This is a rush transcript of "Special Report With Brit Hume" from March 3, 2008. This copy may not be in its final form and may be updated.


SEN. HILLARY CLINTON, PRESIDENTIAL CANDIDATE: I don't think people should come to Ohio and tell the people of Ohio one thing and then have your campaign tell a foreign government something else behind closed doors.

So that's the kind of difference between talk and action that I have been pointing out throughout this campaign.

SEN. BARACK OBAMA, PRESIDENTIAL CANDIDATE: What's not disputed is that Senator Clinton and her husband championed NAFTA, worked on behalf of NAFTA, called it a victory, called it good for America, until she started running for president.


BRIT HUME, HOST: So this is what it has come down to in Ohio, and to some extent, I guess, in Texas as well — a debate over the North American Free Trade Agreement, which Ohio worker, in some number, believe has been harmful to the state's economy out there.

And in the midst of all of this comes the allegation that an Obama supporter and senior advisor in the eyes of the Clinton camps has said to the Canadian government "Don't pay any attention to Obama's criticism on NAFTA. He doesn't really mean it, and it is just for politics."

It has gotten so hot that the Canadian government in the person of the prime minister himself in a parliamentary exchange felt called upon to weigh in on that today, and let's listen to what he said.


AUSTAN GOOLSBEE, OBAMA CAMPAIGN SENIOR ADVISER: The Canadian embassy in Washington has issued a statement indicating it's regretted the fact that information has come out that would imply that Senator Obama has been saying different things in public than in private.


HUME: So what about this controversy, and what difference could it make? First of all, what about the advisor — what does he believe to actually have been said? His name is Austan Goolsbee?

BILL SAMMON, SENIOR WHITE HOUSE CORRESPONDENT, WASHINGTON EXAMINER: He allegedly said to the Canadians that Barack Obama is talking trash about NAFTA, but he really actually is not going to have a problem with it once he is elected president. That's the allegation.

HUME: What does he admit having said?

SAMMON: Well, he admits having a very casual conversation with someone during a walking tour.

HUME: And he wasn't with any representative of Obama?

SAMMON: He said he was not representing Obama. And you can make the argument that he was, but the problem is, from Hillary's perspective, that her hands aren't necessarily clean on this issue, because she is now beating up on NAFTA, but she supported it, and her husband signed it. So I think it is a wash politically when you get down to the level of NAFTA.

MARA LIASSON, NATIONAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I don't know. I think that it evens the playing field a little politically, because up until now she has been on the defensive, because she has had nice things to say about NAFTA, and he has been pointing them out.

The truth is they're both doing the exact same thing. They're both saying horrible things about NAFTA now, and they're both essentially free traders.

HUME: You think so, really, now. You think if president each would be a free trader?

LIASSON: I think they are not saying they are going to pull out of NAFTA. They're talking about renegotiating it around the edges, seeing if they can improve it in terms of environmental and labor protections.

I think they have both been pandering to Ohio voters. Don't forget, in Texas, on the border, NAFTA is popular.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It hurts him because he's the one of the aura of a man who is above politics. She is the one who is looked at as the aggressive and old politician who would say or do anything.

Well, both of them are pandering on that. You expect it out of Hillary, but you would have not expected it out of Obama if you were someone in the thrall of Obama. So I think it punctures his balloon to some extent.

And if you listen to what the prime minister said, it is so carefully worded. What he says is I regret the leak.

LIASSON: He didn't say it was wrong.

KRAUTHAMMER: He didn't say it didn't happen. Obviously, Obama is sending a signal consciously, or his advisors know that this is a fraud and a fake.

HUME: Or they hope.

KRAUTHAMMER: Look, he is saying it in Ohio.

HUME: His cousin (ph) is an economist, so he probably thinks free trade is a good idea.

KRAUTHAMMER: The president is not going to stiff Canada and betray its closest ally, particularly at a time when Canada is taking the highest per capita casualties in Afghanistan. That is not going to happen.

HUME: Now, what about these races — not the little ones, but the two big ones tomorrow — what are the chances for these two candidates?

SAMMON: You have three possible outcomes, broadly speaking: Hillary wins both Texas an Ohio, she loses both Texas and Ohio, or wins Ohio and loses Texas.

I think if she wins both, obviously, she stays in the race. I think even if she wins Ohio and loses Texas she stays in the race.

I think only if she loses both Ohio and Texas does the pressure becomes very intense on her to get out of the race, because, you remember, Brit, if she stays in, we got seven more weeks of Democratic in-fighting at a time when the Republicans already have their nominee. That could hurt the eventual nominee.

HUME: And, Mara, we're now beginning to have somewhat more intense scrutiny of Barack Obama.

