PRESIDENT BARACK OBAMA: Early this morning, the House and Senate reached an agreement on the set of Wall Street reforms that represents 90 percent of what I proposed when I took up this fight. We'll put in place the toughest consumer financial protections in our history while creating an independent agency to enforce them.


BRET BAIER, "SPECIAL REPORT" HOST: Well, the president talking about financial regulation overhaul that was approved by the conference committee in the wee hours, actually after 20 hours of straight work, 5:40 in the morning they came to a conclusion with all the details passing it. It's on the way to the president's desk. The president is speaking on the way to the G20 summit in Toronto.  Here's what Chris Dodd had to say about the financial regulation overhaul: "No one will know until this is actually in place how it works. It took a crisis to bring us to the point where we could actually get this job done." He was actually emotional when he said that in the committee.  The Senate Minority Leader Mitch McConnell responded to that, saying, "Americans are in no mood to have Washington tell them 'trust me.'" Talking about the 2,000-plus page bill, the sponsor of the Wall Street bill, when the chief sponsor says no one will know if the bill works until it's really implemented, it doesn't really inspire confidence.  So, what about this, and the summit we're going to see this weekend?  Let's bring in our panel: Bill Kristol, editor of the Weekly Standard; Erin Billings, deputy editor of Roll Call; and syndicated columnist Charles Krauthammer.  Let's start with financial regulation overhaul.  Charles, it sounds like the House speaker, Nancy Pelosi, when she was talking about health care.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It's amazing that he would admit he's passing this massive bill and he admits he's the author and he doesn't know how it's going to work. And he also said, this is about as important as it gets because it deals with every single aspect of our lives.  So, here he is, passing a massive bill that's going to affect every aspect of our lives. He has no idea how it's going to work. This is the-- I mean, this is sort of a classic example of the sort of social engineering hubris of American liberalism. And it's like what happened in health care, whereas you said the speaker of the House said we'll learn what's in it after it passes.  Every one of the measures -- there are hundreds of these in the bill, is going to be unintended consequences, and there are going to be interactions among their hundreds ever unintended consequences, which means that there's going to be a second order of unintended effects, which means that we are passing something in the dark.  Too specifics, there's (INAUDIBLE) going to increase the chances of new bailouts. And secondly, it's going to help the big banks because there are measures in the bill that are going to allow the Treasury to take it over, to clean up its debts. If you're a small lender, a small bank, you're not going to have that and you're going to be at a disadvantage.

BAIER: Erin, your thoughts about the bill overall and perhaps the perception that this is another big win for President Obama.

ERIN BILLINGS, ROLL CALL: Well, I mean, you know, the bill hasn't passed yet and it's just got through the conference committee and we have two big fights, a fight in the House and a fight in the Senate. Now, it's probably going to clear both. But the Republicans we've kind of seen a preview what they're going to say on the floor.  Is it a win for President Obama? You know, it's probably in the eye of the beholder, but he did want this passed before. He went to Toronto for the G20 Summit, he wanted this in hand so he could say to these other nations, look at what we're doing at home to try to overhaul our financial system, you should do the same.  So, is it a win? I'm not sure I'm the one to determine, but certainly, his defenders would say so.

BAIER: Sure. Bill?

BILL KRISTOL, WEEKLY STANDARD: Now, with this legislation, he wanted it and he got it, and if it passes both bodies now, which it probably will, he'll sign it. So, I think the key point is this attempt -- I mean, there were particular problems that had to be fixed in the financial system. They were fixable and there was a bipartisan consensus about how to fix a lot of them. It was not rational for banks to be leveraging themselves at 30 to one (ph), and there are pretty straightforward ways to fix that and to prevent that.  And we could have had a sensible debate that, have a hundred-page piece of legislation, had simple rules that would be straightforwardly enforced and fixed that aspect of the financial system that did cause a crisis. And then we've got this bill that as Chris Dodd says he can't understand all the implications of it and it will touch every aspect of our lives. It won't quite touch every aspect of our lives, but it will touch almost every aspect of every -- not just financial firms, but all kinds of other firms in the country.  So, I think it's a classic example of the liberal desire, you know, to regulate everything instead of fixing actual concrete problems that need to be fixed.

