'Special Report' Panel on President Bush's Speech, the Recession in the European Union and Palin at the Governor's Conference

This is a rush transcript of "Special Report With Brit Hume" from November 13, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

GEORGE BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: Some blame the crisis on insufficient regulation of the American mortgage market. But many European countries have much more extensive regulations and still experienced problems almost identical to our own.

GEORGE SOROS, BILLIONAIRE INVESTOR: Excessive deregulation is at the root of the current crisis, and there is a real danger that the pendulum will swing too far the other way. That would be unfortunate, because regulations are liable to be even more deficient than the market mechanism itself.

(END VIDEO CLIP)

BRIT HUME, HOST: Those two gentlemen are no political allies, and as you can hear, they come from a different place when they start talking about regulations in the current crisis, but they seem to have come out in the same place.

Some thoughts on all of this now from Fred Barnes, executive editor of The Weekly Standard, Mort Kondracke, same job at Roll Call, and the syndicated columnist Charles Krauthammer, FOX News contributors all.

More economic news, most of it not good. The market goes up, looks like a typical bear market rally. But what do we think now about all this, and the pressures coming from Capitol Hill and elsewhere for regulation — Fred?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: There is a lot of pressure for that, and as the president said elsewhere in his speech — President Bush's speech was very good, by the way — that what historically has caused problems for economies and had them not grow is too much government, not too little government.

And the truth is, look, this world free market has created more wealth and reduced more poverty in the last 20 years than ever in human history. It's been remarkable.

And it does need some more transparency, particularly in some of these exotic financial vehicles that we're created that are even hard to explain what they do.

I really don't know what George Soros is talking about when he says excessive deregulation. You could say well, there was enough regulation, but there wasn't a lot of deregulation.

The problem was that outfits with government sponsorship like Fannie Mae and Freddie Mac announced that they were going to buy up all these mortgages which shouldn't have been granted in the first place and which encouraged banks and other lenders to create more of them, to make the loans. That's the problem.

HUME: Now, Mort, on Capitol Hill the complaint is that the banks, who are struggling for solvency and have gotten bailout loans, that they're not lending enough. Is it fair to say that the Democrats may be accusing the banks of not making more bad loans?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: Well, I think they have been given this money, and what they're doing —

HUME: Loaned this money.

KONDRACKE: Loaned this money, and what they're doing with a lot of it is buying up other banks. And that's not what it was intended for. It was intended to get the credit flowing to businesses and individuals.

HUME: They argued today-

KONDRACKE: The money is fungible —

HUME: They argued today, Mort, that they are doing more lending and they've accelerated their lending, at least some of them did, on the hill.

KONDRACKE: I'm glad they had a chance to straighten that out, and it's getting clearer what's going on.

But I think what the excessive regulation that the president was talking about is the stuff that the Europeans are going to come here proposing.

Now, my understanding of what is going to happen this weekend is that this is going to be a U.S. bashing session on the part of the other 19 countries that are here. The Europeans are all blaming us for this catastrophe. And partly it is our responsibility, but David Smith, the international economist, you know, that —

HUME: Editor of the International Economy Magazine.

KONDRACKE: Right. He points out that the Europeans have six times more exposure to debt from emerging economies than we have exposure to subprime mortgages.

So all this regulation that these central banks and governments in Europe have that we don't didn't save them from getting into trouble.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The president's speech, I agree, was only, in part, aimed at Capitol Hill, but it was largely aimed at the Europeans, who had a meeting in Brussels last week to present a plan here in Washington on Saturday, which the prime minister of Britain has called a new global order.

And, in fact, they have 100-day deadline that they are giving the United States to respond. I thought the president's speech was a way of saying "fat chance."

The main element in the plan is to make the IMF the kind of super regulator of all markets. And as Brown, the prime minister has also indicated, he wants the IMF to act as an early-warning system and a crisis prevention mechanism.

Irwin Selzer, the economist, points out that, a, the IMF is not interested in the role at all and can't handle it and has said so. And secondly, there is no one who can be an early warning system. The science of economics is insufficient. It cannot predict. If it could, we wouldn't have had the bubble now, or the bubble in the year 2000, or any of these others.

Alan Greenspan, who was the guru of the '90's, admitted himself he never saw it coming. So —

HUME: The bubble or the bursting of the bubble?

