SPECIAL REPORT

GOP 'Wave' in November? Prospects for Mideast Peace Process

This is a rush transcript from "Special Report With Bret Baier," September 2, 2010. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

LARRY SABATO, UNIVERSI TY OF VIRGINIA: There's absolutely no doubt at this point, it's a Republican year and very probably a big Republican year.

SUSAN ESTRICH, DEMOCRATIC STRATEGIST: Tea Party candidates suggest to me at least that the Republicans are not necessarily nominating the candidates who have the strongest chance against the Democrats.

(END VIDEO CLIP)

JIM ANGLE, ANCHOR: OK, more and more information coming in about the likely outcome of November's elections. Of course, unforeseen events can always change things, but right now let's look at Larry Sabato's predictions for the fall elections.

He says that -- or predicts, rather -- a net gain of 47 seats for the Republicans in the House, which would give them a majority, and eight to nine in the Senate, putting one seat short of taking over both Houses of congress.

Now, let's bring in the panel, Steve Hayes, senior writer for The Weekly Standard, Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer.

Charles, what do you make of this? This is the second report we had this week to suggest pretty big gains, significant gains for Republican in Congress.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: That is from an analysis of seat-by-seat and state-by-state. I think the number that sort of explains it overall is what is called the generic ballot, where you ask someone if you vote Republican or Democratic in November? And it is at the largest spread, a 10-point Republican lead, in the 68 years of Gallup, which means it's -- at a time when Reagan was still a Democrat. This is a very long time. This is totally unprecedented.

And that portends a wave election. A wave election is like Johnson in '64. Like Reagan in '80, Gingrich in the mid-'90s, and now -- curiously, every 15 years or so. And if that number holds, that generic spread of 10, then you get this kind of wave. I think you do get the House clearly will fall to the Republicans and the Senate will be close. I think Sabato is probably right. The Republicans have to pull an inside straight in order to get control. They'll probably only have a flush, and I'd say they will end up minus one.

ANGLE: Juan, what do you think of all of this?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: Well, I think we have come to the end of the summer. I think Labor Day awaits us and we can now draw some conclusions.

First of all, everyone was saying going in the summer this was an anti-incumbent year. What we just heard from Larry Sabato is he thinks it's turned out to be -- as the summer evolved -- an anti-Democratic year.

I think, as I look forward, I think -- over the same data that Larry, that he's looking at, I think it's become anti-Obama year. I think Obama has become the repository of all the anger at government and at taxes and the failure to get the economy going.

So now I think Republicans are saying, you know what? It's going to be a wave year for us. But I just think wait a second, it's just Labor Day. And so the campaign may yet turn. When you think about how could it turn to benefit Democrats, two things stand out.

One is the Democrats could make the case that the Republicans don't have any great ideas for what they will do if they take over, except look back. And two, what Susan Estrich said in the package, which was a number of the events of the summer have been about intramural feuds among Republicans that resulted in some candidates that could be painted by Democrats as extremists.

ANGLE: Steve, do you see anything that could help the Democrats whittle down one prediction after another that the Republicans are going to have huge gains in November?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Nothing.

Juan, that was a valiant effort. Those were two good things that I think Democrats --

(LAUGHTER)

It doesn't -- it doesn't work.

Not all of us -- I just want to correct one thing -- not all of us had been saying that this was largely an anti-incumbent mood before the summer. In fact, I think it's been clear for a long time it's been anti-Democratic, anti-big government for a long time.

And I think you can trace the roots of this back to the stimulus plan. When the Obama administration decided to pursue a stimulus plan that was largely a giveaway to Democratic interest groups, was not the kind of stimulus plan that many economists, middle of the road economists were predicting, and did so without bringing Republicans on board so Republicans had some ownership of the economy.

They didn't do this. That was the beginning of what we've seen as a progression of big government steps.

And so I think now, looking at November, we have an election that's largely about the size and scope of government. And you've got Democrats defending a left-leaning president in a country that's center-right country.

ANGLE: Of course, since the president is not running if you are upset with Obama as Juan says, who do you take it out on?

KRAUTHAMMER: But I'm not sure it's just Obama, because he's not on the ballot. I think it's about Democrats. Democrats -- Pelosi and Reid are not very well-liked. The House, the Senate are held in low regard in any of the polls.

The fact, the way it acted, it's not just that we have a bad economy. That obviously is a framework and context. It's not just that they spent all the money on the stimulus and it hasn't helped. I think it's the kind of arrogance and contempt that was shown by the Democrats.

Look, when you had the election in Massachusetts where a Republican wins a Senate seat held by the Kennedys since 1952, it means something. But it was ignored. And after it happened, and Democrats shoved the health care proposal down the throats of the Congress and the people even though it was unpopular, even though the Brown election of Massachusetts largely hinged on that and was a message about it. It was a demonstration of we have an ideology; we won the election in '08; we're going to do it and we don't care.

And that I think is what stokes the anger of the electorate and the energy of Republicans, so in the context of a bad economy and with the anger and the energy, it looks like a wave.

ANGLE: There is one other factor in all that's interesting that Larry Sabato mentions, and that's -- let's assume for a moment that you get big Republican gains. He is talking about what the dynamic might be in that, because it would give President Obama fresh target, if you will, to deflect criticism. Let's listen to what he has to say:

(BEGIN VIDEO CLIP)

SABATO: Right now, Obama and the Democrats are in charge of everything. They have nobody to blame. If Republicans are in charge of one or both houses of Congress, suddenly there is a whipping boy for the Democrats.