BAIER: And as the president goes up and is in Toronto now for the G-8 and then G20 Summit, the administration is making the case to other foreign leaders -- the president will take that case -- to continue economic stimulus packages while those countries are really starting to cut spending. This is what the chief of staff, the chairman of the Joint Chiefs of Staff said on Thursday about his concerns.


ADM. MIKE MULLEN, JOINT CHIEFS CHAIRMAN: Yes, I think the biggest threat we have to our national security is it our debt. I was shown a figure the other day by the comptroller in the Pentagon that said, the debt -- I think it's in 2012, but the interest-- the interest on our debt is $571 billion in 2012. And that's notionally about the size of the Defense Department budget. It's not sustainable over time.


BAIER: That's what countries, Bill, like Germany and Great Britain are saying in the wake of the Greek financial meltdown, exactly that. Yet, the administration is saying the stimulus packages in these countries need to continue.

KRISTOL: The administration's position is in the short term, we need stimulus to avoid a recession. In the long-term, we do understand that the debt is unsustainable.  Now, there are times when you would need some stimulus in the short term and it's worth running up short-term debt. Most conservative economists were for some stimulus a year ago, for example, even though it's going to create the debt and deficit in the short-term.  Where is the debt reduction over the medium and long-term though? That's the disaster that we're looking at down the road. It would be one thing to say, reluctantly, we're going to have to spend a little more now, but we're putting in place these tough reforms down the road. But the president's agenda increases the debt and the deficits down the road.

BAIER: Erin?

BILLINGS: Well, you know, the president has a complicated message here. I mean, he's trying to sell stimulus here at home and he can't do it, and now, he's going abroad and trying to sell it to these other nations. You know, I think it's difficult for him to try to, you know, come with credibility. He can't get an extenders package through the Senate right now. They keep trying to change the price tags, lower, lower, lower, and they can't still get it through.  He just teed up a $50 billion package of local aid to schools that really hasn't gone anywhere. I mean, in fact, Democrats are saying whoa, we don't want to touch that.  So, you know, he's got a difficult job selling this, you know, elsewhere when he can't sell it at home.

BAIER: Charles?

KRAUTHAMMER: That's exactly right. He doesn't even represent his own country in calling for extra stimulus because as Erin says, he can't even get a stimulus that is billed as a relief -- helping the unemployed, which is hard to oppose, but it is opposed in his own House and Senate, which he ostensibly controls.  And secondly, the Europeans are way out there on debt. A few years ahead of us on debt, have already hit the wall, are looking at a collapse of Greece and possibly other European countries, particularly Spain, Portugal and Ireland. They are in no mood of listening about increased spending at a time when debt has already impacted their economies and could bring them down.

BAIER: Well, you've been voting this week on our home page at foxnews.com/specialreport. For your choice online topic of the week in the Friday lightning round, we will find out the winner. Aren't you excited? After the break.


BAIER: Every week on the foxnews.com/specialreport home page, viewers vote on what topic we should discuss first in the Friday lightning round. And today, the winner is -- drum roll, please -- Bill Kristol's wild card pick.  Look at that, very -- are you excited about this win?

KRISTOL: It's beautiful.

BAIER: Yes. All right, what is the choice?

KRISTOL: The choice is terrible modern innovations in sports, like tie breakers.

BAIER: Tie breakers. All right. We're going to do that last since it's sports-related.  First, the Blagojevich trial, the former Illinois Governor Rod Blagojevich on trial in Chicago and a lot of names in this administration are coming out, including the chief of staff, Rahm Emanuel, and senior advisor Valerie Jarrett, about the Senate seat that Blagojevich was allegedly trying to sell.  What about this? What if, let's say, Andrew Card, chief of staff of President George W. Bush, had been mentioned in a trial ongoing about corruption and fraud, Bill?

KRISTOL: It's too bad the trial isn't televised, but since, you know, that would be great entertainment. Probably better even than the Elena Kagan hearings next week for the Supreme Court, but since there are - - I do think the networks make -- in fact, I make a recommendation to Fox here, Bret, you should use your influence, we should -- you know, recreate them out here. You don't have the trials, actors playing, you know, Blagojevich and everyone else, Rahm Emanuel's voice on the tapes, that'd be pretty fantastic.

BAIER: Erin?

