This is a rush transcript of "Special Report With Brit Hume" from January 22, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: While I was working on those streets watching those folks see their jobs shift overseas, you were a corporate lawyer sitting on the board of Wal-Mart.

SEN. HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: Yes, they did have ideas, and they were bad ideas, bad for America. And I was fighting against those ideas when you were practicing law and representing your contributor, RESCO, in his slum landlord business in inner city Chicago.

(END VIDEO CLIP)

BRIT HUME, HOST: The ideas, of course, that Hillary Clinton is discussing are those of Ronald Reagan, whom she accused Barack Obama of having, in effect, endorsed. He said he did no such thing; he simply made some historically correct observations about the effect of the Reagan presidency.

Some thoughts on this debate and the Democratic race in general now from Fred Barnes, the Executive Editor of "The Weekly Standard," Mara Liasson, National Political Correspondent for National Public Radio, and the syndicated columnist Charles Krauthammer, fox new contributors all.

That was about as heated as it gets — to what effect, Mara?

MARA LIASSON, NATIONAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I have been thinking about this ever since last night. I think that she came in wanting to metaphorically rip his face off, and she certainly tried.

I thought the task for Obama last night, which I think he mostly fulfilled, is to show that he can throw a punch and take one. He looks a heck of a lot tougher and confident and assured of himself than he did three or four debates ago.

So I think he proved that. And he did fight back against both Clintons, who he feels has been unfairly distorting his record. A case in point was the thing that sparked that exchange that you just showed, which is where she keeps on saying he said he liked Reagan's ideas, or he thought Reagan had better ideas —

HUME: He never said that.

LIASSON: He never, ever said that. But they have been repeating this and repeating this. So I think he did fulfill that.

For her part, I have talked to Democrats who were puzzled about why she felt she had to be so aggressive. As a matter of fact, clearly the audience felt she was over the top a couple of time, because you heard the boos. There was another moment when she even was booed louder.

But, clearly, she feels that she has to raise as many doubts about him as possible. Her campaign feels her negatives are so high, there's no cost to her — in other words, there's no danger to her at this point. But it was really quite a display.

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": I'll say. It was awfully lively.

I think there are dangers to her in what she is doing, particularly in one that didn't get much reporting. But when she said she was asked is she for winning the war in Iraq or ending it, she said "I'm just for getting the troops out," which means she is not for winning the war.

Not that may not be a problem for her in the Democratic primaries. That is going to be a problem for her if she is the nominee. And I think Bill Clinton is going to be a problem.

That's what I have thought about.

HUME: What about the effectiveness in the current fight, which is for the Democratic nomination?

BARNES: Well, there's no difference between her and Obama, or between her and John Edwards either on Iraq. They all pretend like Iraq is lost, the surge means nothing, we just have to get the troops out, we don't care about winning.

But she was pretty explicit last night a way — I mean, you can put together a little pit in an ad that if the surge continues to be successful in Iraq, and there is more reconciliation and there is more diminishing of the violence and Iraq becomes a somewhat stable country — and there is a lot time between now and November when that could happen, I think that could hurt her.

The other thing is, she completely took no responsibility for her husband, Bill Clinton, being out there campaigning for her, pretending like he is just another one of the surrogates out there. Obama has surrogates and I have surrogates —

LIASSON: We all have spouses.

BARNES: We all have spouses.

The differences here is that it is beginning to look, at least to me, that there is a faint feeling of George and Laura Lee Wallace. Why did Laura Lee Wallace run and why was George Wallace for her? Because he wanted to govern again. He couldn't legally be governor of Alabama again. He had to wait some time.

So his wife, whose experience in the job market consisted of a dime store clerk, she got elected and he ran the country.

Does anybody think — Alabama, the country of Alabama — does anybody think that Bill Clinton is only doing this because he thinks his wife would be such a wonderful president, or does he want power back? Obviously he wants power back.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: That will hurt them in the general election, because everyone will look at this and see tag team wrestling and know that it will mean tag team governing. And I don't think America is ready for that.

HUME: Will it be a hillbilly White House?

KRAUTHAMMER: It will be a two-headed presidency, and a lot of people who don't like Bill or Hillary. But among Democrats, where Bill is extremely popular, in New Hampshire, the exit polling showed that five out of six Democrats had a good opinion of him, and more than a third would elect him today if they could.

He is a real asset. And I think when he attacks Obama, he has succeeded.

Their strategy ever since Iowa and that soaring speech that Obama gave after the Iowa victory was to bring him down off that perch. He was flying high as the transcendental, trans-generational, post-ideological, all the rubbish that you have read in the press — people swooning left and right over this new politics.

And the aim of the Clintons was to bring him into a fistfight, which is what happened last night. And even if Obama wins on points, he loses, because his appeal had been to be above all this. And the minute he gets in the street in a fight with Hillary and Bill, he loses.

