This is a rush transcript of "Special Report With Brit Hume" from April 4, 2008. This copy may not be in its final form and may be updated.

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SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: A mistake, I myself made long ago; I myself made long ago when I voted against a he federal holiday in memory of Dr. King. I was wrong.

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: I told him either we go up together or we go down together. And when he was killed, the following day, it left a wound on the soul of our nation that has not yet fully healed.

SEN. HILLARY CLINTON, (D) NEW YORK: And I remember hearing about it and just feeling such despair. I walked into my dorm room and took my book bag and hurled it across the room. It felt like everything had been shattered.

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BAIER: The three presidential candidates honoring Dr. Martin Luther King, Jr., 40 years after he was assassinated in Memphis.

Some analytical observations about today from Fred Barnes, Executive Editor of "The Weekly Standard," Mort Kondracke, Executive Editor of "Roll Call," and syndicated columnist Charles Krauthammer, FOX News contributors all.

Fred, John McCain went to the Lorraine motel today and gave a speech in which he apologized for opposing the federal holiday in memory of Dr. King. Was that an important step for him?

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": I think it was probably the right thing to do, but I would defend people who didn't immediately want a Martin Luther King holiday. When did it come up? About 25 years ago, in the early '80's, as I recall. And it takes a while to realize that some leaders are as great as they are.

Martin Luther King was a very controversial figure at the time, and we didn't—I don't think many people realized what a towering figure he was. Now, maybe everyone in the black community and others did, but someone who while Abraham Lincoln and George Washington have to share a holiday, he should have a separate one.

I think it is correct thing now, but we had successors in the civil rights movement, for one thing, to realize how great Martine Luther Kind really was.

And, of course, for McCain, though, just pure political correctness meant that he had to admit that he made a mistake.

BAIER: Here's what the Democratic National Committee put out about this today—"It's frankly disingenuous for John McCain to try and reinvent himself for the general election by distorting his record of opposing a holiday honoring Dr. King."

MORT KONDRAKE, EXECUTIVE EDITOR, "ROLL CALL": He didn't distort his record. He apologized. He said he was wrong. I don't know how much more you can say to that.

Look, in 1968, it was clear that Martin Luther King was a giant. It was clear—if it hadn't been clear before that, it was clear in 1963. The speech at the Lincoln Memorial established his place in history. He was the symbol of America, of the healing of this massive wound that had existed since the beginning of the republic.

And I remember 40 years ago this very weekend I came to Washington with a black crepe flying from the antenna of my car when we were coming here.

In any event—look, on a political basis, all these speeches, Barack Obama is going to get 90 percent of the African-American vote. To the extent that this was not just genuine expression of emotion, this was an appeal to moderates and liberals and independent whites.

I think McCain did the best he could possibly do under the circumstances. He says he's going to go campaign in African-American communities. I think that's great for a Republican. They have been ignoring them.

And Hillary Clinton was clearly trying to get the Edwards' vote by saying that she is going to appoint a cabinet level czar for poverty.

BAIER: Did it make a difference that Barack Obama didn't go to Memphis today, that he gave a speech at Ft. Wayne's town hall?

KONDRAKE: I don't think so.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think that this attack on McCain is a cheap shot.

Let's remember where he heard the news of the assassination of King. He heard it in a prisoner of war camp, told by his torturers. He was a guy who was not here at the time of these events, who was having airplanes shot out from under him at the time of the worst of the difficulties and violence and the attacks on civil rights marchers at that time.

So he didn't experience it as most Americans did; he wasn't here. And I think that helps explain why, as he said, it took him longer to appreciate the magnitude of what King had wrought, and I think his apology ought to be accepted as sincere.

King was a miracle in American history. I mean, it's remarkable that we should have had an African-American leader who saw the African-American story as a part of the American story and not antithetical, as a lot of successors in the civil rights movement had, including, I might say, Jeremiah Wright. And also a man who believed in nonviolence, which has a tradition in America—Thoreau and the Quakers, but it is an oddball tradition. He absorbed it from Gandhi and from India and from a Christian perspective of the Christ story, and that, I think, infused him.

It wasn't only a tactic. He believed in it, and by sharing it in a community at a time when it could have easily gone the other way, he created a revolution in America unlike any other, peaceful and successful, that only he could have done.

And that's why he's got a holiday, and that's why we remember his death all these years later.

BAIER: Last word from the panel.

