This is a rush transcript of "Special Report With Brit Hume" from June 28, 2007.

BRIT HUME, FOX NEWS ANCHOR: Next on SPECIAL REPORT, that immigration bill goes dow n in a stampede of no votes, in which even some of the bill's previous backers voted no. It is now dead. House Republicans move vote to block regulation of talk radio and now that idea appears dead too. The Supreme Court rules five to four against race-based diversity plan in two school systems. The White House, meanwhile, refuses to honor Senate subpoenas, asserting executive privilege. Democrats complained, but they didn't the last time. We'll explain that.

Plus Fred Thompson all but declares in a Fox News interview. All tha t right here, right now. Welcome to Washington. I'm Brit Hume. Not only did the Senate immigration bill go down today, it was swamped. It sank so deep, it's not likely to come back in this Congress or in this presidency. Congressional correspondent Major Garrett reports it's all over, including the shouting.


MAJOR GARRETT, FOX NEWS CONGRESSIONAL CORRESPONDENT (voice-over): This is the sound that sent the immigration bill over the cliff.

SEN. JIM DEMINT ®, SOUTH CAROLINA: People are trying to get in touch with us. Even now, they are calling in such numbers that it has crashed the telephone system here in the Senate.

GARRETT: That is not all that crashed.

UNIDENTIFIED MALE: On this vote the yeahs are 46, the nays are 53.

GARRETT: Supporters fell a staggering 14 votes short of the 60 they needed to move the bill toward final passage. Significantly, this test vote failed to muster a simple majority.

SEN. JEFF SESSIONS ®, ALABAMA: The senators gave a decent respect to their opinions of their constituents and their votes reflected that.

GARRETT: Conservative talk radio host Rush Limbaugh said grassroots opposition turn the tide.

RUSH LIMBAUGH, TALK RADIO HOST: When the rubber hit the road, they listen to you. They listen to the polling on this.

GARRETT: Democrats suggested bigotry or worse motivated callers who lobbied against the bill.

SEN. DICK DURBIN (D), ILLINOIS: These are voices of exclusion. People who want to keep those people out. People who want those people to go away. That's not America.

GARRETT: News of this bitter defeat for the Bush White House arrived just as the president prepared to deliver a war on terror speech. The president's post-defeat remarks, terse.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The American people understand the status quo is unacceptable when it comes to our immigration laws. A lot of us worked hard to see if we couldn't find common ground. It didn't work.

GARRETT: Supporters of a bipartisan bill that sought tighter border security, a guest worker program, verifiable worker records, and legalization for millions of illegals here now said this kind of measure will not resurface until after the next election.

SEN. MEL MARTINEZ ®, FLORIDA: But today is a time to be a realist. I don't see where the political will is there for this issue to be dealt with.

GARRETT: Homeland Security Secretary Michael Chertoff said he would now carry out existing law, building 370 miles of fence on the southern border and hiring thousands of new border patrol agents. He also vowed to deport illegals, but sounded this note of caution.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY : You will continue to see heart wrenching examples of families being pulled apart, because I have an obligation to enforce the law, whether it is painful to do or whether it is pleasurable to do. But in order to regain the credibility of the American people that has been squandered over 30 years, we are going to have to be tough.


GARRETT: Chertoff's statement probably music to the ears of opponents of this bill, who have said over and over again that the country did need a massive new immigration bill, because it was having a hard enough time enforcing the immigration laws already on books. But even as Chertoff talked about more immigration raids, Democrats who represent communities with large illegal immigrant communities said those communities live in fear and feel under siege. Democrats are betting, in the main, that their advocacy of this bill, which outnumbered the advocacy among Republicans, will help them with the Latino community down the road. Republicans appear to have calculated that their dispirited base that got fired up to stop this bill was more important to placate than the promise of theoretical Latino support years and years down the road. Brit?

HUME: Major, thank you. The latest Fox News/Opinion Dynamics poll, meanwhile, finds President Bush at a new low point with the American people, showing a 31 percent approval rate. That is the lowest he has ever had in this poll. But Americans are handing out bad grades all around. Only 36 percent approve of the job Democrats are doing in Congress. And that's a higher number than in some other polls. And a mere 30 percent of those asked think the Republicans are doing a good job in Congress.

