This is a rush transcript of "Special Report With Brit Hume" from July 31, 2007. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

FRED THOMPSON, (R) FORMER TENNESSEE SENATOR: This is a matter of raising some money, and it is a matter of get your people together, and getting your organization together.

But, in the end, it is more important than organization, and it is more important than money. It is going to come down to ideas, ideas that are going to help this country. And it is not often that a person has the opportunity to really do that.

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HUME: That was Fred Thompson the other day talking about his campaign, his hopes, his ideas about how it will go, and so on. He has got new money figures out today, which, as Carl Cameron reported early, are less by a million and a half or so than his aides had led people to expect. But he is seriously in play anyway, though he hasn't announced.

Let's look at a few new polls. This is from the American Research Group. New Hampshire numbers show that Rudy Giuliani has moved ahead of Mitt Romney, who had been leading in that state. Fred Thompson back at 13, John McCain appearing further to sink.

In Iowa with we have something similar—Giuliani ahead by a statistically meaningless point, essentially tied there. Thompson again at 13, McCain ahead of him there.

And in South Carolina, guess who? Rudy Giuliani ahead of Thompson, who would figure to do very well in South Carolina, and had been leading, I think, at some earlier polls there, announced or not.

So that is the latest polling data, put together with the latest money data, put together with the latest discussions that we've been having about how well Thompson's campaign is coming together as an organization. Fred, where are we?

BARNES: Well, I think Giuliani is ahead. Giuliani has run the best campaign, he has been the best debater in the Republican debates so far that have been on television. And he is, I think, just a better candidate as things stand now.

He has jumped ahead. He has a healthcare plan that he is talking that is a much more free market plan than the one that Romney has. Remember, Romney had to get his plan through the Massachusetts legislature, which is very Democratic, it is more of a government plan. I think Giuliani's plan would be an easier sell to Republicans in the Republican primaries. And he has done very well.

Fred Thompson, I don't know whether she doing this on purpose or not, but he is managing to lower expectations, and that is very good. By not raising as much money as at least one of his aides had said he might, and having staff squabbles, and stories about his wife ordering staffers around and getting them fired, and so on. It really is having an affect of lowering expectations—

HUME: Speaking of his wife, she showed a picture of her on the screens, she is quite glamorous. But she is no slouch as a political figure.

BARNES:Oh, I know. But expectations were getting out of hand for Thompson. They are still pretty high, but I think—

HUME: So you think that the little downturn in Thompson's fortune is a good thing? Just what he needed?

BARNES:Absolutely.

LIASSON: Look, Fred Thompson, first off, for somebody that hasn't gotten into the race, he is doing pretty good, and that is a good thing. Bad thing is that he has been having a little bumpy road getting ready.

But he has very high expectations. He has to come into the race—

HUME: Have they come down now as far as that goes?

LIASSON: I think they have come down. But he still has a big void that he has to fill. He is supposed to answer the dreams of all these Republicans for the southern conservative who has, until now, been absent from the race.

What I think is really interesting about these latest poll numbers is the sustained power of Rudy Giuliani. For months and months we have all been talking about how the inevitable implosion of Rudy Giuliani as soon as Republicans learn more about him. Well if they don't know about him by now, I don't know when they will, and about he various liberal positions of social issues.

He is tied with Romney in Iowa and in New Hampshire and in South Carolina. That is extraordinary. Romney has spent millions of dollars on the air. He is also has tremendous organization. And I think that is the most significant—

HUME: What is happening with this? I mean, it really did seem that Giuliani had surged ahead of everybody, and then begun to fade—

LIASSON: And then came down a bit, that's right.

HUME: —and that his campaign was beginning to sink a bit.

LIASSON: I think that, as Fred said, he is a great performing candidate.

HUME: So he hits these states, and people get fired up. LIASSON: People get fired up. And also, they—I think Republican primary voters are sorting out in their minds how important they want social issues to be. And Giuliani argument is, they are important, but they are not the most important thing. National security, terrorism, and the economy are more important. And I think they are buying that to a certain extent.

KONDRACKE: And also, in his stump speech, he is always bashing the Democrats. But especially—Giuliani does it in a more aggressive way.

I mean, today for example, in announcing his health plan, he is accusing the Democrats of favoring socialized medicines. Now they are not in favor of socialized medicines. It is not like Canada where there is a single pair health insurance system, where there is no private insurance company, or like Britain, where all the doctors work for the government. It is not socialized medicine.

But he is accusing them of socialized medicines.

BARNES:Mort, they are moving in that direction.

KONDRACKE: Oh, please.

BARNES:You know they are. They want government healthcare.

KONDRACKE: There are 47 million uninsured people, and the Democrats have one scheme toward insuring them all. Now it is not necessarily the best scheme, but his is not the best scheme, either.

BARNES:The problem of their scheme is it would draw people off who are now on private insurance and draw them into a government healthcare plan. Now, you tell me they are not in favor of at least government health insurance? Come on, Mort.

KONDRACKE: The problem with his is that you have to be paying income taxes in order to benefit from the Giuliani system. Most of the people that we are trying to cover are poor people who don't have enough money to get—

BARNES:That's one plan. You look at the Coburn plan, you look at other plans that the White House has endorsed. They provide refundable tax credits.

And what that means is—

HUME: A great discussion. How did we get into a serious discussion of an issue? We are trying to do a horse race. We are done.

That's it for the panel. But stay tuned, because another broadcast reporter has decided to get involved in the story. That's next.

(COMMERCIAL BREAK)

HUME: Finally tonight, it's hinted that authorities have been zapping the waters of the Illinois River to get rid of some undesirable marine life. And a TV reporter thought he should go along to see how it was working out. But it turned out that the electrically stimulated water put a charge into all kinds of marine life.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: A 10 pound carp leaps out of the water from the far side of the boat, and hits the hard from more than eight feet away. That would not be the only one.

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HUME: That is Special Report for this time. Please join us next time. And in the meantime, more news is on the way. Fair, balanced, and unafraid.

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