This is a rush transcript of "Special Report With Bret Baier" from February 26, 2010. This copy may not be in its final form and may be updated.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: His desire is to see something that improves the lives of the American peop le soon. I don't want to get ahead of what the president might announce next week in terms of the way forward.

REP. NANCY PELOSI, (D-CA) HOUSE SPEAKER: What you call a complicated process is called a simple majority. And that's what we are asking the Senate to act upon.

REP. CHARLES BOUSTANY, R- LA.: Everybody has focused on the 51-vote margin in the Senate you with this parliamentary maneuver. But I'm not sure the votes are there in the House. I think they are having to scramble a bit to figure out how to proceed. But I think the die was cast a long time ago, to be honest with you. Certainly on the House side there was not much effort to bring Republicans on board.


BRET BAIER, "SPECIAL REPORT" HOST: One day after the health care summit we learned that the president will speak out sometime next week likely by Wednesday about the next steps forward. And while everyone is talking about reconciliation, or the nuclear option, about getting past the Senate, as you just heard there, they are still concerned about votes in the House. That's the first step. So what about this? Let's bring our panel, Steve Hayes, senior writer for the Weekly Standard, Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer. Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I think the White House strategy is now clear. They are going to push forward with reconciliation. Robert Gibbs made allusions to that in his briefings today. It's been briefed I think on background by the White House officials in the past 24 hours.

I think what they are most likely to do is push forward with reconciliation, but only after this event that the president has, embracing some Republican ideas and trying to do so in a splashy, out-front way, possibly tort reform, some kind of medical malpractice reform.

David Axelrod mentioned that specifically as an area of possible agreement. Gibbs again today mentioned it.

So I think what they do is they try to embrace some Republican ideas, probably several that were offered yesterday at the session. Republicans don't — still don't want to sign on to this massive bill, the takeover of health care, and the White House says, look, because these Republicans are so ideological and so strongly opposed to this they won't accept our compromise, we have no choice but to push forward with this partisan bill.

BAIER: Juan, we tried to lay out earlier in the week what this process is, this reconciliation. Some have called it the nuclear option process.

Whatever you do with it, you have to start with the House passing the existing Senate health care reform bill. And there is a big question whether that can happen.

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: Right, because they don't have the votes right now according to Speaker of the House Nancy Pelosi.

But she has been making the case that, in fact, there is momentum building among House Democrats to get something done realizing that they have already cast one vote is the way the White House is selling it to people now.

You already cast one vote, so what's the problem with casting a second vote? It's not going to hurt you or help you with voters down the line. You have already given your opponents a basis for saying you are pro-health care.

So, the big stumbling block now is Bart Stupak and the abortion.

BAIER: The congressman from Michigan.

WILLIAMS: And the question about whether or not this is abortion-neutral, which is what President Obama again has been emphasizing to Stupak, who controls now about 40 votes in the House on this issue.

BAIER: Some say he may have slipped to 15, but it's still a sizeable number that could affect the vote.

Charles, the president said we're just going to go forward if this doesn't work out and we will let elections determine it. He has lost elections in Virginia, New Jersey, and Massachusetts where health care, at least in part, was part of that campaign.


I think what he is signaling when he talks about elections, elections are a contest between parties. And what he is saying basically is after the seven and a half hours, this is when he said this, we're ready to go and have a contest of parties, meaning he knows there is not going to be any acceptance by Republicans of the bill and he is not going to accept the idea of starting all over again, ditching the bill.

So he is ready to go to the mat with a partisan bill. I think the whole thing is a theatrical production — starts with the meeting we had on Thursday. Then he will have the speech on Wednesday in which he will speak about the summit Thursday and he will say, look, I gave it a shot, seven and a half hours. I offered to incorporate a few ideas here, a couple of ideas.

He knows even if he takes an idea or two, the Republicans are not going to accept the monstrosity of the bills as they exist even with a slight amendment here or there. And then he will say, well, I offered it, I went the last mile, and now I'm going to go to ram it through.

The reason he is doing all of this is because independents, who went against him in Virginia and in New Jersey, two to one in Massachusetts, three to one, are the ones who are most upset about the process about the idea of it being corrupt.