At least one leading Democrat on Capitol Hill is backing off a bid on talk of reinstating the fairness doctrine, a long dead Federal Communications Commission rule designed strike a political balance on the public airwaves. One Republican Congressman isn't taking any chances, however, and is leading the charge against any new regulation. Chief Washington correspondent Jim Angle reports.


JIM ANGLE, FOX NEWS CHIEF WASHINGTON CORRESPONDENT (voice-over): Congressman Mike Pence wants Congress to ensures that no future administration could revive the long discarded fairness doctrine, for with he has a different name, without going through Congress.

REP. MIKE PENCE ®, INDIANA: I urge my colleagues on both sides of the aisle to rejection the unfairness doctrine.

ANGLE: Senator Dick Durbin, the number three Democrat in the Senate, is one of several Democrats, along with Senator Diane Feinstein, to talk this week about bringing back the fairness doctrine, a federal rule thrown out 20 years ago, which required all broadcast agents to air opposing viewpoints on controversial issues. But Democrat David Obey denied anyone in his parts actually intends to resurrect the rule, saying in mock horror, he would never want to see Sean Hannity or Rush Limbaugh hold back.

REP. DAVID OBEY (D), WISCONSIN: I want to see the real raw Rush. I want him and folks like him to be thoroughly and fully exposed to the American listening audience in all of their bloviating glory.

ANGLE: In fact, Obey said, any attempt by the government to step in now would only enhance the standing of conservative talk show hosts, a prospect Obey clearly finds distasteful.

OBEY: Rush and Sean are just about as important in the scheme of things as Air America, a group of liberal talk radio programs. But Republicans argue the fair doctrine, thrown out in 1987, belongs to another era.

REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: My goodness, we are in the 21 century, where people get their news from thousands of different sources. It could be radio, from hundreds and hundreds of radio stations. It could be from TV, where we now have hundreds and hundreds of stations.

REP. SCOTT GARRETT ®, NEW JERSEY: Fair and balanced media, truly a laudable goal. But, quite frankly, Mr. Chairman, we achieve that result when we do, in fact, let the public decide. They report, you decide.

REP. MARK KIRK ®, ILLINOIS: This 1929 radio regulation that these senators want to dig up was written when there was no TV, no cable, no Internet, not to mention no satellites or Myspace or Youtube. As kids today would say, this doctrine is so 20th century.


ANGLE: There are two bills on this, one tonight to deny any money for the FCC to implement such a rule. But that would only block any return of the fairness doctrine for a year. Mike Pence is introducing another free standing bill that would bar any future administration from ever reviving the fairness doctrine without the permission of Congress. Brit?

HUME: Jim, thank you. Democrats and Republicans in the House last night refused to block an automatic pay raise for themselves. That means their current pay of 165,200 dollars will go up about 4,400 dollars. Last year, Democrats led a successful effort to block that annual cost of living increase until the Congress raised the minimum wage, an objective they achieved this year. The Senate has confirmed Army Lieutenant General Douglas Lute as deputy national security advisor, President Bush's so called war czar. The vote was 94 to four. Lute will oversee day to day operations in the wars in both Iraq and Afghanistan. During his speech today at the U.S. Naval War College, President Bush said that the troop surge in Iraq is showing results and he urged Americans to be patient about the progress of the war. Mr. Bush pointed to successes already achieved in Operation Phantom Thunder aimed at bearing down on terrorists in and around Baghdad. And he said such progress will lead to new allies for America in what he called the cause of freedom. Later in our program, a first-hand look at the positive turn of events in Iraq's Ramadi Province. And after a break, that's—we will tell you what Fred Thompson told Carl Cameron today.


HUME: He walks like a candidate, talks like a candidate, but Republican front runner Fred Thompson has yet to acknowledge that he is a candidate for president. Nevertheless, he was in the key primary state of New Hampshire today, touching all the right bases, including that of our own chief political correspondent Carl Cameron.


