This is a rush transcript of "Special Report With Brit Hume" from May 18, 2007.

JIM ANGLE, HOST, SPECIAL REPORT WITH BRIT HUME: Next on SPECIAL REPORT, conservative critics howl about what they see as amnesty in the new immigration bill, while liberals claim it i sn't generous enough, calling it "cruel."

One border sheriff says some illegals are from the Middle East, not the Southwest, and may be terrorists.

On war funding, Democrats demand what the president has already vetoed, while Republicans get the White House to agree to new conditions .

After Congressman John Murtha threatens a colleague, the House may vote on a formal reprimand.

And how an effort by an environmentalist backfired and replaced forests with subdivisions.

All that right here, right now.

Welcome to Washington. I'm Jim Angle, in for Bri t Hume.

There are several detailed provisions in the new immigration reform bill, touted by Senate leaders and the Bush administration. But much of the debate centers around one word - amnesty.

Congressional correspondent, Major Garrett, reports that how lawmakers feel about the use of that word pretty much defines how they feel about the legislation.


MAJOR GARRETT, FOX NEWS CONGRESSIONAL CORRESPONDENT, (voice-over): Legalizing illegals, treating temporary workers as truly temporary, limiting family migration. Conservatives brand the first part amnesty. Liberals call the other two parts cruel and un-American - soft spots all for the Senate immigration compromise.

Conservatives despise legalization through the new Z visa, a four-year visa that requires a clean work record and a $500 fine. Workers can renew the Z visa indefinitely, if they pay the $500 fine every four years.

REP. STEVE KING, R-IOWA: It's a pardon to immigration lawbreakers. And it's a reward with the objective of their crime.

GARRETT: Workers must wait eight years and pay a $4,000 fine to obtain permanent legal residency. Five years later, they can seek citizenship. Taken together, critics call these steps amnesty.

BRIAN DARLING, DIRECTOR OF SENATE RELATIONS, HERITAGE FOUNDATION: What should happen is, these individuals should leave the country, wait in line like everybody else, and go through the normal process of becoming a citizen.

GARRETT: Republican presidential candidate, Mitt Romney, who endorsed last year's immigration bill, opposes this one and today released a TV spot to capitalize on conservative angst.

MITT ROMNEY, REPUBLICAN PRESIDENTIAL CANDIDATE: Legal immigration is great, but illegal immigration - that we've got to end. Thank you. And amnesty is not the way to do it.

GARRETT: Potential GOP presidential candidate, Fred Thompson, also a no.

"With this bill, the American people are going to think they are being sold the same bill of goods as before on border security," Thompson said in a statement.

Homeland Security Secretary Michael Chertoff said the compromise will separate security risks from hardworking illegals, thereby sharpening border patrol focus.

MICHAEL CHERTOFF, SECRETARY OF HOMELAND SECURITY: They can focus on the drug dealers and the gangbangers and the terrorists, instead of chasing down housekeepers and landscapers.

GARRETT: Appearing with Chertoff on FOX AND FRIENDS, Commerce Secretary Carlos Gutierrez called the amnesty debate a distraction.

CARLOS GUTIERREZ, SECRETARY OF COMMERCE: If we sit here and continue to argue whether it is amnesty or not and continue to just, you know, dissect that word, we're going to stand still and keep the status quo in place. And the status quo is dysfunctional.

GARRETT: Liberals also have gripes. First, the new guest worker program offers no hope of future legal status.

Frank Sharry of the National Immigration Forum, backs the deal but sees trouble.

FRANK SHARRY, EXECUTIVE DIRECTOR, NATIONAL IMMIGRATION FORUM: It's going to be very controversial, this idea that we're going to have a temporary worker program for low-skill service workers, and that most of them are going to have to go home.

GARRETT: The compromise also restricts future chain migration to spouses and minor children. No more brothers, sisters or adult children, even for U.S. citizens or green card holders.

SHARRY: The idea of them being caught in a backlog for many years, not being able to come in because of this new cap, is going to be hugely controversial.


GARRETT: As this deal was being brokered behind the scenes, FOX News has learned Republican anger burst forth, memorably and loudly. Arizona's John McCain and Texas' John Cornyn argued over the compromise.

McCain accused Cornyn of trying to sabotage it. Cornyn told McCain he wasn't around to negotiate - too busy running for president.

McCain, FOX News has been told, used the "f" word toward Cornyn. We just can't be sure if the "f" word was a verb or a gerund - Jim.

ANGLE: OK, Major. Thank you.