He wants to show the process is now a clean one. It's his process. It is no longer the one of the Congress. He has taken control, and that's why I think this is all a set up.

And then he goes into reconciliation where, as you say, the process is so obscure — it's never been tried for anything of this size, that when it gets into the Senate, there is unlimited amendments allowed for the opposition, which will stop it cold.

And, also, the parliamentarian is going to have to rule whether abortion is in or out, whether other provisions are in or out. And most interestingly the vice president, who is the president of the Senate, can overrule those rulings.

So this is really uncharted territory. And I don't think anybody knows how it is going to go, particularly in the House.

BAIER: Juan, politically, House Speaker Pelosi was asked today, what about taking the ideas that Republicans can agree on and moving forward there? And here is her answer.


PELOSI: The debate that you saw will start over, itsy bitsy spider, little teeny, tiny — you can't do it.


BAIER: Saying you can't do it, baby steps, itsy bitsy spider doesn't work. What about that politically?

WILLIAMS: Well, politically, I mean, that's what happened this week. I mean there were two audiences for what happened yesterday. One is the general public. They really wanted to move the needle in terms of building greater support.

You know, Charles talked about those independents who have been falling off in terms of support. That is exactly right. So the idea was if we can build sufficient support in the public, it will put pressure on some of those Democrats in the House who are wavering and get it going.

And then the second audience was, of course, the House Democrats in specific. And the idea that Pelosi just spoke about, itsy bitsy spider, I think she is right. If they went back to ground zero, there is no chance this would get done in an election year much less going forward 2011, 2012 with the presidential election out there. It wouldn't happen.

BAIER: So they look at the polls and see something different. They think the American public doesn't understand what this bill is really about?

WILLIAMS: That's exactly right. If you looked at the way the president handled the event yesterday, he was breaking it down into small pieces and saying, you know what, aren't insurance companies running wild? Didn't they just raise your premiums out in California? Let's talk about that.

HAYES: If you go back to when — let's just pick the date that the "cornhusker kickback" was agreed to. It was in the papers on December 20th.

If you look at the polls that were taken in the week preceding that deal, which was sort of the worst of all of the deals, the most highly publicized of these deals, polls at that point showed that people did not favor it by 15 points, 17 points. You know, respectable, mainstream polls, sort of across the board.

It's the policy. They think it's the process. They are answering it with a process answer. It doesn't change the policy.

BAIER: It is taking a lot of oxygen out of the debate on whatever here in Washington and it likely will next week, too.

Be sure to logon to "Special Report" homepage and get more on all the stories we talk about here as well as web exclusive reports, extra grapes on the grapevine, much more. Up next, the Friday lightning round, and we will start with the topic you voted for on the homepage right there on the right side. We'll be back in three minutes.


BAIER: Every week on the FOXnews.com "Special Report" page, viewers vote on what topic we should discuss first during this the Friday lightning round. As of 4:30 eastern time the ACORN resurgence was ahead with 3,000 votes, although I was very close — Bret's wild card pick at 36 percent, 2,300 votes roughly. It was neck and neck all day.

But, ACORN resurgence won, and I step aside proudly. We are back with the panel. Basically the story, Steve, is that ACORN, after all the controversy and Congress was taking away funding, is now resurging in a number of different states with a number of different names, but it's essentially the same organization.

HAYES: Yes, they are resurging or just sort of renaming themselves.

BAIER: Renaming.

HAYES: Look, it's a PR move. I don't think it will be very effective. ACORN is what ACORN is. You remember Value Jet Airlines after the crash turned itself into Air Tran. Now Air Tran has actually proven highly successful.

I don't think ACORN can do the same thing because it will — the taint of ACORN will be with it. And, federal dollars are not going to be flowing to that organization.

BAIER: Yes, Juan?

WILLIAMS: It's not that they were tarnished. I think their name was trashed.

You know, they do some important things in terms of helping low income people with mortgages and — but at this point, all of that good has been lost and lost in part to their own corruption, corruption that was documented and shown to the American people.

So they are trying to recover. I hope they have some success because, as I say, I think for low income people they do perform some valuable things, but they can't go about it in an arrogant and illegal way.

BAIER: Charles?