CARL CAMERON, FOX NEWS CHIEF POLITICAL CORRESPONDENT (voice-over): A welcome reception for the prospective candidate the moment he arrived in New Hampshire, home of the first presidential primary. First stop, Reilly's Gun Shop, a tradition on the GOP presidential campaign trail.

FRED THOMPSON ®, POSSIBLE PRESIDENTIAL CANDIDATE: Keep your powder dry. We will be back.

UNIDENTIFIED MALE: Take that step, quick.

CAMERON: Thompson is an ardent supporter of gun rights and was making a statement, because Mitt Romney boasted of being a life-long hunter, but has only gone twice. And as mayor of New York, Rudy Giuliani backed gun control, tremendously unpopular in this libertarian state.

THOMPSON: I appreciate what you all are doing. When we think of New Hampshire, you think of freedom and independence. And the second amendment is a very big important part of that.

CAMERON: From there, it was off to the Merimack (ph) restaurant, another political landmark visited by White House hopefuls for decades. After lunch, the obligatory interview with the only statewide newspaper in New Hampshire, the conservative "Union Leader," which has made and broken Republican presidential candidates for 50 years. Then he joined Fox News for an exclusive national interview, in which he insisted he is not running as an outsider.

THOMPSON: I don't use that term. I don't know what it means, really. You don't have to be from Alaska or Hawaii to see what is wrong with the way your government is operating. I have been critical when I was outside. I have been critical when I was inside. And now I'm critical again.

CAMERON: Washington, he complains, is lost, both parties and his president.

THOMPSON: I think that Washington is suffering from a lack of credibility. It's a bipartisan problem, I think we've got. And I think we all share that. I think there is a whole lot more that we have in common than divides us in this country. And geography is not as important a factor as it used to be.

CAMERON (on camera): Should we assume that you include some of the president's own leadership when you say the credibility problem?

THOMPSON: Well, I think everybody in leadership has a credibility problem these days, quite frankly.

CAMERON (voice-over): Hours after immigration reform was blocked in the Senate, he hailed its derailment.

THOMPSON: Sometimes not making the wrong move is better than nothing at all. I think if they had an immigration bill that doesn't secure the border, I think that it shows a disconnect with the American people that they thought that they could convince them.

CAMERON (on camera): Senator McCain, your friend and rival, says that it's wrong to do nothing. Is he wrong?

THOMPSON: No, I think we should do something. I think that we should enforce the law. That's a very good place to start and the American are saying don't put on a piece of paper that you are going to secure the border and call it a bill.

CAMERON (voice-over): As he climbs in the polls, criticism mounts. Some say he is not pro-life enough.

THOMPSON: I got the National Right to Life endorsement in 1994 when I first ran. They were the only ones who came down and sat down and interviewed me at the time. And I had a full discussion with them. And then I proceeded to cast 100 percent votes in the anti-abortion fashion.

CAMERON: And after talking to the folks at Reilly's Guns, he made clear that on gun rights the contrast to Giuliani and Romney matters. (on camera): How important is that distinction?

THOMPSON: I think it is an important distinction. I think second amendment rights are important to the American people. It's important to our way of life.


CAMERON: And so Fred Thompson has begun the process of comparing himself to the competition. He did so today, both in his rhetoric and with his campaign stops. Technically speaking, he is still not yet an official candidate, just testing the water. But that is almost a farce. Everything he says seems to indicate that he is, indeed, going to get into the race. He'll announce it and be back in New Hampshire in mid July.

There is one test, however, that he ducked today. New Hampshire is the state that prides itself on offering the so-called anti-tax pledge. Would he pledge to never raise new taxes? On that he demurred, saying he will talk about it at great length later. As he giggled and chuckled his way away from the question, Brit, he said I have never met a tax hike that I liked.

HUME: OK, Carl, thank you. Good work. Still ahead on SPECIAL REPORT, the White House rejects Congressional subpoenas and Democrats react. When we come back though, the Supreme Court limits the way schools can achieve racial integration. Stay tuned.

