This is a rush transcript of "Special Report With Brit Hume" from November 26, 2007. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

RUDY GIULIANI, PRESIDENTIAL CANDIDATE: I thing Mitt has a record. He has to defend his own record. And I don't think his record is going to be a record he can talk about very much.

We talk about our record a lot, and we talk about the things I did in New York, and I want to do them for the rest of the country. And he kind of runs away from it. So there is a difference.

MITT ROMNEY, PRESIDENTIAL CANDIDATE: He's pro-choice, like Hillary Clinton. He's pro-gay civil union, like Hillary Clinton. He's pro-sanctuary cities like she is. And the record of ethical conduct, particularly with someone like Bernie Kerik in the administration, reminds us of the Hillary Clinton era.

(END VIDEO CLIP)

BRETT BAIER, GUEST HOST: Mitt Romney on Rudy Giuliani, Rudy Giuliani on mitt Romney. Can you tell we're getting closer?

Some analytical observations about the Republican side of this horse from Fred Barnes, executive editor of The Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and Mort Kondracke, executive editor of Roll Call.

So Romney and Giuliani today, Fred, really went over a lot of territory, calling each other basically everything in the book. And it continued from over the weekend. Is there anything of this sticking in that back and forth?

FRED BARNES, EXECUTIVE EDITOR, WEEKLY STANDARD: It's hard to know whether it is sticking or not, but it is certainly being heard. It is in the forefront of the campaign. It's been widely covered, and it has gotten pretty tough when you list a bunch of issues and declare that your opponent, Rudy Giuliani is just like Hillary Clinton. That doesn't help you much with Republican voters.

I don't think that some of these, particularly on crime, where Giuliani cited a judge who has been appointed by Romney who had let a killer out who killed again, and then Romney fires back about Bernie Kerik, who has been indicted, and was a long-time aide to Giuliani. I don't think that helps much.

I think what they have to watch out for is this — if they keep this up, attacking each other this way, other candidates can slip by. It helps Mike Huckabee in Iowa, and it probably helps John McCain in New Hampshire.

So they better be careful. If they keep this up, they will only hurt themselves.

MARA LIASSON, NATIONAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I agree with that. We certainly have seen other multi-candidate races where this happens, where two guys are duking it out, and the guy who stands on the sidelines innocently, free of mud, benefits. That happened in Iowa in 2004 in the Democratic race.

But one of the things where Mitt Romney actually does have a similarity to Hillary Clinton, which Giuliani pointed out, is that his healthcare plan that he enacted in Massachusetts, which he is not running on now, is very similar to the Hillary Clinton plan, and her campaign even says that she's based many of her ideas on what he did there.

Look, I think that this debate is happening because there is no real frontrunner there. There was a thought for a while that Rudy Giuliani was going to base his whole strategy on winning states that didn't start voting until January 29, starting with Florida. With this fight, he is clearly giving that up.

He is going to compete hard in New Hampshire. He is taking advantage of Mike Huckabee's rise in Iowa to see if he can chip away at Romney in New Hampshire. And Romney is no longer the safe frontrunner in those two states as he was.

BAIER: What about Fred's point? If Romney continues to go after Giuliani, doesn't he take it on the chin a little bit in Iowa against Huckabee?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: Well, there's now an attack on Huckabee for being a tax raiser. Bob Novak had a column today listing all the ways in which he is not a real conservative. Even though Huckabee is very conservative on social issues, on taxes and on spending, he's not conservative and doesn't have a conservative record.

So the scrutiny machine has been turned onto Huckabee, so that may help Romney somewhat to keep his heed in Iowa.

But, look, the race has changed. As Mara and Fred said, Romney was safely ahead safely in the first two states. Huckabee is now challenging in Iowa. Giuliani is coming on with ads, finally, in New Hampshire, and these attacks.

And, interestingly, in the third, fourth, and fifth races that are going to go on — the Michigan caucuses, the Nevada caucuses, and South Carolina primary, Giuliani is right up there with Romney now.

And it was thought, for example, in Michigan, which used to be Romney's home state, that Romney would sweep. Well, Giuliani is suddenly, the polls indicate, caught up.

So it's a different race than it was just a couple of weeks ago.

LIASSON: Something else is coming into play now — how these guys perform on their feet. Up until now, mitt Romney has had a completely logical strategy, great organization. He has run a great campaign in a lot of ways. But now he's going to see if he can be the kind of attack dog that doesn't boomerang back on himself.

Giuliani is comfortable with this role. He is like a junkyard dog. This is his element. And Romney has to deliver these slashing attacks without losing his optimistic, as he keeps on reminding, sunny, Reagan- esque approach to things.

BARNES: Let me quibble with one thing — Romney was never safely ahead. He can't be safely ahead two or three months away from a primary where voters — it's Democrats choosing among Democrats, they like them all. Republicans like all the candidates enough, and so they switch back and forth.

So nobody was safely ahead. Certainly Hillary wasn't.

BAIER: All right, Fred, let's talk about Fred Thompson, who appeared on FOX News Sunday this weekend. And Chris Wallace played a sound byte from Fred Barnes and Charles Krauthammer about Fred Thompson's campaign. And here was his reaction.

(BEGIN VIDEO CLIP)

FRED THOMPSON, PRESIDENTIAL CANDIDATE: For you to highlight nothing but the negative in terms of these polls, and then put on your own guys, who have been predicting for four months, really, that I couldn't do it kind of skews things a little bit.

