This is a rush transcript of "Special Report With Brit Hume" from January 8, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

JOHN MCCAIN, PRESIDENTIAL CANDIDATE: We know how important New Hampshire is to our campaign. There's no sugarcoating that. It's straight talk that is absolutely important.

MITT ROMNEY, PRESIDENTIAL CANDIDATE: No guarantees, but I'm planning on winning, and I can be pretty sure that by the end of the day, I will have received more votes for president than any of the Republicans.

(END VIDEO CLIP)

BRIT HUME, HOST: Of course Mitt Romney is talking there, not about just this race, he's talking about all these races so far, and maybe that will be true. The problem for him, of course, is to come in first somewhere, sooner or later.

If you think about it, what the two guys seem to be acting like were a couple of guys who were in a very, very close race, and all the best indications we have tonight are that indeed they are.

In fact, we had an Election Day poll — this is not an exit poll. As we mentioned earlier, this is a poll we took starting last night and through the day. And, as you can see, it points to a very close race: McCain, 35, Romney, 34, Huckabee 12, with a margin of error of four or five. The outcome could fluctuate in either direction, and possibly by quite a bit.

Some thoughts on this race now on the Republican side from Fred Barnes, executive editor of The Weekly Standard, Mort Kondracke, executive editor of Roll Call, Bill Kristol, editor of The Weekly Standard, and Nina Easton, Washington bureau chief for Fortune Magazine — FOX News contributors all.

Mitt Romney is saying, Fred that, regardless of the outcome here, he will go on. John McCain made it clear that this is vital to him. What about it?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Well, it is vital. It is actually vital to both of them, it is vital to Romney. They will both go on. It looks like it is going to be a close finish. Then we move to Michigan next week.

Michigan is an interesting state because it is the home state of Mitt Romney where he grew up. His father was governor. It's a state that McCain won in 2000 over George W. Bush.

HUME: That's a Republican only deal.

BARNES: There's no Democratic test. It just has Hillary Clinton on the ballot, so it's not contested, so it will be the big story there.

Now if McCain — if this holds, as it does in that poll, by FOX, and McCain wins in New Hampshire, then he's going to be the comeback kid, a bigger comeback kid than Bill Clinton was in 1992.

HUME: Because he could win.

BARNES: Because he could actually win.

And you have to remember where McCain was last summer. His campaign was in total collapse. He was out of money. He had to let go a good number of the people that worked for him. The issues were not working for him. The war in Iraq was not going that well — it is now. Immigration was a hot issue, then — that is one that doesn't help him among Republicans. And now if he can win here, he will be the frontrunner in the race, all of a sudden. Not a commanding frontrunner, but he will be the frontrunner.

HUME: He will have a frontrunner moment.

BARNES: He'll have a frontrunner moment, and it may be more than a moment. And it will — and he'll face Romney. Romney will be near death if he loses here and Michigan.

MORT KONDRAKE, EXECUTIVE EDITOR, ROLL CALL: Well, if he loses in Michigan, he would be near death, if he lost three in a row. Romney was supposed to win Iowa — de didn't, lost to Huckabee. He was supposed to win here, and so on.

But Romney is not dead. The regular Republican conservatives out there have to go someplace. They may go to McCain finally —

HUME: Reluctantly, yes.

KONDRAKE: They probably not going go to Huckabee. So there's still a chance for Romney. I would say that Romney, even if he loses here, is in better shape in the Republican Party than Hillary Clinton will be having lost two in a row to Obama, if she does onto other side.

And the Romney people say that they're very happy with this new message that they have developed, namely that Washington is broken, and he's a turnaround specialist in business, and he's the one to turn around Washington.

HUME: First of all he may need to turn around his campaign!

BILL KRISTOL, EDITOR, THE WEEKLY STANDARD: He really did turn around the Olympics, which, to be fair, he really did from a managerial point of deal, a fantastic achievement. Whenever he says "I turned around the Olympics," I keep think those Olympics are the same boring events they were when he took over. He didn't change the luge or the bob sled.

HUME: Just because you don't like the luge — you're bigoted against the luge.

KRISTOL: I am, that is a good point.

Michigan and New Hampshire are a doubleheader. If either candidate, McCain or Romney, sweeps the doubleheader, the other one is knocked out. That's the simplest way to think about it.