(COMMERCIAL BREAK) HUME: A closely divided Supreme Court today sharply limited methods public school systems may use to achieve racial balance in their class rooms. National correspondent Catherine Herridge has the story.


CATHERINE HERRIDGE, FOX NEWS NATIONAL CORRESPONDENT (voice-over): The two school districts, one in Kentucky, the other in Washington State, suffered stinging defeats at the hands a newly conservative leaning Supreme Court. Before the court in December, the two school districts laid out different methods of taking a student's race into account when deciding which school they would attend.

Their stated goal was to create racial diversity. But in the Seattle, Washington case, a white student was denied access to a school whose programs catered to his interest in the bio technology. In a Jefferson County, Kentucky case, students were subjected to long commutes in order to satisfy racial quotas. The Supreme Court consolidated the cases. And, in a five to four decision, restricted the use of race when assigning students to public schools. The parents who brought the cases, backed by the Bush administration, essentially won. The decision means race can be used, but now in very limited circumstances. Writing for the majority, Chief Justice John Roberts stated that "The districts failed to show that they considered methods other than explicit racial classifications to achieve their stated goals." Justice Anthony Kennedy, one of the court's swing votes, sided with the majority, but stated that race could not excluded entirely from school diversity plans. And Justice Steven Breyer, in a dissent joined by the court's other liberals, said, "to invalidate the plan under review is to threaten the promise of Brown," the landmark decision Brown v Board of Education that paved the way for school desegregation. On the steps of Supreme Court, the reaction was swift.

SHARON BROWNE, PACIFIC LEGAL FOUNDATION: Hundreds of school districts across the nation are going to have to eliminate any race-based assignment program. The court recognizes that using race is wrong and that all students deserve equal education opportunities.

THEODORE SHAW, NAACP LEGAL DEFENSE FUND: This is not a good day for our country. It is not a good day because the court, as Justice Breyer pointed out, in as impassioned and powerful dissent as I have heard read from the bench in the Supreme Court, walks away from both the spirit and the substance of Brown.

HERRIDGE: In 2003, a divided court said considering race was acceptable in an effort to attain racial diversity at the Universities of Michigan Law School. Since that ruling, a key swing vote, Sandra Day O'Connor, has retired.

JONATHAN TURLEY, CONSTITUTIONAL LAW PROFESSOR: With O'Connor gone, and Sam Alito in her chair, I think that we very well could see a roll back on the law school and the university levels.

HERRIDGE (on camera): With this decision, court observers say the true Bush legacy is emerging. It may not be Iraq. It may not be immigration. But a court the president fundamentally changed with the appointments of Justices Alito and Roberts. At the Supreme Court, Catherine Herridge, Fox News.


HUME: A familiar phrase was used by the White House today in its refusal to comply with subpoenas issued by Congress as it investigates that decision to fire eight U.S. attorneys last year. Correspondent James Rosen looks at today's developments and the use of executive privilege.


JAMES ROSEN, FOX NEWS CORRESPONDENT (voice-over): As President Bush traveled to Rhode Island to address the Naval War College, his aides delivered a letter to the chairman of the House and Senate Judiciary Committees, in which the White House council asserted executive privilege to deny those committees access to White House documents they had subpoenaed earlier this month as part of their investigation into the dismissal last December of eight U.S. attorneys. "Presidents," wrote counsel Fred Fielding, "would not be able to fulfill their responsibilities if their advisers, on fear of being commanded to Capitol Hill to testify, or having their documents produced to Congress, were reluctant to communicate openly and honestly in the course of rendering advise and reaching decisions. There is no demonstration," Fielding continues, as he claimed is required by law "that the documents and information you seek by subpoena are critically important to any legislative initiatives. The president personally authorized the letter after receiving on of his own, eight pages long, from a top Justice Department official, providing a legal rationale for the assertion of privilege. Among other arguments, DOJ maintained Congress has no oversight authority to probe the exercises of powers that are, as with the selection of U.S. attorneys, the president's alone. Democrats swiftly likened the current controversy to Watergate.

