This is a rush transcript from "Special Report," May 24, 2011. This copy may not be in its final form and may be updated.


KATHY HOCHUL, D-N.Y., CONGRESSIONAL CANDIDA TE: My opponent has said that she would have voted for the Ryan budget had she been in Washington. Those are her words, not mine. So you can check the record.

JANE CORWIN, R-N.Y., CONGRESSIONAL CANDIDATE: There have been a lot of lies and distortions about, ya know, my position on Medicare. And it's scaring seniors quite frankly and I'm shocked and appalled by that. And I think it's important that seniors understand that I'm trying to save the program.

JACK DAVIS, I-N.Y., CONGRESSIONAL CANDIDATE: They're taken votes from me. I'm not taking them from them. Alright.


BRET BAIER, ANCHOR: The last shot there from Jack Davis, the self-proclaimed Tea Party candidate in New York-26. The polls are still open there. Davis, a businessman, ran three times as a Democrat previously.

The polls are still open but the question now is whether this is really a referendum on GOP plans for Medicare. Earlier in the newscast, we asked you should the New York special election be considered a referendum on GOP Medicare plans? Just 14 percent said yes, 86 percent said no in this nonscientific poll. We're back with the panel. Juan, what about this? Is it in fact a referendum? Is that what it has come to in this race?

JUAN WILLIAMS, SENIOR EDITOR, THE HILL: Well, I think it's what people in Washington are looking at it for. The political strategists are saying this has had a tremendous impact on what it should be, an easy election for any Republican. It's a heavily Republican district. Went for Senator McCain over President Obama.

And the dynamics of it is that it's been all about Medicare and it's all about the Ryan plan. And it certainly has hurt Jane Corwin, the Republican candidate. So to that extent, it's hard to say how things turn out. The early indications are that in ya know, Rochester the Republican districts like that, there's been light turnout with heavier turnout in ya know, Erie County, which is Democratic leaning, so that would be helpful to Hochul.

But ya know, I don't know that it's the actual result that matters here. I think it's the political dynamic. Clearly we are in a moment when the Medicare plan is something that has become a lightning rod for our politics.

BAIER: So Bill, depending on what happens, this will be spun either way by either side.

BILL KRISTOL, EDITOR, THE WEEKLY STANDARD: You ask for the results in New York 23, when was that? Last -- late in 2009 and then Pennsylvania 12 in early 2010, both of which the Democrats won in idiosyncratic special elections and didn't turn out to be a very good indicator of what was going to happen in November of 2010.

And this race has all kinds of weird dynamics. The third party candidate who spends a ton of money, mostly attacking the Republican. Kathy Hochul, the Democrat is running against the Medicare -- against the Republican Medicare plan. She's also saying she would not have voted for Obama's Medicare cuts. She gets the best of both worlds. In the real election of 2012 when president Obama is at the top of the ballot and Obamacare is the front and center issue, you don't get to say I'm against any cut by anyone in Medicare. You have to say are you for Paul Ryan's reform of Medicare or are you for Obamacare?

BAIER: Mentioning Paul Ryan, just want to listen to this. As he's been asked numerous times about this issue and whether the GOP is attacking Medicare.


REP. PAUL RYAN, R-WIS.: Our budget makes no changes for those in or near retirement. And it offers future generations a strengthened Medicare program that they can count on with guaranteed coverage options, less help for the wealthy and more for the poor and the sick.


BAIER: He said it numerous times different ways. Charles, is that sinking in? You look at the ads by Democrats and Jack Davis, the self-proclaimed Tea Party candidate who [INAUDIBLE] ran as a Democrat many times, they focus on Paul Ryan and this plan.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, if Ryan is explaining it, it sinks in. The problem is that Corwin hasn't explained it that well. She was extremely defensive running away from this. And unless you are adept at explaining the plan and being behind it and not saying, oh well, maybe it's not as bad as you think. You're gonna lose on this issue. I'm not optimistic on this. Even if Corwin the Republican pulls it out it's clear that "Medi-scare" has had an effect here. If you end the polls --

BAIER: By the way, we are looking at this ad, where someone who looks like Paul Ryan pushes this old woman off the cliff.

KRAUTHAMMER: Well, I mean I admire its subtlety in giving its message, which is exactly how the Democrats are treating this issue. But unless you can explain it as a Republican, you are going to be in trouble.

In the polls, in this district, you ask people what are the three most important issues, debt, jobs, and Medicare. If you had had that poll a year ago in November in the Republican sweep, you wouldn't have had the Medicare in there. So clearly it is an issue up there equal with all the others. It is a result of the Ryan plan.

And the moral is, demagoguery works, especially on entitlements. And you shouldn't -- if you want to be a Republican in this race, and the Republicans are hitched to the Ryan plan, you better be able to defend it.

BAIER: So for all this talk Juan about the adult conversation, the fact that we have to deal with the big ticket items that entitlements have to be dealt with, and if the debt situation's going to get under control. For all of that, when it comes election time, it just goes out the window?

WILLIAMS: Well, people are still very afraid of alienating senior voters, they're a reliable voting block, Bret. And they come out. Now the thing is, that I'm sure that if you were talking to the president's people they'd say, well you know what, Republicans take revenues and tax increases off the table. So you get both sides. I think playing politics with this and it's very difficult to achieve the cuts.

KRAUTHAMMER: Juan -- but Juan, this doesn't affect a single senior for ten years.

WILLIAMS: Well no, the seniors in polls have said they care about the fact that you're taking away -- you're changing the plan even for younger people.

KRAUTHAMMER: It's not going to affect them personally.

BAIER: That is it for the panel. But stay tuned to see a tough interview from last weekend.

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