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Special Report Roundtable - February 27

FOX News Special Report With Brit Hume

(BEGIN VIDEO CLIP)

GREG VALLIERE, STANFORD POLICY RESEARCH: This was overdue. This was long overdue. It's unhealthy to go straight up, you have to have to have a pullback, I think this was normal and not at all apocalyptic.

(END VIDEO CLIP)

HUME: Well, it might have been normal, as Greg Valliere suggested, it certainly was sudden. The DOW Jones industrial average down 416 points today, after having been down as much -- well, there you see it, 500, at one point. It was down 546 at one point, closed right where you see it there, 416.

Some thoughts on this development from Fred Barnes, executive editor of the Weekly Standard; Jeff Birnbaum, columnist of the Washington Post, and Mara Liasson, national political correspondent of National Public Radio -- FOX NEWS contributors, all.

Well Jeff, we're going to give, as a veteran of the Wall Street Journal and Fortune magazine, before you're -- before you went to the Post, first crack at this story. What's your take on this sudden DOW plunge today?

JEFF BIRNBAUM, WASHINGTON POST: Well, this -- I mean, this is the poof of global markets. All of this began with the decline of nine percent in the Chinese market.

HUME: Now, what was that all about?

BIRNBAUM: That market had doubled in a year and there were rumors that government was going to crack down on a variety of economic policies that would deflate that market a little bit. And as it turned out, it went down only nine percent, but that was enough to send a wave throughout the markets, first in Europe and then in this country. So clearly the -- our own markets were going to decline as a result of that.

But in addition to that, also in Asia, Alan Greenspan, the...

HUME: Speaking from here, by some kind of a hookup?

BIRNBAUM: That's right. That's right. The former chairman of the Federal Reserve said that there might be a recession by the end of this year, in this country.

HUME: He wasn't predicting, (INAUDIBLE).

BIRNBAUM: He said it might be, right. Which contradicts what the current chairman of the Federal Reserve said just one week ago, that's Ben Bernanke. In any case, that combination and the belief that on Wednesday there is going to be a revision of the estimate of the rate of growth in this country, at the end of last year, in the last quarter.

HUME: Revision down.

BIRNBAUM: Revision downward from 3.5 to somewhere about in the mid- two percent increase, and the expectation...

HUME: That's a rumor, though, right?

BIRNBAUM: That is a rumor, but the expectation that the growth in our economy, this year, will also be slower than last year. Put all of that together and an increase in our markets, since a steady increase since last October, clearly there was time for a correction, that is a reduction and we got it in spades today. That's what happened.

HUME: Now, in political terms, one would have to say that this is unfortunate news for a beleaguered president, but I guess it's fair to say, Fred, that he hadn't been getting a whole lot of credit for the market being up, maybe he won't get that much -- but will -- does that mean he won't get any blame when it goes down?

FRED BARNES, WEEKLY STANDARD: Well, he gets some blame. You know, Jeff and I were talking beforehand, you know, compared to the end of the world, you know, this was a pretty good day.

Compared, however, to an average -- what is regarded as a bad day for the market, it sinks one percent, this was a bad -- a worse than bad day because...

HUME: Three point three.

BARNES: Yeah, 3.3 percent.

HUME: Almost 3.5 on the S&P, yeah.

BARNES: I mean, this may not lead to recession, I don't -- I have no reason to -- I still get zinged at the Weekly Standard magazine for magazine for having promoted a story predicting the 1986 recession.

(LAUGHTER)

There was not one. So...

BIRNBAUM: It was a very good story.

MARA LIASSON, NATIONAL PUBLIC RADIO: Even as dramatic and scary as this drop was in the market, President Bush is not going to suffer a whole lot because of a one-day 416 point drop; however, I do think that if the growth rate revised downward, he has less to brag about when he talks about the growth of the economy. That might hurt him more.

BARNES: That depends on how much it's ratcheted down.

LIASSON: Yeah.