SEN. CHARLES SCHUMER (D), NEW YORK: This goes to the level of what happened with Richard Nixon in his last years in the White House. There is just stone wall, stone wall, stone wall.

ROSEN: One Democratic veteran of the Nixon impeachment committee noted that Fred Fielding served as deputy counsel in the Nixon White House.

REP. JOHN CONYERS (D), MICHIGAN: Guess what, it's the same lawyer for the president that was in that issue, same one.

ROSEN: Democrats did not invoke Watergate the only other time Mr. Bush has exerted executive privilege, back in December 2001, when he denied access to documents concerning alleged violations of campaign finance laws during the Clinton era. Today's assertion of privilege covers only documents about the firing of the U.S. attorneys and not the testimony sought from former White House aide Sara Taylor and Harriet Myers. Nor does the Fielding's letter address subpoenas issued by the Senate Judiciary Committee on Wednesday, demanding documents from the White House, the vice president, the NSC and Justice about the warrantless wiretapping project the White House calls the Terrorist Surveillance Program. Instead, the White House renewed an offer for March, if the subpoenas are withdrawn, to make the former aides available for informal questioning with no stenographer present. And also made abundantly clear how the administration feels about the wire tapping subpoenas.

DANA PERINO, WH DEPUTY PRESS SECRETARY: I do think it is quite an overreach by the Congress to be asking for documents regarding the highly classified program, in which members of Congress have been briefed on—the contents of that program from the very beginning. There has been extensive oversight. There have been many hearings. And I think that it's partly more of a show trial than it is anything else.


ROSEN: Perino dismissed as apples and oranges the comparison with Watergate, noting that that involved a request for evidence in a criminal case before U.S. district court. This matter, at least at this point, Brit, remains strictly a Congressional investigation.

HUME: The subpoenas issued by the Senate Judiciary Committee, Chairman Patrick Leahy, of course, how did he react, if at all, today?

ROSEN: Well, the Vermont Democrat issued only a paper statement today dismissing the Fielding letter as an example of, and I quote, Nixonian stone walling. However, Senator Leahy took quite a different view of these kinds of matters back when there was a Republican Congress seeking documents from a Democratic president, namely Bill Clinton.

In September of 1999, Senator Leahy told the Judiciary Committee, and I quote, in the context of a Congressional investigation, executive privilege would be more difficult to overcome. He added, the executive privilege may also be construed broadly to permit the government to protect documents that would reveal advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated.

So very often, as is often the case in Washington, it depends on whose ox is being gored. One final note, just to let our viewers know, if anyone thought that the Bush White House is prepared to dump on the Nixon White House, I asked Dana Perino point blank if she thought Nixon was a good president and she said, point blank, yes. Brit?

HUME: OK James, thank you. Secretary of State Rice said today she is hoping for a swift shutdown to North Korea's nuclear weapons program now that U.N. inspectors are in the country. Rice made the comments before a meeting with South Korean Foreign Minister Song Min-soon. She said she was hoping for rapid progress following the resolution of a dispute over some 25 million dollars worth of North Korean funds. International weapons inspector today visited a nuclear facility at Yongbyon. Russia said today it has carried out a successful test of its new intercontinental missiles, sending it almost the length of the country, from a submarine in the White Sea to a peninsula in the far east. The missile carried a dummy warhead. But in a real attack, it could carry a nuclear warhead. The Bulava missile had failed in several earlier tests. Venezuelan President Hugo Chavez paid a call on Russian President Vladimir Putin in Moscow today. Their meeting comes just days before Putin arrives in the U.S. for a visit with President Bush at the Bush family home in Kennebunkport, Maine. Chavez told a Russian audience that his country wants only peace, but is in danger of a U.S. attack. However, he denied that she was seeking to buy more weapons. Venezuela has already purchased some three billion dollars worth of arms from Russia, including military helicopters, Kalashnikov rifles and fighter jets. Got to take a break here to pay our bills and update the other headlines. When we come back, the tale of Elizabeth Edwards, the camera and the park ranger. That story next on the Grapevine. (

Graham amendment—

HUME: No, I'm not talking about any particular amendment, I'm talking about the provisions that were in the body of the bill that, clearly, Michael Chertoff and others believed would help the enforcement. They just didn't believe them.

