This is a rush transcript from "Special Report," July 7, 2011. This copy may not be in its final form and may be updated.


MICHELE BACHMANN, R - PRESIDENTIAL CANDIDATE: I was born and raised in Waterloo. As a mom of five, a foster parent, and a former tax lawyer, and now a small business job creator, I know that we can't keep spending money that we don't have. That's why I fought against the wasteful bailout, against the stimulus. I will not vote to increase the debt ceiling.

TIM PAWLENTY, R - PRESIDENTIAL CANDIDATE: And we want to make sure that you have somebody come out of Iowa who can be the party's nominee, unite the party, and go on to win the White House so we can get this country moving again in the right direction.


BRET BAIER, ANCHOR: Former Minnesota Governor Tim Pawlenty there. You see him trailing in the polls. And Michele Bachmann, the congresswoman from Minnesota, this is in Iowa, neck in neck with Mitt Romney there in that latest poll from the Des Moines Register.

If you look at New Hampshire, WMUR, there you see Michele Bachmann gaining some points in recent days. Mitt Romney obviously still at the top in New Hampshire. Michelle Bachmann running a new ad starting today in Iowa trying to win early. Back with the panel. What about her efforts and how did they go in Iowa?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think Iowa is the perfect place for Bachmann. I think she has the right appeal. And I use the word without any adjectives attached to the word "appeal." She -- and it's her constituency.

I think her problem is, as you saw in that ad, where she said "I will not raise the debt limit at all." Now, it will play well in Iowa and in other places. In the general election that would be a handicap because I think in the end, look, the entire Republican leadership in the House and the Senate would do a deal if it had the right deal. But it's not going to oppose raising the debt limit at all. People, I think independents will see it as irresponsible.

So it places her in a position where I think it diminishes her chances in the general election, but I think it enhances her chances in the primaries.

BAIER: You referenced something from a Tim Pawlenty adviser, Vin Weber --


BAIER: -- who said that Michele Bachmann had "sex appeal." And Tim Pawlenty, the former Minnesota governor, apologized for that saying, quote -- first of all, Vin Weber apologized, but Pawlenty said - quote -- "I don't believe that he or anyone else should be using as a reference somebody's sex appeal to judge their fitness for office or the strength of their campaign. It was a wrong statement. He should not have been making that reference." A little speed bump for the Pawlenty campaign, Juan.

JUAN WILLIAMS, SENIOR EDITOR, THE HILL: Well, I'm not going to get myself in trouble here, but I just think Vin Webber didn't commit any sin. Obviously human beings have appeal and we notice it. And we elect people who are attractive and smart and have all sorts of other attributes including wealth and exercise of power and ability to speak. I'm on Vin Weber's side here. I think Vin was not intending to offend anybody. But anyway, back to the subject at hand. Which is --

BAIER: I don't know if you kept out of the controversy. I'm not sure.

WILLIAMS: I'm trying, trying my best.


BAIER: If we had A.B. Stoddard here, it would be better.

WILLIAMS: OK, but what Tim Pawlenty said I think was very pertinent here, which is do the voters in Iowa believe that Michele Bachmann can beat Barack Obama? Can she beat a substantial general election candidate given her viewpoints not only on issues like the budget and the debt ceiling, but on things like doing away with minimum wage?

I look from the outside, and everyone wants to make fun of Michele Bachmann at points, but it's her extremism on serious issues that I think the independents, the general electorate will find impossible to deal with.

BAIER: OK. Bill, there are many who don't see exactly as Juan sees it. And she is obviously a hero for the Tea Party.

BILL KRISTOL, EDITOR, THE WEEKLY STANDARD: Well, a lot of people thought that some of these conservative candidates in 2010 were too conservative. I think I said before the question about Michele Bachmann is, is she Marco Rubio, a Tea Party candidate who upset the establishment candidate and won a huge victory in the swing state of Florida? Or is Christine O'Donnell or that type of Tea Party candidate who turned out to be insubstantial and weak and lost the general election?

I'd say so far she's more like Marco Rubio. And I think, I mean, she is running on issues. And that ad is a very effective ad. And I think it's the last nine words that are very effective. Charles may be right that it's a problem in a general election, but I do not believe the Republican primary electorate, and I don't believe the Independents, and I'm not sure that many Democrats are enthusiastic about raising the debt ceiling, especially if it's part of a deal that's arrived at behind closed doors and has tax increases and huge defense cuts in it.

And I think going up on the air in Iowa with an ad that's not just a nice, soft, fuzzy introductory ad, that there's a little bit of biography in it, that says "I will not raise the debt ceiling," that is pretty effective, I think.

BAIER: I mean Charles, when you ask people in polls are you for paying your bills and living within your means? Are you for a balanced budget amendment? The polls soar. Now if you ask them are you for that if there are major cuts involved or if it increases taxes, it flips.

KRAUTHAMMER: And that's why I think her problem is it was a categorical statement. She said I will never do it even if it's in return for all kinds of cuts, something that would make our economy healthy and control our debt. I think that's her problem. It's a question of nuance.

I'm not opposing her. I think she is an extremely strong candidate. I'm just saying it's the old Buckley rule, which is he said I'll always support the most conservative candidate in any race who can win -- who can win. But -- the most conservative, yes, not just anybody who can win. But it's got to be somebody who's electable.

BAIER: Quickly.

KRISTOL: Tim Pawlenty will also oppose lifting the debt ceiling, and I wouldn't be surprised if Mitt Romney also opposes. When the debt ceiling comes to an actual vote in the Congress, I'm not sure they all won't oppose hiking the debt ceiling.

KRAUTHAMMER: But he won't oppose it categorically.

BAIER: August 11, the next GOP debate here on Fox in Ames, Iowa two days before the straw poll. That will be interesting as well. That's it for the panel, but stay tuned to see one baseball legend, why he may have a tough time in his trial.

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