This is a rush transcript of "Special Report With Brit Hume" from October 16, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

JOE WURZELBACHER, PLUMBER: I have to buy supplies from other companies. And if he comes out and raises taxes on those other companies, then that hurts me eventually.

It starts at the top. It doesn't come from the bottom up.

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: Here is a guy that has a chance to realize the American dream, working hard all his life, and yet he is going to reach a tipping point in Senator Obama's estimate that we now have to spread the wealth.

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: How much plumbers do you know making a quarter million dollars a year?

I have a different set of priorities. I'll give a middle class tax cut to 95 percent of all workers.

(END VIDEO CLIP)

BRIT HUME, HOST: Well, that might be kind of hard to do since 95 percent of all workers don't pay income taxes, but, hey.

Some thoughts on the debate engendered by Joe from Mort Kondracke, Executive Editor of Roll Call, Nina Easton, Washington Bureau Chief of Fortune magazine, and Charles Krauthammer, FOX News contributors all.

Well, I suppose if you were looking for a way to get this debate into a nutshell, Mort, the case of Joe, the man who would like to own the plumbing company he works for and is worried about a tax increase because he would be in an upper bracket by Barack Obama would be a good place to start. What do you think?

MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: It's an interesting, fascinating of the debate.

One, Joe, apparently, is a Republican to begin with. He is not your average independent voter. He voted in the Republican primary this year.

Two, judging by his press conference, he thinks that the graduated income tax is socialism. So he's —

HUME: So he's a nut case?

KONDRACKE: No. He's approaching this from the right, shall we say, to begin with. Three —

HUME: But what about the issue he raises?

KONDRACKE: OK. He doesn't make $250,000 a year now.

HUME: He wouldn't. He said that. He is think that he would if he owned the company.

KONDRACKE: So under Obama's plan he would get a tax cut.

HUME: Yes, but he is talking about what would happen — the whole premise is if he bought that company —

KONDRACKE: He buys the company. He gets an SDA loan from Obama to start the company. He gets no capital gains, unless his company is making over $250,000 a year. He gets a job creation tax credit if he hires somebody.

So unless he nets after — as a gross — I'm sorry — a net profit of more than $250,000 a year, he is not going to pay any more taxes, even if he starts this business.

If he makes over $250,000 a year total net profit, he will be taxed at the rate he would have been taxed under Bill Clinton. That did not destroy the American economy.

HUME: But it would be more than he would be taxed now.

KONDRACKE: Yes.

HUME: OK.

KONDRACKE: But starting out this business, buying this little business of his, he is not going to be making over $250,000 a year in profit.

NINA EASTON, FORTUNE MAGAZINE: From a political standpoint, the issue is less Joe than what Barack Obama said, "We need to share the wealth."

HUME: Barack Obama made no secret of the idea that he is perfectly happy if this guy makes that kind of money to take it from him to spread it around.

EASTON: To share the wealth. And, of course, the flipside is to penalize success, right?

And John McCain, I think, for several months has had — the greatest vulnerability of Barack Obama is his liberal voting record and his inexperience.

For months, now, John McCain has been unable to go after Barack Obama too effectively on the liberal Democrat part because he's got Republicans in the White House who are spending billions of dollars to intervene in the financial markets, who are nationalizing banks, who are big government spenders. It's hard to make that case in this environment.

I think McCain hit on a very effective way last night to make the case about why he is potentially dangerous liberal to independents. I think it's probably too late in the game, but I do think it's an effective argument.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think McCain had an amazing stroke of luck. Here comes a guy out of nowhere, and he makes the philosophical case that McCain has been unable to make.

You take the Obama notion that the government's role is to spread the wealth.

You add to that the answer that Obama had given in the Democratic debates to Charlie Gibson when he asked him about Obama's proposal of raising capital gains rates, which Obama explained is a way to be fair — you don't want the rich guys to own Wall Street and to get away with keeping that much money.

Gibson then responds, but historically when you cut the rates, it increases the government revenue. So if you increase the rates, you may actually hurt the government and decrease its revenues. And Obama persisted in saying he would still do it on the grounds of fairness.

So spread the wealth. You raise the capital gains rates even if it hurts the government, and add Biden's statement that paying taxes is patriotic.

There you have the great difference between Republicans and Democrats. The Republican thinks tax is a necessary evil to raise money to accomplish stuff government has to do. The Democrats see it also as a way to redistribute wealth.

That's a big issue that McCain can exploit, because most Americans believe that the Republican stand on that that is correct and the other is a kind of social democratic idea which you see in Europe but is not the American tradition.

EASTON: What you're going to see from Obama is, again, where he consistently says I'm going to cut 95 percent of the people, which you may dispute, but that's the case he makes over and over again.

