Updated

This is a rush transcript of "Special Report With Bret Baier" from November 2, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

DEDE SCOZZAFAVA, R-N.Y. FORMER U.S. CONGRESSIONAL CANDIDATE: It is clear th at the campaign is lagging. We had a struggle with finances. And I think it was time today to, I think, do the right thing, which is to release the Republican county chairs. They have stood beside me this entire time, and let them do what is best for the Republican Party.

(END VIDEO CLIP)

BRET BAIER. HOST: That was Republican Dede Scozzafava of New York's 23rd congressional district saying she was suspending her campaign and "releasing her supporters for the good of the Republican Party."

A short time later she endorsed the Democrat in that race, Bill Owens, saying this, quote, "It is in this spirit that I am writing to let you know that I am supporting Bill Owens for Congress and urge you to do the same."

Well, here is the latest poll in New York 23, and there you see the numbers with the developments this weekend, Doug Hoffman, the Conservative Party candidate at 41 percent, Bill Owens, the Democrat, at 36 percent. But of course, the undecided, is pretty high there.

What about this race and all the other races we will be covering tomorrow? Let's bring in our panel, Bill Kristol, editor if the Weekly Standard, Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer.

We'll start with New York 23 — Bill?

BILL KRISTOL, EDITOR, THE WEEKLY STANDARD: Well, this is a district that President Obama, candidate Obama carried by five points last year, exactly a year ago.

People forget this is a traditional Republican district. It has been going Democratic. Obama carried it. That's why they made John McHugh the incumbent secretary of the army.

This was an incredibly clever move by Rahm Emanuel to pluck a popular incumbent Republican out of the House and give him enough of an important job in the executive branch, and win this special election and get an extra Democratic Congressman.

Then we have the chaos of the Republican side, Scozzafava has to pull out. She then endorsed the Democrat. The real Republican, Hoffman, is running on the conservative line, which is a little hard, not the obvious vote for republicans. And the absentee ballots that have already been cast for Scozzafava won't be counted for Hoffman. Nonetheless, Hoffman is likely to win.

It is really amazing. This is plus five Obama district, chaos on the Republican side, a respectable Democratic nominee, and the Democrat is going to lose, probably.

BAIER: Juan, you listen to a lot of the national media as they look at this race, and they made it a huge deal out of this conservative candidate overtaking the Republican. Do you make a huge deal out of it?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: I think it's probably the most important race in terms of looking forward that we're going to have tomorrow night. And I say that because I think it's really telling about what is going on inside the GOP. If you get House Minority Leader John Boehner, if you get Eric Cantor, if you get Newt Gingrich all saying, you know what, we are with Dede Scozzafava, and the GOP, the people on the ground, saying this is the candidate for our party.

And then you get this highly energized, very conservative base saying, no, we don't like her or what she stands for, it doesn't fit for us. And you have to say exactly who is in control of the party? Who is defining the party at this critical moment?

We know that people are saying the party is anti-Obama, but it's go got to go beyond that and say what it is for. And at the moment, I think it is limiting the size of the tent.

Is that going to help? It is an energized space, very energized. It is going to turn out tomorrow in big numbers. But down the road, what does it say to independent voices to Republican moderates, that the party is not there for them?

BAIER: Well, they weren't, the Republican Party as a whole, for the stimulus, and Dede Scozzafava was. She was actually, some say, left of the Democratic candidate in that district.

WILLIAMS: Sure.

BAIER: So is that telling for the national Republican Party?

WILLIAMS: Yes, it is telling. In other words, you can have — I think if you look at Democratic Party. You have liberal Democrats, you have conservative Democrats. That's part of the blue dog argument that we experience here in terms of the health care reform argument.

But on the Republican side, what we're seeing now is if you are a liberal Rockefeller, New York Republican, that kind of Republican is no longer acceptable.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: This idea that it is limiting the tent of Republicans is absurd. She is not a moderate. She is a liberal.

As you said about the stimulus, but also she is for card check, which is the abolition of the secret balloting of union elections. That isn't a moderate position. That is a left wing position. Even a lot of Democrats are ambivalent about that.

So it's not only social issues, which is how liberals are portrayed. If you're not down the line on social issues you will be read out of the Republican Party. She was not a Republican and she showed it.

It took a half a day and she turned on the party. She was a liberal. She was an unimportant legislator in the New York state that had a chance. She thought she would ride the idea of being a liberal into the Congress. It didn't work.

The message here is that there is a true revolt. There is an opposition grassroots in the country to the overall Obama agenda. It is about high taxes, about expanding the government, it is about expanding the reach of government. It is about the government control. It is a fundamental and important movement.

If the Republicans ignore it — it's the engine of recovering the House and the Senate. If it's ignored and tapped down in the name of appeasing independents and the name of acting as a liberal, that's and an absurd strategy. And that's what is being uncovered in New York 23.

BAIER: Let's go to the New Jersey poll. That race for governor, there is a new poll out that says that Chris Christie, the Republican, is up now by 2 points, obviously it's within the margin of error there. It is very close.

Bill, what does this say, this race, if, for example, Chris Christie can pull it out.

KRISTOL: That's a state that Obama carried by 16-point one year ago. So let's assume it's even. That's a 16 point swing against the Democrats.

One word on New York 23 for its significance nationally. This is a classic swing congressional district. There are a heck of a lot of Democratic congressmen who were elected in 2006 and 2008 exactly in districts like this, districts that went for Bush in 2004, but for Obama in 2008.

If a conservative Republican can win in this district with all the disadvantages of the chaos on the Republican side and the official Republican candidate pulling out and endorsing the Democrat, what does that say to the moderate Democrats in the House?

