Updated

This is a rush transcript from "Special Report, “October 18, 2010. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Why was Rand Paul a member of a secret society that called the holy bible a hoax and that was banned for mocking Christianity and Christ?

JACK CONWAY, U.S. SENATE CANDIDATE D-KY.: He still hasn't answered the fundamental question. Why did he join a group known for mocking Christianity and Christ? Why did he join it?

RAND PAUL, U.S. SENATE CANDIDATE R-KY.: You don't just make stuff up that you attack someone's character, Jack. I mean, you really should be ashamed of yourself. Run on the issues of the day, but don't make up stuff about me from college that you think you read on internet blogs, OK. Grow up.

(END VIDEO CLIP)

BRET BAIER HOST OF “SPECIAL REPORT”: Well, the race in Kentucky for Senate, Rand Paul against Jack Conway has really become interesting. As you take a look at the Real Clear Politics average of poll, Rand Paul has about a five-point lead heading to the last two weeks of the election. That is where we start, looking at some of the different and the big pictures. Lets' bring in our panel tonight, Bill Kristol, editor of The Weekly Standard, Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer. OK, let's start in Kentucky. What about this back and forth, Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think it's time for the truce of 2010 where we declare after all candidates in all places for all time, life starts after college. We're not going to count witchcraft, wearing a beard and being a Marxist, or the joining of a fraternity where you do stupid pranks. This really is the measure of the desperation of Democrats that the opponent of Rand Paul is running on, a 20-year-old prank of a guy who is a respected eye doctor and a serious candidate.

BAIER: Juan, bringing up someone's religion, fair game? Questioning their religion?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: Here’s the thing. I think this is a Democratic strategy with a lot of Republicans this year, which is that you portray them as extreme. It's an appeal to people who have second thoughts about supporting Rand Paul. Remember, there were questions about whether or not he thinks Social Security is constitutional and the like. That’s exactly what he’s doing. I would go along with Charles on exclusion for college and high school pranks given my background.

(LAUGHTER)

But other than that, I would say that you know what? It's legitimate to bring up questions -- and I think it's a big mistake by the way for Rand Paul.

BAIER: So you think the accusations are legitimate, the ones he's leveling now?

WILLIAMS: No, it opens the door to second thoughts is what I’m saying Bret. And I think its mistake for Paul to say I'm not going to debate you anymore. BAIER: Which he said today, that he is considering dropping out of the final debate.

BILL KRISTOL, EDITOR, THE WEEKLY STANDARD: Juan’s position is that this is illegitimate, really despicable assault. Can you imagine if a Tea Party candidate attacked someone else for not being a good Christian? The whole country would be up in arms, there would be a crisis. What happened to the first amendment? Oh, my God. But now this attack by the sitting attorney general, democratic attorney general of Kentucky. Not some fringe candidate, the attorney general making an explicit appeal to religious bigotry, I guess you would have to call it. That is pretty shocking. Attack Rand Paul on Social Security. Don't claim he is not a Christian when he says he is. Can you imagine the Tea Party saying President Obama he's -- one demonstrator at one Tea Party says President Obama might be a Muslim and everyone has a heart attack and that is inappropriate to saying anything like. Here we have the equivalent attack on Rand Paul and the liberal establishment is pretending it's complicated. Rand Paul should debate. He shouldn't be offended by this. President Obama should denounce Jack Conway, don't you think? He is the guy who thinks there should be higher standard for political discourse.

KRAUTHAMMER: I want to hear about Juan's college history.

WILLIAMS: Wait a second, he just said given the college pranks and tying up this woman, and aqua Buddha, he wasn't attacking his Christianity.

BAIER: He said he called the holy bible a hoax. In the debate --

WILLIAMS: He's pointing out these absurd acts and saying its evidence of his irrationality. I don't know if attacking his Christianity. You are taking it far more seriously than I took it.

KRAUTHAMMER: I think there's something to the aqua Buddha. Obviously we have Democrats with nothing else to talk about and can't run on the economy. And they don't have a program, so they are digging dirt. But I think this sort of goes a little bit beyond the pale.