BILLINGS: I wonder who has the rights for the made-for-TV movie because this just screams made-for-TV movie.

BAIER: But isn't this something that's not really getting a lot of traction?

BILLINGS: It's not and for such a sexy story. I mean, this was such a sexy story and we're just kind of getting, you know, bits and pieces of it. You know, right now, it sounds like there's a lot of he said-she said, but really, we're not getting the full flavor of what's going on. In fact, maybe we should all go and sit in the courtroom.

BAIER: Monday, we're going to have a full piece.  Charles?

KRAUTHAMMER: I venture a guess the reason it's not reported as it would be if it were Republicans, because it is the Obama administration. But that's only a wild guess. What's interesting to me, apart from the amusement factor, is it's like the McChrystal story, grousing of a military about civilian leadership is as old as warfare, but it doesn't appear in print, and if it does, it's a scandal. The trading of favors which is what all of this is about, coming right up to a line of bribery, but not going over, is the norm in politics, and what we're seeing is the seamy side because of the wiretaps which you ordinarily wouldn't have, and that's why I think it's so entertaining and scandalous. In and of itself, I think it's probably what usually happens.

BAIER: Down the line, Louisiana Governor Bobby Jindal, is he recuperating his political image in this -- in the wake of this oil spill?  Charles?

KRAUTHAMMER: Absolutely. Look, I mean -- and the contrast with Obama is sharp. Obama gives a great speech, Jindal gives a horrible speech. But Obama is not a great executive. And in this spill crisis, Jindal is out there acting, doing stuff on the ground, proposing ideas, and Obama is giving speeches. I think it's an excellent contrast.  Jindal's going to have a second chance at high office.

BAIER: Erin?

BILLINGS: I do think he has somewhat resurrected his political career. Do I think he's going to be a presidential contender again? No. But look, he's handled this very well, he's been very gubernatorial.  And, you know, Charles does make a good point. This has been a real public relations nightmare for the president. For Bobby Jindal, it's been, you know, a home run public relations-wise. He really has stood up in all of this.

KRISTOL: Two years ago, one of the bright, young Democratic governors in the country, Rod Blagojevich of Illinois, one of the brightest.


KRISTOL: One the bright Republican governors in the country, Bobby Jindal. I think it's a pretty good comparison.

BAIER: OK. We're going to talk about Elena Kagan all next week. So, we're going to go to Bill Kristol's question about overtime rules.

KRISTOL: Well, the fantastic match at Wimbledon this week, made me think, why are there tie breakers in the first four sets? Why are there tie breakers in all this? When I was a kid playing tennis, you just played until someone won the set by two games. What about the other terrible (INAUDIBLE). The designated hitter, tie breakers in the World Cup, can you imagine if the U.S. lost the World Cup on the tie breaker?  So, get rid of all these newfangled innovations in sports.

BAIER: OK, then. And I should say --

KRISTOL: And also, instant replay in football, I'm against that. And I have a few others down my list, if you care to let me go on for a couple of hours.

BAIER: Isner-Mahut, I said Mahot (ph) earlier. It's Mahut. OK.

BILLINGS: I did a little research for this. And I have to say, what is modern, because the designated hitter, 1973.


KRISTOL: That's modern. You're just young. I remember the day -- I remember the day that happens in baseball.

BILLING: 1965. So, Bill, what is modern?

KRISTOL: I remember. I remember the good old days before that.

BAIER: Charles, your thoughts?

KRAUTHAMMER: Bill is the true believer in the old. You wait, I think he would abolish pads and helmets in football if he could. But I'm with him on this, and I think the heroism that happened as a result of that match would never have happened if we hadn't had these crazy, arcane rules that you really only hadn't written and remember, it conducted a 100 year war against the French. So, it demands endurance and stamina.

BAIER: Down the line, Elena Kagan gets approved?

KRAUTHAMMER: Easily, although there will be interesting elements in the hearings.

BAIER: Erin?

BILLING: Yes, what I'm anxious to see is, does she get more than 67 votes that Sonia Sotomayor got, I kind of doubt it but we'll see.

KRISTOL: The treatment of the military at Harvard Law School is the one issue that could really explode a little bit.

BAIER: OK. We'll have it all starting Monday, noon Eastern here on Fox News Channel. That is it for the panel.