BARNES: They didn't believe them, and that's why there was going to be this amendment by Lindsay graham that would have toughened things, that would have required, you know, you had to go back to your home country just to get a Z visa, and it was going to crack down on all the people who had outstayed their visas that they had here, and so on. And it was going to be a tough measure, that might have brought some of the conservatives along, although I'm not sure that it would have. But they never got to it for procedural reasons, because they couldn't get to it. If they had, if that had been the vote just before cloture, it might have changed it. But, you know, it might not have.

HUME: Well, on the other had, did anybody seriously think that if this thing could somehow manage to squeak out the Senate on some hairline vote, which is all it ever would have been, that it was ever going anywhere in the House?

LIASSON: I think the House voting on that resolution, the House Republicans voting on that resolution, saying, in effect, this is dead on arrival, I think had an affect on the Senate. It did. It was, like, why should I stick my neck out if this thing is going to die in the House?

BARNES: If the Senate would have passed it, it would have generated some momentum. It would have been quite remarkable. This is a very important issue, and a very important bill if it had passed. And, obviously, it didn't, so the House won't do it anyway.

KONDRACKE: It would have kept it alive, there would have been a chance. There might have been a conference that could have worked out the details. Part of the tragedy here is that President Bush has just lost any persuasive power with Republicans or anybody else.

HUME: Which Republican, if any Republican, had any persuasive power on this issue?

KONDRACKE: Well, look, there are a lot of people, some of whom I named, like John Warner, and people like that, who had voted for these kind of bills in the past. He is not even up for reelection—

BARNES: Yes, he is.

HUME: Yes, he's up, depending on whether he'll run.

KONDRACKE: But if John Warner runs again, he will probably win. But he got scared off this bill, and he voted for immigration reform last time. And it was this upheaval on the part of base that was stirred up by the talk show hosts.

BARNES: It wouldn't have happened the way it did today. It started, obviously, among the conservative base, and heavily abetted by conservative talk radio, hadn't spread across the country and taken up by the general public.

HUME: I would submit that one of the things that went wrong here is the more the people found out about the bill, not just they heard opinions expressed about it, the more they found about what was in the bill, the less he liked it.

KONDRACKE: But almost all of what they heard about the bill was bad.

HUME: Well, that's what—

KONDRACKE: Was it perfect, no? But it was only way to move on to try to solve this problem.

LIASSON: The big mega phone was missing, the bully pulpit of the president, because he has no more juice left. And the other mega phone that Republicans used to rely on, talk radio, was completely turned against them. They had very tools.

HUME: Next up with the panel, the Supreme Court ruling vote on race in schools. We'll talk about that next.


REP CAROLYN KIRKPATRICK, (D) MICHIGAN: Fifty-three years ago, in this building, the Supreme Court ruled that this must be a just society, that there should be equal education and access for all Americans. In one swoop, in a 5-4 decision, this court turned that 53-year-old decision, and others, upside down.

JONATHAN TURLEY, CONSTITUTIONAL LAW PROFESSOR: What you really see with these decisions is the emergence of a true Bush legacy. When people talk about will it be Iraq? Will it be immigration? No, it will be the Supreme Court.


HUME: Well, some people think that is wonderful, perhaps. Obviously, Carolyn Kirkpatrick, and others members of the Congressional black caucus feel otherwise. And that was a pretty strong statement she made.

What about that? We had two decisions today which, basically, said that the race-based diversity plans, which assigns students to certain schools within two school districts in this country, were impermissibly based entirely, or too strongly, on race and nothing else. And we're getting strong 5-4 decisions. What about this? Does this completely undo race as a factor in school admissions from now on? Mara?