As the politicians hash out the semantics of immigration reform, border towns deal with the reality of people sneaking into the country, and the danger they might pose.

In one Texas community, that uncertainty has prompted a battle between the sheriff and the mayor over just how real the danger is.

Correspondent Kris Gutierrez has the story.


KRIS GUTIERREZ, FOX NEWS CORRESPONDENT, LAREDO, TEXAS (voice-over): Laredo is the busiest border town in Texas. Here in Webb County alone, authorities monitor four international bridges trying to keep out drugs, illegal immigrants - and according the sheriff, terrorists from so-called "countries of interest" like Iraq and Iran.

RICK FLORES, SHERIFF, WEBB COUNTY, TEXAS: Mexicans are paying $2,000 to get into the U.S., $5,000 for Brazilians, $6,000 to $8,000 for Chinese. You can imagine what somebody from a country of interest will pay to get into the U.S.

GUTIERREZ: On a recent ride-along with a Webb County deputy, two men flagged us down for a ride. Apparently, they didn't realize they were waving at authorities, because it turns out both men had just crossed into the U.S. illegally.

One was carrying a jug of water. Both still had fresh mud from the riverbanks on their boots.

They were from Honduras, but the sheriff says they could have just as easily come from the Middle East.

FLORES: These people eventually are going to climb up to large metropolitan areas, where they could already be planning or plotting or already have something orchestrated to happen in the future.

We don't want to have another 9/11.

RAUL SALINAS, MAYOR, LAREDO, TEXAS: I think it's deplorable to make up stuff and to alarm the American people.

GUTIERREZ: Laredo mayor, Raul Salinas, worked for the FBI, stationed in Mexico City, for five years. He says there's absolutely no evidence terrorists are crossing into the U.S. from Mexico through his community.

SALINAS: At one time it was said that terrorists were training in Nuevo Laredo - ludicrous, absurd. What that's doing, that's scaring the people. And it's just not true.

GUTIERREZ: The sheriff points out these patches as proof that it is happening. These were taken off a jacket found near the border. One is an Arabic military badge. The other depicts the tragic events of 9/11.

The Border Patrol confirms these patches are common in countries in which al Qaeda is known to operate.

GUTIERREZ (on camera): Still, Mayor Salinas says the Mexican government has a strong handle on terrorism, and adds, the American government should utilize its intelligence. But others wonder if the Mexican government can even be trusted amid allegations of corruption.

In Laredo, Kris Gutierrez, FOX News.


ANGLE: A deal on another major issue - how to pay for the wars in Iraq and Afghanistan is the subject of some finger-pointing tonight. Democratic congressional leaders met with administration officials today to try to hammer out a compromise.

Democrats propose timelines for withdrawal, which the president has already vetoed. But there other efforts by Republicans to get the White House to accept some new conditions.

Chief White House correspondent, Bret Baier, has the story.


BRET BAIER, FOX NEWS CHIEF WHITE HOUSE CORRESPONDENT, THE WHITE HOUSE (voice-over): It had been billed as a key negotiating session between congressional leaders and top White House aides over a war spending bill. It broke up after an hour, with all parties united on one thing - how they characterized the meeting.

SEN. HARRY REID, D-UTAH, SENATE MAJORITY LEADER: To say I was disappointed in the meeting is an understatement.


REP. JOHN BOEHNER, R-OHIO, HOUSE MINORITY LEADER: Our meeting earlier this morning was a great disappointment.

JOSHUA BOLTEN, WHITE HOUSE CHIEF OF STAFF: It was a lively exchange, but it was not the exchange we had hoped for.

BAIER: As predicted, Democrats touted their willingness to strip all non-defense spending - or pork - out of the bill, while leaving in timelines for U.S. troop withdrawal.

PELOSI: Domestic funding was only an excuse for the president not to sign the bill. It wasn't a reason.

The reason he didn't sign the bill is he did not want to have any accountability.

BAIER: Democratic leaders also insisted they were being flexible with the troop withdrawal deadlines.

REID: With the president even being able to waive some of the timelines and the readiness accountability, no. Everything was no.

BAIER: Pointing out that the president and his commanders make the military decisions, the White House chief of staff said, any timelines were nonstarters.

BOLTEN: Whether waivable or not, timelines send exactly the wrong signal to our adversaries, to our allies and, most importantly, to the troops in the field.

BAIER: The Democrats' reluctance to drop the timetable provisions was not a surprise, since party leaders, especially in the House, having been getting intense pressure from anti-war groups, as evidenced by this new MoveOn.org radio ad against the House majority leader.

