This is a rush transcript of "Special Report With Brit Hume" from April 17, 2008. This copy may not be in its final form and may be updated.


SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: Last night I think we set a new record, because it took us 45 minutes before we even started talking about a single issue that matters to the American people.


BRIT HUME, HOST: Well, those Obama supporters down in North Carolina today loved that. That was Obama's lament about last night's debate in Pennsylvania, in Philadelphia, moderated by ABC newsmen Charles Gibson and George Stephanopoulos.

Some thoughts about this debate and the complaints about it from Mort Kondracke, Executive Editor of Roll Call, Nina Easton, Washington Bureau Chief of Fortune Magazine, and the syndicated columnist Charles Krauthammer, FOX News contributors all.

Well, Obama's words were mild compared to those that were bestowed upon the debate and its moderators by people like Tom Shales of The Washington Post, who said the questioners were despicable, and he had plenty of company across the mainstream media and his critics today.

What about that, Mort, first of all? Let's talk about that.

MORT KONDRAKE, EXECUTIVE EDITOR, ROLL CALL: Look, I think that 45 minutes of questions about character probably was a little too much, because there was a lot of meat that they got out of the questions about Iraq and Iran and the capital gains tax, and stuff like that.

But those were perfectly legitimate questions that they were asking Obama. He is the frontrunner for the nomination to be president of the United States, and he is not a known quantity. Who he is is still an unknown matter.

So things like do you wear an American flag pin and why don't you, why are you associating with a former weather underground person — those are perfectly legitimate questions. And all of those reveal things about his character.

We know things about Hillary Clinton, and what we know about Hillary Clinton makes it — it emphasizes why that whole Bosnia thing was so damaging, because she got a reputation as a liar.

And, in fact, last night she lied again when she was asked do you think Obama is electable. She said, oh, yes, when her whole campaign is talking about how unelectable he is for all the reasons that Gibson and Stephanopoulos were asking about.

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: Barack Obama today characterized this to supporters as a "gotcha" moment, that this is just "gotcha" politics.

In fact I thought this was finally a commentator in a debate going after these candidates and asking them very pointed questions, and not only that, asking them follow-up questions, or providing the opening for Clinton to follow up with Obama.

For example, the Reverend Wright question. We heard from Obama last night that he disinvited Wright to his kickoff, his launch at his campaign, because of the roughness of his sermons. So he knew things were rough. He knew this was an issue —

HUME: We knew that before.

EASTON: — but this all goes to the question — it does go to these character questions, and on the left wing of the Democratic Party, there is a certain "hate America" element. We saw it come out after 9/11, we see it continue to come out here and there.

And I think it's a fair question to ask, are these people — I'm not questioning Obama, but are these types of people that he's comfortable in his orbit. And I think that's a fair question to ask, and he should answer it.

And he acted so rattled by these questions, and his body language showed that he was so rattled, because he hasn't had to answer tough questions.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The liberal critic's idea of what a question on the issues would have been Senator Obama, can you tell us how you are going to undo the diplomatic, economic, and all the other damage that the Bush administration has committed over the last seven years, and while you're answering, would you like a pillow?

And the reason that issues had to wait is because there are no huge issues between these two candidates. On the war each of them is for evacuation regardless of what the generals are saying. On taxes, they want to abolish the Bush tax cuts.

On just about every other issue — they're difference, for example, on healthcare is miniscule. It is about individual mandates, and Barack Obama admits that if his alternative doesn't work, he would go for individual mandates.

That's why the campaign between them has become a campaign about personality and certain cultural attitudes. It's not invented by Stephanopoulos and Gibson.

HUME: What about Obama on the question of taxes and the capital gains tax? The premise of the question from Charlie Gibson was every time we lower the capital gains tax rate, we get a larger gusher of revenue from capital gains taxes. Would you want to raise it anyway?

Obama said yes, not so much because on the revenue side, but because of fairness. How about that?

KONDRACKE: That shows that he doesn't understand how markets work, and he is less interested in growth for the economy and for controlling the deficit than he is in, quote unquote, "fairness."

Jack Kemp had a wonderful piece in "The Wall Street Journal" today about how it is that even blighted neighborhoods grow. You create an enterprise zone where the capital gains rate is zero, and that encourages investment. That's what you want in those kinds of places.

