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Bret Baier, Karen Tumulty, Charles Krauthammer, Steve Hayes

xfdfx FOX-SPECIAL-REPORT-WI-04

Show: FOX SPECIAL REPORT WITH BRET BAIER>

Date: April 7, 2011>

Time: 18:40>

Tran: 040704cb.254>

Type: Show>

Head: Fox News All-Stars>

Sect: News; Domestic>

Byline: Bret Baier, Karen Tumulty, Charles Krauthammer, Steve Hayes>

Spec: Politics>

(BEGIN VIDEO CLIP)REP. JOHN BOEHNER, (R) HOUSE MAJORITY LEADER: There is no agreement on the number, there are no agreement on policy issues contained with it.

UNIDENTIFIED MALE: We do not need another short-term measure with $12 billion of additional spending cuts. Separate from the negotiations because we are now at a point where we can get the deal done.

MCCONNELL: Democrats can either take up and pass this reasonable Bill that falls well within the bounds of what their own leadership defined as acceptable, or shut down the government.

HARRY REID, (D-NV) SENATE MAJORITY LEADER: We get back here at 7:00 and hope when we get done we'll have something done. If not we have to look forward to a bad day tomorrow.

(END VIDEO CLIP)

BAIER: Now it's 7:30, pushed back a little bit, that meeting at the White House. The next meeting as the negotiations continue toward this tick-down, the clock ticking toward possible government shutdown. What about all of this? Let's bring in our panel, Steve Hayes, senior writer for The Weekly Standard, Karen Tumulty, the national political correspondent for the Washington Post, and syndicated columnist Charles Krauthammer.

OK, let's start, Karen, with what happened today. The House passed a continuing resolution that would fund the government for a week and fund the Pentagon for the rest of the year. It also contains other things, but not many of them. Explain what that is.

KAREN TUMULTY, WASHINGTON POST : The other thing that the bill has these so-called two of the riders, one of which would assure that Guantanamo remains open. The other would prohibit the District of Columbia from using local funds to fund abortion.

Now this kind of prohibition was in effect until about two or three years ago, and then the Democratic Congress reversed it. It would be a reversal of status quo, but it would be going back to what the policy used to be.

BAIER: We know there is a standoff on the bigger issues the rest of the issue, the rest of the year. There are other riders on that bill. But the continuing resolution that lasts a week and funds the Pentagon, what is the push-back do you sense from the Democrats in the White House?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD : I think their argument, they made the argument several times today from the White House and the Senate Democrats. They said it's all about the riders. It's all about the policy things and what you are having as the house Republicans being ideological in pushing the policy riders. It's not really about anything else.

The problem with that is as Kevin McCarthy pointed out, Democrats supported in particular this particular abortion policy in the past. I guess Steny Hoyer 19 times but Harry Reid supported it, Chuck Schumer supported it --

BAIER: Riders on other funding bills.

TUMULTY: Other funding bills in the past. And the argument you are getting from those on the left is, well, this would be a change of policy, as Karen points out. The argument from those on the right is you supported it, you know, countless times before. Why all of a sudden in this particular instance is the thing that will lead to a government shutdown?

BAIER: You heard the two whips go at it. And $12 billion is cut in the continuing shorter resolution. Democrats are now up to $33 billion for the rest of the year. It's not the money, Charles. So I guess you hear the White House saying we're so close to a bigger deal, while agree with another short-term deal? Is that a legitimate political stance to take?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I don't think it's a winning argument at all. If they try to shut -- if they refuse the short- term stopgap the one week and shutdown the government on the argument, well, we were working on the longer-term one, that is a loser if you're a Democrat.

If the argument is this is no way to run a government week after week, which with is what we heard the press secretary say, that is also a loser I think because you say you want to shut down the government after you've done the short-term extensions again and again and again over this one?

I think the only argument is we don't want riders. We have don't want to decide major issues like abortion in this emergency stopgap with everything hanging. I'm not sure it carries here because it has to do with the District of Columbia. It's narrow, something that existed and two riders in the bill, Democrats supported it in the past. I think the Boehner approach smart one. I think he has maneuvered the Democrats in to a box.

BAIER: Now that is interesting, because just the other day you said Speaker Boehner was in a box.

KRAUTHAMMER: Until he pulled out the one-week, which is what I was hoping he would do, the one week, almost completely clean. This is one with only two riders. The longer term one has got about 40 riders which is a target. It would allow the Democrats to say this isn't about the budget. It's about a way to get changes in the policy, illegitimately.

BAIER: Karen, let's talk about the longer debate as the meeting continues up at the White House. Who is winning that battle politically? Is there a sense yet? Or do you think we really are headed for a shutdown? You know, set aside the short-term CR, is this impasse going to continue?

TUMULTY: You know it's fool-hearty to go on television and predict on things you're going to know the answer to in 24 hours.

BAIER: But I ask anyway.

(LAUGHTER)

TUMULTY: But I won't be fool-hearty enough to say. My gut is telling me that if there is a shutdown I think it will be relatively brief. And I think it is going to be relatively limited. And ultimately I think both sides are going to come back to the starting position, which is that this is really not in anybody's interest to see this happen.

BAIER: Because you look at the Washington Post poll, 37-37, who is to blame if it does shut down. The political carnage could be different places.

TUMULTY: And most importantly of all, Democrats keep saying they want to see a compromise. Republicans say they don't. But independent voters want to see government work. They want to see the guys sit down and come up with an answer to this.

BAIER: Steve, is there also a debate about who is an essential employee and who is not? And could it lie with the president to then say well, these people are essential and these people are essential, and you're going to keep working.