UNIDENTIFIED MALE: Steny Hoyer was one of just a few Democrats to vote against the McGovern bill - a real plan for withdrawing from Iraq, an end to this endless war. Shouldn't Steny Hoyer support the rest of the Democratic leadership, as they increase the pressure on George Bush to change his strategy?

BAIER: Sources on both sides of the aisle conceded that today's meeting was more political theater than substance. But there was some notable movement.

Bolten said definitively that the White House is ready to accept legislation put forward by Virginia Republican senator, John Warner, that would tie political and military progress by the Iraqis to future U.S. aid.

BOLTEN: That involves using benchmarks on the Iraqis, having accountability for those benchmarks and giving the president the obligation to come back and report to the Congress.

BAIER: And after all the disappointment about the meeting, the House speaker also sounded confident.

PELOSI: We'll now proceed to write a bill, to fund the troops. When we leave here for Memorial Day, our troops will be funded.


BAIER (on camera): Speaker Pelosi also said negotiations are not dead. A top aide to a moderate Democratic senator tells FOX the leadership knows that they will not end up with a timeline for withdrawal.

But, quote, politics is politics, and the anti-war guys are ripping their hair out - Jim.

ANGLE: Bret, thank you.

Coming up later on SPECIAL REPORT, are the presidential candidates telling you their honest opinions, or saying what they think will get them elected.

But first, the latest on the massive efforts to find those three missing American servicemen in Iraq and what happened when they were captured - next.


ANGLE: Army officials have identified the fourth soldier killed Saturday in the ambush near Baghdad that left three other troops missing. He is identified as Sergeant Anthony Schober of Reno, Nevada.

Four thousand U.S. troops and 2,000 Iraqis are said to be involved in the search for the missing men.

Correspondent Courtney Kealy has more.


COURTNEY KEALY, FOX NEWS CORRESPONDENT, YUSUFIYAH, IRAQ (voice-over): Patrol Base Inchon. The three missing soldiers come from this base with the Delta Company of the 4th Battalion, 31st Infantry.

Their fellow soldiers remain out here, coping with the fallout of the attack and searching for the missing, night and day.

They will not stop until they find these men, they say. They have become family.

It's the threat of constant attacks that have brought them so close.

1ST LT. THOMAS LOVELESS, DELTA COMPANY: You go out, guys will get blown out, see how everybody is. Come back here and the next thing you know, you're getting attacked on the patrol base. So, it's a very stressful environment.

KEALY: Iraqi soldiers acknowledge that local terrain (ph) aid (ph) them. These men have refused to leave the base for a break. They will continue to help, saying they will remain for months, if necessary.

This man's cousin, an Iraqi soldier, died fighting alongside the four U.S. soldiers killed in the ambush.

Bombs secretly placed are often unnervingly close by.

Recently, a rocket exploded through this window and killed an Iraqi interpreter in the soldiers' sleeping quarters.

Despite the constant attacks, meetings with local leaders continue in an attempt to smooth relations. Daily life for the locals has been severely disrupted as detainees are brought in and patrols set up checkpoints and shut down the area.

Brian Davenport leveraged information from locals to nab two men who confessed to taking part in the attack.

BRIAN DAVENPORT, DELTA COMPANY: There had been reports of something, of an attack. No specifics on it, but there was no way to tell where it was going to be or when it was going to be.

I would say this is the worst village in Iraq.

KEALY: Saturday's attack happened less than 900 yards down this rural farm road called Route Malibu by the U.S. soldiers.

It's an area that used to have idyllic vacation homes for some loyalists and Revolutionary Guards. Many of those people are now part of the security problem.

Insurgents, believed to be al Qaeda loyalists, launched this carefully planned assault with the intent to kidnap U.S. soldiers.

About 20 different fighters attacked them with small arms fire and grenades. Two of the humvees were set on fire. They returned fire. A gunfight ensued.

But while rescue teams were delayed by roadside bombs, impeding them from the north and south, an Iraqi and four U.S. soldiers died. The two humvees, engulfed in flames, popped off rounds of ammunition, and insurgents kidnapped the three U.S. soldiers.

The dense foliage along this rural road proves how difficult and painstaking the search continues to be.

South of Baghdad near Yusufiyah, Courtney Kealy, FOX News.


ANGLE: The six men who allegedly conspired to massacre U.S. service personnel at Fort Dix, New Jersey, were apprehended after what would appear to be a silly mistake - having a video store clerk make a copy of a video showing them practicing for the attack.

But the man in charge of America's internal security says that doesn't mean they did not have the capability to carry out their plans.