LIASSON: No, it doesn't completely undo it. But it ratchets it back, and it limits the ability of these school districts to use race as a criteria when they are designing their desegregation plans. Look, I think Jonathan Turley is absolutely correct. I think that no matter what happens in any other aspect of his agenda, the president has put a lasting imprint on the Supreme Court, and you are seeing this, kind of, one after another of these 5-4 decisions come down that, clearly, the Court has moved in a more conservative direction than before Alito and Roberts were on it.

BARNES: That's true. He has succeeded where Nixon, Reagan, and his father all failed. Remember? They wanted to turn the court in a more conservative direction, and they really didn't, it didn't work that way.

But this decision, you know—the black caucus, I mean, they are hysterical, this is going to change things very, very little. This was a very narrow decision made even more narrow by the concurring opinion of Justice Kennedy who kept it from being—

HUME: More sweeping.

BARNES: —more sweeping, and what had to be followed always in other cases. What they said was, look, race is a blunt instrument. And when it is the only factor in school districts that have overcome segregation—Seattle never had segregated schools, but Louisville had been certified to have overcome the legacy of segregation—when you are doing it just on race only—you don't look at individuals, and other things that may be factors in assigning of the schools—when you do that just on race, you can't do it. In the majority opinion, Justice Roberts made one point that I thought was terrific. He said, under the Seattle plan, if you had a district that was 50 percent white and 50 percent Asian, that was fine, that met the diversity criterion. But if the district was a quarter Asian, a quarter Hispanic, a quarter African American, and a quart white, it wouldn't need it.

HUME: Why?

BARNES: Because they had these rigid standards that you had to have at least 31 percent whites in a school. The goal was diversity. I can't think of anything more diverse than a quarter of all those different groups.

KONDRACKE: Fifty-three years after the Brown versus Board of Education decision we have separate and unequal school systems around the country. If you are an inner city, you don't have them legally but you have, yes, inner city schools, in general, around the country, stink. And the kids who go there get inferior educations. Now, the Supreme Court—

HUME: Is that because of race?

KONDRACKE: Well, it's partly because of the legacy of segregation, yes, it is. These kids have not—have broken families, and stuff. They go into schools with a much greater burden than kids living out in the suburbs. Now, I don't think the Supreme Court can do something about it, but legislatures can. And the way legislatures can is to insist on paying teachers a professional salary, and demanding that those teachers act like professionals. Instead of having teachers unions determine all the rules, to impose discipline, to have high-quality teachers. We are never going to solve this problem by insisting that white kids have to sit next to black kids. It's not going to happen that way. It's going to happen only if we have standards and money together, and improve the school system so that inner city—

HUME: So do you support these decisions and think this was the correct rule, or what?

KONDRACKE: Yes, fundamentally, think racial quotas simply don't work. They are nice, they create some sense of diversity, and stuff like that. But that diversity is not the problem. Quality is the problem, and that's what we have to fix as a society.

BARNES: Well said.

HUME: Do you agree with Mort? (CROSSTALK)

HUME: Mara, I think it's probably time to get this panel over with. We put you between the beltway boys to try to avoid any fights, and it seems to be working.

LIASSON: Yes, not that they agree. What Mort is talking about is correct about education. Of course, this was focused on slightly different matter.

HUME: That's it for the panel, but stay tuned to find out why it is not always a good idea for a president to take questions after a speech.


HUME: Finally tonight, President Bush discovered there are some smart people at the Naval War College where he spoke today, and they ask good questions.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: I've enjoyed my stay so much I thought I might answer some questions.

UNIDENTIFIED MALE: It strikes me that war you are fighting today is very much a land war intensive campaign. What, if any, impact, is that land campaign focus likely to have on your propensity to invest in a maritime strategy in the future.

BUSH: Yes, thanks. Uh—


Now who exactly invited you here? (LAUGHTER)

No, thank you, sir. Just kidding.


HUME: And that's "Special Report" for this time. Please tune in next time. And in the meantime, nor news is on the way. Fair, balanced, and unafraid.

Content and Programming Copyright 2007 Fox News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2007 Voxant, Inc. (www.voxant.com), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, LLC'S and Voxant, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.