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Fox News Network

August 2, 2012 Thursday

SHOW: FOX SPECIAL REPORT WITH BRET BAIER 6:00 PM EST

Political Headlines

BYLINE: Bret Baier, Jennifer Griffin, Mike Emanuel, James Rosen, Jim Angle, Ed Henry, Catherine Herridge

SECTION: NEWS; International

LENGTH: 3825 words

BRET BAIER, FOX NEWS ANCHOR: Good evening. I'm Bret Baier, and this is Fox News alert. Breaking reports say Syrian forces have killed at least 50 people during clashes with rebels in the central city of Hama. This is just within the past few hours. The brutal Syrian civil war is growing deadlier by the day, by the hour.

And now, President Obama has committed American resources to the fight. Syrian rebels are, for the first time, turning heavy weapons, captured from government troops against them the nation's largest city. And the U.N. envoy to Syria abruptly quit today. The president has given the U.S. intelligence community orders to get involved.

National security correspondent, Jennifer Griffin, is watching all of this from the Pentagon.

(BEGIN VIDEOTAPE)

JENNIFER GRIFFIN, FOX NEWS NATIONAL SECURITY CORRESPONDENT (voice- over): As the fighting escalates in Syria's largest city Aleppo, for the first time, President Bashar Assad's fighter jets are seen firing on to the civilian areas. The situation became too much for U.N. peace envoy, Kofi Annan, who resigned today.

KOFI ANNAN, UN ENVOY TO SYRIA: And the clear lack of unity in the Security Council have fundamentally changed the circumstances for the effective exercise of my role.

GRIFFIN: The conflict in Syria may be entering a new phase. Opposition fighters seem better armed and more organized than before. This amateur video appears to show one fighter holding an advanced shoulder-fire missile, presumably an SA-7. As of yet, none of the surface-to-air missiles has brought down any Syrian planes or helicopters.

A senior U.S. official tells Fox that President Obama has signed what is known as a finding directing the CIA and other agencies to provide support to the Syrian opposition fighters. The CIA declined to comment. The president's stopped short of allowing lethal aid or weapons to the Syrian fighters.

The U.S. Treasury Department, however, issued a license last month that would clear the way for private groups to provide money to the insurgents. A loosening of restrictions that occurred with little fanfare.

BRIAN SAYERS, SYRIAN SUPPORT GROUP: It's a significant move, because it allows the Syrian support group to coordinate financing, logistics, communications, and services to the free Syrian army. With the funds to oversee if they could purchase weapons.

GRIFFIN: The CIA has been helping with Syrian opposition with non- lethal support helping with command and control from a base in Turkey near Adana. The U.S. has a large air base nearby at (INAUDIBLE). Experts are skeptical that the CIA is training the free Syrian army and its nine factions to fire SA-7s.

MATT SCHROEDER, FEDERATION OF AMER SCIENTISTS: The U.S. government is very careful about shoulder-fired weapons and has taken many, many steps to prevent their proliferation and misuse. And I would be very, very surprised if they were to provide any training to the rebels in their use.

GRIFFIN: One reason for increased U.S. help to the Syrian fighters is the appearance of al Qaeda factions attempting to fill the vacuum as the fighting is prolonged. In London today, British Prime Minister, David Cameron, took Russian president, Vladimir Putin, to the Olympic judo finals to talk about Syria. The Russians have blocked U.N. efforts to tighten sanctions against the Assad regime.

(END VIDEOTAPE)

GRIFFIN (on-camera): At the U.N. tomorrow, a vote is expected on a watered down general assembly resolution that removes a call for Assad to step down. The White House says Kofi Annan's resignation highlights Russia and China's failure to back further Security Council action against Syria - - Bret.

BAIER: Jennifer Griffin live at the Pentagon tonight. Jennifer, thank you. More on this with the panel.

Mitt Romney is counting on having strength in numbers on this his first day back on the trail after a European tour. The former Massachusetts governor is, at this moment, appearing with ten current Republican governors. Some of them are believed to be on an exclusive list. Chief Congressional correspondent, Mike Emanuel, has the story from the mountains of Colorado.

