This is a rush transcript of "Special Report With Brit Hume" from December 31, 2007. This copy may not be in its final form and may be updated.


SEN. HILLARY CLINTON, PRESIDENTIAL CANDIDATE: My two leading opponents are spending a lot of time right now talking about each other. I'm going to keep talking about the people of Iowa and the people of America.

SEN. BARACK OBAMA, PRESIDENTIAL CANDIDATE: We've got e-mails floating around. We have folks going through my kindergarten papers, and we' ve had outside groups spending millions of dollars. But what I've noticed is that among voters, among caucus goers, they are responding to the positive message that we have put forward.


BRETT BAIER, GUEST HOST: there you see Senator Barack Obama and Senator Hillary Clinton today on the campaign trail talking about the situation in Iowa.

On the Democratic side, let's look at the averages of the polls, the Real Clear Politics averages. And there you see it is essentially a tie at the top, with Clinton, Obama and Edwards right there neck in neck.

So what do they have to do between now and Thursday night's caucuses? Some analytical observations from Fred Barnes, executive editor of The Weekly Standard, Jeff Birnbaum of the Washington Post and syndicated columnist Charles Krauthammer — FOX News contributors all.

Fred, you heard Senator Clinton saying she will leave it to Barack Obama and John Edwards to go at it.

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: She has a short memory. She has never spoken ill of her opponents. But, certainly, she has of Obama for a long time, and so has her husband, the former president.

In Iowa, I don't think there is anything in particular that a candidate can do positively, because they have spent so much time in Iowa now that Iowans know what they stand for. They have probably seen all three of the candidates more than once.

And I think the candidates just have to guard against screwing up — some gaffe, some dumb statement, the kind of stuff that we will talk about that Mike Huckabee has done on the Republican side recently.

I think in Iowa it looks increasingly that on the Democratic side, Iowa will decide nothing. And this is particularly true because John Edwards seems to have done so well in the closing days here.

With Obama — we knew that Hillary Clinton has enough strength around the country that she can hang on for sure, because she has such a face in the party even if she comes in third.

Obama looked like he might win. His expectations aren't as great, but he will be around, too. And Edwards, if he wins, in particular, he will be a factor that hadn't been counted on, and so we will move to New Hampshire.

BAIER: So Jeff, do you think that there are three tickets out of Iowa?

JEFF BIRNBAUM, COLUMNIST, WASHINGTON POST: Well, there are two tickets out of Iowa, I think, and three if Edwards wins. I think that's the way you have to look at.

Clinton and Obama, if one of the two wins — if Edwards doesn't win in Iowa, I think that he has a much hobbled campaign going forward. Obama, I think we will see very soon, has raised a tremendous amount of money and can compete with Hillary Clinton all the way through, whatever all the way through is.

I think that what they have to do, in answer to your question, is the ground game. They have to make sure that they get all of their supporters to the caucuses on Thursday night. That's what it's all about.

There really aren't that many people who go to the caucuses. And so if you're able to get more than your opponents, if you have a good band service going around all over Iowa, then you are likely to have a much better chance of winning.

It doesn't have to do with what people are saying anymore. It's what they're doing and how many cars they have to transport people.

BAIER: On that point, Major Garrett reported today that some Clinton bigwigs like Harold Ickes are going to be actually driving the vans on caucus night. So I don't know if that makes a difference or not — Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: That is the kind of humanizing humiliation you enjoy seeing in presidential campaigns. It is the only thing that actually makes it worthwhile — Howard(ph) Ickes driving a van, that's just wonderful.

Look, I think the real story here is that Obama is worried about Edwards. I think he hears the pitter patter of Edwards sneaking up on him. And he knows that the threat to him is if Edwards wins, he gets propelled into New Hampshire.

Obama is doing well in New Hampshire. He is even ahead in some of the polls, but Edwards would steal all that thunder and would really hurt him.

I think Hillary will come out of it OK either way. And he is worried about Obama also because the story over the last two or three months was Obama's rise and Hillary's missteps, and the fighting between them. And during that period, Edwards was off the radar.

As we saw earlier in the show, he had very strong union support, the support of these so-called unauthorized groups running very strong ads in his favor. And he's got a populist message which is almost savage in its edge, well honed. And in a constituency like Iowa, heavily unionized and more left than most of the country that might resonate.

If he shoots ahead, I think Obama is the one that is hurt, and that's why Obama is talking a lot about Edwards a lot today.

BAIER: In fact, the campaign put out a PowerPoint presentation showing that Obama is better positioned around the country than Edwards is.

BARNES: Look, if Edwards wins by two points over Hillary, and Obama is one point behind that — if they are all with roughly a third of the vote, which it looks like it may be something like that — look, if Edwards comes in first, he will get something out of it. I don't think he will get the slingshot that others have gotten in the past.

And remember, Iowa is not a good predictor. Think of all the people that have won in Iowa — George Bush, Sr. got it started in 1980, and you can go down and name the number who have won in Iowa and then died.

BAIER: Last word, Jeff — one, two, and three.

BIRNBAUM: Who are one, two, and three? Thanks a lot.

I'm going to go with Obama, Clinton, Edwards.

