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

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POLITICAL AD -- ANNOUNCER: One of his biggest fundraisers helped him buy his million dollar mansion, purchasing part of the property he couldn't afford. From Obama, Rezko got political favors, including $14 million from taxpayers. Now he's a convicted felon facing jail.

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POLITICAL AD -- ANNOUNCER: Call it "country club economics." How many houses does he own? John McCain says he can't even remember anymore.

Well, it's seven. No wonder McCain just said the fundamentals of our economy are strong, and anyone making less than $5 million a year is middle class.

Maybe McCain thinks this economy is working for folks like him, but how are things going for you?

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BRET BAIER, GUEST HOST: Two different ads there hitting the airwaves. This all has to do with this back and forth over a question John McCain was asked, how many houses do you and Mrs. McCain own? He did not have an answer right away, and that has spurred this back and forth. You saw Tony Rezko being mentioned by the McCain ad.

Now, today Barack Obama was asked about this charge of John McCain being elitist. Take a listen to this interview.

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SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: For John McCain to suggest that I am somehow elitist, which he has said-

UNIDENTIFIED MALE: Well, you did say, by the way, you made $4 million.

OBAMA: Well, over the last two years. John McCain has been living like this for the last 25.

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BAIER: When they made the money.

We're back with the panel. Some analytical observations about all of this from Fred Barnes, Executive Editor of The Weekly Standard, Nina Easton, Washington Bureau Chief of Fortune magazine, and Mort Kondrake, Executive Editor of Roll Call, FOX News contributors all.

Fred, you were laughing at that answer.

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": I don't think that softens a lot. It was $4 million over two years he said, not one year.

And for Obama to say he is not an elitist is silly, because of course he is. He was a law school professor and he lives in Hyde Park, one of these, you know, hoity-toity, heavily academic suburbs of Chicago.

On the other hand, in the ads, the Obama ad is certainly a lot better, and grabs on a point, a clear point that I think people understand than the Rezko ad that the McCain people did.

The McCain people, if I were in their shoes, I'd drop the subject. You don't need to go back and forth on this. This is not something that is going to help McCain. I don't think it's hurting him much, but the longer it goes, it might.

BAIER: Nina, could the Democrats overreach on this one? Could they go too far, or no?

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: Absolutely not. I think this was a gift that will keep on giving for them for one reason, and that's that when people see John McCain, they tend to think of him as Vietnam vet and so on, an senator. They don't think of him as a wealthy man.

And Cindy McCain is a very wealthy woman, and you saw the news all day. -- This was very smart of the Obama campaign, by the way, is to keep off the VP announcement all day today so that you could play this over and over again, but we now know about Cindy McCain had a condominium, a multi-million dollar condominium in San Diego and she didn't like sharing it with her kids, so she bought another multi-million dollar condominium.

BAIER: So he's married to a rich woman, and that somehow is a negative on him?

EASTON: It's going hurt him. First of all, the economy is the number one issue, as we all know. It's bad economic times. People are feeling the strain, and it hurts him, because it defines him as a wealthy man, and he wasn't defined like that before.

MORT KONDRAKE, EXECUTIVE EDITOR, ROLL CALL: Look, I think that this ought to kill the elitism issue. Face it--they're both elitists in their own way. He is an intellectual elitist, and McCain is an economic elitist. I mean, he is "traveling with the rich." He he's been traveling with the rich for a long time.

What they ought to do is forget about character identification or assassination or whatever it is that elitism is all about and start concentrating on policy, for heaven's sakes.

I hate to be a wonk about this, but one candidate or the other ought to be --both candidates ought to be, arguing about which of their economic philosophies is better for ordinary people.

And I think Obama has a pretty strong case that continuing, basically, the Bush trickle-down economics--trickle-down economics has not worked for the average person in the past eight years, and repeating it without better adjustment in some way is not going to work for the ordinary American in the next eight years.

I think that's a dynamite argument for Obama.

(CROSSTALK)

BAIER: McCain is an elitist, with his history, it's tough to pin that on John McCain.

KONDRAKE: He doesn't look like an elitist, he doesn't act like an elitist. He just is very rich--maybe by marriage.

BARNES: The notion that somehow people say "John McCain is rich, I'm against him now"? Utter nonsense!

EASTON: No, no, wait, wait, wait. Can I answer that? It feeds into the whole problem that McCain is having on the economy, his gaffe starting back with, you know, I don't know much about the economy. It is part and parcel of a larger package. So it does hurt him.

BARNES: McCain has a problem on the economy because the economy is sour. In fact, though, when he says it's fundamentally sound, it is obviously fundamentally sound because of all the hits it has taken, no recession. You know Mort's going to owe me $10 on this!

(LAUGHTER)

BAIER: Here is another issue coming up as we head to Denver--Hillary Clinton and her role there. At a speech in Florida last night she said "I need a president who will work with me, who will be there for the people I care about, that I get up and fight for every single day."

She went on to say that is Senator Obama.

Today she had this to say:

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SEN. HILLARY CLINTON, (D) NEW YORK: I have always said that I will do whatever I can because I feel so strongly in making sure that we elect Senator Obama our next president.

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BAIER: Mort, Major Garrett said some of the speculation out there is that this VP announcement hasn't come because this they're trying to take some of the sting out of the Clintons' first two days controlling the story in Denver. What do you think of that theory?