(BEGIN VIDEOTAPE)

MIKE EMANUEL, FOX NEWS CHIEF CONGRESSIONAL CORRESPONDENT (voice-over): Governor Mitt Romney returned to the campaign trying to get back on offense on the economy. His first stop was Golden, Colorado, which is in Jefferson County, one of the keys to winning the swing state. Romney started his pitch by giving President Obama failing marks on jobs, unemployment, home prices, and more.

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: I know that in campaigns, talk can be cheap. You can say anything. But results, if they're not done the right way, they can be real expensive.

EMANUEL: Romney and his surrogates are emphasizing what he would do to help the middle class, including building energy independence, ensuring Americans have the skills to succeed, opening markets that work for America, cutting the deficit, and championing small businesses.

Advisors admit these are not new themes but argue more people are now paying attention less than 100 days before Election Day.

ROMNEY: Because we're going to have low cost energy here by taking advantage of our resources like coal and natural gas and oil, renewables, we're going to see manufacturing come back. Low cost energy brings back manufacturing.

EMANUEL: Helping the former Massachusetts governor in Colorado are current Republican governors, some of whom have been mentioned as a possible running mate. Chris Christie from New Jersey, Bobby Jindal from Louisiana, and Bob McDonnell are among GOP governors who are holding a conference in Aspen.

Meanwhile, on the Senate floor today, Majority Leader Harry Reid reiterated an unsubstantiated charge he's made in recent days that an unnamed Bain Capital investor told him about Romney and tried to shift the burden of proof to Romney.

HARRY REID, (D-NV) SENATE MAJORITY LEADER: The word is out that he hasn't paid any taxes for ten years. Let him prove that he has paid taxes, because he hasn't. We already know from one partial tax return that he gave us he has money hidden in Bermuda, the Cayman Island, and a Swiss bank account.

EMANUEL: Although, senators are required to file a financial disclosure statement every year listing their assets and liabilities. Reid has refused to release his tax returns. A top Romney advisor called Reid's attack a distraction from what really matters, the state of the economy and blasted Reid and the Obama campaign.

ERIC FEHRNSTROM, ROMNEY CAMPAIGN ADVISER: Every day, they seem to reach a new low. Harry Reid's charges are baseless, and they're untrue. And I would ask him one simple question. Have you no sense of decency, sir?

(END VIDEOTAPE)

EMANUEL (on-camera): Back to the fight for Colorado, Barack Obama won Colorado by nine points. The Real Clear Politics average of recent polls shows Mr. Obama is up by three points, but Governor Romney clearly using strong economic message and the help of some popular GOP governors, on stage behind me, is clearly hoping to close the gap -- Bret.

BAIER: Governor Romney with the -- Governor Romney. Wow! Mike Emanuel with the Romney campaign. How about that. That's the red eye from Los Angeles. Mike, thank you.

U.S. stocks slumped this morning after the European central bank failed to take any decisive action to solve the region's debt crisis. The Dow lost 92. The S&P 500 dropped 10. The NASDAQ also fell 10.

A White House desperate to tout its stimulus agenda is being blamed for the loss of a half-billion of your tax dollars on the failed solar company, Solyndra. Chief Washington correspondent, James Rosen, looks at a new report that makes bold accusations and how the administration is firing back.

(BEGIN VIDEOTAPE)

JAMES ROSEN, FOX NEWS CHIEF WASHINGTON CORRESPONDENT (voice-over): This was the high point for Solyndra when President Obama toured the company's Northern California plant. Under the Obama stimulus program, the Department of Energy had extended $535 million in loan guarantees funded by taxpayers to help the solar panel manufacturer expand, a move the White House said would create at least 4,000 jobs.

Fifteen months later, Solyndra was bankrupt. The FBI raiding its offices. Now, after 18 months of investigation, the GOP majority staff on the House Energy and Commerce Committee has concluded it is clear DOE should never have issued the loan guarantee to Solyndra and that DOE violated the plain language of the law when it restructured the terms of the loan guarantee.

JOHN BOEHNER, (R-OH) HOUSE SPEAKER: Mr. Lew and the White House owe the American people an explanation.

ROSEN: In February 2011, White House chief of staff, Jack Lew, was director of the Office of Management and Budget. With Solyndra collapsing, OMB signed off on a restructuring of the firm's loan and under the new terms if Solyndra went bankrupt as the firm ultimately did.