National correspondent Catherine Herridge has the story.


CATHERINE HERRIDGE, FOX NEWS NATIONAL CORRESPONDENT, WASHINGTON (voice-over): In his first public comments about the takedown of an alleged terrorist cell, the Fort Dix Six, the secretary of homeland security told FOX the public should not underestimate the potential threat the group posed.

MICHAEL CHERTOFF, SECRETARY OF HOMELAND SECURITY: You don't have to be smart to be a killer. You just have to be ruthless and evil. So, I would hesitate to dismiss plots that appear to be unsophisticated.

HERRIDGE: The alleged cell of six - which included three brothers, ethnic Albanians from the former Yugoslavia - is accused of plotting attacks against Fort Dix in southern New Jersey, as well as other military sites.

As FOX was first to report, the Duka brothers were in the U.S. illegally, having crossed into the country near Brownsville, Texas, in 1984, presumably smuggled in as small children.

With a deal on immigration reform, Secretary Chertoff said the loopholes which allowed the brothers to remain in this country will be closed.

CHERTOFF: Those who came in and illegally were able to stay - not because we didn't find them, but because they kept litigating the issue of asylum in the courts.

And that's why one of the features of this bill is to give people a fair hearing in court, but to make sure it's not the court system that allows people to game it for a decade.

HERRIDGE: In the 10 days since the arrest, there is still no evidence to suggest a link between al Qaeda leadership, including Osama bin Laden, and the alleged cell in southern New Jersey.

That said, Homeland Security officials believe isolated, self-directed terror cells are the wave of the future.

CHERTOFF: I think we're going to - we will see more of them. We're hard to understand what causes people to become radicalized and how we can counteract that.

HERRIDGE (on camera): Secretary Chertoff told FOX News that the key to infiltrating cells and disrupting plots here in the U.S. comes down to human intelligence, as it did in the Fort Dix case. The alleged cell was infiltrated by two confidential witnesses, who were working for the FBI.

Chertoff said technology is not enough in these cases.

In Washington, Catherine Herridge, FOX News.


ANGLE: A White House spokesman says the administration is moving quickly to find a successor to World Bank president, Paul Wolfowitz, who has agreed to resign.

Wolfowitz will leave next month after a controversy over his role in a job transfer for a female companion who worked at the bank. This morning, Wolfowitz thanked his staff for their hard work and support.


PAUL WOLFOWITZ, PRESIDENT, WORLD BANK: The only thing I'd want to add is that I am grateful. I've gotten a lot of very gracious comments, notes, e-mails from staff. I'm grateful for that.

And I'm particularly grateful for the hard work they've put in the last two years. We've accomplished a lot in the last two years.


ANGLE: Paul Wolfowitz.

A little later on the broadcast, another blowup from the combustible John Murtha has some House colleagues calling for a reprimand.

And next, do you expect to hear the truth from politicians, or just spin? When we come back.


ANGLE: Do politicians tell you what they think, or what they think you want to hear? And does it really matter?

Interesting questions, in light of the fact that a new poll shows the leading Democratic contender for president has some issues with the public on that very question.

Chief political correspondent, Carl Cameron, explains.


SEN. HILLARY CLINTON, D-NEW YORK, DEMOCRATIC PRESIDENTIAL CANDIDATE: You know, I'll do my best for you when I'm president. I can sure tell you that.

UNIDENTIFIED MALE: I believe you, too.

CARL CAMERON, FOX NEWS CHIEF POLITICAL CORRESPONDENT, WASHINGTON (voice-over): Katrina victims in New Orleans want to believe her. But the latest FOX News opinion dynamics poll suggests, above all other candidates, Hillary Clinton has a credibility problem.

Despite a 15-point advantage in the polls over Barack Obama, voters consider Clinton the most likely candidate in either party to say anything in order to win votes.

Character always underpins a presidential race. Seventy-two percent say credibility and consistency on the issues is a priority. But none of the candidates has convinced a majority they mean what they say.

John McCain and Rudy Giuliani are close. Forty-nine percent believe they say what they truly mean. A third of Republicans think Giuliani panders, and 29 percent suspect McCain's so-called straight talk really isn't.

Clinton is the only top-tier candidate in either party that a majority of the electorate doubts. Fifty-five percent believe she will say whatever she thinks will get her elected, and only 34 percent consider her a straight shooter, while 46 percent say Obama says what he actually believes, and 27 percent aren't convinced.

But Obama has been consistently opposed to the war that Clinton voted to authorize in 2002.

