recent gathering of their policy coordinating committee on Iran, a mid-level group of White House, State, Pentagon and Treasury officials, ended in frustration. They said Under Secretary of State Nicholas Burns, who steers Iran policy, has persuaded foreign governments, banks and oil companies to cut off the regime in Tehran, but the U.S. believes its allies in Europe and Japan are not bringing enough financial pressure to bear to force the Iranians to stop enriching uranium.

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: I think there's more to do. But they are taking this seriously.

ROSEN: Officials and private analyst describe the U.S. effort to block Iran from the international financial as a full-court press, more important even than the push for more economic sanctions at the U.N. Security Council. The Treasury Department has quietly contacted 40 international banks to warn them about Iran's material support for Middle East terrorism and the insurgency in Iraq.

Precise statistics are difficult to come by, but one reliable estimate suggests a reduction of 50 percent, maybe more, in Iran's ability to do deals with the world's leading bankers.

CLIFF KUPCHAN, EURASIA GROUP: In part, they don't want to assume the reputational risk of doing business in Iran. In part, they don't want to take risks vis-a-vis their exposure in the U.S. In part, they're getting clobbered over the head by the U.S. government.

ROSEN: Treasury has also made it illegal for U.S. citizens and citizens to deal with Bank Sepah, Iran's fifth largest state owned bank, with branches and personnel in Rome, Paris, Frankfurt and London, and estimated total assets of 14 billion dollars. Even Germany, one of Iran's largest trading partners, with some five billion dollars a year in imports to Tehran, has taken the limited steps of cutting export credits to the Islamic Republic by 40 percent.

Also aggressively targeted by the U.S., international oil companies, including Shell, the Chinese National Oil Company, and firms in Malaysia, all of which have signed memoranda of understanding with Tehran, but responded to recent U.S. pressure by holding of on actual investment and construction in Iran.

KUPCHAN: These companies, in my judgment, are keeping a toe in the a water, just in case this blows over.


ROSEN: The State Department described its contacts with the oil companies as informational briefings, designed to make them wonder, and I quote, if this is the right time to place a big bet on the Iranian energy sector. Brit?

HUME: James, thank you. The Arabic language broadcast network al Hurra was supposed to do for the Middle East what Voice of America and Radio Free Europe did to break through Soviet propaganda during the Cold War. But al Hurra is accused of handing a megaphone to terrorists. So what happened? National security correspondent Jennifer Griffin has the story.



over): It was supposed to present an alternative to the anti-American views presented on most other Middle Eastern airwaves. But in the last six months, Republicans and Democrats have accused al Hurra of using U.S. taxpayer dollars, 70 million dollars a year, to push an anti-Israel agenda and give a platform to terrorists.

Last December, the network ran an hour-long unedited speech by Hezbollah leader Hassan Nasrallah, provided uncritical coverage of a recent Holocaust denial conference in Tehran, and in the crawl at the bottom of its screen, referred to the creation of Israel in 1948 as Naqba (ph), the Arabic word for catastrophe.

GARY ACKERMAN (D), NEW YORK REPRESENTATIVE: Instead of being an answer or a counter balance to al-Jazeera, we were just letting these guys have access to the airwaves that American taxpayers were paying for, which was absolutely absurd.

GRIFFIN: Employees of al Hurra, who spoke to Fox News on condition of anonymity, say the changes occurred when al Hurra hired former CNN producer Larry Register as news director last November. They say he came in with ideas of how to attract Arab viewers and compete with the more popular al Jazeera. In effect, one employee said, he tried to appeal to the anti-

Israeli bias of most of their viewers.

Former broadcasting board of governors chairman Ken Tomlinson says he tried to push the oversight board to investigate Register and the new practices at al Hurra, but was rejected by a vote of 5-1 at board meeting in March.

KEN TOMLINSON, FMR. BROADCASTING BD OF GOV CHMN: He had a philosophy that we should be competing with al Jazeera for audience, as opposed to being an alternative to al-Jazeera.

GRIFFIN: On a Friday, Register resigned. Quote, "for reasons I still do not understand, I have been professionally and personally attacked. When this began a few months ago, I told you I would fight these smear campaigns as long as al Hurra and the vital missions we are trying to accomplish didn't suffer. Regretfully, I have come to the conclusion that these attacks are placing al Hurra and its editorial independence in jeopardy.

Register had received the full backing of the State Department. On May 9th, Spokesman Sean McCormack said Register was doing, quote, a very good job. Yesterday, McCormack acknowledged mistakes were made and said a review is pending.

MCCORMACK: The real question I guess is: was this part of that learning process? Was it part of that shakedown period? Or was there something that was systemically wrong?

GRIFFIN: Tomlinson says there was a systemic problem and that Karen Hughes, undersecretary of state for public diplomacy, shares responsibility with other board members for failing to fix problems at al Hurra.

TOMLINSON: Sadly, my colleagues, including Karen Hughes, tried to deny that anything was wrong. I could not — I stood virtually alone in trying to expose this inside government. Fortunately, now people have come to understand what a horrible situation it was. Register has been forced out. And I believe others who are responsible for this should leave.


GRIFFIN: We contacted Karen Hughes' office for a response. Her spokesman said simply, quote, she looks forward to working with the new broadcasting board of governors. Tomlinson's term as chairman ended just a week ago. Brit?

