This is a rush transcript of "Special Report With Brit Hume" from October 9, 2007. This copy may not be in its final form and may be updated.


FRED THOMPSON, PRESIDENTIAL CANDIDATE: I think we need to tell them the truth that our security is on the line, that our economy is on the line, that our prosperity is on the line. We are going to have to do some things differently.

We are probably going to have to spend more than four percent of our budget than we are spending right now on our military. We are bankrupting the next generation of those yet to be born. Those are truthful things that the American people, I think, have an intuition about. We need to own up to it. It is not all gloom and doom.


BRIT HUME, HOST: That may not sound like the most earthshaking thing or heard, but it was a big deal because Fred Thompson had never appeared in such a setting — that is to say, in a debate along with his fellow Republican presidential candidates. It happened this afternoon.

And we will have some thoughts about it now from Fred Barnes, executive editor for The Weekly Standard, Mara Liasson, national political correspondent for National Public Radio, and the syndicated columnist Charles Krauthammer — FOX News contributors all.

Well, Fred, you saw Fred Thompson for the first time. How did he do?

FRED BARNES, EXECUTIVE EDITOR, WEEKLY STANDARD: Well, he was the one thing that mattered here, whether he could run with the others guys or not. He did fine, I thought.

He didn't dominate —

HUME: Did he separate himself from the field?

BARNES: Not particularly. It wasn't a commanding performance. He did get a hook, as some people have called it. I am the consistent conservative, he didn't make that point particularly well, but I thought he did fine, particularly at the end.

The Romney people were already emailing out the transcript of that jab that Romney had, that the debate was just like a "Law and Order," the who that Fred Thompson was on. He came back, I thought, extremely well in saying I thought I was going to be the best actor on the stage. That was very good.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I don't think he dominated. I agree with Fred, I think he did fine. He was the tallest candidate, but he was not the dominant one. And I think, once again, Rudy Giuliani was, has been consistently the best performer in this debate.

What I was surprised at is we were all waiting for the Giuliani- Romney debate over taxes to be played out on this stage, and for some reason Romney decided to narrow it to the line item veto. He said, now we really are both tax cutters, and we have a lot in common, but we differ on the line item veto. So he's chosen to make a stand there.

HUME: Speaking of which, let's take a look at that exchange on the economy between those two candidates. We have it right now.


MITT ROMNEY, PRESIDENTIAL CANDIDATE: We both agree with the need to cut taxes, and I fought to do so, and I did so in my state, too. We both believe in cutting back on spending as well.

RUDY GIULIANI, PRESIDENTIAL CANDIDATE: I brought taxes down by 17 percent. Under him taxes went out 11 percent per capita. I'd led, he lagged.

UNIDENTIFIED MALE: Is there a rebuttal here, a final rebuttal?

ROMNEY: It is a nice line, but it is baloney. Mayor, you have to check your facts. No taxes — I did not increase taxes in Massachusetts, I lowered taxes, number one.

Number two, the club for growth looked at our respective spending record. They said my spending grew 2.2 percent, yours grew 2.8 percent a year.


LIASSON: That is .6 percent. That is the difference.

HUME: Point — sixth tenths, yes. That is total spending —

LIASSON: I know, but still, I think Romney is actually correct. The biggest difference is the difference on the line item veto, which I don't think is enough of a difference to separate these two, as the governed, pretty liberal Republican candidates.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: That exchange between Giuliani and Romney is the Tom and Jerry show. Every week or so it reappears in a different form. It is the same idea, and there isn't a lot there.

Romney obviously chose these two issues because he wanted to separate himself, he wanted to go after the big guy who had been leading everywhere, and he is catching up a little bit. But that really has not helped.

HUME: Catching up a little bit in New Hampshire.

KRAUTHAMMER: Catching up a little bit in New Hampshire, but it hasn't — I mean, Romney's numbers, if anything, nationally, have slipped. It is McCain who has come up to about 15 percent. Romney, again, hovers around double digits.

On Thompson, it was the big debut. And as Cameron said he came out unscathed, which is not exactly a scintillating performance. We talked earlier here among ourselves about him being hailed as an heir to Ronald Reagan. He is Reagan after his bedtime. He is soporific and lugubrious and slow and measured.

HUME: And amiable.

KRAUTHAMMER: And a bit like Sam Ervin, the old country lawyer. Everything is sort of — he is extremely amiable, but there are no sharp edges.

Is that going to win in this election year? You have an unhappy electorate, a little anxious about things, perhaps. He thinks reassurance is gong to win, but I think you have to be a little more energetic and dynamic.

He had a chance to be and he really was not.

BARNES: What you are describing is Fred Thompson is southern. That is why southerners like him so much. They think of him — and they do, a lot of them. I spent the weekend in Alabama —

KRAUTHAMMER: Isn't that a stereotype?

BARNES: Sort of. But one thing about stereotypes is they are usually true.

HUME: Or at least they are based on truth. Something about them is true.

BARNES: You can quibble with how I said it.

But I thought the line item veto thing, I though clearly that that was another case where Giuliani did better. He had the Supreme Court ruling, that was six to three, striking down the line item veto as unconstitutional. And it was not a bunch of liberal who did it, it was Clarence Thomas and William Rehnquist who were in the majority on that decision, striking down the line item veto.

