This is a rush transcript of "Special Report With Brit Hume" from December 1, 2007. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

STEPHEN HADLEY, NATIONAL SECURITY ADVISER: The intelligence community has high confidence that Iran halted its covert nuclear weapons program in the fall of 2003 and they had moderate confidence that it had not started that program again as of mid 2007.

SEN. HARRY REID, D-NEV., MAJORITY LEADER: We should be having a surge of diplomacy with Iran, and based upon this, I think it would be a pretty good idea.

(END VIDEO CLIP)

BRIT HUME, HOST: And says Harry Reid, he was the one that called for this National Intelligence Estimate because he suspected the administration was making scary noises about Iran in order to take us into war.

Some thoughts about this from Fred Barnes, executive editor of The Weekly Standard, Mort Kondracke, executive editor of Roll Call and the syndicated columnist Charles Krauthammer — FOX News contributors all.

Well, what to make of this? I mean, this, at first brush, this is about as good news as you could ask for. Iran has halted the program, it has been under intense pressures since and it doesn't sound like it could be very far along under any circumstances. What about it, Mort?

MORT KONDRACKE, ROLL CALL: Well, yes, it stopped the program in 2003, we don't know for sure whether it has restarted it or not. There is less confidence about that than there was about the fact that they halted it. I think it undercuts the so-called neoconservative case for a bombing raid on Iran. I mean, I don't see how the president could possibly persuade anybody that we need to bomb out Iran's nuclear facilities, if that's what he decided to do, on the basis of the fact that they're not very far along.

On the other hand, we don't know whether they intend to start again. They are still trying to reprocess uranium. If they find out how to reprocess uranium, it's a short step from that to a nuclear program. So I think that the case for sanctions and inspections very strong.

FRED BARNES, WEEKLY STANDARD: Certainly, look, Harry Reid must not have read the same report I did. He said he hasn't read it. Or seen the briefing by Steve Hadley.

HUME: He said he hadn't read it when he said that stuff.

BARNES: Well, look, this is not a case for diplomacy. That's not what worked. It wasn't diplomacy. He wants a surge in diplomacy, what they should be calling for is a surge in increased pressure economically and otherwise on the Iranians to stop the enrichment of uranium. It's clear what the Iranians are doing is trying to develop the capacity for a nuclear weapon even though they may not be pursuing weaponization at this moment, but they want to have the increased uranium, the enriched uranium, and they want to have the long ballistic missiles and so on they can at some point have a nuclear weapon.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: If you want to go nuclear, you have to have three things. You have to have the raw material, uranium enrichment, which Iran is doing at a high level. You have to have ballistic missiles to deliver the stuff at the end, which Iran is doing with alacrity and success, but you need a third element, which is to turn the raw material into a weapon which you then stick on the ballistic missile.

The third step is what the NIE is saying has now been halted four years ago, and is now remains halted.

HUME: As far as they know.

KRAUTHAMMER: As far as they know. The confidence in the halting is high, but the confidence in the non-resumption two years ago when the uranium enrichment was resumed is only moderate. Now, that means the news is good. I'm a believer in accepting good news unlike the Democrats, for whom good news on Iraq is bad news. Good news on Iran is good news for the whole country and I welcome it, and I think it's a reason to increase our pressure.

When you get a John Edwards arguing that this report means that he was right in imposing the economic sanctions on the Revolutionary Guards who are working on the nuclear stuff, he's exactly wrong. That's what has been working and that that's why it has to be continued and accelerated.

HUME: Charles, what impact will this report have on our allies whose cooperation would obviously be helpful in making further sanctions meaningful?

KRAUTHAMMER: It takes the military option off the table. There is no question in our minds and in theirs, but I think that it's something that may actually encourage the ones who are aren't serious, the French, the Germans and the British .

HUME: Really?

KRAUTHAMMER: Yes. I don't think it will encourage laxity. It will encourage strengthening this because the conclusion here is that the Iranians are acting rationally.

HUME: And in response to pressure.

And it also means, Mort, the other part of this report that I suppose is good news that it shows they are more subject to pressure short of military that anybody might have thought.

KONDRACKE: Apparently - they did. According to this report, they stopped their program in response to the initial pressure applied by the IAEA. And you're right except the Chinese and Russians will say, well, we got a lot of time so we don't have to be that insistent on sanctions.

