This is a rush transcript of "Special Report With Bret Baier" from January 18, 2010. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

MARTHA COAKLEY, DEMOCRATIC CANDIDATE FOR U.S. SENATE: I think the president has come here because he knows that I'm going to win tomorrow and he is trying to get that message out.

PRESIDENT BARACK OBAMA: I would think long and hard about getting in that truck with Martha's opponent.

(LAUGHTER)

It might not take you where you want to go.

Look, forget the ads, everybody can run slick ads. Forget the truck. Everybody can buy a truck.

(LAUGHTER)

SCOTT BROWN, REPUBLICAN CANDIDATE FOR U.S. SENATE: We have some very serious economic problems where people are hurting. Unfortunately, because of some of the policies that are happening in Washington, people can't afford to buy trucks.

(END VIDEO CLIP)

BRET BAIER, HOST: The sights and sounds there of the Massachusetts Senate race for the special election. And this comes on a day when we have five new polls released. Of the five polls here, and there you can see them all, there is one poll that is tied, one has a spread of ten points for the Republican Scott brown. The average of the five polls, however, 51 percent for Brown, Coakley at 44.8 percent.

Remember, this is a special election for a seat that no one thought could be anything but a Democrat's this year.

Where are we now? Let's bring in our panel. Steve Hayes, senior writer for the Weekly Standard, we welcome Susan Milligan, she is the national political correspondent for The Boston Globe, and syndicated columnist Charles Krauthammer.

Susan, welcome to the panel.

SUSAN MILLIGAN, NATIONAL POLITICAL CORRESPONDENT, BOSTON GLOBE: Thank you.

BAIER: Let's start with you. What about these polls and the situation for Martha Coakley?

MILLIGAN: I think the situation for Martha Coakley is pretty dire. People in Massachusetts are frustrated and angry. Conservatives are very angry. Liberals and a lot of the young voters are dispirited, they don't like the way things have been going. They wanted to see more progress in Washington, and she has to turn those people out.

I think if she gets them turned out she can pull this out, but she is in real trouble here.

BAIER: Charles, this race?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The empirical evidence, all the polls are pointing towards the Republican success here. Secondly, the anecdotal evidence, the lawn signs, the bumper stickers, enthusiasm of the crowds that there is a huge difference in intensity.

However, it is Massachusetts. It is a state that this Kennedy seat has been in the family since 1952. And also remember, in the one national race in November, New York, 2003, there was a conservative who came out of nowhere who was ahead in the polls up by five on Election Day, Doug Hoffman, and he lost by four in the actual elections.

So the reason that it's extremely hard to model with the computer the turnout in a special election, particularly an off year. Off year election, and particularly one, as scrambled and crazy as this one in which a president arrives two days before and in which it is basically the president of the United States up against Curt Schilling — hope and change against the bloody sock. It's hard to predict.

BAIER: Yes. You mentioned Curt Schilling. A lot of people are saying health care reform obviously is at the basis of this race. However, this candidate, Martha Coakley, analysts on both sides of the aisle say she has not exactly been a great candidate. You mentioned Curt Schilling. Take a look at this little exchange.

(BEGIN AUDIO CLIP)

COAKLEY: If we weren't so close Rudy Giuliani wouldn't have come either. And besides, he's a Yankee fan, I just want people to know.

DAN REA, 'NIGHTSIDE WITH DAN REA', HOST: Scott Brown is Curt Schilling, OK.

COAKLEY: And another Yankee fan.

REA: Schilling?

COAKLEY: Yes.

REA: Curt Schilling a Yankee fan?

COAKLEY: No? All right, I'm wrong.

CURT SCHILLING: The fact that she called me a Yankee fan probably bothers me more than anything. But she clearly doesn't — it doesn't feel like she has a line in to the people of the state.

(END AUDIO CLIP)

BAIER: The campaign, Steve, said it was a joke that fell flat.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: It was not a joke that fell flat. She was clearly clueless about it.

And I think if you want to get into things that are emblematic of the way that she has run her campaign and how in touch she is, I think this was one of many missteps that she made along the way.

I was actually struck by President Obama's comment, and this goes to the same point, sort of dismissive and almost derisive about Scott Brown's truck. On the one hand it was a campaign gimmick and using ads with a pickup truck and everything. And Obama says everyone can buy a truck.

