This is a rush transcript from "Special Report," January 2, 2012. This copy may not be in its final form and may be updated.


RICK PERRY, R - PRESIDENTIAL CANDIDATE: Listen, I got all the respect in the world for my opponents. But you got to ask yourself, are we going to replace a Democrat insider with a Republican insider and expect to get any change in Washington, D.C.?

MICHELE BACHMANN, R - PRESIDENTIAL CANDIDATE: I am not a politician. I am not an establishment person. I am a real, authentic Iowan, and that's what they want, someone who will reflect their values.

NEWT GINGRICH, R - PRESIDENTIAL CANDIDATE: I don't think I'm going to win. I think if you look at the numbers, I think that volume of negativity has done enough damage.


BRET BAIER, ANCHOR: Some of the sights and sounds from the trail. Now let's welcome in a panel of Iowa-based journalists. Kay Henderson is news director of Radio Iowa, Dave Price is a reporter and anchor with WHO-TV, and Kathie Obradovich is a political columnist with the Des Moines Register. Thank you all for being here. This was the panel before the straw poll. It's a little colder now.


BAIER: And actually the race is a lot different, Kathie, than when we last talked.

KATHIE OBRADOVICH, DES MOINES REGISTER: It is a lot different. The race has changed over three or four times, I think, since we were last here.

BAIER: What about, Dave, the undecideds seem like they are so, it's almost half of the caucus goers. Inside the precincts do people, are they swayed by some of these speeches?

DAVE PRICE, WHO-TV: Definitely. I think a lot of them will talk about and maybe it depends who the person is who is trying to sway them. Is it an elected official maybe they know? Is it their spouse? Is it their neighbor? We had a guy outside a Bachmann event today, was the perfect undecided guy. He's standing out there, and I assume, oh you are Bachmann person. He said, actually, I liked Ron Paul. So you are going for him? So I might go for Mitt Romney. But I like Rick Santorum.


PRICE: So ya know it is 24 hours before, he's still thinking, so he's out sampling everybody right now.

BAIER: You get that feeling too, a lot of sampling, Kay?

KAY HENDERSON, RADIO IOWA: Indeed. Even Congressman Steve King has said he is an undecided voter and may be undecided tomorrow night in his own precinct caucus, which is interesting because here is a guy who has met face to face with all of these candidates repeatedly. And if he can't make a decision, what does that say about Iowans in general?

BAIER: Sure. Kathie, in the Des Moines Register poll, the last two days Rick Santorum was seen surging. He has been on the stump. A lot of people associate social issues with Rick Santorum, but he has been talking a lot about manufacturing and the economy. I talked to him today. Take a listen to this.


RICK SANTORUM, R - PRESIDENTIAL CANDIDATE: I saw here across Iowa, small town Iowa. Going to those 99 counties. The very same thing, all the small towns struggling because the manufacturer or the processor left town. And you know, we are seeing this all across America. And that folks who are being left behind in this economy and the small towns and a lot of blue collar workers who are frustrated they are not getting the opportunities to rise in society. And so when I put my economic plan together and we want to be fair and have a tax code is that is fair and flat and all those sorts of good things. But we also have to compete.


BAIER: So we often talk about him and social issues and what the evangelicals are going to do. But he seems to be connecting on the economy out there.

OBRADOVICH: You know, he is making a smart political point with the economy, because, actually, he ties this to presidential politics. He says these manufacturing jobs are not only important to the rural Iowa, places like Iowa. They are also important in places like Pennsylvania, places like Ohio, places where the presidential race is decided.

BAIER: Swing states.

OBRADOVICH: Yes, exactly. And so he is trying to make the argument that yes he is more than just a social conservative and that he has something in his agenda to appeal in swing state.

BAIER: Are we in for a surprise, Dave, do you think? It seems like it is all bunched up. At least the three top frontrunners are right there.

PRICE: I wonder if Santorum has ruined the surprise, you know, maybe if we were talking three, four weeks ago. However, a lot of folks in Iowa, you could see it slowly building for quite a while. People may have been in denial, but he was doing all the traditional things that we're used to seeing in this state, going to all the counties. He was the first one to go to all of those. He wasn't doing big ad war like Rick Perry, for example, tried to do for months. So he was doing the things that traditionally work. And as the others fell he finally got his chance.

BAIER: Kay, is this a long night? Is it a process that takes a long time? Democrats take a lot longer, because --

HENDERSON: There is math involved.


BAIER: Yeah there's a lot of math involved. But we'll know results within a couple of hours, right?

HENDERSON: We may even know sooner than that. What will happed is folks will be given a piece of paper after they hear these neighbors talk about these candidates. They will write a name on the paper, they'll turn it in. They'll count the votes. They will telephone them into an automated center. Out of state somewhere at an undisclosed location and we will learn the results. It could be over quite quickly indeed for some of those folks at the bottom of the pack.

BAIER: What happens after we all leave? I mean are you depressed? What happens?

PRICE: It's a lot easier to get a table.


OBRADOVICH: What is interesting is oddly the next campaign starts very quickly. On January 20 of 1997, when Bill Clinton was sworn in office. I got a phone call from Steve Forbes telling me he was going to run for president next time around.

HENDERSON: Plus Iowa is a battleground in general election. Barack Obama already has eight campaign offices here. That conversation starts immediately as the Republicans leave the state.

BAIER: The fact is their caucuses are going on, and the president will phone in and make his presence known.


PRICE: Yeah. Unless you're Jon Huntsman you are still thinking about Iowa.

BAIER: OK, I'm going to go down the line. Winner?

OBRADOVICH: You know, it's really hard to predict. I would say the odds are in Mitt Romney's favor.


PRICE: Romney and Paul.


BAIER: Alright. Thank you all very much. We really appreciate your expertise locally.

That is it for panel, but stay tuned for some final thoughts from Iowa.

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