This is a rush transcript of "Special Report" on October 11, 2021. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

JOE BIDEN, (D) PRESIDENT OF THE UNITED STATES: In total, the job creation in the first eight months of my administration is nearly 5 million jobs. Jobs up, wages up, unemployment down. That's progress.

UNIDENTIFIED MALE: There are bills to pay for most people. So how long can somebody actually sit there and say I'm looking?

UNIDENTIFIED MALE: Great question. These questions are asked every month.

UNIDENTIFIED MALE: What's the answer?

UNIDENTIFIED MALE: I don't think there is an answer.

UNIDENTIFIED MALE: Why aren't school employees, public school employees, going back to work?

UNIDENTIFIED MALE: I don't have an answer for you. If I had that answer it'd be giving it all day.

REP. KEVIN BRADY, (R-TX) HOUSE WAYS AND MEANS COMMITTEE: This jobs report is another nail in the coffin for Democrats. Certainly, President Biden is now a million jobs short of what he promised from his last $2 trillion giveaway. Why would you trust him to create more jobs?

(END VIDEO CLIP)

BAIER: A lot of focus on the economy, about legislation pending on Capitol Hill, COVID mandates, and what that means politically. We have shown you this before. The Quinnipiac poll and the approval-disapproval for President Joe Biden again underwater in this poll and a number of other polls. But as you look deeper into handling of the issues, even on the coronavirus, which he was succeeding at, he's upside down. And when it comes to the economy, even more so, kind of matching the approval number. If you break out independents, it's much lower.

Let's bring in our panel, FOX News senior political analyst Brit Hume, Ben Domenech, publisher at "The Federalist," Juan Williams is a FOX News analyst, and Jason Riley, "Wall Street Journal" columnist and senior fellow at the Manhattan Institute.

Brit, what about this current time and where we are on the economy and how much the administration has to do with it?

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: I think we are in a recovery, there's no doubt about that. And job growth is to be expected. And when it comes in low, people notice. And I think that's part of what we are seeing in these polling numbers.

Bret, some crises occur to an administration and a president because of that administration's policies. The Afghanistan withdrawal is one example. The mess of the border is another. Some sort of happen to presidents. This chip shortage that we are dealing with, the continuing problem with the COVID vaccine and the attendant effects on the economy, these are things that happened to this president, in a way. And either way they happen, it is up to the president to deal with them. And a president who cannot seem to deal with them is going to be in political trouble. And I think that's part of what we are seeing now.

BAIER: And Juan, what about -- is it happening to him, or is this an action by the president that somehow is spurring some of it on?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: I think if you're looking at standard measures, economic measures of seasonal job growth, you would think given what the president has done so far, you would've looked for far better numbers coming out of September.

The problem with that, I think, is lack of context. Clearly, we are still battling the coronavirus, and it's still having an impact on our economy, Bret. And I think one consequence of that is it distorts the normal September back to work, fall hiring and layoff patterns. Right now we actually saw more growth in July and August. They had to go back and up those numbers, more than we would've anticipated.

So right now, it looks like we're going to be going through this for a while. Some big companies have announced now they won't be going back until even past January, and I was surprised at that. So you have to keep that in mind.

Right now, if you stop and think about it, though, from the Biden administration perspective, we are under five percent unemployment, down from 6.3 percent I think it was in January. That's pretty good. You just heard the president say added 5 million jobs under his time. Again, that's very good. But to Brit's point, when the American people look at those numbers, they can be disappointed because they're not putting all the context in.

BAIER: Jason, critics of this administration would say that they are looking towards the prescriptions to be the exact opposite. Instead of incentivizing to create more jobs, they're prospectively, if they get the legislation passed, going to raise taxes on a lot of these companies.

JASON RILEY, COLUMNIST, "WALL STREET JOURNAL": Yes, that is the plan, and that's also the problem. Juan points to the unemployment rate below five percent. There are two reasons unemployment falls. One is because more people who are looking for work find work. The other reason is because fewer people are looking for work. And the problem here is that that latter cause could be what we are dealing with.

There are 5 million fewer people working today than before the pandemic. And the question then becomes why is that? Why do we have so many job openings and so few people looking for work? And the question there is whether there are too many incentives in place not to work, whether these - - we have ended the supplemental un-insurance program. I think we waited too long to end it, but that was a good thing to do.

But we still have lots of checks going out to families with kids, rental assistance, and so forth. We have a lot of incentives in place for people not to return to the labor force. And going forward, this administration was to increase those incentives not to return to the labor force, even giving families, six-figure income families, up to $200,000, incentives not to return to work.

And that could be a problem going forward, not just in terms of the unemployment rate but in terms of the productivity of the country. Fewer people working means we are a less productive country, and that could in the long run affect our standard of living.

BAIER: Ben, I have a buddy who is a Chevy dealer who has been telling me about the chip shortage forever, that he couldn't get cars and this was a coming crisis. Now more and more people see it, but it's not just for getting cars or electronics. It's actually a security threat for the country. Take a listen to the G.M. president on this.

