This is a rush transcript from "Special Report," January 17, 2019. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

REP. TIM RYAN, D-OH: I think everybody knows what the state of the union is. It's screwed up right now.

REP. NANCY PELOSI, D-CALIF., SPEAKER OF THE HOUSE: Have you heard? No, we haven't heard yet. We'll cross that bridge when we come to it. We haven't heard. It's very silent for more than 24 hours.

UNIDENTIFIED FEMALE: Fox News alert. President Trump denying a military jet for House Speaker Nancy Pelosi.

UNIDENTIFIED MALE: Nobody has told them yet that they have to get off the bus.

REP. STENY HOYER, D-MD.: It is unbecoming of the president of United States, but it is unfortunately a daily occurrence.

KEVIN MCCARTHY, R-CALIF., HOUSE MINORITY LEADER: I'm just shocked she'd even thin that she would leave the country. Why would you leave the country with government shut down and you're Speaker of the House?

REP. ADAM SCHIFF, D-CALIF.: We believe this is completely inappropriate by the president. We're not going to allow the president of the United States to tell the Congress it can't fulfill its oversight responsibilities.

(END VIDEO CLIP)

BRET BAIER, HOST: This was quite a day. After the Speaker of the House said, you know what, you shouldn't do the State of the Union address, security concerns. Today she and some other lawmakers were heading overseas on what's called a Congressional Delegation, and CODEL, and then just before they left this letter came out from the president. "Due to the shutdown I am sorry to inform you that your trip to Brussels, Egypt, and Afghanistan has been postponed. We will reschedule this seven-day excursion when the shutdown is over. In light of the 800,000 great American workers not receiving pay, I'm sure you would agree that postponing this public relations event is totally appropriate.

I also feel that during this period met, it would be better if you were in Washington negotiating with me and joining the strong border security movement to end the shutdown. Obviously if you would like to make your journey by flying commercial, that would certainly be your prerogative."

Our friend and frequent panelist Amy Walter tweeted out at that point today, "We are now in what historians would call "the nah-nah-nah-nah-pooh- pooh" era of American politics." There's where we are.

Let's bring in our panelists, Charles Hurt, opinion editor for "The Washington Times," A.B. Stoddard, associate editor at Real Clear Politics, and Matthew Continetti, editor in chief of the "Washington Free Beacon." Charlie?

CHARLES HURT, OPINION EDITOR, "WASHINGTON TIMES": I was really waiting to see how you were going to pronounce the nah-nah, ha-ha, pooh-pooh thing.

(LAUGHTER)

HURT: Washington has been dysfunctional for a long time. And I think that today, the last couple of days, has been a very outward expression of that. And for a lot of people I think it is kind of a relief. It is like, OK, let's have the fight all out in the open.

The problem here, and I think Donald Trump in that letter and Kevin McCarthy restated this as well, make a very good point. If the government is shut down, and maybe they believe that the crisis on the border is manufactured, but the crisis here is not manufactured. Why aren't you here negotiating?

And at the end of the day, the big question remains, what are the principles that the two side stand for? We know what the principle that Donald Trump is standing for right now, which has to do with border security, building the wall, whatever you think of that. What are the principles that Nancy Pelosi stands for and Democrats stand for? They want to save money? They don't have a very good track record. They want a more efficient way of dealing with the border? They don't have a very good track record at dealing with the border. So I think the political fight here at the end of the day is beneficial to President Trump.

BAIER: A.B., Democrats have pushed back, immediately saying, well, the delegation is going to Davos from the administration. During this show they just canceled that. The president saying that he'd like everybody to stick around and not go to Davos. Obviously CODELs are important for lawmakers to get a sense of things on the ground, talk to NATO officials in Brussels, talk to military leaders in Afghanistan. But to Charlie's point, what about not negotiating, and the speaker being out of town for however long she would be out of town?

A.B. STODDARD, ASSOCIATE EDITOR, REAL CLEAR POLITICS: I cannot imagine what it's like -- there are millions of people suffering. It's not 800,000 workers. There is a huge ripple effect and the president is being informed about the economic damage that the shutdown is doing that he owned on December 11th that the polls show Americans blame him for. People are really, really hurting.

So to watch cable news today, if you're one of those people, I cannot imagine what it's like to watch the funny, sick burn coverage of this political smack down. I actually agree with the outcome. I don't think there should be a State of the Union address while the government is shutdown. And I think that the CODEL is not an emergency and it can be postponed. I think the NATO commander's need a little assurance right now. They are afraid that the U.S. president is going to pull out of NATO. But I don't think it's right to expand any non-emergency resources whatsoever with all of these things that can be postponed. And so I just think it's better that both things were canceled.

BAIER: Senator Lindsey Graham, he's been active in a lot of these different parts of the shutdown and everything else, tweeted out "One sophomoric response does not deserve another. Speaker Pelosi's threat to cancel the State of the Union is very irresponsible and blatantly political. President Trump denies Speaker Pelosi military travel to visit our troops in Afghanistan, our allies in Egypt and NATO, is also inappropriate." Matthew?