BIRNBAUM: It's important to separate a decline in the stock market from the economy. The U.S. economy is still going along pretty well, it's just not going -- it will probably not go as fast as it did last year, which was a very good year. This year probably just going to be a good year and...

HUME: And what about the argument that Greenspan makes that -- which is kind of interesting. He seemed to not to be saying that some mistake had been made or there was some aliment within the economy overall unsoundness. He seemed to be saying that we're at the end of a sick -- toward the end of a cycle in which, you know, you have -- and nobody has repealed the business cycle. He didn't put it this way, but that there was -- in danger for cyclical reasons.

BIRNBAUM: Right.

HUME: That in an economy that's been going up this long and been growing this quickly is bound to go the other way at some point.

BIRNBAUM: Well, he makes a very good argument. If the economy has been growing without a recession since 2001, which is a fact. Eventually, whatever goes up must come down a little bit. The question is will it go down to the extent that it's actually negative growth or recession? Economists have been talking for months about a slowdown, but people like Ben Bernanke, the current chairman of the fed, has been talking about a soft landing that is a gradual decline.

HUME: The holy grail of central banks...

BIRNBAUM: That's right.

HUME: Which can affect the economy with a rather blunt instrument known as interest rates, has always been a so called soft landing.

BIRNBAUM: Right.

BARNES: And we've had one. And We've had one. We had one.

(CROSSTALK)

HUME: But on the other hand if we get a recession next year, maybe the historians will revise that judgment.

BARNES: They might, but so far we've had one, Bernanke's done a great job. I think Greenspan is -- look, it's so easy to say there may be a recession. Yeah.

HUME: I agree with that, so do you probably.

(CROSSTALK)

BARNES: There may be the end of the world, too, later this year, you know, I mean to say, may. Now, if Alan Greenspan were saying I think there's going to be a recession later this year, then that would mean something.

HUME: Would you start selling?

BARNES: Yeah, I'd think about it, that is for sure.

HUME: All right. Go ahead, Jeff, last comment.

BIRNBAUM: I was just going to say a lot of people are worried about housing prices in particular which have been taking a hit lately. A lot of people sell -- economic self-awareness is very.

HUME: Caught up in the price of their homes...

LIASSON: Not to mention their net worth.

BIRNBAUM: Right. They've been using them like ATMs and if that continues to go down, then there will be a problem.

HUME: Because that dampens spending and reverberates across the economy.

BIRNBAUM: Reverberates through the whole economy.

HUME: Gotcha.

Next on SPECIAL REPORT, Democrats continue to try to find a way to block the war in Iraq or oppose it or do something about it, but can they find something they can all agree on? More with the all-stars, next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HARRY REID (D-NV), SENATE MAJORITY LEADER: The last vote we had on this, virtually every Democrat voted for, so don't talk about anyone 00 no one should be concerned about the Democrats not sticking together. We have stuck together on our approach to Iraq. We will continue to do that.

(END VIDEO CLIP)

HUME: It's just that they can't seem to pass anything, which is the dilemma that Senate leaders face when they're in the majority, but it's a narrow majority. And once again, it's not clear, even now, after weeks of deliberation and discussion and debate and non-debate and so on, what approach that the Senate Democrats will take to try to get something passed on Iraq. The House has passed a resolution of disapproval it's now trying to do something more, it's not clear whether they'll ever be able to pass that. What is going on? First of all, what's the state of play in the House -- Fred.

BARNES: Well, they got this proposal by John Murtha that would put conditions on the spending for the troops. There's been a revolt of Democratic moderates against it. Now we understand they've changed the bill so we -- the president can waive some of these conditions. That's w- a-i-v...

HUME: In other words, Mr. President, you must not use the troops in this way unless you decide you want to.

LIASSON: Unless you want to, yes.

BARNES: Yeah. And that may lose anyway. Murtha's handled this thing very, very poorly.

