This is a rush transcript of "Special Report With Brit Hume" from May 2, 2008. This copy may not be in its final form and may be updated.
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SEN. HILLARY CLINTON, (D) NEW YORK: This primary election on Tuesday is a game changer. This is going to make a huge difference in what happens going forward.
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SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: What I want to do is make sure I'm finishing strong, that I'm talking about to the American people about their hopes, their dreams, that they feel confident that the solutions I'm offering and the kind of politics that I've been promoting will make a difference in their lives.
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BRET BAIER, GUEST HOST: Senators Hillary Clinton and Barack Obama talking about the prospects for Tuesday's primaries in Indiana and North Carolina.
Let's take a quick look at the average of the polls, the RealClearPolitics.com averages. Indiana as it stands now—Hillary Clinton is up 47.5 percent to 43.1 percent. In North Carolina Barack Obama holds the lead, 49.5 percent to 41.3 percent. Again, these are the averages of the polls.
Now let's get the analysis of what is ahead this week. Some observations of from Fred Barnes of The Weekly Standard, Mort Kondracke, Executive Editor of "Roll Call," and syndicated columnist Charles Krauthammer, FOX News contributors all.
Fred, how does it look to you?
FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": Well, I think Indiana looks pretty good for Hillary Clinton. Remember that Barack Obama usually over-polls a few points. In the realclear average she was eight points behind. He doesn't over-poll that much. She will have to get closer than that.
There is this history—in almost every primary where the late deciders have gone for her for a variety of reasons. Here's what she needs though. Unless there is some breakthrough here, Barack Obama is going to be the Democratic nominee.
She needs to win a big primary upset. North Carolina would qualify and maybe Oregon in a few weeks would qualify as one where Obama is supposed to win. I think she also needs to really gain a lot in the popular vote—the way the system is, she can only gain so much among delegates.
And then the real sign that she's going somewhere will be if super delegates who have endorsed Obama switch to her. Now, we have seen a few go the other way, like Joe Andrew this week, but we haven't seen a single Obama superdelegate — and they are not bound — we haven't seen one switch from him to her.
If that starts happens, then we will know something is really up.
BAIER: Mort, you heard her today say potentially Tuesday is a game changer. How is it a game changer?
MORT KONDRAKE, EXECUTIVE EDITOR, ROLL CALL: It would be a significant game changer if she won both Indiana and North Carolina. He has been ahead in North Carolina by up to 20 points. That was overstating it, but he is up by, what, nine now.
And if she were to pull that one out, that would cause superdelegates, I think, to stop going in his direction and wait. And if it's a split, which everybody expects it to be, this thing is just going to go on and on and on.
I think one other thing that could conceivably be a game changer is if match-ups between McCain and the two of them begin to show a wide disparity in her favor, it's something like six points that she now beats McCain and I think Obama is now tied, that that would have to continue over a period of time and get wider and wider and make it obvious that white working class people are simply not going to vote for him and that they would vote for her.
I think those things could be game changers. Otherwise, he's ahead in delegates. He going to stay ahead in regular delegates because the African-American districts have more delegates in them. He carries them by a wide margin, so he gets those.
And the popular vote, she would have to—I don't see how she can catch up. I did some math on this, and I don't think she can catch up.
BAIER: Charles, we have been talking this week, obviously, about Reverend Wright and what the impact of that is on Obama. Rasmussen has a new poll out saying—the question was how likely is it that Obama shares Wright's views? Somewhat likely—30 percent, very likely—26 percent.
And was he outraged, or was it politically convenient to come out and say what he said? Outrage—30 percent, politically convenient—58 percent.
What do you take from those polls and the issue for Obama?
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think he has been obviously hurt, and I think it's a permanent amount of damage. But I'm not sure it increases.
I think the real problem, and I think the thing that Democrats will have to consider, is that if Wright reemerges—now he is quiet again and he could remain quiet. But if he reemerges, and he has a book coming out later in the year, and if he is on a tour—if he repeats his rant, it's not going to make a difference, it's not going to hurt Obama additionally.
But there is one thing he could do, and that is if he contradicts Obama's claims— oft repeated that he didn't know about any of his views.