(BEGIN VIDEO CLIP)

MARK REUSS, GENERAL MOTORS PRESIDENT: The reason why, and people don't fully understand this sometimes, to get profitable, vertically integrated chip manufacturing, it's billions of dollars to facilitate it, which can happen. But then you have millions of uses for it, millions and millions and millions of volume to go in there to make that efficient and productive and profitable. Any one automaker, probably it's a very difficult business case for it. But if the auto industry and the country come together and do that, that's a big deal.

(END VIDEO CLIP)

BAIER: But you are even talking if you do it full out, Ben, maybe two, three years before the U.S. is able to handle or get a grip on creating some of those chips?

BEN DOMENECH, PUBLISHER, "THE FEDERALIST": And that's the problem that I think that we are actually discussing writ large with the economy as a whole. So many of the fixes that the Biden administration wants to bring to bear are things that aren't even going to be wound up within the next calendar year-and-a-half, if not beyond that. And I think that with this semiconductor crisis, you see it again a situation where you can't just flip a switch and turn things on.

I think that this Southwest Airlines situation where you see so many pilots and crew potentially involved in a mass revolt against the vaccine mandate that has been pressed upon them, I fear that that type of reaction is going to spread throughout our economy, and that we really are potentially on the cusp of a number of serious crises that the White House really is already dealing with so many in so many different areas. I'm not sure that they really have a solution that's going to be able to be brought to bear in time to make a meaningful difference for people in the economy in a short term.

BAIER: What about that, Brit, the vaccine mandates and how that affects the whole thing?

HUME: The vaccine mandates don't help, I don't think, because anything that incentivizes people who are concerned about it not to go to work or to be willing to lose their jobs is going to hurt the economy. There's just no two ways about that. And the workforce participation, as Jason has pointed out, is already a problem.

One more thing, Bret, on that semiconductor shortage. If anything could bring the Taiwan policy and the threats to Taiwan into sharp focus, that certainly is it, because so much of what we get in semiconductors comes from Taiwan. We need that production in the near term and possibly in the long. And if that is cut off in any way, we are really in trouble.

BAIER: And speaking of that, Juan, China policy from the Biden administration seems a little nebulous. It doesn't seem like it's nailed down exactly what it is. And as Brit is talking about, the threats to Taiwan in just recent days with these bombers and jets flying over, it seems urgent.

WILLIAMS: Yes, I would say so. Clearly the president of Taiwan came out and said she is not going to be intimidated by that kind of behavior. The U.S., as you know, recently strengthened its relationship with Australia, strengthened its relationship in terms of military supplies, talking about semiconductor chips, with lots of the people in that pan-Asian basin to try to say that we are united, we're not giving up on that area.

But when you use the word "nebulous," I guess you mean, are we going to be more pointed in taking on the Chinese and challenging the Chinese? And there I think that's an ongoing issue as to how you do it. Clearly, we are not interested in bombs and fighting a war with them, but I think you have to be very clear about the fact that they are aggressive in terms of their behavior in that region, and that we should not be backing off in my opinion. But I think semiconductors, you've got to believe in American ingenuity. Our defense industry is the best of the world. I don't think anyone would contest it.

BAIER: Last thing quickly, Jason, did you see this Ben & Jerry's interview? Where they couldn't answer why they are not selling --

(LAUGHTER)

RILEY: I don't know what you can add to that, Bret.

BAIER: It just speaks for itself.

RILEY: They were really caught flatfooted there. Yes, it really speaks for itself.

BAIER: All right, panel, stand by. When we come back, tomorrow's headlines.

(COMMERCIAL BREAK)

BAIER: -- headlines with the panel. Jason, first to you.

RILEY: A major city, Bret, Austin, Texas, jumped on the defund of the police bandwagon a couple years ago, and now they are seeing the consequences. Violent crime is up, murders have almost doubled since 2019, and the police department is having trouble recruiting new cops. I don't think Austin is going to be the last big city to learn this lesson the hard way.

BAIER: Ben?

DOMENECH: Superman is bi, and nobody cares. As many comic book industry folks have tried to take advantage of their success at the movies, these types of appeals to woke people and trying to get some kind of new audience for actual comic books, this one is just one more attempt to trend on Twitter for a day.

BAIER: Juan?

WILLIAMS: Baseball rules need to be revised, Bret. If you saw last night's Tampa-Boston game, the ball bounces off a Boston player and then over the fence, and they stopped the Tampa team from scoring. I think it's in the rulebooks, but it's not right.

(LAUGHTER)

BAIER: All right, Brit.

HUME: Democrats propose new election rules in which people will be allowed to vote by phone, and only the vaccinated will be allowed to vote. Dr. Fauci, however, says it's too soon to tell if it's safe to hold the election.

(LAUGHTER)

BAIER: By phone. All right, panel, thank you.

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