Clinton's taken heat lately for trying to blur both her differences with Obama and her Iraq positions in general.

Earlier this week, she voted for a measure withdrawing funds for the surge, and removing combat forces by next spring. But in what's become a pattern recently, she insisted it was a vote only to spark debate on the idea.

CLINTON: I voted in favor of cloture to have a debate. We weren't successful.

I'm not going to speculate on what I'm going to be voting on in the future.

CAMERON (on camera): Quoted off camera hours later, Clinton admitted that she did support withdrawing troop funds and combat forces in that particular measure.

In recent weeks, the precision and clarity of her Iraq rhetoric has ranged wildly. And it appears to be showing up in the polls, as voters say they're suspicious that what the Democratic frontrunner says and believes are not always the same thing and subject to change.

In Washington, Carl Cameron, FOX News.


ANGLE: Environmentalists who tried to save the forests in Washington state ended up hurting their own cause by pushing for regulations that gave landowners only one way to make money. And as correspondent Dan Springer reports, that led to an even bigger environmental problem.


DAN SPRINGER, FOX NEWS CORRESPONDENT, SEATTLE (voice-over): According to a University of Washington report, the evergreen state isn't as green as it used to be. Researchers predict the loss of 300,000 acres of forest by 2012. And environmental groups are partly to blame.

In 1999, regulations aimed at protecting salmon banned logging within 200 feet of any stream, taking 20 percent of private forest land out of production.

BRUCE BARE, COLLEGE OF FOREST RESOURCES, UNIVERSITY OF WASHINGTON: The forest owner faces some of the highest environmental regulation. But that same stream then flows through agricultural land where there's less regulation, and then into a suburban area where there probably is less, and so forth.

And they feel this is not an equitable treatment.

SPRINGER: In fact, activists have been so successful at restricting logging, the only way for companies like Weyerhaeuser to make a profit on hundreds of square miles of forest is to sell it off. That literally paved the way for housing tracts and strip malls.

SPRINGER (on camera): In an effort to at least slow down the conversion of forest to houses, some environmental groups are now actually pushing for what amounts to a huge government subsidy to keep timber companies cutting trees.

King County paid $22 million for 90,000 acres not far from Seattle, and doesn't own one inch of it - no hiking trails, no public access. It simply keeps the timber companies from selling out to developers.

CHARLIE RAINES, CASCADE LAND CONSERVANCY: There is a realization that we're losing this resource so fast, that we have to do something pretty dramatic to stem the tide.

SPRINGER (voice-over): They fought the timber industry tree-by-tree in the 1990s. But now, many environmentalists here see lumber companies as an unlikely but powerful ally in the fight against urban sprawl.

RON ARNOLD, ENVIRONMENTALIST AUTHOR: There's been a growth together, I think, seeing what happens if you don't have the timber guys there. What happens? Well, development of other kind comes in, and it doesn't re-grow trees.

SPRINGER: Along with the cost in tax dollars, stopping development means higher housing prices. But short of rolling back species protections, it may be the only way to keep the evergreen state ever green.

In Seattle, Dan Springer, FOX News.


ANGLE: We're going to check headlines and hear from our sponsors. Then the candidates one influential evangelical promises he won't vote for. And how to profit from a non-profit, next on the grapevine.


ANGLE: More of SPECIAL REPORT in a moment, but first let's get a check on today's other headlines and a preview of tonight's FOX report from Shepard Smith in our New York newsroom - Shep.

Click here to read the "Political Grapevine."

One of the hotter heads on Capitol Hill is said to belong to Pennsylvania Democratic John Murtha and most of the time he's gotten away with the anger (ph) that some find objectionable. But after a couple of recent incidents, this time things may be different. Correspondent James Rosen explains.


JAMES ROSEN, FOX NEWS CORRESPONDENT (voice-over): Congressman Jack Murtha, chairman of the powerful Defense Appropriations Subcommittee may face a formal rebuke by his colleagues following confrontations on the House floor with two Republicans in the last 10 days.

First, Murtha directed some angry words at Todd Tiahrt of Kansas at screen left, witnesses said Murtha threatened to cut off funds for defense projects in Tiahrt's district.

Next in Murtha's crosshairs was Michigan's Mike Rogers and Army veteran and former FBI agent now in his fourth terms. Both Republicans have voted in procedural actions to block Congress from spending $23 million Murtha has set aside or earmarked for a project in his home district, the National Drug Intelligence Center in Johnstown, Pennsylvania.

REP MIKE ROGERS (R), MICHIGAN: This was a program that has been listed as duplicative and wasteful.