So, on balance, I thought he did well. I agree with Mara, Rudy does great in all these debates. I thought Romney would do better in a debate where economics and finance and business were the things on the table. It is not that he did poorly, but he did not really rise to the occasion.

I thought that was the debate, not geared for McCain, for sure — not his issues — these were Romney's issues. He did not do well as —

HUME: What is it about Romney? You watched him. He was a polished performance, he did not lose his cool, he didn't stumble, he had ready answers for everything. His positions were by and large appealing to a conservative electorate.

Why doesn't he seem to penetrate more?

LIASSON: I think this is a mystery. Maybe because he seems too polished, or somehow light. One thing about Giuliani, if this is the year for authenticity, I would say that so far Giuliani has been the authentic candidate in the race. He is very much himself, he is in your face, he seems to be comfortable in his own skin.

HUME: Certainly Fred Thompson seemed authentic today. He was the guy we have always known, wasn't he?

LIASSON: That's right, but Romney is also strong and tough, and he has experience. I mean Giuliani.

But I think that nothing about what happened today in Detroit changed the dynamic of this particular race.

HUME: So you think that Fred Thompson will still remain in second place in a large number of places?

LIASSON: Probably.

HUME: All right. Next up on with all stars, we will look at Democratic Presidential candidate Hillary Clinton's plan for universal retirement accounts. Stick around.


HUME: Senator Hillary Rodham Clinton today unveiled a retirement security plan which, basically, comes down to this. It is sort of a 401K for everyone. If you have a 401K through your company and you like it you can keep it. But if you do not have one because you do not have a company or the company does not offer one, well the government will offer you one in which you will have a variety of choices of where you put your money.

There will be a government contribution to help what you save to grow, and it will grow tax free, much like a 401K.

That does not sound like such an exotic ideas. Is it, Mara?

LIASSON: It is not exotic. Bill Clinton proposed it. They were called USA Accounts back then, and now I think they're called American Retirement Account, but it is pretty much the same thing. She has got the same stable of people working for her cooking up these ideas.

The question is, of course, how she would pay for. I think this, basically, would be a popular idea. She said she will do it by not —

HUME: The reason it would cost a lot of tax payer money is that people would be coming up with their contributions out of their pockets, but the matching money, which normally a corporation or your company will put, will be put up by the government if you don't have one of these.

LIASSON: That's right. It is $1,000, I think, if you are to $50,000, or $60,000, and 500 if you're up to $100,000.

HUME: So you get a 50 percent match?

LIASSON: A 50 percent match.

She says she will pay for it by stopping the expiration of the estate tax for estates over $7 million and more.

HUME: Would this not be in fact a new entitlement?

LIASSON: Sure, if you guarantee everyone — maybe it is the kind of entitlement that people would want the government to fund, because it is about savings. But, yes, it would be guaranteed.

HUME: So, Fred, sounds like a great idea. Or does it?

BARNES: The truth is we already have American retirement accounts — it is called Social Security. We do not need to set up another entitlement. We do not need to tax more money. We do not need to take more money out of people's pockets. What you can do is —

HUME: But wait a minute, this will be about putting money in a lot people's pockets.

BARNES: OK — some you will. And I am not clear whether you put the money in only for the first $1,000, or does it continue for the next $1,000?

LIASSON: No, it is capped —

BARNES: Yes, for now. You can see it change.

All you need to do is rather than claim that Republicans or President Bush want to privatize Social Security, which they could never do even if they wanted to, just have the individual investment accounts out of Social Security.

People have already paid the money in whether they have 401Ks at their office or their employer or not. You have the money there, they can invest it.

Hilary says right now it is only rich people who are benefiting from 401Ks and things — look, if you use these individual accounts from Social Security, this gives poor people who have never had a chance to have any financial assets in their life a chance.

And they have already paid the money. They do not have to put in the first $500, or anything. It is a perfect solution.

And if Democrats and some Republicans, who haven't been courageous on this, just didn't fall apart when you think of using that Social Security money, which is now being spent by Congress, using it in a way like that that would help, particularly the poor, it they wouldn't collapse when you are using the Social Security money, we could enact it.

KRAUTHAMMER: This is reasonably innocuous and nondescript. You are right, it is a new entitlement. But it is a modest one, and if you're a conservative it has the advantage of creating for the first time out of a Democratic idea, creating an individual account which is portable.

And Republicans, of course, have been pushing that —

HUME: And presumably it would result in investment in the private economy as you get a bunch of choices, right?

KRAUTHAMMER: The private economy — and you would have a class of people who today do not have it at work or don't have a private retirement account, starting them off in this area, and, perhaps, becoming attached to the idea of a personal retirement account, and spreading in the country.

HUME: You think it is smart.

KRAUTHAMMER: It is politically, as always, a brilliant idea, because it weaves in between extremes.

It does not take out of Social Security the way the Bush plan would have, which would have been anathema to any Democrat. On the other hand, it establishes the principle of establishing personal accounts, which is a good idea.

Over time, as Social Security is depleted by the boomers retiring, you might get people proposing the Bush plan ultimately, so you could end up with a combination of the two.

Content and Programming Copyright 2007 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2007 Voxant, Inc. (www.voxant.com), 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 Voxant, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.