KRAUTHAMMER: It may not be an exact analogy, but Mussolini made the trains run on time. I think ACORN could change its name all it wants, has a right to do that, and recreate itself. If it goes straight, that's OK. If it doesn't, we ought to track it and watch it.

BAIER: And we will.

OK, New York lawmakers, you have the incumbent New York governor, a Democrat, David Paterson saying today that he is not going to run for election this fall after a series of stories about him. And now he is saying he is out. Charles?

KRAUTHAMMER: Look, he was way behind in the polls. In the absence of this, he would have been crushed by Andrew Cuomo, who is running in the primary — will run in the primary against him. I think this is going to help him to make an early exit and not be humiliated by the result of a lopsided primary.

BAIER: Juan?

WILLIAMS: He humiliated himself, Charles, this guy's behavior, the fact that he abused his power by intervening on behalf of an aide who was accused of domestic violence case, just unbelievable.

BAIER: He denies that says the investigation is going to exonerate him.

WILLIAMS: You know what, this is tawdry stuff. And not only that, if you look at his record of as governor, there is a reason he was trailing badly in the polls.

Now the "New York Times" also has a role to play here, how they have gone about this story is very interesting. And he is attacking the "New York Times," but it really comes down to him, and he just has not upheld his responsibilities as governor of that great state.

HAYES: The good news for New York Democrats is that after Eliot Spitzer, after David Paterson, they are going to have Andrew Cuomo, who has proven himself to be wildly successful at advancing in his career, despite many unethical and I think questionable decisions that he has done over the years, particularly when he was the a second of HUD under Bill Clinton, took trips to New York practically every week when he was in his last year before he was setting up to run for governor the first time.

BAIER: Republicans have a shot at that seat in the fall?

HAYES: Republicans have a shot at just about any seat at this point.

BAIER: OK, Charlie Rangel, New York congressman, the chairman of the house ways and means committee — the ethics committee came out and said that they essentially admonished him for a Caribbean trip. He came out and said it was his staff, not him. There is other investigations that are going on with Charlie Rangel. What about this down the line?

HAYES: I'm eager to see mainstream news outlets start talking about the quote-unquote "culture of corruption" because that's what they did before the 2006 election with Republicans. There were a couple of scandals, some of them — I mean, most of them run related to each other, and then we had a culture.

WILLIAMS: The big story today is that Democrats are now leaving the Charlie Rangel camp. Previously Nancy Pelosi and others really were acting as a bull work, especially the black caucus, to protect somebody who has been around so long. Now the dam has burst.

BAIER: So does he step down from his chairmanship?

KRAUTHAMMER: I think he will be forced out eventually. I think what we are looking at here is a replay of 16 years ago, the first midterm of a young, promising Democratic president in which you had the failure of health care and the culture of corruption. The Democrats were swept out of the House for the first time in a generation.

BAIER: The Olympics ends this weekend. USA hockey is riding high, just with another victory today. Charles, wrap up the Olympics for us.

KRAUTHAMMER: Well, I don't know about you, Bret, but I'm racing home tonight after the show to watch curling, which one wag this morning described as a cross between horseshoes and housekeeping.

I know you have got a graphic of hockey and it's a lovely game, but curling has had me up all week. Curling is perfectly ridiculous, agonizingly slow. And I have to admit for the first two hours I watched, I had no idea what the rules were, but I didn't care.

BAIER: They are very exciting about the sweeping.

KRAUTHAMMER: I was mesmerized.


I have heard they also have skiing at Vancouver.

BAIER: Juan?

WILLIAMS: I just haven't watched it. I'm not a skater or skier. My kids love hockey, and so the hockey stuff has thrilled me, especially the men's hockey when I saw the end of that. But I can't comment because I haven't seen much of it.

BAIER: But you are American, Juan.

WILLIAMS: Yes, I'm all for it. Go team go.

HAYES: Maybe one of the worst moments came today when the International Olympic Committee suggested it was going to look into the women's Canadian hockey team bringing champagne, cigars, and beer onto the ice after their victory in the gold medal game last night against the United States. Get a life or take off. That's just a ridiculous thing.


BAIER: All right, go USA.

Content and Programming Copyright 2010 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2010 Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.