MATTHEW CONTINETTI, EDITOR IN CHIEF, "WASHINGTON FREE BEACON: On one level it is not surprising. What is the one quality that is always attributed to President Trump? It's the fact that he is a counterpuncher. So what did Nancy Pelosi expect when she ostentatiously said, we can't have the State of the Union this year because of security reasons, which I'm sure they were going to be able to find workarounds. So instead of saying I'm going to hold a speech anyway, or I'm going to give the speech in a different location and send you the text, which he may still decide to do, President Trump has retaliated, as he usually does.

And I think this dynamic illustrates why we are no closer to reaching a compromise that we were last month, which is that both sides are now firmly entrenched and they are playing to their base. And when you have 80 percent of Democrats telling Nancy Pelosi, don't give him any money for the wall, and you 79 percent of Republicans telling President Trump, we need that wall or else, how are you going to reach a solution?

BAIER: A.B., there is a lot of focus and coverage on Republicans breaking ranks and saying we need to open this now and negotiate the border later. What about on the Democratic side? Is there a feeling that there is a breaking of ranks? And I talked to Steny Hoyer last night. He said there's a compromise possible, walls work sometimes.

STODDARD: I saw what he said, and he made the point that the State of the Union offer had not been rescinded or rejected. It's that it's been postponed.

On this impasse, the Democrats are aware of these two political traps. One is that President Trump intends to swap all of 2019 and all of their message bill moments and everything they want to do on voting right protections and gerrymandering restrictions and transparency this and that, everything they wanted to do on the House floor, Medicare for all, he intends to swap by flooding the zone no matter what, and that they are going to be blamed. All these freshmen Democrats who won Republican seats, whether they were Trump seats from 2016 or Clinton seats, are going to be blamed by their constituents soon for coming to Washington and voting no and not helping reopen the government.

That said, they also realize that this is a tactic by Donald Trump that if he is indulged on, it is not a negotiation. It is he wants a wall, and he hasn't offered them one thing, as I said last week, that would bear him politically.

BAIER: They haven't been at the table.

STODDARD: He walked out of the table last time they met.

BAIER: Understood, but they haven't come forward with anything.

STODDARD: Where is the offer that says for the wall, I'm going to do this for the Dreamers? Every time, I said it would be so great that Lindsey Graham --

BAIER: We just saw -- it's all happening.

STODDARD: I said it would be so great that Lindsey Graham and Jared Kushner, I was in this chair and said last week, it was great that they were coming up with a compromise. It was rejected, look at Mark Levin's Twitter feed, by the right immediately.

BAIER: Doesn't it require Democrats to say, OK, we are open to that. Not $1 for the wall, we are not giving any border security.

STODDARD: I truly believe that if Senate Democrats and Republicans who are working together closely come up with a compromise that would really be a policy exchange that the Democrats would be forced into voting on it. I really do. There is just nothing on the table that they can say is a win for them.

HURT: And the other thing from your interview last night with Steny Hoyer, he made a very good question, is the wall immoral? And he made it very clear that he does not think the wall is immoral, putting some distance between him and Nancy Pelosi.

And I do think some of these freshmen that have come in who are more apt to try to make some sort of deal believe that, OK, let's spend some money on wall funding. At the end of the day it keeps coming back to the same question, and that is, when you remove all the tit for tat and all that kind of stuff, in the big picture fight you have Donald Trump who is fighting for border security, something that people in this town, both parties for 30-plus years have failed to do anything or at least failed to fix, and you have him on that side, and then you have recalcitrant Democrats in Congress arguing against doing that. The political fight is an easy win I think for the president.

And the other thing, it's easy with us in Washington to focus on the hysteria around the shutdown, but when you get outside of Washington, the shutdown is not that big of a deal.

STODDARD: Charlie, I beg to disagree.

HURT: The point of the federal government is not to create federal jobs. I feel terrible --

STODDARD: I'm talking to those communities where those federal salaries are spent, at the barbershops and the car mechanics and the gas stations and grocery stores that are completely upended by the fact that people have no paychecks.

HURT: I don't like polls, but there was a poll in "The Washington Post" last week that said, of all the questions it asked, the single biggest number was the 80 percent of people who said they've not been personally affected by the shutdown.

STODDARD: The economy has been. And every single poll shows that the president is being blamed for this.

HURT: So people in Washington getting all worked up about this doesn't mean the rest of the country cares --

BAIER: Clearly, those people, the 800,000 and others are feeling it. This would be an interesting commercial break, though. Next up, Democrats veering hard left for 2020.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. KIRSTEN GILLIBRAND, D-N.Y.: I'm running for president of the United States. I want to represent our country, our whole country.

