This is a rush transcript of "Special Report With Brit Hume" from December 3, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT-ELECT BARACK OBAMA: This will start helping homeowners in a serious way to prevent foreclosures. The deteriorating assets in the financial markets are rooted in the deterioration of people being able to pay their mortgages and stay in their homes.

And if we help Main Street, ultimately we're going to help Wall Street. So that's an area that I'm particularly interested in.

(END VIDEO CLIP)

BRET BAIER, GUEST HOST: There you see President-elect Obama talking about helping home owners after a question was tossed to him about what to do with the remainder of the money in the $700 billion financial rescue package that Congress allotted.

Now, tonight we have breaking details from FOX Business News Peter Barnes and The Wall Street Journal that Treasury Secretary Henry Paulson is, in fact, considering a new program, a massive program to jump start the struggling housing market by financing new mortgages, and mortgage refinancing at an interest rate of 4.5 percent.

What about this? Some analytical observations from Fred Barnes, executive editor of The Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer — FOX News contributors all.

Fred, you have read over some of the details as this is developing that they are considering. What do you think of this?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Well, the deal with what's missing in the whole economic program and the bailout program, what they haven't dealt with yet is what they were initially supposed to, and that is all the bad loans out there that are on the books of banks, and one of the great impediments for banks to start lending.

And so this proposal would have actually the government come in and let people choose whether they wanted to take one of these loans, if it were four percent or 4.5 percent.

Larry Lindsay, the former economic adviser for President George W. Bush in his first term, has proposed a program exactly like this. He says four percent, could be higher. It would be a great saving on their payments every month for anybody who wanted to stay in his home.

And what this plan would do is it would divide up the people with questionable loans.

If you really planned to stay in your home and wanted to pay off your mortgage, you would take one of these new deals from the federal government because it would be much lower and you would save money. But if you were somebody who didn't plan to and weren't going to pay off your home loan, and you probably couldn't anyway, then you wouldn't join it.

So it would be clear after a while who wanted to stay and who didn't, and you would foreclose on those other people, and the people who wanted to stay would get theirs, and it would clear up this problem where nobody knows, you know, how these mortgages stand, how these loans stand, the people who wanted to stay, and those who didn't.

BAIER: Mara, it would also require Treasury Secretary Paulson to go to Congress and go into the second $350 billion, that originally he said he wasn't going to touch, for the Obama administration to deal with, and Tim Geithner to deal with as treasury secretary.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Almost every single thing Hank Paulson says, in a day or two he thinks differently. And I don't think that is a terrible thing necessarily.

This is a really scary situation for people, for policymakers. They're not quite sure what to do, and they've been trying something different every week.

This seems to have a kind of consensus behind it. Certainly Obama looks at this kind of approach favorably.

But it shows you how hard it's been. Now we are certainly over a trillion dollars in what government has put into the economy to try to stimulate it. It shows you how hard it has been to make this work.

And the scary thing for people is whether or not they're pushing on a string or whether they will figure out the key to stabilizing this. Maybe this massive mortgage refinancing is the trick.

BAIER: Charles, one would assume that Tim Geithner, the incoming treasury secretary, the designate, is intimately involved in any discussions on what's going on. But still, this is a massive program.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: And it's Henry Paulson. I mean, look, you know, Henry Paulson has woken up with yet a new idea. Gird your loins, as the vice-president would say.

Look, he has done a good job, I think, in the sense that our economy is afloat, but he sure has introduced uncertainty.

By my count, this is plan c. Remember, the original TARP, the original buying up of the troubled assets, did not happen, which was going to be a way to bail out the banks. It was shelved because it was either impossible to implement or would look as if it was a gift to the banks.

So he went to the injecting of capital into the banks, which has been to some extent a success. The overnight lending rate, which at the peak of the crisis was at 6.8 percent, is now at 0.8 percent. So lending has been resumed. But, of course, we're looking over a cliff into a deeper recession, which is now why he looks as if he has a TARP nostalgia. He wants to return to the original issue of the mortgages. And now he wants to do it, apparently, by injecting it into the homeowner.