There is a lot of other opinion out there. The National Review that I've gotten —

CHRIS WALLACE, FOX NEWS HOST: Do you know anybody that thinks you have run a great campaign?

THOMPSON: It's not for me to come here and convince you that somebody else thinks I have run a great campaign.

(END VIDEO CLIP)

BAIER: So, Fred, has he run a great campaign?

BARNES: That was, by Chris, a very great question, however, that stumped him.

Thompson raised high expectations and he hasn't delivered.

KONDRACKE: And he's not showing up.

I'm sorry I wasn't here for that, and Mara wasn't either, because he hasn't run a good campaign. He is finally coming up with some proposals that are attracting attention, but it's pretty late in the game.

You have a tax scheme where you can choose between either paying the old income tax, which I don't know who is going to do it, with all kinds of deduction — I suppose some people will, or you pay a 25 percent rate or 10 percent rate.

But it's pretty late to be trying to astound everybody with your new tax ideas.

BAIER: We'll leave it here. Are we going to see, Mara, over the next six weeks just increased attacks from every Republican going after everybody, since it's not really a frontrunner's game?

LIASSON: It's a complete brawl. It's not just two guys duking it out.

Yes, I think we will see attacks coming from every which way, and the results could be almost anything. I think you could see Huckabee or Romney winning Iowa.

And don't forget, Romney's win in Iowa now has to be convincing enough so it doesn't look like he has made a poorer than expected showing.

(CROSSTALK)

KONDRACKE: Let me stipulate one thing. This is not throwing mud. Nobody has gotten down and dirty on this stuff. It is based on accusations based on records, which have checkable facts and stuff like that. It's not mud.

BAIER: All right, we'll leave it there.

Next up with our panel, the second ranking Republican in the Senate says he'll resign. We will tell you what that means for his party and his chances in 2008. That's next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. TRENT LOTT, R-MISS.: We've had this great experience with for these 35 years, but we do think that there is time left for us to maybe do something else.

This is not a negative thing. There's no malice, no anger. There's nothing but happiness and pride at the job that I have been allowed to do by the people of Mississippi, and by my colleagues in the House and the Senate.

(END VIDEO CLIP)

BAIER: Mississippi Senator Trent Lott announcing he is stepping down this year. He was just elected again in 2006, so why is he doing it, and what does it mean for Republicans in the Senate?

We're back with our panel. Mort, the explanation he gave at his press conference was that he wanted to do something else. He wants to go make some money.

KONDRACKE: Right.

BAIER: He wants to with be his family, which we hear all the time. What's behind all of this?

KONDRACKE: Well, I think a lot of it is what it is. He has been in Congress for 35 years. He did not really want to run again in 2006. He decided to do it — changed his mind. Partly, it was surely that he wanted vindication, and —

(CROSSTALK)

KONDRACKE: Yes, but don't forget that he was disgraced and dumped as Senate Republican leader over the remarks that he made about Strom Thurmond. He gets himself reelected. He serves. He gets elected as Whip. He serves as Whip, and now he is ready to go out under his own steam.

As one of his GOP aides told me today, he is going out at the top instead of at the bottom. And he wants to make money.

Now, he also wants a Republican to replace him. Haley Barbour was successfully reelected as Republican governor of Mississippi, so his replacement will be a Republican for sure.

Also, Thad Cochran, the senior senator from Mississippi announced that he was going to run for reelection, so that the clout and the pork train for Mississippi will be maintained, whether or not Trent Lott stays as a senator.

BAIER: Fred, this is six Republicans, now, in the Senate that have announced they are stepping down, retiring, resigning, whatever — 16, by our count, Republicans in the House. What does this mean for the chances to get back both chambers?

BARNES: Well, you have to think that a lot of these Republicans figure that they are not going to win back the House for or the Senate in 2008 or at any time in the near future, and they had a great run being in the majority, but it's not as much fun being in the minority. So that's one reason.

Now, in the Senate seats, Lott's seat, Republicans will hold that seat, in Idaho, they'll hold that. But they will have trouble with seats like the one in Virginia, where John Warner is retiring, New Mexico, where Pete Domenici is retiring, and Colorado, where Wayne Allard is retiring.

So it makes a difference which state loses someone. But there are three retirements that have meant that those states that are Republican states, they are up for grabs.

BAIER: And there is no doubt in Mississippi that it will stay red.

LIASSON: This is an opportunity for us to review how many open seats there are, and the Republicans are defending more of them. They also have more vulnerable incumbents who are trying to retain their seats.

I think the Democrats have one potentially vulnerable incumbent, and they've got a whole bunch of them — Norm Coleman in Minnesota, Susan Collins, although she is not as vulnerable as she used to be, in Maine.

So I think the Republicans are definitely looking at an uphill climb next year in the Senate.

BAIER: With Lott stepping down, it is the end of an era, isn't it?

KONDRACKE: He has certainly been around for a long time. And he was a House leader before he became a Senate leader. So he has certainly been a fixture on the Senate scene, that's for sure.

BAIER: And was he vindicated?

KONDRACKE: Yes, I think so — basically.

LIASSON: He got the vindication he wanted and needed. He came back, and he came back into the leadership.

BARNES: He was vindicated 100 percent.

Content and Programming Copyright 2007 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2007 Voxant, Inc. (www.voxant.com), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, LLC'S and Voxant, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.