This is a rush transcript of "Special Report With Bret Baier" from April 1, 2010. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: They're going to run on a platform of repeal in November. And my attitude is, go for it. You try to repeal it.

(APPLAUSE)

(END VIDEO CLIP)

CHRIS WALLACE, FOX NEWS CHANNEL HOST: President Obama on the campaign trail in Maine today, selling health care reform and the Congressional Democrats who voted for it.

Let's bring in our panel, Fred Barnes, Executive Editor of The Weekly Standard, A.B. Stoddard, associate editor of The Hill, and syndicated columnist Charles Krauthammer.

Let's look at some numbers from a new Gallup/USA Today poll out today. Here they are. A record low 28 percent say most members of Congress deserve reelection, 28 percent. The Tea Party has favorable rating of 37 percent. As you can see, that is almost as high as the favorability for the Democrats and the Republican parties.

And in the generic ballot question, voters choose Republicans by just one point over Democrats.

Interestingly enough, though, when he added all that up, Bill Clinton's former pollster Stanley Greenberg said this looks like a change election and could be as big as 1994 when the Democrats lost more than 50 seats. Fred Barnes, how does it look to you?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: It looks like it could be 1994, a big election like that, a sweep for Republicans, a landslide, but not necessarily. Republicans will have to have things they have to do.

Remember what midterm elections are about. They're not about persuasion, and I think the lines are set. People won't warm up to Obama- care and independents won't sweep the Democrats all of a sudden. It's not about persuasion; they're about turn-out.

So the Republicans have a majority out there, but they have to keep up the fervor and excitement all the way to November 4, 5, early November. Anyway, that is a long time off in political time.

And so what I think they need to do is they can't just assume that because everybody hates Democrats, or at least they think so, that that is going to help them. That is never enough. It makes a big difference if they win 20 seats, which they'll win easily, or 40 seats or 41 to let them capture the House.

So what I think they need to do is show daylight between themselves and the Democrats, a lot of it. This is what the Republicans did in '78 and '80 with the tax cut and '94 with the contract with America. Both things, the Democrats said those are too radical. They attacked them. They thought by attacking them it would help the Democrats. They helped Republicans.

I think people are looking for something a lot more radical than they've seen from a Republican so far, except for Paul Ryan. I think the roadmap for reforming everything is something that Republicans ought to grab on to.

WALLACE: A.B. the question of timing that Fred brought up is something that Stan Greenberg, the Clinton pollster, also brought up. He thinks that the Republicans peaked too soon, that they peaked with the Scott Brown victory in Massachusetts on January 19.

He still thinks it will be a good year for Republicans but he thinks that this huge enthusiasm will wane as the year goes on. And he talks about the Republicans gaining, but the Democrats holding on to the House and Senate.

A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: Right. I think that is the question. When you talk to people working on the Republican campaigns they tell you, I just wish the election were this week, they say. Even if my Republican experts say 41 seats in the House is a very heavy lift. Maybe 25, but flipping control, they don't see it -- 41 seats is a lot.

Also, if you look at the economy, even the administration doesn't expect for the job picture to improve until after November. But if we have a good jobs report tomorrow, if a good jobs, an improving jobs outlook would help the Democrats reverse the talk about health care, the trend over so much anger directed toward their record of stimulus, of bailouts, of health care, of taking the student loan program under the reach of the government, of basically exploding the government deficit and the debt, that is the narrative right now.

But if the jobs picture improves, the narrative shifts. That's their only hope though, Chris. This is really only four months away. They will leave in August. They only have a few months, the Democrats do, to change the picture up on Capitol Hill. I don't think they can reverse how unpopular health care reform is and how upset Americans are at the Congress.

WALLACE: Charles, is the economy still the top issue or has it been superseded by the health care reform and the whole narrative about the big government and big deficits and big spending? And if, as A.B. suggests, the job picture improves even marginally, is that going to help Democrats and maybe tamp down some of the enthusiasm for Republicans?

KRAUTHAMMER: I think the state of the economy sets the frame. But it isn't the major issue, because neither side really has an answer on the economy. And nobody believes the government will do something magical that will reduce unemployment.

WALLACE: Don't Democrats get the credit or the blame regardless of whether they can do anything?

KRAUTHAMMER: Exactly. But I'm saying if the rate stays where it is now, the Democrats will hurt more. If it improves, they will have a marginal increase in support. But it is not going to be the issue. The issue is the one you talked about, and that is the issue that rouses the most enthusiasm that propelled the Republican success in Massachusetts.

And that is the narrative of the Obama administration and the very liberal House and Senate leadership propelling America into huge amounts of debt, high taxes, which are inevitable, and a great increase in size, reach, the scope of government. That is the narrative.