One initial point, I had breakfast this morning with Ari Richter, the managing editor of The Concord Monitor, who made a very good point. He said McCain was really down in the summer, as Fred said.

Rudy Giuliani was doing pretty well in New Hampshire. Rudy Giuliani could have, probably, finished off McCain if he had really invested in New Hampshire. If he hadn't kept saying "My strategy is February 5, I don't care about those piddling little state like Iowa and New Hampshire."

If he had said "I cam coming to New Hampshire," he is similar to McCain in message and persona. Those McCain voters were up for grabs. The independents were up to grabs to some degree. It rally will be interesting. You never know what could have happened.

But it will be interesting when people write the histories to see that McCain's comeback was part of Giuliani, for really inexplicable reasons, I think, pulled back from New Hampshire in the summer — not to take credit away from McCain who has run an excellent store campaign in the last couple of months.

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: That's a really interesting story coming out of this is Rudy Giuliani, because he spent something like $5 million and was here something like 40 times. But he didn't do the elbow grease like John McCain did, who was here something like 100 times, did a 100 town hall meetings, really worked.

The voters of New Hampshire expect you to work them. They want to look you over tow or three or four times. And Rudy Giuliani came in, kind of did a superficial attempt at New Hampshire, and now he's going to come in fourth, possibly fifth, behind Ron Paul.

What does that mean for his campaign? Rudy Giuliani, last summer — he is a social liberal, pro choice — but last summer, I think the party was willing to go with him with this grand bargain because he was a winner. He was perceived as somebody who could beat Hillary Clinton.

What does it mean now? What does it mean if he is not perceived as a winner coming out of Iowa and New Hampshire. McCain already announced today an expansion of his Florida operation, and, as Bill said, they do occupy the same space, in the Republican spectrum. What does this mean for Rudy Giuliani?

BARNES: I will tell you about New Hampshire, where a guy spends $5 million and comes in 40 times, and they think he dissed the state.

KONDRAKE: What I think is interesting is will either Romney or McCain try to take a bite out of the Huckabee appeal. That is, Huckabee cares about ordinary people. We have a recession coming, maybe. Yes, things are not good. Huckabee is the only one who acknowledges that things are not good.

You don't hear McCain saying that. You don't hear Romney saying that. Somebody — the opportunity is there for somebody to try to do that.

BARNES: Yes, but that's not why Huckabee got votes. Huckabee gets vote —

HUME: Suppose Huckabee makes a stronger than expected third here. Does that help him at all?

KRISTOL: I think he can win the nomination, sure.

HUME: You wrote that in "The New York Times."

KRISTOL: Yes, and I am sticking with that view for at least another 24 hours.

HUME: Next up with the panel, we'll talk about the Democrats, and we'll put that primary under the analytic microscope. Stay tuned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENTIAL CANDIDATE: We have Nevada next, and we have already an organization on the ground there. I will be spending a lot of time in Nevada.

And then South Carolina is after that, and we have a great organization. We have been campaigning there actively, and we will spend a lot of time in South Carolina.

(END VIDEO CLIP)

HUME: Barack Obama looking down the road, where he undoubtedly sees good things.

We would have showed you a little bit of Hillary Clinton today, but she didn't really say anything today. She worked the rope line and sat down to let the voters decide.

And if our Election Day polls, not an exit poll, conducted by telephone overnight and through the day something is correct, she will come in second to Barack Obama, although look at that margin of error — plus or minus 4. That means the race could go the other way.

So, here we are. We are hearing reports that a shakeup is inevitable in the Clinton camp. But what happens if she pulls it out here? Would there still b be a shakeup? What do you think, Nina?

EASTON: She's not going to pull it out here. That would be —

HUME: Let's assume — Terry McAuliffe, the chairman of her campaign was in today, and he said "If she holds it under 10 points, she will be the comeback kid." And I said, "Terry, do you think you can sell that?" He said "I can sell anything." Well, maybe, but wouldn't it be more like under five, comeback kid? What do you think?

EASTON: No, I don't think so. And I know terry, Terry can sell anything. But I think that it is retooling time, and I think she has time to do this. We're talking about Paul Begala and James Carville, possibly.

HUME: They are vehemently denying it.

EASTON: They are denying it, but, nevertheless, it is clearly, I think, if they retool, they will be looking for a new message, and they've got some time to do it.

