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March 29, 2007

Special Report Roundtable - March 29

FOX News Special Report With Brit Hume

(BEGIN VIDEO CLIP)

TONY BLAIR, BRITISH PRIME MINISTER: To be absolutely clear with the Iranians that the pressure will be stepped up bit by bit by bit until they do what they should have done right at the very outset, when we showed them that the original coordinates they gave where the people where -- were actually inside Iraq.

ALI LARIJANI, IRANIAN NATL SECURITY COUNCIL (through translator): Britain's leaders are mistaken in their calculations. We were going to free the female British sailor, but if we observe such bullying and inappropriate behaviors we will not free her.

(END VIDEO CLIP)

HUME: Well, that bullying got even worse this afternoon at the U.N., folks. They put out a press release that said the Iranians should release the captives and they were going to say something about how they were captured in Iraqi waters, but they thought they'd better water it down because of who knows what.

Some analytical observations on this now from Fred Barnes, executive editor of the Weekly Standard; Mort Kondracke, executive editor of Roll Call; and Nina Easton, Washington bureau chief of Fortune magazine -- FOX NEWS contributors, all.

Well, what's going on here? Where does this stand? What do the Brits appear to have as a strategy, if anything?

MORT KONDRACKE, ROLL CALL: You took the words right out of my mouth. You know, this -- the idea that the Brits are being harsh is ludicrous. The Iranians seem to want to have a hostage crisis and they're being as provocative as they can possibly be. They trotted out this woman sailor, made her sign a statement, it's clearly under duress that...

HUME: You think that because of the way it was written, like English somebody's whose English wasn't a first language. The second one.

KONDRACKE: Exactly. And you know, confessing to everything and all that kind of stuff and demanding that the Brits withdraw from Iraq and all that kind of stuff. That's not something that a sailor's going to say of her own freewill. They said they were going to release her and now they're not going to release here.

I got to say, Tony Blair is not exactly acting like Margaret Thatcher would act under these circumstances, he's acting like Jimmy Carter might act. It's tiptoe, you know -- one idea I heard today is that, Britain might threaten to close an Iranian port and if the Iranians said you do not any ships around to do that, oh, yes we do, we have submarines and you know, they wouldn't know where the submarines are and close down a port and ratchet up the pressure. You know, that...

HUME: There's been no -- that idea come from someone who knew that the Brits might do this?

KONDRACKE: No.

FRED BARNES, WEEKLY STANDARD: No, look, they can use -- American ships are there. You know, there are two carrier groups in the Gulf and I would think that the thing that President Bush would have done would have been to call Tony Blair and say, look, these are your people, we'll back you on whatever your policy is, including a military option if that is what has to take place.

HUME: Our correspondent James Rosen was reporting that the Brits said there's a series of steps that you sort of walk through at the U.N. to try to get to something that might matter. You start out with a press release, you water it if you have to...

(CROSSTALK)

BARNES: Telegram to follow later. We can sum this up as it's a strategy of strong letter to follow. Certainly not much.

HUME: Well, I understand that. Is it worth going to the U.N. at all?

BARNES: Well, you know, they're low-keying it, you know, the British navy...

HUME: Well, that's the first step, though right. Press release is the first thing...

BARNES: Yeah I know, but the last step is some resolution sanctioning the Iranians and they're already defying another one in the nuclear development.

NINA EASTON, FORTUNE: Well, I think there's some sense that -- by Britain that you've got to be careful dealing with this regime. This reveals a regime that wants to be considered a government, has already been marginalized by the international community with the sanctions that were passed by the Security Council on Saturday. They're acting like a rogue terrorist outfit, you know, trotting this woman out, you know, the letter, it sounds like -- you know, they're acting like a terrorist organization.

And there's some sense that you don't want -- they're a terrorist organization with a lot of economic power. Already we saw oil prices spike up, they'll continue to spike up, there's analysts saying they can go as high as $80, $90, $100 a barrel.

HUME: I've heard that before.

EASTON: This is a fourth -- well you know, it's the fourth largest producer of oil. We don't import it...

(CROSSTALK)

BARNES: The point of what you're saying is they're making money on this. The Iranians are making money on this. The longer they keep it going, the more valuable their oil is.

Look, there's one thing could you do and this wouldn't be shooting at anybody, but just block their ships from leaving port with oil.

HUME: With oil exports.

BARNES: Yeah, just block then in the Gulf. You could do it in the Persian Gulf, we certainly have the naval power there to do that.

EASTON: But you have to be willing on a worldwide economic...

(CROSSTALK)

You have to absorb the cost of doing that and that'll be a large economic shock.

(CROSSTALK)

BARNES: That would be up to the British.

KONDRACKE: You would think that this would offer the opportunity for us, in the West -- the president, by the way, has not said a word about this. He's letting Tony Blair handle this. But this would be an opportunity to rally everybody involved as to the nature of this regime. This is total blackmail. They're behaving utterly irresponsibly on the nuclear front and on this front, they cannot be trusted and this is the time to put the whammy on them.

HUME: Well how? How?

(CROSSTALK)

KONDRACKE: Well, by going to the Europeans and saying, OK, now is the time for real sanctions. Now the Russians don't want to go along but the Europeans, the allies of Tony Blair could certainly do it.

(CROSSTALK)

At the U.N. They don't have a...

HUME: So, you think for the sake of 15 British soldiers that you could get places like France and...

KONDRACKE: Right now it's 15 British soldiers it could be anyone's soldiers or could be anybody's civilians. This is hostage-taking and it's illegal by every rule of international behavior and this is an outlaw rogue regime and it should be treated as such.