Let's say he talks about a couple of meetings he had had in private in which he talked about AIDS or 9/11, or he says he was in the pew when I spoke about X, Y and Z. If he did that, that would undermine Obama's veracity, and make him out to be a liar.
It would reignite the issue in a different way. It would be Obama as the man who talks straight and is honest in a new kind of politics.
In that sense he's hostage, because Wright is out there the whole time, and if he decides he wants to say something like that, that would destroy Obama.
I think Democrats have to have that in the back of their minds.
BAIER: Will we hear Obama on Wright before Tuesday?
KRAUTHAMMER: No. I think this episode is over. I think he stops the bleeding by renouncing—
BARNES: He's going to be on "Meet the Press" this weekend.
BAIER: He will be asked about it, of course, but is he going to initiate it.
KONDRAKE: His problem is that it constantly keeps coming up. He can't change the subject. This gas tax thing is not superseding the Wright affair.
BAIER: That's the last word here.
When our panel returns, is the economy starting to recover, or are new numbers heading in the right direction just a blip on the screen? We'll hash it out when we come back.
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GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: We're a resilient economy because we have good capable, smart, hard working people in America.
I know it's tough times, and I know you are having to pay more at the fuel pump than you want, but this economy is going to come on. I'm confident it will.
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SEN. CHUCK SCHUMER, (D- N.Y.): The stimulus checks families receive in the mail next month will in all likelihood go to pay eye-popping gas and grocery bills this summer and end up in the coffers of countries like Saudi Arabia.
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BAIER: There's President Bush and Senator Chuck Schumer today talking about the economy on the day the Labor Department reported 20,000 jobs were lost last month, fewer than expected. So moderate news, not great news.
What about the economy as an issue? We're back with the panel. Fred, what do you think about the numbers and how it is shaping up? The president insists this economy is going to bounce back.
BARNES: He would say that anyway, and I think he is basically right. Look at the things that have happened that we just found out today. Factory orders are up, the jobless rate declined a tenth of a point, and the stock market, which is always a bet on the future, finished its close today with the high close of the year, its peak.
Those things are not consistent with a recession. We obviously have a slow, weak economy, but a recession is something in particular—it's two quarters of negative growth—and I think these indicate to me, and I'm not an economist, but economists are usually wrong in predicting recessions because we have one out of every five recessions that they predict.
I don't think we will have one.
KONDRAKE: If, even if we don't have one, there are two things—what is the economy going to be like around June or July which is politically when people make up their minds about the general shape of the economy is. Are we still sluggish? Are, you know, gas prices still astronomically high? And what is people's attitude about it?
People have been negative about the economy for as long as I can remember, practically. Even when it was good they thought it was bad. And when you asked people, the Pew poll asked who you trust on economic policy, McCain or either of the Democratic candidates? It was like 55 for the Democrats and 33 for McCain.
McCain has now adopted the Bush tax cut position. He's going to have to defend that and explain why that kind of economy is better than the Democratic economy.
BAIER: The White House, Charles, insist that we should give it time, let the rebate checks set in. Democrats on the hill are pushing for a second stimulus package. What do you think it shapes up as come election time?
KRAUTHAMMER: Let me just stipulate that if any of us on the panel knew which way the economy and the market were headed, we wouldn't be on the panel, we would be watching it from our yacht in the Aegean while getting a pedicure.
With that said, I agree with Fred, I think we are bottoming out, so I'm willing to go out on a limb here.
And what's interesting here is how the easing of the Fed, I think the fact that it's now stopping the easing—it's signaled that it is not going to lower rates anymore—I think is actually going to help us, because as it eased, the dollar got weaker, and, as a result, oil went sky high. Oil reacts if the dollar is weak. Commodities rise, and the one that really hurts Americans is oil.
With the signal that the easing has stopped, oil had dropped $8 yesterday and today. And it's the oil, I think.
And it's a huge tax on our economy, a doubling of the price of oil in the last year, and that tax doesn't even end up in our government. It ends up in Saudi Arabia.
The oil, I think, is the real key here. On the mortgage issue, I think, we're actually getting it under control, but oil is killing the economy.
BAIER: That's it for the panel.
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