Next up, public dissatisfaction with the way the country is headed. It's at an all time high according to one poll. We'll talk about the reasons and the political fallout coming up.

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CLINTON: I have consistently said what I thought needed to be done, you know, since last March, and I am continuing to sound the alarm. I feel like, you know, Paulette Revere. The recession is coming! The recession is coming!

OBAMA: I'm less concerned with the technical definitions of recession and more concerned with what I'm seeing on the ground every day, which is people are losing their jobs, they are losing their homes.

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BAIER: There is the two Democratic candidates talking about the economy, this as a new poll is out, "The New York Times"/CBS poll, about one question there, is the country on the right track or the wrong track? There you see it—81 percent in this poll say it is on the wrong track.

In the very same poll, take a look at this question—how is the financial situation in your household? You'll see 72 percent say very good or fairly good. That is the same poll by "The New York Times" and CBS News.

What about this and the status of the economy and how it's playing on the trail? We're back with our panel. Charles, you look at these numbers. Does this make for a Democratic year? What does it tell you?

KRAUTHAMMER: Well, it should. They're overwhelming numbers.

But I think what is really interesting here is that disconnect between people's impression of what is happening in the country and what's happening in their own household.

It's a huge split, and in general, if you ask over time, not only in a recessionary slowdown, you ask people how is the country doing—always worse than their own situation.

So in part, it's the media, because a lot of information about how the country is doing is received through the media, which, of course, extenuates the negative.

Of course, when you have a campaign where all of the attention is in the opposition among the Democrats, who attack the administration on the economy, it will be exaggerated.

You have the British newspaper, the Independent, where the headline just earlier this week had said "American Depression." There you have unemployment of 20 percent and higher, and now it is five percent.

So it is a huge difference, and I think there's really a perception that is accentuated that doesn't reflect the reality. It's interesting that in their own lives there's a sense of at least people are doing OK.

But it does make for a Democratic year, and I think it's a miracle that McCain is actually neck in neck in a year in which he ought to be 30 points behind at this point.

KONDRAKE: Look, people are not saying that they are terrified of unemployment, because the unemployment rate is not that high. It's five percent, or something like that. But they do know, they are complaining about high gasoline prices. They're complaining about high healthcare costs. Healthcare costs have eaten into compensation, worker compensation, to the point where wages have basically been flat during this recovery. People have not been making more money than they did in the past. And now they're losing their home equity.

All of that, you know, is a real downer. And, you know, I thought in this poll that fewer than half the people said that they expected their children to enjoy a better standard of living than they themselves do, and only a third thought that the next generation ask, asked a different way, I guess, would live a better life than they do today.

This is a pretty depressed outlook on the part of people.

And you're right, it should indicate that it's a Democratic year. John McCain is going to have to do a lot of explaining as to why his kind of economics is the right kind of economics in order to get through this.

BARNES: "The Wall Street Journal," Larry Kudlow, among others, and myself, have pointed out that—who does it remind you of when you have an economy in trouble and in a serious slowdown? Who was it that proposed in American history that we deal with it by raising taxes and by having higher tariffs, and cut off trade? Who did that? Herbert Hoover did that.

Now, what are Obama and Hillary Clinton proposing to deal with this downturn? Higher taxes, higher tariffs; no more free trade agreements with Colombia or any other countries. What does Hillary want? She wants a moratorium on trade agreements, and so on.

This 81 percent number is really high. When you compare it, say, to what was true California in 2003 when they had the recall election, it was 76 percent thought California was going the wrong way. And that meant out for Grey Davis and in for Arnold Schwarzenegger.

So this is not good news for Republicans.

BAIER: How is that Paulette Revere line?

KRAUTHAMMER: That's a plunker. That doesn't work.

BAIER: That's the final word from the panel, but stay tuned to see just how competitive Hillary Clinton really is.

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BAIER: Finally tonight, we all know the Clintons have a reputation of fighting for every vote, never giving up. Hillary Clinton now continually says on the campaign trail that she is in it to win it, and this week she compared herself to Rocky Balboa.

OK—she's competitive. But our friends at late night TV found out how competitive.

(BEGIN VIDEO CLIP) JAY LENO, HOST OF "THE TONIGHT SHOW": Roll the footage. Look at what's she does here. He shoots, and she comes out of nowhere.

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BAIER: Bowling and then basketball—he can't get a break. That is "Special Report" for this time. More news is on the way—fair and balanced, as always. Make it a great weekend.

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