We have to restore the integrity. We have to restore the stability.

REP. JOHN DELANEY, D-MD, 2020 PRESIDENTIAL CANDIDATE: What the American people are really looking for is a leader to bring us together, not actually talk like half the country is entirely wrong about everything they believe.

JULIAN CASTRO, D-TX, FORMER SAN ANTONIO MAYOR, 2020 PRESIDENTIAL CANDIDATE: I'm running for president because it is time for new leadership, because it's time for new energy.

REP. TULSI GABBARD, D-HI, 2020 PRESIDENTIAL CANDIDATE: And this is the problem with so many issues in politics today and in Washington is you have leaders who get stuck in these partisan arguments.

(END VIDEO CLIP)

BAIER: If you thought it wasn't here, it's here -- 2020, the race is already here. There's a cast of thousands potentially coming out on the Democratic side. You can take a look at the list, the potential list. Some of them are already coming out, some of them making plans to come out to run for president. NPR/PBS/Marist poll, just doing favorable and unfavorable. And the top five there, Joe Biden, Bernie Sanders, Elizabeth Warren, Cory Booker, Beto O'Rourke.

Back with the panel. Matthew, one of the things you've noticed is this effort to track left because the power, the passion is really on the progressive left side of the part.

CONTINETTI: There is, and we were talking just recently about that latest Gallup poll which showed now a majority of Democrats identify themselves as liberals. All these potential 2020 candidates can read that poll, so they're all tacking left, not really thinking, I think for what it means for the general election.

I do believe that there is this overconfidence among Democrats that President Trump is unpopular to such a degree that basically any Democrat will be able to beat him in 2020. I don't think that's the case. And when I see this field emerge, I have to say, so far it's rather lackluster. Not very accomplished people or even people who have really professional campaigns or high name I.D. at this point. In 1988, there were seven dwarves that the Democrats ran. I think in 2020 we're going to have the 20 Smurfs. It is the same thing.

BAIER: That was a clickable moment right there.

(LAUGHTER)

BAIER: I just want it noted. I want it noted.

One of the people coming out, Kirsten Gillibrand, senator from New York, was on Rachel Maddow's show last night. She has evolved quite a bit on a number of different big issues, and Maddow pressed her on them.

(BEGIN VIDEO CLIP)

GILLIBRAND: Ten years ago when I became senator of New York state, I met with a family which had just lost their daughter, a teenage girl who was shot with a stray bullet. And when I met Naij's (ph) parents and her classmates and realized the pain and suffering that they were going through, I just knew I had to do more and I had to be a strong voice for that family and all the families who suffer from gun violence around my state and now the country.

(END VIDEO CLIP)

BAIER: Obviously that is about guns and being supported by the National Rifle Association. But a number of evolutions for some of these candidates.

STODDARD: Yes. Donald Trump evolved in his political career from Democrats to Republican. Elizabeth Warren has been a Republican. Mitt Romney certainly evolved from when he was governor of Massachusetts to a nominee for the Republican Party. We are seeing that with a lot of these candidates, and we're going to continue having these discussions. I think that is not really new to the process.

I think what stands out right now about -- and I agree with Matt, no one is really standing out. There is no center left voice right now. So if Biden wants to get in, that's fine. If Terry McAuliffe wants to get in, that's fine. No one is pushing back on the socialist progressive message right now, and these --

BAIER: Except John Delaney from Maryland. He is out there campaigning.

STODDARD: Right. He is not getting enough attention. But I think the people who are getting the most attention are these socialists in Congress who people are talking about taking anti-Israeli positions, and they are getting the most oxygen. That is setting the term for this field because there is no one who has come in and said let's move the party back to the center.

BAIER: And Beto O'Rourke has not had a great week. The dentist and the constitution, maybe it doesn't work.

HURT: Too much information. And of course, this is why if you don't like what is going on in Washington right now, it is not going to get any better in the next two years, because all of these candidates are going to drag the party farther and farther to the left. And it's going to become the worst thing any of them could do would be to stick out -- make any effort whatsoever to try to come up with any sort of compromise with President Trump or, for that matter, with any Republicans.

BAIER: The compromise thing is not working here in Washington that well, as of yet. Panel, thank you very much.

When we come back, a double portion of honesty and integrity.

(COMMERCIAL BREAK)

BAIER: Finally tonight, are you ready for some good news? Don't you want some good news. A veteran is thankful to two good Samaritans, 14-year-old twin sisters, Makhia and Makyla Vincent. They were walking to school in Detroit and they spotted a wallet on the ground. It contained a couple hundred bucks, cash, credit cards, and a military I.D. The girls returned the wallet to disabled veteran Mark Walsh, and he was so grateful for their act of kindness, he gave the girls all the cash in his wallet. The sisters say they plan on saving most of the money. They're going to spend a little bit. But, hey, that's good. The U.S. is good.

Thanks for inviting us into your home tonight.

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