BARNES: It is up to the British to decide. Look, you know President Bush would be glad to be condemning the Iranians every day if Tony Blair said it would help for you to do that, but remember the British in first place, when the Iranians snatched the 15 in Iraqi waters, not Iranian waters, there was a British ship there accompanying it that could have fired on the Iranians and could have stopped it, and they didn't. And they followed, pretty much, a pretty wimpy policy since then and they haven't gotten anybody back, either.

KONDRACKE: One other little factor that's not involved in this is that Tony Blair is in a political crisis at home. You know, one of his top aides is about to get indicted for campaign finance violations. It's bribery or close to it.

HUME: Feingold?

KONDRACKE: No, no, no, well, you know, it's bribery or next to it. And Tony Blair has actually been interviewed by the police in this matter. He's in bad shape.

HUME: Next up with the panel, the House budget and when are rising taxes not a tax increase? We'll get more analysis from the all-stars in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP DAN LUNGREN (R), California: The Democratic plan, despite the protestations of its proponents, does in fact contain the largest tax increase in American history.

STENY HOYER (D-MD), HOUSE MAJORITY LEASER: There are no tax increases in this bill. In fact, it provides for tax cuts for the middle class, but they have to be paid for.

(END VIDEO CLIP)

HUME: So what's this all about? What it's all about is this -- when the Bush tax cuts were originally passed they were enacted so that they would expire in 2010. For a couple of years now the president, when he had control of the House and Senate, was trying to get them extended and unable to do so. Now the Democrats are in and they have passed a budget which does not extend them which means taxes automatically go up. House Republicans argued today, in vein, at least in terms of blocking the bill, that it was one of the biggest tax increases, indeed they said the biggest in American history. Is it? Is it fair to call it that?

BARNES: Well, people are going to be paying more taxes, maybe sooner than when those expire, I mean, the Democrats have also said they want to get rid of the alternative minimum tax or at least stop its reach into the middle class and the alternative minimum tax was passed to get...

HUME: In the next couple years is going to effect up to 23 million people.

BARNES: Yeah, and it was designed to hit extremely rich people who, through tax loopholes and tax shelters and so on were paying little or no tax, that's what it was supposed to reach -- Zillionaires. And now it's getting to 23 million people. Well, if you get rid of it, then you're going to have to raise taxes somewhere else, they're going to -- I mean...

HUME: So they're not getting rid of it?

BARNES: Well, it's not in their budget. There's all kinds of holes in their budget where they have to come up with money to fill this hole and that hole. I mean it's a fake budget. But, when you get after 2010 and you don't let them extend the Bush tax cuts then you're going to get a huge tax increase. It just -- what happens.

KONDRACKE: Neither the Republican budget nor the Democratic budget took account of the AMT fix that is necessary. It's going to cost a trillion dollars -- it's going to tax people a trillion dollars over a 10- year period if something isn't done about it, it's going to have to be done. Or maybe it's a five-year period, I forget.

The one point here is that the Democrats look as though this Congress will have a budget resolution that the two houses will agree on. The Republicans didn't last time and as a result of that, and partly as a result of that, they never -- they didn't even pass 10 of the appropriations bills that fund the government. All they did was extend last year's spending to this year with fixes in it, which is kind of fiscally irresponsible, it's not doing what you're supposed to do. So at least they're starting down the right road.

Now there, as Fred says, there would be tax increases even though they claim there wouldn't be if -- after 2012 if they haven't accounted for all them of. On the other hand, you look at the Republican budget, the Republican budget -- alternative budget, which by the way, 40 Republicans didn't vote for -- froze every domestic program, practically: Children's health, education at last year's levels, cut Medicare by $400 billion...

HUME: Cut the growth of Medicare.

KONDRACKE: OK, yeah, but still...

HUME: That's a distinction worth making, wouldn't you agree?

KONDRACKE: Those programs are entitlement programs. They have a formula written into them, if you cut $400 billion out of the growth, then you have to keep it at a level that's not accounted for in the budget. In that event, that was all to sustain the Bush tax cuts. This is a Democratic Congress. What do you expect? I mean they're...

HUME: Nina would you like to say something here? I think Mort has run out the clock almost.

(LAUGHTER)

EASTON: We're in Mort's territory, here. You know, I think yeah, they got a budget together, but I think the Democrats are at least as guilty of accounting gimmicks as Republicans are. They put in a -- one of the big problems is children's health insurance and we're trying to ensure more poor children, they've put in $50 billion for that, but set up a special reserve fund, that it's unclear where the money comes from, to pay for it. So, you know they're guilty of a lot of the same shenanigans that...

(CROSSTALK)

BARNES: I know where the money could come from. You know where it could come from? You know, the 10 percent of the children's health insurance program goes for adults, not children. Some states like Minnesota, 75 percent of the money goes it adults not children.

(CROSSTALK)

HUME: Now hold on. Hold it a second. We're off in the weeds here. The big issue, the big question, the big argument, and you could see it in the debate today is the fact that taxes are going to go up by a huge amount if this budget becomes a reality of what we're dealing with.

Now, there are people who would argue that that's a good thing. That we got a lot of government programs we need to pay for and we've got a big deficit we need to continue to cut down and so on. So, who wins this debate? What effect -- what's -- other than people not liking it, what is the effect of a tax increase at this stage?

(CROSSTALK)

Mort, what effect on the economy?

KONDRACKE: There will be no tax increase until 2012. They're ticking this all down the line because the taxes are in effect until -- tax cuts are in effect until then. So they pushed it back beyond the presidential election, 2010, 2011, whatever it is. OK, so it's all an argument, nobody is going to see extra money coming out of their payroll.

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