This is a rush transcript of "Special Report With Brit Hume" from October 11, 2007. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

MITT ROMNEY, PRESIDENTIAL CANDIDATE: You sit down with your attorneys and tell you what you have to do. But, obviously the President of the United States has to do what is in the best interests of the United States to protect us against a potential threat.

RUDY GIULIANI, PRESIDENTIAL CANDIDATE: Mitt made a mistake. It is one of those moments in a debate, and we probably have all had them, or are going to have them, which is you say something and you go like this — I did not mean to say that.

(END VIDEO CLIP)

BRIT HUME, HOST: What is it that Mayor Giuliani thinks that Governor Romney did not mean to say? Well, he says he should not have said that business about sitting down with the lawyers in the middle of a big national security crisis with trouble on the way.

Some thoughts on this and this race in general from Fred Barnes, executive editor for The Weekly Standard Mara Liasson, national political correspondent for National Public Radio, and Mort Kondracke, executive editor of Roll Call, FOX News contributors all.

Let's take a quick look at a poll, let's looks at the New Hampshire primary pool. And this is a place where mitt Romney had enjoyed a considerable lead for a considerable period of time. And he is still leading, but if you follow this, you know that Rudy Giuliani has gained on him. This is an average of polls. John McCain has had a little bit of a bump up. Fred Thompson has not made much impact yet, but he has just gotten in.

But there you get a sense of it — Rudy Giuliani gaining in a state where he hadn't been able to do much, and some people thought he would not.

So what is the situation? First of all, was the mistake that mitt Romney made that Giuliani has jumped on a serious mistake — Fred?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Serious — I do not know about serious. It was a mistake, for sure. You really have to do something a lot worse than that to have a serious mistake. If you mean "serious," something that will affect the outcome of the primaries or the caucuses, I think this will probably be forgotten.

But it was a mistake, because it just didn't sound presidential. I winced when I heard him say that.

HUME: He went on to say you had to do what you thought were in the best interests and all that.

BARNES: But what was his response in a flash? I am going to check with the lawyers.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: It sounded like a businessman checking with his lawyers. Giuliani also said in another response to this I cannot imagine John F. Kennedy during the Cuban Missile Crisis checking with lawyers.

HUME: I think we even have that quote. We can show you that because it is an intriguing quote.

"I can't imagine John F. Kennedy during the Cuban Missile Crisis saying I will check with my lawyers. The American people are looking for leadership. This isn't a time to check with lawyers."

LIASSON: Rudy Giuliani is selling leadership. That played right into his hands.

In the fight between Giuliani and Romney, where Romney is focusing on the line item veto and Giuliani is taking this opportunity that he found to contrast leadership, I would say that one of the issues is a "mego issue," meaning my eyes glaze over — the line item veto.

HUME: The line item veto is too wonkish?

LIASSON: Yes. And the other one is clear, and people get what it is about.

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: Yes. I think the businessman issue is strong with Romney. He was a significant leader of Bain Capital and all that, and he was a substantial CEO.

One political consultant that I talked to said this is at the root of his authenticity problem. What does a CEO do when his market share is flagging? He redesigns the product. And that is what Romney has done. He has redesigned himself.

He has changed from a moderate Republican to a conservative on all kinds of grounds. And that gives him the problem of being a flip-flopper. It is a CEO kind of problem.

I think what he has done is he sees himself way behind Giuliani in the national polls, he sees Giuliani catching up to him in New Hampshire, the state right next door to his home state, and so he went on the attack on the line item veto.

And I agree, the line item veto is not a very substantial ground on which to attack. And in that debate, Giuliani slapped him back, saying I'd be President Clinton in the Supreme Court. That is a wonderful thing for a Republican nominee.

HUME: But let's assume for the sake of discussion that the line item veto is something that Republican voters know about. God knows every Republican politician in the last decade or more has been talking about it, or longer than that.

Is it a good point for Giuliani to be making to say it is unconstitutional?

BARNES: Well, it is unconstitutional. They voted six to three.

HUME: But that was a particular attempt to create a line item veto by a bill.

BARNES: I like the line item veto. I wish it were constitutional, but it is not.

The problem with Romney is not that he just started that issue — I got another e-mail from him today about the line item veto. He is belaboring it. It is not really getting him anywhere.

And the lawyer thing — look, the line item veto thing, which I agree that Giuliani won, the lawyer thing was good for Giuliani. These are not things that matter.

Contrary to what Mort said about Romney, however, the national polls don't matter at. His strategy, we know exactly what it is — Romney's. It is the early primaries.

Now, the New Hampshire thing might worry him a little bit, but he is still way ahead in Iowa.

