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'Special Report' Panel on Politics and Elections

This is a rush transcript of "Special Report With Brit Hume" from January 10, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: I'm confident that I will attract the core establishment and the social conservatives, and I think I will win these races because I will have support throughout the political base of the Republican Party.

SEN. JOHN KERRY, (D) MASSACHUSETTS: Martin Luther King said that the time is always right to do what is right. And I'm here in South Carolina because this is the right time to share with you, to make sure that we know that I have the confidence and that Barack Obama can be, will be, and should be the next president of the United States.

(END VIDEO CLIP)

BRET BAIER, "SPECIAL REPORT" GUEST HOST: OK, There you see Senator John McCain talking about his campaign, and Senator John Kerry, the 2004 Democratic presidential nominee, endorsing Barack Obama today.

We will talk about both races, this a little more than a couple of hours before the Republican presidential debate here on FOX. Some analytical observations 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," Fox News contributors all.

Fred, let's start with the Republicans. John McCain seems to be gaining a little steam in Michigan. There are some polls out that show him pulling ahead of Romney. Talk about Michigan, because that is the next stop for Republicans.

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": It is the next stop. I am sorry you mentioned polls.

MARA LIASSON, NATIONAL CORRESPONDENT, NATIONAL PUBLIC RADIO: We don't like polls anymore!

BAIER: Let's not talk polls anymore, all right.

BARNES: The truth is that McCain should win this state. He beat Bush there in 2000.

One of the most important things is this: it's an open primary and it's easy to vote in either party. You just go in and ask for the Democratic ballot or the Republican ballot. You don't have to formally join a party, or anything.

It is very easy for Democrats, who probably won't be interested in their primary because it is just a beauty contest. Hillary's on the ballot, but Obama is not, and I don't believe John Edwards is either. So there's really no incentive to vote in it.

So a lot of Democrats and Independents, I think, will vote in the Republican primary, and they are more likely than not, I think, to vote for John McCain.

And Romney says it's his home state, and it is. He hasn't lived there for over 40 years. That's long time. He moved to Massachusetts.

And so, I think, basically, the political landscape there favors McCain.

LIASSON: I think it is a must-win state for both of these guys. Romney certainly has the money to continue no matter what happens in Michigan, but I think there will be a lot of questions raised about his candidacy if he loses three out of the first big ones.

I think for McCain, he has to show he can win somewhere outside of New Hampshire. This happened to him before. He won New Hampshire last time. He did win Michigan, but then he foundered in South Carolina.

So I think it is really important. You can tell how important it is just because Romney is pulling back resources, even though he has plenty of them, from the other states. He's not advertising right now. He's off the air in South Carolina and, I think, in Florida to really concentrate on Michigan.

BAIER: Let's look real quick at the FOX News Opinion Dynamics poll in South Carolina. The top contenders, McCain: 25 percent, Huckabee: 18, and Romney right there at 17. You see Thompson, who is really trying to make a stand in South Carolina, at the bottom there.

Mara, are those numbers surprising to you?

LIASSON: Yes, they are, because McCain seems to have gotten a real bounce out of New Hampshire. McCain was not there not very long ago in South Carolina. Huckabee was way up because of his win in Iowa.

But I think the interesting thing about this race is, and everybody is waiting to see if this happens, will this be a race between Huckabee and McCain?

First we have to get through Michigan to see what happens with Romney, but if it does, it will be fascinating—one person that the Republican establishment considers a heretic, and the other one that they consider a inaccessible maverick might be battling it out.

BAIER: I want to turn to the Democrats. Do you have something quickly?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: I would expect tonight's debate to be a pounce on McCain time, because both Huckabee and Mitt Romney have got to score points against McCain, who seems to be the front runner both in Michigan and South Carolina.

One fascinating thing about our poll is that when you ask who is the true conservative, Romney doesn't score. For all this bending himself out of shape, he is still not regarded as a true conservative.

LIASSON: The operative word there is "true."

BAIER: let's talk Democrats. Fred, John Kerry endorses Barack Obama. Does it make a difference?

BARNES: I don't think it really does. I guess if you are a Democrat, you would rather have it than not, but endorsements don't matter very much.

The expectation was if Obama had won New Hampshire, there would have been three or four other Democratic senators that have endorsed him, and they still might.

Actually, I would say the endorsement by the culinary workers in Nevada is more important than the endorsement by John Kerry. Even union endorsements aren't all that important, but still that is one that is more important than most.

And Nevada is a battleground, and that's going to help Obama there.