HUME: When we come back, the margins narrow in the Democratic presidential race. We will see how Hillary Clinton is coping with what is now a serious challenge. We'll be back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON, PRESIDENTIAL CANDIDATE: It's beginning to look a lot like that, you know, it really is, where we can't get a straight answer on healthcare, where somebody who runs on ethics and, you know, not taking money from certain people has found out to have at least skirted, if not violated the FEC rules and to use lobbyists and PAC money to do so.

SEN. BARACK OBAMA, PRESIDENTIAL CANDIDATE: Folks from some of the other campaigns are reading the polls and starting to get stressed and issuing a whole range of outlandish accusations.

(END VIDEO CLIP)

HUME: And said Barack Obama, contrary to Senator Clinton, he didn't violate any elections laws and everything has been on the up and up. All this is happening perhaps in the response to but certainly in the aftermath of the emergence of a poll this weekend from the "Des Moines Register" whose polling is respected in the state of Iowa that shows Barack Obama by a three-point margin, which is in the margin of error, we should add, but it represents a significant uptick for him is now in the lead narrowly in the state of Iowa, which of course is first up in a month from today.

So where are we in all this, how rough is this getting and how much rougher will it get? Fred, I remember hearing from you last week when I was watching from vacation worrying or suggesting at least that the Republicans were beating each other up. Now you are beginning to see it get a little rough among the Democrats. What about it?

BARNES: Well, look, obviously you said perhaps that poll had something to do with it. Of course it had everything to do with it. But I think this is a strategy by Hillary Clinton. I think really it has no risks. What are people going to think, gee, she's tough and she's mean and she is not as nice and likable as we thought she was?

Nobody ever thought that anyway. So I don't think the risks are there, but she realizes that she can lose Iowa, she can lose Iowa and still — because she has a base in the Democratic Party and still live on as a candidate, but if she wins Iowa and this is what she is doing, really going for the kill here. If she wins Iowa, as many, many people have written, and the political analysts have said, and commented, and people in the political community have said if she wins Iowa, the race is over, it's hers. And that may be true, and so she's going to just let it all fly in Iowa. Why not?

HUME: Even if she wins by a whisker in Iowa it would be enough to put Obama away?

BARNES: Maybe not a whisker, but if she wins by more than a whisker, it may be.

KONDRACKE: I think that's true but Mara has often said that when Hillary gets stressed by close polls and a tight race, she is going to do something really dumb, and I think this is really dumb. To say that this is the fun part, now comes the fun part and she goes on the attack against Barack Obama, as though, you know, she is enjoying this, she was the one saying that we all ought to attack just Republicans, and that people who question her are throwing mud. I think .

HUME: Now she is throwing mud.

KONDRACKE: I think she does look desperate here. She does look desperate and I think this is more defensive and rather than .

HUME: Do you think it will hurt her?

KONDRACKE: I think it will. I think that Iowa voters are not going to like a harsh attack on her part against Obama's character.

HUME: Fred Barnes says she doesn't see any downside risk her. Mort Kondracke says he does. Charles, you want to break this tie?

KRAUTHAMMER: It's Mort. He wins by a knockout.

HUME: By a whisker?

KRAUTHAMMER: By the chin. Look, Iowa has a history of being unhappy with frontrunners who attack each other. In the last cycle we had Gephardt and Dean who whacked each other, who were ahead, who had very harsh ads attacking each other.

And of course we all remember Kerry and Edwards snuck in and buried the other two. I think this is an example of her overreacting because of the polls. The part of the spat I'm enjoying the most is the spitball match over who has lusted for the presidency longer.

HUME: We'll talk about that later.

KRAUTHAMMER: She holds the world indoor record on this, having wanted it for at least 20 years .

BARNES: She started in Kindergarten.

KRAUTHAMMER: But her campaign has found a news story he wrote in kindergarten saying he wanted to be a president. Now, that is a parody. That stuff ought to be not in the panel but the kicker ...

HUME: It will be. Trust me it will be.

KRAUTHAMMER: Obviously I was not in on the planning of this show.

BARNES: Charles, they had a lot of negative stuff stored in the cupboard and they cleaned out the cupboard including that one.

KRAUTHAMMER: When you seriously quote an essay written in kindergarten, you have gone way over the edge.

HUME: Are these two candidates beating each other up so both the Democratic and Republican presidential candidates will be equally beaten up?

BARNES: I don't think so. You heard Obama. He is doing a rope a dope. He is on the ropes and letting Hillary flail away and hopes that will hurt her.

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