HUME: That would work because he would win a couple of early primaries and then there is a huge rush of media attention, and then you try to build that into a big national —

LIASSON: And he has the money to spend in all those February 5th states while he is still running in Iowa and New Hampshire, whereas Rudy Giuliani is focused on February 5.

KONDRACKE: If he doesn't win New Hampshire —

LIASSON: He doesn't have to sin an early state.

HUME: Giuliani does? Or Romney does?

KONDRACKE: I think Romney absolutely has to win New Hampshire.

BARNES: No he doesn't. If he wins Iowa —

HUME: Romney?

BARNES: Romney — he'll probably do pretty well in New Hampshire. We will be surprised if he wins that.

South Carolina is going to be hard for him against Fred Thompson.

LIASSON: In his backyard where, traditionally, Massachusetts governor's over perform? If he loses New Hampshire that will be the same as a big blow to him.

BARNES: Mike Huckabee got out of coming in second place with three major candidates not even in the Iowa straw poll. Everybody made out — well, not everybody, but some journalists made out like that was such a big deal, and Huckabee has been going up ever since — second, the Ames straw poll.

HUME: All right, when we come back with the panel we will look into the Democratic presidential race. Do not miss this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, D-ILL.: Senator Clinton represents what has been going on in Washington, and I represent what can be happening in Washington.

UNIDENTIFIED MALE: Are you concerned that Barack Obama is getting a little bit more personally negative?

SEN. HILLARY CLINTON, D-N.Y.: That is where every candidate to choose. I feel like people know me, they know where I stand. They know what I will do. And that is what I am going to keep putting out there for the voters.

(END VIDEO CLIP)

HUME: She has been putting that out there, and it has at least created a certain sense of inevitability. Look at this poll finding about what people think who will be the next president. This isn't people necessarily for her — 44 percent. That is a huge plurality at this stage think that she will be the next president. And the next best person gets 12, and that is Rudy Giuliani.

So that gives you an idea and may help you know why the fundraising gap between the Democrats and the Republican is so great. But Obama has begun to toughen a little bit, by naming her by name, something he had hitherto declined to do.

Where do we stand in this race, and is it now simply her to lose — Mort?

KONDRACKE: Yes, it is hers to lose. There are ways that you can imagine that she can lose it.

HUME: How?

KONDRACKE: The most plausible way is that the supporters of John Edwards and Bill Richardson get discouraged and they fled to Obama and Obama wins Iowa, and Obama then creates an avalanche, and it overwhelms her and it carries into New Hampshire, and so on.

I think it is implausible, but you can imagine it. I think it is plausible, but possible.

The second one which I think is even more implausible, is that people get tired of her. There she is, the front runner — we need some novelty. That doesn't play —

HUME: If the press could vote, that might happen.

BARNES: The most plausible thing is something her husband does, reminding people of this psychodrama that their marriage is, and that could hurt her.

I think he is a danger. He could be a great help too, raising money, campaigning, people like. But things could happen with Bill Clinton that do not happen with other major political figures.

LIASSON: But they haven't happened for many years, and assuming they can keep it together —

BARNES: But the spotlight will be on him more than it has been over the last few years.

LIASSON: It has been on him a lot, too.

I agree with Mort. I think the idea that somehow Democrats are going to make a protest vote because they want things to be more interesting is unlikely. They want a winner, and that is what she has been great at doing is convincing people she is going to win.

And she constantly says "When I am president — " They have been working very hard to create this aura of inevitably, and it clearly is working.

I think one thing that could happen is that all these excited young people who flocked to Barack Obama's events, we haven't seen them show up in the polls. But if he can get them to vote, maybe he could surprise her in Iowa, and then that would give him some momentum.

HUME: If he were to upset her in Iowa that would be more than "some momentum."

And it would not be that much of a stretch. Look at the average as of October 3 in the Iowa caucuses. It is only like a 3 percentage point lead there separating Hillary Clinton and Barack Obama, and with John Edwards, at least as of then, still in the hunt.

So it would not have to be everyone who is voting for those people would have to come —

LIASSON: And the really interesting thing would be to see who are the second choices, just what Mort was talking about. Who are the second choices of John Edwards or Bill Richardson? We have to assume that Hillary is so well-known that she would be getting who she is going to get.

HUME: And let's look at New Hampshire to see how far had she is there in the average — this was at the end of September. It is a more substantial lead there, but that is the kind of lead in New Hampshire that would be affected, presumably, one way or the other by the outcome in Iowa.

BARNES: That is the lead in New Hampshire that has vanished many times.

HUME: In a matter of days.

BARNES: I remember when Gary Hart did that in New Hampshire.

What hurts Obama now is the way the press treats him. Admittedly, it is partly his fault because he is Senator "Bring us together." And now he goes out — the normal thing you do is the campaign is criticize your opponent, raise doubts about his or her record, and he does that, and he is going negative.

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