And what Obama's economic people will tell you, and I'm sure we will be hearing this in the next couple of weeks, is that Bush's tax policies, what they did was they worsened a growing inequality between the classes. So all he is doing is shifting it back to Clinton era, when it was more fair.

KONDRACKE: And what Obama, if he was smart would say, spread the wealth-"What I mean by spread the wealth is to create opportunity." That is what America has always done, is to give —

HUME: That's not what he is doing on the tax code. He talking about making sure people get other people's money.

KONDRACKE: No. I think when he engaged Jo on that street, he ought to have said-Let's see, Joe. How are you going to start your business? Here is how I'm going to help you start that business.

HUME: But, basically, what Joe did was to give him a scenario. What you're saying is that that scenario might not actually apply to Joe. But Obama didn't know. All he was answering was the scenario.

It might not have apply to Joe, but it might apply to a lot of other people. What has made it interesting was not Joe — Joe himself is kind of interesting because he is a compelling character-but what is really interesting is what Obama said, wouldn't you agree?

KONDRACKE: And, furthermore, Obama promised at one point that he would not raise taxes in the middle of a recession. It seems to me that he ought to go back to that position because it makes no sense to raise taxes in a recession.

HUME: If Obama wins and Democrats maintain majorities in congress, as they are expected to do, what will that sweep mean for this country? We'll talk about that next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCAIN: Were my opponent elected with a Democratic Congress in power, not only would there be no check on my opponent's reckless economic policies, there would be considerable pressure on him to tax and spend even more.

(END VIDEO CLIP)

HUME: The scenario that Senator McCain describes there is probably a plausible one if you assume an Obama election. It is hard to imagine that the Congress would continue within the Democratic control to flip either house. So his scenario is realistic if Obama is elected.

So what about this parade of horribles that he describes in part there, Mort? What would it be like?

KONDRACKE: Well, I think that it's a good point. And it seems to me that every Republican candidate for the Senate ought to make that same argument — "I'm all that stands between the country and Harry Reid and Nancy Pelosi running things."

Just think about what they wanted to do in the $700 billion rescue package. They wanted to put union representatives on the boards of the various banks that were being taken over. They wanted to give money to ACORN to go out and round people up to help them refinance their mortgages.

You know, the Democrats have complained, legitimately so, that George Bush raised the national debt from $5 trillion to $10 trillion, but they abandoned pay-go too, the idea of paying as you go.

And now the stimulus package that was $60 billion, which the president threatened to veto and never passed the Senate either, Nancy Pelosi wants to raise to $300 billion.

So I think that the proclivity of the Democrats to tax and spend if they have 60 votes in the Senate will be enormous, and it will put pressure on Obama to go left.

HUME: And is there any reason to believe, Nina, that if Harry Reid, Nancy Pelosi, and Barack Obama are all in power, that Obama would be able to actually confine his tax increases to people making less than $250,000 a year, or $200,000 a year, or would it inevitably end up taxing at a higher rate more people?

EASTON: Keep in mind the Democrats take pride in the fact that they have had a balanced budget at the end of the '90's.

HUME: But they were not in power then in congress, Nina. The Republicans had control of the Congress then.

EASTON: When you talk to Democratic strategists, though, they consider themselves, and they want to portray themselves to the American public, as the folks who are more responsible in spending.

HUME: So Reid and Pelosi would be a break on Obama?

EASTON: No, I'm saying these are the people around Obama. And I'm not saying that would be a break, but I do think that there are moderate spending forces within the party that could pose a break.

One place where there won't — and I do think there could be splits within the party, over trade, for example, over treatment of corporations, for example. Obama wants to penalize companies that move overseas. That's not going to go over well with some more moderate Democrats.

But the one thing I think you're going to see wide agreement on, and it's really profound, is unionization, this card check legislation that is going to enable unions to unionize much easier. It's broadly supported among Democrats. It's going to — it's going to increase —

HUME: This would be the end of the secret ballot union elections?

EASTON: Exactly.

Let me just finish — it is going to increase the base of the Democratic Party throughout the country.

KRAUTHAMMER: If Obama wins the push left will be unprecedented. It's not because of the personalities of Obama, Pelosi, and Reid, who are all essentially liberal. It will be, in part, as a result of what has happen in the last couple of months.

The philosophical and ideological and psychological barriers against government intervention have been shattered in the last month.

We had, in the last week, a Republican government bringing in the heads of nine banks, handing them a piece of paper, and saying we are now going to be a partner. That kind of stuff happened in Peron's Argentina and in Chavez's Venezuela.

And in a banana republic you have a gun on the table. Here you didn't have to have a gun.

This kind of intervention, the stuff that liberals would have never dreamed about, now it's happened. The barrier against expansion of that is gone. And the Democrats in power controlling the presidency and the Congress are going to be irresistible in expanding and exploiting that.

HUME: That is it for the panel.

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