This is a rush transcript of "Special Report With Brit Hume" from January 1, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

MIKE HUCKABEE, (R) PRESIDENTIAL CANDIDATE: I have no regret at all about pulling the ad. I absolutely had no regret. I slept well last night. I woke up this morning feeling even better about it. I know we did the right thing, and I have no regret about saying let's change the tone. That was the right decision, and so I stand by that.

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: Well, I don't think Governor Huckabee was able to fool the media at his press conference. I don't think he will fool the people of Iowa. It's a little like going up and saying "I'm not going to call my opponent any names, but if I were going to call him some names, here are the names I would call him."

(END VIDEO CLIP)

BRET BAIER, "SPECIAL REPORT" GUEST HOST: There you see former governors Mitt Romney and Mike Huckabee talking about this Huckabee ad that really never made air, except for the coverage of the Huckabee ad after he pulled it after a press conference. It's confusing, but it's the day after, and the fallout of all of this.

We have a new poll out, Des Moines Register poll, that is getting a lot of attention. There you see Huckabee 32 percent, Romney at 26, and McCain at 13 percent.

This is a little different than the trend lines of the averages, the Real Clear Politics trend lines. There you see Huckabee and Romney, and Huckabee has taken a dive in recent days.

So what does all this mean with 48 hours to go until the caucus? Some analytical observations from Mort Kondracke, Executive Editor of Roll Call, Jeff Birnbaum of The Washington Post, and syndicated columnists Charles Krauthammer, FOX News contributors all.

Mort, this Des Moines Register poll, it seemed like Huckabee has held on to this lead. It is outside the margin of error, but polls around the holidays, question mark?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: Well, you know, this is going to be as much a contest among the pollsters as it is among the candidates, because they disagree.

I would think that because the Des Moines Register is the biggest paper of the state and would get a lot of publicity that there is a certain bandwagon effect that Huckabee will benefit from right before the primaries.

But, then the question is, where do we go from there? As Fred observed last night, in The New York Times there's a chart today — the bodies of winners of Iowa caucuses are all over the place — people who never made it to the nomination, Ed Muskie and Bob Dole in 1988, and George Herbert Walker Bush in 1980 — he eventually became president but not in 1980 and so on.

So if Huckabee does win in Iowa, it doesn't mean he's going to win the nomination. In fact, he's got a long way to go before he wins the nomination, including 20 states on Super Tuesday, February 5, where he's not going to have the money to really compete.

BAIER: How does Romney come out of this whole back and forth about whether Huckabee was going to run the attack ad? He commented on it today — Jeff?

JEFF BIRNBAUM, COLUMNIST, "THE WASHINGTON POST": Well, I don't think there's any question that governor Romney has won the debate with the media, and there are a lot of reporters in Des Moines, about 2,500 or so credentialed for the caucus night.

But they don't vote in Iowa. And so whether or not the cynics, like we have been about this, are the ones who win the day, I don't know. Huckabee got applause from the people he was talking to when he said he pulled the ad, even though everyone in the audience pretty much knew what nasty things he was saying about Romney.

So it may be perfectly the case that Huckabee loses our votes but wins enough votes in Iowa by going positive, basically, in order to pull off a narrow victory over Romney, which would, I think, be a very difficult day for Mitt Romney moving into the New Hampshire primary.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Let me say as the resident cynic on the panel that, it was an incredibly cynical ploy that Huckabee pulled yesterday, but I think it works. You watch him today on the stump: he says I'm Mr. Positive.

After all, the negative effects of the Romney ads had already hit on Huckabee. He wasn't going to undo that. He needs to return to the theme of I'm a likable guy, which is what propelled him. So I think he did it right.

But I think the storyline coming out of Iowa is going to be if Huckabee wins by four points or more, then the story is the guy who pulled off a miracle, outspent 100 to 1, and Romney is hurt going into New Hampshire, where already he is slipping against McCain.

If they come within a point or two of each other, then I think the story will be Hucka-boom, Hucka-bust. He fell to earth on this.

But if he loses by four points or more, he's a footnote. He's done.

BAIER: You mentioned McCain, and he has a new web video out today where he attacks Mitt Romney. Let's take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Mitt Romney says the next president doesn't need foreign policy experience.

John McCain for president.

I'm John McCain, and I approve this message.

(END VIDEO CLIP)

BAIER: So, Mort, obviously that ad, most of it is Islamic extremist video of terrorists in action, or the aftermath. Is that effective?

KONDRACKE: I think it is effective. And on the merits, I think McCain is absolutely right. What Romney said was that if you want foreign policy experience, then you ask somebody at the State Department who spent his entire career in foreign policy and make him president. That's not what you do. You have somebody that knows how to make decisions and has good judgment.