When it came time to dole out whatever money could be recovered from the wreckage, the taxpayers were to be placed second or subordinated to Solyndra's private investors. Chiefly, Argonaut (ph) ventures whose top executive, billionaire, George Kaiser was Obama bundler in 2008.

Newly released e-mails show Lew did not follow the recommendation of his own analyst who urged the White House to forget restructuring and cut its losses there and then, advice that if heeded would have saved the taxpayers nearly $400 million.

DOE's and OMB's reviews of the Solyndra application were rushed and the quality of those reviews was negatively affected by political considerations, the report found.

Adding, treasury and OMB staff believe that DOE's decision to subordinate the government's interest to two Solyndra investors was not proper and questioned whether this decision was consistent with the provision in the energy policy act of 2005.

CLIFF STEARNS, (R-FL) INVESTIGATION'S SUBMCTE CHMN: I think there obviously is a sense of favoritism, and they're trying to cater to their contributors. And I think ultimately, if we find there is a case of untruthfulness, we will refer to the justice department.

DIANA DEGETTE, (D-CO) HOUSE ENERGY & COMMERCE CMTE: Chairman Stearns has been on a witch-hunt for months over this. It's unfortunate when a loan like this comes out, because taxpayers do lose a lot of money, but that doesn't mean you get rid of the whole program.

(END VIDEOTAPE)

ROSEN (on-camera): The White House said today this report produced, quote, "zero evidence" of political favoritism and that President Obama still believes, Bret, that it was the right decision to invest in clean energy technologies.

BAIER: James, will taxpayers get any of this $535 million back?

ROSEN: By one estimate, about 24 million which should be about 4.5 percent of what the taxpayers shelled out.

BAIER: OK. James, thank you.

Lawmakers in the House just moments ago voted not to adjourn for their August recess. The vote was 265-170. Democrats voted to stay in an effort to make Republicans look as though they were abandoning Washington with much work undone.

Some Republicans voted to stay as well. They pointed to the Democrat- controlled Senate leaving without passing a budget for more than three years. The house will meet again tomorrow morning.

One of the key officials embroiled in the "Fast and Furious" probe is out of a job tonight. Former ATF deputy director, William Hoover, turned in his retirement papers, and his last day was Tuesday. A Republican draft report says Hoover and four other ATF officials share much of the blame for the failed gun tracking operation.

The postal service has, for the first time, defaulted on $5.5 billion payment to its healthcare fund for future retirees. Senators are blasting House leaders for not taking up their funding bill. The House has passed 38 bills to rename post offices, but none to rescue them. Post office insist the default will not affect your mail service.

So, what do you think about the U.S. Postal Service situation? Let me know on Twitter. You can follow me @BretBaier.

From snail mail to e-mail and whether the White House is playing by the rules. That's later in the "grapevine."

And up next, President Obama is linking his tax plan with Bill Clinton's. Fair or foul? We report, you decide.

BAIER: President Obama is channeling Bill Clinton or trying to as part of his re-election campaign. Tonight, chief national correspondent, Jim Angle, looks at whether this president's tax plans can be fairly compared to the plans of the last president from his party.

(BEGIN VIDEOTAPE)

JIM ANGLE, FOX NEWS CHIEF NATIONAL CORRESPONDENT (voice-over): When the economy was growing at 2.3 percent, President Obama agreed to extend all the Bush tax cuts, arguing the economy was too weak for any increase on anyone.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Potentially, you'd see a lot of folks losing business, more folks potentially losing jobs, that would be a mistake when the economy has not fully taken off.

ANGLE: Now, the economy is growing even slower at 1.5 percent this quarter, but the president wants to raise taxes anyway. Now that he's ignoring his own warnings, though, he needed a new argument to justify increasing taxes and seized on Bill Clinton.

OBAMA: All I'm asking is that we go back to the rates that were paid by wealthy individuals under Bill Clinton. And if you remember, that's when our economy created nearly 23 million new jobs.

(CHEERING AND APPLAUSE)

ANGLE: And created a budget surplus. The president called that "our plan," meaning, the Democrats plan of higher taxes, the Clinton plan, if you will, and said that's what he's running on.