KONDRAKE: Look, the announcement has got to come before Saturday before he appears in Springfield. If it doesn't happen then, people are going to start--

BAIER: They waited this long--

KONDRAKE: Look, I think that the waiting has built up suspense. It's demonstrated incredible discipline on the part of the Obama campaign to keep this from leaking. And a little bit of it is a game and maybe played over the top a little bit, but, nonetheless, I think it has been pretty effective. And everybody is going to be watching on Saturday.

EASTON: And it showed also, it revealed all of us on cable TV playing along with this game that they have set up for us, because all day long, breathlessly waiting, any minute it's going to happen, any minute there is going to be announcement.

The effect of that is that there are more people calling in to give the Obama campaign their cell phone number because that's how they're going to communicate this. So the media bought into this whole get out the vote effort by the Obama campaign today.

BARNES: If you think that that will affect the outcome of this election in even the tiniest way, you're nuts -- because it's not at all.

What is happening here, the only think is they dragged out the announcement and so some reporters are irritated because they thought it was going to come early. Does the average person care whether it's Saturday or Sunday or whether it's tonight or whether it's right after this show? No, not at all.

BAIER: And what about the Hillary Clinton/Bill Clinton storyline in Denver?

BARNES: There is only one story right now that people are interested in Denver, and that is the Tuesday night speech by Hillary Clinton. That's the big story.

Now, it may, after she gives it, we may forget about it, and then we'll go to the veep speech and the Obama speech. Right now, it's the Hillary one, though.

BAIER: Man, the "beltway boys" come back, and suddenly things get fiery.

All right, the U.S. and Iraq are said to be close to a deal that includes U.S. troop withdrawal timelines. How will that affect the presidential race? We'll talk about it after the break.

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GORDON JOHNDROE, WHITE HOUSE SPOKESMAN: We announced that as part of any agreement with the Iraqis establishing our future bilateral relationship would include aspirational time horizons, goals for when Iraqi troops begin to take over more of the combat missions in various parts of Iraq, which allow for more U.S. troops to come home.

President Bush and Prime Minister Maliki had a good conversation this morning in discussing the agreement, and our team and the Iraqi team are continuing discussions now.

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BAIER: Gordon Johndroe, the spokesman for the National Security Council talking about a draft agreement, not a done deal yet, according to him, between the U.S. and the Iraqis.

And, basically, we're getting word that the draft agreement will include getting all U.S. troops out of Iraqi cities and villages by June of next year, also all combat troops out of Iraq by 2011. Currently there are about 140,000 U.S. forces in Iraq.

We're back with the panel. Nina, the interesting words there were "aspirational time horizons."

EASTON: I loved that. It's no longer "timetables for withdrawal." It's "aspirational time horizon."

However you cut it, it is a pretty aggressive withdrawal plan. And I do think politically, if we're going to look at it how it affects the candidates in the race, it does take some wind out of the sails for John McCain in terms of attacking Barack Obama for saying you said a withdrawal timetable or an "aspirational time horizon," or whatever you call it, then you're getting into terrorists and you're leaving a situation.

Let me just finish -- I think what it does is it continues John McCain's effort to switch the conversation to the surge, to continue to say over and over again, look, Barack Obama was wrong about the surge. His judgment was bad. The reason that we can have this withdrawal is because I alone pushed this surge.

And that's what we're going to continue seeing John McCain do.

BAIER: The thing that we're not talking about here are three words: "conditioned-based withdrawal," which will, I guarantee you, be on the bottom of every page of whatever agreement is signed between the U.S. and Iraq.

And how does that fit in politically? Does that somehow affect McCain?

KONDRAKE: I think as long as that language is in there, McCain can still say that this is not a hard and fast deadline of the kind that Obama was in favor of.

In fact, Obama wanted all combat troops out in March of this year. Now, if they had been out in March of this year, we would have lost in Iraq. And I think McCain will say that over and over and over again, and he should.

Now, there was an interview in The New York Times played way back in the paper with David Petraeus, who said that the conditions, as he is leaving office, the conditions in Iraq are obviously favorable but fragile. And part of the outcome of this depends on American troops still being there in order to help out the Iraqis.

I think that's a very important point, and if anybody knows what's going on in Iraq, it ought to be Petraeus.

BAIER: Senator Obama released this statement today. He said "I am glad that the administration has finally shifted to accepting a timetable for the removal of our combat troops from Iraq.

Success in Iraq depends on an Iraqi government that is reconciling its differences, taking responsibility for its future, and a timetable is the best way to press the Iraqis to do just that. I welcome the growing convergence around this pragmatic and responsible position."

Nothing about a "conditions-based withdrawal" there.

BARNES: Here is what is going to happen. I think politically this means one thing. You have to remember that what is being negotiated here, a status of forces agreement, which you only negotiate when you have won, you've won the war! And then you negotiate when your troops will leave and how many stay.

And there will be a substantial body of troops. They won't call it "combat troops," who will stay there, not permanently, but for a long time. And they will be a deterrent against any enemies of Iraq. They will make Iraq even stronger as a buffer against Iran, and it will be an Arab democratic country in the heart of the Middle East.

But politically in this race, I think it means that--or it helps mean that Iraq won't hurt the Republicans. I mean Iraq was a huge drag in 2006, and it won't be in 2008.

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