Then in the Senate, you know, they want to pass some resolution that either changes or repeals the original war resolution from October 2002 and they can't find one that seems to want to get anywhere. Remember, here's a little history, Brit, remember nine days ago, there was a Saturday vote on trying to get a resolution in the Senate because Harry Reid said it was just so urgent that they do that, so urgent. And, of course, he couldn't get that past a Republican filibuster, so that's nine days ago. Now last week, at the end of last week, he said, well, we're going to bring this up early this week. And now he's put it off probably for a couple of weeks after this 9/11 bill goes through. They just haven't come up with an amendment or...

(CROSSTALK)

HUME: Why? Is it because the Republicans are so determined or the Democrats are so divided or what?

LIASSON: Well, no. Well, both. But, I think the Democrats did come up with something that a majority of them would stick together on, and it was this disapproval -- this resolution of disapproval...

HUME: Non-binding resolution of disapproval?

LIASSON: And that's -- and then the question now is...

HUME: But they couldn't pass it.

LIASSON: They couldn't get it through the Senate, but they did pass it through the House and a majority -- they got a majority of votes in the Senate, not 60. But the question now is -- is there something further than that, you know...

HUME: That might actually expect something?

LIASSON: That the Democrats could actually pass, and that's why Harry Reid said earlier the program, look, "We're going to stick together, but I'm not going to tell you what we're going to stick together on." I mean, he's way -- he's trying to...

BARNES: Don't know what it is.

(CROSSTALK)

BIRNBAUM: Wait, wait. Sorry. The Democrats are retreating from their anti--Iraq legislation, just as quickly as they would like the United States to retreat from Iraq, I believe. They don't have a proposal that has a majority and if they go beyond a non-binding resolution, I don't -- the -- I think even getting a bare majority of the House and certainly of the Senate could be in danger. I think they worry that the voters will reject their proposal if they go too far. I think the Democrats have gone as far as they can go until things change on the ground in Iraq. They're just -- it's manifesting itself in a division among the Democrats right now, but what it's really reflecting is, there is not popular support for doing anything, I think, that really bites on the Iraq issue.

LIASSON: You know, and there's another question, too. Up until now, the Democrats have reflected the public view, which is disapproval for the president's policy, but it's the president's policy. If they do actually pass these things, which I don't think they can, then it become theirs, because they're micromanaging the policies. So, that's a risk that a lot of Democrats do not want to take.

BARNES: Yeah, I think both of you are right, but what happens and it happened when Republicans took over the House and the Senate in 1994, you over-interpret your mandate and you -- and then overreach and clearly, the original Murtha resolution was way of overreaching. They were overreaching in the Senate, as well, with a resolution that would repeal the war resolution from back in 2002. That was just overreaching.

LIASSON: But Fred, they're not overreaching if they can't pass it.

(CROSSTALK)

BARNES: But they want to. But they want to.

HUME: But isn't failure to pass the consequence of overreaching?

BIRNBAUM: Yeah. I think the Democratic leaders want to put their members on record as often as they can against the war. That's why there's pushing, still, to have these additional funds.

LIASSON: Because they want to put Republicans on record as being for the war.

BIRNBAUM: On the other side, all looking to 2008, but not trying to take responsibility enough to actually pass legislation.

HUME: And the thing that's holding up the votes on all of these is the unwillingness of the Democrats, if I'm not mistaken, to allow a vote in the Senate on a measure that would say whatever else they say, we will not vote to cut off -- we oppose cutting off the funds for the troops because that, apparently would get the biggest votes of anything, correct?

BIRNBAUM: Yes, and certainly over the 60 votes that is now the procedural hurdle, there.

BARNES: Well, Democrats are dreaming up a Greg light, that is the amendment that would...

HUME: Quickly.

BARNES: ...say we have to fund the troops. One that would allow Democrats to vote for something about the funds, but not for the serious resolution.

HUME: We'll see how this plays out.

For more visit the FOX News Special Report web page.

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