BAIER: Juan, Alexi Giannoulias in Illinois today told the AP he thinks President Obama made a mistake by focusing heavily on healthcare and not being laser-like on creating jobs. In Illinois that race now stands very close as you look at the Real Clear Politics average, essentially a tie. New polls come out all the time. This is the average. What about that race?

WILLIAMS: What Giannoulias said is he should have focused on jobs like a laser and he even said the president was too nice. He didn't go as he should have aggressively and sell a jobs program. But I think this is a way in which, again, a Democrat strategically can say I have differences with the president, I would have handled things differently and appealed to those middle swing voters. That is going to decide the Illinois race.

BAIER: Colorado, Charles, the Senate race out there. Both candidates op Sunday show "Meet the Press" this weekend. That race now stands as Ted Buck the Tea Party favorite is up over two points over the incumbent Michael Bennett.

KRAUTHAMMER: Buck had a larger lead and it's slightly smaller now. I think he made a couple mistakes in his debate. The idea is if you're ahead stay on message. He wandered off. There was history that he was a prosecutor and there was a case about rape which he spoke not quite as well as he wanted to about it. He said there was a question about whether it was. I think he opened himself to some attack on that. But the major issue on which he opened himself to attack is like the gubernatorial candidate in New York, he started to expand on the nature of homosexuality, which is not exactly the major issue of our time today and something a politician has no expertise and ought to stay away from. I think it’s only going to hurt him. I think he should stay on economy and message and he'll win. But if you're a rookie, it's a little bit hard to do that.

BAIER: Finally, in Nevada, Bill, we have Sharron Angle holding on to a slight lead it appears according to average of polls, very slight, as you can see. There are new polls coming out. She had a fundraising quarter and a decent debate if you talk to most analysts.

KRISTOL: She has a good debate against the Senate majority leader, which is pretty impressive for three-term state assembly woman. When a challenger holds his or her own in a debate against a well-established incumbent politician, the challenger wins. I think Sharron Angle won that debate. I think she is very likely now to win in Nevada and defeat Harry Reid.

BAIER: Finally, President Obama on the stump this weekend had this to say about 2010 voters, quote, "Part of the reason that our politics seems so tough right now and facts and science and argument does not seem to be winning the day all the time is because we're hard-wired not to always think clearly when we’re scared. And the country is scared, and they have good reason to be." What about that statement?

KRAUTHAMMER: Obama reaches levels of arrogance unheard of in American history. He gets any more arrogant he will be Napoleonic. The reason people are going to vote against Democrats is because they don't get it and they can't think straight because of the fears is precisely what you'd expect for president who as a candidate spoke about the little people of the Midwest as clinging to god and guns and typically to others as a result of the economic anxiety. This is disrespect and disdain he has for the American electorate. It's simply shocking. If you are a Democrat do you want to run on a president who insults the American electorate because it doesn't accept his arguments? This is not something if you are a democrat and you want out there repeated, but I think it will be.

BAIER: Juan?

WILLIAMS: I think Charles is using this as an opportunity to attack the president. I think I just look at the polls and I know Americans are extremely anxious, extremely concerned about employment, deficit spending, size of the government. These are hard right conservative issues. And you are right, people are very upset. And if the president says the people are upset and they're reacting in this way. They think less of congressional Republicans than they do of congressional Democrats, and yet they are going to throw everybody out, baby with the bath water. I don't think it's irrational.

BAIER: Bill?

KRISTOL: I think the president should not try to be what my colleague Jay Cost called a dime store sociologist. It's unbecoming of an elected official, whether president, senator, or governor to be sitting around offering his kind of attitudes and his analysis of the American public as if they're sort of specimens in some lab that he studied. He should be proud to be President of the United States and assume the American public is acting reasonably, as he assumes they did when they elected him two years ago, and he should take their concern seriously and not that they're frustrated and fearful and they’re going to do really irrational things.