LIASSON: Yes. I think things are changing somewhat in the last couple of days. I don't know if they're going to be enough to put her over the top, but, first of all, we are having more intense scrutiny over Obama. Maybe the Obama honeymoon is finally over. She has been encouraging it, of course, but, finally, it is happening.

I also think that all of the attacks that she has been throwing at him — he is all talk and no action, this NAFTA attack, the national security ad she has been running: who do you want at 3:00 a.m. answering the phone —

HUME: Let me ask you the question: do you really want a White House where the phone rings at 3:00 a.m. and the president is up and answers it?

Sorry, wrong number!

LIASSON: She has been attacking him on what is his greatest weakness, which is national security. She might not have much of her own to point to, but the polls do show a little up-tick for her in both places.

HUME: Charles, you have the last word here.

KRAUTHAMMER: At some point, the Koolaid is going to wear off. It could wear off next year after inauguration day, but it could start wearing off now. He is getting pinpricked here and there — a mistake on Farrakhan, on NAFTA. If he begins to look like a regular politician, he can lose.

I think it's in her interest if she wins Ohio and perhaps even loses narrowly in Texas, stays in and hopes that something will happen in the next seven weeks, and it could.

HUME: When we come back, the U.S. air strike in Somalia and the state of play in the war against Al Qaeda. Stay tuned.



UNIDENTIFIED MALE: If we drive them out of Iraq and Afghanistan, and if the Pakistanis are successful driving them out of the Fatah, where will they go? And the area that probably gets the most votes when you talk to the intelligence community is a place called the Transahill(ph), which is in the northern portion of Africa.


HUME: That place has been getting a large share of the bombs lately, too, not the least of being the attack just now which was aimed at another Al Qaeda senior operative.

The U.S. has had some success attacking these Al Qaeda operatives from the air. This was another case of that. We don't know if we got him yet. Presumably we'll know in a couple of days.

But it raises some interesting questions about the state of play in this war against Al Qaeda, which gets less attention than the war in Iraq, perhaps, but where some notable things may have happened — Bill?

SAMMON: It shows how silly this argument is about whether the war on terror is in Iraq or Afghanistan. It's global. We're not able to keep the terrorists in handy nation states and contain them there and attack them there — they're everywhere.

And so I think this shows the Bush administration is casting a wide net, and in addition to doing what they're doing in Iraq and Afghanistan, are going after terrorists in northern Africa because these terrorists are looking for safe havens.

They are looking for failed states, like Somalia, and I think what we did there is try to help them from setting up camp there in Somalia.

LIASSON: It also shows that it's not like we have them where we want them in Iraq. We can't contain them in Iraq. Just because Iraq was for a time called the "central front in the war on terror," the war on terror has a lot of fronts.

HUME: Well, it appears, though, that they have been nearly completed defeated in Iraq.

LIASSON: But we can't stop them from spreading.

HUME: Or fleeing.

LIASSON: Or fleeing and setting up camp elsewhere, yes.

KRAUTHAMMER: The one question historians are going to ask is how the Bush administration go six-and-a-half years without a second attack, which nobody expected.

In part it is the success of the declaration that Bush made right after 9/11 in that speech in Congress in which he said states ought to think twice about harboring and giving sanctuary.

And with the exception of Iran, states are not harboring terrorists, so even a place like Yemen or Libya has come relatively clean.

So the terrorists have to end up in the lawless places of the world, in the provinces in northwest Pakistan, which nobody has controlled, even the British never did, Afghanistan, of which the hinterlands have never been controlled, even the Soviets and the British did not success. And in states where there is no government at all, like in Somalia.

The bad news is that it means that this low-level insurgency will continue for a long time. But the good news is that if you are in these hell holes without any infrastructure or easy access to the outside world, you cannot organize large attacks on the U.S. homeland or even our installations abroad.

We have not had an insignificant attack even on our embassies abroad. And I think it shows that this overall strategy is succeeding, despite the claims of Democrats that we are losing the war on terror, or Al Qaeda is stronger now than at any point since 9/11.

It is very weak, scattered, and hiding in places like Somalia.

HUME: It doesn't appear that Republicans or the administration will get credit for that at any time soon, does it Mara?

LIASSON: The absence of attack — I think you have to go for a very long time without an attack. I know six-and-a-half years, you would think you should get credit for that, but there was about six-and-a-half years between the first World Trade Center and the second.

SAMMON: Bush used to always say we got them on the run, we have them on the offense. People would make fun of that and say it is a clich,, but that's literally what we are doing. We have them on the run and we're staying on offense by going after them in places like Somalia. And that is what prevented the attack —

HUME: And it appears we have killed over time — we keep killing, as someone said, the number three.

SAMMON: Exactly. We have had five or six number threes, plus Zarqawi, who was the top terror target in Iraq.

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