OBAMA: We've tried our plan and it worked. That's the difference.

(CHEERING AND APPLAUSE)

OBAMA: That's the choice in this election. That's why I'm running for a second term.

GREGORY VALLIERE, POTOMAC RESEARCH GROUP: There are times where you can raise taxes and have it not hurt the economy. Unfortunately for Barack Obama, this is not one of those times. I think to raise taxes now as opposed to during the Clinton years would be very ruinous for the economy.

ANGLE: Analysts of all stripes note the Clinton economy was on fire because of the high-tech and dot-com boom which eventually crashed, but until it did, the economy grew at an average of 3.5 percent a year, the unemployment rate dropped to the low four percent range, and revenues were pouring in.

CHAD MOUTRAY, NATIONAL ASSN OF MANUFACTURERS: We aren't in the 1990s anymore. We don't have a huge technological boom that's going to continue to propel the economy forward.

VALLIERE: We had a balanced budget, we had a very accommodative fed easing rates. Right now, we have no new tech boom, we do not have a balanced budget, and the fed can't cut rates anymore.

ANGLE: Nevertheless, counter to the president's earlier warnings, the White House now insists higher tax rates will do nothing to hurt economic growth.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Under President Clinton, marginal rates at that level were in place when we saw this substantial economic growth and job creation.

ANGLE: Though, officials concede this economy is far different from the Clinton one.

CARNEY: The economy is not growing fast enough. The economy is not creating jobs fast enough, and this president says that every time he speaks about the economy --

(END VIDEOTAPE)

ANGLE (on-camera): That's why analysts fear raising taxes now could do serious damage to an already weak economy, but that's a danger the president acknowledges and is apparently willing to risk -- Bret.

BAIER: Jim, thank you.

A huge election year indicator comes out tomorrow morning. The July unemployment report could energize or deflate either presidential campaign. We received an early indication today of which way things might be headed. Chief White House correspondent, Ed Henry, is looking at the numbers tonight. Good evening, Ed.

ED HENRY, FOX NEWS CHIEF WHITE HOUSE CORRESPONDENT: Good evening, Bret. You're right. This is an early sign about tomorrow's numbers that mixed at best for the president. A number of people seeking unemployment claims went up by 8,000 last week. Now, that may have been skewed a bit by seasonal factors, and the four-week average, we should point out, fell for the six straight weeks.

Some economists are saying that's a sign maybe things are starting to get a little bit better. The president was on the road today in Orlando, at a campaign event. He talked a little about jobs but spent a lot more time shifting the focus to tax fairness again instead of jobs as he continued to hit Mitt Romney hard. Take a listen.

(BEGIN VIDEO CLIP)

OBAMA: They have tried to sell us this trickle down tax cut fairy dust before.

(LAUGHTER)

OBAMA: And guess what, it didn't work then. It will not work now. It's not a plan to create jobs. It is not a plan to reduce the deficit. It is not a plan to build our middle class. It is not a plan to move our economy forward. It takes us backward.

(END VIDEO CLIP)

HENRY: Now, Romney aides quickly shot back that in terms of going backward, the president's plan has, in fact, led to rising unemployment, rising deficits. And they also release a new ad today, the Romney camp, in the state of Florida, key battleground, obviously, where they took something the president during the 2008 campaign in the Sunshine State to try and make the case in this ad that he didn't keep his promises. Take a listen.

(BEGIN VIDEO CLIP)

OBAMA: More and more Americans are mired in debt. Our economy, as a whole, suffers.

UNIDENTIFIED FEMALE: But under President Obama, 8.6 percent unemployment, record foreclosures, 600,000 more Floridians in poverty. He focused on Obamacare instead of jobs.

(END VIDEO CLIP)

HENRY: Now, the Democratic convention ends on September 6th, the following day, the August jobs report will be coming out. Meanwhile, the October jobs report comes out on Friday, November 2nd, just a few days later, obviously, you'll have the election. So, starting tomorrow, these last few jobs report are going to be very big in framing the final days of the election, Bret.

BAIER: We'll watch them closely. Ed Henry live on the North Lawn. Ed, thank you.

The Democratic Congressional Campaign Committee is apologizing tonight for what it calls its own unsubstantiated allegation attacking casino magnate, Sheldon Adelson, a big Republican donor.