I think it's a good idea. I think a lot of the McCain advisers had advocated this, including Martin Feldstein at Harvard, but it is a little bit late, and, again it introduces a huge amount of new uncertainty.

BARNES: It's late, but there is a history here. Remember, the Japanese had a recession for almost the entire 1990s, and the reason was they never cleared these bad loans off the banks' balance sheets. And that's why something like this was necessary. And I agree, it is a good idea.

BAIER: The Democratic dream of a filibuster-proof majority in the Senate is over for now. We'll talk about the state of the Senate following Tuesday's Georgia runoff when the panel returns.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. SAXBY CHAMBLISS, R-GA.: You have delivered a message that a balance of government in Washington is necessary. And that's not only what the people of Georgia want but what the people of America want and have demanded by their participation.

(END VIDEO CLIP)

BAIER: Saxby Chambliss winning a runoff yesterday in Georgia by 57 percent of the vote, a much bigger spread than anyone thought, in the race against Jim Martin, the Democrat.

Let's start with the — we are back with the panel. The state of the Senate, Charles, what did that race tell us. As we looked at it, it was going to be very close heading in.

KRAUTHAMMER: What's remarkable is I think it was not so much a victory for Chambliss or the Republicans, but Barack Obama, ironically. If the Republicans can't win a straight up Senate race in Georgia, they ought to disband and join a country club. But Obama ends up as a man who is winner here because in the original election, Chambliss won by three points with Obama on the ballot. With Obama off the ballot he wins by 15. You do the math, and you end up with an Obama coattail of 12.

That is absolutely huge, and I think it is a message he can send to Democrats in the House and the Senate, meaning cross me in the next our years. If you want my help, it translates into real results.

And if you also want reelection in 2012, you are going to want a successful Obama presidency. You want a president Obama as popular then as he is today, and you might use those 12 coattail points.

It may not be 12 in 2012, but even if it is three or four or five, it could be enough to drag a Democrat over the finish line.

BAIER: As a motorcade goes by outside. I do not know if we can hear that.

Mara, a couple of other openings here, obviously — Senator Obama's seat in Illinois, Senator Clinton's seat in New York.

LIASSON: Lots of fun speculation about who might replace him, including names like Bill Clinton to take his wife's seat, Andrew Cuomo, who is the attorney general of New York.

What is really interesting about all this speculation from Washington about who are the candidates who are replacing these senators who are moving on, is that it looks so different when you actually go to the states.

These are appointments made by governors. They have their own political imperatives. And what people in Washington think would be the appropriate replacement for Hillary Clinton or Barack Obama might look very different to a David Paterson or to a Rod Blagojevich, who is in —

BAIER: Governor of New York and Governor of Illinois.

LIASSON: — terrible trouble, and has his own political pressures.

But you're going to get names shortly after the new year and I bet they won't be the ones we're talking about today.

BAIER: Any chance Bill Clinton?

LIASSON: I just can't imagine it — to go to be one in 100, as opposed to what he is now.

KRAUTHAMMER: However much we journalists wish it.

LIASSON: Yes, it would be so much fun.

BARNES: I can imagine it. I can imagine that Bill Clinton would like to be a senator. But I suspect it will not happen.

BAIER: What about Florida — open seat — Mel Martinez says he is not running in 2010?

BARNES: Jeb Bush says he is considering running. That was the most amazing thing.

Mel Martinez, I think, is leaving because he wants to go back to Florida. He could have won reelection. 2010 will certainly be a better Republican year that 2006 and 2008. And he was not in bad shape.

But he is not going to run. If Jeb Bush says he is considering running, that means he is probably going to run. But for the moment, it freezes the field. No other Republican is going to get in because they know they couldn't get any support. Everybody will wait for Jeb.

I think he is running. And he had 70 percent popularity when he started as governor. He had 70 percent popularity when he left eight years ago. That is pretty good.

BAIER: And one senate race remains — Minnesota, Norm Coleman leading by 303 votes over Al Franken, who says he could challenge in court or in the U.S. Senate. We shall see.

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