ROSEN: According to a resolution Rogers will introduce on Monday the 18-term Democrat approached him on the GOP side of the floor on Thursday and said, "I hope you don't have any earmarks in the defense appropriation bill because they are gone, an you will not get any earmarks now and forever."

"This is not the way we do things here," Rogers says he replied, adding, "and is that supposed to make me afraid of you?"

"That's the way I do it," Murtha allegedly shot back.

ROGERS: This was clearly an effort to intimidate and bully a member from changing their opinion on going after pork barrel spending.

ROSEN: Murtha's office released a statement saying, "The committee and staff give every Democrat and Republican the same consideration. We have extensive hearings and every request is carefully considered: we will continue to do just that."

House rules forbid members from basing funding decisions on any vote cast by another member.

MICHAEL BARONE, ALMANAC OF AMERICAN POLITICS: I think if it's clear that Mr. Murtha has violated a rule, a reprimand or some kind of notice may be in order and it's not something that the Democratic leadership can prevent.

ROSEN (on camera): Minority Leader John Boehner accused Murtha, a leading critic of the Iraq war, of committing an abuse of power and signaled the GOP's intention to force the Rogers resolution it a floor vote.

In Washington, James Rosen, FOX NEWS.


ANGLE: Israeli war planes today, pummeled Hamas targets in Gaza; and Palestinians continued their rocket assault across the border. Correspondent Reena Ninan has the latest on the fighting that has Israelis leaving their homes in order to escape with their lives.


REENA NINAN, FOX NEWS CORRESPONDENT (voice-over): Fifteen second, that can be amount of time between life and death along the Israeli-Gaza border. A Kasam rocket launched from Gaza hit an Israeli gas station, Friday. This time no one was killed. More than 20 rockets have been launched into Israel today, one hitting a house wounding several people, the explosions are continuous.

(on camera): Just behind me, the town of Sderot, Israel, we are hearing a warning call, they are saying "code red" meaning in the next 15 second a rocket is expected to land.

Kasam rocket launching has been significantly decreased since yesterday. This town hit by 10 Kasam rockets today, this one just exploding behind me from Gaza into Israel.

(voice-over): Most of the residents here have been evacuated with the help of the Israeli government and wealthy philanthropists. The population of roughly 20,000 now reduced to a fraction of that. For those who remain after months of attacks, fear has turned in bitterness.

UNIDENTIFIED MALE (through translator): I would say, aim your rockets at the people in the Israeli parliament will do nothing. We are treated as a second class citizen.

NINAN: As Hamas members continue the attacks on Israel the Israeli government has responded with the second day of air strikes on the compounds of Hamas fighter, nine of whom were killed today.

ISMAIL HANIYA, PALESTINIAN PRIME MINISTER (through translator): This is really an attack on the Palestinian people. It's meant to break their spirits and determination and taunt their mind, the Palestinian code, but we're here to say that the Palestinian people and their resistance can withstand any attack.

NINAN: The situation is only escalating on the ground. Israeli tanks are positioned inside Gaza, ready to retaliate, so is Hamas. Both sides gearing up for another day of battle. On the Israeli Gaza border, Reena Ninan, FOX NEWS.


ANGLE: When SPECIAL REPORT continues, there's plenty of complaining, but not much compromising on the war funding legislation. The FOX all-stars weigh in on that when we come back.



DAVID OBEY (D-WI), HOUSE APPROPRIATIONS CMTE CHMN: The offers that were made today represent a very large steps toward compromise on or part and I think that we got an inch worm response from the administration, virtually no movement whatsoever.

JOSHUA BOLTEN, WHITE HOUSE CHIEF OF STAFF: The conversation this morning was a disappointment. It was certainly courteous and candid and it was a lively exchange, but it was not the exchange we had hoped for. Democrats seem to be dug in on precisely the same approach that resulted in the president's veto.


ANGLE: OK, Democrat David Obey followed by White House chief of staff, Josh Bolten, talking about negotiations over a war funding bill. Here we are with our panel to give us some analytical observations from Fred Barnes, executive editor of the Weekly Standard; Juan Williams, senior correspondent of National Public Radio; and syndicated columnist, Charles Krauthammer — FOX NEWS contributors, all.

Now gentlemen, on this debate, Democrats demanded what the president had already voted, which was time lines so they were going to offer a waiver with that, while Republicans got the White House, Charles, to move a little bit on some new conditions.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Right, that's the one place where there's a little bit of room in the president's position, that has to do with benchmarks on the Iraqi government.