The release states, "this was wrong, the statements were untrue and unfair and we retract them." Adelson's attorney threatened to sue the DCCC over a press release stating that some of Adelson's money came from Chinese prostitution.

Still ahead, what is and is not being done in New Orleans seven years after Katrina?

First, with one cyber attack every 90 seconds, what officials now say must be done to keep the country safe?

BAIER: We're getting indications of just how badly western sanctions are hurting Iran. Bloomberg reports the penalties are costing the Islamic republic $133 million a day in oil revenue. It says shipments have plunged by 52 percent since last sanctions. The last -- the latest sanctions, rather, went into effect July 1st.

But the price of oil has not risen globally. Iran is vowing not to buckle to western pressure to alter its nuclear program.

Spanish police have arrested three suspected al Qaeda members who may have been planning attacks there or elsewhere in Europe. They say the man had amassed enough explosive material to blow up a bus.

A different type of terrorism, this kind, through computers has lawmakers and security officials here in the U.S. very concerned tonight. Chief intelligence correspondent, Catherine Herridge, says the message is time is running out to do something about it.

(BEGIN VIDEOTAPE)

CATHERINE HERRIDGE, FOX NEWS CHIEF INTELLIGENCE CORRESPONDENT (voice- over): Despite a full court press by the Obama administration to push cyber security legislation through the Senate, the vote had 52-46 fell short of the 60 votes needed to move to final passage.

TOM CARPER,(D) DELAWARE SENATOR: Maybe this is time to cool our jets. This is not a time to turn them off.

HERRIDGE: While supporters said the legislation would help businesses better protect their computer networks, critics including several Republicans said the new rules boil down to big government and over regulation.

KAY BAILEY HUTCHISON, (R) TEXAS SENATOR: The bill that was put forward on the floor is not one that will achieve the purpose that all of us want.

HERRIDGE: Other Republicans complained procedural issues derail the legislation.

MITCH MCCONNELL, (R-KY) SENATE MINORITY LEADER: And we decided appropriately given the complexity and the number of members who have expertise on this issue to not finish it today.

HERRIDGE: Those who crafted and supported the law said national security fell victim to politics.

JOE LIEBERMAN, (I-CT) SENATE HOMELAND SECURITY CHMN: Once again, the members of Congress have failed to come together to deal with a serious national problem.

DIANNE FEINSTEIN, (D) CALIFORNIA SENATOR: You see efforts from bad actors across many seas attacking this country and acts of industrial espionage.

HERRIDGE: Given Republicans like to consider national security an issue their party owns, the vote was vastly to those within the party who believe unresolved issues including the budget and tax cuts will mean cyber security does not come up again before the election.

SUSAN COLLINS, (R) MAINE SENATOR: I am very worried that we have run out of time. And, our adversaries will know that we failed to act. And I'm afraid that that will embolden them.

HERRIDGE: In a statement, the White House chastised Republicans, quote, "The politics of obstructionism prevented Congress from passing legislation to better protect our nation."

(END VIDEOTAPE)

HERRIDGE (on-camera): This letter sent by the head of U.S. cyber command to senators urged immediate action. Gen. Alexander recently told reporters of a 20 fold increase in attacks on the U.S., adding the attacks could quickly evolve from (ph) destruction to the destruction of entire computer networks -- Bret.

BAIER: Catherine, thank you. Catherine is also reporting tonight that for the first time, the FBI is admitting that it knew radical Muslim cleric, Anwar al-Awlaki, was returning to the U.S. in 2002. And that an FBI agent discussed this with the U.S. attorney before al-Awlaki was detained and then abruptly released. The terror leader was killed in Yemen by a U.S. drone strike last September.

A Denver TV station says the university psychiatrist treating the suspect in the Colorado theater massacre repeatedly tried to discuss her patient with a campus panel nearly a month before the attack. Lynne Fenton (ph) reportedly called members of the group, but they never met. James Holmes is charged with gunning down 12 people and wounding 58 in the rampage two weeks ago.

New questions about the most transparent administration in history before (ph) questioning that.

And an answer to the question, why is President Obama holding this baseball bat in this photo? The "grapevine" is next