I think understanding the content of foreign policy, especially in the kind of world that we live in now, is vitally important. Having experience with crises in the past, a foreign policy crises, understanding the motivation of the various factions in countries, understanding who you can trust and who you can't trust I think is indispensable.

Again, history shows that presidents get tested early in their administrations, and they often make rookie mistakes. Bill Clinton made rookie mistakes in Somalia and Haiti, and John F. Kennedy even made rookie mistakes with the Bay of Pigs.

BAIER: Quickly, McCain rising in New Hampshire, possibly rising in Iowa, too?

BIRNBAUM: I think so. I don't think there's any question that he will get third place, and that will help McCain in New Hampshire. He could well win there not just because he has foreign policy experience, but because he has been strong on Iraq — the surge, he backed it — and I think that kind of background will help him a lot because the war in Iraq is turned around.

BAIER: That's if for this topic. Next up with out panel, a look at the Democrats and their hopes for the ticket out of Iowa. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: The polls look good, but understand this: the polls are not enough. The only thing that counts is whether or not you show up to caucus.

JOHN EDWARDS, (D) PRESIDENTIAL CANDIDATE: I do not need a poll to tell me we are moving, and we are moving every single day, and we are moving in the right direction in this campaign.

SEN HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: Those of you who are still deciding, those of you of never caucused before.

(END VIDEO CLIP)

BAIER: There you see Hillary Clinton, John Edwards, and Barack Obama talking about the polls, talking about getting people out to the polls. The latest polls that we talked about, the Des Moines Register poll, and we'll put that up now.

On the Democratic side it shows Obama with 32 percent, Clinton at 25, Edwards at 24. Of course, still some questions about how this poll was taken, and also when it was taken, around the holiday.

So, Charles, what about the Democratic side? And is there somebody who is trending one way or the other? It seems like a big bunch altogether.

KRAUTHAMMER: It is a big bunch, but that Des Moines Register poll is interesting, because the CNN poll shows Hillary ahead, but this shows Obama ahead substantially.

Remember, the Des Moines Register poll had twice the number of people who are interviewed, so that counts for something. And, secondly, the Des Moines Register has a track record: four years ago it predicted Edwards and Kerry coming up ahead of the Gephardt and Dean, it wasn't the most accurate.

The problem with the polls is who you estimate and believe are going to show up to the caucus, because that skews the numbers. Who has the best screen in these polls?

The Des Moines Register got it right last time, so perhaps Nurse Ratched, who is the editor of this newspapers, she may not be the best moderator for the debate, but she may happen to know how to pick pollsters who understand the Iowa electorate.

BIRNBAUM: It would be a lovely thing if it were true, it would make things easier. But polls are very dangerous when it comes to caucuses.

I think this time it will be a matter of cyberspace and then real space. This time really will be an important for get-out-the-vote efforts that are online. And if that is the case, then I think Barack Obama on the Democratic side as a tremendous advantage. He has used the internet better than his other major rivals.

And the real space is the weather on Thursday night. It is supposed to be a very cold evening, though maybe clear.

It is cold and Iowa, let's put it that way. You would really have to want to go and spend the night out in order to vote, and turnout will be extremely important.

BAIER: What about, Mort, the first time caucusers? Barack Obama apparently has a lot of them, a large percentage of his supporters are first-timer's.

KONDRACKE: Right. Supposedly, according to this "Des Register" poll, 60 percent of the people polled would be first-time caucusers, which seems awfully high. And Obama support is even higher among the percentage of his support that is first time caucus goers. Can he turn them out? Will they actually turn out?

Clear whether would suggest that older people, who are Hillary Clinton supporters, will be able to go out. They are not going to worry about sliding on the ice, or something like that. The Clinton people are going to have tea and cookies or something like that, refreshments at all the caucus sites to get their people there early.

And, as Jeff said, this is all about organization, it is all about who do you get there. And I say it is absolutely unpredictable. You could have almost a dead heat coming out of this, in which case you wonder if anybody won.

BAIER: That is interested, because The New York Times had a story today about what happens if there is a three-way tie, essentially, and there are three people that come out of Iowa on the Democratic side?

KRAUTHAMMER: Logically, people ought to say it is a tie and a do over, and let's look at New Hampshire. I think if they are bunched together, the media consensus will be that.

But I think if Edwards trails by three or four, even if it that close, I think he will be ruled out and he will be really hobbled in New Hampshire and beyond that.

But it will hinge on who turns out. If it is young people, it's Obama, old people, it's Hillary. If it is angry folks, it will be John Edwards.

BAIER: We will leave it there.

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