This is a rush transcript from "Special Report," November 2, 2011. This copy may not be in its final form and may be updated.

BRET BAIER, ANCHOR: President Obama leaving the White House tonight bound for France and the G-20 summit. This is the Greek debt deal. The eurozone deal is really in trouble, it appears. We'll see if they can salvage that.

Meantime, the Federal Reserve chairman Ben Bernanke up on Capitol Hill today really painted a dire picture of the U.S. economy, downgrading the forecast the Fed did for 2012. Original estimate from 7.8 percent to 8.2 percent unemployment next year now worsened to a range of 8.5-8.7 percent. We're back with the panel. Mara?

MARA LIASSON, NATIONAL PUBLIC RADIO: 8.7, that's still pretty good. I mean it's better than we are now. There are a lot of people who thought it was gonna stay at nine. When you are as bad as we are now going in the right direction is what the White House wants to hear. But that is still terrible. And I don't think --

BAIER: Thanks for the clarification.

LIASSON: It's still horrendous. And I don't think that any president since FDR has run for re-election with unemployment even that high. So, Barack Obama's gonna try to make history in another way. He made it in 2008 and if he's gonna get re-elected he's gonna have to make it in another way, which is to defy historical odds. But, you know, Bernanke says there are still more tools in the Fed's tool box that they can use.

BAIER: Which the market apparently liked today.

LIASSON: Yes, liked today. And we don't know exactly what they are, but I think what is happening in Europe is gonna be a huge, huge drag, as Bernanke said today.

BAIER: And what about that G-20 trip and the prospect of this Greek deal? They were going into a referendum to approve the eurozone debt deal, which didn't, wasn't really an optimistic sign for the European leaders.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: What happened is that last week it looked as if the European had finally come to an agreement on how to bail out the Greeks, including discounting their bonds by half. So if you invested in a bond you lose half your money, which appeared to be something that might work. Not 100 percent sure.

Then all of a sudden, the Greek prime minister announces on Monday shocks the Europeans, with a betrayal of that agreement. And he says that I'm gonna put it up to a referendum. And the chances are that it may not succeed and it may end up defeated. His government might actually fall.

BAIER: Let me just interrupt you. The Greeks just put out an alert that the referendum will be December 4. That is a Sunday. They will have a vote December 4.

KRAUTHAMMER: It introduces --

BAIER: -- a long way away.

KRAUTHAMMER: It introduces at the least a month of tremendous instability. And we saw the instability in the markets up remarkably at the end of last week, a crash at the beginning of this week. So it increases instability. It makes the Greeks unreliable. And there is actually a chance that Greece will end up being kicked out of the eurozone, or leaving on its own, because it cannot sustain itself in a grand market including the Germans and the French and the British -- well, the British aren't on the euro, but with northern European countries with whom it can't compete.

BAIER: And it's all interconnected, Fred.

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Yeah, it is. And both of those options that Charles mentioned probably include a default by the Greeks. I mean they are just not going to - look, it just cannot be avoided particularly since even this bailout that they are going to vote on, on December 4 is one that will impose more austerity on the Greek economy. Well, I mean that's the last thing you want is more austerity, because then there will be little economic growth. They won't be able to pay anything off. They will have more joblessness. It will just make the situation worse.

BAIER: But wait a second. Isn't that what Republicans are calling for here, more austerity measures here?

BARNES: They are calling for tax cuts to generate growth and spending cuts, exactly what Ronald Reagan did back in 1981 and what countries have done all over the world much more successfully than the remedy that's been applied by Obama here, that's for sure.

But the Greek prime minister won't hear it. It's the conservative alternative, the leader of the conservative party who may wind up being the next president or whatever is it actually who was saying austerity is the last thing we need, and he is absolutely right. But look, Greece should not be in the eurozone as long as we have the euro.

LIASSON: Well, first of all, the Greek prime minister is for this package and thinks that he might be able to sell it. However, there is something really fundamental here. Why shouldn't the Greek people vote on whether they are going to accept this or not? I think that it might end with them exiting the eurozone. But this lays bare all of the contradictions of the eurozone experiment. You can't have a central monetary policy without coordinating fiscal policies, and they never did that. This is not like the United States of Europe where there is a central government. And this, I think, has really exposed all of the flaws in this model.

BAIER: Last thing...

KRAUTHAMMER: But they are in a crisis. The Greeks are so overleveraged that their austerity is spending cuts and tax increases, unlike what Republicans are suggesting here.

BAIER: That is it for the panel, but stay tuned to see what may have been one weatherman's best day ever.

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