KRAUTHAMMER: Both. And he made mistakes, which he admitted, and he was the one who was supposed to be the wisest of all the bankers.

Given this, I think what's going to happen on Saturday here is you're going to have a meeting of the 20 countries, and it's going to be the economic equivalent of the Annapolis Summit on the Middle East — a lot of talk, holding hands, welcoming new members, and nothing of substance coming out, which is exactly the right result that you want.

HUME: Charles is predicting a good outcome, not always what happens, Charles. Glad to hear that. Thank you.

Sarah Palin was apparently a hit at the Republican Governors' conference. Thoughts from the panel on her and the Republicans in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN, (R-AK) FORMER VICE PRESIDENTIAL CANDIDATE: In respect to our presidential campaign, now it is time for us to go our own way, and leaving neither bitter nor vanquished, but instead confident in the knowledge there will be another day and we will gather once more with new strength. We'll rise to fight again.

(END VIDEO CLIP)

HUME: Sarah Palin in the midst to a talk to the Republican Governors Association in Miami where they're meeting to regroup, I suppose, and they are focusing a lot of media attention on her, of course, and whether or not she will run in '12. She seemed not to want to think about that at the moment.

But this is an interesting moment for the Republicans and her, and her role with them. Fred, your thoughts?

BARNES: She has a big role for sure, but it will be hard to play it going back to Alaska. I talked to a couple of people who were there at the Governors' conference, including Bill Kristol, who was on a panel there, and he talked to Sarah Palin, and she is always in a good mood. Once again, she's in a good mood.

And so were the governors, actually, in a pretty good mood. They're not throwing up their hands and saying woe is the Republican Party, we're in the ditch for as far as the eye can see. About half of the Republican governors there are thinking of running for president in 2012.

So they don't think that Obama is quite the master of the universe yet.

The notion that somehow governors, however, lead Republicans in their recovery, that's never really happened. Remember who after the Goldwater debacle in 1964, who was the next Republican who became president — Richard Nixon. He hadn't been a governor. He tried to be one and failed.

And then Ronald Reagan then came along. He had been a governor. But that's not why he was elected president. He was the conservative leader. That was the reason.

And then, of course, in 1994, with the big Republican takeover of congress, who was the leader? It was Newt Gingrich.

So they don't necessarily look to governors.

HUME: Well-

BARNES: Governors are important, but the notion that somehow —

HUME: You just had a two-term presidency by ex-governor George W. Bush, though. And the president before that who served two terms was Bill Clinton.

BARNES: Yes, I know, but I was referring to something different.

I was saying, look, the governors' claim, hey, look to the governors, and we'll lead Republicans back to a majority. And I would say, look, some of them are fine, but I don't think they're the ones who are going to be able to handle that.

KONDRACKE: Look, Republican governors actually can run things. The Republicans in the Congress are not going to be able to do anything except occasionally block something in the Senate, maybe, and all they can do is sound off in the house.

So if there's going to be models for what Republicans can do, it's going to come from the states. And there's a lot of talent out there.

And there are big problems. I mean, how they handle the consequences of this recession is part of it. How they pursue economic development — and especially if one of these governors could really transform the education system of a state and make it first-class and a national model, that would get everybody's attention, and —

HUME: Do you see anybody starting to do that?

KONDRACKE: As a matter of fact, there is one guy, Huntsman from Utah, signed up for total education reform, a couple of weeks ago.

HUME: We'll keep our eye on Huntsman of Utah — Charles?

KRAUTHAMMER: Keep your eye on Sarah Palin. She was the real star here.

Look, I have nothing against her. She is a political star. She's got charisma, which counts for a lot. Obama rode it all the way to the White House.

But I give would offer her this advice — for the next two years, go home to Alaska and read. And I don't say it condescendingly.

HUME: And get reelected, by the way.

KRAUTHAMMER: She is extremely intelligent, but there is a huge deficit of knowledge which we saw in the campaign. And she needs facility and fluidity on issues like — I mean, for example, on national issues.

What are the arguments pro and con for Nato expansion? What is the importance of Taiwan? What is the legacy of the Oslo agreements? She doesn't know how to answer those questions. You and I know only because being here 30 years you marinate in this and you absorb it, hearing and watching the debates. She hasn't had that experience.

If she aspires to the presidency, and she obviously does, she has to learn this stuff, and she can. But she ought to do it now and not start running prematurely.

HUME: That is it for the panel,

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