But the point really isn't buying a truck at this point. The point is that he has driven this truck and owns this truck and has put 200,000 miles on a truck. And it's the way I think the national Democrats and Martha Coakley in this instance have dismissed the enthusiasm or intensity of people who are concerned about what's going on just the way the president did.

BAIER: Susan, what is your sense of the White House feel for this race? Privately they told a couple of reporters they thought there was a chance she could lose and that was seen largely as spin to lower expectations so that if she pulls it out he's the white horse that comes in and basically saves the race.

What's the inside feeling at the White House, do you think?

MILLIGAN: They're nervous. If they weren't nervous they certainly wouldn't have sent the president of the United States up to Massachusetts on a weekend when he is trying to deal with health care and deal with the crisis in Haiti. They are very nervous about it, he very much needs that vote.

But I think you're right. She is a terrible candidate. She is not a politician. She doesn't really have a feel for that. She made some comment, well, should I be outside of Fenway Park in the cold shaking hands. Yes, you should. Frankly, Ted Kennedy would have done that.

So she doesn't have a sense of how to actually campaign, and I think that that derailed her for quite some time. She didn't really see this coming and see how frustrated and angry people were in Massachusetts.

But yes, I think they are quite nervous about it at the White House. It throws into question what they're going to do not only with health care but with a lot of the rest of the domestic agenda.

KRAUTHAMMER: But no matter how bad a candidate she is, her Republican opponent never would have gotten a leg up, never would have appeared and would not have surfaced had he not nationalized this election and said if you send me to Washington I will stop health care.

He made it a referendum on the Obama agenda and also on single party rule in Washington. And he said this is a way that you can register operation in the bluest of the blue states.

If Massachusetts, whether it elects him or whether it's a close election, either way, sends a message of rejection of this agenda and of unified Democratic rule, it will be devastating.

BAIER: What about that? Even though this is very close, if Martha Coakley pulls it out — we will talk all about the health care possibilities in the next panel — but is this a referendum on health care reform, this race?

HAYES: I think it's broader than just health care reform. I do think there's a certain sense that what has happened in Washington, people are obviously not happy about it.

You look at the polls on health care in Massachusetts even, and you are talking about 36 percent of people approve what is roughly known as Obama-care.

But I think it is broader than that. She was a horrible candidate and he is a very good candidate. He is a very likeable guy. We don't pay enough attention to likeable candidates in our politics. He is a likeable guy and he came off very well.

And I think there are also problems with Governor Patrick, real problems with his polling and with his favorability rating. All of these things together at the same time have led us to this point.

But even, she could have been the worst candidate in the world, she could have still been elected if it weren't for all of the other factors. There are a lot of terrible candidates who are sitting senators today.

KRAUTHAMMER: Even a likeable guy he is not going to engender enthusiasm of this remarkable sort unless he has got an electric message, and his message was I'm going to stop this machine in Washington single-handedly in this January election. And that is what caused this tsunami.

BAIER: OK, and quickly, Susan, there is a machine in Massachusetts as well about getting out Democratic votes. Despite these polls, it is still possible they could rally back.

MILLIGAN: Absolutely. They have been working hard in the past week especially in phone banking and so forth. And some of the people I talked to for a story I wrote on Sunday about how dispirited they were, said I wasn't even paying attention, and when I realized how close things were I started phone banking and calling people.

It is still a three to one Democratic to Republican registration advantage, and they have un-enrolled voters who are not really very Democratic friendly right now. But if they get the vote out, I think she can pull it out.

But I agree that it is not just a referendum on health care per se. People are angry and want to shake up Washington and shake up what is going on. They are very upset about the economy, which I think will actually be more of the defining issue this fall than health care.

BAIER: OK, a possible Brown upset as we've been talking has Democrats scrambling to figure out plan b for health care reform here in Washington. We will talk about that in three minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. DICK DURBIN, D-ILL.,SENATE MAJORITY WHIP: Massachusetts makes a big difference for us. We need to win in Massachusetts. If we don't, the challenge is even greater to pass health care reform.

SEN. MITCH MCCONNELL, R-KY., ENATE MINORITY LEADER: Regardless of the outcome Tuesday, we know that in the most liberal state in America you are going to have a close election for the United States Senate because people in Massachusetts don't want this health care bill to pass.