I don't think Barack Obama understands anything about a capitalist economy.

EASTON: And I think that the campaign has really closed him off from tough press scrutiny. There aren't the opportunities to ask those kinds of questions. He has put up in these arena settings, and to give these speeches, these high-minded speeches, on the economy, for example, which raised a lot of important questions which he should provide more opportunity to field those questions. But they're treating him like a caged bird.

KRAUTHAMMER: And this was the first debate since the Wright story had broken. How can you not ask him questions about his association of 20 years with a guy who gives sermons that include a lot of raving racism? Of course it's a question you've got to ask.

And you've got to ask a question about the clinging to guns and religion. Obviously, he had to explain that. And in trying to explain that, he got himself in even deeper last night, I thought.

HUME: Charlie, George — form your friend over at Fox News, the verdict of the panel is "hang in there." We hope that doesn't do you any harm.

When we return with our panel, as the Democrats continue to pick each other's scabs, John McCain is sitting pretty and gaining traction. We'll examine the Republican side of the race next.


HUME: So there was John McCain today meeting with British Prime Minister Gordon Brown. The other presidential candidates did, too, but this was not McCain's first meeting with Brown, it was his second, because McCain, with the luxury of time away from the campaign trail with the race over had the opportunity to meet with Brown in London earlier.

These are not bad days for John McCain. Let's take a look at some polls that may illustrate that. Let's look at an AP poll going back to November of 2007, and the Democratic candidate in a generic match up against a Republican enjoyed a 15 percentage point advantage.

Now look at McCain versus the current pair of Democratic potential nominees. First against Hillary Clinton, it's a tie with a margin of error, and if you look at the McCain versus Obama, it is virtually the same picture, McCain slightly ahead. All of this is within the margin of error.

Now that will change many times between now and November, of course, and it may change much for the worse for McCain. But it is certainly different than it was last November, and it is different in a way that obviously shows to the advantage of the Republicans.

So, what about this period that McCain is in? How well is he managing in running his affairs? Is he simply lucking out because the Democrats are in extra innings, or he is himself campaigning or conducting himself in an effective way?

KONDRACKE: I think he's being effective. He's announced that he is going to go campaigning around places that Republicans don't usually go- -slums and barrios and Democratic areas, and so on.

And he's made, I think, some effective economic speeches. That is what he had to do is to get going on the economy. There are rich speeches that he has been delivering, not making conservative Republicans at all happy, because there's a lot of populism in them.

I think the one thing he has to do is to begin to deal with the question which will be thrown at him by the Democrats — are you better off now than you were eight years ago. And an on every measure that you can count — national debt, poverty rate, median income, all that kind of stuff, people are not better off, and they don't feel better about.

That will get thrown at him, and he better have an answer about why his kind of economics works, because it's similar to Bushes.

HUME: It may also depend on the date on which you ask that question. Are you better off than you were seven years ago, which would place you right in the middle of the economic downturn that occurred in the immediate aftermath of 9/11.

EASTON: I think we need to put some perspective on these numbers. Yes, John McCain's favorability has gone up. It seems to be ahead of Hillary's and Barack Obama.

But that's pretty golden when you the only people attacking you are Hillary Clinton, Barack Obama, and John Murtha, who is raising questions about his age now. So he doesn't have Republican candidates attacking him.

You cannot lose sight of the fact that with the economy the way it is, with a very unpopular war, the bottom line is this a change election year. People want change.

HUME: So the question arises, does John McCain, by virtue of his many disagreements with the Bush administration and his maverick role within the Republican Party, seem a change agent, Charles?

KRAUTHAMMER: He is enough of a change, and that's why he's OK, because he is not a generic Republican.

People know from his history and his past that he is a maverick, that he is angered the Bush administration. He stood out on issues like interrogation and immigration and a lot of other stuff — on what I would call restricting free speech —

HUME: Campaign finance reform.

KRAUTHAMMER: Yes — all of these issues that conservatives are worried about. But of course he's going to carry the base. Conservatives are not going to go for an Obama or a Clinton. They're not going to have the enthusiasm that the base had for a Bush, especially in the year 2000, but he will carry it.

And he has to run as an independent. And that's where his strength is. He is doing exactly the right thing.

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