HUME: Thanks very much, Jennifer. We have to take a break here to give our sponsors a word and update the other headlines. When we come back, some Denver residents are hot over a plan to combat global warming. Wait until you hear about this. It's next on the Grapevine.



Ted Kennedy.

Now look, they've been raising a lot of money off of Ted Kennedy, making him the poster boy for horrible liberal extremists. But the fact is that Ted Kennedy is a legislator, he wants to get things done. He cooperated with the president on No Child Left Behind, this isn't a brand new role for him.

But Republicans are shocked and pleasantly surprised to find this out. I mean, he wants to get things done, and he played a pivotal role in this, he was the centerpiece of this compromise, and he certainly hopes to revive it.

HUME: And if it fails, will it be seen as a defeat for him? If we have got Senator Kennedy, who is regarded as kind of a senator's senator, particularly by Democrats, and their elder leader, their statesman leader, what does it say that he has got Harry Reid pulling the bill off the floor?

LIASSON: Well, we have to wait and see. If he asks again for Harry Reid to put it back on, and says I have agreement from the Republicans, Harry Reid would have to have their agreement then it would be reviewed to him.

But I don't think this is seen as-

HUME: What further explains, if anything, the Kennedy mystique that seems to have captured Lindsey Graham, Trent Lott, and Michael Chertoff, among others?

BARNES: He makes a deal with you, and you can trust him. You know what a compromise is, he gets something, you get something. Republicans got a lot out of this immigration bill, things like a temporary worker program and the end of chain migration. Kennedy got the Z visas.

So what do you have to do to pass it when you have a compromise? You have to make sure poison pill legislation amendments, that you vote against them.

Now, there are all these liberal Democrats like Hilary Clinton and Joe Biden and Chuck Schumer that say they are for immigration reform, but when there is a bill, an amendment that is a poison pill, like the one—

HUME: You mean one that would queer the deal.

BARNES: Yes, that would queer the deal, they vote for him, because the AFL-CIO is for it or somebody, they queer the deal. Teddy Kennedy takes the tough votes. That's what he said, that's what we're here for, to take the tough votes.

He wants legislation, he will make compromises, and you can trust him. He will be with you until end.

KONDRACKE: All of that is true. This is a man who is 75 years old, and he is there, he's been during the immigration debate on the floor, all the time managing his side of the issue, making bargains, passionately arguing, dogged, and as everybody has said, he is a legislator, he wants to get something done.

And it is admirable, and the Republicans when they are in agreement with him, appreciate it. When he is on the opposite side of them, then he is ultra liberal, which sometimes he is.

BARNES: There is one other thing. He's fun to watch. He yells at Democratic colleagues. He yells at Republicans. He knows how to manage a bill. He's got it all in his head.

I have never seen a floor man that is more fun to watch.

HUME: He has got a reputation of being kind of a public speaking bumbler, but he does get (inaudible) details of legislation.

BARNES: He does. He's a factor.

KONDRACKE: And there is always a moment in every hearing when he cares about something, when he delivers the sound bite peroration, usually passionately, quaking and shaking and all that, and it's wonderful to watch. You know it is coming, and you wait for it, and enjoy it. That's pure political theater, as well as substance.

LIASSON: People who play this role are always more appreciated by their former adversaries, just the way John McCain was appreciated by Democrats, and the way I think that Jon Kyl this time. Somebody who is this pretty staunch conservative who ahs also been in the middle of this.

HUME: Just a little prognosis here. Will Kennedy and his Republican allies ultimately be able to save this bill and get it passed, at least through the Senate?

KONDRACKE: I'm totally with them, so I am going to be an optimist and say yes.

HUME: So you are biased?

KONDRACKE: Yes, I'm biased, I confess my bias. It ought to pass for the sake of the country, and therefore I say it will pass.

HUME: Come on, Mara.

LIASSON: It's hard to tell now. I was very optimistic before it was pulled.

HUME: You are for it, then?

LIASSON: Well, I think it was a compromise that had a lot of reasons, you know, to be passed. I think that in the end this thing will pass the Senate.

BARNES: I'm pessimistic today, I don't think so.

HUME: Why?

BARNES: Well, because I think you see senators like Johnny Isakson of Georgia who says look, we have to pass a supplemental spending bill to start ahead of time on border security to convince people that we are serious. If we don't do that, then it's not likely. Then, he says, the bill won't go anywhere.

HUME: One more Republican vote peeled off, right?

BARNES: Yes, maybe two.

HUME: That's it for the panel. But stay tuned to see how political debate should be promoted to get a big audience, that's next.


HUME: And finally tonight, it's awfully early to expect people to be all that interested in next year's presidential election, to watch a two-

hour debate among a slew of candidates. But our friends over at CNN figured out how to get people to tune in.


UNIDENTIFIED MALE: The Democratic presidential candidates face the American people. Tune in as voters ask the questions that everyone wants answered.

How would Hillary Clinton handle Iran? What would John Edwards do about health care? And how the hell did Dennis Kucinich get a woman like this to marry him? Tonight at 7:00, 6:00 Central.


HUME: And that's "Special Report" for this time. Please tune us in next time. In the meantime, more news is on the way. Fair, balanced, and unafraid.

Watch "Special Report With Brit Hume" weeknights at 6 p.m. EST.

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