(END VIDEO CLIP)

ANGLE: And of course, that's exactly what Bill Clinton did after he lost Congress in 1994. And it worked fairly well, Steve.

HAYES: Yes, he did. I think there is one major difference: President Obama has succeeded, he largely passed his agenda -- his liberal agenda. President Clinton didn't. His health care plan failed. So President Obama is going to have to defend this again and again and again and he is going to have to answer for an economy that's continuing to teeter on a non-recovery.

So I think those two things combined, he may be able to maneuver to get to the point he can make that argument, but I think it will be tough.

(CROSSTALK)

WILLIAMS: He's going to make the case that the Republicans have been the party of no. That's where I disagree with you. You say Obama didn't reach out and do business with Republicans. Republicans took a strategy of obstructing Obama. Now if they take control of the House, he will be absolutely to pin it on them.

HAYES: But that's OK, if the voters believe that obstructing the president as he tries to enact this agenda that many people disagree with is a good thing. I think the Republicans now, or the voters now, are saying yes, it's fine if they want to obstruct the president.

ANGLE: Remember, Clinton said the era of big government is over and President Obama has all but said the era of big government has returned. So that's a big factor as well.

Up next, the panel discusses the chances for peace in the Middle East.

In the meantime, visit "show notes" section of the homepage at foxnews.com/specialreport for the latest on the peace talks and what the administration is hoping to achieve.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SECRETARY OF STATE HILLARY CLINTON: We are convinced that if you move forward in good faith and do not waiver in your commitment to succeed on behalf of your people, we can resolve all of the core issues within one year.

(END VIDEO CLIP)

ANGLE: Well, there is Secretary of State Hillary Clinton talking about the Mideast peace talks underway that were underway today here in Washington with the administration sort of being the midwife if you will, to try to get the Palestinians and the Israelis together.

Charles, why now? Why is the administration making this effort at this time to tackle a problem that every president tries to attack at some point? But why is he picking this moment?

KRAUTHAMMER: Well, I think for the president, it's important. He has wanted to from the beginning, but he stumbled for the first year-and-a-half.

But I think the most important element here is you have an Israeli leader who is said to be a right wing, but leads a national coalition -- left and right and center coalition -- who wants a final settlement. That is what is remarkable. And who can deliver.

It's usually only a Nixon in who ends up in China, a Begin who gives you a deal with Egypt and who wants to. That's what's new.

And I'm encouraged by the fact that the administration structured the talks in the right way. This is not about interim, temporary agreements like Oslo was. That was a disaster. It ends up with Israeli concessions and the Palestinians, as happened a decade ago, starting a war if the concessions weren't enough.

This is about final status, end of the conflict. It was said that, Mitchell said today it's about ending the conflict. No demands after that, which is what the Israelis need and want.

It's also not about a partial agreement -- Jerusalem here, settlements here, no. It's about everything in a framework, meaning, Israelis will make huge concessions on territory in return for, if the Palestinian will give concessions on security. Israel will give concessions on Jerusalem, if the Palestinians will give a concession on the idea of the right of return.

That has to be what the negotiations are about: the large concessions. Once you have the framework, and it happened in the Israeli-Egyptian negotiation, you had a framework. Afterwards you worked out language of a treaty. If that is the objective, at least the idea of this is right.

Whether it will happen, I'm not sure. The Palestinian leadership appears unwilling for a final settlement and that, I think, in the end is the stumbling block.

ANGLE: What do you think, Juan? The administration is taking this in a deliberate fashion -- getting them together, having them meet separately with the president, meet together. Not pushing a lot in public, but trying to get people to sit down. And it seemed reasonably cordial on the first day.

WILLIAMS: Well, I think a lot of that is PR, window dressing. I think we're accustomed to that. The question is in my mind -- the big question is whether or not you have Prime Minister Netanyahu actually determined that he is going to engage in settlement. Does he have the will in his heart or is he putting on a good face to maintain relationship with the United States, given that the administration has been very clear they expect Israel to step up to the plate given U.S. involvement in Iraq, Iran, Afghanistan.

The key for me so far has been to watch the idea that you just heard from Secretary of State Clinton that this is a one-year deal, that there is a time limit. There is a clear framework there. But that this goes beyond simple declaration of principles is what George Mitchell, the special envoy, said today. It goes beyond the principles to the idea that here is exactly what we're trying to accomplish and that's why they detailed the supposed framework.

We haven't seen the framework, but they say there's a framework that lists what Charles was talking about, settling all these issues, getting violence off the table, putting everything in place. That's what's different here.

Mitchell said today when you look back at Annapolis and these other recent efforts, the big problem has been time ran out. And in this case, because President Obama has done it from the very beginning of his time in office, potentially time is not going to be an issue.

ANGLE: Even if you don't get a final agreement, Steve, the time is right for President Obama to come up with something positive to point to other than the economy and predictions about the elections.

HAYES: Yes. I think your first question is exactly the right one. Why now? Why is he doing this now? And I think there is very political downside to him here domestically for doing this now. It's something that allows him to be presidential and be a statesman and allows him to bring together these parties that have been, you know, at each other's throats for decades, and to try to resolve something.

I think the problem he faces is that it's -- in spite of the better arrangements -- and I agree with Charles on the way is that the talks have been structured -- very few people think he is likely to have any kind of real success and certainly not to have it within a year.

And I think the bigger problem, the further problem, is also a matter of sequencing. The White House believes that you can have Middle East peace before you can deal with Iran. I believe the opposite. I think you have to deal with Iran first and then deal with Middle East. I don't think you're likely to see much from the White House on that.