This is a partial transcript of Special Report with Brit Hume, October 3, that has been edited for clarity.

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TONY SNOW, GUEST-HOST: Four days before the California recall (search) election, Democrats are pouncing on new allegations, based on flimsy documentation, that Arnold Schwarzenegger said vaguely nice things about Adolph Hitler (search) 28 years ago. Schwarzenegger says he has no memory of such statements and stresses his long support of Jewish efforts to promote tolerance.

Now joining us to discuss the political fallout or lack thereof of these recent stories, California's Republican Chairman George "Duf" Sundheim.

Mr. Sundheim, welcome. Now, let's talk first about what you're seeing in your internal polls. I know there was some so-called flash polling done overnight. Did the stories hurt Arnold Schwarzenegger, help, or make no difference at all?

GEORGE "DUF" SUNDHEIM, CHAIRMAN, CALIFORNIA REPUBLICAN PARTY: What it did is it reinforced people's mind that this government runs puke campaigns and the number of people that are trying to recall this governor increased by two percentage points last night.

SNOW: All right. How about support for Arnold Schwarzenegger?

SUNDHEIM: That's holding...

SNOW: Did that…go ahead.

SUNDHEIM: That's holding firm.

SNOW: That's holding firm. Now, we've seen all the requests, not only for Cruz Bustamante to drop out of the race, but also for Tom McClintock to do so. There is a lot of speculation about what may happen to Senator McClintock, even if there is a Governor Schwarzenegger. Will there be no retaliation against him?

SUNDHEIM: Absolutely not. This party is united in trying to work closely together with all factions of the party. Tom is an expert in terms of fiscal matters and he will have a key role to play as we move forward.

SNOW: Now you have mentioned the history of rough politics on the part of Gray Davis. We have no evidence that he was directly involved in either of these stories. But do you expect further negative reporting to appear on the front pages of newspapers? We still got four days before the election. Has the final shoe dropped or do you expect more?

SUNDHEIM: We absolutely expect more to come. But, Tony, you know, you indicated there is no direct evidence. But we did receive a call last week by somebody who had historically given substantial amount of funds to Davis that indicated to us that there was going to be this change in approach.

And they recommended that we go down to an event in Los Angeles where he would go on the offensive for the first time. So, I did go down to Los Angeles and he went on the offensive for the first time at that event.

The party also indicated to me that there was a company in Philadelphia that was going to be running a combined mail and phone program and its two programs were going to be on sexual harassment and on ties to the Nazi Party.

And lo and behold, a week later, these allegations come out. So, it is very suspicious. We only have the dots, but it doesn't take too much to connect them.

SNOW: All right. There does appear to have been somewhat of a sympathy backlash over the groping allegations. Now the Nazi stuff is going to frighten people.

It appears that the Schwarzenegger campaign is preparing ads. Is that what it needs to do?

And have you been satisfied with the explanations today, which is that Arnold Schwarzenegger says he has no recollection of making such comments. Why not simply say I'd never say anything like that?

SUNDHEIM: Well, Tony, I don't know what your memory is. But I happen to be a 50-year-old and I can't remember a lot of times what I did last week, much less what I said 27 years ago.

But I think it is very clear. If you look at this man's conduct and the way that, as you mentioned earlier in your set-up piece, he's been very supportive of the Jewish community in Los Angeles, giving millions of dollars to their programs.

There is no question that he's strong against anti-Semitism.

So, you compare that verses the fact that Senator Byrd (search) actually went around with a sheet over his head. And that was, you know, OK and should be forgiven.

Yet these unpublished comments 28 years ago that the publisher says are taken out of context, that somehow were supposed to put any weigh on that, I have a real problem with that. And I think his response is appropriate and I don't think it's going to have an effect on the race.

SNOW: All right. In fairness to Senator Byrd, who just got dragged into an election 2,500 miles away from his home state, he later apologized and asked forgiveness for his earlier activities.

So, one has to be consistent on that.

SUNDHEIM: That's right. That's right.

SNOW: Now, again, you say you expect further attacks, of what nature?

SUNDHEIM: Well, we haven't…we don't know where they're specifically going to come from.

But for example, they do have these group that are going around, trying to drum up this issue. They're also running television ads that deal with this specific issue and the sexual conduct comments.

So, that's what we see right now. What else is going to come, unfortunately, they don't give me advance sheets on what their plans are.

SNOW: We're going to talk in a couple of minutes during The Grapevine about an allegation made that stories about Gray Davis physically assaulting people have been covered up by the press. Do you think that's true?

SUNDHEIM: I don't know. But we're not going to go there. What we're focusing on is the fact that this state has been for sale for the last five years. This recall has received the number of petitions signed that it has because people want to take their state back.

They understand that Schwarzenegger is strong enough to do that. So, the message that's going to be coming out of California next Tuesday is that we're going to hold elected officials accountable to their conduct and do to the conduct of Davis during these last few days of the campaign, that the state of California rejects the politics of puke politics.

SNOW: OK. So how long should it take Arnold Schwarzenegger to balance the books?

SUNDHEIM: You know, I don't think it's going to be that difficult. I think-we have a real problem here in terms of spending.

We don't have a revenue problem. Our revenue has gone up 25 percent in the last four years. So we have the money there. We just have to have somebody who's willing to put their foot on the brake.

SNOW: All right. Now, do you fear that this whole thing could collapse in the last couple of days? What is your strategy for responding at the last hour to late-breaking accusations?

SUNDHEIM: Well, we just have to be ready. But we have a positive message for the people of California. That positive message is resonating; as you can see from the turnout he's getting at his events.

I was at an event in Orange County yesterday. They had an incredible turn out. I heard today in Bakersfield, the turnout is even bigger.

So this event is not dampening the spirit of the people of California. They're committed to working with Governor Schwarzenegger to really make a difference in this state.

SNOW: All right. Duff Sundheim, thanks for joining us.

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