I think if Hoffman can pull it out with a big Republican victory in Virginia and maybe a narrow victory in New Jersey, I think it is a huge blow to health care.

Nancy Pelosi needs the votes of Democrats from districts exactly like this, and the swing voters in this district are turning against the Democrats.

And what is the essence of Hoffman's campaign? It is totally about Pelosi. Mr. Owens is a nice man, he's a good local citizen. Don't send him to Washington to be a rubber stamp vote for Nancy Pelosi.

BAIER: And quickly, Virginia, we have Bob McDonald now up huge in the latest poll. That's a Republican there. Obviously a purple state, Virginia, and he is up 18 in the latest poll.

Juan, what happens if Republicans do sweep these three big races, the message that is sent, and what happens if it is split? How do you read it?

WILLIAMS: Well, if it's a tidal wave, let's say, I think a lot of what Bill is saying is sort of wishful thinking about the larger impact of this, because it's really not a referendum on health care or immigration.

What it is, I think, in it's telling sense in New Jersey about taxes and about corruption in that state, much more so than anything else. But people will interpret it as a negative sign for Obama and pressure on conservative Democrats.

KRAUTHAMMER: It tells you that '08 was a charisma election, a one-shot deal, and all this talk about realignment, about a new era of the death of Republicanism or conservatism is utter nonsense.

It was an unusual election last year, all the stars were aligned Democratic, charismatic candidates. Still only a seven point victory. The return to the norm is happening now, and we're going to see it tomorrow night.

BAIER: We will talk about the election that isn't going to happen in Afghanistan and what it means for American troops after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES OF AMERICA: About an hour ago I spoke with President Karzai and I congratulated him on his election for a second term as president of the Islamic Republic of Afghanistan.

I emphasized that this has to be a point in time in which we begin to write a new chapter based on improved governance, a much more serious effort to eradicate corruption.

He assured me that he understood the importance of this moment, but, as I indicated to him, the proof is not going to be in words. It's going to be in deeds.

BAIER: Well, the opposition candidate in Afghanistan, Dr. Abdullah Abdullah, announced Sunday that he was pulling out so an election runoff was not necessary.

And Afghanistan's election commission declared incumbent Hamid Karzai the winner and cancelled the plans to hold that second runoff election this coming Saturday, even though Karzai had at least 1 million bogus votes from stuffed ballot boxes and fake polling stations.

We are back with the panel. How does this affect U.S. policy to Afghanistan — Charles?

KRAUTHAMMER: It has no effect. The Obama excuse for all the agonizing around and the waiting and deliberating over troop levels, excuse had been, well, we really can't really decide this unless the taint of this election is removed and until we are really sure about who our partner is was always a fig leaf. It was always an excuse.

It was a weak and corrupt government before and it is today and nobody expected anything different.

Look, the reason Obama has been agonizing is not because he has concerns about the composition of the government in Afghanistan. He is worried about the composition of the government in the United States, meaning whether his popularity would suffer if he went with the generals, whether the Democrats are going to lose seats in the House and the Senate next year, and, overall, whether or not he will be able to pass his cherished domestic agenda if he alienates his left by accepting an escalation of the war.

It is all about politics, and they are American politics, not Afghan politics.

BAIER: Yes, there is a large question of when President Obama would announce his decision, and a lot of people said it would be after the runoff. Well, now there is no runoff, so it will be after tomorrow.

WILLIAMS: Yes, and apparently it is going to be after this nine-day trip, according to the White House. So we don't know. But I must say, Charles, you almost articulate the White House point of view, interestingly, in your comments, because, you know, Hillary Clinton, the secretary of state, White House people have been saying, oh, yes, this is now a legitimate government. It has gone through the electoral process. It's been certified by the Afghan government.

I am thinking to myself, who are they kidding? Of course it is not a legitimate election. The man just cheated wildly, and if America is looking for a partner that is reliable and that the Afghan people can say this is a legitimate government and we understand if we go with them we're not going with a bunch of thugs. We're going with someone who will not cheat us, not abuse us, and they're better than the Taliban, the Afghan people don't know that as a result now of this election.

And it makes it more problematic for the U.S. government. And to say that this is all about healthcare, I don't know where — I really do believe that the president is sincere in saying he cares deeply about resolving this so we can fight terrorists. This is about fighting Al Qaeda. That is the goal here.

BAIER: Bill?

KRISTOL: The president said today, and I agree with him, this has to be a point in time in which we begin to write a new chapter based on improved governance.

And he should take that seriously and he should show improved governance in the United States and he should make a decision. This has been a farce. This endless seminar, and now he is looking into the composition of each province in Afghanistan so he can second-guess General McChrystal and the huge team of military advisors he has that knows quite a lot about each province in Afghanistan and which came up with a recommendation of the troops that were needed to win the war.

He should take seriously the notion that deeds matter, not speeches, and he should act to send the troops that are necessary, and not just because it is annoying seeing him dither. It matters. It matters when the troops get there.

General McChrystal said there is a sense of urgency here. There is going to be a summer offensive. It takes time to send troops into rotation, and the longer he waits to make the decision, the more on the defense we will be, and the more disadvantaged we will be militarily.

BAIER: Last word?

KRAUTHAMMER: The question is, he said it is a war of necessity. Does he believe it? And that's the real issue. If you're going to go into war and escalate a war, you have to have a commander in chief who believes in the war.

And the way he has acted it looks as if even if he decided he would go into it he will be half-hearted. And do you want a war that escalates with a half-hearted commitment on behalf of the commander in chief? It's a real issue.

BAIER: That is it for the panel, but stay tuned to see some real in depth, top notch reporting.

Content and Programming Copyright 2009 Fox News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2009 CQ Transcriptions, LLC, which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, LLC'S and CQ Transcriptions, LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.