Everybody loves to put benchmarks on them and not us and of course, it's a good idea, you want the government to do stuff in terms of reconciliation. The president is willing to do that, Senator Warner had proposed a bill which would threaten to cut off nonmilitary aid to the Iraqi government. Now, that's foreign aid and if there's one thing on that people on Capitol Hill love to oppose it's foreign aid. So it's not going to be hard to get people to link the benchmarks with this "foreign aid."

The only question is will the president accept a hard benchmark in the sense the money would have to be withheld or will he be allowed a waiver? I suspect he would not agree it a bill that doesn't allow him a waiver.

ANGLE: Now Juan, it is was interesting that the White House noted Josh Bolten was saying, look the Warner bill is the only bill that has gotten a bipartisan majority. It didn't get enough votes to proceed, but it's the only one that got a majority, go 52 votes the other day. So, there does seem to be a lot of support for that. Is that likely to be enough for Democrats in the House? There you have a lot of pressure on the leadership from the anti-war left.

JUAN WILLIAMS, NATIONAL PUBLIC RADIO: Well, the question here is one of accountability. Is the president going to be held accountable for the progress or lack of progress on the warfront? And what he's saying right now is even if he is given a waiver he's not buying in.

On timelines, you mean.

WILLIAMS: Right, on terms of a deadline for withdrawal of troops. So what that means is he doesn't want any accountability and maybe the accountability can slop over in terms of this proposal by Senator Warner of Virginia that you put the pressure on the Iraqi government to build up. But he's, I think he's really holding a hard line here and apparently doing so with no political consequence in terms of the Republican base.

ANGLE: Fred.

FRED BARNES, WEEKLY STANDARD: Look, he's being held accountable all the time, by you right now. I mean the notion that the president's not being held accountable is absurdment. Look at his popularity rating, because the war's not going well. He's being held accountable.

Now look, Democrats had to know that this was an offer that to we'll get rid of some of the pork if you accept the timelines, this was an offer that the president was bound to refuse. They knew that. But there's something are smart in what they're doing, it's purely political, but every week in which the Democrats raise the Iraqi issue is good week for Democrats, politically. Even Republicans in Congress will tell you that. They hate to see it, but they recognize what is happening. The war is unpopular, the more Democrats harp on that issue and it's the big issue in the forefront, it helps them politically.

ANGLE: Now Charles, Brit was reporting that one Democrat in the house, referring to the fact that Nancy Pelosi has a pretty big anti-war block over there, and nothing will suit them except a date certain for complete withdrawal. So, at least in the initial going, the sense is that she has to go in and push things pretty hard in order to satisfy them that she made her best effort and I think Brit quoted someone as saying that she knows she won't get a timeline, but they have to do their best because the anti-war guys are ripping their hair out.

KRAUTHAMMER: Now the question is, whose hair, her or theirs? (INAUDIBLE)


.we have to investigate. Look, what's happening here is a dynamic that's very clear. The Republicans, ironically, are united on this at least until the beginning of the surge. They are not going to desert the president right now. The Democrats are divided. They have the antiwar wing, but ultimately as Pelosi has said, she said it earlier in that clip, they are going to approve the authorization. They are not going to withhold the money for our troops and leave them, because in public opinion in the polls if you ask who's to blame if the money doesn't reach troops, it's Congress and not the president. So she has to placate them by these shows week after week, but ultimately by Memorial Day there's going to be a bill, it's going to have the money.

WILLIAMS: Well, just one quick point, I don't think it's a matter of placating anybody. I think that in fact, the will of the American people to their representative is let's look for some reasonable way out of this problem and the president's saying, look, I believe in what I'm doing, I understand, I respect the president, but he's not in keeping with the will of the American people, here.

ANGEL: OK, up next: When's the last time Congress took a no confidence vote? How about never? But one is planned next week for Attorney General Alberto Gonzales. We'll hash that out when we come back.



SEN CHARLES SCHUMER (D), NEW YORK: It is clear that the time has come for the attorney general to step down. Today, we are announcing that we will offer a no confidence vote on the attorney general. We hope to vote on it next week.


ANGLE: OK, there's Democratic Senator Charles Schumer talking about a no confidence vote on Attorney General Alberto Gonzales. A no confidence vote, gentlemen, will the U.S. parliament actually take that kind of action?