BAIER: Bill Richardson drops out today. How does that factor in?

LIASSON: He didn't factor before and he doesn't factor now.

I think the Democratic race, despite the rollercoaster that we have all been on and the way that the polls have led us by the nose, or we have allowed them to, this is a race between two well-matched opponents. The Democrats like them both. They both have a lot of money. They're popular. This will be a battle of the titans.

I think it is very well matched. Both of them are very strong in the next two states of South Carolina and Nevada.

KONDRACKE: I think the importance of these endorsements that they occurred in spite of Obama's loss in New Hampshire. In other words, he did not lose anybody that he was going to get, and they came the next day, and they said we still love you, Obama. And I think that that helps them considerably.

BAIER: And both campaigns say they have money flowing in now.

All right, that's it. Next up with the panel, we'll look at what the troop surge has accomplished after one year in Iraq and what remains to be done there. Stay with us.

(BEGIN VIDEO CLIP)

ROBERY GATES, U.S. SECRETARY OF DEFENSE: The number of IED attacks per week has declined by half. Anbar Province, once considered a stronghold of Al Qaeda, has been reclaimed for the Iraqi people. High- profile attacks, car bombs, and suicide attacks are down 60 percent since March. And civilian deaths are down 75 percent from a year ago, although still far too high.

(END VIDEO CLIP)

BAIER: That was Defense Secretary Robert Gates today talking about the troop surge in Iraq. Obviously, the political situation there has not moved forward, and that is a point Democrats continue to make.

House speaker Nancy Pelosi put out a statement about the surge one year later, saying "Despite the bravery of our men and women in uniform, the primary purpose of the president's surge policy has not been achieved. The Iraqi government is nowhere near political reconciliation that would contribute to regional stability."

We're back with our panel. Mort, what do you think about the back and forth and about the surge overall?

KONDRACKE: Well, clearly the surge is accomplishing its military mission. It has suppressed the violence. Casualties are down. It's working. Al Qaeda in Iraq is being defeated.

And you would think that the Democratic Party, its presidential candidates and its congressional leaders, would at least say yes, it's worked. It is working. Sorry, we were wrong. We wanted to de-fund it, but, by gosh, it's working.

Now, it hasn't worked as well as it should, but they can't do it because the base will rise up against them. And I think John McCain was absolutely right today when he said that if it had been up to the Democrats, Al Qaeda would now be victorious in Iraq, and they would be saying to the world we defeated the United States.

BAIER: He and Joe Lieberman—

KONDRACKE: He and Joe Lieberman wrote a piece—there of a warning in that piece that the United States should not pull down troops too low. We're going to pull out the surge brigade, but to go back down to a too-low figure for political reasons or for other reasons would not be good unless the Iraqi military can stand up in place.

Bush may as well play this game out and try to win if he possibly can during his term.

BAIER: Mara, there aren't a lot of people out there who say that the violence is not down.

LIASSON: That even the Democrats will agree on. The candidates will say that, but they say the political piece of this—the idea that the surge was to make a space for the reconciliation to occur, and yes, the military side has worked but the political side hasn't. That's their argument.

I think what is interesting in the Democratic primary, at least, is that Iraq has really receded as an issue. You just don't hear people talking about it. It has become this weird popularity contest between Obama and Hillary, but it's not about Iraq, at least it isn't right now.

And on the Republican side, I think John McCain is clearly getting a boost because he was right all along.

BARNES: He was right. If you watch the exit polls, the war in Iraq is more popular with Republicans than President Bush is by a substantial margin.

But the surge's success has destroyed many myths that Democrats still seem to believe. One was that the war was lost—obviously it's not. Another one was that we can't stop this sectarian violence. It has been stopped. We'll lose more American troops, casualties will go way up. They haven't. They're way down once all the troops got there.

The capital city, Baghdad, has been virtually secured. Mort said Al Qaeda hasn't been fully defeated, but it's certainly on the run. And there really has been a lot of reconciliation. The Sunnis from Anbar have thrown in with the U.S. and the government.

You do have a feckless prime minister, but there has been remarkable political reconciliation at the provincial level.

BAIER: Fred, here is what the critics say, is that we are giving weapons and money to the Sunnis, and when we leave it will go, essentially, into the toilet.

LIASSON: Used in the civil war, yes.

BARNES: Look, the Sunni insurgency is over. Are the Sunnis going to start it up again? No, they aren't. Are the Shia, they're the majority, are they going to kill all these Sunnis now? It's just illogical. It's not going to happen.

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