BAIER: All right, that's the last word for this topic.

BARNES: I agree with that.

BAIER: OK, Fred agrees.

Next up with our panel, we will look at the Republican presidential campaign in Iowa, how the frontrunners doing, and what they need to do before Thursday night's caucuses, next.



MIKE HUCKABEE, PRESIDENTIAL CANDIDATE: This morning, I ordered our staff to pull the ad. I told them that I do not want it to be run.

We are now committed from now through the rest of the caucuses that we will run only the ads that talk about why I should be president, and not why Mitt Romney should not.

I want you to see it. This is what we planned to do. I think when you see it you will realize this is why we are not going to run it, and that is why it is being pulled.


BAIER: What you can hear there are the reporters laughing. Mike Huckabee cuts an attack against Mitt Romney, calls a press conference, and then says he has a change of heart, but in the press conference runs the ad to show that they actually cut the attack ad.

Mitt Romney late this evening had a response: "The press conference which Governor Huckabee had today I think is confusing to the people of Iowa. On the one hand he wants to run a positive campaign, and on the other hand he shows a negative campaign ad in hopes that people promote it to the public through the earned media, and I think that's a very confusing and puzzling message."

We're back with our panel. Charles, let's start with you. What do you think of this development?

KRAUTHAMMER: This is hucksterism at an entirely new level, a cosmic level. I have cut some negative ads, but I don't want to show them because I'm a really positive guy. But I want you to see them, because that'll show you how positive I am.

This ranks with "I'm not going to make my opponents religion an issue, but isn't it true that Mormons believe that Jesus and Satan are brothers?" It also ranks with we ought to find it in our hearts that the children of illegal aliens in Arkansas have scholarship, but last week he said we have to be careful about the hordes of nefarious Pakistanis sneaking across the Mexican border.

This guy is so cynical that I think it almost works, although, as you said, the laughter of the pressroom indicated that it certainly didn't work on the intended audience.

But, remember, he got that ad, or at least a piece of it, on our show, and it was shown that way without a tagline "I'm Mike Huckabee, and I approve this." It ended with a tagline, I'm Carl Cameron, and I'm just showing it.

BAIER: Jeff, what do you think? Does this controversy hurt Huckabee today, New Year's Eve?

BIRNBAUM: Well, I think the strategy works. This is a purely pragmatic view, that is, that Huckabee is going to have the negative attacks in the ad read and seen by far more voters in Iowa, New Hampshire, and around the country, by pulling down the ad — by not paying for it and putting it up — then if he actually put it up.

BAIER: So you're saying this was on purpose?

BIRNBAUM: Without question.

BAIER: You don't believe he had a change of heart?

BIRNBAUM: No, I think he had a change of heart because he realized that by not putting up the ad, he will have more people see his attacks.

BAIER: For free.

BIRNBAUM: For free. He saves money, too.

But I think that they may also catch how cynical that decision is, and punish him for it.

BAIER: Fred —


BARNES: I think it's amazing how cynical you all are.


Huckabee was riding high, the press was carrying him around on their shoulders — here's this new guy, we all like him. And then all of a sudden the honeymoon was over. This ended a couple of weeks ago, and the press started to scrutinize him.

Mitt Romney, his chief opponent, started running ads against him. I watched all those ads today. They are utterly conventional contrast ads. They're negative ads, but there's nothing unusual about them. Huckabee was demanding an apology for them.

Look, he's gotten in a real campaign now, and he can't handle it. And this was a good example of it today.

BAIER: We're going to put up the polls today, the average in the polls. And, again, it's just a tie there in Iowa. There you see the Real Clear Politics average — Romney at 28, now Huckabee at 27. At one point he was up by 15 or 20 points, Jim, so this is a major slide.

BARNES: No, no — one poll showed him up by 22 points. I don't think anybody believed that poll. These are just polls now.

BAIER: In the average he was up 10 or 15.

BIRNBAUM: We can judge nothing by this poll, basically. We don't know who is going to win, but I bet you are going to ask us who we think is going to win.

BAIER: I'm not going to ask you.

BIRNBAUM: Thank god I'm off this time.

BAIER: Fred, one, two, and three?

BARNES: I always thought Romney would win there, and it looks like he will, and Huckabee maybe a close second. And McCain is coming out of nowhere in Iowa and is really gearing up to beat Romney in New Hampshire.

BAIER: So does this hurt Huckabee today?

BARNES: Yes, of course it does.

BAIER: It does, definitively?

KRAUTHAMMER: Fred's right. It's going to be Romney, Huckabee, and I think McCain gets the bronze and a big ticket, because nobody expected him to do well in Iowa, and because he came out against ethanol in Iowa. If you do that and you come in third, you ought to get a gold.

BAIER: OK, and last thing — Fred Thompson today is making — he's on the web. He's putting out this video, 17-minute video that says he's the real conservative. Is his race done? Quickly.

KRAUTHAMMER: If he comes in fourth, I think he's done.

BIRNBAUM: Yes, I think that we won't have to worry about Fred Thompson after New Hampshire.

BARNES: If he can get 30 seconds instead of 17 minutes, he would have a better shot.

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