BARNES: Well, how long have we had Congress going, since what — 1789 and they haven't done it yet and maybe they'll do that vote. But I think it'll have no effect on the Bush administration. You know, the White House, and I have talked to people there, one of the things they feel the most passionate about is not that Alberto Gonzales is the greatest attorney general, but he has been abused and abused and abused over and again by Democrats in Congress and they're not going to, look, they're not going to can him because Chuck Schumer says so. Because they think he has done nothing illegal, nothing wrong, perhaps some things clumsy, but no grounds for being canned and so they're not going to go along with this even if there ultimately is a vote and there may not be.

WILLIAMS: Now, I have some friends who don't even like what I do for a living and stay out of politics and they live in Washington, but they stay out of politics. But this week they were all talking about the drama in James Comey's testimony, the former deputy attorney general, and saying that Alberto Gonzales, the attorney General, and Andy Carr, the former White House chief of staff, had gone, in the dark of night, to John Ashcroft's bed, as Ashcroft was sedated and tried to get him to sign a document that would allow the president to conduct the wiretaps on telephones intended to discover information about terrorists.

Now, as it turns out, it has been said, you know what, but he didn't need that signature. The president has the authority to do that anyway, and secondly that this was the night before the Madrid attacks. And so they were really hungry for information to stop this possible attack, at least that's the thought. We don't know that specifically. But the point I think that is spreading nationwide is why are you going to it man's hospital room and while he is sedated, even if you don't need the signature, apparently you thought you needed the signature.

ANGLE: Well, let — we should explain to people a little bit. What was happening was there's a regular 45-day review that the president insisted on, in the executive order when he established this program in October of 2001. And it had been renewed repeatedly. Comes up to this point in March of 2004 Ashcroft goes to the hospital, Comey is the acting attorney general and he says the time is up for it and he will not renew it.

So the White House, card and Gonzales go to Ashcroft's bed, Charles, and try to get him to overrule him and Ashcroft says no, basically I agree with Comey and besides he is attorney general right now, so it's up to him. Later on Comey meets with the president, a couple days later, and the president tells him to do what's right.

KRAUTHAMMER: Fred used the word "clumsy" in relation to the attorney general. I would agree. He is the Inspector Clouseau of American government, and I would dismiss him on those grounds alone. But on this issue, even though it was a clumsy attempt and the signature of Ashcroft was not required, Comey himself has said, when he was asked before the Senate, this was — there was nothing illegal here, it's a matter of custom and after all, the attorney general works for the president, it's his ultimate authority as to whether he can have this program or not.

And the second issue of illegality it wasn't in and of itself illegal. There obviously is a division of opinion, the president after 9/11 was looking for any way to protect America, including listening in on al Qaeda and he stretched the limits of what's legal and people have disagreed, although I think he was right in this. He had Article Two authority as commander in chief to do this.

So there was nothing illegal, here. It was a clumsy attempt to get the signature, but on the basis of fact, there was nothing he did wrong and in fact he defended us and this program and it was extremely important in accounting for the fact that we have not had a second attack since 9/11.

WILLIAMS: So the question is, why did he feel he needed to go to this man's hospital bed in the middle of the night?

KRAUTHAMMER: You want the most authority on your side in a difficult decision in which people honorably disagree and he didn't get it.

WILLIAMS: We didn't get it and he knew that Ashcroft disapproved and so that's — I think that's — you know, but...

BARNES: But they rested this on presidential — every president has claimed this authority in wartime so President Bush wasn't asking for anything new and obviously it was to protect our country from another terrorist attack.

ANGLE: Well in fact, the Justice Department prevailed on this, because Comey and Mueller met separately with the president, the president said you go back and do what is right and they eventually brought the program into compliance with what the Justice Department thought was in fact — could be certified...

KRAUTHAMMER: Which shows that everybody acted it good faith, here.

WILLIAMS: No, but it says that in that case, that night they were trying to force something and that's — even the supporters — even Gonzales' supporter say they're not clear why that night they felt they needed that signature in such a rush.

KRAUTHAMMER: Well, because it was expiring. Because authority was expiring. I wouldn't have gone into an intensive care unit, but there was a matter of urgency.

ANGLE: OK. All right. T'is the season of political debates and we have one you've never heard of, but would love to see. That is next. .


ANGLE: Finally tonight, with close to 20 presidential candidates involved in the 2008 election, debates separated by political party can become a little crowded, maybe it's time to divvy up the candidates in a different way.


ANNOUNCER: Newt Gingrich, Chris Dodd, Bill Richardson, don't miss this historic election event. The first all-doughy guy presidential debate, sponsored by Sara Lee, May 31 on MSNBC.


ANGLE: And that it for SPECIAL REPORT and the not-so doughy panels. Stay tune to FOX for more news — fair, balanced and thin.

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

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