(END VIDEO CLIP)

BAIER: There you hear some of the debate about health care reform. If Scott Brown wins in Massachusetts, what about this and what are the options? We're back with the panel. Steve, it seems like the simplest option is for the House of Representatives to just swallow the Senate bill. How likely do you think that is?

HAYES: I think it is highly unlikely. The Senate bill that passed on Christmas Eve, everything that has been happening since that date has been to make it more palatable to the House. And they are having a lot of trouble doing that.

What I think they have to do is find, essentially without getting too in the weeds on the question, I think it comes down to abortion. They are going to have people who voted for the bill because they were in favor of the Stupak amendment...

BAIER: Bart Stupak from Michigan.

HAYES: ... who cannot abide by the Senate language, which is weaker on abortion than Stupak is and would not likely be in favor of that kind of a vote.

And then what you get down to is you are essentially going to have to have, because it passed 220-215 in the House, a one-to-one swap. This on the day after Scott Brown, assuming that, after Scott Brown wins an election in Massachusetts, a state in which President Obama won by more — by a higher percentage than any other state but three last year.

Scott Brown wins in Massachusetts with a health care message, with other factors, and then you are going to have people say now is a good time to cozy up to the president and be more with his agenda? I just don't think it is going to happen.

BAIER: The politics, Susan, of trying to push it through before Brown is seated really aren't that appetizing for Democrats.

MILLIGAN: Well, I mean, it is not as though both Houses haven't passed a version of this bill. It's not like they are trying to sort of write it right now.

But I don't know. I agree with you, it's hard for the House to swallow that bill. On the other hand, I have just been astonished at what Nancy Pelosi has been able to get through the chamber. She got through the stimulus and climate change and health care and all these appropriation bills that the Senate hasn't been able to do. So she might be able to pull it off.

I think they don't want to go home with nothing this fall. It looks so much worse to go back having spent more than a year on this and having strong majorities in both Houses and having the White House and not having anything.

BAIER: Charles, do you think if Scott Brown wins that the White House does an about face and tacks towards the center and tries to rework this thing before, let's even say even the State of the Union on January 27th?

KRAUTHAMMER: If he wins health care is dead. They are going to have to start from scratch, if they want to, which would mean bringing in Republicans, rewriting it, tort reform, it would be completely different.

If Brown wins tomorrow the bill as we see it is dead. The only hope is if the House swallows the Senate bill whole, which I think is not going to happen. The only alternative is to delay the swearing in of the Republican in the Senate, and that would be catastrophic for the Democrats.

There is already a question of legitimacy hanging over the bill, a, because it would be the largest change in our social structure, a sixth of the economy, purely on a partisan vote, secondly, because you have huge resistance in public opinion, a spread of at least 10 points against it repeatedly and consistently.

Lastly, because already people have watched all the corrupt swaps, bargains and deals behind the scenes. You add on to that the illegitimacy of having it pass with a vote by the Democrat from Massachusetts whose term essentially has expired and whose mandate has been revoked and repudiated on Election Day, leave him in office a couple of extra days would be so illegitimate that I suspect even a few principled liberals, perhaps Joe Lieberman or some others, would object and object on the basis of the process even if they accept the substance of the bill.

BAIER: There is some debate whether Kirk, the interim senator, once the election is over on Tuesday could even vote on the bill legally, Paul Kirk.

Quickly, not to give you the weedy question, Steve, but the third option is called reconciliation, to strip down the bill for budget and tax measures. Apparently the House has already passed basically what is called a vehicle to get that through. That would only require 51 votes in the Senate. What about that option?

HAYES: It would take — I think Charles is right. It would take something that the public has said repeatedly and consistently that they don't like, add on to that the layer of special interests and favors that we saw take place over the past six weeks, and you're going to do legislative trickery on top of that?

I think if they were to happen, if they were pass something approaching some health care insurance reform, a watered down health insurance reform, and they did it by that process, you really could have a discussion in November of 2010 of both Houses being in play.

I mean I'm skeptical if you do the numbers on the Senate being in play. It looks really hard for Republicans right now. If they did this kind of — undertook this kind of an effort, I really do think then you would have a full on revolt.

BAIER: That's it for the panel. Susan, thanks again for being here.

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