'Special Report' Panelists Discuss the VP Debate; What Passage of the Bailout Bill Means to the Presidential Race

This is a rush transcript of "Special Report With Brit Hume" from October 3, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

CARL CAMERON, FOX NEWS CORRESPONDENT: Folks said, wow, that looked like "Sarah barracuda" out there last night, because it was back and forth and you were taking on Joe Biden.

Do you think it surprised him by the way in which you were sort prepared to go after his record and Obama's? What was the body language and the psychology between the two of you on that, because he was sighing a lot, and some of folks thought that you kind of exasperated him?

GOV. SARAH PALIN, (R-ALASKA) VICE PRESIDENTIAL CANDIDATE: Well, again, my point of view was it was pleasant, and it was a lot of fun.

But there just wasn't enough time, either—90 minutes in a debate. It sounds like it will be a heck of a lot of time to get a lot of words in and countering each other's records.

And there wasn't enough time to go through everything I wanted to go through, because [after] 35 years in the Senate, he has a record. A lot of the reflections of the voting records shows us why they are considered the most liberal ticket probably ever.

There just wasn't enough time to go through the voting records that proved that, and you know, I wish that I had more opportunity to do that.

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BRET BAIER, GUEST HOST: Governor Sarah Palin's only post-debate interview right here on FOX, sitting down with our own Carl Cameron talking about the debate, and also talking about the campaign.

So how did she do in that interview, and a look at the debate last night. Some analytical observations about all of that from Fred Barnes, Executive Editor of The Weekly Standard, Mort Kondracke, Executive Editor of Roll Call and syndicated columnist Charles Krauthammer, FOX News contributors all.

Fred, also in this interview with Carl, Cameron she said she doesn't want to give up on Michigan. She's not ready to let Michigan go. What do you think of this interview?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: She is a maverick. The McCain campaign has given up on Michigan, and she said no. I'm going to Michigan. I will take my hubby with me. I wouldn't be surprised if they did revive Michigan. We'll see, if it gets close enough. Right now it's not, and there was reason for leaving.

Look, this was an amazing debate performance by Sarah Palin, somebody with very limited experience in high-level national politics. And I thought she was triumphant.

And we find out today, as people have gone back and looked at particularly some of the things that Joe Biden said, that the most incredible number of gaffes and errors and mistakes were not by Sarah Palin. They were by Joe Biden.

I know I talked to Charles earlier about where Biden talked about the U.S. and France had driven Hezbollah out of Lebanon. — That didn't happen. I don't know where he comes up with these things. And about the missiles from Pakistan can reach Israel, which of course they can't, with nuclear weapons, and on and on and on.

And even about the vice-presidency itself, where he said Article 1 covers that when it didn't, and he said the vice president only presides over the Senate when there is a tie vote. That's not right! He presides all the time.

My point is this—if Sarah Palin had made one or two of those really egregious mistakes, we would be sitting here tonight talking about whether John McCain will be able to keep her on the ticket.

But maybe we ought to be talking about whether Barack Obama can keep Joe Biden on the ticket.

BAIER: Mort, 70 million viewers tuned in to that debate. That's a lot. She had that folksy style, and the back and forth. We have a little sound bite here from the back and forth last night:

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SEN. JOE BIDEN, (D-DE) VICE PRESIDENTIAL CANDIDATE: I haven't heard how his policies can be different on Iran than George Bush's. I haven't heard how his policies are going to be different with Israel than George Bush's.

I haven't heard how his policy in Afghanistan can be different than George Bush's. I haven't heard how his policy in Pakistan is going to be different than George Bush's.

PALIN: For a ticket that wants to talk about change and looking into the future, there is just too much finger pointing backwards to ever make us believe that's where you are going.

Positive change is coming though. Reform of government is coming. We'll learn from the past mistakes in this administration and other administrations.

(END VIDEO CLIP)

BAIER: Was that effective, Mort?

MORT KONDRAKE, EXECUTIVE EDITOR, ROLL CALL: Oh very. Of a smiling barracuda. Look, she is very effective, and she delivers the knife with a smile.

Now it seems to me that there was a retort to that that Biden could have used. We are looking to the future, and how are we going to know about the future but by looking at where John McCain has been, and he has been with Bush on economic policy, on tax policy, on all of that, on war policy, on health policy. And that's the prediction of the future.

And, furthermore, he could have said, now just what exactly—you're going to clean up Wall Street. Just exactly what are you going to do to clean up Wall Street? I don't know what either one of them will do to clean up Wall Street, but those are the kinds of things that he could have come back with.

BAIER: Charles, a day later, what does this mean for the campaigns? Does it mean much?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It does, because she had become a liability after her poor performances in the other interviews.

She had been a big star. She had energized the whole McCain campaign, and then all the air was coming out of that balloon. I think she reestablished herself as a serious person.

She will never quite have the electricity of that speech she originally gave. But she has, I think, reenergized the base, which had become demoralized. She hasn't won over Democrats, but that is McCain's job.

I thought that, look on points, Biden had won. But you don't judge debates on points, otherwise Nixon had beaten Kennedy. It's how you present yourself. And I thought her presentation was winning and sympathetic and direct.

And I agree with Fred that people really overlook any— I mean if Biden is the sage of Delaware, the man who he knows all about foreign affairs, his attack on the Bush policy in the Middle East had about seven errors in 60 seconds.

He started with Hamas winning the election on the West Bank. It did not. He continued with that idea of us driving Hezbollah out of Lebanon, which hadn't happened.