BAIER: For the latest political news and polling, subscribe to the Fox News power play mobile application. And of course we'll have the battleground polls earliest tomorrow morning, the new ones on the app. So check that out. Up next, Germany's chancellor says multiculturalism had failed.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ANGELA MERKEL, GERMAN CHANCELLOR (via translator): The multicultural approach that we live here side-by-side and be happy about each other, this approach has failed, utterly failed. Those who want to participate in our society must not only comply with the law and adhere to the constitution, but above all, must learn our language.

KENAN KOLAT, TURKISH COMMUNITY IN GERMANY CHAIRMAN (via translator): We have to do everything in Germany to get a common feeling of "us." Right now we have a culture of "us and them." These right wing tendencies in Germany have to worry us and the chancellor as well.

(END VIDEO CLIP)

BAIER: For reaction to German Chancellor Angela Merkel's speech about multiculturalism, saying it has essentially failed, that guest workers, mostly Muslim, are separate from other part of German society, and she says that has to change now. We're back with the panel. Charles, what about this?

KRAUTHAMMER: The problem is never immigration alone. Immigration with assimilation, as we had in the United States in the 19th and 20th centuries, is a great success in made America what it is. It's immigration without assimilation. That’s happening in Europe. Some of it is happening here as well. We tried, for example, bilingualism in some states and it was a disaster and a way to retarding assimilation into American culture. And it's been the drop around America. But in Europe, it's very strong. It goes under the name of "multiculturalism," which is a fancy word for essentially leaving these people alone, outside. There are suburbs in France where it's highly immigrant, almost entirely immigrant, mostly Muslim, where the French police cannot go. It isn't in France anymore. It's its own state of nature in many ways. And that is happening in other area of Europe, and now you're beginning to get very late, maybe too late a reaction in Europe because it knows the result. The result is it radicalizes the young and it stops their opportunity if it can't speak the language of the country. You are not going to get ahead. You get extremism and terrorism and you get a country ridden with strife. That is happening in Holland happening in France and happening in Germany. It's a wake- up call to multiculturalists in the U.S. it will happen here if we do the same thing. BAIER: Juan, some analysts say Europe now wants to be like America and that perhaps America wants now to be like Europe.

WILLIAMS: You know what; I think the Europeans have been hypocrites on this subject for a long time. They have been looking down on us and have always been critical of our attitudes about race in the United States. Now as we see globally people from the southern hemisphere moving more aggressively into northern areas. I think you see in Europe the numbers that present the problems. I think Angela Merkel, I don't know if she is running in New Hampshire or Colorado primary, but I will vote for her. Because she is exactly right. She’s exactly right when she says this is not about people living side-by-side, this whole mosaic model. It's got to be about assimilation. "Assimilation" should not be a dirty word. Learning the language of a country should not be dirty, abiding by the laws of the country should not be seen as extreme, that you are forcing me to be like you. You are in that country to succeed in that country. What would you say to your children? Learn the language, go to school, succeed. It’s unbelievable to me that people tolerated this for this long.

BAIER: Bill?

KRISTOL: She can just say this out of the blue. The president of Germany a couple weeks ago gave a speech on the occasion of the 20th anniversary of the unification and said the Judeo-Christian tradition is what Germany is founded on, Judaism has been part of Germany, Christianity is part of Germany, and then he hastened to add Islam today is part of Germany. I think this is political correctness and politeness, really, but there was a huge reaction. He hit a chord inadvertently, in which people said, wait a second; is Islam really part of Germany the way the Judeo-Christian tradition is? It was that reaction that Merkel said we need to be more serious about integrating immigrants and not just saying in nice multiculturalist way every religious tradition and ever public, people integrated itself perfectly. BAIER: Charles, quickly, Islam has bloomed in Europe, grown exponentially.

KRAUTHAMMER: Right. And unlike in America where here it's been largely assimilated and integrated a part of society and they feel part of society, it hasn't happened in large areas of Europe. They're isolated and resentful. And that's why there is a threat to structure of European society.

Content and Programming Copyright 2010 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2010 CQ-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 CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.