And the Clintons are the best street fighters around, you know. You cross them, you end up with a horse's head in your bed.

BARNES: Can you imagine in 2000, when George W. Bush was running against Al Gore, can you imagine his father, former President Bush out there attacking every day Al Gore, distorting what Al Gore had said, and leading the charge against him?

No. You didn't see it, for one reason, because George H.W. Bush wasn't looking to come back in power again,. And besides, he was a decent guy who wouldn't do that thing anyway.

HUME: When we return with the panel, how much will the Fed rate cut help the economy, and how does this issue play politically? We'll talk about the whole issue of the economy next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: I believe we can find common ground to get something done that is big enough and effective enough so that an economy that is inherently strong gets a boost.

SEN. HARRY REID, SENATE MAJORITY LEADER, (D) NEVADA: We want this stimulus package to be dealing with the problems of the American people, not ideology. And we're anxious to see as quickly as we can see this move legislatively.

(END VIDEO CLIP)

HUME: So it appears that what Jim Angle has referred to as a Kumbaya moment may indeed occur, and that this president and this congress who have fought so roughly and repeatedly might come together on some kind of package to stimulate the economy.

In the meantime, of course, all the candidates out on the campaign trail have their own prescription. So what about what the Fed did today, a sudden and somewhat unexpected three-quarter rate cut — that's the biggest in something like 17 years, all at once.

BARNES: Since 1984, I think. It's like 24 years, a long time. It's a big rate cut, and it obviously worked.

In the first place, Brit, let me say this: this idea of $150 billion stimulus package is ludicrous. The world rendered its verdict on it on Monday and said we think the U.S. is going to have a recession, that what they're talking about, this stimulus package, isn't going to do anything, and markets fell all over the world.

HUME: Do you think that would have been different if on that day a stimulus package had passed?

BARNES: No, of course not. It's just to small to have any impact in the short run, and probably in the long run. The only idea that I have heard that I thought might have some impact was one that was in Mitt Romney's package, which is a little bigger than the others.

His is $250 billion or something like that, where you have 100 percent expensing — that means immediate depreciation for two years. And there not going to get anywhere near that. They'll have 50 percent for one year, or something like that.

But what the Fed did really did cut off what might have been a real sharp downturn in the stock market today, and continue to have some impact. But what they're talking about, the president and Harry Reid, is puny and won't have any impact.

KRAUTHAMMER: There are two issues here. You have the structural issue of the housing crisis and the credit crunch, which will take time to work itself out.

It is not a catastrophe. If you compare it, for example, the banks up to date have declared about a 0.7 percent of GDP loss. The SNL, the Savings and Loan crisis, was a 2.5 percent.

So, in historical standards, it's still not yet of catastrophic proportions. And that will work itself out. The stimulus will have no effect on that.

But what the stimulus package is doing is counteracting a second event, which was the oil shock that we have had over the last six months. The simple increase in oil prices since August has had the effect of siphoning $150 billion out of the economy. And this stimulus package is, no coincidence, exactly the same amount. It's a way to counteract the oil shock.

When we had a shock in '73 and '79, it caused a recession. So it's putting that money into the pockets of consumers, essentially neutralizing it.

But it will have no effect on the structural issue of the housing crisis, which is the real and ultimate cause of this turndown, and that's simply going to have to work itself out —

LIASSON: There is no short term solution to that.

KRAUTHAMMER: Exactly — over the next year or two.

LIASSON: You know, Fred, I agree that the stimulus package might be puny compared to the effect of the rate cut. On the other hand, politically, it is not puny, and it's going to be done. And both parties, as you can see, are rushing to work to get this done.

HUME: The ingredients of this bipartisanship are that the members of Congress feel that they can't have the same result they had last year with their standoff on the war. They need to —

LIASSON: They need to go home and say they did something, and there will be money in your pocket, Mr. and Mrs. Taxpayer or Social Security recipient, or however they are going to get it to them, fast.

BARNES: Don't hang around the mail box. It's not going to get there that fast.

This is to stimulate the voters. It's not going to stimulate the economy.

KRAUTHAMMER: It is easy to get sweetness and light and comedy when the issue is dropping money out of airplanes, which is exactly what this package is all about. There is not a lot of debate and difference over that. Everybody will benefit politically.

HUME: So will we get it?

KRAUTHAMMER: Absolutely. But if it takes six months, it's too late. It's got to happen right now.

LIASSON: I think we will get it.

HUME: What, in a month?

BARNES: We'll get something.

But I've been listening to Larry Kudlow, the economist who was formally in the Reagan administration, said the best thing we could do right now is eliminate the capital gains rate.

HUME: That won't happen.

BARNES: What it would do is it would deal with asset values. Ben Bernanke, the head of the Fed, said let's right now make permanent the cut in dividends. Good idea. It would help.

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