And all the elements are there. Stimulus, the takeover of auto and sweetheart deals that the unions got, the takeover of student loan that was never debated, and the big one, the takeover of health care.

And if Democrats think the small improvements that people will see on health care, the children having protection against preexisting conditions is going to help them, I think it's not. The bigger issue is the incredible amount of debt that the new entitlement will bring on. That is the big issue.

If the Republicans make coherent case, they will win big.

BARNES: Can I go back to something Stan Greenberg said?

WALLACE: No, you may not. We're out of time for this segment.

(LAUGHTER)

But keep that thought. You can find out a lot more about election year politics on the homepage at Foxnews.com/specialreport.

Next up, the Catholic Church is under attack facing new allegation of abuse. We'll discuss that in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

FATHER JOHN ZUHLSDORF, CATHOLIC ONLINE FORUM: The harm that it's done to the expectations of people all over the world inside the church and outside the church has been just tremendous damage.

(END VIDEO CLIP)

WALLACE: Father John Zuhlsdorf reacting to new allegation against the Catholic Church regarding sexual abuse by priests, all this coming during Holy Week.

We're back now with the panel. Fred, your sense, how damaging are these new reports of the priests abusing children to the church and to Pope Benedict?

BARNES: They are terribly damaging, no question about that. I think the scandal of the predator priests is now in the second decade. It hit the United States earlier. I think the European bishops are handling it much better than initially the Catholic Church of the United States did.

And in particular, one of the cases that the people that attacked the Pope for is one that I think is a pretty flimsy argument against him. It's this priest who had abused deaf students, young -- deaf young people. A horrible --

WALLACE: In Milwaukee.

BARNES: -- a horrible thing. But yet the priests by the time it got to the Vatican, the priest was dying. And prosecutors hadn't gone after him. There was no reason for the Pope to step in, although it probably would have been better to defrock him, which they didn't do.

The Catholic Church survived the Reformation and they'll survive this scandal.

WALLACE: I don't think anybody thinks the Catholic Church --

BARNES: I think it will survive it, and the Catholic Church is the center for Christian orthodoxy.

WALLACE: I understand. I don't think anybody thinks it's about to crumble. But the question is what does it do, as the Father Zuhlsdorf said, to the moral authority of the church? What does it do to this Pope?

And to be specific about the Milwaukee case, there was a church trial of this priest. The victims very much wanted him to be defrocked. He wrote a letter to the office of the Pope and suddenly the trial was canceled.

You also have a case involving a priest when he was the archbishop of Munich. This does get to the doorstep of the Pope if not into his office.

STODDARD: There are serious current questions about our current pope's involvement in the Father Murphy scandal with the deaf boys, and there are two questions now. He has a lieutenant picking a fight with The New York Times.

WALLACE: This was the original story.

STODDARD: And it was this lieutenant of the Pope out there countering, saying that it's not fair. There were many other people involved in this, it wasn't just the Pope Benedict who was handling whether or not to give the guy a trial. But holding him up as pioneer of zero tolerance policy in the Vatican is not right either.

This is systemic and a tragedy. It's going to taint the church for years to come. I think this pope can help himself now by not picking political fights and come out saying and unequivocally saying this will not stand, the church doesn't tolerate the molestation of innocent children and putting this behind him.

If he tries to play politics with this and have his allies defending him and picking fights with newspapers, he's not helping himself.

WALLACE: Charles, when this Pope was elected, we were told that his biggest goal was to reenergize the Catholic Church in Europe where their attendance has very much fallen. Now we've got abuse scandals in Germany, Austria, Switzerland, and Ireland. That's certainly going to make it much harder to get the Catholics to come back to the church.

KRAUTHAMMER: As you say, there already was an enormous amount of secularization, particularly in the Catholic south of Europe, where the church attendance has radically declined. Of course this will make it worse, but I think temporarily.

Look, the American church experienced all of this about eight years ago, it exploded eight years ago, and it has recovered. It was a long, painful process. There was a lot of stumbles at the beginning. But once it adopted a zero tolerance, it hasn't suffered a permanent wound.

I think the same is now happening in Europe. As you say, you have a domino effect, a church in one country after another, but the model is the American one. You've got to have disclosure, confession, you have to have atonement and reparations. It will cost the church a lot and be a difficult and painful process.

It's already starting in Austria where they are already in the process of confession, atonement, and revelation. I think the model is set. They need to follow it in Europe.

It will be a wrenching time, but in the end, I think Fred is right. The church is the oldest institution in the west and represents something of core of human nature and I think if it handles this with any rationality, which I suspect it will, it will come out all right.

WALLACE: Thank you, all, panel.

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