TUMULTY: The president head of agencies will make the determination. Again, in the context of a $1.6 trillion deficit raises questions about what the heck we're doing in Washington if you have so many people who are nonessential employees why are we funding them?

The bigger picture, if you take a step back and look at where the Republicans want to be, they want to talk about the 2012 budget. They'd rather talk about the debt ceiling and trying to extract concessions on those. That's why for a long time I thought it was unwise to go head-to- head Boehner versus Obama on this.

Having said that, I think Charles is exactly right. The way that John Boehner manipulated the situation where the Democrats are going to shut down the government potentially objecting to things they have already supported makes Republicans --

BAIER: Last word.

KRAUTHAMMER: If the government shuts down, this is what will happen on Saturday at 10:00 a.m. cameras outside the gates of the national zoo. The family having driven from Tuscaloosa is going to arrive. They are not going to be allowed in. A little kid carrying a teddy bear in his hand is going to start to cry and the whole country will say open the government again.

BAIER: OK, we'll follow it. Next up, word of a previously unknown secret nuclear site in Iran. (COMMERCIAL BREAK)

BAIER: An Iranian dissident group released satellite photographs of what it says is secret centrifuge production facility six miles outside Tehran in Iran. The Iranian regime the group says is quietly making a lot of progress enriching uranium needed to make nuclear weapons. This is the same group that revealed in 2002 that Iraq facilities, revelation that lead to more U.N. inspections and the world taking a second look at the Iran nuclear program.

What about this? We're back with the panel. Charles, as we focus on all of the protests and rebellions around the Middle East, we largely have not been focusing on Iran.

KRAUTHAMMER: That's why Iran in two ways has been the big beneficiary of this unrest. Number one, the west has taken its eye off the ball because what is happening among Arabs unprecedented, extremely important. And this story will get a lot less attention than it should.

But it's extremely important, because it even though it's unsurprising it's alarming. It tells you they are hell-bent to acquire a nuke. Though they had difficulties with the computer virus introduced that delayed a little, the program. It's now on track. It's now developed all of the components to spin the uranium to weapons of grade material.

The second advantage is the regimes are toppling, the regimes that were staunchly anti-Iranian starting with Egypt. You have Hamas now with a friend in Egypt, allowing it a lot of activity, which is why we are seeing attacks on Israel. We had the former prime minister of Lebanon as we heard earlier on the show accusing Iran of taking over his country arming Hezbollah.

Iran is using the unrest, the weakening of the anti-Iranian autocrats in that region to stir the pro-Iranian elements.

BAIER: Karen, we didn't hear from the administration officials on this. Many officials on background said they're still looking into it. But administration policy on Iran, after Egypt they talked a lot about what was happening in Iran but largely have not talked about it since. Do you sense that there is any urgency with the administration on this issue?

TUMULTY: Well, we actually did have an interesting development today, which was the Defense Secretary Gates meeting with the Saudis came out and accused Iran of interfering in Bahrain. This was a stance that we had not heard them take before. In fact, they had been somewhat critical of the Saudis coming to Bahrain government defense there.

All of the developments are a reminder for everything else going on in the Middle East there is absolutely no more crucial foreign policy imperative for the United States than containment of Iran, and that, in fact, a lot of the developments as Charles said has complicated that for the United States and its allies.

BAIER: Steve?

HAYES: Secretary Gates was in Saudi Arabia for one reason. He was there to repair the damage that has been done to the relationship between the United States and the Saudis. Where it's at the point now where communications have been cut off in some instances. The Saudis don't trust what the United States is doing. We saw that when they sent their own troops in to Bahrain.

BAIER: There has been a report that Saudis reached out the China and Russia.

HAYES: Right. Basically, they don't trust the United States any longer to guarantee their security, which had been this corrupt bargain going back decades. I think that is what Secretary Gates was there and explains his comment.

On the broader question on what is taking place in Iran, when I was asking people in September of 2009 after the White House revealed the existence of the facility, another one of these, I talked to intelligence sources at that point and they said they had been monitoring suspect sites for nearly a decade in Iran and there are more than a handful of them potentially. So it's not surprising we would find this. And it will be interesting to see if they can confirm it and confirm it quickly.

BAIER: Charles you mentioned the Stuxnet computer virus that many officials believed really took a toll on the Iranian nuclear program. If all of this is true, perhaps could it indicate that the virus was not as effective as once believed?

It probably was as effectives but it looks as if the Iranians have worked around it by producing their own new machines because the virus didn't only interrupt enrichment, it destroyed machines. But apparently it's producing its own machines clandestinely, which is what we discovered today, which is why it's increasing the supply of the uranium in the last year or two, even though weary assumed as a result of the viral attack it had been reduced.

BAIER: That's it for the panel. But stay tuned for a wild celebration.

(COMMERCIAL BREAK)

BAIER: A lot of sports talk lately. Finally tonight the Texas A M Aggies beat Notre Dame to win the NCAA women's basketball title. You think that people would be excited, but --

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Guess what. Last night the lady Aggie's basketball team won it all. Reporter Kevin Reese joins us live with all the activity at college station. They have got to be excited. Kevin?

UNIDENTIFIED MALE: Very excited. This place is still hopping. You can see the folks still here celebrating. How is everybody doing?

(LAUGHTER)

(END VIDEO CLIP)

BAIER: What happened? They didn't even react. Thanks for inviting us into your home tonight. That's it for this Special Report, fair, balanced, and unafraid. We will have continuing coverage of the talk of the shutdown. In fact, we may be live at midnight Friday night with Special Report. We'll see you.

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