And then he said that if his proposal of introducing NATO into Lebanon had been adopted, Hezbollah would not now be in the government. There was never such a proposal. It would have never been passed, and Hezbollah was already in the government.

This is a guy that is supposed to know a lot of stuff on foreign affairs.

I would agree, if Palin had said this, she would be off the ticket. However, she did not know enough to counter him on any of those errors. And that's her problem.

BAIER: John McCain today, Fred, said that at times he felt sorry for his old friend Joe Biden being on that stage. How is the campaign going to deploy Sarah Palin now?

BARNES: You know, I'm not really sure. They still have to make this decision.

I think they need to deploy her at the highest level. I know she is going to campaign some with John McCain next week.

But here is what I would do-I would have her — I would get maximum media attention, not just do conservative talk radio and some things, and have her in the states that matter—Florida, Ohio, Pennsylvania, Wisconsin, New Hampshire, you know, the battleground states. There are about a half dozen of them. You just have her there and nowhere else.

And on TV, a lot.

BAIER: When we come back, what the passage of that massive bailout bill means to this presidential race. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: On this vote, the yeas are 263, the neighs are 171. The motion is adopted.

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GEORGE BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: This morning we learned that America lost jobs again in September, disappointing news that underscores the urgency of the bill that Congress passed today.

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NANCY PELOSI, (D-CALIF.) HOUSE SPEAKER: We were dealt a bad hand. We made the most of it. I think the American people will benefit from it.

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BAIER: The House finally passed the massive $700 billion rescue plan. There you see the president talking about it, and House speaker Nancy Pelosi-they managed to turn the votes around, 263-171. This on the day when the Labor Department announced that 160,000 jobs were cut in September as the economy continues to take a hit.

First reaction about the vote on this bill-Charles?

KRAUTHAMMER: Well, there were a lot of switches. The speech of the Speaker made on the floor, unlike the speech he had made Monday, was a calm, non-attacking, non-partisan speech, which I think gave an idea of the climate in which this was done. In the end it obviously had to be done.

I think the winners here are people who depend on credit, and people who have invested in wooden arrows in toy archery sets, of which I mentioned the other night as one of the many "goodies" hanging on this "tree."

It's an ugly bill but it had to be passed.

BAIER: Mort, there were some law makers who said they may lose their seat because they voted for this bill. Sue Myrick from North Carolina said she thought by switching her vote from no to yes that she could potentially loose her House seat.

KONDRAKE: Well, I guarantee you that if she had voted no and been with the majority in this case and the had economy cratered, she would have lost her seat, indeed.

And anybody who voted against this bill, and had it gone down, and we end up in a depression, those people would have lost their seat, and they would have deserved to lose their seats.

Now, what she needs to do is go to her constituents with some help, perhaps, from John McCain and Sarah Palin and explain to them that this is not a $700 billion Wall Street bailout.

It's not $700 billion, because we will get money back, it's not a Wall Street bailout. It is a Main Street rescue. And it is not a bailout because we're buying deficient securities that presumably will be sold back, so it's not a bailout. It's none of those things.

And as to the wooden arrows, by the way, these are children's wooden arrows that would be taxed the full amount of the arrow. This is children's arrows as opposed to hunting arrows. And you know, there's all kinds of stuff in that bill—

KRAUTHAMMER: But what if you make a plastic arrow, you don't get a break...

BAIER: All right, Charles, that's not the issue...

KRAUTHAMMER: ...arbitrariness is the issue.

BAIER: This bill has made it through. The question is, does it fix the problem?

BARNES: Well, it fixes one problem. But, I mean, it won't be implemented right away. The Treasury is not going to be going out tomorrow and snatching up these toxic assets and writing a check for them. It will take many, many months.

But, look, something had to be done now, and the administration was dealing with a Democratic Congress. You had to get something through the Democratic Congress.

Now, there are other things that I might have liked better and conservatives might have liked better. But this was the only one that was going to get through, and I'm glad it passed.

BAIER: Let's take a listen to the candidates today reacting to this.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: That's why if I'm president passing this rescue plan won't be the end to what we do to strengthen our economy. It will just be the beginning.

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(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R-ARIZ.) PRESIDENTIAL CANDIDATE: It is not a cure. It is a tourniquet. It will stop the bleeding. But now we have got to reform the way we do business in Washington, and it has to be reformed now. And we have to fix it, and we will fix t.

(END VIDEO CLIP)

BAIER: Charles, how does this play on the campaign trail for these two candidates?

KRAUTHAMMER: Well, if it ends the discussion, the obsession with this issue, it helps McCain. This issue hit McCain like a tsunami. It overwhelmed all other issues. And if you're a Republican, it's a Republican administration, you get the blame. There is no escape, and that's why he was sinking in the polls over the last week and a half.

If it changes the subject, which means if at least it arrests the panic of the decline in the markets until Election Day, it allows McCain to argue about other things and have a chance.

But it depends on how the real economy responds.

KONDRAKE: Right. There was still 159,000 jobs lost last month. We're heading into a recession. This, in and of itself, is not going to rescue us from economic consequences.

So McCain still has the burden of being a Republican in bad times.

BAIER: Quickly, did anybody play it better, Fred? Did one of these two candidates play this situation better than the other?

BARNES: As it turned out, McCain was active and hot, particularly as he appeared on television, and Obama was cool and passive. And cool and passive prevailed. I mean Obama did better by doing practically nothing.

BAIER: That's the last word on this panel.

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