The big problem, I think, from there end is funding, because, as your report pointed out —

HUME: He told me they had $28 million in the bank.

EASTON: That's higher than some of the reports.

HUME: But that's a lot less than they had. They raised $110, or something like that.

EASTON: The Obama camp point is that they have 475,000 donors who haven't tapped out. They haven't given the maximum limit under the legal limit. So they can go back to these donors.

The question — and it makes it easier to do it. The question with Hillary is the extent to which they have they tapped out their base of donors, and can they expand their donor base if she has lost the first two states.

KRISTOL: She has lost the first two states, it looks like, and I think she'll lose the next couple that are contested — Nevada and South Carolina. In Michigan she is the only one on the ballot because of this bizarre circumstance with the Democratic National Committee fighting there- -

HUME: That will be a win but won't provide any delegates because of the rules?

KRISTOL: Right. So, I think she could be 0-4. There is not much point — this week will be Obama's week. Even if he wins by five or six points, it is not a real blow out.

She has to think not just about staffers, but, strategically, how can they re-launch after South Carolina and try to really get back on the playing field for Florida and for Super Tuesday on February 5? Challenge them to one on one debates, no moderator, on foreign policy.

She has to do something that is more than bringing on Paul Begala, as much as I like him, and do something to change the storyline a little bit, and maybe Obama would have a tough time saying "No." And then she could really have a debate with him. Maybe she could change things.

HUME: That might get Edwards out of the race, but would it hurt Obama?

KRISTOL: It's going to be a rough couple of weeks.

KONDRAKE: She needs a game changer like that in some fashion. She cannot depend, at least the Clinton people don't think they can depend upon the press to provide the scrutiny for Obama that, frankly, Obama deserves.

Obama is like a national Rorschach test — everybody looks at it and sees whatever he or she hopes will happen for America. And there is very little in the way of detail, very little in the way of record, very little in the way of examination that has been done so far, and the Clinton people don't think that the press will be give it to him.

HUME: They don't think they will give him the scrutiny?

KONDRAKE: Yes. So they're going to have to figure out how to inspire this without seeming to be mean and nasty. And they seem to be every time they try — they sound mean and nasty.

One thing in the shakeup department, I've heard, is that they're going to shake up the press operation, that the reporters don't apparently like — I haven't been out with them, but don't like the people that are handlers, so they're going to get new handlers as well as new strategists.

BARNES: The Clintonites don't want scrutiny of Obama. They want hit pieces, as many as they can get.

There is an opportunity for her. She has got, what, the 8th — until the 26th with the South Carolina primary, the next big one. So she can have a breathing spell here to work on her message, and so on.

The problem here, Brit is it's not the message, it's the messenger. She's the problem, that's what people don't like. They don't like her. They don't trust her.

HUME: If that's the case, then it's hopeless.

BARNES: That's hard to change. It's hard to fix that now.

HUME: Obama is running as a bipartisan agent of change, the man who could reach across the aisle, who will end these divisive politics.

The Clintons may seem to have an opening based on the fact that his voting record and his actions in the Senate really haven't supported that proposition. But can the Clinton people attack him on that given her record?

EASTON: I don't think that's the problem. The ADA, a very liberal, left group, gave Obama a 97.5 percent rating lifetime. The gave Hillary a 95 percent rating. So they're very similar on domestic issues. I think where she can trip him up is in foreign policy.

The other thing is that events happen. If she responds more like a commander in chief than he does, you know, that could provide a setback.

KRISTOL: We're talking about Hillary here, but we should say that Barack Obama has run really one of the most extraordinarily able(ph) presidential campaigns that we have seen.

In the last year, he and Huckabee and then McCain on the comeback trail, three instances where really the candidate did it. David Axelrod, Obama's campaign manager, has been very good and they have been very able, but in all those three cases, certainly Obama, Huckabee and McCain, it was much more the candidates than the campaign.

And these are three very talented politicians. They may not be good presidents, we may not agree with them on issues, but it is impressive to see those three, who really haven't done it through muscle or really money, particularly — Obama raised a lot of money, but that was the surprise, due to his ability to mobilize people.

BARNES: Another thing that could help Hillary Clinton down the road is that it looks like she and Obama will split the Democratic vote, but independents are the one's that are helping McCain and are also helping Obama overwhelmingly. But a lot of states you can only vote if you are a member of the party, not an independent.

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