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Special Report Roundtable - Aug 31

FOX News Special Report With Brit Hume

BAIER: This is a FOX News alert. The Associated Press is reporting that Idaho Republican Senator Larry Craig will announce tomorrow that he will resign from the Senate over his arrest and guilty plea in that police sex sting in an airport men's room.

They are saying that the announcement--we can confirm the announce is going to happen at 12:30 eastern time tomorrow. And, according to the AP, the resignation will be effective as of September 30.

Our sources are telling us this is not coming from the Craig's office, but it is coming from state officials. Again, it is what the AP is reporting at this hour.

What does this all mean? Some analytical observations now from Mort Kondracke, Executive Editor of Roll Call, Jeff Birnbaum, columnist for the Washington Post, then Mort--OK--syndicated columnist Charles Krauthammer, FOX News contributors all.

OK, so, the breaking news, the Associate Press saying it, Major Garrett on the ground saying every indication was that it was going to happen. Charles, what does this mean, and what if it is effective September 30?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It seems to me a month is long time, and, in fact, there is going to be a lot of business in the Senate with Petraeus and Crocker, a lot of hearings. So, perhaps he actually wants to participate.

I do not see how that can really happen, given the state of disgrace he is in. But the fact that is important here is that the inevitable happened and that the bleeding, ultimately, will stop.

Look, as Major reported, what the Republican leadership essentially did was walk into this office, hand him a sword, and leave the room. And he did the right thing.

BAIER: What does this mean? Obviously Republicans are sighing a sigh of relief.

MORT KONDRAKE, EXECUTIVE EDITOR, ROLL CALL: What the Republicans are trying to do is excise a boil at the minute it pops off--they don't want it to fester and to continue to be talked about on radio talk shows and all of that for weeks and weeks and weeks, and damage the party.

The party was damaged by charges of corruption in 2006. The Mark Foley case cost any number of Republicans their seats--presumably it depressed Republican turnout. The want to lance all the boils right away.

They are doing it in an incomplete way and an inconsistent way. In the House of Representatives, two members have had their affiliated offices raided by the FBI in corruption scandals, and they are being eased out-- John Doolittle and Rick Renzi. And at the same time at the Senate, you have Ted Stevens, whose house has been raided in Alaska, and nothing has been done about him.

So this is still a work in progress, this house cleaning.

JEFF BIRNBAUM, COLUMNIST, THE WASHINGTON POST: The most important two words to explain what is going on are "Mark Foley." It's what happened last year, the page scandal. One of the reasons why the Republicans lost control of the House was that the House Republican leadership did not act quickly enough to deal with Mark Foley's problems and were blamed for it. And the voters were upset enough to toss them out.

The Senate Republican leaders this years understood that and acted very quickly in concert with state officials in Idaho to make clear that if Larry Craig did not leap out the window, they were going to push him. And that is what has happened here.

And, in all likelihood, this will pay off, because people will forget this by the time of November 2008, the next election. The governor of Idaho is going to pick a very popular person, in all likelihood, to replace Larry Craig, the Lieutenant Governor Risch, who is a well-known person in that state, and very popular, and is very likely to both get the Republican nomination and to win the general election and keep the seat for Republicans.

KRAUTHAMMER: Which is why the worst news for the Republican Party in the Senate today was not Idaho, but Virginia, because John Warner resigning means that his seat is in play. He had kept its safe for almost a quarter of a century.

And right now I would predict that Mark Warner, who is the former governor, a Democrat, very popular, with a lot of money he will run, he wants it. And he'll win. And that could be the flip of a seat which would be extremely important given how tight the numbers are in the Senate today.

BAIER: As an incumbent, Senator Warner would have held onto that seat almost assuredly. Now because Virginia is shifting a little bit blue--

KONDRAKE: Yes. And Mark Warner is a moderate Democrat. And he has been talked about as a presidential candidate, almost ran for president. He has been talked about as a vice presidential candidate.

But if he does not run, then the seat could be held by a Republican, either Jim Gilmore or Tom Davis. But if Mark Warner runs, he is probably going to win. And that will put about six Republican seats seriously in a play next time, and only one or two Democratic seats. So the Republicans are going to lose more seats in the Senate.

BAIER: And, quickly, on the big Senate picture--

BIRNBAUM: Without question it is going to be a Democratic year anyway in 2008. There are 22 Republican seats up, and only 12 Democratic seats. The retirement--not the resignation--the retirement of Senator Warner is as yet another likely Democratic victor.

And Tim Johnson coming back from South Dakota means the Democrats could well hold on to that seat which they might have lost otherwise. So it looks like it is not going to be a good year for Republicans in the Senate in 2008.

BAIER: OK, we will leave it there.

Again, the breaking news that Senator Craig will resign according to the Associated Press tomorrow.

When we come back with our panel, the market soured after remarks made by the fed chief and President Bush. Just how much will the recent housing and credit crunch affect the economy? Stick around.

(COMMERCIAL BREAK)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: It's not the government's job to bailout speculators, or those who made the decision to buy a home they knew they could never afford. Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders or a little help from their government.

SEN CHARLES SCHUMER, (D) NEW YORK: These are all good steps. And the best point of all here is that the president has gotten out of his ideological straightjacket and seen that in times of crisis one of the jobs of government is to help.

BAIER: Senator Charles Schumer responding to President Bush as he listed a series of actions to help homeowners in trouble to avoid foreclosure. What was done today and how much did it help? We're back with our panel.

Jeff, tell us a little bit about what happened, and exactly if it's enough.

BIRNBAUM: Well, it was basically a one-two punch that we heard today. We saw the one punch from the president, that is, giving the Federal Housing Administration a lot more authority to underwrite, in effect, loans, mortgages for homeowners in trouble, and to give more loans in general, because there are so many homeowners who are going to be in trouble of not meeting their monthly payments because their adjustable rate mortgages are going to be adjusting upwards soon--maybe two million people, but hundreds of thousands in trouble.

But there was also a speech today by Federal Reserve Board Chairman Ben Bernanke, who promised, too, that the Fed would be very careful and act quickly to protect the economy. It's not just inflation that the Fed will worry about, but rather making sure that the economy doesn't decline because of this credit crunch.

Whether it will be enough, it could very well be enough. But there's no question that the Democrats in charge of Capitol Hill, when they return, will try to one up the president more than FHA loans, and it could get very expensive. There will be a very big fight starting next week.

KONDRAKE: If this has been the panic of '07, it may be over-- hopefully, it's over--with both the Fed and the president stepping in. The president did take three weeks to discover that he's a compassionate conservative again and start helping out these people who are about to lose their homes.

Schumer tried to link it to the departure of Karl Rove and the departure of Alberto Gonzales. I don't think so. I think it's Hank Paulson who is in charge of this sort of thing.

In any event, if the panic is over, then we've survived it. It seems to me, though, that Congress, and this is not something they're doing, ought to be looking into regulating hedge funds in the private equity market now.

One of these narrow focus things could topple the whole economy.

BAIER: Believe it or not, Charles, you have 15 seconds.

KRAUTHAMMER: The president finessed it. He knew he had to actually bail somebody out, and he went for the little guy, helping from below. He did it in a moderate way and, I think, a smart way. And it will probably have at least a moderate effect.

BAIER: We'll credit that to your account for next time, Charles.

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